Global Perspectives: Why Low Rates Are Here to Stay
To kick off our new podcast series, “Global Perspectives,” Global Head of Portfolio Construction and Strategy Adam Hetts is joined by Jenna Barnard and John Pattullo, Co-Heads of Strategic Fixed Income. In this candid conversation, the trio talks about the COVID-19 crisis, global credit, inflation trends, fool’s yield and false summits, among other topics.
- High-quality corporate bonds have outperformed during the COVID-19 crisis, as central banks globally slashed interest rates and fixed income investors sought strong balance sheets.
- The historic monetary and fiscal response to COVID-19 could fuel a rise in cyclical inflation. Even so, we believe central banks globally will be unwilling to hike rates, especially after a decade of undershooting inflation targets.
- For a sustained rise in inflation, not a “false summit,” we need an inflation regime shift – the realization that orthodox economic models cannot cope with the current environment – along with long-term structural shifts in factors such as fiscal policy, productivity and demographics. Fixed income investors who remain realistic about this view and focused on the long term could be well served.
Adam Hetts: Hello, and welcome to Global Perspectives, where we feature candid conversations with Janus Henderson’s thought leaders. I am your host, Adam Hetts, Global Head of Portfolio Construction and Strategy here at Janus Henderson, and for our very first episode, we are excited to have as our guests, Jenna Barnard and John Pattullo, Co-Heads of Strategic Fixed Income at the firm. They are based in London, have been working together for over 17 years; and today, we cover global credit markets, the threat of inflation, the long-lasting consequences of the COVID crisis for fixed income and much more.
So, John and Jenna, welcome to the show. I suspect that like myself, many listeners are avid followers of you both, since you always bring very clear-minded provocative insights on the macro landscape and fixed-income markets. I think you take a pretty dull asset class and make it pretty interesting over time, and you have this flexible approach and benchmark-unconstrained, in a sense. And the strategy has evolved over time to fit your client base. It started out as credit investors, then you were more macro for years with this lower-for-longer Japanification view of the world. Now that environment has been borne out of the COVID crisis and you have gone back to your roots a bit as credit investors. So, can you walk us through the sell-off as you saw it happening earlier this year and the process you both took behind the scenes to adjust your world view?
Jenna Barnard: Sure. We, I mean I think coming into the COVID crisis, it is quite useful to zoom out. Credit spreads were extremely tight, that is to say that corporate bonds are very expensive relative to government bonds from a historic perspective. We spent a couple of years just averaging out the riskier areas of the corporate bond market, so high-yield bonds, subordinated financial bonds, so kind of quasi equity bank bonds and things like that. We basically had a portfolio with government bonds and investment-grade bonds, predominantly.
So, coming into the crisis, we felt that COVID was obviously a huge economic shock. It would be a massive stress test for corporate balance sheets and business models. But we thought in terms of the quality credits, both within the investment-grade market and the high-yield market, so companies that have steady, sustainable historic earnings streams that were, I think, more akin to quality equity investing and value equity investing, have actually for those kind of corporate bonds, the COVID crisis was just going to result in an all-time historic low corporate bond yields and all-time high in corporate bond prices for that segment of the market. Obviously, energy, airlines, shipping, the kind of problem areas that we have known about for years, we are going to have huge default risks. But for the majority of corporate bonds, we actually thought this was ultimately going to play out very bullishly for the market. I think we wrote a piece in early March saying that, probably too early, because we then hit an enormous liquidity, systemic liquidity crisis where central banks frankly let the plumbing of the financial system go into meltdown for two weeks, which caused a much bigger sell-off than we initially thought would happen. But we used that opportunity from really the third week of March, once central banks had got that liquidity crisis under control to just buy an awful lot of corporate bond exposure. So, take that relatively defensive position we came into the crisis with and reducing the government bond allocation and the cash allocation and buying investment grades and high-yield bonds, as I said, from kind of late March onwards.
John Pattullo: That last week of March, the first week of April were the key points, and we actually wrote a piece, Corporate bonds: from reassuringly expensive to scary cheap?, was really a pivotal time right then. Because U.S. investment-grade bond spreads went from 1% over Treasuries up to, would you believe 4%, and today they are about 1.3%. And, you know, as bond managers, we were a bit scared because it was scary times. But also, we were probably more excited than scared because we knew that the valuations were compelling. We had this kind of liquidity backdrop that Jenna spoke about and wrote about in the following week. And we actually did weekly videos through this time. And then the Fed [Federal Reserve] stepped in, basically backstopped investment-grade risk, if you like, did massive fiscal, importantly, as well as monetary easing. And from then on in, the VIX [Cboe Volatility Index] and volatility came down beautifully, if you like, and we added a lot of risk during that time. And that liquidity really started healing and reeling around that first week of April. And then it has really screamed in ever since. So, it has been an extraordinary time, but you know, something when you feel it in your stomach, this is just, you can’t miss this. I need to pick up good quality credits at extraordinary yields for our clients. That was pretty exciting, a little bit scary, but you know, that is kind of the job and that’s the exciting bit.
Hetts: I think that is a really interesting angle that you and Jenna have talked about, that sequence of putting cash to work. And I remember during the peak of the sell-off back in March, there was this internal Janus Henderson call that you both were on. One of the things you talked about was the death zone for credit spreads, and the death zone was something you borrowed – it is a mountaineering term where at a certain elevation the air gets so thin the biological system can’t survive indefinitely. And you said with spreads where they are at, whatever it was, 900 or 1,000 bps [basis points] at the time, the economic system can’t survive indefinitely at spreads at this level, so spreads have to come down. But you had this jaundiced take on the typical investor reaction. I think you said, “Any idiot can throw money at cheap bonds, but it is a lot harder to have disciplined security selection and not turn around the cash too soon.” And I thought that is essentially an active versus passive argument right there. So frankly, from here on out today, what is the difference and why shouldn’t you just throw money at the index right now?
Pattullo: Why shouldn’t you? Well, bond indexes are bizarre because what they tend to do is those people needing more and more capital, who don’t use the capital very well, tend to become an increasing part of the index. So, it is like a kind of negative sort of survivor bias, if you are with me. And that is true of European high yield, where you get more and more bad Italian businesses and fewer and fewer quality German businesses, and in the States, you get more and more shale gas because they keep coming back for more and they keep trashing the capital.
If you actually think about it, you almost want to lend money to people who don’t need money because they will give it back to you. And we are very disciplined and quite aggressive in who we don’t lend money to because we want to lend more money to quality businesses who have a good return on capital, who would do something sensible with that money, rather than get misguided and trash it in low-value destroy-asset, you know, quality-asset destroying businesses, who tend to have lower returns on capital – value traps if you like, rather than the sort of quality growth businesses, which any sort of rational person would want to lend to. So, we feel quite strongly about that, and a lot of bond managers, in our opinion, haven’t got a great style. They tend to just buy what is in the index and what is getting sold to them. We try and buy quality businesses, which we want to own. And if you actually think about it, you actually want to buy bonds which are quite scarce and quite sought after. You know, if people keep presenting the stress industries and bonds at increasingly higher yields, you are probably going to lose money. So, we are a bit choosy, but we are pretty proud of that.
Hetts: So, going into this year, I remember that you were both quite optimistic still about just corporate debt and rates and this lower-for-longer kind of view, but there was this opposing narrative about the corporate debt super-cycle and whether that was going to end and that got to be a pretty heated argument as this crisis, earlier this year, began to unfold. But again, you were really optimistic even going through the belly of that crisis and you stuck with your thesis that corporate bond yields are going to get lower than ever, and you have been correct so far. So how long do you think these low rates will continue and what would it ever take for this low-rate cycle to finally end?
Barnard: So, we would need a regime shift in inflation because central banks have really learned the lessons of their mistakes of the last decade. I think their overreliance on these very faulty, unsophisticated orthodoxy economic models – things like the Phillips curve, which is the relationship between unemployment and inflation – that completely broke down. They were excessively reliant on that, woolly concepts like the output gap, and they basically overestimated inflation consistently since the great [Global] Financial Crisis. And in fact, you can go back much further, they have been doing it for years. With that in the background, a huge deflationary shock in the form of the COVID crisis, the central banks are just saying, “We would rather do too much than too little. We would rather overstimulate the economy, and we ain’t going to hike rates.” I think Chairman [Jerome] Powell in the U.S. said, “We are not even thinking about rate [inaudible]. So, we are in a, I think, a world where even if inflation does pick up, which one would expect next year given base effects for a low commodity price this year, central banks are not going to hike rates. It will take years to compensate for the fact that they have undershot inflation targets for a decade.
So how long will the low-rate environment last? It will last for, I would think, many years. And if there is an inflation regime shift for the first time in decades, frankly, there is a burden of proof there that inflation is sustainable, so it is going to take years to prove that there is a regime shift in inflation and not just price volatility. So yeah, I think we are in this kind of continuation of this low income, low interest rate world for a number of years. John and I are actually much more sympathetic that we may be at the foothills of a change in inflation regime, but as I said, we are going to need a lot more evidence over the coming years to support that thesis. And it just won’t be clear for a while. So yeah, the market is racing to price in zero interest rates for a long time. There is a huge demand for quality corporate bonds, a huge demand for gold, which is a monetary metal related to real yields. And I would say it feels a little bit complacent in the short term, a little bit overdone in the very short [inaudible], but central banks are indicating that that is probably right, no interest rate hikes for years. Sorry to say that because most of our clients have an income problem; income and interest rates were already too low prior to the COVID crisis, so this only accentuates a bigger concern for most of our investors, but it is what it is.
Hetts: And maybe that can be a bit controversial, and inflation is a mysterious force. I think some of the kneejerk reactions that my team has picked up in our client consultations is clients just see the trillions of dollars being pumped into the system this year and to think that inflation must immediately kick up and we are not just in the foothills, but we are a lot closer to inflation really coming on strong. But you are not very concerned about inflation any time soon, you just mentioned the foothills. So, in the face of these trillions of dollars, why not? Why are we only at the very early stages, if at all?
Barnard: Because people make the mistake of thinking central banks are printing money. They are not printing money. We had this debate in 2009/2010 when quantitative easing emerged for the first time, ex Japan, and people thought then it would create inflation. You know, by buying bonds, buying assets, central banks are creating bank reserves, and the banks need to go out and lend that money in the real economy to create inflation. We need some velocity of circulation of that money. And actually, that is where we are a bit more optimistic. We just had no bank lending, particularly in Europe, for a decade coming into this crisis. We had no fiscal spend, and this time we are getting both. Fiscal spend, obviously, everyone will know about that in their own home countries. But I think the bank lending is really interesting, and the governments are almost dictating to a number of these banks that they will lend through various schemes. So, for the first time you have got monetary policy, you have got fiscal policy and you have got bank lending going on. So, there is the potential this money will circulate around and will create inflation. The problem is, at the moment, it is just a working hypothesis. We need more evidence that those policies will continue for long enough to create escape velocity. So, it is kind of exciting and interesting, but it is not a done deal for obvious reasons.
So yeah, we are more hopeful, but it is, you know, what we don’t need is policy makers kind of pulling back that stimulus too early. You need a boldness about this to keep the momentum going in these economies. And you are seeing new fiscal stimulus being announced progressively over time. But you know, you have got to fight the fiscal orthodoxy that is in a lot of these finance ministries that we want to rein back fiscal spending as soon as possible. So, we will see, we will see, it is really interesting. It is very different, the last decade. You know, monetary policy is tapped out, we kind of knew that coming into the COVID crisis. If you think about central banks in this crisis, they basically, their job was to stimulate financial conditions, frankly, and stop that sudden, the emergence of a sudden stop in financial markets. That is what central banks did. It was the governments through fiscal policy that did the heavy lifting for the economy. So, it is a very different policy mix to the one we have had for the last decade. I think Germany is probably the most interesting in terms of the fiscal paradigm shift that is going on at the moment.
Pattullo: Yeah, I might just add that Richard Koo, calling the Japanification of Europe, always called for a wartime response using fiscal policy combined with monetary policy to get growth and inflation going again. And the COVID crisis has justified the political, the politicians to essentially have a wartime response here on the fiscal side. And that is good, I mean that is great, well done, you know, it is a great effort. Just a shame we needed the COVID crisis to justify and get away with it. But on inflation, I think people are a little bit loose about how they talk about inflation and certainly there is quite a lot of cyclical reflation going on in the next year or two if you look at commodity prices, copper, silver, gold, aluminum, lead, timber, you know, there is definitely a bit of a shift going back to the cyclicals reflation bottlenecks. U.S. Housing is quite good, but don’t confuse an uptick in cyclical reflation with a structural trend-break in inflation and inflation expectations. And I think everyone else will be telling you that this is going to happen probably about this time next year and it is very important not to confuse bottlenecks, price volatility, cost-push inflation with what people are really, longer term, really talking about is demand, too much demand in the economy and too few goods produced. And that might come in ten years’ time, who knows. But it is just quite a nuance, sometimes people just use the terms, we think a little bit loosely. You know, headline inflation will rise because there is a 12-month rolling average including the oil price. Unless oil prices stay at -40 [USD], just mathematically, of course, it’s going to rise. But there are lags, you see. So, I think just hopefully that explains it a little bit.
Hetts: Yeah, you make a good point: In the news and the headlines, you might see a short spike in demand and price levels and inflation talks pick up. But it is a whole different experience than actually having an inflationary regime in the markets.
Barnard: Yeah, we call that price volatility, not an inflation regime or inflation cycle. It needs a mechanism to be sustained year after year. And actually, it is quite interesting, in 2010 coming out of the financial crisis, we had a spike in inflation. I think U.S. CPI got to 4%, UK CPI got up to 5% and a bit, Europe up to 3% and a bit, and some central banks did hike rates into that commodity inflation, including the ECB, the European Central Bank. And it was a pretty embarrassing mistake, and I think central banks have learned their lesson that that kind of inflation is a tax on consumers and a tax on growth. So, you do not hike rates into that kind of inflation, which is why they will be hesitant to raise rates with a bit of price volatility next year. You know, the burden of proof for inflation now is very, very high in the mindset of central banks and the mindset of bond investors.
Hetts: I like that price volatility versus actual inflation cycle differentiation. I think for some individual investors, they are used to seeing an equity market rally, but they don’t cry bull market. But, you know, they might see some price volatility and cry inflation a lot sooner. It is a lot harder to track, but you make it sound easy, you talked about fiscal policy, monetary policy, bank lending and we are not getting to this escape velocity, as you termed it, quite yet. But in real life, how are you actually tracking those data points? And so, say they did start to flash, say they are flashing green for escape velocity, what kind of response would you take in your portfolios? What kind of asset classes or trades do you like if you do get a strong view inflation is finally picking up?
Pattullo: Yeah, I think it is the change of behavior. I mean because money has been cheap as chips for years, but generally speaking, people don’t want to borrow money. You know, it is a classic balance sheet recession. And hence, monetary policy is ineffective. Whether fiscal policy can be more effective to make people actually want to borrow and spend and consume and, most importantly, invest and governments invest on our behalf from the surfaces in the rest of the economy, I’m not sure. But it certainly could happen. Tougher argument in Europe where people tend to save too much and governments save too much. But yeah, it could happen and maybe if incomes were fairer and more equal and all that sort of stuff, very hard to generalize at the whole economic level. But you know, you can get a sense if people want to borrow money and buy a big house and all that sort of stuff, or actually, you know, just if you get any excess cash flow, people might use it to pay off debt. And as we know in the States, the fiscal transfer has been pretty beneficial. But years ago in Japan, I think people got essentially gifted money from the government and they had to spend their saving voucher because it had a limited time on it, but then they actually saved the balance of the cash flow, if that makes sense. So, as to your story, you can give people more money, but maybe they just pay off their debts, so they have got excess money and maybe they go out and spend it. So, we need to really monitor those sorts of things. And like some of the credit card surveys during the crisis are pretty interesting because obviously people aren’t using physical cash, people are using more debit cards and credit cards, which is quite interesting. And you can get weekly tracking on all that stuff. So, I think Jenna and I have just got to keep our fingers on the ball. They have put a massive stimulus in here, and that unknowing bit is really the way we hope individuals react and how confident they feel.
Barnard: I think it is going to be really difficult to know whether the, because this policy shift is so reliant on the politicians, the fiscal spend and the politicians forcing the banks to lend. Yes, we all know they are going to have to extend the fiscal stimulus, but in real time there is always a debate, there is a threat to pull it back and it is going to feel very stop/start and there is always going to be a deadline six months forward. Do you know what I mean? I think the nature of it is, whereas in 2012 when [former ECB President] Mario Draghi said, “We will do whatever it takes.” Boom. I have just told you we have got the bigger balance sheet than you, multitrillion euros and we will do whatever it takes. And it is like, “Okay, done, yeah, we believe you.” And that was it, game over, peripheral crisis ended when he said that in July/August 2012. With fiscal, you always have that political debate, political pushback. Is there the boldness, is there the leadership? You know, it is a very difficult policy shift to trade in that respect.
Hetts: And I think that context alone is just really interesting that inflation isn’t this binary signal that clicks on or off that it is just going to be uncertain for a while and it goes back to the mountaineering metaphor about being in the foothills, and maybe I can even add to that a little bit with my least favorite mountaineering term, which is the false summit. And the false summit is when I am hiking on an easy trail and I think I am done, but I am really just on the initial hill coming over and there is a, the real summit is not even in sight any time soon.
Pattullo: But you see, your false summit could be that cyclical, inevitable cyclical uptick in commodity price-based inflation in the next year or so, where all the talking heads will probably be getting pretty, “I told you so, I told you inflation was coming back,” and all that sort of stuff. So, I think that is probably, it could be that false summit. Because the other thing is, I think it is important to remember the way you really get growth is you have population growth, demographic growth and you get productivity growth. And the States ain’t winning many awards at that, and no country around the world is really growing terribly fast in that regard. So we have all grown up with the idea that economies just keep growing, but if you look at some of the demographics, you know, they are fairly low return rates of productivity and it is pretty hard to get the rate of growth that we knew when we were young. So, that is another reason why you might get bottlenecks and then false summits, if you like. So, we will see, but we are trying to keep open minded.
Hetts: And in the note of high yield, just globally, as you have been picking over high-yield opportunities since the crisis started, just how is the marketplace different in the wake of March’s sell-off compared to the other sell-offs that you have lived through?
Barnard: So, the key difference was the speed at which new issues started printing. So, the speed at which corporates could issue new bonds and raise liquidity in the markets, just completely different to the great [Global] Financial Crisis. During that period, the European high-yield market basically ground to a halt for almost 18 months, which is a trickle of new issuance. And for the U.S. high-yield market, it was a handful of months. So, in complete opposition to that, this time around with the Fed having said they would buy corporate bonds and in early April said they might buy high-yield bonds, the market reopened with a bang and there has been record issuance really for all kinds of companies, you know, airlines, cruise lines, you know, the usual quality companies in high yield as well. And that really has fueled an expectation of lower default rates because defaults are ultimately a liquidity event, even if you know it is a bad company, it could be a zombie and it could continue for longer than you expect. So, with this liquidity backdrop for high yields, it looks like default rates would be a lot lower than people thought given the GDP decline back in March.
I suppose the other micro theme in high yield is this what looks like an incredible divergence between European and U.S. high yield default rates. So, most U.S. high yield defaults are really concentrated in the energy sector. I think John made reference to this binge of bad lending and capital being thrown at the shale exploration industry, and that has predictably blown up. But once you X out that sector, a little bit of traditional retail, there are very few defaults. And in Europe, we just don’t have that commodity sector in the high-yield markets. I mean there are forecasts that European high-yield defaults could be as low as 4% or 5%, which is not dissimilar to an average year, even during the COVID crisis. So that is a really interesting geographic divergence. And Europe has also benefitted from a huge amount of direct government aid to corporates.
Hetts: So, at this point I think we should get a bit higher level and talk about the way you put all these macro pieces together. The very clever way I have heard you explain this is through the persona of Margaret. So, can you talk about Margaret for a minute?
Pattullo: Yeah, sure, I will have a go at that. And Margaret is really the ultimate client. We did some work years ago when we used to have more client information, and Margaret is 76 years old, she probably lives on the South Coast of England in retirement. And you know, she is retired, and she doesn’t want any surprises out of her bond manager. So, we try and focus very much on buying bonds that she would recognize, she would understand, and we try not to surprise Margaret, especially not on the downside, as in drawdown. And often, even when we are speaking to investment banks, when they are trying to frankly flog us some bond, which the sales guys are keen to sell us, we say, “Well, actually, that doesn’t suit Margaret’s profile because she is retired, she wants stable income, she doesn’t want surprises, you know, she doesn’t want highly leveraged shale gas or energy or commodities or airlines or shipping.” She kind of wants dull, and bonds are meant to be dull. It is a very effective response to the investment banks to say, “Well, actually that doesn’t suit Margaret because she doesn’t want that.” And we always try and think of the end client. You know, it is not our money, it is the client’s money. And we need to protect her, and actually, roughly 56% of our income book is actually female because ladies actually live longer than our guys. So that is who we kind of think about when we are buying bonds.
Hetts: Well, we have covered so much. I think the last question I wanted to ask is, you are talking about high yield U.S. versus ex U.S., talking about non-investment grade versus investment-grade credit versus sovereign. So, you have got this unconstrained flexible approach in your portfolio. And in my experience since the Global Financial Crisis working with different financial professional clients of ours, there has just been this huge proliferation of unconstrained fixed income investing and strategies in the marketplace in the last few years. But it means a million different things to a million different people. You have had this type of approach for a long time. So, can you just talk about what unconstrained means to you both, and in the marketplace where do you see your peers taking this approach well, and when does it go wrong?
Pattullo: Yeah, I think you need to know your boundaries and your limitations. So we are, for example, not too interested in emerging-markets bonds. A lot of emerging-markets bonds come from currency speculation and local currency. Or alleged diworsification benefits, which aren’t actually genuine but can be a little bit illusory. We have found structured products tend to be sold by overzealous investment banks who tend to charge big commissions and tend to be packaging leverage to facilitate illusory returns. Dan Rasmussen, he talks about false yield. So a lot of, he is a commentator in the States, and he said, “Well, false yield is a kind of idea that there is a yield beyond which you are almost guaranteed to lose capital because the quality of the business or the product you are lending to is impaired.” And you know, some of our clients in the States and Europe have misadventured into infrastructure, PFI, peer-to-peer lending, small-cap lending, all sorts of esoteric exotic illiquid off-the-run stuff. I am not saying there is anything particularly wrong with this, I am just saying you have got to get paid the right yield in the first place, get paid for the volatility and not get charged too many fees.
So, we know our limitations, we are pretty much on-the-run, liquid, developed world, quality businesses, sovereigns, investment grade and high yield and loans, and we don’t try and do anymore. We think the bulk of the return is from the asset allocation through those sub-asset classes, and we really try not to get distracted. Then finally, we are quite miserable really, we are rather good at saying no. So, I think it is a really important discipline to say, no. We just don’t want to buy whatever the investment banks want, necessarily are selling today, because they want to sell it. That is no logical way to build a portfolio. You want to build a portfolio of quality businesses through time and just because some industry is deregulating or has some technological breakthrough or, you know, airlines are being deregulated or banks are being deregulated or this shale gas explosion; you know, we are bondholders. We just want our capital back. And it is complacent and illogical to go and throw money at whatever someone is selling you. And Jenna and I feel very strongly about that. And that is back to that point about how unrepresentative bond indexes can be. So yeah, we feel quite strongly, don’t we, Jenna?
Barnard: Yeah, I mean the biggest structural error for flexible bond funds has been running long credit risks of the short duration overlay. Because if your short government bonds and your long credit risks, you are all in and you create a kind of mini equity fund. You create a risk, risk proxy fund, not a bond fund. So, I think there are times where it works and it is logical, given where they are in the cycle. But to just structurally run a flexible bond fund in that way, I think ultimately is a height into nothing. Because when risk-off happens, you don’t behave like a bond fund and you profoundly disappoint the clients.
Pattullo: Yeah, we did get invited to a conference once and I think it was called Finding Yield and Structural Complexity. We were clever enough not to go to the conference, I am glad to say. And actually, my Bloomberg strap line is actually, “Have you got a bid in $50 million inverse ratchet floater snowballs?” Because the structure product community invented inverse structured floater snowballs back in the ‘90s and 2000, which was basically a nasty option of what the yield curve would do and with lots of optionality built in pretty much against the client. And a lot of people lost money in these things, so they didn’t understand it. But it was sold as, you know, the Nirvana, the new Messiah, you can’t lose money on this. And we just hate complexity. It just doesn’t make sense to us; we just try and keep it simple. We are bond people. And you know, keep it simple, understand it and don’t be a hero.
Barnard: Yeah, I think the investment banks often say to us, you know, “If you do the work, you can get comfortable with it.” Really? If you can’t explain it to me in five minutes such that I understand it, there is something wrong with you and the product, not me. So, John is right, we just try and keep it simple, be realistic about the world we live in, look at long-term thematic and structural drivers and just be very skeptical about orthodox economic models, which haven’t worked for decades. We are pretty simple, we are simple people, but we are, yeah, we are just a bit skeptical about what is sold to us and what is pitched to us.
Hetts: Okay, now that we have hit on the global fixed income markets, fool’s yield and false summits, I think we can wrap it up. John and Jenna, thank you for joining us for this episode of Global Perspectives. As always, the views of Janus Henderson’s investment teams and thought leaders are freely available within the Insights sections of our website. We look forward to bringing you more conversations in the near future.