DoubleLine Portfolio Manager Ken Shinoda and Deputy Chief Investment Officer Jeffrey Sherman Sept. 3, 2024, review macro and markets for August amid very likely, but potentially overzealous discounting of, federal funds rate cuts. Highlights include:
(1:02) of Macroeconomic surprises to the downside, which have helped bring interest rates as the markets expectations of rates cuts have increased and been pulled forward.
(4:03) Inflation readings, with Ken Shinoda raising the possibility of a sideways movement in inflation going forward;
(5:55) Labor market readings, including divergent household and establishment surveys and indications of weaker jobs growth but so far not a collapse;
(10:39) An assortment of gauges bearing on the health of the consumer, including wage growth, the savings rate (which while falling does not account for household gains in stocks and home prices or money put to work in money market funds), consumer credit delinquencies and declining hirings by small businesses;
(15:38) Fixed income performance, with strong returns across the board, led by riskier credit and non-Agency commercial mortgage-backed securities;
(24:18) Currencies performance, with the U.S. dollar “near the weakest of the year,” Ken Shinoda notes, “which makes sense because we’re finally going to cut rates.”
(25:15) Commodities’ weaker performance, with lower energy prices supporting disposable income for consumers;
(27:27) Equities’ strong performance with equally weighted portfolios showing recent outperformance amid a correction in mega-cap tech.
Mr. Shinoda joined DoubleLine at inception in 2009. He is Chairman of the Structured Products Committee and oversees the non-Agency RMBS team specializing in investing in non-Agency mortgage-backed securities, residential whole loans and other mortgage-related opportunities. Mr. Shinoda is co-Portfolio Manager on the Total Return, Opportunistic Income, Income, Opportunistic MBS and Strategic MBS strategies. He is also lead Portfolio Manager overseeing the Mortgage Opportunities private funds. Mr. Shinoda is also a permanent member of the Fixed Income Asset Allocation Committee, as well as, participating in the Global Asset Allocation Committee. In addition, he hosts DoubleLine’s “Channel 11 News” (Twitter @DLineChannel11, dline11@doubleline.com), a webcast series that provides market insights and commentary with peers and industry experts. Prior to DoubleLine, Mr. Shinoda was Vice President at TCW where he worked in portfolio management and trading. He holds a B.S. in Business Administration from the University of Southern California and is a CFA® charterholder.
Jeffrey Sherman, DoubleLine’s Deputy Chief Investment Officer, is a thought leader, portfolio manager and public speaker in the industry. Mr. Sherman is a member of DoubleLine’s Fixed Income and Global Asset Allocation committees, and he serves as lead portfolio manager for the firm’s multi-sector and derivative-based strategies. In his role, Mr. Sherman guides the investment teams in developing top-down macro views and collaborative asset allocation processes throughout a market cycle. Additionally, he is a member of DoubleLine’s Executive Management Committee. In 2018, Money Management Executive named Mr. Sherman as one of “10 Fund Managers to Watch” in its yearly special report. Prior to joining DoubleLine in 2009, Mr. Sherman was a Senior Vice President at TCW, where he worked as a portfolio manager and quantitative analyst focused on fixed income and real-asset portfolios. Prior to that, he was a statistics and mathematics instructor at the University of the Pacific and Florida State University. Mr. Sherman taught Quantitative Methods for Level I candidates in the USC/CFALA CFA® Review Program for many years. He holds a B.S. in Applied Mathematics from the University of the Pacific and an M.S. in Financial Engineering from Claremont Graduate University. Mr. Sherman is a CFA® charterholder.
