DoubleLine Deputy CIO Jeffrey Sherman joins Bloomberg’s The Close live from DoubleLine’s L.A. offices, urging investors to tune out the headline ping-pong and focus on underlying fundamentals. While the earnings backdrop remains solid, Mr. Sherman notes that at roughly 25x forward earnings, equities are stretched, and with the two-year U.S. Treasury yielding 4%, the risk-reward is increasingly difficult to justify. He warns that inflation, tariffs and elevated energy prices are acting as regressive taxes on the lower-end consumer, and he questions whether the Federal Reserve or the government has meaningful capacity to respond given a $2.2 trillion deficit before factoring in the costs of the ongoing Iran war.
On positioning, Mr. Sherman sees compelling value in emerging markets (EM) local currency bonds, where a diversified basket can yield close to 7% while offering a natural hedge against a weaker U.S. dollar, and notes additional upside in gold supported by continued central bank buying. He closes with what he views as the most underpriced risk in markets – U.S. immigration policy and its downstream impact on labor supply. Mr. Sherman argues that two decades of underinvestment in skilled trades have generated a meaningful headwind to growth that is severely underappreciated by markets.
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.
