The world today is challenging many of the foundations of a status quo that have stood since the end of World War II in 1945 and the fall of the Soviet Union at the end of 1991. DoubleLine Deputy Chief Investment Officer Jeffrey Sherman moderates a discussion with Global Bond Portfolio Managers Bill Campbell and Valerie Ho on escalating geopolitical risks reshaping world markets and economies. This episode of The Sherman Show was recorded Feb. 24, 2022.
Starting with Russia-Ukraine (1:38), Mr. Campbell analyzes the historical relationship of those countries and the strategic objectives of Russian President Vladimir Putin, concluding Russian forces will remain in Ukraine until a new government is in place that guarantees the country will remain aligned with Moscow and outside of NATO. Next, Mr. Sherman asks Ms. Ho (17:44) to survey the political risks stemming from the upcoming presidential election in Brazil, with the base case of former Brazilian President Luiz Inácio Lula da Silva winning a third term, and Chile, where a constituent assembly is more than halfway through the 12-month process of a sweeping rewrite of that country’s constitution. While Lula appears bent on expanding social benefits and directed credit in the face of anemic domestic growth, double-digit inflation and high levels of debt, Ms. Ho doubts (20:11) he will go so far as to provoke a crisis of confidence.
Turning to “the other elephant in the global room” (28:20), Mr. Sherman asks for an assessment of building risks around China-Taiwan. Mr. Campbell says he is growing more concerned that China is moving toward militaristic rather than diplomatic means to reassert its sovereignty over Taiwan. However, he does not expect Chinese President Xi Jinping to force the issue until after the 20th National People’s Conference in October, which is on track to “solidify his next term, which will make him leader for life.” That probably means Taiwan will not move to the front burner before 2023. The discussion turns to Mexico (39:07), and Ms. Ho analyzes the factors that have prevented America’s southern neighbor from capitalizing on U.S. efforts to realign its supply chain away from dependence on Chinese imports. She and Mr. Sherman also (42:52) discuss the prospects for further supply-chain disruptions around the world as trucker protests draw inspiration from the “Freedom Convoy” in Canada. Finally, with Iran reportedly weeks away from achieving weapons-grade uranium enrichment, Mr. Campbell examines (45:25) the many challenges and obstacles besetting Washington’s quest for a nuclear deal with Tehran.
As DoubleLine’s Deputy Chief Investment Officer, Jeffrey Sherman oversees and administers DoubleLine’s Investment Management sub-committee coordinating and implementing policies and processes across the investment teams. He also serves as lead portfolio manager for multi-sector and derivative-based strategies. Mr. Sherman is a member of DoubleLine’s Executive Management and Fixed Income Asset Allocation Committees. He can be heard regularly on his podcast “The Sherman Show” (Twitter @ShermanShowPod, ShermanShow@Doubleline.com) where he interviews distinguished guests, giving listeners insight into DoubleLine’s current views. In 2018, Money Management Executive named Jeffrey 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. He was a statistics and mathematics instructor at both the University of the Pacific and Florida State University. Mr. Sherman taught Quantitative Methods for Level I candidates in the CFA LA/USC 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 the Claremont Graduate University. Mr. Sherman is a CFA® charterholder.
Mr. Lau joined DoubleLine in 2009. He is a Strategist on the Fixed Income Asset Allocation (FIAA) Committee and a contributing member on the Global Asset Allocation and Macro Committees. Mr. Lau is a Portfolio Manager on DoubleLine’s strategic commodity strategy while working in portfolio management and trading for derivatives-based and multi-asset strategies, including DoubleLine's Shiller Enhanced CAPE®, Shiller Enhanced International CAPE®, Real Estate and Income, and Multi-Asset Trend strategies. He also co-hosts the Sherman Show (Twitter @ShermanShowPod, ShermanShow@Doubleline.com) and Monday Morning Minutes (Twitter @DLineMinutes, Minutes@Doubleline.com) podcasts. Prior to DoubleLine, Mr. Lau was a Vice President at TCW where he worked under Jeffrey Gundlach as a Research Analyst in the Mortgage Group. He holds a B.S. from the University of Wisconsin, Madison and an MBA from the Marshall School of Business at the University of Southern California.
