In the third installment of DoubleLine’s Sherman Says, Deputy CIO Jeffrey Sherman and Strategist Ryan Kimmel are led by Relationship Manager Nick Dalgety through a bond market that has been repricing since the war began in late February. Sherman says the bond market has already priced the Fed’s next moves, and that the Fed probably needs about three more hikes to catch up. Energy is driving the story, with yields and fuel prices more correlated than at any point since 2007. The Fed can’t do much about that directly: “They can’t produce a barrel of oil.” What it can do is slow aggregate demand, and the team doesn’t see the wage or labor warning signs that made 2022 so difficult.
On credit, Sherman says spreads are tight for a reason, and the bond market is no longer turning a blind eye to risk, with tech names and the weakest parts of high yield and loans bearing the brunt of roughly $580 billion in AI-related issuance this year. Asked whether the AI debt buildout works mathematically, he puts on the professor hat: “It has a way out. I just can’t pencil it out.” If he had to lock an investor in a room and make them buy one thing, he says, it would be a five-year Treasury, and he still likes high quality, shorter duration credit and nibbling emerging market local debt on weakness. The webcast closes with audience questions on TIPS, mortgage rates, and the drivers of higher yields.
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.
Mr. Dalgety joined DoubleLine in 2013 and is responsible for managing our National Accounts and Retirement teams. He has more than 20 years of experience in the financial service industry. Prior to DoubleLine, Mr. Dalgety was a Vice President with Goldman Sachs. Within that role, he worked with financial intermediaries on manager selection, asset allocation decisions and practice management. Mr. Dalgety later worked as a Financial Adviser to high net worth clients and business owners. He has been a speaker at various industry conferences and has served on the Scenemakers Board for the Goodman Theater in Chicago, Illinois. Mr. Dalgety holds a BBA in Finance from the University of Iowa. He is a CFP® certificant and holds the Series 7 and 63 Licenses.
Mr. Kimmel joined DoubleLine in 2013. He is a Strategist on the Macro Asset Allocation team, the Fixed Income Asset Allocation (FIAA) Committee and a contributing member on our Global Asset Allocation Committee. Mr. Kimmel also co-hosts DoubleLine’s weekly “Minutes” podcast (X @DLineMinutes, Minutes@Doubleline.com). Prior to DoubleLine, he was a Proprietary Trader at Gelber Group. Prior to that, he was an Investment Banking Analyst at Morgan Stanley. Mr. Kimmel holds a B.A. in Business Economics from the University of California, Los Angeles (UCLA), and an MBA from the Anderson School of Management at UCLA.
