DoubleLine’s Jeffrey Sherman and Samuel Lau welcome highly rated and much awarded analyst Jim Reid, Deutsche Bank Global Head of Credit Strategy and Thematic Research, to “The Sherman Show,” recorded June 15, 2021. The inflation debate quickly takes center stage, and Mr. Sherman praises Deutsche’s analysis for putting out both the transitory view and the higher-over-time perspective. Mr. Reid says that in his 17 years doing Deutsche research, he’s never experienced such as divisive subject. The bottom-up numbers support the transitory view, he says. However, other analysts on his team see a structural change going on that while hard to model points to a new economic orthodoxy “that is quite tolerant toward both high government spending and money printing.” The trio also discusses, among other topics, if debt still matters, whether the boom-bust cycle is over, pricing power and wage pressures, and will the Fed be stuck holding its large balance sheet forever. On that last subject, Mr. Reid says, “I’ve had a longstanding view that central banks will be buying government bonds for the rest of my career,” as the once extraordinary use of QE measures has become ordinary.
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