YouSaid · the spoken record

Michael Zezas

lines on the record: 77
first: 2017-05-07
most recent: 2017-05-07
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Yeah, you mentioned Michael Lewis earlier. I mean, he basically lionizes the type of people who just don't take things for granted, right? And, you know, the...”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“What I mean by that is the sovereign authority means they get to write the rules, they get to write the contract laws. And I'm not a lawyer, so I think there are a lot of lawyers who could get in here a debate that say that what's happening in some of these situations is unconstitutional, but you create facts on the ground beforehand that create losses for bondholders first. So going back to the question itself, I think you have to take all rules and all laws with some kind of grain of salt. You always have to figure out what your blind spot is and at least account for how this could go against you and not take for granted some of the kind of standard rules of any market, right? Or the standard kind of rules of thumb anyway.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The mantra before the financial crisis and even for years afterwards were general obligation bonds don't default, can't default. The law says that you as the bondsholder are entitled to any and all resource that the municipality has at its disposal to pay you back before anyone else. And if you think about it, that doesn't make much sense because what political constituency or group of citizens anywhere is going to allow the bondholders to completely suck dry the resources of a municipality just to uphold the law, particularly when states are sovereign entities, Puerto Rico is not sovereign but Congress was and Congress saw that the only way to effectively solve this crisis was to exercise its sovereign authority”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“There are stresses that are so big that the things that are being promised to you as an investor can be broken for reasons outside of your control. That shouldn't scare you. What it means is that you should demand some extra compensation for it and you should take that into account when you analyze it. And here we go back again to something like Puerto Rico.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that was great. That was great. I mean, you know, you had spreadsheets, Bloomberg machine and your wits and you go and you learn how to innovate. You learn how to take responsibility. It's a sink or swim kind of moment. And I think if you have those moments earlier in your career, it gives you a lot of confidence later.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Probably out of necessity. And this was something that I was born of being in Morgan Stanley in the financial crisis, right? Where in the crisis, in the immediate aftermath, there weren't a lot of resources to go around. A lot of people kind of forced into duty that was a little bit above their heads Kind of like an Apollo 13 moment, like we all have to fix this problem, but you only have the things that are being thrown on the desk right now to fix it with. Do your best MacGyver impersonation.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Rates, inflation, convexity, and therefore there are macro elements. I have to know as much about what's going on with the Fed as I do have to know what's going on in Springfield, Illinois with the state legislature. So, I think it challenges you on a number of different levels. So don't let the fact that it tends to be something for mom and pop as opposed to derivatives or FX or something like that kind of shy away from it. And then, I mean, the other bit of advice I would have is more just general career advice than something that worked really well for me, even though I didn't seek it out, which is kind of find a job where you're probably going to get too much responsibility too early.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“On the cusp, right? I got the technology aspect of it, but maybe a little bit of a different worldview. I would say two things. One on the muni issue specifically, because Munis have this, or at least had this reputation of being boring asset class. You kind of put the charismatic, but people who are considered less intellectual on that product in terms of sales and trading. One of the early phrases I heard about the muni industry was it's the muni jocks, right? And I think the post-crisis realization is that this is a market that incorporates elements of sovereign risk analysis. Corporate credit analysis, traditional bond math analysis. I mean, there are a lot of similarities to the mortgage inflation.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I'd say a couple of things, and this is interesting. I always like the millennial question because I'm not sure if I'm a millennial or not. I feel like a straddle. I'm like right there.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, it's good because part of my job is to sit in front of people and they want you to have all the answers. And so it's tempting to pretend like you do have all the answers. But I think what's better and more genuine, and you often get rewarded for sure. Is admitting that you don't know the answer, thinking and brainstorming about how you might get that answer and come back with it later. No doubt. The smartest investors know that no one has the answer, so they're going to know you're fake if you try and fake it.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And kind of putting your ego aside, right? I mean, you don't have to be the smartest person in the room. You're not a failure if you're not the smartest person in the room on everything. But you can be a failure if you try and pretend you are and ultimately don't know what you're talking about.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, no, I mean, to me, it was a big failure in the sense that I believe it was my sophomore year of college. And I was always able to until then kind of reach back kind of based on raw intellect and get by, right? And in that class, it was very humble experience because I left that class and it finally sunk in. They're like, there are things that I just know nothing about. And I really knew nothing about what this professor was teaching me. And I think after that, I decided that's not going to happen again. And so it wasn't about public finance per se. It was about not being afraid to ask for help, not being afraid that I to admit that I don't know something and ask for help.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, I think it's helpful. And listen, I think there's a lot of, I'm not trying to proselytize here about religion or anything, but I think there's a lot of Sort of encouragement of truth telling and truth seeking. That I think you need that inspiration, particularly when you're in financial markets, which is every day is a puzzle where you're really trying to figure out what the kind of most truthful nugget of information is that you can rely on. And I think that inspiration really helps.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's really interesting. So, some of that gives you a new perspective. Also, for me, it's just a way to kind of keep on task, right?”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“You do. I mean, I would say it's more or less chronological, but you know, the. The interesting thing is when you get to Psalms, which is I mean, more or less poems that they can kind of pair them with the events that are happening, whereas the book of Psalm stands on its own.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, I mean, it's corny, but the Bible, I still read the book. Yeah, I'm, every couple of years I try and grind through the sort of chronological, there's a version of the Bible which attempts to kind of reorganize the Bible in chronological order. What's the name of that?”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“I think there's some truth to that. I think Muni Bond desks in particular tend to have a lot of ex college athletes It definitely makes for good intramural sports. We had a dodgeball team a few years ago, which was undefeated. Dodgeball. Yeah.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and I think Lizard, for me, I kind of feel like on some level, I kind of share an experience with the people in that story in the sense that there is sort of a shared purpose that comes with organized sports and teamwork. And there's also a kind of shared experience of what it means to Persevere, you know, succeed or fail. And having those experiences helps you later in life to also persevere.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Happy not too happy about, but it's amazing what they can do with modern medicine. I could hold the beat. I was good enough to hold the baby when so.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, right, right. So it's basically, so the author's Bissinger and he goes and lives with a high school football team in West Texas for a season and kind of follows their trials and tribulations. But the book is less about football and it's more about kind of the experience that the team has kind of focusing on following one dream. And it's also about kind of the social and economic stresses of the area and how they interact. I mean, the reason I think it appeals to me is that sports have played a really big role in my life. I basically played organized sports all the way through college”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So what I like, or a book that's really helped me from a work perspective. Is thinking fest and slow? So it's identifying psychological biases and being aware of them and the kind of role that data can play in sort of training your mind to be aware of those probably makes me a much more boring person, but I think it makes me better at my job. On the more leisurely side, a book that I really like and I still reread every so often is Friday Night Lights. Yeah, so not the TV show.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“No, we lived together in college for a few years. Really? I would not have guessed that he would end up being the kind of responsible guru that he is. I won't go into any detail on that. I think you could take.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's more or less the philosophy that Cullen uses when he's taking an approach to what's happening with the economy, what's happening with the financial system. And I think there's something really refreshing about that, sort of free from the constricts of having a consistent academic theology as opposed to a really pragmatic kind of functionary.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you know, here I'd say that I rely a lot on the people I work with. I think Morgan Stanley has a brilliant research department with a lot of experience. And here I'd actually also kind of give a shout out to my friend Colin Roche, who we talked about earlier, who I think you can, but by the process, we use a very evidence based process, right? We try as much to kind of ignore what we think should happen and look at what we think will happen, right? If someone wants to sit down with me over a beer and talk about ideally what would I want to happen in a perfect world, that's fine. But for investors, ultimately what matters is what will happen.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“You said that. Well, you know, and it's not that I haven't had great people guiding me throughout my career, but the voice in my head when it comes to Being a critical thinker and working hard and sort of persevering. And I mean, we deal with sort of tough ambiguous analytical challenges all the time. So it's really easy to kind of throw your arms up and just walk away from it. And so, you know, that voice in my head kind of keeps me going, gives me confidence, and that's who it comes from.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So it's a great question, and I wish I had a more, I don't know, sort of corporate answer for it, but the answer that pops to my mind is my death.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And on top of that, if you want to do it in a revenue neutral way, you have to consider things that would be in the new taxes.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, I think reasonably speaking, 25% we think is the lowest they can go at this point. There are scenarios. I mean, 15 is really kind of a struggle. No, we think 15 is pretty much off the table. It just costs too much”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Because what you have is a higher probability of delays because of what happened with the Affordable Care Act and the fact that they're going to follow a more deliberative process now. And then B, you have less of a path towards a tax reform that doesn't include some of the elements that the markets would probably consider somewhat disruptive in the near term. Things like limiting corporate bond interest, for example, limiting deduction of corporate interest, for example.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“From our last iteration, it's down about 10%, but the outcomes within tax reform are kind of skewing somewhat worse from a market standpoint. Really?”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So with comprehensive tax reform, the first thing we like to tell people is that there are a lot of different things which could hypothetically count as comprehensive tax reform. And some of them are really good market outcomes. Some of them are really risky market outcomes and some are just kind of neutral. So right now we're saying that you've basically have about a 60% chance in the next 12 months that you will see a tax reform.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's unclear how much different they want things relative to what the current system is. So those two things really can't be reconciled. I think Paul Ryan did his best to try and reconcile them, but he ended up with a thankless and almost impossible.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“To go through Yeah, I mean, I think that's right. And I think that if you, I think the political analysts were probably very focused on the idea that the intent of Republicans and sort of the motivation was really high to get this done. Right, that there were going the wings of the party, though they disagreed on how to replace Obamacare, were not going to risk not doing this because it would be a political blunder. But what the market was telling you was that there were just irreconcilable differences within the Republican Party as to how you replaced this. The conservative wing of the party wants a very market-based approach where you reduce coverage, but then lower costs. And the moderate wing of the party”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that was a great opportunity to buy hospital bonds. And you even saw kind of a mini opportunity around that emerge in the first quarter because it looked like the train was really rolling, the Republicans were going to get rid of the Affordable Care Act. And all of that revenue and margin expansion that happened with Obamacare was going to be totally unwound. So you had spreads widening again. And then as soon as you could tell the political prospects for this were just not going to work out”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“When Obamacare was being debated and initially passed, the spreads on those bonds really widened quite a bit. And this was a great, in my opinion, this was kind of a great example of where people kind of conflated their public opinion, or sorry, their political opinions with market views. Because what was really happening was regardless of whether or not you think Obamacare is a disaster, it was creating a massive amount of government spending that was going to take a whole bunch of uninsured people and make them insured.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So that's the kind of secular burden of debt generally, but the sort of soft debt of pensions. But there's still enough kind of life in those funds that this is probably not a problem for another five years or so. The other secular trend, which is it's not about state and locals whatsoever. It's just one example, really, that I find really interesting and really timely given what's happening in DC is the secular shift in how healthcare is provided in this country. Obamacare came to be, there was in the muni bond market, so hospital debt is basically about 10 to 11% of the Munich bond market.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, yeah, of course. And the question there is about when are those funds depleted such that it actually impacts the operating budget and therefore there's less money to pay for schools and roads and the type of stuff that voters care about. Which then catalyzes the political risk. In Puerto Rico, the willingness to pay was high until it wasn't. And it wasn't because all of a sudden it was not politically popular to pay the bondholders anymore because they would rather not pay the bondholders than shut down another hospital.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So I'll give you a couple of secular trends that are important. The one that gets talked about all the time is pensions and retiree liabilities, right? And that is a problem most acutely being experienced in states like Illinois, but it's certainly not absent in other geographies.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So here's our team is the sort of strategy team from the municipal market. It's akin to having strategist who covers the S&P 500 and equities. So, the single name analysis is largely done by our desk analyst team. We are more sort of trend watchers and sort of we build up sector trends. So we do a lot of sing-on name analysis in the aggregate where we try and build up what trends are driving credit quality moving up and down. Give us an example.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“The revenue shortfalls there, at least the risk of revenue shortfalls, were really substantial. But ultimately, the state of North Dakota has about $2 billion of debt outstanding, and that's including all of the local debt. So that's not even the state level debt. Really kind of a drop in the bucket relative to a 3.7 trillion market.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“A state like Texas that's certainly true. And Texas was one of the more conservative states in terms of projecting oil prices for, so a lot of these states have what they call severance taxes, right? When you take some oil out of the ground or anything else, you charge a tax on it. And that tax is based on the prevailing market price for that oil. Texas, I don't remember the exact numbers, but amongst the major states that are oil producer, so Texas, Oklahoma, Louisiana, Alaska, North Dakota, Texas had among the more conservative estimates of what the price would be. So the revenue shortfall for them was far smaller on top of the fact that they were much more economically diversified. You know, you look at a place like North Dakota, which is focused on shale and therefore needs that price to be higher.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Dakota, they don't have a lot of dead outstanding. So the risk of this being a systemic problem was quite low. There was a risk of these places kind of underperforming. And net net, we didn't think would be a big problem for the market. So we said, all right, well, this is not going to drive our view. There are other things that are going to drive our view, but not necessarily this.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And it seemed like the energy sector, if there was going to be another recession in the short term, was going to be driven by the energy sector. So then what we had to do was go around and say, where are the regional economies that haven't outsized exposure to the energy sector? And realistically, not just the economic impact, but what is the revenue impact to state and local budget? And what we found there was that you had mostly higher rated areas of the country were exposed. Outside of a few kind of smaller”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So we always start with fundamentals. And it's both top down and bottom up. The process I like is to sort of sequence them that way, top down then, bottom up. Top-down meaning where are we in the economic cycle? What's driving the economic cycle? Where are the weak sectors of the economy, the strong sectors of the economy? And then go bottom up to see where are their credit vulnerabilities within the municipal bond system? Are there regional economic vulnerabilities? Is it the vulnerability in terms of types of security? So to give you an example, a couple years back when oil prices were dropping like a stone.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Than yeah. So, what happened after the kind of, let's call it the heretofore failure to repeal and replace Obamacare was it was failure to pivot on the part of the Republicans. Right, we said they need to fisher cut bait whether or not they fisher cut bait and move to tax reform is going to tell you a lot about the timing of tax reform and the content of it. And they appear to have tried to do both. They said they're going to focus on tax reform, but they haven't given up on the legislative process. And so that pushes the timing of tax reform back. They've also, in our view, tried to overcorrect for what happened in ACA by opening up the process. So now they're going to have hearings. Now they're going to engage Democrats.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, a part of this for us is defining a timeline too, in the sense that we think that a failure to pass a tax reform in a timely fashion is potentially as disappointing to investors as just an outright failure.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then you sort of iterate for new information. Well, what's new information here? New information is that Republicans control the White House in both houses of Congress, and we know that 60% of the time they can execute on their top priorities. We know that the reforms they want to pass can go through the reconciliation process. So that ups the probability and on and on and on.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“So Bayes' theorem is just a way of calculating the probability, or at least the way we use it, it's the way of calculating the probability of an event given the sort of prior baseline probability and then relating it to new evidence. So if in any given year knowing nothing else, the probability of a tax reform was 5% based on just how many years you got a tax reform divided by how many years we've been in existence”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, and I'm simplifying it a bit, and I'm a big fan of using kind of sanity check ourselves. I'm a big fan of using Bayes' theorem. I'm also a big fan of just kind of asking some of the other smart people that we work with.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source
“And then we had to layer on top of that. Given the current political conditions, how likely is it that a president and the same party can actually execute on their policy priorities? So we had to go back and reconstruct data. We looked all the way back to presidential elections going all the way back to World War II. We cataloged what the main promises were of each candidate who eventually won and what was the execution rate in their first year on office. That was about 60%. And so we were able then to iterate above and below 60% based on other conditions.”
2017-05-07 · Masters in Business · Interview With Michael Zezas: Masters in Business (Audio) · IDENTIFIED FROM THE TRANSCRIPT · source