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Tina Vandersteel

lines on the record: 76
first: 2022-01-21
most recent: 2022-01-21
sittings or episodes: 1
sources: podcast

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“Well, I would say in line with the last question, you got to try stuff, right? I think it's hard for me to say what do I wish that I had known. I think you got to try stuff, fail, try again. That's how you learn. And I can tell you to avoid mistakes, but until you make them yourself, it's going to be really difficult. I remember considering going to get a PhD actually while I was at JP Morgan thinking, oh, that would be something useful to have. And I went out to Stanford and met with the person who I thought I wanted to study under. And I explained the use case, like, why do I want to have this PhD? And I explained to them what I did for a living. He says, you don't need this PhD to do what you're doing for a living. If that's your use case, forget it. You are a practitioner already.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, definitely try and get yourself a job at one of the big banks and go through the training program experience. I mean, you get a free MBA, you get to rotate around and figure out what you like, because I think it's very hard to imagine what you're going to like without actually doing it, right? After that, I would say think very, very carefully about cultural fit. I didn't know that that mattered so much, like I said, until it was gone. If you're not feeling it, move on.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So when I thought about what books do I most love, I thought of it more in a desert island books. So you're stranded on a desert island, you can only bring so many books with you. And if that were the case, the ones that come to mind top are Thoreau's pillars of Hercules. Odonches running in the family or the English patients. I love Anne Patchett. She wrote Belcanto and patron saint of liars. And then I think I would always need to have a copy of Hofsteder's Godel Escher Bach, which keeps your mind sharp. I'm looking at a copy”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“He taught me all about relative value. He was there. He watched the GMO versus long-term outcomes. He was the person who suggested I go to Brazil. He said, listen, this relative value work is really interesting and we all really like it, but you're not going to win any II awards or get paid much for doing it. You need to be one of these strategists. You need to be a person who can talk about the country. And so he said, just take the job in Brazil. I couldn't speak Portuguese. I didn't know anything about Brazil. He's like, it'll be fine. And it was so fun.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, certainly my parents, my older half-brothers and sisters, they're much, much older than I am. And they had interesting careers that I learned about growing up. I would say my high school math teacher, one of my college journalism professors who was at my wedding I'm still very good friends with. At JP Morgan my God, there would be too many to mention. The place was just teeming with unbelievable people. One really comes to mind as fellow Mike Sembelist who still works.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Upbeat workout stuff. Yeah, I listened to a lot of the 180 beat per minute running workout stuff. So that's my hypothesis where that comes from. In terms of watching stuff, the girls have gotten us into a show. I don't even think it's on Netflix. I think it's on YouTube called The Try Guys. So it's these four hilarious guys who are on a cooking show where they're not allowed to use any recipes.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, my two teenage daughters glued me in the other day. They said, Mom, you haven't opened your Spotify wrapped yet So, I don't know if you know what that is, but that's where Spotify tells you what you most listen to It's perfect timing. So according to Spotify, what I most listen to is Eminem JZ NF, and Rihanna.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“But what we row on concept twos, which are just the basic equipment. I learned recently that one of the women from back in the day, this woman Katrine, is working on an improvement to what we have going, which is just literally FaceTime. So we've got video chat going on, but we can't see each other's monitors as though we were all there together. So she's working on an enhancement where it'll be FaceTime plus your ability to see other people scores, which really gets your juiciness going, you know?”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, that looks like a very, very spicky machine. I've seen not only have I seen the advertisement for it, but the people who do the videos.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“We were out on Saturday and Sunday. This morning I have a group called the Early Birds. It's all of these fabulous women. And at 5.25, the race starts. So you just hit the FaceTime, whoever shows up today it was Sam and Alex. And we had a workout we'd agreed to yesterday. Normally we would do it at the rowing club on the rowing machines, but right now with COVID, we just do it over the FaceTime.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I was so pleased. And then this year at the head of the Charles, we raised my partner and I raced against a couple of the open weight women from Athens, Hillary and Marion We just lost, so it's fun to still race these women all of these years later. Of course, we have kids and jobs and other stuff going on.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And now, interestingly enough, I still row every day. And on the weekends, we have a house at the Cape, and I've started rowing down there. And one of the guys I now row with is the coach of the other women's double. And I remember the first day that I showed up, I was so nervous. I thought, oh my God, I'm going to meet Jim Deetz. And I said, hi, Mr. Deets. And he says, Vandersteele, you wrote against Stacey. I'm like, yes. He said, you did a good job.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, in 2003, which is the year leading up where they're going to decide the likely national team the following year, we came in second at trials”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“They did. And fortunately, the head of the team at the time himself is really big into sports. We still follow each other on Strava now that he's retired. And so most of my interview with him was about my power to weight ratio. I'm not kidding.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yep, yep. I mean, I didn't make the team and I was very despondent about that, but I didn't meet a guy who's now my wonderful and long-suffering husband. And I said, I'm not moving back to New York. So then I thought, what am I going to do? So I called up GMO and said, hey, you remember me? I'm like, yeah, I remember you. I said, I need a job. They said, okay.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, this is the women's lightweight double, yeah. So in Olympic women's rowing, if you're an open weight, there's the single, the double, the four, the quad, and the eight. In lightweight rowing, there's the double. So you're either number one and two in the country or you're not. And plus, it's a lot of dieting. You had to weigh a very small amount. It was really intense to do, and my coach, you know, when I showed up for practice the next day, and I said, I quit my job, Vinnie, I'm ready to go. He says, all right, now you have to move to Boston because that's where all the lightweight rowers are. I couldn't believe it. I was like, what? I thought I was going to row for you. He says, no, you're rowing for Athens. So you moved to Boston.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so my coach, who was watching me get faster and faster, simultaneously saw me not love my job anymore. He's like, you used to be first off the water, jump in your little car, get to your job, be at your desk at 7 in the morning. Now I see you hang out, you have breakfast with the team. What's going on? And I said, I don't love my job anymore. And he says, you're so talented. Why don't you quit your job then and try and train for Athens? And so I said, you know what? You're right. And I did.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so I bought a car. I joined a rowing club. I loved it. I got more serious. I transferred to the New York Athletic Club and had a great coach there who watched an evolution that was very subtle. And this is partially a story of JP Morgan. So JP Morgan had an extremely special culture. It's hard to describe until it was gone, right? That was the only job I'd ever had. But Chase bought JP Morgan in 1999. Right. And that culture fell apart.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so after I moved back from Brazil in 1997, I took over a pretty big job at JP Morgan, and it was right as the Asian financial crisis came. And that was a hellish period for about 18 months through Russia's default. And I just burned out a lot. And one of my clients, who was a prop trader at Bankers Trust, said, I think you need to take up a sport. You work all the time. I said, well, I live in Manhattan. I live in a village. What sport am I going to take up? He says, Why don't you take up rowing? Nobody needs you at four in the morning.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“The borrower, right? Let's say it's a government borrower may not be so transparent and their utility function can shift quickly over time. And so just thinking about how that evolves and trying to make some guesses, and by the way, this administration might get voted out of office over the term of the debt of the bonds that you own. And so your opinion is only good so long as so-and-so is in office. A great example of that was Ecuador earlier this year, where you vote in the new guy and the new guy is more investor friendly and the bonds go up 60%. So that's a pretty big change.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, no, they were super, it's mostly about. How to take these strategic interactions and map them onto the utility functions of the people involved. So my utility function as an investor on behalf of endowments and pensions and foundations or whatever is to maximize alpha relative to my benchmark. I have a very, very transparent utility function.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And so you can try and conceptualize things that way and say, okay, what are the facts that we have or the known unknowns about this particular situation and how does it line up with our past experience? But again, there's still some unknown unknowns every time you do that. So you just have to be humble about what is really knowable in any given situation.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Every family is unhappy in its own way. Every crisis is unhappy in its own way. There are elements that may be the same, but each one is slightly different and early that was given to me when I started, well, there were two books when I started in the emerging debt markets about the relationship between creditors and debtors and what happens when they get into crisis. One is called banks, borrowers and the establishment, which is a great book. And the other one is called debt games. And in debt games, they look through all the crises up until the moment that book was written. And they use a game-theoretic approach to the strategic game of creditors and debtors as they head into a failure to pay moment.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, what I mean by financial repression is a running down of debts by allowing the So, whether it's corporate earnings or personal earnings or government earnings, to be inflated through the inflation process while the debts that are owed, whether it's M0 in the form of your banknote in your wallet or in your bank account, all the way out to your US 10-year bond, yielding 140 something. If inflation is higher than that, then you're eroding the real value of those debts, which is somebody else's asset. And that's how you run down your debt GDP slowly over time, but you don't actually default. You don't fail to pay. You just fail to pay in real terms.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that's why, in my opinion, you see shadow assets trying to pop up. So if all the develop markets are all using financial repression simultaneously, If you're China, you used to have a closed capital system. So it was very hard for people to say, I don't like negative real interest rates here. I'm going to go buy US dollar bonds or something like that. It's hard for citizens to change their currency. That's evolved a little bit, but it's still fairly hard. So you see people playing hope as a strategy. I would say cryptocurrency is hope as a strategy. I know I'm a sitting duck for financial repression, so I'm going to hope that this other thing is better. Because there's nowhere else to escape.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So inflation is a form of default. Where you don't have to declare it. So, from everything I know about sovereigns when they get their backs against the wall and eventually have to make a political choice to default, it's generally a very unpopular decision. And if you can, you want to conditional on being in that position. You want to heap the losses on foreigners. That's why it used to be that countries would default on their foreign currency debt, because that's where the foreigners were. Russia changed that calculus because they defaulted on local currency debt, which is where the foreigners were, and paid dollar debt, which is where the Russian oligarchs were. So once you're in that position, if you can use financial repression in the form of negative real interest rates, partially through higher inflation, then you can default slowly without having to make a political decision to say we're not going to pay.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“the worldwide JP Morgan sales force what the thing's going to be, that kind of inside knowledge, that doesn't exist anymore.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's correct. If you've marketed yourself as boots on the ground and we think we can get more information than other people, which by the way, regulation FD wasn't just for equities, it's for everybody. Everybody gets the same information at the same time, the same roadshows, the same everything. It's not true even”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, if you think through the process that I've just described where you load your chips, your alpha chips on arbitrage-like things, where you don't even really care which country you're talking about, frankly, right? Then from that perspective, no, you don't need boots on the ground because you are emphasizing that activity and de-emphasizing what you think you know about any particular country. And so the country tilts that we remain with are mostly a function of whether or not there are arbitrage-like things to do in that country. If I take Papua New Guinea or Tajikistan, there's nothing to do there. You either buy the one bond they have or you don't. It's pure country selection. So we just don't bother, right? So you're saying.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. That's right. That was our only Mexican holding for years until Brexit came along and a sterling version of that bond became shockingly cheap to it. So we got rid of all of our dollar bonds and bought sterling bonds. It was just a relative value play.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And we couldn't figure out why would Mexico give us such a free lunch? It just doesn't make any sense. And our sovereign analyst came up with a theory, which I think is a reasonable one. He said, here's the thing. U.S. rates are low, interest rates are low. So while the spread is very wide, the yield is one of the lowest that Mexico has ever issued at. And that's politically popular. On top of that, It's politically popular to say we Mexico can borrow for a hundred years while Spain is struggling.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“But I thought one of the most interesting things in 2010 Mexico issued its first century bond 100-year bond. And the Mexican hacienda, the debt capital markets group there, was very, very clever. And they figured out which investors would be most likely to dip their toes into this 100-year Mexican bond. And they offered it shockingly cheap to the Mexican curve for those of us brave enough to do it. And by the way, they issued it at a large original issue discount, which meant it had a lot of default protection relative to other Mexican bonds. It was nirvana of a bond for us. We bought as much of it as we could. We were the largest holder of this bond, even though we weren't a very large emerging debt asset manager.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“As a relative value construct, of course it would abradiate out. I mean, if you're going to get paid $500 over boons for BTPs or Spanish government bonds, why on earth would you buy emerging markets debt? So, of course, our spreads widened in sympathy. And I used to say that, you know, it's Spain's default, right? If a major developed market's government elects to default, the signaling for our markets will be very, very bad. Just think about how terrible that would be. Argentina would just default because they would say, well, if a Spanish aren't going to pay, we're not going to pay, even if they could pay.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a great question. So earlier when I was trying to lay out the taxonomy of what's considered an emerging country from an investment perspective, I said it's usually lower middle income countries or countries that have defaulted. Even if they're high income. And I would put Greece in that latter category.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, both crises really Are exogenous shocks from the perspective of the emerging markets. Unlike 1998 where we were the epicenter, let's say, in 2008, Emerging markets were run over as bystanders, right? And I would say the whole world was run over as part of COVID. So whenever you have these external crises that impinge upon the markets, there are some very well-established programs out there for the sovereigns in our markets to make sure it doesn't become a systemic crisis. So if you think about 2008, there was a very standard playbook already in place to help some of the weaker credits whose debt was sustainable in the medium term. They just had a rollover problem and the IMF was there to help them roll over their debts until market access was regained. Some of them, of course, their debt was not sustainable in the medium term and so they elected to default. So in Ecuador defaulted in 2008, for example.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“I would say the thing that's glaring right now are the stressed and distressed emerging countries. So if you take out the real wise of the pandemic, the difference between the high yield sub piece of our hard currency benchmark versus the investment grade one, it's at very, very wide levels, right? So not pandemic levels, but very wide levels, about 500 over investment grade. Within that subset, there are arbitrage-like positions that can be set up. And by that, what I mean is these are countries whose bond prices indicate a high likelihood of default. So can you ensure the default case while holding on for the no default case? And in a handful of those... Those countries, the answer to that is yes. And I think those make some of the most interesting opportunities.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So, the question is can you choose from the group of positive yielding EM local markets on a currency hedged or unhedged basis in the event that you're willing to take some currency risk and you think it's well priced that has the defensive properties of these developed market bonds but with positive yields? And the answer to that is yes, there's a small clutch of these things. They are not EM countries for the most part. They're not the poor countries. They are the Taiwan's and Koreas of the world. But those markets do present as relatively safe. Now, not safe from financial repression. None of us is safe from financial repression, but safe in a anchor to winward statistical sense.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So earlier, we talked about $14 trillion in negative yielding debt. So we ask ourselves The purpose of holding a certain class of government debt, we used to refer to it as the anchor to winward portfolio, either the hell or high water portfolio, is to have ballast in your portfolio in the event that there's a severe equity market decline or risk assets have their own decline, whatever that is. The cost of holding that debt right now in many of the major markets, whether it's buns or oats or JGBs or so forth, is holding a negative yielding asset, right? It's an insurance premium almost.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So they got all the reputational hit of doing this, but they got none of the debt relief that Kazakhst filed that under a head scratcher. Why on earth would they do this? It's still in the London courts, by the way. I actually wrote to the finance minister of Azerbaijan. I said, this just doesn't make any sense. Conditional on your writing off creditors, you should at least get some debt relief for doing it. But to your point, all you can do is file these away and understand what's happened in the past and make some educated judgment about how likely the current administration or dictator or whatever it is of the country is likely to do that in the future. That's an art. Like I said, the credit research people on my team have a very hard job.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“In that case, they went on to have quite a lot of debt relief for the country. So this is 2014 after that oil market collapsed, and so oil-sensitive countries like Kazakhstan needed debt relief and so forth. We fast forward to Azerbaijan, and there was a fascinating case that we were involved in. We owned some bonds from this bank called the International Bank of Azerbaijan. It was 90-something percent government-owned, so we considered it a state-owned enterprise that followed that same playbook. Over the weekend, they rewrote their bankruptcy laws and so forth. And they gave a very mild haircut to creditors. It actually was more or less NPV neutral.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's a good question, and I would say for the fundamental credit analysts who we have on the team, we rely a lot on precedent, frankly So I'll take an example from a few years ago in, well, first, I guess in 2014 in Kazakhstan and then later, a few years later in Azerbaijan, where we weren't involved in the Kazakh one. There was a big bank in Kazakhstan, and I actually don't know the name of it, but the ticker was Bitas. Over the course of a weekend, And basically wiped out the bank creditors. And so you look at that and you say, gosh, that's a serious risk that we should take into account. I said we weren't involved because the risk premium that you were being paid over Kazakhstan wasn't enough to even contemplate such things at the time.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Ambient fundamentals of this particular country in terms of its balance of payments, its place in the economic cycle, and so forth. What's the likelihood that we'll get to keep whatever the ex ante carry of the currency is? And so, you know, if this is a pegged currency, we were looking most recently at the Uzbek Som That currency is more managed against the Russian ruble than against the dollar per se, but it has very high yields for 10, 12 percent. And so the question is, is that high enough or will we see a devaluation in the sum that would wipe out that ex ante carry? So that's how we think about the problem.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So this is a very, very difficult question. As an arbitrage focused person, when I think about naked currency risk, it's so far away from an arbitrage. I, of course, lean on my team who are much smarter than I am in these dimensions. So we bucket the emerging currencies in two different buckets. One are floating rate currencies and the investment thesis there is the broad dollar goes up and down and takes all of them up and down with it, right? So we're going to pick relative winners and losers among that pack of floating rate currencies. That way we insulate ourselves from broad dollar move. So it's a relative value program. For the very highly managed and pegged currencies, we have a program that one of the people on my team developed, which tries to answer the question given the”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Well, you have a number of choices. If you're a dollar-based investor, you can simply buy dollar Brazilian bonds. There aren't that many dollar Thai bonds, but you can buy dollar bonds. You can buy local currency denominated bonds and hedge the currency risk associated with those bonds. And to take a recent example, we found this fascinating Brazilian real denominated instrument. It's actually guaranteed by you and me, the US taxpayer. Really? And it was paying local Brazilian treasury, so NTN, plus 40 basis points. So you could hedge out the currency risk and the interest rate risk of that thing and be left with a US guaranteed thing at sort of treasury's plus 100.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And that was precisely the point of my talk. It used to be that you could look at interest rate differentials and price currency forwards in developed markets, right? Not always in emerging markets, especially in non-deliverable emerging markets. But by this point in 2012, and for sure in 2016, developed markets were no longer following this, right? There were huge cross-currency bases going on, only eventually capped by the growing use of central bank swap lines, right? And lately, repo lines in the case of, say, the People's Republic of China. So I would say finance and macroeconomic textbooks are actually not all that useful these days, because what you would have learned hardly applies anymore.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“Olivier Blanchard gave a talk called How to Teach Intermediate Macroeconomics After the Crisis, this is after the Great Financial Crisis. And he says, I used to derive movements of exchange rates from uncovered interest rate parity conditions.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“And the quote that struck me was from 2013. I remember going to the IMF meeting, so ostensibly just to think about EM. But if you think about the time period of European sovereign debt crisis is sort of coming to a denouement, and the Cypriots had just defaulted on bank debt, so there's a lot of interesting stuff going on. And the most crowded room at that IMF in 2013 was the Bank of Japan. The Assistant Governor of this fellow MOMA says, stakes are high. If we fail, economics textbooks might be wrong. That's uncertainty. And I could never forget that quote, because I thought to myself, well, gosh, it seems like economics textbooks have been wrong for some time now. But what I'm interested in is the fact that the finance textbooks are also wrong. Right.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“It's funny that you say the textbook models. I gave a talk. We have a fall client conference and in 2016 I wanted to give a talk about arbitrage. And that is an extremely dry topic, especially at a firm where plausibly I am following Jeremy Grantham himself on the stage. So now you have a bunch of people interested in equities and ass allocation. I'm going to try and get them to be really interested on Japanese cross-currency basis and this kind of idea. And I started off with a quote because at this point it was just around the time that Japan was entering”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So from memory, I would say each of these were probably about half again this size or half the size, maybe 15 years ago. So it's growing. For sure, there's more interest in it. I was looking this morning at the Bloomberg Global Aggregate Index, and they produced the sub-index of negative yielding debt. That's about $14 trillion. So folks are axed to find things with positive yields, and I think that's where EM debt has been coming in.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source
“So round numbers for dollar denominated bonds, sovereign and quasi-sovereign external debt in the MB Global Index, it's around 1.4 trillion. For the corporate EM index also around 1.4 trillion and for local currency EM debt it's around 2.5 trillion. Now that's just the index eligible stuff. I think you could safely multiply that by another 50% to capture all possible investable debt.”
2022-01-21 · Masters in Business · Tina Vandersteel on Emerging-Country Debt (Podcast) · IDENTIFIED FROM THE TRANSCRIPT · source