How Rick Rieder is feeling about record earnings momentum

00:00 Speaker A

one thing that’s been in the market that I don’t think people have really factored in as much as they should. The amount of cash that is that is out there. I looked today, money market funds, here’s 11 and a quarter trillion in money market funds. In fact, I didn’t think the number was that high, but it’s 11 and a quarter trillion.

00:20 Speaker A

Plus, you don’t you’ve had this period for a number of years that the buybacks grossly exceeded the IPO calendar. Even today, even with all this issuance, you still have buybacks that dwarf. So in equities, there’s not just not enough supply. And so I think you’re getting now you’re fulfilling some of the some of the opportunity in terms of what people are looking for in terms of putting cash to work. I get 20, you know, I put 20% of my salary into equities for example.

00:44 Speaker A

Gosh, now I’m getting some opportunity to take advantage of that. So I think that is that is a big driver of what is soaking up some of that a lot of that supply that’s coming on the market. So I still think the technicals are pretty darn good and uh, you know, even with this immense amount of supply that’s coming.

00:58 Speaker A

You know, I would say on the on the debt side, some of the investment grade, you know, credit that’s coming is okay and they in uh but you know, some of the data center finance has been really interesting. Um some of actually some have come in convert form where you actually get to buy upside at a pretty cheap pricing and get paid a coupon for it. So there’s been some stuff to do around that that’s that’s been pretty exciting.

01:21 Speaker B

The question is, if there is cash out there, what convinces it to come in? And and so I guess the question is what’s that catalyst now? Cuz obviously, there’s been no lack of participation in the market. There’s been a lot of people, you know, we’ve seen the mark what what stocks have done this year.

01:38 Speaker B

So what is the thing that is going to get them in?

01:39 Speaker A

So I I think two two things. One, listen, people are always wary about when you have a big geopolitical dynamic. And if we’re on the back, even if it’s going to be messy, even if we’re going to go through some headlines, it’s clear the momentum is towards some broad solve. That’s given people comfort. The second is these earnings numbers are I mean, almost staggering. And so, you know, when you look at some of these big semi companies and you say, my god, these stocks, you know, have tripled and what and then you look at it and then you look at their earnings. and you say, wow. And you know, we did something yesterday, you can even sell put options and the volatility you’re getting paid, you know, we did something yesterday, we sold calls and puts, the volatility people are paying is immense.

02:19 Speaker A

And so we were looking at selling puts yesterday and and I…