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[00:00:08] Introduction and Participants

  • [00:00:08] Introduction and Participants
  • [00:01:11] Geopolitical Environment and Oil Impacts
  • [00:02:27] Bond Market Analysis and Fiscal Concerns
  • [00:10:48] Federal Reserve Policy and Leadership
  • [00:21:15] Corporate Credit and the AI "Bubble" Debate
  • [00:30:02] AI in the Investment Process

On this page

  • [00:00:08] Introduction and Participants
  • [00:01:11] Geopolitical Environment and Oil Impacts
  • [00:02:27] Bond Market Analysis and Fiscal Concerns
  • [00:10:48] Federal Reserve Policy and Leadership
  • [00:21:15] Corporate Credit and the AI "Bubble" Debate
  • [00:30:02] AI in the Investment Process
Fixed Income/April 16, 2026/3 min read/youtu.be

Jeffrey Sherman and Jason Draho: How Should I Be Positioned? | UBS On-Air

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This podcast features Jeffrey Sherman (Deputy CIO of DoubleLine Capital) and Jason Draho (Head of Asset Allocation for the Americas at UBS) discussing investment positioning amidst geopolitical tensions, inflation, and the rise of AI. This podcast was recorded on April 9, 2026, at the UBS 1285 podcast studio.


[00:00:08] Introduction and Participants

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  1. Original source (youtu.be)

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Published
April 16, 2026
Read time
3 min read
Progress0%
  • Host: Dan Cassidy welcomes listeners to the new 1285 podcast studio.
  • Guests: Jeffrey Sherman, Deputy CIO of DoubleLine Capital, and Jason Draho, Head of Asset Allocation for the Americas at UBS Chief Investment Office.

[00:01:11] Geopolitical Environment and Oil Impacts

  • Context: Recorded on Thursday, April 9, 2026, amidst the ongoing US-Iran war.
  • Inflationary Impulse: Sherman asserts that "war is inherently inflationary" and destructive [00:01:54].
  • The Oil Factor: Oil is a critical global input. Sherman posits that if oil stays at an $80 price for the rest of the year, it will act as a significant "impediment to growth" [00:02:46].
  • Growth Estimates: Draho notes the outlook was 2.5% growth as of Feb 27, but under ceasefire conditions, it likely shifts closer to 2% [00:05:16].

[00:02:27] Bond Market Analysis and Fiscal Concerns

  • Market "Neurosis": The bond market is described as "neurotic," struggling to interpret the supply shock vs. growth slowdown [00:02:30].
  • Yield Curve Positioning: Sherman identifies the 5-year part of the curve (the "belly") as attractive, pricing in a slower economy with some remaining inflation [00:03:50].
  • Fiscal Deficit: The CBO reported a $1.05 trillion deficit in just the first five months of the fiscal year [00:10:08]. The US is currently running at a $2.2 trillion annual deficit rate [00:10:17].
  • Anecdote - DOGE: Sherman quips, "Where's Doge? We were promised that a year ago," referencing the Department of Government Efficiency concept [00:10:20].

[00:10:48] Federal Reserve Policy and Leadership

  • Rate Cut Forecast: Base case remains two cuts (September and December), though this is heavily dependent on labor data [00:11:06].
  • The Labor Pivot: Powell is now focusing on the unemployment rate and supply/demand equilibrium (influenced by immigration) rather than just non-farm payroll numbers [00:12:52].
  • Kevin Warsh: Mentioned as a candidate to be the next Fed Chair, scheduled to testify before the Senate Banking Committee [00:11:27]. Sherman seeks to see how Warsh preserves the Fed's legacy of independence [00:19:38].
  • Historical Warning: Sherman recalls the "scary" moment last summer when reports leaked that Trump tried to fire Jerome Powell, causing Treasury yields to spike [00:19:18].
  • Policy Shifts: Sherman predicts we will never hear the phrase "Average Inflation Targeting" again, calling it a framework that led to the "transitory" error [00:17:42].

[00:21:15] Corporate Credit and the AI "Bubble" Debate

  • Credit Spreads: High-yield spreads are inside 300 bps, and Double-B (BB) credits are inside 200 bps [00:22:18].
  • AI and Software: AI is currently seen as a margin compression story for software, not a total obsolescence of the sector [00:22:52].
  • AI Capex: Estimates project $3 to $4 trillion in capex spending between now and 2030 [00:27:26].
  • Asset Risk: Sherman advises avoiding AI risk in the debt market (specifically CMBS/ABS for data centers) and prefers owning it in equity where ROI is realized [00:29:12].
  • Office Debacle: Sherman notes we are "not even to the bottom in office yet" [00:28:38].

[00:30:02] AI in the Investment Process

  • Usage at DoubleLine: Primarily used for data scraping of quarterly reports, coding, and report infrastructure [00:30:22].
  • The "Hallucination" Issue: Advanced models show promise but still suffer from hallucinations, requiring human "sensibility" [00:30:57].
  • Tony Stark Vision: Draho aspires to use AI like Tony Stark's "Jarvis," simply asking the machine to run models to avoid the manual work of downloading data [00:31:37].

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