My kids don't get shoes if I don't get a bond sold, regardless of what bond that is or some kind of trade done. I was probably a little bit more thoughtful. I used to have managers that would pick on me a little bit saying I'm overthinking it from a sales perspective. And that opened my eyes to, you know, I wanted to move to a role that really fit my passions and my skills and I, that was the buy side to me.
Mike Ensweiler:Welcome everyone to the fifth episode of In Your Best Interest: An ALM First podcast, a show that will explore common depository challenges, give you an insider's view of the latest market trends and share stories and insights from industry leaders. I'm your host, Mike Ensweiler. Economic uncertainty, a seemingly worsening political climate, excess liquidity and compress margins have depository searching for yield. This hunt for yield coupled with credit concerns and diversification of the balance sheet are front and center on people's radar. This week's episode will focus on institutional fixed income investing in this current environment. Today we are joined by Jason Haley. Jason is ALM First's Chief Investment Officer joining the firm in 2008. He heads ALM First's Investment Management Group and is the portfolio manager for the Trust for Credit Unions Mutual Funds. Jason and his team are responsible for leading the investment process and investment theme development for the firm. Jason also oversees all capital markets activities, including portfolio management, trading, market research and commentary, and execution of hedging and funding strategies for the firms depositories clients. He is a frequent and much sought after speaker on economic and investment topics in the depository space and I'm very excited to have him here with us today. Thanks a lot for taking time to be with us today. Jason, very excited to have you here.
Jason Haley:Thanks Mike. It is really great to be here and see if I can share any helpful insights.
Mike Ensweiler:Well, before we get into the theme of the day institutional investing, especially for depositories in this environment, tell us a little bit about yourself, Jason.
Jason Haley:Well, I have been in the capital markets arena for a little over 18 years now, but I grew up originally in a small town in Mississippi and graduated both undergrad and grad school at Ole miss. Um, and I started my career interning, um, in the investment banking space, um, fell in love with it. And after I graduated, stayed in the industry and here we are today. Married for a little over 18 years now with three children, eight, 11 and 14, which happens to be just about the same age as yours. So we're going through it all together right now. Particularly the virtual school element, which is a, uh, a unique challenge in this environment.
Mike Ensweiler:There are a lot of unique challenges in this environment and not just with our kids. So tell us something about yourself that not many people know, Jason.
Jason Haley:Well, if you get into unique characteristics about me, this is one that I definitely haven't run across with anyone else to this point. So I've come across plenty of people, plenty of couples that are high school sweethearts, but I have yet to come across anyone that matches my wife and I, which are fifth grade sweethearts. So if anything that, that tells you about me is that my knack for spotting value started very early. So it's worked out pretty well for me. So that would definitely be one of the more unique items about me, that a lot of people don't know.
Mike Ensweiler:That's great. Tell us a little bit about the path that led you to ALM First.
Jason Haley:Well, going back to, you know, how I met you. I started my career, uh, in grad school back in 2002, between my first year and second year. I decided that I wanted to get into the capital markets space and, you know, maybe for the wrong reasons, a lot of people that got into the business in the nineties and the early two thousands had read Michael Lewis's book, Liar's Poker, uh, and thought it sounded fantastic whether it's sales and fixed income sales and trading or investment banking. So I actually started as an intern, investment banking intern, focused on public finance, which is deals with municipal under-writings. And once I got done with my second year of grad school, I went to work for the same firm that I interned with, but on the sales and trading side. And my focus, you know, I was at a regional broker dealer and the focus was mainly on depository institutions. I was working out in Memphis at the time, which had a specialty in that area. Uh, and I spent the first five to six years of my career on the sell side with a broker dealer. And it worked really well for me because the one thing that I got was a lot of product knowledge and a lot of experience with really how capital markets work, the engine that's really driving things. But what I also learned is that, you know, I was talking to a lot of depository institutions on a regular basis, but as much as I have good intentions, it was still very transactional to me and where I really was passionate about more consulting and truly trying to help my clients in making reasonable decisions. But you're in a very competitive environment where at the end of the day, you know, my kids don't eat. My kids don't get shoes. If I don't get a bond sold, regardless of what bond that is, there's some kind of trade done. And so it just, I was probably a little bit more thoughtful. I used to have managers that would pick on me a little bit saying I'm overthinking it from a sales perspective. And that opened my eyes to, you know, I wanted to move to a role that really fit my passions and my skills and I, that was the buy side to me, which is where I am at ALM First now. So I started looking into those roles. I wrote down a list of many cities, um, that, uh, to get my wife's approval on, which has to come first, as we know, uh, of where we might be willing to move in and out all the usual suspects of, you know, New York, Chicago, San Francisco, Boston, um, oddly enough, I didn't have Dallas on there because at the time it wasn't as much of a hub for fixed income, but, you know, I said, this is going to be a two or three year process and I'm not in a hurry and I'm just going to make the right decision. And as sure as it works, it was literally less than a month at the job at ALM First opened up. A guy next to me, pointed it out and said, you know, do you want to do this? And I was like, well, that was quicker than I expected, but I knew a lot about the firm on the other side of the business. And they had a really good reputation and growing fast and I said, all right, Dallas, it is. My wife and I agreed. And we moved, uh, roughly 12 years ago. And it's been everything that I expected more to experience on the buy side, definitely a lot more consultative, really feeling like, you know, I'm getting to use the skills that I developed on the sell side of the business and capital markets, but I'm getting to use them in a better way I think in helping clients perform better.
Mike Ensweiler:And it's, it's been amazing, you know, I started after you and um just, you know, the role that you play at our firm and the, and the role our firm plays in the depository space is, is, is really exciting to me. And, you know, you've really grown that role to become that Chief Investment Officer, but it's not just on the fixed income side. You're our leading economists, so to speak and in a sought after speaker. And I know recently you participated in a panel discussion, um, you know, trying to argue for one side of the economic recovery. And we certainly don't have to get too deep into that, but it, it just, you know, has me thinking about 2020 and in this has been an interesting year to say the least, you know, depositories have excess liquidity, compressed margin, there's market dislocation, a very, um, seemingly deteriorating, uh, political environment, and so maybe you can, you know, for the audience sake and to set the stage recap the events that led us to where we're at today.
Jason Haley:So, yeah, Mike, it's obviously been a, a unique environment. Um, you know, if we go back to how we started this year, and really, if you look at treasury yields, they started rallying before, um, we got into March and of course all the pandemic concerns began. So we were already on that trajectory. Um, but what happened in March, um, was certainly one of the more unique circumstances from a market perspective that we've seen. And, you know, it, it an especially in the middle of the month, every bit as much a financial crisis as what we experienced in 2008, it was just far more condensed. And I say that because having worked through the 2007, really to 2008 financial crisis, that was spread out over a much longer time period. Um, but what we saw in the middle of March when the economy effectively got self-imposed lockdown and the volatility in the bond market and the liquidity drain was every bit as bad as it was in the peak in 2008, the big difference was the Fed this time around had the playbook. And so they knew what it took to respond and to restore order effectively in the markets and as easy as it is to be critical of policymakers and everybody likes to beat up on the Fed. I will actually give them a very high Mark and high grade for how they responded in a very difficult environment to restore order. Um, and so we've come a long way from that point. I mean, spreads significant widened significantly in the middle of March. Um, everything was for sale. There was no bid. Now you've seen spreads on fixed most fixed income assets, particularly in the investment grade space have retraced completely into where some sectors like Agency MBS, where the Fed's buying$40 billion per month spreads are actually tighter than they were. So as unique as this environment is, I still think it's helpful to take it back a step back and really focus on the elements of the current environment that are not all that different from previous business cycles that we've been in. Yeah, this is unique and that we shut ourselves down and it is very severe, but a lot of the things are happening we've seen happen before, um, whether it was in the financial crisis or other severe recessions. And so I think when we talk to clients and try to think about how does it affect depositories? Well, an inflow of deposits. That's happened this time around, and that's definitely happened back in 2008 and 2009 in any real severe economic shock. Um, we also see margin compression. That's not unique that happens. It just is a little bit more severe right now. Um, I guess the more unique element that people are trying to get their hands around is, um, the forbearance issue of trying to help borrowers and defer payments in the future, and really trying to figure out what are my liabilities going to be, um, from a credit perspective? What are my losses going to look like? Um, and that really depends on the asset mix. Um, but we've had a lot of those discussions as well. So, um, the Fed has definitely helped market functionality. They've helped supply, you know, restore the flow of credit downstream to consumers and businesses. Um, but they can't fix everything. And Jerome Powell, the Fed chair, has said as much that, you know, the fiscal policy makers, there's something they have to do there. And there's a lot of wrangling going on still between Democrats and Republicans. Um, but there's only so much that can be done there and there's still gonna be an element of uncertainty. I just think the more critical thing we can do in an environment like this is do our best to stay focused on what we know and what we can control and not get totally paralyzed by the unknown, which we see happening from time to time.
Mike Ensweiler:Yeah. Especially as management teams and boards are trying to put some certainty around very uncertain times. So, you know, you mentioned the inflow of deposits, margins under pressure, credit concerns for lenders. How does a depository grind for extra basis points in this environment?
Jason Haley:It's a good question um, and it's something we've all been focused on, um, for a while now, but, you know, I would argue Mike, we started having these discussions back in 2019. I mean, it's not as if rates were really high before and the curve was significantly steep. It wasn't margins were already under pressure. And we were talking about that in, you know, the third quarter of last year. It's just far more severe now. So when you think about for a depository institution, when, when rates get to the zero bound, like they are right now, that funding benefit that we have as depository institutions versus the, the rest of the capital markets, it's gone. The value of our deposit franchise is as low as it can possibly be right now. So as we know, yes, margins are under pressure in an environment like this, and we have to work that much harder for every basis point we grab right now and you use the word grinding, that's, that's effectively what it is right now. We're having to grind and work a lot harder for a lesser amount of earnings. Um, and so you think about what can I do in this environment? And there's, there's different leavers we can pull as depository managers. Um, a few examples is one is interest rate risk, you know, do we chase yield, um, by going further out in the curve? Um, do we take more credit risk, um, whether it's in the bond portfolio or in our core balance sheet, or do we employ more leverage and just kinda quickly thinking about all three of those leverage is the one, I mean, excuse me, interest rate risk is the one that you gotta be careful with. And it's in our core philosophy. We talk about this all the time. As depository institutions, we're financial intermediaries, we are spread managers. We're not trying to speculate on the direction of rates because we have a funded balance sheet with core deposits for the most. Most institutions with core deposits funding us. That means that we have a liability that reacts typically inversely to our assets from an interest rate risk perspective. So we want to, always want to manage our balance sheet in a sound ALM framework. So I would prefer not to take excess interest rate risk beyond what my balance sheet called for at any given time. Um, credit risk, you know, that's one that it can be reasonable. The only trick that, or the only caveat that always put forward is you have to stay within your comfort zone and your resources as an institution. The worst thing I think that can happen in an environment like this is your margins are under pressure, your earnings are under pressure and you start doing things that you don't have the systems or the human capital in place internally to be able to do this. So you're getting outside your comfort zone and you're chasing credit risk. And that's where we, we typically in the past have seen mistakes and institutions get into trouble. If you do have the resources to more effectively assess and manage credit risk, then it comes down to where can I generate the best risk adjusted returns? Is it in my loan book or is it in my bond portfolio? And for most institutions you're more limited on the amount of credit risk you can be exposed to in your bond portfolio. And it doesn't have to be one or the other. It could be both, but again, it just has to be in the overall balance sheet structure. You just have to make sure you can model it and assess it properly. Um, if you're going to add that risk. And then the third one I mentioned that I think is, is another very viable opportunity in the, this environment is leverage. And so for institutions that have excess capital and a lot of depository institutions came into this with excess capital, which is why I think they're in better position than they have been particularly going into the 2008 financial crisis. Yes, we do have the concern right now is with all that inflow of deposits has the effect of levering up the balance sheet. Um, but if you started with enough excess capital and even with the inflow deposit deposits, you still have excess capital. And then of course, there's the concern about what your future credit losses are going to be on your loan book. If you can get your hands around that and model some reasonable stress scenarios and where I think a lot of that exposure is. And if you look at the Fed stress test related to COVID, um, and there are DFAST, right annual DFAST test where they saw the greatest loan losses by a wide margin was in commercial loans and credit cards, which makes perfect sense. If you look back at previous business cycles, that's where you've seen the greatest losses. So if you have greater exposure to those two categories, maybe you need to hold a little bit more aside for potential losses in the future, but if your more typical consumer exposure through autos and mortgages, and you're not expecting to have that much of an increase in losses from a normal environment, then maybe you do have some excess capital that you can use to leverage high credit quality assets. And we talk about that all the time. That might be a better alternative for you than chasing credit risk, which is also using capital. If you're using it in a risk adjusted framework. I mean, capital is there for unexpected losses, and that goes for chasing credit as well. So one example of levering high credit quality assets that's available in the current environment is an MBS dollar rolls. And that's something as a firm that we had done a lot of in the past, not just this cycle, but coming out of the previous financial crisis. And when the Fed is engaged in quantitative easing, without getting too much into the weeds on this, they are creating a supply and demand technical that creates effectively low hanging fruit for us as investors. So if you're just taking what the market's giving you, when the Fed is buying up as many agency mortgage securities, as they are right now, then it's creating a supply and demand imbalance, where if you are willing to continue to push your settlement into the forward into the future one month at a time that gets treated as a financing, and it's a short term financing it's effectively a 30 day borrowing. But if you think about it in terms of your income that you're receiving on those mortgage investments, right now, it's a lot of cases on certain terms and coupons, you're doubling the yield you receive in a given month, the income you receive in a given month because of what the Fed's doing. So I would rather leverage that high quality asset on something that I can take it off anytime in 30 day periods. You know, it's not like going and putting on five-year borrowings. It's a very short term opportunity. That's an asset that I want to own anyway and I get to take advantage of what the Fed is creating. And those are easy wins for me. When we talk about grinding it out to try to generate earnings in an environment that's difficult to operate in, that's an easy win for us. And so those are examples of some things that we want to look at, and we want to try to grab that low hanging fruit, um, and an environment that's just tougher depository institutions right now.
Mike Ensweiler:Yeah. And those are really great points, especially that leverage idea of the dollar roll idea, because I hear a lot of CFO's, CIO's, portfolio managers say that they don't want to invest long in this low rate environment. And a lot of questions about how to put that excess cash to work for any sort of reasonable return. And as you mentioned, those roles are effectively doubling the return you would earn on that asset in any given month. Um, so, you know, I also hear in addition to investing long, is chasing more esoteric assets or the story bonds and a lot of CFOs or, you know, treasury types who haven't invested in a while are definitely looking to chase yields because their margins are under pressure and they have excess liquidity. You know, I've heard some comments along the lines of, is it better to lower my loan rates and try to generate more loans if I enable, or, you know, should the bond portfolio plays some role on my balance sheet? And so maybe, you know, I know I've thrown a lot at you there, Jason, but just really interested to get some feedback from you on those things.
Jason Haley:No, it's a reasonable, a very reasonable question. And it's something we've heard a lot of, of course, and it's, it's not unique to this environment either again, we've seen it before where you have institutions that in particular have had very high loan demand and high loan to deposit ratios. And all of a sudden you get into a sh economic shock like this and loan demand falls precipitously. And now all of a sudden I have to, you know, I have to spend more time on my bond portfolio and have this excess cash. And I haven't done this in a while. And even for the institutions who have been investing more regularly, it's still not an easy operating environment, but what it really comes down to that question that you initially proposed about, should I go long right now? Or should I be more conservative and stay in cash? That really still gets into the interest rate, risk discussion. And, you know, it's natural for someone to look at the current environment, go look, the rates are close to zero right now across the curve. Why would I want to buy longterm assets when they're close to zero? And I'm going to go take us back to that discussion. We were just having a little while ago that as depository institutions, we manage interest rate risk and an ALM framework and asset liability management framework. And we don't want to get ourselves in a position of trying to speculate on the direction of interest rates. And I do this all day. I look at markets and I look at rate trends and I wouldn't do it myself with my own balance sheet because it's just too unpredictable. There's too many factors that play. And the fact that we have a liability on the other side, that our asset is extinguishing. So if we can get those more properly aligned, we don't have to worry about the rates component as much. And we can just go back to what we were talking about before is being a spread manager. So when I think about managing an investment portfolio in an environment like this, it's really no different than any other. People ask us all the time to present on, you know, managing a bond portfolio in a rising rate environment or a falling rate environment. And I try, we always try to be polite about it and I say, okay, we'll present on that, but I'm going to tell you upfront that my answer is going to be the same for any of those scenarios, our approach, and our philosophy doesn't change. And the first thing that we do when we're going out and building a bond portfolio is we want to make sure the duration target is reasonable and which is the interest rate risk profile. And for us to be able to do that for a depository institution, we've got to get into the core balance sheet. And we've got to figure out, look, there's a, there's a finite amount of interest rate risk that we can employ on this balance sheet. How do we allocate it from the loan portfolio to the bond portfolio? And as an example, if you were a heavy mortgage lender and you were booking a lot of 30 year mortgage loans, which typically tend to have a little bit more interest rate risk and convexity risk than perhaps they're using up more of your duration budget and your bond portfolio needs to be lower duration, less interest rate risk, because you're using up most of that budget and the loan portfolio and vice versa. If you don't have as a loan book that you have more autos, or you just don't have much loans, period, then you might need to use more of that interest rate, risk budget in the bond portfolio. So I'm not moving my target around unless something has changed in my core balance sheet. Maybe that's happened right now. Maybe my loan demand has plummeted and now my bond portfolio is a much bigger portion of my balance sheet than it was before. Okay, well, in that case, you might need to adjust your duration target and from where it was before, but it really has nothing to do with the level of rates right now. As hard as that is to stomach, it shouldn't be based on that. So I don't want to ever get into that discussion of, you know, should we invest right now? Or are rates are low or high because look, I'll put it this way. We heard the same things back in 2009, uh, you know, rates are really low and they weren't as low as they are now. I don't. Why would I ever buy a longterm asset? Well, what ended up happening? Rates stay low for a long time. And so we always hear these extremes, I guess it's the human condition is it's always concerns about rates up and rates down. What happens, you know, if rates fall 300 basis points or rates rise 300 basis points? I'm like, you know, there is a third option as well. If we're going to have this rates discussion, there is a third option in that rates go sideways, which is what typically happens. 80% of the time rates go sideways, not up or down. And so if you're managing your bond portfolio always, for just one scenario, your performance is just not going to be there over a long time horizon. And so that's where we're always trying to beat the drum for our clients and for investors is be a long run investor. Don't change your philosophy. Don't change your approach just based on the level of interest rates, because you do not know where they're going and when they're going there, just know that you have a portfolio that is funded with core liabilities that help extinguish some of that interest rate risk and let's go try to maximize risk adjusted spread based on what our duration target needs to be.
Mike Ensweiler:So what I'm hearing you saying is take the speculation out of the process, your long run investors, and stay the course.
Jason Haley:Absolutely. Um, you know, unfortunately we don't have crystal balls and if we did, we might employ a very different strategy than what we do right now, but we don't have the luxury of seeing the future. So it goes back to what I was talking about in the beginning of let's focus on what we do know, um, and not get paralyzed by the unknown.
Mike Ensweiler:Yep. So, you know, I hear this a lot and I'd love to get your take on it. You know, I hear, you know, institutions that don't have a sizable or much of any, um, bond portfolios. So, you know, we're in the business of making loans. And so while I wholeheartedly agree with that, the portfolio does have a place on the balance sheet for, you know, 10, 15, 20% of that balance sheet. Talk a little bit about the role that that portfolio plays.
Jason Haley:Yeah, that's a great question. And you know, what you said is when I go back to my career starting, and I'd mentioned that my focus was always really on depository institutions, even on the sell side, I remember talking to the first banker who would actually take my call, um, early in my career. And, you know, he's like son, there's three ways I make money. You know, first and foremost is loan book. Second is fees. And distant third is the bond portfolio. Now whether that's truly, you know, scientific and an accurate approach is generally true. And how much is depository institutions where you think about your longterm earnings? I mean, you're in the business of lending money out. That should be your first and foremost focus. Um, but the bond portfolio is still, as you say, it has a place and it's important. And one of the things that we've seen people get into trouble in the past is they do have very strong loan demand. And first and foremost, we tell you, just make sure you're pricing them effectively, make sure you have the tools and resources to make sure you're getting compensated for that risk and not just being a volume proposition where I'm just throwing as much of it on the balance sheet as possible. Make sure it's priced effectively, and if it is, if that's a better return profile, that's great, but don't run your bond portfolio down to zero. Because where we've seen in the past is that ends up becoming a liquidity problem because the bond portfolio is still the most liquid assets that you have on that balance sheet typically. And so you can still use it for leverage if necessary, if you need to borrow for short term cash needs, that's more difficult to do with your loan portfolio at times. So, um, there's nothing wrong with keeping your focus on that loan portfolio. First and foremost, it's just that bond portfolio is still plays an important role. Even if you, if you have a significant amount of loan demand, it serves for liquidity purposes. Um, but it's also diversification benefits as well. Um, and different assets that I can get in, in the securities market that I might can't get access to in the loan market and vice versa. They should all work well together and compliment one another, not be these isolated portfolios in a vacuum. They should all work together for a comprehensive balance sheet strategy.
Mike Ensweiler:Yep. And that gets into your sound framework discussion earlier.
Jason Haley:Yeah, absolutely.
Mike Ensweiler:The other thing I've heard of is people looking for the short terms... The short term earnings bump, you know, is this a market to take gains on sales for parts of my portfolio?
Jason Haley:There's definitely been more, uh, consideration around that, but just because of the leveraging up that has happened and of course the people thinking about potential credit losses coming in the future. You know, here's the thing I have to always be careful with this discussion because, you know, at the end of day, we have to account for things on our balance sheet, accounting is important. Uh, but at the same time sound accounting should line up with sound economics, um, over a long time period. And if you have a situation where, you know, you want to sell certain assets and you want to collect that gain, what I would, I would urge people to consider is to make sure it makes good economic sense too. So you're obviously taking the reinvestment risk. I have to redeploy those funds and if I can sell assets that have an accounting gain and most do right now in this rate environment, and I can reinvest those assets at wider risk adjusted spreads, then absolutely. That makes perfect sense. That's just being a good active risk manager. The problem we see sometimes when folks you want to book accounting gains today, and then you reinvest into something that has lower economic value going forward, it's just robbing Peter to pay Paul. It's not a good longterm strategy. Um, so yeah, in any environment, that's where I would just make sure that the accounting and the economics lineup well. And if you think about it in terms of, in an environment like this, the discussion we've had a lot, Mike is the clients that have more passive investment strategies with a, you know, a three to five year bullet or treasury ladder. And those securities are starting to roll down and the reinvestment risk is high right now. I mean, you've got, you know, two and three year treasuries or bullets inside a 30 basis points yield wise. So if you had gains in those assets and their economic value going forward is pretty low and you wanted to reinvest them into spread assets like MBS and floaters and other assets that don't have credit risk, but in an environment where we talk about we're trying to grind it out and grab basis points where we can on a risk adjusted basis, then maybe that makes sense. I can go ahead and monetize the gains and those assets that have lower economic value going forward and reinvest them into assets that have higher expected returns. And it's a win, win situation in that way. You win on the accounting side and you also win on the economic side.
Mike Ensweiler:This has been awesome. I could do this all day with you, Jason, you make this very, very easy for me, which I greatly appreciate, but we are bumping up against time. And so, you know, two things I'd like to end with and I'll throw them both at you. And it's really just your closing thoughts. What should we have covered today that we didn't. And also I'm starting to get this question. What impact is the election going to have on the economy and on the markets?
Jason Haley:Good questions. Um, I'll start with the last one you threw out there about the elections. Um, you know, it's obviously unique times on that front, you know, with conventions now going virtual and, you know, markets have plenty of things to get distracted by right now. In the near term, I would argue that it's probably not that big of an issue. Um, when I think about elections and changes potentially in administrations, I think more about policy risk and going from one administration to the next, if there is a potential change, how does that affect us from a regulatory perspective? Because I think monetary policy is going to be pretty consistent. I think the fed has made it very clear. As much, it goes into that discussion we've been having about rates being low and what, when is that going to change? I think this is not a rates bet. This is just listening closely to fed leaders. They are in no rush to do anything right now. They are making it very clear that they are going to hold put until it is absolutely certain that the recovery is very well underway. And so I am not worried about much change from a monetary policy perspective, unless you thought that there was going to be a change in Fed leadership. And I still don't think that's as big of a risk because it's a committee. It's not just one person. Fiscal policy, that's a whole other thing, but that's still, that's a congressional issue. Um, and that's where the elections could possibly have a bigger impact. Is if you see the Senate turn where now all of a sudden Democrats are in control of both sides or vice versa, Republicans are in control of both. Um, but other than that, I think the markets can see a little bit through this. And right now, especially if you think about the stock market, it's completely drowned in Fed liquidity. Um, and so until that changes, it would take a pretty big shock that the market doesn't see right now, politically speaking to really alter that. Um, but beyond that, there's nothing else that I think that we should really be focusing on right now. Um, other than, uh, kind of summarizing what we've talked about, just be careful about chasing things you're not comfortable doing. Um stay a long run investor and balance sheet manager in general. And look, everyone understands the difficulties that depository institutions are facing right now. So it's not like one institution is under pressure more than the other. Hey, you know, I've got to take care of my stakeholders. Everybody knows it's a tough environment. So you just gotta grind it out and make sound decisions. Um, like I said, the good thing about coming into this as a depository institutions were very well capitalized with good liquidity profiles, um, that is going to help us through this. And as much as none of can predict the future, let's just keep taking it as cliche as this sounds one day at a time being effective risk managers and don't get out ahead of our skis.
Mike Ensweiler:Well, we are out of time. Thank you so much, Jason, for joining us today. It's been very insightful.
Jason Haley:Thank you, Mike. Thanks everyone.
Mike Ensweiler:I want to thank you again, Jason, for taking the time to talk through investing in the current environment with us. At the end of each episode, I also like to take a moment and let you know about some of our events or articles we have coming up. If you'd like to listen to more of Jason Haley, check out his Bi-Weekly Market Update series, which keeps you current on market and economic trends and translates its impact on depositories. As always stay safe, stay healthy, and thank you for listening to In Your Best Interest: An ALM First podcast.
ALM First:The content in this podcast is provided for informational purposes and should not be relied upon as recommendations or financial planning advice. We encourage you to seek personalized advice from qualified professionals regarding all investment decisions. Current and future holdings are subject to risk and past performance is no guarantee of future results. Podcasts should not be copied, distributed, published, or reproduced, in whole or in part. Information presented herein is for discussion and illustrative purposes only and is not a recommendation or an offer or solicitation to buy or sell any securities. The views and opinions expressed by the ALM First Financial Advisors’ speakers are their own as of the date of the recording. Any such views are subject to change at any time based upon market or other conditions and ALM First Financial Advisors disclaims any responsibility to update such views. These views should not be relied on as investment advice, and because investment decisions are based on numerous factors, may not be relied on as an indication of trading intent on behalf of any ALM First Financial Advisors product. Neither ALM First Financial Advisors nor the speaker can be held responsible for any direct or incidental loss incurred by applying any of the information offered. ALM First Financial Advisors is an SEC registered investment advisor with a fiduciary duty that requires it to act in the best interests of clients and to place the interests of clients before its own; however, registration as an investment advisor does not imply any level of skill or training.