Rick Rieder

we can reduce a little bit of our duration, we've reduced a little bit of our investment grade, more than a little bit of our investment grade credit, because quite frankly today where spreads are, it doesn't do a lot for us.

And if rates are pretty stable, mortgages become, agency mortgages become much more interesting, and low coupon agency mortgages become much more interesting in the portfolio.

So we've been doing that.

By the way, we look at the data, including last night.

You're seeing with the mortgage rate coming down, a bit of prepayment, faster prepayment.

So we've reduced some high-coupon mortgages.

A lot of technical there, but some stuff moving on.

So, you know, there's something, by the way, this is a time of year you tend to get momentum gets chased out of the markets, particularly today where you have ambiguity around some trends that are taking place.

So, by the way, I know, I don't think it's an AI bubble and I don't think there's too much froth.

And depending on where you go, if you look at some of the big hyperscalers that trade at 20 to 25, 26 times earnings and they throw off ROE, return on equity of 30, 35, 40%,

And you look at their free cash flow.

I've never seen in my career free cash flow generation.

We can talk about top line revenue growth.

When you can have that much free cash flow generation, it allows you to do your CapEx, which is extraordinary today, build R&D, which is your future cash flow, and then you can buy back your stock.

So what's happening, you have an unbelievable dynamic.

And by the way, we're now about to open the buyback window.

that you have this dynamic you throw off immense amounts of free cash flow and so there's multiples are not scary there are parts I see it the private market and I see it in some places where you're seeing businesses that have no cash flow for a number years how much would you finance those so I do see froth in some areas but in the traditional big market cap stuff and I would say related to that in semis in health care technology where you're seeing a rapid change but real cash flow alongside a bit it is the exact

dichotomy of what you saw in 2002.

So first of all, when you look at any measure, debt to EBITDA, you look at their debt to book cap, debt to market cap, these companies are under geared or under levered.

Their cap structure is so low in terms of leverage, certainly relative to their market cap, but relative to their book cap.