This week on our Masters in Business radio podcast, we sit down with Michael Zezas, the chief strategist for public policy and municipal bonds at Morgan Stanley. He is a CFA charterholder as well as a member of the CFA Institute, the New York Society of Securities Analysts, the National Federation of Municipal Analysts, and the Municipal Analysts Group of New York. Previously he worked as a credit analyst at Fitch.
Zezas tells the story of starting his job on the Fixed Income side at Morgan Stanley just as the 2008-09 financial crisis was beginning. The weakness in corporate bonds was an early telltale sign that something was amiss in the credit markets, even as government bonds were holding up well. Corporates tend to be more sensitive to economic events and earnings, while Treasuries react much more of a lag.
The $3.7 trillion dollar municipal bond market is a key asset class; Zezas explains what the process of evaluating municipal bonds is like — both the technical credit evaluation as well as the top down macro research which goes into any bond purchase.
Recently, Zezas wrote: “The prospect of a Fed taper to its balance sheet raises obvious questions about long-term rates, just as tax reform threatens long-end muni ratios.” He explains how the Morgan Stanley bond department analyses and evaluates the various pending tax reform proposals and expected Federal Reserve actions on rates. He tries to reduce the theoretical impact everything to a set of probabilistic odds – a percentage possibility.
All of the books Zezas discusses can be found here.
You can hear the show on Bloomberg Radio, or stream/download the full show, including the podcast extras, on iTunes, SoundCloud and on Bloomberg. All of our earlier podcasts can be found on iTunes, Soundcloud, and Bloomberg.
Next week, we speak with L.A. Laker Byron Scott / CEO of McKesson & Deer Park Spring Water Charles Norris, discussing leadership in business and sports. They are the authors of Slam-Dunk Success: Leading from Every Position on Life’s Court.