Bonus Interview: Robyn Grew, Man Group CEO

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Ethan Wu (0:30)

Hey, Unhedged listeners. As you know, it's a real confusing time in financial markets right now. And we financial journalists rely on smart insights from the best people in the financial industry.

And to that end, our own Katie Martin just had a discussion over at the London FT Weekend Festival with Robyn Grew, Chief Executive of Man Group. We're dropping it in this feed for you to listen so you can hear from some of the best in finance. Enjoy.

Katie Martin (0:57)

Okay, someone has just given me a thumbs up. So I guess we are off. This is an extremely incongruous situation. I'm sitting in a kitchen. My name is Katie Martin. I'm the markets editor at the Financial Times. I write the long view column at the weekends. And I also do the Unhedged podcast.

I am very, very happy to be joined by Robyn Grew, who is the chief executive of Man Group, which runs a whole bunch of hedge funds.

And we're here to talk about where markets are going. Do you know the answer?

Robyn Grew (1:28)

Yeah, yeah. That's why I'm very good at knowing where markets are going. I learned early on not to forecast these things.

Katie Martin (1:35)

No, never ever make predictions. I've made this mistake myself.

But what we're hoping to do is talk about why markets are so challenging to read at the moment and what portfolio managers might be able to do about it. So to kick off, Robyn, you've had a very varied career, right? Markets are not your bread and butter as such. But nonetheless, anyone can tell you, market's been a nightmare for the past couple of years, right? They go up when everyone thinks they're going to go down. They go down when everyone thinks they're going to go up. Why have they been so challenging ever since COVID hit?

Robyn Grew (2:10)

I guess, listen, let's be clear.

2010s, the 14 years there about, we were in this extraordinary position where if you were an asset owner, I mean, like an asset owner of pretty much any asset, risk adjusted, if you wanted, you'd need to have slightly maybe less tech stocks than you might bond. But if you were an asset owner, you've held on to it, you made money. The markets went up. You had zero volatility, really. You had no dispersion, really.

You had zero inflation. And I think everybody got-

Katie Martin (2:44)

Everyone whinged at the time and said it was really difficult. But what you're saying is it was really easy.

Robyn Grew (2:47)

It was much easier if you were a beta player at that point, right? And I think that that's some of what happened. So when we had this inflationary piece, the thing that kind of got out of the bag and the Fed went, uh-oh, we're gonna do something about this. And they did something about it and they did it aggressively and quickly.

Katie Martin (3:04)

So inflation got above target and then it got way above target. And the Fed kept saying, it's okay, don't panic.

Robyn Grew (3:10)

It's gonna be fine. It's gonna be fine. Until it wasn't.

Katie Martin (3:12)

Until it wasn't.

Robyn Grew (3:13)

And then they hiked rates. And they hiked those rates in a way that was hard for markets to keep up. And what essentially happened was people went, there's something that's changed now. We're in this, oh my goodness, we've got rates and inflation. We've got this shock of the rates inflation. What does that normally lead to?

That normally ends up in a cash flow and earnings situation, right? So you go from this hurricane of rates into this top-down hurricane of rates and inflationary shock into a bottom-up sort of tornado of earnings and cash flow, except that kind of didn't happen. And on top of that, if you then layered on some of the geopolitical pieces, so you then have a war that's waging, which is terrible in and of itself, but affects energy pricing and affects supply chains. And then you look at what happened in China and you look at the equity pricing, what happened with COVID controls that came out of China.

And then you think about the fact that there may be people in this audience, I'm not going to make assertions, that might remember days when interest rates were at 17% and you were paying your mortgage on a 17% basis. But there are a lot of people in the workforce and a lot of people in this audience also who don't remember that time at all.