Financing In The AI Boom: Masters in Business with Bob Michele

SPEAKER_1 (0:02)

Bloomberg Audio Studios, podcasts, radio, news.

Barry Ritholtz (0:07)

This week on the podcast, another fantastic conversation. Bob Michele has had an amazing career, could be one of the most informed influential managers in the whole world of fixed income. In his perch as Chief Investment Officer and Head of Global Fixed Income Currency and Commodities at JPMorgan Asset Management, he oversees a lot of assets and a lot of people, not just for corporate America and for central banks, but for regular investors, for pretty much everybody in the world. Few people know as much about what drives the fixed income markets. As Bob does, I thought the conversation was fantastic. And I think you will also, with no further ado, my conversation with JPMorgan Asset Management, Bob Michele.

Bob Michele, welcome to Bloomberg.

Bob Michele (1:12)

I'm thrilled to be here.

Barry Ritholtz (1:13)

I'm thrilled to have you. The timing couldn't be better. Before we talk about what you've built at JPMorgan and the state of the fixed income markets, I want to dive into your background, which is so interesting. University of Pennsylvania Classical Languages degree. That is not the traditional route to managing fixed income.

What was the original career plan?

Bob Michele (1:41)

Well, it's a good point. I'm here by accident. So that's how the career plan worked out. Actually, I was a dual major. I also majored in natural sciences. Both my parents were doctors. My father was a surgeon. My mother was an orthodontist. Every job I had over the summer was pretty much working in a hospital or lab somewhere. I was doing pre-med studies at Penn, ready to go to medical school. Unfortunately, my father died my junior year, and I decided maybe I should take a break before I do all of that. You're at Penn, Wharton's right there. Everyone's talking about business, going to work for a bank. I said, why not me? I'll do that for a year.

Everyone laughed at me. You have absolutely no business courses. Give me one to take, I said, and they said, take accounting.

I took accounting second term my senior year, didn't understand anything about it, interviewed with a load of banks, and someone was foolish enough to hire me, bankers trust. I'll tell you Barry, after one week in banking in New York City, I knew I was never going to medical school.

Barry Ritholtz (2:49)

Really? That's fascinating. So it was just dumb luck you ended up at bankers trust right out of college.

Bob Michele (2:55)

Pretty much. I wrote to a lot of firms. I laugh and maybe this is a complaint for the University of Pennsylvania. I went to college hall and pulled Lehman out of the folder and sent them a letter, but Lehman was spelled L-E-G-H-M-A-N for some reason. So there was a typo. I didn't know.

I wasn't a business major. I was doing sciences. I was doing classics, Latin and Greek. So I sent it off. They must have had a good laugh. I never heard back from them.

Barry Ritholtz (3:28)

Well, they assumed you were too risky. Right? So you start on the investment management side at Bankers Trust as an analyst, eventually a portfolio manager. Then you shift to managing taxable and total return portfolios at Brown Brothers Harriman. You were never an economist. You were never a market strategist. You went straight from the classics to an analyst to a PM.

Tell us about that progression.

Bob Michele (3:58)

Well, there are a couple things along the way that I learned. The first is I took the CFA. I figured if I didn't have the background and the CFA was becoming popular, I could learn it then. I also had a lot of confidence in myself. I sat there and I figured if going to a class a couple times a week for one term, you can learn organic chemistry. What if you're doing something eight to 12 hours a day, five days a week for 30 days? Can you learn it as quickly as you could organic chemistry? And the reality is, yeah, you could pick up a lot, you could teach yourself a lot.

What did appeal to me was the mathematical aspect behind investments.

Doing the sciences, there's a lot of math involved, and there it is, right in investments.

Barry Ritholtz (4:53)

So people always bring up that it's not a science, it's not quite an art, it's a little bit of a mix of both. Is the same true for fixed income?

Bob Michele (5:04)

I think it's a little bit more of a science than an art.

Perhaps equities is a bit more art than science. I did a lot of equity work until the early 90s, and I switched purely to fixed income. And the attraction for me is the valuation metric that goes along with fixed income. You could model it, there was a maturity, all the dynamics behind the cash flows could be calculated. There was a finality to somebody with a mass background, with a sciences background, that was appealing.