Rob Citrone 与 Karen Karniol-Tambour 出席 Sohn 2025

I think we should probably kick it off, since the world is so complicated. You can kind of solve and figure out what's happening out there. I know you've said that we're looking at an economic generational shift, so what does that mean for the world, and what does it mean for the markets? How should we be thinking about that?

Let's definitely have some fun. Thanks for having me. It's really fun to do this with you in particular.

1. Modern Mercantilism Reprices Markets

When you look at investment returns over a period of not years, but many years and decades, you tend to have very big secular forces that drive the environment that you're in. All of us who have been investing have basically invested in one paradigm that got way accelerated over the last 15 years or so. That's been a paradigm of massive globalization and integration around the world, with the U.S. as a security umbrella to everything. It's been a certain geopolitical paradigm that was deflationary and allowed for very easy money.

The last 15 years made the United States such a winner that pretty much the best thing you could have held was a simple S&P 500—no questions asked, no fees paid. That's the best you could have done. But where that leaves us is that, when you look around today, it's hard not to feel that we're fundamentally in a different place. It's certainly accelerated under President Trump, but it didn't happen just the day Trump was elected.

There's been quite a few years now, certainly since Trump won, of a realization in the United States and other countries that there's some dissatisfaction with some of the elements of the past paradigm and some desire to shift that. We've called the new environment “modern mercantilism,” meant to describe a worldview that the state's job is to really maximize that country's national wealth, its strength, and its self-sufficiency.

That manifests in all kinds of ways, including looking at trade deficits as a transfer of wealth, as something that needs to be avoided and handled; thinking about self-sufficiency and what gets made in your country; and being willing to handle your traditional allies in much more coercive ways. That new paradigm is only starting to be priced into markets. Markets have barely started pricing in what that means.

There are going to be ups and downs. You're going to get tariffs up, tariffs down, and announcements, but at the end of the day, that's a fundamentally different paradigm to be investing in, and one that's starting from a pricing that assumes the old one. We don't have the prices today that we did in 2010. In 2010, we looked at a world that was pricing much lower profitability and so on for U.S. companies. Now, the assumption that you've got to keep beating what you had before is even stronger.

So, how about you? You're also looking at the world and seeing lots of things.

Yeah, Karen, I think you hit on a lot of key things that we agree with. The one area that I think has been very interesting, and that we see, is that global investors are so long corporate America in every kind of asset you can think of, whether it's private equity, private credit, equities, or venture. You just go down the list, and it's not only U.S. investors; it's global investors.

I think what we've seen recently is this shift of investors saying, “How much of my money do I want to have in the United States?” That's a shift that, as you're saying, is going to take a while, and it's probably just in the early stages. That makes it very difficult to think about the dollar and think about asset prices in general.

I do think, though, that U.S. exceptionalism in the private sector is still here. I think it's still with us. I still think we have a massive edge in technology. I think we have a massive edge in financial services and capital markets, and I think that's a huge advantage for the United States. So it's not going to be easy for money to leave the U.S.

2. Latin America Finds Its Opening

What we see as an opportunity in this kind of world that's going to be, we think, siloed now—where you're going to have the Americas, Europe, and Asia—is that there are some opportunities in places like Latin America, which has been left for dead for the last 25 years since the Tequila Crisis. What we see now are significant political shifts.

We look at countries like we look at companies. The first thing we look at is management: How good is management, and what are the policies of management? We're seeing a big change in Latin America, where management is changing. I think Javier Milei in Argentina is the best example of that: good management and good policies. Now we're seeing that potentially spreading to the rest of the continent.

We have 4 big elections in the next few months—over the next 18 months—in Peru, Colombia, Chile, and Brazil. We think that's going to usher in substantial change in the region. The great thing about Latin America is you can make huge returns in equities, but also in currencies and credit. Rates are high, currencies are cheap, and there's huge room for massive improvement.

So we see lots of dislocations. We think it's a very tricky world. We think you have to have shorts, we like the fact that you have to protect your portfolio at certain points here, and you have to be dynamic.

So I completely agree that this shift away from U.S. assets isn't something that happens in a day. It's something that investors are just starting to understand—the magnitude of how reliant we've become as a country. The flip side of a massive trade deficit is a huge amount of current-account inflows: people are buying all of our things, and that doesn't go away in a day.

It's primarily U.S. allies. It's not the Chinese who are buying assets. When you start talking about this fractured world, in every one of these regions I think there's going to be more and more of an impetus to say, “If the United States is so hellbent on being self-sufficient, why aren't we?” Look at what Germany did. They said, “We should make our own defense and our own infrastructure.”

So there'll be more opportunities to actually have capital stay at home, and a little bit of a stress to say, “If I'm already 75% in the United States, where should I be now?” I also like some of these Latin American countries. I particularly like currencies in places like Brazil and Mexico.

What I really like about the conversation you're having, though, is that it takes geographic diversification seriously. When you look at the market cap of Brazil or Mexico in a world index and say it's negligible, you're not getting much exposure.

I have to tell you a funny story about that. The Monday after DeepSeek came out on Friday, we got to think about it over the weekend, and then NVIDIA's market cap fell on Monday, right? It fell by 2 Mexicos. That's how significant—and how undercapitalized—Mexico and Brazil used to be. Actually, Brazil was larger relative to Mexico. Now, at this point, they're basically equally negligible.

3. Geographic Diversification Takes Priority

The number-one thing I think I've been telling investors as the world is changing is to take geographical diversification seriously. Everybody is heavily, heavily in the United States because, admit it or not, they're really guided by market cap. I understand why: there's a lot of governance issues that make that easy. You think in market-cap terms, and liquidity isn't important, but it leaves every investor around the world extremely concentrated in the United States and extremely vulnerable to a world where the U.S. doesn't just keep beating everyone.

The most fundamental form of diversification is to be in countries that actually have a different system, a different beat of the drum, different growth, different inflation, and different monetary policy—where elections actually matter to what happens to those companies. Latin America is one; Asia is the clear other one, where you have markets of a decent size that have been ignored for a long time, and where you have a lot of fundamental diversification from what's happening around the world.

I think treating diversification seriously means both thinking about where you are in the world—that alone takes you somewhere else—and treating it seriously in terms of how you're going to do depending on what happens to the economy. I think there's very clearly some degree of economic slowdown ahead of us and some inflation ahead of us because of the set of policies.

Certainly, the last 48 hours or so have taken some tail risk off the table. We're less likely to have the kind of massive pace of factory shutdowns and empty shelves we could have had. But that doesn't mean there isn't some amount of slowdown. Most people's portfolios are not prepared for that.

Thinking seriously, as you said, about liquidity and shorts is important. We've shifted to a world where people have smaller and smaller allocations that are actually liquid and can respond to conditions as they change. More and more portfolios are constrained by how much illiquid investment they've made to take advantage of all the pricing opportunities that are going to happen, and I think both you and I see that pricing opportunities are going to happen in this environment.

Yeah, this is a great environment to invest globally, for sure, and to use all the tools in the toolbox. I think the other interesting thing—and I think we differ a little bit on this—but I actually think, at least for rates in the U.S., that rates in the U.S. are going to back up, particularly in the 10-year sector. I'm thinking that we're going to hit 5% to 5.25% this year, and then from there, I'm not sure.

But I do think the economy is going to pick up as we move into the third and fourth quarters. I think next year is a boom in the economy in the U.S., on the back of significant fiscal tax cuts in particular, with fewer spending cuts than they're talking about.

And at the same time, I think you're going to see reshoring come and have an impact, and the uncertainty around the tariff stuff will have ended. So I think you'll see companies and individuals spending more. I think next year is going to surprise everybody. I don't think the Fed's going to cut any rates this year, and I think rates back up.

I agree with you that 2026 is where you start getting the stimulus. Yeah, 2025 is where you get the pain from the tariffs. 2026 is where you can actually get the fiscal stimulus hitting, and reshoring—we know—takes time. The faster you buy down uncertainty, the faster reshoring can actually happen, meaning the more you get out of the paralysis mindset where no business can possibly decide to reshore because they have no idea what they're going to be facing. The faster that can happen, so I think, if all goes well, you start getting that boost in 2026.

I like fixed income a lot more in other countries than in the United States because I think other central banks—for them, easing is just more straightforward, right? They're looking at a situation where, for them, whatever slowdown is happening from all the tariffs, it's not created by them. They don't have the same inflationary impulse. As much as the Fed can say, “Look, ideally, an inflationary impulse from the tariffs is a one-off. It kind of goes through like a VAT tax increase and fades,” you don't know for sure.

And the more it comes with supply problems, the more it looks like a cost-push shock, where demand is there but supply is on the other side. You can get more of an inflationary problem. It's a tough environment to proactively ease. And the more certainty they get, like you're saying, that either reshoring is coming or fiscal stimulus is coming, why ease into that?

If you're in other countries, it's much more deflationary, right? Look what happened to the currencies of other countries. Look what's happening to energy prices. When you get that slowdown going through the global economy, even with the magnitude that it is—I don't know, half a percent of GDP—easing into that feels a lot more comfortable, and there's not a lot of easing priced in. Everything's kind of pricing off the United States.

I also think that part of the backup you're seeing in Treasury yields is that you kind of started this environment with nothing really looking like a big risk premium on Treasuries. If you said, “What am I getting for Treasuries versus cash?” probably not much. And it's not unreasonable for people around the world to say maybe Treasuries should have some risk premium.

Yeah, I agree with that. So where does this leave you in terms of some of the things you really like and have high conviction in, and some of the positions that you think are really attractive looking forward?

4. Foreign Bonds Offer Better Value

So I really like fixed-income government bonds outside the United States. I think it's a great time for that. Many people here know we're fundamental; we're also systematic, and so we can measure the strength of the pressure relative to history. I think in some of these fixed-income markets, it's like a once-every-10-to-15-year type size.

So it's not—do you think Japan continues to raise rates and you think yields back up in Japan? That's a bet, I'd say. Maybe—where are you in fixed income across the board? Then I'll go to a little bit of currency.

Well, the US is going to force rates in most countries higher. I think Japan goes higher and the US goes higher. I think those are the 2 clear shorts. I think something like Brazil, Mexico, Argentina, or Turkey are places where rates can come down a lot. And so I want to play where rates can come down thousands of basis points, at least hundreds of basis points.

I don't know Europe. I'm not sure. A lot's priced in in Europe, and so I'm not sure. I think the UK is probably the most attractive, where you say rates can come down—what am I getting?

And then I think currencies are also under once-every-10-year-type pressures, especially if you look at the big crosses, like the euro and yen, where you really say, why wouldn't you get inflows into those countries? Why wouldn't you get outflows out of the dollar? How much is behind us, and how fast can people move?

I think the dollar move so far has been primarily from people who are either speculative or able to do things really quickly, like, “I can just put on a hedge and be done.” And lots of the big currency drivers don't work that way. They're going to take a while to work through governance. And so I like shorting the dollar, not against everything, but the euro and yen, kind of the big crosses.

I think other than that, it's an okay time to take risk, and certainly not the best time ever to take risk in the United States in particular. And so, generally, if you're saying, “How much risk should I have on, and where should it be?”—which I think, at the end of the day, is probably the most important fundamental question you're asking as an investor—my answer would be, it's not the best time ever to take risk, but mostly take it outside the United States.

I kind of would agree with that. I think there are great opportunities in the US, but there's a lot of landmines as well. We have probably 70% of our risk outside the US and probably half our risk in EM. As I said, we like Latin America quite a bit, and Argentina and Mexico would be our 2 favorites.

We think Brazil in 2026 can be the best-performing market in the world. We're just a little worried about what Lula might do in the next 18 months, and a little worried about the fact they've had to hike rates 500 basis points in the last few months, which will have some consequences. So we're looking at that very closely.

And then I like currencies in a place like Nigeria and Turkey, where they've had big devaluations and interest rates are incredibly high—30% in Nigeria, 45% in Turkey. It's a very interesting opportunity, I think.

5. China Rewards A Flexible Playbook

Yeah. Well, you obviously have a broader emerging-market footprint than we do—we try to run a smaller fund—but I will say people are constantly surprised that our China-only and Asia ex-China-only funds have been our biggest winners because it feels so counterintuitive.

And I think the reason it feels counterintuitive is that the vast majority of investors, when they go into a country, just buy the stock market, right? And so the idea that you could make money in a place even if the stock market doesn't do well feels baffling, but there's no reason to invest that way. Neither one of us does. Both of us invest across the spectrum.

And so when we go into China, look, Chinese stocks are extremely cheap, and you've got to think about valuation. There's certainly a path where they stimulate and you get something out of the stocks, but it's not the only scenario. And so far, being in China, being able to also profit from the fact that the economy has actually been weak, the bonds have been a good buy, and the currency has devalued, has given us much more of a range of being able to make money in a country without it being just stock-focused.

And it just brings back the point that this is a great time not to be stuck in a paradigm that says, “I only buy stocks and I only buy US stocks,” right? There's lots of assets to buy. There's lots of places to be around the world. There's no reason to be that concentrated. And so far, performance in 2025 just gives you a clear sense that that's not the only thing that can do well. There's going to be lots of opportunities, and you have to be nimble enough to actually be able to take them.

6. Ignored Assets Find Their Moment

We haven't talked at all about credit. Do you have any strong views on credit?

No. I mean, we are not single-name credit investors. We'd love to hear what your thoughts are. We do very little single-name stuff. Occasionally, we do more sovereign-type credit. Anything you like? Is this a big area of risk for you?

No, it's kind of the same countries I've been talking about: Argentina. I think you still get paid a lot for that. Nigeria—you get paid a lot. Ecuador, but they're very specialized and very specific, and you have to have big returns.

On credit, we don't have a strong view either. So maybe that's why we didn't discuss it. Well, I will say a big thing I have seen across the institutional clients we work with is that fixed-income capabilities have generally been degraded because so much has moved to private credit.

The average institution, if it used to hold fixed income, did so because the goal was more or less, if there's a recession, at least I'll get some easing and that'll be kind of a balancing out of all my risky assets. When rates were zero, that seemed extremely uninteresting, and there was sort of collateral damage from the more alpha teams that are actually picking where to be on the curve and which countries' credit, because it just kind of got hollowed out. What's the point of owning this stuff if rates are zero anyway?

A lot of money went into private credit, which can have totally great returns. The issue with private credit is that you tend to get, depending on where you are in the risk spectrum, something much more similar to equity-like risk. And so those uncorrelated opportunities that come from selecting names and sovereign risk, choosing where you are on the curve, even being able to select—I was talking earlier about how I like bonds outside the United States better—you won't believe how many people tell me, “Well, I don't buy any bonds that aren't US Treasuries. My mandate is just US Treasuries.”

I used to, but at this point, rates were zero everywhere. Who cares? So stepping back into that space, I think that generally duration and currency are great alpha spaces that have seemed uninteresting for a while, when rates were zero, and are kind of coming back in a big way.

I agree with that. I like oil. When it got down to $55, it was a very interesting buy. We bought it between $55 and $58. I think we can't underestimate the risks in Iran and Israel and what's going to happen there. There's no way that Israel is going to allow Iran to stay nuclear, so something's going to happen. I think something happens soon, and that could have a major impact on oil prices. I think the risk-reward in oil prices is phenomenal right here. Long term, I'm not sure, but near term, I like it a lot.

I don't tactically like oil that much, but I will say that it fits into the category for me of another kind of ignored area where you just haven't had any inflation in so long that it seemed uninteresting. It's taking the kind of run we had in gold for people to start saying, "Wait a minute, why aren't I looking at gold?" That just hasn't happened in commodities. But the entire commodity complex—gold, of course, being a unique commodity within that—these are useful assets. You're clearly looking at a world that has more inflation risk than it used to. So even though tactically I don't think I'd be buying oil right now, I like gold better tactically.

I do think that, again, these are kind of ignored asset classes. Gold's had a big run, and everybody's long, and oil, I think, people are short. So I think, technically, in the near term, you could see a big spike in oil, with gold not performing as well.

Any single names you want to talk about?

I'll tell you what my favorite single name is: América Móvil, AMX, in Latin America. It's basically in all the major countries in Latin America, so you get exposure to all of them. It has huge moats in its business, generates a 10% free-cash-flow yield, trades at 4 times firm EBITDA, is growing at 10%, and buys back 7% to 10% of the stock a year. Carlos Slim is the major shareholder, and you can trust Carlos. So that's an amazing stock, and I think it's poised to do very well. It's another one you would not get a lot of exposure to if you're just a benchmark investor. It would kind of be irrelevant in your portfolio.

Yeah. And it's a $55 billion company, so it's not small. Well, it's been a lot of fun. What I love most about pairing the 2 of us is that I think our portfolios are some of the most different from what everybody's holding. It's just a great time to pause and say, "Is this who should be holding? Where else can I be in the world, and what would be diversifying to what I hold?" There are so many zero-correlated opportunity assets out there relative to how underutilized they are.

Totally agree.

And I found out you're a Pittsburgh Steelers fan, so that was even more surprising.

I would say my understanding of the sport of football is relatively limited, but I am a deep Pittsburgh lover, having spent some years there. So I think that qualifies me.

It qualifies you. Great. Thanks.

Pleasure.