Chief Investment Officer & Global Head of Investments, Citigroup Inc
David Bailin - Bloomberg Radio - Apr 1 2026
About David Bailin
David Bailin, Chief Investment Officer and Global Head of Investments at Citigroup, appeared on Bloomberg Radio on April 1, 2026, and in a July 17, 2026 interview. In the April appearance, he discussed cash yields for ultra-high-net-worth investors, stating that yields had dropped from 2.3% to 2.1% despite recent short-term rate increases. He noted that 9 to 11% of family office wealth is held in cash, which he said is not viewed as an asset class. Bailin also argued that the dollar was near a 20-year high and that it was a good time to re-enter international stocks and go short the dollar. He predicted inflation would remain near 3% for the next 12 to 18 months due to the oil situation, and said money market rates would stay attractive but not fall below 3%. He added that the best-case scenario for tariffs was a $170 billion negative impact on U.S. GDP, or three-quarters of one percent, this year and slightly less next year. In the July interview, Bailin argued that markets had overreacted to AI fears and that investors were overestimating earnings expectations while underestimating the long-term impact of AI. He said the build-out of data centers was about one-third complete, and that falling token prices would drive higher volumes of AI utilization in areas like robotics, logistics, and call centers. He identified hyperscalers and companies that use AI as beneficiaries, while warning that commodity hardware manufacturers facing falling prices carried the greatest risk. He also noted that private equity shares were beginning to recover and that health care, which had been under pressure for two years, was showing improvement.
Transcript (19 segments)
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Host0:00
See that right? We say good morning folks and Brent crude 102 down from the 118 stress on generic crude yesterday futures up 52 nice lift to the market and exceptionally busy day here culminating in the president's schedule to speak tonight at 9:00 p.m. Bloomberg will give you full coverage. This is an app time. David Bailin does many tasks including calming people trying to invest for a 3-year, 10-year, 20-year perspective. He is a CIO group and course with decades iconically at City at Citibank Citigroup is well. David, you've made a study of cash. Do we just presume a lower yield on cash out there?
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David Bailin0:46
Well, that's been the case most of the families and ultra-high-net-worth investors have actually seen their cash yields drop from 2.3% on average to now 2.1%, which is remarkable since we've just seen rates go up in the short term over the last three weeks. And what's really amazing to me is the fact that they're just simply not watching. Between 9% and 11% of family office wealth is held in cash and it is simply not viewed as an asset class.
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Host1:12
Wow. Sweeney's all fired up here. Let me steal a question from Paul. Is it efficacious to migrate out to the Sweeney 2-year yield? The Sweeney 2-year yield because there were even things better than that and I don't say that I say that politely but I think the larger point is there are many different ETFs from triple AC low rates to certain mortgage related securities where you can get yields now in the mid-fours and building a portfolio of those which is really not risky is a smart thing to do and it's simply not done by most advisers to these families. Some of it's because they have multiple advisers and some of it's because they simply are not watching. And Tom, the city of New York did a municipal bond, a general obligation bond last week, 1.9 billion dollars. If you were a New York City resident, your taxable equivalent yield was 10.1%. How about that? Right. Pays your parking tickets and 10%.
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David Bailin2:04
Exactly right.
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Host2:05
David, the market seems to be pricing in here looking towards the other side of this war in Iran. To the extent that's a fair outlook, how are you positioning yourself for getting back to normal as normal as you can?
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David Bailin2:18
I like to think about this. Let's ask this question fundamentally. Where would we be without tariffs and without the war? Yeah. And we would be in a very, very different position in terms of consumer confidence, investment by corporations, and the like. And that's what's on the other side of these things. That's what would have been had we been there. The difference between the Iran situation and tariffs though is that it's sort of a one-sided trade, which is we've calculated that it's about a $170 billion impact, 3/4 of 1% of GDP negative for the US this year and slightly less next year. And the problem with that is that that's the best-case scenario. Okay. Right. Anything else that happens is not good. And so, when we think about portfolios, we want them to stay fully invested, but we're now leaning back into the AI beneficiaries. Those stocks that really will in our minds get powered by the AI boom, and there's plenty of them. And cybersecurity is a great example of that.
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Host3:12
And now, folks, we got an incredible show today. Alan Zentner coming up and all of this is President of the Supreme Court at 10:00 a.m. Here's the most important question of the day. Define David Bailin's value trap. Everybody now is saying, slide back into the market. Look at a value trade of that. I think I just heard you say go growthy.
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David Bailin3:30
Oh, I think we still have to go growthy. The best parts of the US market are still going to be in technology, even in software and certain things. And we had a baby out with the bathwater trade that took place, just like the tariff trade of April of 2025, and we have to look through that. You think about where Amazon or Google will be or even Microsoft when they finally put their package of AI together. These are companies investing trillions of dollars in the aggregate and they're doing it for a reason, Tom, which is to make money, right? And I mean, I actually am the second largest user of AI in my company. I found out that I exceeded my quota of tokens the other day.
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Host4:07
Do you code? What do I do, code?
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David Bailin4:10
I can't speak to that. It would be unprofessional of me to talk about vibing this morning this early.
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Host4:15
David, when we saw the tariffs come around the last year, just about a year from now, the dollar sold off while everything else kind of rebounded here. I've got the dollar index right back near 100 here. I mean, it seems like the dollar's come back. Is the soft dollar story, is that a trade just in our rearview mirror? This is a great moment to re-enter international stocks and to actually go short the dollar, right? Which is sort of the trend, which is what the trend before the war.
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David Bailin4:42
That can't be. I'm serious. The dollar is within now 12% of its all-time high in the last 20 years. And prior to the war, we were seeing a slow sort of degradation that I think is going to start again. And I think that's why we saw international stocks at one point outperforming the US stocks by 9%. That went down to three and a half. We think that trend's going to go back. So, for clients that are entering now, good time to enter international stocks, good time to be selective in software, good time to just simply rebuild your quality portfolio if you were trading.
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Host5:16
Right. Paul, BBDXY, this is the Bloomberg dollar index for those of you with the terminal in your car. BBDXY, 11% dollar weakness here, and then we've reversed only about 25% of that. I mean, we haven't gone wicked dollar strength versus where BBDXY was January of last year.
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David Bailin5:38
I only did that for terminal sales.
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Host5:40
It works, it works fine. Very well done, Tom. The team over at Terminal said, 'Do something, Tom. Justify your existence.' Push that button. All right, so we got the maybe a little bit of softness in the dollar. Does that suggest that when you think about non-US equities, about emerging markets, because that had a nice run in 2025 and I'm not sure how much of that was the dollar weakness and how much was that?
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David Bailin6:00
Well, the best sort of comeback trade right now is in Asia. Asia was by far and away the most impacted by the oil by Iran. It's not over yet, but if it is, that's going to be where the biggest bounce is going to be. And certainly, I think that in non-financials in Asia in particular, I think you're going to be where to be. So, we've even got Chinese internet stocks in our portfolio now because again, this is going to be the area that's going to drive growth globally and simply when the Iran war, hopefully is over, I think we will see a return to that focus.
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Host6:33
I'm going to throw a curveball out there. How about gold here? We had that just ripping rally for so long, got to $5,000. Everybody was talking about gold. Now, it's pulled back 10% or so and I'm not sure what to do here.
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David Bailin6:47
Right. So, again, we have gold in the portfolio. This has been an unusual time because we, according to Bloomberg, by the way, which is an authoritative source, we saw selling in Russia, we saw selling in Turkey, and we saw selling in Poland of gold out of their national treasury in large amounts. And that really would make a lot of sense in terms of the need for cash during this time. But that will again, we think, reverse as well. We think gold has been a solid diversifier in portfolios, so we've retained it. And this is why, by the way, more broadly, this diversification of portfolios has really been helpful during this particular period of time and I think will help in the recovery. Where's the money market rate going to be in 12 months? You've got it coming in, right?
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Host7:26
Yeah, I've got it lower. Oh, yeah. Under four? Under three? No, definitely not under three. We have a real problem with inflation. Inflation was roughly at 2.5%. I think that the oil situation will for the next 12 to 18 months keep inflation closer to three. And therefore, yeah, three-ish. And I think we're going to see some pretty high prints over the next two months. So, the money market fund's going to stay very attractive. But, we still think that people should take their cash and actually build a portfolio of these overnight and short-duration securities. We call it the Sweeney portfolio. David Bailin, thank you so much, founder and CEO, CIO Group. I can't say enough about his analysis of the habits we have in cash, whether you're high net worth like Sweeney or you're low low low low low low low low net worth like Tom Keene. Cash, we just sort of ignore it. It's just kind of there, and David Bailin says, 'Focus on cash.'