 those future ordinary dividends which is very interesting and then of course we've also heard the buyback program being announced the on-market share buyback by Qantas of up to $366 million. So this is really what we're talking about with our guest host this morning in studio with me Mark Bailey from Fixed Securities. Mark, interesting that we've also seen this buyback program being announced from Telstra. You've actually got a chart for us that you're going to bring up and I want you to just kind of put it into context in terms of where we are sitting in the cycle. Sure, absolutely. So this is a credit cycle. It's a standard cycle. It usually takes around about six or seven years to go around from kind of bus through boom and then back to bust. It's probably been elongated this time in terms of the central bank's action in terms of additional liquidity. So it starts in phase one where you've got low profitability. The focus is on balance sheet repair after the bust. So that's beneficial for credit investors not so good for equities because they don't get the dividends. In phase two it's the holy grail. Profitability is increasing rapidly. Credit sped is tight and so it's positive for credit investors but also equity investors get the dividends. Now the phase three is what we're seeing at the moment and probably a bit beyond but in terms of the actions from Telstra and also Qantas in terms of those share buybacks and dividends to try and boost the equity price and give equity investors that return that they're looking for. Not so good for credit investors because cash leaving the business is probably increasing leverage. Other signs of activity in that corporate action in that phase are debt financed, mergers and acquisitions. And I think we're probably almost into phase four where you're seeing that bus scenario. Equity is a really, really price to perfection. There's concerns about valuations. Interesting we're already seeing higher default rates coming through in credit but you're not seeing those impacting spreads and yields. People and investors are still chasing those at the moment. So at the moment I think we're between that phase three and phase four and that's why I'm talking to our clients and saying look you should be positioned defensively in whichever asset class you are and between asset classes as well to prepare for a potential correction in the equities which will also impact the credit markets as well. Yeah well just on that potential correction in equities we've obviously been seeing the equity market and the bond market moving in tandem with each other this sort of upward momentum which is not something you typically see. Are you concerned that we'll also see a correction in the bond market? Yeah look there's been a lot higher correlation between bonds and equities than we've seen in any time in historical records. And I think that's largely driven by the central banks. What will happen is you'll see an equity correction but I think you will still see safe haven buying. What this crisis has taught me over the last 10 years or so is it's almost irrelevant what the underlying yields are and let's not forget it's about a third of the developed markets bond government bond markets in negative yield. I think it's about 14 trillion worth of bonds are in negative yield and if you'd asked people 10 years ago whether that would be the case they would have thought you were crazy but that's that's the situation that we're in. And so I think in terms of if there is an equity market correction people will naturally go and buy sovereign bonds US treasurers and those safe haven assets and drive those yields down even lower as it's a place to store and preserve capital and maybe yes you do lose a bit of capital in terms of you know some of those negative yields that you're buying if you hold to maturity but if you're only losing you know half percent compared to maybe 10 15 20 percent that you may lose in the equity market sell-off it's still a relatively safe asset class to be in and that's what investors are being kind of driven towards and are focusing on in terms of you know trying to protect their portfolios at the moment. We're talking about a lot of cash sitting on the sidelines at the moment and at some point I guess that's going to come back into the market. Are you investing at the moment and where are you finding good sort of opportunities. Look I think there's good opportunities in corporate bonds you know at the moment our investors that have a preference for fixed rates corporate bonds in terms of where we're guiding investors I would certainly say in terms of your asset allocation mix and the asset allocation mix in Australia is completely wrong. There's only Australia Poland and Korea that have got less than 10 percent of their super funds pension funds allocated in bonds. The next country up is Finland that's got 30 percent. So in terms of if the equity market was to correct Australia along with Poland and Korea would be the most hit from an equity market correction and less protected. So I think the biggest driver for returns is asset allocation and you wouldn't expect me to say anything else but I think a bigger portion of Australian super funds should be in fixed income and bonds and within the bond sector I would say look default rates are increasing credit spreads probably likely to be a bit wider in the second half of this year into 2017 position yourself more defensively. So either up the investment grade spectrum into the more double A single A category from the triple B and in the high yield spectrum more towards a double B in terms of the better credit quality. But again it depends on what other assets you've got in your portfolio and also moving from longer dated into some shorter dated assets as well because again you know at some stage those long end yields will rise and you can take a fairly significant hit in terms of the duration. So again if you're moving shorter you're kind of preparing your portfolio and kind of almost kind of bomb proofing it for any kind of upturn in yields as well. So that's what we're talking to our clients about and yet in terms of you know the yields that's significantly more attractive than term deposits on some corporate bonds that are out there and you know we're trying to open that universe up by bringing on board Stirling bonds some US bonds as well to give the investors a diversified portfolio that isn't always on offer in the Australian bond market. All right fantastic some really good advice there Mark we might leave it there appreciate your time this morning thank you. Mark Bailey joining us there from Fig Securities. Time for a break coming up on market count down more opening calls this is Noel Yates from Aquari Wealth Management joining us next