The Federal Open Market Committee meeting on June 16-17 will be quite interesting as Kevin Warsh should be in place in time to chair the meeting. Will he be a hawk or a dove? If the war in Iran continues, a rate cut is unlikely and a hike could be the next move. Join us live on June 18 at 1 p.m., as KBRA Chief Strategist Van Hesser discusses the meeting, Warsh's press conference and the new Summary of Economic Projections.
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Transcription:
Transcripts are generated using a combination of speech recognition software and human transcribers, and may contain errors. Please check the corresponding audio for the authoritative record.
Gary Siegel (00:10):
Hi, and welcome to another BondBuyer Leaders event. I'm your host, BondBuyer Managing Editor, Gary Siegel. Today we're going to discuss the Federal Open Market Committee's meeting and monetary policy. My guest is KBRA Chief Strategist Van Hesser. Van, welcome and thank you for joining us.
Van Hesser (00:34):
Nice to be here, Gary. Thank you.
Gary Siegel (00:37):
So for the audience, just so you know, there won't be a specific question and answer period. If you have any questions, just pop them in the Q&A queue and we'll get to them. So Van, was there anything in the post-meeting statement or Fed Chair Kevin Morsh's press conference that surprised you or grabbed your attention?
Van Hesser (01:00):
For sure. So I think we all had a lot of anticipation coming into the event of what this coming out party would sort of look like. I was struck by the brevity of this statement that was certainly tipped off. We know the Fed chair's view on forward guidance and Fed communication in general. So I think that maybe wasn't a surprise, but it still was a surprise to see the actual particulars and dimensions around both the statement and his comments in the press conference. I think it was more hawkish than I would've expected on two fronts. One, I think the committee was much more divided than I think we had expected. Nine committee members penciling in a hike I think was a surprise, certainly a pivot, much more of a hawkish pivot. And again, I think if there were any questions about whether this newer version of Kevin Warsh was going to be more dovish, I think he kind of put that to rest.
(02:12):
I think the statement that the committee will deliver price stability was pretty definitive.
(02:22):
And then I'd also say I liked the idea of the task forces and maybe I wasn't thinking this would be as public as it was or the scope of what these task forces intend to address. I think we all knew about, again, trying to limit Fed communication or tailor it. I think we all knew his feelings about the Fed footprint and also the size of the Fed's balance sheet, but to also introduce a review of data sources and how we look at jobs and productivity and the labor market. I mean, that really gets at the fundamental roots of what the Fed does. And so it's created, again, I think some plenty of interest, if not uncertainty around what those findings ultimately will be. We'll have to wait toward the end of the year, I think, to find all of that out. But yeah, that's a lot of surprise coming out of what we though would be a pretty straightforward introduction of the new Fed chair.
Gary Siegel (03:39):
And what is your opinion of the possible changes? Are they positive for the market? Are they negative?
Van Hesser (03:48):
Well, I think the first thing to say is we really don't know because we don't have a whole lot of details around this. I do think that analysts, market participants like information. And so I understand the case to be made that you don't want an abundance of information out there, which can sometimes put the FOMC theoretically in a box in terms of policy. But I think explaining rationales behind what the Fed does is important information that the market relies on. And so we'll watch closely to see what more limited Fed communication and getting rid of forward guidance really means. But again, I always think more information is better. The market can figure it out. I'd hate to see we go back to a time where we have just much more limited information. I don't think that would be a positive.
Gary Siegel (04:56):
So you mentioned a data review and there has been a lot of criticism about the data that the Fed use because it's always backward looking. So is there other data they can be using potentially and how would that work?
Van Hesser (05:13):
I think for sure the data gathering business also being changed by technology, so we've got much more real-time data. I think it's always worthwhile for any organization to go back in and review what their MO is. And so I think this is a very healthy, as I think Chair Warsh said, a very natural time with change of leadership to go back in and review everything that they do day by day, meeting by meeting and see what comes of it. So I think there are going to be data sources that can be introduced. Again, I don't think there's a lack of economists or data that the Fed operates with today. It's going to be really his priorities and his direction about what to pay attention to and then to communicate that to the market is what I think is at stake here. So yeah, I think we'll look forward to what his data preferences are, how they've changed and how that ultimately might impact monetary policy.
(06:36):
I think that's all very much up for grabs.
Gary Siegel (06:40):
So Kevin Warsh did not offer any projections for the dot fly. Did that surprise you? And if it didn't surprise you, or even if it did surprise you, how surprised were you that he went ahead and told everyone that he chose not to participate in this event?
Van Hesser (07:00):
Yeah, I mean it was clearly a statement. Again, I don't think that was a surprise that really anybody who has followed his criticisms of the way the Fed operates. You can debate whether or not it was inappropriate time to do that, but I did find it a curious and interesting choice. I don't think, again, any of us had really any doubt about where he stood on this issue, but if you ever did, that was pretty clear that he was sending a signal there. So yeah, I don't think it's all that meaningful, but it was a point of curiosity for sure.
Gary Siegel (07:43):
And he said that he encouraged the others to participate. So that seems a bit contradictory.
Van Hesser (07:50):
Yeah. Well, again, I think in your coming out party, I think you want to be careful. This is a committee that you've got to operate within. You've got to win over sentiment of committee members. That respect has to be earned. And I think you want to go in with a lighter touch just because I think you want to ideally give everybody a voice and know that all viewpoints are going to be welcome here. Ultimately, he's got to sift through that and form that into how he thinks that the FOMC should operate. But yeah, I think it was probably the right thing to... Again, you can send that signal. I'm not going to give you my dot, but I think you want to be careful about too radical a change right out of the shoot. I think you want to set a tone of we're going to figure this out collectively together.
Gary Siegel (08:57):
Lan, the task force creation. The question is the market believes that there's going to be less communication. We already saw the shorter post-meeting statement. There's some question about the continuation of the press conferences. And when Warsh was speaking, he said something about sometimes we need the press conference to say something. What do you expect the takeaways are going to be from this task force? Do you think that there's going to be anything beyond the data collection, the press conference, the statement that maybe the dot plot's in danger? What are your thoughts?
Van Hesser (09:50):
I think you're right to pick up on the comment around press conferences. So if they've got something to say, we'll come out if it's theoretically material. But that also implies that maybe they won't have press conferences at times. So I think he's pretty clear about his views on forward guidance and really wanting to ring that out of the communication. So I think we're going to see some changes on that front that affect all those things that he wasn't a big fan of. I think a lot of those are going to be addressed really directly. And ultimately you take your cues from your committee members as well as markets as to how important this is. I do think the risk of going really limiting communication take yesterday's decision for example. You've got a divided committee, you've got significant issues to be addressed really in both parts of the dual mandate and yet there was very little discussion about here's why we did what we did.
(11:03):
I can understand maybe Ring taking out the forecast. I think the rest of us out here on the street can figure out forecasts. But understanding what's important to the Fed, what it pays attention to, that's important information I think that ultimately mutes volatility in the market. So again, I'd like to believe that we're going to go about this in a relatively iterative way as opposed to just coming in and changing dramatically the news flow coming out of the Fed. It'll be interesting to watch how this all develops because he's so passionate I think about too much information out there and too much communication. All right, so we're going to back off and do less of it, but are we going all the way back to the green span era or is there a happy medium in between? I'd like to believe that I believe markets think there's a happy medium in between.
Gary Siegel (12:07):
Ben, when Warsh spoke yesterday, well, maybe not when he spoke yesterday, he thinks that the press conferences and the abundance of information cause volatility where markets don't believe that they think the information is needed. It sounds like you agree with markets that the information is beneficial not causing volatility.
Van Hesser (12:32):
I do agree with that. I understand from a policy perspective about how, as I mentioned earlier, maybe the FOMC with being so explicit and continual about its delivering information can put the FOMC in a box. You could argue that was a big problem back in the transitory era of 2022, but markets like information, they like transparency. We can figure out how to move. And I honestly think that more information mutes volatility. So again, if you take their viewpoint, Warsch's viewpoint that we don't want to get put into a box because that can distort policy, I get that, but let's not go too far and take away important communication to markets on a regular basis. I think that to me feels like the best possible outcome here. So room for reform for sure, but let's be careful with just how ideological we want to get on this is my viewpoint.
Gary Siegel (13:47):
Ran, you said earlier that Warsch is committed to getting inflation in check. Won't that require rate hikes at this point since inflation has been above target for years?
Van Hesser (14:04):
The market clearly believes so, and nine members on the committee are signaling that's a very real possibility. Remember, a lot of this is going to be data-driven. So if the economy does slow in the second half of the year, again, sometimes that can do the Fed's work, it can tighten financial conditions on its own. So I think a lot of this is going to be very data dependent, something that I think Warsch believes in. So we don't know yet exactly how this is all going to play out. Should the labor market continue to improve? We've seen a real turn obviously since the beginning of the year here or over the last three months anyway. I think that then brings that focus on inflation and the fact that it's been above target for more than five years, really back into sharp focus again. And so yeah, under that circumstance with some additional fact pattern developing, I think that could then give the committee tilt the committee's response to rate hikes.
(15:18):
But I think again, a lot of that is to be determined at this stage of the game.
Gary Siegel (15:24):
Is the panel more concerned about inflation now or are they equally concerned about inflation and employment or has the past three months of employment numbers come their thoughts about the labor market?
Van Hesser (15:38):
Yeah, I mean I've found it and I've spoken quite a bit on Chris Waller's flip-flop. I don't want to call it that because very well respected thought leader on the FOMC. And he described a couple of months ago looking backwards that the labor market was in his words, weak and fragile, that a lot of the job creation was in lower paying healthcare and travel and leisure categories. And this was the bigger risk from his perspective, the bigger risk of the dual mandate. Then we've got a couple of good job prints here and inflation started to really be sticky high on the back of the developments in the Middle East largely. And so I give him credit for calling a turn. He said things have changed. Now I think you want to allow those patterns on both fronts to develop a bit more before you decide one way or the other.
(16:43):
But clearly at this point, the attention is now really focused on inflation price stability and the fact that we've endured this now for five years. And again, as that statement made very clear, the committee will deliver price stability. That's a pretty authoritative statement.
Gary Siegel (17:07):
Yes, it is. Yes. So the decision to hold rates was unanimous, but as you mentioned, the dot plot wasn't. How do you reconcile that? I
Van Hesser (17:20):
Think the two can be true at the same time. Again, it goes back to the timing of these changes in both inflation and on the labor market. So I think those nine committee members are clearly saying the risks now have really tilted towards the price stability side as opposed to the labor market. I think you can still say, I want to confirm that these trends are going to continue because again, there's a recency to these developments on both sides. So I think you can have a unanimous decision that we're going to hold rates where we are, but we're also, at least nine members think I'm going to signal via my dot plot what I think the bigger of the two risks are. And right now that is clearly on the inflation side. So yeah, I think it's a curious pairing of those two outcomes, but I think you can rationalize it.
(18:19):
That said, we get to the next meeting six weeks from now, we'll have a lot more data and maybe that's going to be enough. Or let's see how the committee processes the data to come and see where we're headed from here going forward. The
Gary Siegel (18:38):
Stock market really tanked after Warsch started speaking and bonds were pretty much stable. What do you think was the most surprising thing for the markets and why did they react the way they did?
Van Hesser (18:53):
Well, again, it's always dangerous to go in and say the stock market did this because of this. But clearly there was a reaction there. And again, I think it was both the statement and his commentary was much more hawkish than expected. So that's what I would expect stocks to sell off under those circumstances. We did see obviously the move in the two-year, which again, the backend held up reasonably well, but the two-year was up I think 16 or 17 basis points at one point. So clearly the front end believes that the risk of rate hikes over the next six months is pretty significant.
Gary Siegel (19:43):
What your base case for monetary policy for the rest of the year?
Van Hesser (19:49):
Well, I think we're on hold for the rest of the year. I wouldn't call it a do nothing Fed because I think the Fed's got a very full plate in figuring out what's going to come out of these task forces. Plus there still obviously there's a lot of things out there which are going to be of interest to the FOMC. But I do think, especially when you're rethinking really everything going into the end of the year with these task force findings, unless something material happens, something on the geopolitical front, unexpected negative development in the economic data barring any of that and we're not expecting that. Again, I would think that the Fed should be content to sit where they are for now. Let's rethink everything, make sure we're in agreement about what all this means, and then think about adjustments to monetary policy after those task force findings are agreed upon.
Gary Siegel (21:02):
So you believe that the task forces will dictate whether the next move is an increase or a rate cut? It sounds like you
Van Hesser (21:13):
Say. Yeah, I wouldn't go that far. I really think it's going to be, again, data dependent, no great surprise. But you've got two things that are moving. Inflation, sticky high and the jobs market recovering. So let's see if that's got real legs. We'll see if that industrial renaissance is really going to start to flow into some of those job numbers with developments in the Middle East. Let's check to see what the price of energy is going to be. So there's some big moving pieces here that we're going to learn about over the course of the summer. And we get into the fourth quarter. It could be a very different environment. So you've got some big moving pieces here. Let's see how it all sort of shakes out before we're ready to go ahead and commit one way or the other.
Gary Siegel (22:12):
So too early to tell if the next move is a hike or a cut?
Van Hesser (22:16):
I'd say too early to tell. It's interesting. We've done some investor dinners of late and we typically will do some polling questions and we post a question of do you think the next move is a hike or a cut? And I think it has moved gradually towards a hike, but it's not a strong consensus at this point. I don't think it was as strong really as what the FOMC voted yesterday. So I think there's still some differences out there in terms of whether the next move is going to be a hike or a cut. But I do think there's a sense that many investors believe the Fed really is on hold now until the end of the year.
Gary Siegel (23:08):
Is there any indication that it's anything other than oil that's pushing people to think that a hike is the next move?
Van Hesser (23:17):
Well, I think you've got inflation is more than just the price of energy. And again, one of the things that Chair Warsch pointed out yesterday is, and it's something I think that we all understand is that one-time price shocks, you've got to adjust for that. I think that's a complicated issue. And back to the task force of studying inflation, at what point does a one-time price shock start to embed in inflation expectations? In defense of Jay Powell, we've had a series of supply shocks really over the last right from COVID. So we had COVID, Russia, Ukraine war, tariffs, Middle East conflict. There's been a series of these kinds of things. And I think there's something to be said that these risks, one-off in nature, can start to embed in the psychology of consumers and businesses. And that's where that inflation expectations piece is going to be so important.
(24:23):
Right now it's relatively well-behaved, but I think we've got to wait and see as to how all of these things really play out. But if we get past just the energy piece of it right now, we still have price pressure in a lot of categories on the services side. Again, you can make the case that a little bit of this expectation might start to be embedded for higher prices. I think the good news from our perspective is that wage pressure has been really well-behaved and it's our expectation that's going to continue. We're going to keep especially close tabs on that because that's when you really start to get pressure for a rate hike is if you start to see some of that wage pressure. But right now that's pretty well-behaved.
Gary Siegel (25:13):
Man, do you think the markets and the Fed are on the same page?
Van Hesser (25:19):
I think they're getting there. So I think with that hawkish tilt that came out of the FOMC yesterday now squares up really with what markets have been forecasting. I think we've got between one and two hikes priced into the futures market today. And so I think that does kind of square up with some of that commentary that came out of the FOMC yesterday.
Gary Siegel (25:52):
Sorry, I forgot to unmute. We have a comment, a question from the audience regarding core inflation. The question deals with Warsch's response about core and the listener wants to know if we could have better detail about core. I guess going forward, how core might be according to their projections, it's going to go a little bit slower. So I guess she wants to know how core inflation will be declining in the future.
Van Hesser (26:42):
Yeah, I think that really does get to the heart of the issue. If you do believe consistent with the statement that these one-time price shocks should be filtered out or at least adjusted, take into consideration, however you want to use that or adjust your data. At the end of the day, core inflation is really where economists... That is the conventional playbook, is that's really what has to be managed. And right now we're seeing it's not just headline and I think you're going to continue to see headline pressure in particular. I'm not sure we've seen oil prices are not going to turn upward again, and I think we've got food inflation coming through over the back half of the year. So I think there's still going to be some pressure there. But again, across a lot of price categories we've got core inflation is not insignificant.
(27:38):
One of the things that we haven't talked about but worth bringing up is just the power of the AI build-out and how it's affecting markets. And we do see some inflation pressure, I think, coming out of all of those industrial components that are going to go into an AI build-out. So we're going to get some natural core inflation out of there that probably wasn't thought about six or 12 months ago. So again, in the core, I think we've got pressure both on the headline side of things as well as core, and I think both are important ultimately to the FOMC. Now that said, I'm curious to see when how we think about inflation rises to the level of getting its own task force, that implies that maybe our data sources aren't optimal. It implies that some of the factors that we're focused on, maybe those weightings should be different.
(28:39):
We're going to go back in and study all of that. So this whole notion of what inflation is I think going to be redefined via this task force by the time we get to year end.
Gary Siegel (29:00):
We have another question from the audience. Does national inflation as a metric really make sense for policymakers? The situation is remarkably different by region, city, and state. I guess he means inflation is remarkably different by region, city, and state.
Van Hesser (29:20):
Yeah, I think that's a really interesting question. There is a real divergence across
(29:31):
Geography of economic performance in the US. Now presumably, monetary policy sets the framework, the standard by which then the financial system can figure out how to allocate capital. So I would say it still makes sense to me to have an FOMC set a targeted policy rate And ultimately you're going to have the private sector is going to allocate capital into those divergent economies in an efficient way. I think the US does a particularly good job of doing that with a very markets-based and decentralized financial system. So again, very interesting question, but I do think the financial system does allow or still enables capital to flow to its most productive use. And that implies that those robust growing regions are going to get the capital they need to continue to fuel growth.
Gary Siegel (30:47):
Man, are you at all worried about stagflation?
Van Hesser (30:52):
I'm really not. I'm worried about the inflation part of that, but I always think of stagflation back to the '70s where you're essentially at or near a recession. And I don't think that's a real tail risk right now in the US. That probability is not zero, but on the back of this AI build out on the really historic wealth effect created out of stock market gains, we've got a nice fiscal tailwind at the back coming off a big beautiful bill as well as still infrastructure spending. And let's not forget about rate cuts out of the Fed, which often will take a year or more to really get into the economy. So we've got some pretty significant tailwinds, which gives me confidence that we're going to continue to grow at a healthy, albeit concentrated level, but call that 2%. I think that's a good growth outcome for the US and I feel like that's my base case for 26 and for 27.
Gary Siegel (31:57):
Van, we have a follow-up on the question from our listener about inflation. Shouldn't interest rates be higher in high inflation places like New York City compared to Omaha?
Van Hesser (32:15):
Yeah, again, I think those divergent views, if I felt like you could point to financial conditions being overly tight or overly loose in one region or the other, I think then you could make the case that yeah, we might want to do something on a regional basis here. But I think in general, again, the Fed is there to really just set a policy rate from which the financial system can then allocate capital to its most productive use. So yeah, I think that runs the risk of too much government interference really in capital allocation.
Gary Siegel (33:06):
How big a problem is the US debt level?
Van Hesser (33:12):
Well, I would say if we go back 20 years and debt to GDP was 35 or 40% and all of a sudden we've had the GFC, we had COVID, both of which were treated with massive amounts of debt. Now we're up to 100% debt to GDP. Is that a level where you start to see crowding out take place? I think you could make a case that on the margin, that's an issue that we have to think about. Does it make your sovereign issuance more of a target for bond vigilantes? I think that's also a risk. That said, I think the US exceptionalism story continues. And so we remain sort of the envy of the world, the Haven status.
(34:09):
So I think at this point in time, if I take a step back and look at these developments, I'd say, wow, the fiscal condition of the United States is very different than it was 20 years ago. And yet I think we still remain a very dynamic economy and in many ways still the envy of the world. So I think we can carry these debt levels for a while. I do worry a bit more about the crowding out effect and maybe again, we're just crowding out things on the margin that really shouldn't have access to capital, but the debt burden we have at the interest rates we have is a significant debt burden to carry. Make no mistake about it.
Gary Siegel (35:00):
So in the press conference yesterday, Kevin Warsch was very serious about the Fed hitting the 2% inflation target. Do you think he was more serious about that than Jay Powell was?
Van Hesser (35:15):
I think if I'm not mistaken, with just about every statement or press conference, Chair Powell also mentioned the 2% target. And of course every year they go back in if it's every year, but they will review from time to time that 2% target. I think that's also going to be part of what will be thought about over the course of the next six months under Chair Warsch. But it did strike me as that was pretty pronounced that we are going to get price stability and we are going to get down that 2% target. Not a lot of detail around how. So again, maybe a little forward guidance there would be helpful or more convincing to the market about how we're actually going to achieve that. But I though it was very, very clear and maybe a tad more emphasis out of Warsch than we've gotten over the years with Powell, maybe because it's almost become just a din out of a lot of past Fed communication that, yep, we still have that 2% target and yes, we're still above it.
(36:27):
But I do think that, and again, remember a big part of why we can focus or I think why Chair Warsch is going to focus so intently on the price stability side is because the labor market and the broader economy feel better today than maybe six to 12 months ago.
Gary Siegel (36:49):
Correct me if I'm wrong, but it's like 15 years that they've been trying to get inflation to 2%. For 10 years it was below, now five years it's both. It's not an easy thing to do.
Van Hesser (37:00):
It's not. And again, I don't think we should assess over getting to 2%, but I think when we're running at 3% and sticky high, which may go even a bit higher from here, I think, and we've been above target now for more than five years as everyone is aware. Yeah, it's probably time to really start to think about how we're going to get down to that 2% target for certain.
Gary Siegel (37:33):
Is the yield curve still worth watching for clues about future recessions?
Van Hesser (37:39):
It's a good question. We relied on that analysis or that guidance in 2022 to 2024 really as the Fed was hiking rates and the curve inverted and oh, the recession's going to be right around the corner. I think what we didn't really factor in at the time was just how powerful stimulus was. And so obviously we didn't turn down into recession even through the fastest rate hiking cycle in 40 years, but there were some extraordinary events really against stimulus, which really changed the calculus there. So yes, I still think it's worth paying attention to an inverted curve clearly suggests that rates are restrictive and the economy is pointed toward recession. I think there's a long body of work in history that suggests that. I also do pay attention to really on the longer end, just the term premium because that starts to get at a little bit of what we were talking about earlier with bond vigilantes and the like.
(38:52):
So I think we pay attention to that as well. But yeah, I think we're always keeping an eye on the curve and what it's suggesting.
Gary Siegel (39:03):
So we have a question from the audience. Do you consider tariffs taxes?
Van Hesser (39:12):
I think the answer is yes. I do think when used strategically, it's a tool in the toolkit that can be deployed effectively. But clearly it is a cost. And I think we've seen it flow through to varying degrees with the effective tariff rate up in the mid-teens here. Again, I think it's a multifaceted sort of question, but at the end of the day, it is a cost that has to be born by somebody. It's sand in the gears. And so the answer is my perspective, yes.
Gary Siegel (39:56):
Van, the biggest risks to the economy are probably unknown, but what do you consider the biggest risks that you can see?
Van Hesser (40:08):
Well, first and foremost, especially again from a credit perspective, it's inflation. We know how destructive that can be when we look back at 2022, 2023. So I think that is the single biggest issue that we focus on at this point in this cycle. We're also looking at the strength of the consumer in the aggregate boosted by this wealth effect that we talked about earlier. The consumer numbers are fine. They're okay. You peel that onion a bit and you get down into that lower prong of this K-shaped economy and we're seeing some real, that les wealthy household cohort is struggling significantly. We look at credit card delinquencies, we see the savings rate coming down, we see borrowing going up. The toll that inflation has taken and probably a less certain or less robust job market is really starting to weigh and we see it in the consumer sentiment numbers.
(41:21):
They're obviously at multi-decade lows, at least in the Michigan survey in particular. So we do worry a bit about consumer spending and the strength of that. We don't expect it to fall off a cliff, but the consumer is running into headwinds. And I think from a macro standpoint, it will slow growth a touch as we go forward. And then the other thing we really think about is the promise of AI. There's so much riding on this technology delivering. It supports obviously the equity market where I think 57% recent calculation of the S&P 500 is AI or ARI related, so call it broadly defined technology. This all needs to hold together to keep that investment continuing to come in. It's 35 or 40% that tech CapEx of GDP growth in the US. So it's a big supporter of growth. And then ultimately over the longer term, we do expect it to impact employment.
(42:33):
We'll have to wait and see how that's going to play out. And then ultimately not unlike past technological revolutions, it's going to define winners and losers. Again, more of an intermediate to longer term sort of view, but we also keep an eye, especially over the near term, because it's so important to GDP numbers, to growth. A lot of is riding on that AI promise continuing to hold together.
Gary Siegel (43:03):
Man, what questions are you getting from your clients? What are they worried about?
Van Hesser (43:09):
First and foremost, is the Fed going to hike rates? So I think that is good timing for our event today, but that is probably top of mind for most folks, both stock and credit. I do think we worry about, or I do get questions on the US consumer, such an important part of economic vitality. And again, we're starting to see some things develop there. Real disposable income has now declined I think for three months in a row. So you've got some things out there that are weighing on people. And again, I think the AI story is just all - consuming from an investor standpoint. It's just such a big part of what happens day-to-day these days. So again, I think people are generally feeling pretty good, especially in the US about the US economy. I think the upturn in the non-farm payrolls numbers has been a welcome surprise.
(44:19):
I think the industrial renaissance is something, again, you look for where some growth is going to come from, to see some vitality there in the industrial production numbers, for example. I think that's been reassuring to folks. So I think people are latching onto that as a up and coming growth driver. So in general, I think people feel pretty good about where we are today. That said, a fair and insignificant amount of uncertainty out there with regards to events in the Middle East and probably geopolitical events broadly speaking. And then again, the ability for these growth drivers to sustain into a world that's got plenty of uncertainty overhanging it.
Gary Siegel (45:05):
Well, that concludes our leaders event. I'd like to thank everyone for tuning in and a special thanks to my guest, KBRA Chief Strategist Van Hesser. Have a good afternoon all.
Van Hesser (45:18):
Thank you, Gary. Thanks everybody.