269001842 - 1_y2z3egc2 - PID 1851201 Investors are stuck in a tug of war. On one side, we have central bankers which are trying to convince us all that they're serious about inflation and are going to keep hiking rates. And on the other side, bond investors who remain unconvinced, which side is right? And what will it mean for your investments? Hey everybody, That's the question we're going to try to answer today. I'm Maggie lake here with dairy as dow, founder of 42 macro. Hi Daren is how are you doing? Maggie? It's great to see how you been. I'm doing well and I kinda feel like that's the question of the moment. Certainly at this point in the summer with the data coming in with all these Fed officials who were just constantly in front of the microphone. This seems to be the big question everyone's asking themselves and there's a lot of disagreement. There doesn't seem to be much consensus. No, not at all. I think you can boil the question doubt even further to first principles. Which is the market going to care about the rate of change of inflation rolling off the peak? Or is the market gonna be more concerned about the level of inflation remaining high and persistent, and ultimately causing the Fed to have to ultimately do more than what's currently priced into the market. And depending on your answer to that, ultimately determine your asset allocation of your portfolio construction. That is a fantastic point. And so to be clear, we're talking about like, let's just throw some numbers on it. So if inflation, if we're getting inflation, monthly inflation prints that are nine or 8.1%. The question is, does the Fed wants to see that come down to some absolute number for 3.5? Or do they just want to see that it's declining in some kind of pattern, then that's the thing that they'll look at. So traditionally it might be high at six or seven, but as long as it as the slope is falling, That's what they'll judge policy on. Is that right? Yeah. Well, so I tend to be in the camp just based on, you know, kinda listening to every single word that these people say every single day and taking detailed notes on it, it's pretty clear that they have a set of thresholds that needs to be met. If you look at it from the perspective of financial markets, they want to see a certain set of financial conditions. Tightening objectives achieved, particularly achieving a real positive real rates across the curve. That's something that they were on their way towards accomplishing in late June, early July. But if sense kinda move back in the wrong direction largely as a function of the easing of financial conditions we've seen throughout July partially driven by Jay Palace, a gas and the press conference last Wednesday. But then from a structural inflation standpoint, they want to see obviously longer-term inflation expectations. If you look at five-year, five-year for breakeven, or if you look at consumer confidence measures, like the University of Michigan Consumer confidence measure, that's up at 2.9%. It's gotta get probably close to around 2.5 for them to feel comfortable that inflation is back to being really anchored. But then ultimately they need to see some actual progress in the data. Brian, if you pull up that chart, slide 87 from our macros got to report. This chart is pretty **** thing in the sense that we are moving in the wrong direction. So these are all june prints in terms of what we're showing here in the gray bar on that chart, the prior month over month annualized rate of change, and the blue bar is the most recent print, but the June month over month annualized inflation print. And as you can see, going across these four indicators, we're very much moving in the wrong direction from a rate of change standpoint. And obviously the levels are way too high to begin with, so we didn't have to discuss that. But the first cluster of bar shows the Dallas Fed trimmed mean PCE inflation. That's what JPAL started talking about last week at 6.9% on a month on month annualized basis. And that's obviously well above where we need to be in terms of 2% for the target. But that's also the fastest route we've seen in 40 years. Cleveland Fed median CPI that 9% annualized is an all-time high. The Atlanta Fed sticky CPI at 8%, That's our 8.1%. That's the fast we've seen since January 91. And then lastly, a core PCE, which is a sort of unofficial target, if you will, at 7.1% month on month annualized. That's a pretty ridiculous number relative to not only their target, but also relative to moving in the wrong direction. Yeah, personal consumption expenditures, basically what we pay for goods and services, right? That's why they look at it. So a lot of people are saying, Okay, well, people have jobs they can afford it. I mean, this is the worry, right? So as long as you're working, how can we, you know, there's something to worry about it in terms of inflation and how can we be in a recession if everyone's got jobs? We have a big jobs numbers tomorrow, but we had weekly jobless claims today and they rose again. There are more Americans filing for unemployment benefits. So what do we look at when it comes to the labor market? Is it as hot as it seems? Yeah, no, the market is still overheating without question. So jobless claims have been inching up since I don't want to say they put in the bottom in March, but we've not really seen that kind of movement you would anticipate if we were actually heading into what we call an actual recession as opposed to a Amir technical recession. There's a couple of ways you can slice and dice the labor market to understand how tight it is. And ultimately, playing this back into the initial question of the show, which is why we have not seen such a kind of cars. We haven't seen catharsis or capitulation on the behalf of equity and credit markets because we still have an economy that is quote unquote hanging in there. So kinda just unpack and the jobs we can look at it from a couple of lands, one from a levels, and secondarily from a momentum perspective, if you pull up chart AD2, this kind of walks you through some of the levels that investors like myself and the Fed are looking at to understand the labor market dynamics. So the first on the chart at e to the first panel, that chart shows jokes divided by total number of unemployment. So jolts is total job openings where at 1.8 in terms of that ratio, that's double where the ratio trended in the pre-COVID era. The second panel is the private sector crits weight, which is about 70 basis points higher than where it trended in the pre-COVID era at 3.1% most recently. And then lastly in the bottom panel we got this number last Friday, we got the employment cost index, total compensation for private sector workers at 5.5%. That's an all-time high, as you can see in the chart, but it's literally 300 basis points higher than where we translated the pre-COVID era at 2.5%. So 2.5% is consistent with 2.5% core BCE. So clearly got a problem here from a levels perspective. And the levels oriented economist at the Fed are going to see that and say, Hey, this is a labor market that we can very much afford to continue tightening into. The second part of that is on slide 83, Brian, where we show a similar analysis just looking at the labor market from a momentum perspective as well. And as you can see, the first cluster of bars where we show the light blue bar. That's the pre-COVID trend in that particular indicator for cluster of bars is private payrolls growth, showing everything on three-month annualized basis. And the dark blue bars is the most recent prints of the June job support. As you can see, we're double the pre-COVID trend in terms of the three-month annualized rate of change of private payrolls, move over one were doubled the premotor pre-COVID trend in terms of average hourly earnings. And then move over to, you, go to the far right cluster of bars. And you'd be something that you aggregate all those statistics you wind up with aggregate private sector labor in common at eight per cent were effectively double where we've trended in the pre-COVID trends. So no matter how you slice and dice the labor market, this is one that is fed should feel very comfortable and confident in terms of tightening into the slowdown in growth. We have seen. And certainly those in the camp who think that things are slowing down and this is a transition. That's why you've got this. You've still got labor market, but maybe some of that lags. And if you look at things like ISM, which we know a lot of people in the Alice community look at that, starting to show things slowing down and some of the manufacturing survey's does that indicate that we're in a transition and we're not sure if we're entering recession or do you think all of that stuff again, even if it's decelerating, is strong enough to withstand, to show that the economy is robust enough to withstand these rate hikes. Because clearly the Fed must see that. Yeah, no, totally and look, the fit is, Joe Powell's is consistently reiterated that they're comfortable to slow down even more or less kind of confirmed that they're comfortable with the recession in order to get inflation under control. So I don t think you could remove the fat from this particular aspect of the debate. I think the real aspect is going back to the investors. Investors. There's two camps of investors right now. There's the rate of change investors that's look forward and see an economy slowing and the Fed tightening into that. And then there's this sort of levels oriented investors. You use the word robust, which I think is a very important word to use at this particular time. If you look around, the labor market is very robust. Corporate earnings, they're slowing, but they're still very robust, certainly on our expectations based relative to expectations. And two, you're looking around, you're still seeing robust levels of economic activity looking through the nominal lens in particular. But then when you obviously looking at a rate of change basis and oh, by the way, that ISM service is print from yesterday was just rocks, this rock solid. I mean, you had to basically new orders, push into 60, a big, big read acceleration where it all mattered. And so it's very clearly that the economy, the real economy is not yet fallen off a cliff, but it's certainly moving in that direction when you look at someone leading indicators, right? Obviously housing, there's the most leading sector in the economy is already in recession. You look at the three-month annualized growth rates of things like housing starts building permits it down 40%. You look at something like ISM, new doors minus inventories. That's putting us at somewhere between 38. Let you just look at the ongoing tightening it in liquidity conditions fed continuing to hike, balance sheet, continuing to contract, and ultimately the rate shock that we've accumulated through the first half of this year, we will have ramifications on a lagged basis over the next few quarters. So this is such an interesting conversation because it's giving us a different question to look at which I think is really important and maybe is going to be easier for us to all track. And that is the rate of change people are in the camp that the Fed is going to pivot because they're going to start to see deceleration. The absolute level people are saying, listen, as long as it remains strong, there's room and the Fed is going to keep going. There was a really interesting thread on Twitter that caught our eye and I think it speaks to this. And it was, I can take a screenshot when Alton tweeted it out, but I think it's a screenshot of a couple of tweets that went out right in a row from her, from al, from atom suggesting that basically the Fed is willing to sacrifice jobs. They intend to weaken the labor market until they kill it, until they get inflation under control. That sounds like there's a lot more downside diarrheas and based on what you're saying, there's a lot more pain in the economy and they're gonna go until we're in recession. Yeah, a 100%. I mean, that's, that's our base case view, is that because the Fed is sort of operating on a Latin, they're using variables that lag the broader economic and market cycle to guide their, guide their policy. There I agreeing and pile sort of a sort of a pined on this last week. And then we got daily Evans, we got Bullard. Who else do we have for Mestre out this week, sort of confirming that he looked, yeah. Everything's robust. We're going to keep hiking. We haven't made enough progress yet. So the problem with kind of guiding policy through the lens of the labor market and through the lens of inflation is both of those things are very sort of late cycle. They are lagging the broader economic cycle, and they're extremely pro-cyclical. So it sort of sets you up for a scenario this fall and into this winter where the Fed is still tightening policy. And markets don't really want them to be still tightening policy right now. Things are, again, as we discussed, are robust enough for investors to kinda look around and say, maybe we overpriced too much and at the June lows, which I don't disagree with, not the least of which, the inflection and the net liquidity cycle, which we can touch on later in the discussion. But eventually we're going to have to come back to that. Chickens will come home to roost on the broader cycle. Because again, you're setting up for increasing divergence between policy tightening and the economy. Right now that divergence is somewhat narrow, but it's only going to get more and more divergent overtime. And welcome to the conversation. Great questions coming in from Tom, yo-yo, mark gangs, DD. We're gonna get to them in a second. So we talked about that, that tension between the Fed and the bond market. The bond markets mispriced right now it sounds like you're saying I don't disagree with that. I don't know if I agree with that. Let's be honest. They're thinking they're going to pivot the bond Mark. I would separate the bond market from the money market, the money market, your dollars, overnight index swaps, fit fund futures. There are sort of pricing and kind of December last like being in December. And ultimately the Fed starting to fade and cuts by, let's call it May, May of next year. So that's kinda the central modal outcome. You may look at. Your dollar is somewhere around March of next year. Do I think that's probably wrong? Based on everything I know today, I would say I would say the curve is probably under-priced relative to the kind of policy rate shocks we're going to continue to receive. And as a function of that, we're probably going to have the Fed's balance sheet contracting for longer. And the net liquidity function contracting for longer. Because again, as long as the Fed continues to take the policy rate in an error in a, in a sort of environment where there's a scarcity of T-Bills. It's very likely we continue to see the reverse repo facility balanced crime as well. So that is usually a negative sign for liquidity as it relates to the boron bond market. I think there's a real debate, is a very interesting debate. And financial markets right now, which I think is as important as the debate on where to rest acids go, which is, What's the neutral Fed funds rate? Pao sort of outlined last week that 2.5% is neutral. And I would be in the Larry Summers camp, Olivier Blanchard camp that says, that's just wrong. We're talking about, no matter what metric you're looking at, you're talking about if it's, if it's trimmed, mean PCE inflation, which fed pals now anchoring on if it's median inflation, both of those statistics are somewhere between two hundred and four hundred basis points higher than they were in for 18 when Powell said neutrals 2.5. And so we may have to go through a process over the next few months of divesting, discussing, and debating whether or not neutral is in fact 2.5. And if we see anything that looks like a positive revision to that, then the entire yield curve here to shift higher. So it may be the case that we haven't necessarily seen the ultimate loans and bonds. But ultimately we do believe that the more the Fed prioritizes fighting inflation to save the bond market implicitly there effectively sacrificing the economy and the equity market and credit markets on the other side of that. Yeah. So important Doris and, you know, great example and we're gonna kinda keep digging into that. Let's jump into the questions because I think some of them will help us tease out some of that. So as we're talking about this, the Bank of England, It's not just the US. We're talking about central banks around the world on this inflation fight on the Bank of England raise rates by 0.5 today, biggest hike in 25 years. At the same time, said, economy is going into recession. A long one, maybe the worst one since the great financial crisis. I mean, that's pretty harrowing. Yo-yo. Asking, how long do you see the USA recession? Recession, based on the BOS comment of more than a year, are we looking at a severe because the Fed is gonna do it until they get inflation under control. Are we looking at a long recession here as well? You'd be a fool. And I would be a fool to answer that question with any specificity. So I'm not going to. But almost by definition, a recession, it's impossible to predict because it's such a statistically significant deviation from any model on a sample basis that you could train it on. So it's not possible, in my opinion. By the way, I've tried trying for the last 14 years and built these kinds of models. You really can't do it. What you can do is identify the conditions that are in place that will put you in a significantly negative economic, enough economic state to see other legitimate actual recession. I mean, you obviously need to be coming off a very high level of total employment, a very low level of unemployment. And obviously you typically need a significant amount of financial need, some sort of shock, whether it'd be through energy, whether it be through fiscal policy could traction, or there'll be through monetary tightening. And unfortunately, we've had all three. So we can assume that the recession risk is very much white rising, which we can imminently observed by the collapsing three-month, 10-year yield curve. I think we're somewhere around 2728 basis points. We were at 200 basis points in that you'll curve for like two months ago, three months ago. So clearly the markets are very concerned about recession, but I don't know if I even answered the question, but the question no, I think you did. And I think this is a really good place to interject something. So we have a, we have a couple of these questions coming in. You know, like where do you see the S&P? All of this, no one has a crystal ball to these answers, especially when you're in this really hard transition period. I think what you do and a lot of the people, you know, analysts, fund managers, Raul talks about this all the time, is try to get the best probability, right? No one has an absolute answer, but it's a game of probabilities at this point. What are you looking at? What do you think is leading and what is your best-case scenario? What's the risk, the risk reward trade-off, right? So this is, we're talking in probabilities when you're answering these questions. Yeah, a 100%. I mean, look, I'll be the first person to tell you. I'm not sure. A lot of folks who do what I do for a living will get on a show and tell you that we were able position for the full distribution of probable outcomes gone in June. I mean, I was saying like We finished June or at least my personal assets that I manage track our 42 macro portfolio construction and we were up just shy of 9% by the end of June and looking at up 2% here in early August. And that was a significant drawdown. And the reason for that was because we overly allocate it to the narrow, the negatively sloped this side of the distribution that was calling for more negative economic outcomes, sooner, more tightening relative to the market pricing. We still think those are the modal outcomes. It's just that position for the broad set of distribution. And the other part of the distribution, which I believe is a little bit more symmetrically, symmetrically shaped relative to what we initially thought. And in June, which is if your a levels oriented investor, which, you know, there's a lot folks who kind of think about the world in first derivative terms. Growth is really high. Nominally, the labor market is really strong. If you believe Jay Powell, than the labor, the economy can withstand rate hikes. And there is this quote, unquote narrow path to a soft landing. And so you have to tape your cap to understanding that, hey, look, we probably overpriced the left tail of the distribution in June and I would argue probably somewhere around 40 to 50 on the S&P were probably overpricing the right tail of the distribution. At the end of the day, the markets are gonna go where they're gonna go. And we think 69 months forward, we're gonna be talking about things that look a lot more recessionary, a lot less robust, and a first derivative basis. Yeah, timing is really difficult and this is why it's super important to size your risk because everybody is going to be in that situation and you can be wrong for the right reasons. The timing can be off. And this is something that we talked about in the academy. There's a whole section on being able to make sure that your sized appropriately for risks. So when you get it wrong, you live to fight another day, which obviously you're gonna be able to do. So we have a question on this sd-areas. Tom, both Tom and Mark asking about stocks and the bear market rally. Tom said this bear market rally and hence of softening inflation with the softening economy seem to be making dairies, rethink his conviction on a deep market sell-off, or at least that's what I hear in his voice. Where do you see where does dairy see the balance of probabilities? Thank you Tom, probabilities over the next six months? Hey, no, that's a great question, Tom. I appreciate the the kind of contextualization of the question. So I'll first start by saying, you should hear nothing in my voice. I mean, everything, every view we have is eminently articulated and perfectly articulated in every piece of research that we put up. We ever portfolio construction, which again, I use to manage my all my liquid net worth. So all my views are very explicit and very ironed out. So if it sounds like I'm saying something different. You're over, you're reading too far into it. So that's point number one. As it relates to just the general outlook, I still think the modal outcome is the US economy tipping in something that looks like a real recession, like an actual recession, if only because we believe there's a stickiness and a persistence to the inflation, particularly on the core inflation side, which we discussed and talked about earlier. That will cause the Fed to increasingly diverged from where markets are going to want them to go. From a policy standpoint. It may be the case that look again, I think there's this real debate and financial markets right now about what is the neutral rate? Is this Fed really serious? They technically can't truly be serious if they think the neutrals at 25 or they're only going to go a little bit past neutral. So we're going to have to learn the next couple of months if they're a, going to revise up that neutral rate or be going to tell us that they're comfortable taking it way beyond neutral in order to get the job done. If they do either of those two things, then I think we're gonna be ultimately crew are right on our central thesis, which is the Fed is hiking for too long, for hiking too much or not hiking, just tightening, tightening for too much and for too long relative to an economy that is in fact slowing down if you look at it, leading indicators terms. Yeah. And by the way, there are some people who think we're already in recession. They're not waiting for the technical and that you're going to start to see that show up. But that's, that's another thing that is up for debate. So I mean, I've seen that analysis and I think Jim Bianco, who have the utmost respect for is one of the best investors in the world. In my opinion, I would tend to be on the other side of the view that, you know, that even though we're seeing robust job growth, that we're still probably technically in recession. You're still seeing the sort of coincident lagging indicators are still very robust. Will they get very robust three to six months from now, probably it just if you look at the compendium of leading indicators, it's very likely that they could become and robust. When I think of the day, I think we're spending too much time on debate, discussing, and debating whether we get a recession, how long that's going to last, how deep it is. Ultimately, we need to understand the fundamental principle of why you should be negative on risk assets from a medium-term perspective, like 369 months from now, is because the Fed is tightening into a slowdown. Whether or not it's recession or not is it is neither here nor there. Now, whether we go into recession does ultimately have an impact in terms of the size of the drawdowns. But we've done a tremendous amount of work on this empirically. Yes, it's kinda correlated with the size of the equity drawdown, but it's not correlated enough to expect that, hey, if we get a mild recession, we have to get them out. Equity drawdown or credit market drawdown. Or if we get a deep one, we gotta get a deep drawdown, what you usually do. But when you're talking about anything between mild and moderate recession, that the distribution is all over the place. So it's not like you can use that to manage risks. Dt has a really interesting question slash point. Did retail actually beat the smart money by refusing to sell and buying the dip? There has been this really interesting dichotomy because you've had fun lightening up on their stock exposure, equity exposure, and you see those sentiments coming out and there are bearish. But you had retail hold firm. And people are kind of scratching your head saying what's going on? Any thoughts on that? Yeah. I mean, I'm just pulling this up now. So the SPI is down 14% from a Thais Bitcoins down 63% from its size. I'm going to go out and limb and say, that's not I would not consider that to be a smart decision if I could avoid us 14 to sixty-five percent drawdown of my own money, which I'm trying to do everyday. They know that. I don't think that's the smart thing to do. Also. I mean, the question also assumes that Retail bought the dip at the blows of June. I mean, the more likely it is that they sold that the lows in June. I mean, that's unfortunate. That tends to be the case, but I mean, at the end of the day, this market is, if you put a gun to my head, what do I think happened? I think we got too far ahead of ourselves. Pricing in a recession in June that may not materialize for another six to nine months. And eventually with markets, they have a funny way of collecting bodies from both sides of the trade, Bulls and Bears alike along the way to ultimately pricing and what they need to price in. So like I said, I've dropped, we've drawn down in the last four to six weeks. I'm still up a lot more than the average person who didn't make the decisions we made earlier this year and going back to the fall of last year. So I'm very comfortable with how we're sitting here. 42 macro. Yeah. I have to get a Mishneh Torah has gone down a lot. Yeah, exactly. It's a great chart about if you if you kinda hold through the drawdowns, how long it takes to recoup that. She feels really strongly about that as well. I have a chart like that. Yeah, That's right. Yeah. That might be worth because we were really taught to sort of try to, if you're a long-term investor, try to block out the noise, don't get hung up in these kind of market moves. But that may not be true when you see this and when you see the drawdowns and you do the math out about what it takes to But it's hard to take for the nasdaq to recoup its highest from callosum. It was like 15 years or something like that. I'm not I'm not saying we're going to be under underwater for 50 years. I would imagine once the Fed pivots, which again we think is a one event of next year, we're probably going to start to trade higher, especially if the liquidity cycle gets, gets infected in a material way. But again, these are, these are things, this is something I also want to bring up. I've heard a lot of sort of, you know, I've heard everything in the last six weeks, right? Everyone is trying to figure out why is the market going up. People with the same lows are trying to figure out what the market is going down the Bulls were. And ultimately, I think the central narrative, unlike, you know what, why the market is up from a fundamental standpoint, I think the reason it's up, it's actually just quantitive chasing it. But from a fundamental standpoint, if you want to attach a narrative to it, it's that we got too far ahead of ourselves in terms of pricing in a recession. And then some people would take that and say, no, you actually did price in the recession. Therefore, that was the low. You gotta think about expanding your risk profile. That's the Tom Lee view of the world. And one obviously disagree with that from a fundamental standpoint. But even if that is correct, That requires a tremendous amount of sort of for looking this, if you will. I don't have a word for this. That markets have judicially not exhibited in the past. I mean, you're talking about a market that effectively pricing in a fed pivot that may not be, let's call it six to nine months away. That's pricing and a bottom and growth that may not be nine to 12 months away. And this is the same market that in January at the all-time highs, thought growth was going to be above trend in 2022, and that the Fed was only going to hike two or three times in 2022. I just don't believe the same collection of market participants is suddenly like living that far in the future. Yeah, suddenly predictive out that, that long which would be departure from historical is, but this is what we always wonder. Is this time different? I mean, that's the all Here's the trick. The line that kinda gets us, by the way, in the last couple of minutes we have, You mentioned Bitcoin. We saw that big. So even though stocks are struggling as we head through this fed talk and jobs, we saw a big move in Coinbase after the exchange announced a partnership with BlackRock that will allow institutional clients to buy Bitcoin. By the way, it moves. He is BlackRock has what looks like a trillion dollars under management, heck of a lot of money. Any thoughts on that? Would you expect there to be a reaction? We also have some news with other things going on in the crypto world than we did seed crypto bitcoin down today. What do you think about that institutional participation? Yeah, it's extremely, extremely positive. Structurally, the easier you make it for institutions to allocate to this asset class, which I think in an environment where we're going to have structurally higher inflation in an environment where the Fed may be ultimately forced to provide its inflation target higher, you're going to have a sort of a could be structural outflows or structural under allocation to bonds relative to where we've been in the most recent decade. And so anything you can do to make it easier for institutions to access that asset class is gonna be very, very positive. Now there's a little bit of horizon investment horizon mismatch there. Just because BlackRock is partnering with Coinbase today doesn't necessarily mean institutions want to buy Bitcoin today. Yeah, right, exactly. And so you'd have to understand that, hey, this is structurally bullish, but it may not be cyclically bullish because again, there's things that are driving it from a cyclical perspective, liquidity cycle. The girls want to squeeze more, Maureen, because I, as I scan down here, we've got a bunch of questions coming in. From John, from Brian, from Honey, Gold. Why is gold up today? That's it for today. Why it's called up-to-date past? I don't know why gold is up today. Who knows? Because there are more buyers and sellers. That's the answer. Yeah, biotech get listened. In markets by the way, it's also August. So sometimes in thin markets we see big moves too. So, but thank you for those questions and we're going to keep looking into that and asking because as you know, we have some dedicated gold bugs who are part of the revision community who I'm sure would love to take a swing at that. So duly noted, everyone will chase that down. Exactly. I appreciate that. You mentioned one thing before we wrap up, like, is this time different and we've done a tremendous amount of work in 42 macro on trying to identify what are the series of catalysts that typically happen in and around a bear market bottom. There have been 17 bear markets since the, since the onset of the Great Depression. So it kinda, looking at the last 100 years of economic and financial market data, I will give all the conclusions away out of respect for our paying customers. But if you put up that chart, slight 145 rhyme, you know, kind of the genesis of the analysis, looking at three things. When does the market traditionally bottom in terms of the inflection of the inflation cycle. Pink line inflection in the black, the growth cycle, black line and flesh and the liquidity cycle, which is the red line. Without being specific, because I don't want to give away the crown jewel, but typically markets bottom after the inflection in liquidity cycle, after the inflection and the inflation cycle, and then after the inflection in the growth cycle. So you typically need to see some activity out of the Fed that is causing investors to take risks. If you go to slide 146. So if you look at the slide on 145, obviously the red line, the Fed funds rate, we've seen no inflection in the liquidity cycle. Clearly have not seen an inflection in a durable inflection in the net liquidity as well. If you look at site 146 and I tell you this one thing keeping me up at night, it is this chart, which is when you swap the red line in that chart from the Fed funds rate, the one year, one month forward OIS rate. Or you could use any forward rate measure in terms of foreign policy rates, Fed fund features, et cetera. It did inflict literally on the lows of the S&P has been trending lower since then. So you have to wonder, has this sort of this interjection of forward guidance into the market function, into the market response function out of policymakers. Has that now pushed us further into the kind of living in the future in terms of the willingness of investors to price in these types of outcomes. Now that creates more risk, like if that projection is wrong, you're going to have a lot more gap risk to the downside on markets. But to me, I think this is kinda the number one thing outside of the neutral Fed funds rate discussion. This is also one on, hey, did we actually get the pivot? Because the market thinks we got the pivot even though we didn't really get the pivot. And I think that's something we're going to debate for the next several weeks. Awesome, great, great stuff to think about dairy us. Thank you so much. Good questions that we're going to continue to mine. We appreciate you. Thanks. Thanks to all of you. Thanks for the great questions will the ones we didn't get to, we'll take it up and we'll continue the conversation. So join us again, will be here Same time tomorrow. I'll be back with Jeffrey Schultz, the director. I clear bridge in the meantime, take care and good luck out there. Take care of each other. Cheers.