AI, the Fed, and Geopolitics Remain in Focus for Markets

Jeffrey Buchbinder:

Hello everyone and welcome to the LPL Research Market Signals podcast. Jeff Buchbinder here, your host for this week with my friend and colleague Quincy Krosby. How are you today, Quincy? How was the long weekend?

Quincy Krosby:

Thanks so much. Busy weekend. But made a lot of time for remembrance, which was, you know, the key for this weekend. Yeah,

Jeffrey Buchbinder:

That is absolutely what it's all about. Honoring those who made the ultimate sacrifice.

Quincy Krosby:

And continue to, yeah.

Jeffrey Buchbinder:

Focus on that. Yes, we're thinking of all those who we lost, and thank you to those who continue to serve our country. So thank you for that, Quincy. It's May 28, 2024. As we're recording this the important disclosures, of course, are here, which you will all read carefully before we move forward. So here's our agenda. So, of course Quincy, you specialize in global markets, global economy, geopolitics, and all of that. So we'll do that for your quick hits. But we also have the Weekly Market Commentary this week, which will be on LPL.com any minute, which is about earnings season, a recap of what was an excellent, excellent earnings season. So, that's going to take up the bulk of the call. We will preview the week ahead as we always do. And of course, recap the markets.

Jeffrey Buchbinder:

Last week, last week, you know, I titled this "Bumpy Ride to Nowhere" because the S&P 500 was flat, but with some ups and downs. So you know, the ups, of course, Nvidia up 15% last week reported earnings and, you know, kept the AI fervor going. And maybe the downs, it's really, maybe that's putting it a little bit too dramatically, but the downs were just, you know, continued unwinding of Fed rate cut expectations on strong economic data and the, you know, slight increase in yields. So here's the S&P 500. We're right near all-time highs. Actually, the NASDAQ is at an all-time high as we open on Tuesday. So as we've been saying, probably do need a little bit of a pause, a little bit of a breather, but still very, very strong.

Jeffrey Buchbinder:

Uptrend here. Right around 5,300 level. I put the 10-year yield in here because it was a story last week, you know, with yields ticking up. The two-year, which is most sensitive to Fed rate cut expectations was up about 10, 11 basis points last week. So, you see here on the far-right hand side of this chart of the 10-year yield, a little bit of a balance, you know, 4.34 to 4.46. So we certainly would love to see this yield stabilize or maybe even fall a little bit continues to be a little bit of a headwind for the equity markets. But if you have, you know, AI excitement, Quincy, then you don't really need or maybe you don't have to pay attention to yields, because I would say last week, the AI story kind of offset the yield story because you see here NASDAQ up 1.4%, the tech sector up almost three, and a half really strong week for tech. Any other observations in terms of, you know, what worked and what didn't last week, Quincy?

Quincy Krosby:

Well, I mean, what worked was obviously Nvidia, but the rest of the market was in the red. And Nvidia stood out, sitting by itself in green, showing that even the strength of Nvidia was not enough to fight the Fed because what the market was reacting to, as we talked about this, Jeff, was the flash report from S&P Global. And normally the market pays attention to the ISM numbers, Institute for Supply Management, but the S&P Global has this flash report, you know, kind of the first look at the service sector and manufacturing. It was the prices paid component going higher, and that's what pushed the yields up, and that's what got the market really worried about the direction of inflation.

Jeffrey Buchbinder:

Yeah, that's exactly right. The inflation data, you know, we got a good CPI. We get the PCE this week. Very important. That's continued the trajectory. But when you look at some of the other, we'll call them secondary indicators of inflation, the story isn't quite as good here. So you know, so that's where you saw a little bit of an uptick in yield. So yeah, you're right. It was pretty much all Nvidia. The only thing that worked, communication services were up a little bit last week. Of course, that's essentially half tech, actually really a little bit more than half tech. So there's a little bit of a halo effect with the AI story that kept that sector in the green for the week. But otherwise, everything was down, especially energy.

Jeffrey Buchbinder:

Now, oil's up today. And the energy sector is one of the leaders today, but last week it was the biggest loser as oil prices ticked lower. You ended up, of course, with tech working at a huge week for growth relative to value. This is why it's a little uncomfortable to overweight value here, right? Because of the earnings power of tech, you know, Nvidia in particular. But it's not just Nvidia. Apple shares are up this morning. Reports of a strong rebound in China, iPhone shipments. And they've also, you know, built up some excitement about what they're doing in AI. So that stock's been, you know, a nice driver of tech and of NASDAQ here in recent sessions as well. And then, you know, the U.S. kind of taken the leadership back a little bit from international markets because you see, you know, other than India, you know, pretty much red up and down, you know, for Europe and for Asia last week.

Jeffrey Buchbinder:

So, let's keep going. Look at bonds, commodities, currencies, and, we'll keep watching the yen, of course. The dollar really didn't do much last week. I mentioned that yields ticked higher so you saw losses across the bond market, pretty much up and down everywhere within the various bond sectors. Here, you see the losses in crude and in natural gas that weighed on the energy sector. Copper has really been volatile lately. I think it just, you know, the speculators maybe got a little ahead of themselves and copper kind of needed a breather. So you see some losses in industrial metals. Gold's up today too at last check but had a challenging week last week. I'm not sure. Anything in the gold or copper markets, Quincy, that you would highlight that people should be thinking about?

Quincy Krosby:

Well, there was a short squeeze in terms of copper and that kind of, you know, underpinned the notion that speculators coming in to that market. Obviously it's going to pull back, but the issue with copper overall is that there's a shortage. There's a shortage of copper. Copper mines have been closed down. They haven't been there. No sense that there will be any new mines coming up. And the old mines that remained have not been upgraded. And now what we're seeing is deal flow in the miners. So again the other question is, remember why copper actually began to jump? It looked like Chinese manufacturing was picking up. But when we look at the broader picture the question is, you know, what's the strength of manufacturing globally? And it is turning the corner. I mean, it is turning the corner. But then you get the other question that goes along with this is what's going to happen in terms of the roadblocks being put up by the Europeans and the U.S. regarding Chinese exports. So you have that, you know, intermittent. But overall, I think that there's a sense that in industrial metals are going to climb higher as manufacturing picks up globally. And that's basically the narrative. But you're always going to have, as you pointed out, Jeff, this back and forth questioning it, especially when the prices keep rising. You need a catalyst to just calm things down, and I think we got that last week.

Jeffrey Buchbinder:

Yeah. That doesn't take away from the fact that it's been a very strong year for metals. Metals and precious metals, according to the Bloomberg indexes are all, are up almost 20%. Yeah.

Jeffrey Buchbinder:

So, you know, you touched on China with regard to copper. I think that's a good segue to our Quincy's quick hits. because we have, you know, China's one of the topics. So, I think this first bullet is really interesting. So yeah, I just mentioned that international equities didn't really help you last week. If you didn't own Nvidia, you didn't really do much. Right? But just in general, looking forward maybe to the, you know, second half of the year I mentioned in your thoughts on whether international diversification still make sense and then some more comments on China. Do you still think it's a trade? Or is there a point where maybe it's no longer a good short-term trade? And then lastly, we previewed, or we just wrote the first draft of our mid-year outlook, that'll be out in about a month. But wanted to get kind of a sneak peek, Quincy, at some of your thoughts on geopolitics for the second half.

Quincy Krosby:

Well, you know, let me go back to China for a minute. That's part of the answer to every point that you have. It's been a really good trade, there's no doubt about it. President Xi Jinping is actually, according to the headlines, pushing and pushing for deeper reforms, regulatory reforms, so that the markets seem more transparent. Well, we'll see about that. But the question really is whether or not investors, investors go in there and stay in the Chinese markets. You know, obviously you could buy them, you know, in Hong Kong. You could buy a part of the market in the U.S. The worry, the worry with China is this, whether or not you're going to see even more tariffs levied on Chinese exports, whether it's the Biden administration or whether it's a Trump administration. The expectations there are that Donald Trump would actually increase the tariffs on China.

Quincy Krosby:

And also you have the Europeans, you know, saying, hey. Wait a minute. You know, we don't want you flooding our markets with cheap and expensive goods. Nor do we want your electric vehicles. Yeah, they're attractively priced, but we've got our own EVs and we don't want yours. And same thing in the United States. So, you know, those, are coming up. But overall, the industrial sector, the industrials are actually doing well. Take a look at the European markets. So that leads us to another area, and that is a monetary policy. It looks as if the European Central Bank is actually going to lower rates at its upcoming meeting, which is just around the corner next week. And the way that they have characterized it, I think is interesting. It is, we believe that we can lower the highest level of restrictions.

Quincy Krosby:

Just bring that down a bit. And then we can wait. We can watch to see what the data will suggest, particularly around wages. So, it looks as if they're going to do it. I mean, when you have the chief economist come out and say, basically, we're going to do it. The market accepts that they're going to do it. That has actually helped the European markets for a number of months as they actually believe that the ECB has been poised to lower rates. So that is going to help. But the industrial sector in Germany has been higher. The industrial sector across the board has been higher. Again, suggesting either that domestic demand and also exports are going to pick up. So, I think that's interesting. And we're seeing it, you know, with Asia as well, the notion that that industrials are gaining momentum, including here in the U.S.

Quincy Krosby:

But there's another element to this, and that is the AI element. And yes, AI everywhere ubiquitous. Because what we have seen is utilities doing well. And initially, you know, there was skepticism. Oh, come on. That has nothing to do with AI. Don't think AI has anything to do with everything. Well, guess what? It also affected the move higher in utilities. Why? Because everyone knows that the electrical grids are going to have to be upgraded. They're going to need to be new ones and so on because of AI, because of data centers. Now, by the way, this is a really long-term story. It's not a tomorrow story. The data centers are going to have to be much bigger, much more powerful, and that just doesn't happen overnight. And yet, what we are seeing is an increasing interest in the industrial names. Industrial names that will be integral to the build-out of these bigger, more powerful data centers that will be needed for the integration of AI into the broader technology market, technology sector.

Quincy Krosby:

And they're already starting to pinpoint which names they want. And they're the names that we all talk about in terms of industrials. So, they are getting a bid, and it doesn't look as if it is a trade. It doesn't even look as if it's the hedge funds. It looks as if it is actually coming from the institutional side of the market for longer-term investments. Not a tomorrow deal, because these data centers are not going to be put up overnight. This isn't one for a prefab. They have to get permission. You know, all these things are part of the constraints towards it. They need water, they need permission to have these big, big utilities working 24-7. So that's going to take time. But nonetheless, what we're seeing is a targeting of those big industrial names that will be an integral part.

Quincy Krosby:

So that's another area. So, AI broader reach. More having to do with the infrastructure for AI as Nvidia is the infrastructure for the technology companies themselves. So that's what we're looking at. Bank of England, by the way, we thought that they would be more forthcoming with a rate cut. Doesn't look like it. You know, they've got an election now that is called for the 4th of July. And right now, the market is pricing in a rate cut perhaps in the fall. But all of these, by the way, before the U.S. first rate cut. And the question is not maybe, but if we're going to have a rate cut. And Jeff, as you pointed out this week, is about inflation. And on Friday we'll get a report from the personal consumption expenditures index. I love to say that, the PCE. And, by the way, the expectations are that in terms of core month-over-month, we may see a little bit of a dropdown in terms of inflation. A little bit of a cooling, which would obviously help underpin this market rally.

Jeffrey Buchbinder:

Yeah. Get ready to go out a third decimal point, maybe.

Quincy Krosby:

Well, that's the world that we live in. And by the way, you know what? We did not mention T plus one. T plus one. Let me put it this way. Someone asked me about T plus one, which is being introduced today. There's a reason it's today because we had a long weekend. It gives them a chance. Europe was open. The rest of the world open. It is that trades are going to be settled very, very quickly, remember we had T plus three, T plus two. Now it is T plus one the modernization of settlements. And the issue has been, well, how are the Europeans going to be able to deal with this? I guess they've been told, they're going to have to deal with it, because that's what we're going to have. The U.S. sees it as the modernization of our systems.

Quincy Krosby:

I go back to Y2K, and, if you remember Jeff, they had everybody so worked up that I think people were afraid to cross a bridge, let alone get on a plane and go anywhere. That, you know, somehow Y2K was the end of the earth. It came and it went. And here we are, these many years later. The same thing will be true for T plus one. There may be some, you know, some pockets of volatility. They'll fix it. They'll smooth it out, but it looks like it's here to stay.

Jeffrey Buchbinder:

Yeah. I guess in the end, that's good for investors, right? They have

Quincy Krosby:

Yeah, exactly.

Jeffrey Buchbinder:

Quicker access to their cash from security sales. So it seems

Quincy Krosby:

Exactly. I'm going back to China. I'm going back to China, Jeff, before you make me go away, because

Jeffrey Buchbinder:

I would never make you go away. Quincy.

Quincy Krosby:

Yeah, you do. You're good at it. But China, there is concern. There's concern more and more about the Chinese relationship with Russia, and whether China is helping Russia to the point that Russia is taking the lead in the war with Ukraine. You notice that Putin came out supposedly and said, I'm ready. I'm ready to go to the table negotiated settlement. As long as I get the land that we have. And that, that's always been the issue. Ukraine not wanting to give up anything. And Russia is saying, we just took it over, we're ready to settle. But the question for the for NATO is what's the role of China? And that has been a problem. They understand that China is supporting Russia, but by how much? What are they giving them? Are they giving them parts, which they believe that is the case? Or are they actually giving them, you know, full-fledged assembled military equipment. They're buying Russian oil, which of course helps Russia and so on.

Quincy Krosby:

And so what we have is as we look in our look ahead is a much almost clearer, you know. Actually, it's becoming much more clear of blocks, regional block. And it is Russia and its best friend forever, China and North Korea. And it is the U.S. and NATO and Japan. But overall, it is China now meeting with Japan and South Korea. Trying to put a wedge between the U.S. and our allies, but most of all trying to break up U.S. hegemony and dominance in their region in Asia, and of course, NATO. So this is the goal. And it is becoming clearer and clearer. And also, you know, you have it vis-a-vis the Middle East. Now everyone asks about Taiwan, you know, because what's going on there?

Quincy Krosby:

Well, we know that the new president has just come in. I think everyone has seen that. And the question becomes, what is China, Beijing going to do about that? Well, they've made it clear that Taiwan belongs under the one China policy. They belong to mainland China. The other issue is look at the U.S. involvement in the Middle East and NATO. Many of the military strategists suggests that their calendar for taking over Taiwan perhaps has moved towards the end of this year or 2025 rather than 2027, which is the year that they thought that that could be done. And why? Because you have its main adversary, the U.S. involved split. And what they have watched very closely is Congress an election coming up, but Congress holding back funds for Israel, holding back funds for Ukraine. That's the kind of thing they want to see.

Quincy Krosby:

And see whether or not it becomes weaker and weaker to hold up U.S. commitment. Because remember, the U.S. commitment isn't just supporting rhetorically Taiwan independence and democracy. It has moved from strategic ambiguity to something else. We will defend you. And that, that is a question mark question mark that perhaps will be discussed in the as we get deeper into the election season. But they wonder. Wait, what happened? How did that all change? So, this is very interesting for the United States and for NATO. And the question is, can the U.S. really corral NATO to work with the U.S. vis-a-vis Beijing? All these are very large questions, and that is why we're seeing these blocks being formed. But where it's the most clear happens to be with Russia, North Korea, and also China.

Jeffrey Buchbinder:

So what does that mean, Quincy, for the China trade? I mean, it sounds to me like if you're not an active trader, you want to continue to be cautious, right? Because there's the potential within the next, call it six to 12 months of, you know, a significant geopolitical event. We don't know exactly what it'll look like, but it's, you know, the possibility of significant event. You know, I don't think you want to want to be overweight China or emerging markets in that kind of an unsettled environment, do you?

Quincy Krosby:

No. Actually, you don't. I mean, ultimately all of these events, Jeff, as we know, ultimately become buying opportunities. But the question is at what cost, and how long would that take? And so, you know, China watches how the U.S. you know, sanctions that don't appear to be working. There's a reason that China has been winding down its holdings of U.S. Treasuries and agency holdings. We've noticed that over the last couple of months, the Treasury Department came out with a report showing that they have been coming down, coming down, coming down. And they are migrating, as we know, over into gold transitioning away from the U.S. dollar. What they're worried about is sanctions. They're worried about their so-called view of U.S. action. They have dubbed it the weaponization of the U.S. dollar. And so they don't want to be in the crosshairs of that.

Quincy Krosby:

Looks like they are preparing for something. I would say looking at it just in terms of the headlines. So yeah, you're absolutely right. We want to be a bit more careful and we want to make sure that we are not, you know, entangled in this and unable to get out if we want to. And that's why we've kept it as a trade. And even if Taiwan were not an issue, given the uncertainty of Beijing's policies and the, what should I say, the gratuitous moves by Beijing in terms of restructuring and weeding out non-loyalists, putting in new leadership everywhere from the military to the economy at large, it makes one wonder what the end game is for Xi Jinping? And you want to be careful, you know. It's called an emerging market for a reason. And that reason is this uncertainty at almost every level. Do they have great companies? Sure they do. We know which ones they are. And you want to be part of that, but not if it is underpinned by a ruler. And that's what he is that, you know, has one thing in mind. And that is complete and utter power. Not just domestically, but in the region, the South China Sea region.

Jeffrey Buchbinder:

Yeah. And the share price of Alibaba or Tencent, you know, those are clearly not the top priorities for President Xi. I think that goes without saying so, yeah. Be careful. I mean, this is in general why we are continuing to recommend a modest underweight in emerging market equities because of this concern. But if you want to continue to play this China trade for folks who are a little more active in the short-term, probably fine. But just, you know, watch the situation closely or maybe employ a hedge, you know, either using options or maybe potentially gold. Gold-related investments could be a hedge. And that can yeah, you know, help you mitigate downside if we do potentially get a negative outcome over there. I guess Europe's a different question though. And so you brought up Quincy that, you know, European industrials are starting to act better and, you know, are seeing potentially a little bit of a rebound in in manufacturing globally. And then of course we have the potential for an ECB rate cut next week, which would certainly be before the U.S. cuts would be before the U.K. cuts too. Is that enough to suggest that, you know, maybe Europe can keep up with the U.S.?

Quincy Krosby:

No, it isn't because

Jeffrey Buchbinder:

Of markets not enough.

Quincy Krosby:

No, it is not enough. Because even when we look at our own market, we know what's leading the market. We know the composition of the market that no other index has or enjoys. And now granted, you'd have to argue that the top five names, and there are all the mega tech names, constitute a maybe to the eyes outside of the U.S. a disproportionate effect on the S&P 500. But, you know, we trade and invest in the market. We have, not the one we want. But the fact of the matter is the U.S., that is part of what they term, in terms of the market, U.S. exceptionalism. These are companies that are powerful. They make money. They have a broad reach, not just in the U.S. but globally, based on their technological expertise and corporate management style.

Quincy Krosby:

No other index has that. They may have one or two companies. And I always have to mention ASML. I mean, it's an excellent company, but it is one company that you can name in Europe that is truly a leader in in technology. And you know, that's a Dutch company. So that's what we have that they don't have. And it's not to say they don't have anything. Of course they do, but the fact is that, you know, I have to say, they're banks. They're heavy in banks. And when we look at the European indexes in totality of the European banks, were leading and doing extremely well. But now we also see, good to see broadening out< that the industrials are holding up.

Jeffrey Buchbinder:

Yeah, absolutely. If you compare the tech weight, if you include, you know, Amazon, which isn't tech, if you include, you know, Alphabet, which isn't tech, et cetera, Meta, and come up with a tech plus weight, I think the U.S. is like 40%, maybe a little more than 40, and Europe is something like 10. So that is a huge difference.

Quincy Krosby:

Exactly. Exactly. And you know, it isn't to say that you won't see a slowdown in sales, but you know, they seem to be able to evolve. That's the thing. They evolve, and they come up with new software. Now they're in, you know, now they're integrating AI into their process. But again, they're innovators. They're innovators. And there's always room for more, but we don't see it coming from really from outside of the United States at this point.

Jeffrey Buchbinder:

Yes. Well, we're going to continue, I guess that theme of AI, when we recap earnings here, Quincy, because it was really all about tech. That's where the growth was. If you take out Bristol buyers, which absorbed a massive loss from an acquisition, earnings for the S&P actually grew 9.5% here in Q1, which is an excellent growth rate. Again, the market commentary this week is a recap of earning season, which was really good. The big techs were about eight points. So, you know, call it 7.8 out of 9.5 ex Bristol-Myers was big tech. So, this is again, a big tech story. That was the case last quarter as well. And the, you know, expectations are for a ramp of even better earnings growth in coming quarters, which is looking more and more realistic.

Jeffrey Buchbinder:

The profit margins didn't go up much, but they went up a little. And remember, the healthcare sector had a sharp decline in earnings year over year in Q1. So did energy and so did materials. So, despite those headwinds, we ended up higher quarter over quarter in net profit margins for the S&P, which is a victory. Now look what happens when you take out those big drags, because they're certainly not going to be as big incoming quarters. These are just estimates, but boy the estimates are for margins to get a whole lot better over the next several quarters. So this is certainly a positive story for markets. It's keeping stocks well supported at higher valuations. Here's your AI again, Quincy. It was a very hot topic on earnings calls this quarter. I mean, that's no change from last quarter, right?

Jeffrey Buchbinder:

Q4 was the same story. But look at the blue line is the number of discussions on AI per earnings call. And it's up almost two. Up two, almost two per earnings call. And this isn't just tech companies. This is all companies in the S&P that have reported. So this is really, I think a good way to illustrate how popular of a topic this has been. And then, you know, I thought this was an interesting contrast to show discussions of recession are down to almost nothing. In fact, I think probably more of those are just analysts asking questions rather than the companies initiating discussions about recession because there's really not much evidence that recession is coming anytime soon. Although you did have some consumer, you know, some retailers talk about consumers pushing back on higher prices. We heard that a little bit from Starbucks.

Jeffrey Buchbinder:

We heard that a little bit from McDonald's. Hey, $5 value meal's coming back. We heard that a little bit from Target. I would say reading between the lines there. So, you know, that narrative of consumers pushing back will get more attention, I think over the next several quarters now that the excess savings are pretty much gone. But we don't have the ingredients for recession here. Not yet. And then, you know, here's estimates. This is really impressive that estimates rose during earning season. The, probably the most impressive to me is 2025. The historical pattern, it happens almost every time where the initial estimate is too high and then it drops over time until you get those numbers actually reported. Well, here we're getting the opposite. You know, the 2025 consensus estimate started getting published last fall, and it's actually up since then.

Jeffrey Buchbinder:

So really, really unusual. And I think there's, you know, the AI boost in there. But even if you look at 2024, just the fact that estimates have held up. The double-digit earnings growth for this year is becoming more and more likely. We're not forecasting it yet, but it's no longer really a stretch goal. And this is key again, just like I had mentioned with margins. Earnings have got rise to support PEs of 21 times, which is where we are right now. And they're doing it. So in fact, I title the this commentary, "Earnings Are Doing their Part." They are sure doing their part. So good earnings season, you know. Check out the commentary if you want to read more on LPL.com. So, we kind of previewed this already, Quincy. The core PCE deflators. The big report of the week. Is there anything else that investors should be paying attention to besides the PCE?

Quincy Krosby:

Well yeah, you know, we're going to hear from Costco and I think, you know, we talk about the consumer. We talk about the consumer as the engine of growth for the U.S. I think we will get an interesting report, not just about their earnings, but what they have to say about the U.S. consumer. And I think it'll be important. We always like to say that the earnings season is already over. It's already over. Not quite. We need, we do need to hear from Costco. And I think, I do think it'll be an important tell. It'll be significant. But one thing and, just in closing, remember Jeff, when we were talking about the earnings recession and how it was going to end. It ended. The earnings recession is over.

Jeffrey Buchbinder:

Oh, it sure is. And we talked at the time, that was I guess Q3 of last year when we started seeing earnings growth again. Typically buying troughs is a good thing. And so what happened right after the, you know, earnings season where we convincingly came out of that earnings recession, that was really the lows, right? Q3 earnings season marked the lows in the S&P 500, and we're up almost, well, maybe 30, you know, close to 30% off of those October 2023 lows.

Quincy Krosby:

Yeah. It's amazing because once you're in that mindset, oh, the earnings recession's going to keep going, keep going. It's hard to get folks to say, well, wait a minute, recessions end. Whether it has to do with earnings, whether it has to do with the consumer, this has been, you know, a rolling recession of, you know, go to earnings, you go to here, go to there. The question for many that I'm hearing is, Quincy, tell me about the consumer. Have we just stopped spending? Are we worried about jobs? Well, I think, you know, listening to what the companies have to tell us. The retailers have to tell us is a very important guide to what we all are doing and what we all are thinking, because they seem to know a lot about us.

Jeffrey Buchbinder:

One hundred percent. Yeah. And the, you know, lower incomes are struggling more than the higher incomes. So, you'll probably hear that.

Jeffrey Buchbinder:

You know, I guess the winner so far has been Walmart, right? Well, and maybe Ross stores. There've been several retail winners. So there's a, and, frankly, it looks like what Starbucks told us was a little bit idiosyncratic. So, you know, I think as you put all this together, it looks like there's some shifts going on. It's not just the tide rising or the tide coming in. Right? So, you know, I guess that's a good, that's better than having everybody suffering weakness at the same time.

Quincy Krosby:

Exactly. That's exactly right.

Jeffrey Buchbinder:

You know, everybody's situation is different. We'll watch all of these consumer companies and Costco's a good one to watch, but in the end, it's just kind of a muddled picture. We still think consumer spending is going to slow, but it's you know, we're, again, nowhere near anywhere where you would be concerned about recession. So good preview of the week. We'll watch PCE on Friday most closely. But certainly Costco earnings matter as well. So we'll go ahead and wrap there. Thanks everybody for listening to another LPL Market Signals and thanks Quincy for joining. Everybody have a wonderful week, holiday shortened week, and hopefully we'll get the six straight up week for the NASDAQ. Take care, everybody.