Looking for a Hawkish Pause Plus Market Recaps and a Fed-Policy Preview

Jeff Buchbinder (00:00):

Hello everyone, and welcome to the latest LPL Market Signals. Jeff Buchbinder here, your host for this week with my friend and colleague, Lawrence Gillum. Lawrence you must be in a good mood. I believe your football team won this weekend.

Lawrence Gillum (00:16):

All my football teams won this weekend, so it was a great weekend. My college teams won as well as my Bucs, my Tampa Bay Buc team. They're 2-0, which is a lot better than I was expecting to start the year. So, it was a good weekend.

Jeff Buchbinder (00:31):

Yeah, they're one of the surprises thus far. Maybe my Kansas City Chiefs being 1-1 is a surprise, but hey, glad to be in the win column. So, here's our agenda for today. We're going to talk about an interesting week, I think last week in terms of the sector leadership. Utilities, one of the worst performing sectors for quite some time, actually turned things around and had a really solid week last week. Of course, we'll preview the Fed. That is the biggest event of the week, no doubt. But as Lawrence will tell us soon, we have other central banks that are meeting this week, and those might be interesting as well. Next the Weekly Market Commentary this week is about the developed international equity markets, so specifically Europe and Japan. So we'll talk about why we've lost some confidence in Europe and our increasingly liking what we're seeing out of Japan. And then finally, we'll preview the week ahead, which is really just going to be a, I guess, verbal retweet <laugh> what do you do with, with X when you retweet Lawrence? Do you know? I'm not sure.

Lawrence Gillum (01:46):

I'm not cool enough. I don't know all the cool lingo anymore. I'm old.

Jeff Buchbinder (01:53):

Yeah. Well, then I am too. So we're going to do a verbal retweet or maybe a verbal re-X and just say the week ahead, all that matters is the Fed. So let's get rolling. Starting with the weekly recap. Well, I kind of promoted the utilities narrative here, so let's start there. You know, over the right, it wasn't a real interesting week, I think, headline wise, because you had just the S&P barely moving. But if you look over to the right at the sector leadership, there's utilities up 2.7 for the week, yet interest rates, as Lawrence knows, as our fixed income strategist, moved higher. So that's a little peculiar. I have two possible explanations. One is utilities were so oversold that they were due for a bounce, and people are just buying it as a mean reversion play as opposed to any sort of interest rate trade, right?

Jeff Buchbinder (02:53):

That's one theory. The other theory is that we are maybe going into a weaker period for markets which would suggest maybe buying more defensive sectors and staples were up a little bit. So that was a mild out performer. Healthcare up a little bit, mild out performer. I'm just not sure that that's enough evidence to suggest we're, you know, the market is signaling a downturn. Now, we've been in the camp of, you know, choppy markets, fully valued, maybe, you know, by on weakness. So you know, that would be consistent with our call if that's what was going on. I guess the, you know, the other thing that jumps out at you is tech weakness, right, down 2%. We had a little bit of sell the news maybe with the Apple new product launch, but I actually think that Taiwan Semiconductors I guess reduced guidance, essentially saying that they're going to spend less on capital equipment, semiconductor capital equipment that caused markets to drop on Friday.

Jeff Buchbinder (04:00):

So really, we were up for the week heading into Friday. It was just, you know, it was kind of all about Friday's declines. So I thought that was interesting. Consumer discretionary, the breadth is weakening a little bit. We recently upgraded it to neutral. Tesla was up 10% last week. That was certainly a big reason why that sector was up. So we wouldn't read that necessarily to mean the consumer is strengthening right now. But still good to see, you know, solid gains, enough gains to kind of offset the losers and you know, leave stocks kind of flat. International markets were pretty good last week. We had actually solid gains out of Japan. You see here up almost 3%. We're not showing Brazil, but that was one of the best markets last week. Certainly, helped emerging markets. And then the dollar was down a little bit last week, which helped international. So turning to fixed income, Lawrence, you know, I mentioned that rates went up a little bit, which made it a little bit surprising that utilities did so well. But certainly, bonds were down in the face of rising rates.

Lawrence Gillum (05:11):

Yeah, we did see some yield yields move higher, particularly on the back end of the yield curve. Not a big move higher in yields relative to kind of what we've seen over the past, call it couple weeks. But you know, the 10-year and out tenors. So 10-years, 20-years, 30-years, they're out. There're up above, you know, they're up higher by about, you know, four to six basis points. And not a big move, but a move nonetheless higher in yields. Spreads for a lot of these spread sectors, those were relatively unchanged as well. So, it was kind of a quiet week as well on the fixed income side. I think a lot of the activity or a lot of the wait and see is happening this week because we have that big Fed meeting, but, you know, yields were higher, but it wasn't something that kind of was alarming in terms of movement. They just kind of kept leaping higher as the week progressed. But nothing that I would call out of the ordinary.

Jeff Buchbinder (06:04):

Yeah, we got inflation data, we got retail sales data. All of that put together was maybe a tiny bit hot. You know, so a little bit of the rate move probably was just a function of the economic data. But you may have also had some positioning ahead of the Fed. Turning to commodity markets. I mean, energy jumps out at you. Of course, oil was up even more than the 2.3% that the energy commodities complex, complex was up. Oil is now on Brent starting with $95. So I mean, this has been a pretty big move. I think WTI at last check 91. It's Monday afternoon, September 15, 2023, as we're recording this. You know, we've upgraded the energy sector. We like it. It's actually our favorite sector for LPL Research right now, tactically. There's some talk though that maybe it's gone a little too far too fast.

Jeff Buchbinder (07:05):

So we'll certainly be watching crude oil. Certainly, a hundred bucks would be a psychologically tough number to break through. But for now, we like it. And we still think the stocks are attractive, attractively valued relative to the commodity and relative to the cash flows. So, let's move on. The S&P 500 did dip slightly below its 50-day moving average last week. So did the Nasdaq. But again, these moves were not very large to the downside. You know, my view is that we're going to have a little bit more weakness maybe in the S&P, and then you'll have the 200-day move up. And at some point, between now and the end of the year, I think those are going to meet. And, you know, that doesn't mean we're going to go down to, you know, 4,100, 4150, but certainly something in the 42 to 4,300 range is a reasonable place for the market to dip to.

Jeff Buchbinder (08:03):

But at the same time, we recognize there's a chance, a good chance, probably of a Q4 rally. So maybe we you know, maybe we dip a little bit more in September. It's a very seasonally weak period on the calendar. And then we go higher late this year. There are a number of challenges. I mean, many of these we've been talking about really all year, you know, with inflation and rates and geopolitics, for that matter. But you know, we haven't talked about government shutdown. That may drive a little more volatility. We've got the United Auto Workers strike, which a lot of people are talking about now. You know, there's student loan repayments starting up again in a couple of weeks. So there's a number of other challenges that are coming that are a little bit newer that may you know, lead to a little bit more of a dip here in the short term.

Jeff Buchbinder (08:51):

So, here's the seasonality I just mentioned, right? This is from Bespoke they do some really great work around seasonality. So, you see in red the 2023 line, we had the big rally, of course, and now we're coming back a little bit off the recent highs. Historically, the market bottoms in mid to late October. And then we get a Q4 rally, which on average is about 4%. So, we're not going to say that this is going to happen, obviously tough to predict and a lot of time between now and the end of the year, but there's certainly going to be a seasonal tailwind coming maybe in about a month. So, if we can get through these next couple of weeks with limited damage, maybe we'll have a, you know, market that ends the year higher than where it is now. So, Lawrence, what do you think of the 10-year Treasury yield chart? I mean, we got really close to breaking out to a new, I guess a new one year high, right?

Lawrence Gillum (09:50):

Yeah, we have bumped up against that 433, 434 on an intraday basis. We've maybe gone a little bit higher than that, but yeah, it is providing some solid resistance in terms of not being able to move through that 433 line pretty convincingly. As you point out here on the chart, the next key level is 450, after that seems to be a pretty empty runway between 450 and 5. So, there's, I mean, if we do move higher here in the near term, and we do eclipse 433, 450 would be the next level to watch. And then after that, I mean, it could be 5%. Now, a lot of this is going to be predicated on what we see and hear from the Fed over the next couple days, right? So, if we do get this, and we'll talk more about the Fed in just a second, but if we do get a pretty hawkish message out of the Fed this week, we could see upward pressure on yields, or if we continue to see better than expected growth coming from the, you know, the market itself or the economy itself has been really resilient.

Lawrence Gillum (11:00):

And that has helped push yields higher. And that's kind of how we keep getting these higher yields in the near term because the economic growth has been better than expected. So, if that continues, or if the Fed provides a bit more of a hawkish response, or this week, we could start to see some yields move up, up against that 433 and possibly through it. But it's been unrelenting <laugh> as a fixed income strategist, you know, we've had pretty much higher yields each week for the past couple months. And hopefully this 433 holds.

Jeff Buchbinder (11:33):

Yeah. And then you're, you know, maybe talking about that 375 target that Research has had for quite a while, at least at the upper end. So, you might see some folks, you know, buying treasuries just because that whole, you know, from a technical analysis perspective. So, let's hope so. I mean, the inflation data didn't really change the narrative too much. Maybe it'll have more focus on deficit spending as we try to solve the, you know, the government shutdown problem. I'm not sure. We still have a lot of treasuries, right, Lawrence a lot of issuance to digest. I mean, I would think that would focus more on the shorter end.

Lawrence Gillum (12:14):

It's going to be mixed. There is a lot of issuance coming to market. So far, Treasury has concentrated that issuance in the T-bills or the one year in maturities. But, you know, there's an expectation of more duration or more coupon issuance in the coming months and quarters, which again, could push yields higher again because to your point, there is a lot of supply coming to market at the same time the Fed is winding down its balance sheet. So, it's trying to take a step out of the treasury market. We'll talk more about that in just a second. And then you have foreign investors who have been you know, seeing, they've seen their yields increase as well in their home countries. So, the attractiveness of U.S. rates relative to their home country rates has diminished. So, the buyer base for treasuries is pretty diverse, but it is shrinking at the same time you have Treasury wanting to issue a lot more debt to satisfy these budget deficits. So, it could potentially set itself up for a, you know, a perfect storm in terms of too much supply and not enough demand, which would push yields higher.

Jeff Buchbinder (13:16):

Well, I think this is the most important thing to watch for equity investors because if you go much higher than this, the, you know, makes it tougher to justify stock valuations because of that inverse relationship between valuations and interest rates. And then certainly to, well, I'll make the assumption that if you're going to have a meaningful spike in rates that somehow sustains itself from here, it's going to take a re-acceleration in inflation. And of course, stock valuations don't like inflation either. So we kind of teased the Fed a little bit here. So why don't I just hand it over to you, Lawrence, you put a couple of slides in here. I guess, what should people be looking for from the Fed? I guess we get the new SEP, right? The Summary of Economic Projections on Wednesday as well as the, of course, the rate decision. You know, how hawkish or dovish do you think they're going to be? What might the implications be for that?

Lawrence Gillum (14:18):

Yeah, for sure. So last week we had the ECB engineer a dovish hike. This time we're looking at the Fed as a hawkish pause. So, I guess you have to throw out some clarifying adjective you know, relative to kind of what the Fed or the ECB does or doesn't do. So we don't expect the Fed to do anything this week in terms of rate hikes. There is the expectation of a pause for the September meeting. What is or could be potentially interesting is to your point, Jeff, is this summary of economic projections. And along with that, SEP you get these new dot plots. Now dot plots, they're not particularly accurate in terms of forecasting, but it does give a, you know, a glimpse into how each of the individual FOMC members are thinking about rates.

Lawrence Gillum (15:07):

That's what each individual dot represents. It's the individual Fed members' expectation of where the fed funds will end at the end of the year. There shouldn't be much change, I wouldn't imagine, out of the 2023 dot plot, I think there's going to be some you know, some more kind of you know, normalizing around that 565 number. So it would give the Fed some optionality to raise rates one more time if want to. I think, what we'll see in terms of the biggest change could be for 2024. And in terms of the expected rate cuts, right? So we could see a fed funds dot plot rate a bit higher than what we have here on the screen, which would likely cause fixed income markets to reprice higher as well, to price out some of the rate cuts.

Lawrence Gillum (15:59):

Now, markets have normalized a lot of these rate cuts, and right now, I think there's only about three rate cuts that are priced in, which is much, much better than what we saw about six or nine months ago when markets were pricing in, you know, 1.5% rate cuts, which we said at the time was, was probably unrealistic. So you could see some rate cuts being priced out, which could push treasury yields higher. The other thing that could be interesting is the longer-term dot plot it's been kind of stuck at 250 for a while now, after Jackson Hole. And the discussion around what the neutral rate is or the rate that's neither accommodative nor restrictive. You know, there's discussion that that rate could move higher as well.

Lawrence Gillum (16:44):

And that would of course cause some, you know, upward pressure on yields as well. So, it looks like this dot plot could be you know, a more hawkish release than what we saw in June which could in fact put additional pressure on yields. But it's all about the dot plots and it's all about what Jerome Powell says after the release. So, during his press conference at 2:30, he'll have his comments and he'll take questions and answers and it's usually during that press conference where there's additional, call it fireworks that come after these meetings. So not expecting a lot of, in terms of rate hikes, but it's about kind of forward guidance, if you will, in terms of what rate hikes or cuts could look like over the coming, you know, call it 12 to 24 months.

Jeff Buchbinder (17:38):

Yeah, I guess if you look at all the inflation data we got, you know, every, everybody's slicing and dicing it all a hundred ways, but you did see, I mean, it was largely energy prices, right? You did see a little bit of an uptick on certain measures. So I think that's probably prepared the market for a touch of hawkishness, but if it's too strong then sure, you're going to see bonds sell off, no doubt. So, I think this will be, I mean, all these meetings are pretty interesting, but this one I could see you know, varying degrees of hawkishness <laugh>, right? There's maybe a wide range of how much hawkishness we could get, because the inflation data generally is trending lower, right? And with each passing meeting you have, you know, more time in a restrictive stance, right?

Jeff Buchbinder (18:28):

And we're still seeing credit conditions tighten, generally. We're getting closer to some more of those headwinds that I talked about. And by the way, <laugh>, I mean, if oil prices are, you know, go higher and stay there, that's going to have an economic impact. And so it's going to be even tougher for the Fed. Of course, that should be temporary. It's going to be tougher for the Fed to hike into a more challenging environment for consumer spending. So yeah, it'll be interesting to watch, and I could see this going a number of different directions in terms of the amount of hawkishness we get. So, I guess, you know, here's balance sheet. So I'll let you talk about this, Lawrence. But I guess one other question I have is what happens to the yield curve, right? Because I think this is an all-time record for documented yield curve inversion.

Lawrence Gillum (19:16):

It is in terms of days. I think your ex or is he still on faculty at Duke University? What's his, I can't remember his name.

Jeff Buchbinder (19:26):

Cam Harvey.

Lawrence Gillum (19:27):

Cam Harvey, you're right. So he came out and kind of maybe clarified some things that based upon monthly inversions, it's not an all-time record, but daily inversions, it is. He prefers to look at monthly inversions. So bottom line, is the yield curve has been inverted for quite some time, and it looks like it's going to stay inverted for quite some time until the Fed starts to cut rates, maybe in 2024. So, it's going to depend on, again, that dot plot and what those Fed members are thinking in terms of when rate cuts are going to happen. But it looks like we're in this kind of inverted yield curve for at least another, I'll call it six to nine months. Now, what could disrupt that yield curve inversion is quantitative tightening here.

Lawrence Gillum (20:14):

So this is the Fed's balance sheet. As we know the Fed owns a lot of Treasury securities and a lot of mortgage-backed securities. Their balance sheet got as high as eight and a half trillion. They've cut it, they've reduced it by about a trillion. So they've made some headway in reducing the size of their balance sheet. Now, if they sped up quantitative tightening, so if they let more of that, call it 95 billion of treasuries and mortgages roll off their balance sheet each month, if they were to speed that up, you could see higher yields on the back end the yield curve because that would, again, push more of the treasury supply out to the market. They would have to digest that. And that usually ends with higher yields. But I think quantitative tightening, the Fed balance sheet is going to be a 2024 story.

Lawrence Gillum (20:59):

Like I said, they, they've done a lot in terms of reducing the size of their balance sheet, but we're getting close to the Fed taking out too much liquidity right now. So, the reason why the Fed is reducing the size of its balance sheet is they're trying to drain excess liquidity out of the financial system. As you can see, in 2020, the Fed bought over $4 trillion worth of securities. They're trying to reduce that footprint. And they do that by taking liquidity out of the financial system usually, or primarily through the banking system. But there comes, there's going to be a point where they maybe take too much out and then they'll have to stop rolling off debt and maybe go back to actually buying Treasury securities. So I do think this is going to be a 2024 story. Why I included this, this time because I think as the narrative shifts from rate hikes and rate cuts, I think Fed balance sheet's going to have a more or a bigger impact on markets, particularly the fixed income markets you know, into 2024 and until the Fed is, you know, too restrictive which we think is going to happen sometime next year.

Jeff Buchbinder (22:13):

Yeah, I mean, you know, even the folks who, or a lot of the folks who called the soft landing this year probably think there's a decent chance that we enter recession before the end of next year, right? So if you just say, we're going to have a mild economic contraction at some point in 2024, that should put downward pressure on rates, and that should facilitate Fed cuts, right? So, I mean, you would expect yields to move meaningfully lower in that scenario. Right Lawrence,

Lawrence Gillum (22:45):

It's going to, I mean, there's a lot of kind of wonkiness that goes into that answer. It's going to depend on the neutral rate, it's going to depend on the term premia It's going to depend on how aggressive the Treasury department is issuing new debt to fund those deficits. My view is that we're not going to see long-term rates fall as much as they have historically absent a deep recession. So, if it's kind of a garden variety recession you could see long end yields fall a hundred, 150 basis points, something like that. But to get the 10-year Treasury yield, which is at 431 now, to get that back into the, say the 2% range, we're probably going to need to see a fed funds rate at 1%. And I think that only comes about if there's a very hard landing.

Jeff Buchbinder (23:33):

Sure. Yeah. I mean, I was thinking more like three <laugh> not two or one, long way down for that. But sure, I think it's important for all of our listeners to know that there are other dynamics beyond just economic growth and inflation that influence rates. So, good perspective there, Lawrence. Certainly, we'll keep watching the bond market really closely, whether it's a Fed week or not, the bond market is is as important as it's been and as attractive as it's been frankly, in quite some time. So let me just quickly review the Weekly Market Commentary, which I think is a good one. Where we spent most of it talking about Europe. And you'll see my charts are all, you know, focused on Europe. But really the key takeaway is that Japan looks really good.

Jeff Buchbinder (24:25):

And you can still actually like EAFE or at least slightly overweight it on the basis of a real strong positive view of Japan, even if, you know, Europe doesn't look so great. It's not a disaster by any stretch, but it doesn't look very good right now, frankly. So, here's our first chart. This is the global PMI. You know, if you look back to the start of this year, it was a lot of green here, you know, February through May, and you see the Eurozone, which is the fifth row, right? That was accelerating. I mean, we went from 47 in October, steadily higher through April of 2023 to a really strong reading of 54.1, right? You know, that was apparently a head fake because we've reversed lower. And now the Eurozone is actually the weakest global PMI reading.

Jeff Buchbinder (25:25):

These are composite readings. So, they incorporate services and manufacturing. We're at 46.7 now, and you know, it's no surprise that that's worse than the U.S. and it's no surprise, it's worse than Japan. But look at China, China's 51.7 and we, you know, talked for many months about how weak China is, how disappointing their reopening was. So that 46.7 is a very weak reading. So, the economic momentum that Europe had is really gone. One of the reasons we got more interested in Europe six months ago was because we had, you know, a weak dollar. Well, we don't have that anymore <laugh>. So, the dollar has pretty much gone straight up over the last couple of months. It's about a 5% rally, and it looks like it might be poised to break out, as you can see on this chart, approaching 2023 highs.

Jeff Buchbinder (26:20):

And we've kind of lost the ECB as a catalyst for a weaker dollar <laugh> because they're now potentially done with their rate hiking cycle. They might even be done before the Fed. That is certainly not what we thought a year ago when it looked clear to us and to markets that the ECB's campaign was going to take longer. So, it's tougher to be a dollar bear, even though we think the long-term path to the dollar might be negative. In the short term, it looks like it's going higher. The you know, we also like the earnings momentum six months ago in Europe. Well, that's reversed too with the economy. So, you can see here the European index from MSCI, forward earnings estimates have been dropping the last couple months as those PMI's have been dropping.

Jeff Buchbinder (27:13):

Meanwhile, we see Japanese and U.S. estimates rising steadily. So certainly this looks like a better investing backdrop for the U.S. and Japan relative to Europe. Now, the best reason to own Europe is valuations. Frankly, that's probably the best reason to own developed international broadly right now. But we want to make the point here that Japan's actually cheap too. So you see here in this table, Japan's below a 15 forward PE. That's pretty close to the 10-year average, and it's still more than 20% cheaper than the U.S. So even though Europe is cheaper we think Japan represents really good value, especially considering Japanese companies are emphasizing adding shareholder value now, much more than they have in the past. And then last thing on this, if you adjust for sector mix, right, because Europe really doesn't have much tech.

Jeff Buchbinder (28:12):

It's kind of a defensive slow growth market. The gap between Europe and Japan gets a little smaller. So Japan looks a touch cheaper given it has more exposure to the more richly valued sectors. Not as much as the U.S. but more. So, the last point on this, you know, you don't have to be a technician to know that you know, based on this chart, Europe has not kept up with the U.S., right? I'm sure many of you know that. It has. I mean, not only has the U.S. outperformed Europe, it's outperformed Japan as well. Although if you adjust Japan for currency, because the yen's been so weak, it's done a lot better. But still, this is in dollars. And U.S. has therefore outperformed EAFE significantly, while those markets have pretty much done nothing the last five years.

Jeff Buchbinder (29:10):

So, this is all just to say that technical analysis tells you that Japan and the U.S. are a better place to be. So, you know, I know that sounded a little bit bearish on Europe, and frankly we are recommending we underweight Europe a little bit. But valuations are pretty compelling and certainly U.S. markets look a bit expensive, so we're not going to get too aggressively underweight Europe. We are talking in our Tactical Asset Allocation Committee about potentially pulling back a little bit on EAFE because of this kind of waning economic and earnings momentum in Europe and the weaker performance. But as of now, we're sticking with our slight overweight to developed international equities. But that comes from the emerging market underweight. So we're neutral U.S. Alright, so with that again, Weekly Market Commentary I just hit on the charts and some of the key points from that's available on lpl.com. So let's do the quickest week ahead preview ever, Lawrence, what should investors be watching this week?

Lawrence Gillum (30:23):

Oh, it's all about central banks and the Fed primarily. Fed meeting starts on Tuesday, starts tomorrow. We get the rate decision on Wednesday at two o'clock, and then the press conference at 2:30. We also have the Bank of England who is expected to raise rates by 25 basis points, or a quarter of a percent on Thursday. And then the Bank of Japan remains a wild card. They meet on Friday. The the Bank of Japan President Ueda has been kind of teasing about the end of yield curve control. Probably won't happen this week but maybe there's some additional conversation about eventually reducing that aggressively accommodative monetary policy that they've had for over a decade for quite some time now. So maybe even Japan is entering a new regime with higher inflation, higher rates. And which, if you ask me, Japan raising rates anytime soon, I would've said no way. But maybe we're in this kind of new normal where we rates are going to be higher than they have been over the past decade. So central banks are still, you know, driving a lot of the market volatility, particularly in the fixed income market. So got to watch the central banks.

Jeff Buchbinder (31:44):

Yep. And that's it. I mean, leading index continues to point to recession, but it just doesn't come. And it's probably not coming in Q3 based on where the GDP trackers are. I mean, we could have 3% GDP growth in Q3. So you know, we'll see when the economy peaks and turns lower enough for the National Bureau of Economic Research to call it a recession. They're the official arbiter of recessions. But it's probably, you know, good couple quarters away at least at this point. But nonetheless, people are still going to talk about the LEI and the yield curve as recession signals. So, thanks for that, Lawrence. I think the Bank of Japan's going to be really interesting just because, I mean, the market knows that at some point they're going to pull back, right?

Jeff Buchbinder (32:35):

And kind of let yields rise a bit. But they've had such a hard time beating deflation for so long that they're going to be careful, right. And so that's, maybe you'll see another hint maybe you'll see another very small move in that direction before they, you know, get to sort of a full hike or a full elimination of yield curve control. But watch the yen because that, I mean, <laugh>, it's going to be volatile probably one way or the other, and that is a really important element of your Japanese returns if you're a U.S.-based investor. So, it's a tough call to make, but maybe right now unhedged might be a better way to play Japan rather than hedged, we'll have to see.

Lawrence Gillum (33:26):

Yep. Just one, one quick comment on Bank of Japan versus the Federal Reserve and other central banks, the Federal Reserve and other developed central banks, they go out of their way, frankly, to tell us what they're going to do before they do it. The Bank of Japan and call it the Bank of Australia, are on the other end of that spectrum. They try to surprise markets at times. So, good point. That's why I'm kind of thinking Japan's a wild card this week because you just don't know what to expect from their central bank decisions. So it wouldn't surprise me if they do nothing, and it wouldn't surprise me if they lay the groundwork for the end of yield curve control. So definitely keeps it interesting though.

Jeff Buchbinder (34:05):

You got to love ending a Market Signals podcast by saying, we have no idea <laugh>, what's going to happen, <laugh>. So, I totally hear you. It is, Bank of Japan is a wild card. We've had debates in our asset allocation committee where we've, you know, some folks have come down on opposite sides, right? So I guess that's what makes the market. So, you know, obviously watch the Fed, that's the big event of the week, but you know, carve out a little bit of time for the Bank of Japan on Friday before you start your weekend. So thank you so much Lawrence, for weighing in. It's Central Bank Week, so I definitely think that's a great time for you to join. Thank you to all of our listeners. We will see you next week for another edition of LPL Market Signals. Take care, everybody.