Middle East and Interest Rates Overshadow Earnings

Jeff Buchbinder (00:00):

<Silence> Hello everyone, and welcome to the latest edition of LPL Market Signals. Jeff Buchbinder here, your host for this week, with my friend and colleague, Dr. Quincy Krosby. Quincy, how are you today?

Quincy Krosby (00:12):

Fine. Thanks so much I appreciate it. Thank you, Jeff. Mm-Hmm. <affirmative>

Jeff Buchbinder (00:16):

Always glad to have you, but especially when the focus is so much on geopolitics and commodities. So let's get right to it. After you look at these lovely disclosures, here's our agenda. We had a down market, in stock market and bond market last week, mainly on the fear of rising rates and of potential escalation of the conflict in the Middle East. So we'll certainly touch on those two topics today. Earnings season is getting overshadowed by the aforementioned catalysts for market movement. So we will you know, still give you the numbers, but frankly, for the markets right now, they're not all that meaningful, in my view at least. Next, we'll preview the Weekly Market Commentary this week, which our chief economist, Jeffrey Roach, wrote. It's cool because it's got some new stuff that we haven't looked at lately and an inside look at the job market and a little bit of a hint as to what to expect in 2024.

Jeff Buchbinder (01:17):

Kind of a preview of the LPL 2024 Outlook publication, which we are working on as we speak. And then finally we'll talk about the data this week. GDP and PCE probably going to get the most attention. They are very important data points for sure. We'd argue that PCE probably more so because it's more timely. And then the ECB meets, and we have a lot of earnings. So let's get right to it. Recap, last week, the S&P was down 2.4%. It was risk off because of the reasons I just mentioned which meant you had some underperformance in the Nasdaq, although actually small caps held up fairly well, essentially in line. There was really no place to hide globally because you see losses across the board in Europe and Asia.

Jeff Buchbinder (02:06):

India actually held up pretty well on a relative basis. I think the sector mix is interesting from last week because you had, you know, you would expect some really good performance from consumer staples in a down week, right? It's a defensive sector. And healthcare held up relatively well, a defensive sector. But, you know, utilities continue to struggle with rising rates. So they're not really providing a lot of defense. Not just last week, but if you look at the last month and the last three months, utilities have really struggled, down 13% over the past three months. The other winner was energy. You would expect that with all attention on the Middle East and on oil. You know, energy wasn't just a leader last week. It's been a leader for the last few months. So I think that's really all I want to call out there.

Jeff Buchbinder (02:58):

Other than just one last thing, communication services. This is a huge week for communication services because we get more earnings there. Netflix was up double digits on its surprisingly strong subscriber growth, that helped comm services outperform. And that actually is among our neutral rated sectors. That's actually one of our favorites. Technicals look good there. The bond market was down, of course, as rates rose, 10-year yield near 5%. So no surprise there. You know, you're not escaping interest rate sensitivity just by going to corporates or mortgages. Those were down even more than the Ag. And certainly, it's in a risk off week, you'd expect high yield to be down, down 1.2%, although not quite as much as the longer duration sectors, which is interesting. And then commodities you know, precious metals. Gold's had a nice run. I'll show you that chart in a minute. And you see energy down. But oil held up a little better than that energy index. So five-year Quincy, I'll bring you in on this chart. The five-year yield hit 5%. What do you think are the key drivers here? Because I think there's, you could point to several things here that are pushing the yields higher.

Quincy Krosby (04:19):

Well, I think that given the Fed's message, and it was in unison, it was orchestrated, which followed the October 9th message from the vice chair. That is to say the Fed is going to be more careful. We're deliberate and we're data dependent but prepared to just wait it out. That was followed by a broad coalition at the Fed, the hawks and the doves, which is very interesting. So you have to do your forensics. And we also have the 10-year Treasury yield climb above 5% last week. Obviously, it didn't slow. So you've got to look at it and say, well, wait a minute. That was the day that earnings were down. We had some earnings misses. The Fed came out and said, well, you know, we'll wait. So it is something else. And I think what it is, is fiscal deficits and larger supply, having, having to go in and raise money through the auctions, and there's going to be more and more.

Quincy Krosby (05:21):

And the other part of that story is the increasing deficits now with the aid to Israel, the aid to Ukraine and the buildup of the U.S. arsenal, all of that is costing quite a bit of money. And then you don't have a House leader. This all together. This all together comes in and says to the 10-year Treasury, you know what, this is beyond the Fed. This is beyond what their intention is. This is larger. And therefore, I think that's what you have. And I think it's a wakeup call, perhaps to Washington. Now, you know, Jeff, you know this, and we talk about it all the time. What's the difference between 4.7, 4.8 and 5, 5.1? The psychology of it, but also the worry that it climbs higher. And the worry that we need buyers.

Quincy Krosby (06:17):

The Fed has resumed its quantitative tightening. Remember they went on a pause following the last spring’s bank problems. They went on a pause. They're back tightening. So they're not a buyer. And a lot of central banks have been pulling back. Now, I wouldn't say for political reasons necessarily, but the private sector that goes into the auctions is more price sensitive. And that means that they want a lower price and they'll get a higher yield. That's the concern. That's what the market is focused on right now. The Fed is kind of, kind of like, you know, eclipsing or eclipsed right now, just, just away from what is this market focused on? And that's it.

Jeff Buchbinder (07:08):

Yeah, I think that's a great point. The you know, the retail sales report last week was very strong. And so certainly, you know, that was a little bit of this increase in yields. And then we have the Fed still doing quantitative tightening. You know, while you have some of these global central banks, sovereigns, moving a little bit away from treasuries. So it's just creating a little bit of supply and demand problem. But yeah, it's hard to say that this latest move of yields is inflation related, right? I mean, maybe there's a little bit of a Middle East premium. Actually, that's a good segue to the oil chart. The you know, oil looks to me like it's saying that the Middle East conflict's going to be, you know, contained and that we're not actually going to have direct Iranian involvement. But what do you think, Quincy? You certainly know the Middle East landscape much better than I do.

Quincy Krosby (08:06):

Well, you know, it's becoming increasingly clear and clear to the other countries in the Middle East that Iran doesn't want Israel to have a detente with Saudi Arabia. But they also don't want, and even though they would like to stay out of this, they don't want any more chaos. So oil, you know, it inched higher, it edged higher, then it pulled back a little. We don't use words like inch and edged when the market believes that there is going to be you know, direct involvement of this war in the oil producing regions. And then Iran obviously involved. So I noticed, I noticed, like I was on the market watching the movement in the market when it was announced that they got the two Americans out of Gaza.

Quincy Krosby (09:04):

The two American hostages. Oil pulled back on that. It was very interesting to watch, but you haven't seen a surge in oil because that is exactly what would happen. No edging higher, inching higher, surge in oil, if the market believed that this was going deep into that territory, or that it was going to expand. Now there's the, I have to say the geopolitical involvement now with U.S. warships there intercepting, you know their drones, intercepting drones coming in for Israel. China sending in six of their warships, which is makes this, I'm trying to find the words for it, and trying to be diplomatic about it. It makes for a, what we used to call war games. You know, what, you, you play war games. This is like a war game scenario that China comes in with their six ships.

Quincy Krosby (10:06):

The other aspect to it is gold. Gold has held up, but it pulled back, if you look at the chart right now, it pulled back. That's a good sign. Although, I will tell you this, in terms of seasonality for gold, absent anything in the Middle East, is a good season for gold. But nonetheless, it pulled back. So pulling back, pulling back oil, treasuries obviously pulled back because we saw the yield claim higher. All told tells us that yes, you're right, that markets sees this as contained for now. And there's a push, a push. I'll add one thing that folks, because I get a lot of emails on this, by the way, this is interesting because there's been a lot of chatter and a number of the websites that I follow. They're geopolitical, they're about defense, has rumors that Israel is getting their super spies all activated.

Quincy Krosby (11:09):

And one of the reasons is, I would always say that the Israelis follow or vice versa, Russian view of how do you deal with enemies? I'll leave it at that. Because I think people know what I'm talking about. But I have been, this threat has been picked up. And some of the people that I follow seem to be convinced that this is the only way that Israel will pull back, a more massive attack. Because they're not going to let this just go. They're not just going to say, well, we'll walk away, because no, they'll find another way. End of my discussion.

Jeff Buchbinder (11:47):

Yeah, no amount of diplomacy from Europe, which is the latest one getting involved. We know that the U.S. has been trying to get, you know, Israel to slow down or maybe, I don't know mm-hmm. Pull back a little bit on its offensive, but I don't think there's,

Quincy Krosby (12:03):

Yeah,

Jeff Buchbinder (12:04):

I don't think those things are going to have much impact. They'll try to get the hostages out, obviously. There's still.

Quincy Krosby (12:09):

yeah, that's the goal.

Jeff Buchbinder (12:11):

That's right. That would <inaudible> Israel will slow down if it wants more time to prepare, but they're not going to slow down just because Europe says, you know, they need more time for aid or the U.S. for that matter. So yeah, gold had this massive reversal on the breakout of the war. Yeah. It's not quite to the point where you know, our technician, Adam Turnquist would say, this is a table pounding buy, but it's close. Maybe you need a little bit of a consolidation and then you know, that will be a little bit better time to get in.

Quincy Krosby (12:45):

Yeah.

Jeff Buchbinder (12:46):

That's a big move.

Jeff Buchbinder (12:46):

That's a big move to digest. And we're talking about 2000. It's not been above 2000 much throughout history. That's a big, that's a big number.

Quincy Krosby (12:57):

Yeah.

Jeff Buchbinder (12:57):

So, thanks for that, Quincy. We'll as everybody is, keep watching the news out of the Middle East. So you know, again, I downplayed earnings because people are focused so much on Middle East headlines and rates. But you know, it is earnings season and so we still want to talk about what we're hearing. And I'd say well, you see the headline here, you know, earnings season has been fine, not great. Frankly, I've been a little bit disappointed thus far. We're only 80 something companies in, but been a little disappointed that we haven't generated more upside. So we're, you know, we'll still end the earnings recession it appears like. Right now we're tracking to, you know, 0.3% year-over-year earnings growth for S&P 500 companies. But that's pretty much where we were before we got any reports.

Jeff Buchbinder (13:48):

So we haven't had enough upside to move that needle. We still think we got a good shot at getting to 3% earnings growth. But it's going to be tougher than maybe we thought. To get a lot of upside, you really need upside from the banks. And the banks did okay, but it was not a blowout by any stretch. The you know, the revenue, these beat rates of 70 and 73%, those are a little below where we would expect to be at this stage. But revenue still, you know, probably make a run at 3% just like earnings. We're tracking to 1.7% now very early. Remember, really all we've gotten is a lot of financials and just a smattering of other companies across the various sectors. So it's too early to make any conclusions. In fact, on the next slide, I just have a list of things we're watching, you know, we'll try to come up with some conclusions based on what we've heard thus far.

Jeff Buchbinder (14:43):

But they're going to be with a big asterisk next to them <laugh>. Because there's a lot more results to go. And then this is a big week. We'll talk more about earnings coming this week when we get to the week ahead slide. But you know, overall, it's just, I don't know, it's been kind of uninspiring. I guess I want to get your thoughts on margins, Quincy, and where we are because you know, obviously if revenue grows faster than earnings, you've got a little bit of margin compression, but it's so early, first of all. Second of all, we've been so focused on pricing power and cost pressures that I, you know, I was kind of struck by you know, Procter & Gamble getting such strong pricing, right? It's just one company, but it's a big one. What's your take on where margins might come in? What have you heard that, you know, suggests maybe, you know, margins could you know, expand a little bit as they did last quarter?

Quincy Krosby (15:45):

Well, also, I just want to add, PepsiCo actually came in, did very well there, yeah in terms of pricing, pricing power, well, you know, this is the big issue is margins. This is a focus for this entire earnings season. Because if margins pull back, I mean Tesla, I don't even have to go in, that's another case study unto itself. But what happens with the margin compression is companies are going to have to cut costs and it will probably be labor. And that then leads you to that slowdown, that recession that everyone is talking about. And that's why following this particular earnings season is going to be crucial. Because, you know, when we all talk about margin compression, you also hear, well, you know, they've been hoarding workers, they've been hoarding workers because they were afraid that if they let people go, it'll be difficult to get workers if we don't go into a downturn and or if the economy springs back.

Quincy Krosby (16:48):

Which, you know, the third quarter is indicating that we've had a probably stellar third quarter. But in any event, this is what we're listening to from the companies. Already with the automakers quietly, they're letting people go because they know that they are going to have to come up with a deal. It's going to be expensive, and they've got to they've got to cut costs somewhere because that deal is going to cost them quite a bit of money. So if you listen to them, I've been following it over the course of the last couple of weeks, they had been letting people go. And many of them are white collar workers. Because those are the ones that are more costly. So you know, the margin compression is, I think, most important element in this earnings season.

Quincy Krosby (17:40):

We're also hearing that the financial companies have upped more and more of letting people go. We're hearing it in advertising, which is interesting, because obviously advertising depends on growth. But you know, I've been hearing that people have been cut, you know, in some of the hubs for advertising, whether it's New York, whether it's Chicago or the West Coast. So little by little, this is starting to pick up, it's starting to pick up. The question is, is it enough to suggest that we are going to see a major bounce in the unemployment rate? Because as you know, that is it, that's the pathway to what ultimately the Fed really wants. They're hoping to do it without it, but they know that they'll get it, they'll get the consumer to pull back spending, right? And that gives you that sort of, that extra push you need to get inflation to that last mile down in that last mile.

Jeff Buchbinder (18:45):

Yeah. They won't admit that they're trying to

Quincy Krosby (18:47):

<Laugh> No, no.

Jeff Buchbinder (18:48):

You know, get people to lose their jobs, of course. And they'd rather, this ties into one of the charts we have in the next section on the job market. Mm-Hmm. They want openings to disappear.

Quincy Krosby (19:00):

Yes. That's the, yeah.

Jeff Buchbinder (19:01):

So then it's not bidding wars for talent, and then you get downward pressure, that way.

Quincy Krosby (19:06):

Of course you could,

Jeff Buchbinder (19:07):

You could do, and by the way, I mean, jobless claims are still pretty close to multi-decade lows. We have not seen signs of increased layoffs there, but you're totally right in segments. You know, the auto industry, maybe in some of the logistics providers, you know you know, the UPSs and FedExs and the truckers and the rails, you know, labor cost pressures might be later in, you know, cooling <laugh> right, in those areas. And certainly you've got you know, you've got some strikes that hit there, right? As well as in the UAW. So yeah, there's cost pressure still. The Fed's work is not done, but this is really the blunt instrument of a rate hike and, you know, probably isn't enough. We're just going to have to wait for some economic weakness, unfortunately, to try to get the Fed off our backs. So good points on the margin situation. I mean, we've, the consensus is that margins are going up and they went up last quarter, they've Yeah,

Quincy Krosby (20:13):

Yeah. Formed

Jeff Buchbinder (20:13):

Expectations. So we'll still stick with that view that maybe earnings growth can at least match, if not exceed revenue growth. But it's going to be tougher. You know, consumers are starting to push back on some of these price hikes and you know, the you know, the cost side's still tricky. We heard some of the banks talk about cost pressures. It's not cheap to operate a big and complex business right now. You know, and AI is not coming to the rescue tomorrow. It's going to take time. Credit environment, just a few other things that we've mentioned that we think investors should be watching. I mean, the cost of credit, you know, I'm talking about like charge offs. It didn't really move much collectively for the banks, but we have seen delinquencies tick up.

Jeff Buchbinder (21:04):

So, and this is, you know, this is why banks have been maybe careful to release loan loss reserves. So I would say the credit environment is deteriorating, but it's still, it's early and it's still in a pretty good place, overall. What's concerning is that it's going to get a little worse. And then in terms of sectors you know, energy still to us, I mean, it's very early. So we haven't seen much out of the energy sector in terms of reports, but we think that's going to be a place where you're going to see some really nice results, some big upside surprises. Of course, you've also seen some big merger announcements, which tends to weigh on the acquiring company. So that created some weakness in Exxon a week or so ago. That's created some weakness in Chevron today because they have announced a big acquisition as well of Hess.

Jeff Buchbinder (21:52):

But nonetheless, the basic fundamentals of energy look good to us. Industrials had downward earnings revisions heading into earnings season. You know, part of it is related to what I mentioned with UPS and FedEx and logistics. There've been some downward revisions there, transports, that's been a segment that's been quite weak lately. Underperformed the market. So that one, still like industrials just like we like energy, but we would rank energy as our top pick. And industrials we've become a little less convicted because of those downward estimate revisions. And because of the technicals, they've been kind of more mixed of late. And then last thing, I want to get your take on this, Quincy, is tech, high bar. You know, you're not going to see, you know, NVIDIA do something crazy and double the revenue estimates or anything like that, right? Because expectations have been ratcheted so much higher. We're neutral tech, so we don't even have skin in the game, really. But the bar is high, right? These stocks have done really well. I think the average mega cap tech name is up like 90% year to date. It's a big number. We're going to get a lot of these this week, right? Amazon, Google. We already got Tesla. We're going to get Microsoft. We're going to get Meta.

Quincy Krosby (23:13):

Yeah.

Jeff Buchbinder (23:13):

So, this is, we'll see how high the bar is. Do you think the bar, I know NVIDIA is much later, but do you think the bar is too high for the magnificent seven, as some people call them to keep these stocks afloat after the reports?

Quincy Krosby (23:31):

Well, you know, I think that they're looking for, they could be looking for a safe haven if this market selloff continues, and if the concerns, you know, begin to just pressure, pressure the overall market, and they could be satisfied with perhaps lowering the bar a bit. But I think, you know, that's why there's been a number of reports about Microsoft coming in because they've got a, you know, a really wide platform in terms of earnings revenue and, you know, you're hearing that, well, you know, there's so much concern about the yield curve, right? I mean, that, you know, you've heard so many of the well-known market strategists and portfolio managers suggesting that the steepening of the yield curve is actually suggesting the recession is at hand. So therefore, there's tremendous interest in these reports because we know that they become a defensive sector.

Quincy Krosby (24:37):

That's the fascinating part of it. These names have become part of your defensive strategy because they're rock solid the rock solid balance sheets. So, I just throw this out there because I remember when you know, during the pandemic, Microsoft, the CFO mentioned that clients were holding back, clients weren't spending as much. It brought Microsoft down, but Microsoft recovered that following week, which was good news. So we'll be paying attention. This is a very important part of the story, because these are the companies who will underpin a market that is worried about you know, this so-called impending recession.

Jeff Buchbinder (25:26):

Absolutely. Tech is so important because of how big of a chunk it is on earnings. Yeah. And then, you know, the capital expenditures into tech

Quincy Krosby (25:33):

Yeah.

Jeff Buchbinder (25:34):

Are,

Quincy Krosby (25:35):

Yeah.

Jeff Buchbinder (25:36):

You know, it's a big part of the economy. So, we got to, yeah, we certainly got to watch. Yeah. And you're right, it's the safe haven utilities in a rising rate environment are not a great safe haven. Certainly, oil and gold appear to be somewhat in during this current conflict. So, let's move on. We talked a little bit about the job markets. So I'll hop through this next section pretty quickly. Inside look at labor markets. The latest Weekly Market Commentary is on lpl.com. It's Monday, October 23, 2023, as we're recording this. And the markets came back from early weakness on falling bond yields, so I'll throw that out there. Stocks, the S&Ps up 15 straight Mondays, I believe <laugh>. So we're trying to make it 16. And it looks good right at the moment midday on Monday.

Jeff Buchbinder (26:28):

So jobs Weekly Market Commentary is from Dr. Jeffrey Roach about, I mean, it's really a sort of an overall economic outlook part for the rest of the year and part 2024, but it really is focused on the job market, the bulk of it. And so he has these three job charts that I think are really interesting. First firms tend to hire part-timers during periods of economic uncertainty. So ahead of the last few recessions you saw more part-time work added and more full-time work subtracted, or at least held steady. We're starting to see that now. So this is a watch out, we're not trying to sound downbeat. In fact, we've, you know, Jeff's even written that the recession may not matter because we priced it in last year and it's going to be short and mild and people won't know about it for a year, <laugh>, right?

Jeff Buchbinder (27:21):

So, you know, this could be the least felt recession if we do have one. But this is another indicator pointing in that direction. Jeff also knows this is a worry for the Fed. Wages, this basically tells you that if you leave your job, you're going to get more money. And the gap between what you're making now and what you might get if you switch jobs is large, right? You can see that between the gap between the orange line and the blue line here, job stayers in blue job switchers in orange. That needs to come down or it's going to worry the Fed because it's going to just continue to put upward pressure on wages as employees switch jobs. This is a chart I haven't seen from, from Jeff. And so my guess is probably many of you haven't seen that either. So the Fed's going to still talk tough, even if they're probably done. The last one.

Jeff Buchbinder (28:13):

Job market loosen, but not much. In a perfect world, we'd have just job openings come down, and that solve the wage pressure problem for the Fed. But it really hasn't come down a lot. You know, it was up over two in terms of the ratio of job openings to unemployed people to potentially take those jobs. Now it's down to about, you know, 1.7, 1.6, not enough. I mean, you can see here in this chart, normal is well below one. So Fed has more work to do. That's the bottom line there. So, let's get to the really good stuff, Quincy. This is a huge week of economic events, economic data and earnings. So what would you point out here that's of interest to folks? Do you have a call on the, you know, on the GDP, do you think there's potential for something outside of consensus on core PCE? Or do you think that the ECB is a wildcard or all the above?

Quincy Krosby (29:13):

No, with the, all the above, actually. But ECB, there's a bit of a chatter that she may stay on hold and have a, you know, a hawkish hold, the way the Fed is looking at it, a hawkish hold. Look, we're still there. We could still raise rates, but we'll pause. And that would be interesting. It seems to be quite a bit of chatter about that. But overall, I think that there's one area that I think the Fed is focused on. I know they're focused on it because they mentioned it some months ago when they moved from 50 basis points to 75. They pay attention to the University of Michigan consumer sentiment report. But particularly, not so much about how do consumers feel, but the expectations for forward inflation, because last week that claimed higher.

Quincy Krosby (30:09):

That's something they don't want to see. Now, you could argue that gasoline prices have been edging lower at least on the East coast they've been edging lower. But consumers are still saying that food prices are still high, oil prices are high, and they expect to see inflation higher in a year's time. That's coming out. The final report is coming out on Friday morning. So I'm looking at that. But there's one other that really is besides, and you'll leave it, I'll leave the best one for you, Jeff, the PCE. But this is personal income and personal spending because we saw, not the last report, but the one before where personal income was down, personal spending was up. The last month it was equal, right? Personal spending up, personal income up. Let's see where it is this time, because this is one, because personal spending is so crucial to our economy.

Quincy Krosby (31:09):

Let's see where it is. At what point does the consumer begin to slow down? And, you know, and I know and much of it, much of it is focused on the labor market. Folks get worried when they see unemployment rise or shatter that a big company where they live is laying off people because they always realize they can be next. And again, it all stems from what we're hearing from corporate America. But the PCE, that's yours, you take it. Because that really is, the market's really focused on it as is the Fed.

Jeff Buchbinder (31:41):

Sure. Yeah. The good news is it's likely to come down, right? The year over year last month was three nine. Now it's going to be or two months ago now, last month expected three seven. So if we get a three six, even though it could be a rounding error the market would certainly like that. I think frankly, the market's probably going to be okay with three seven. And inflation, you know, this is the Fed's preferred measure, so it actually means more than the CPI, even though regular people pay much more attention to the CPI. Yeah. What's interesting that, you know, core PCE is not as real estate driven because it's not, it, you know, we don't have that what do they call it, right? The owner's equivalent rent, which is a theoretical rent for an owned home. And it's just, and it's a big chunk of the CPI. So, we would like, and Powell <laugh> likes the PCE much better. So hopefully we get, you know, continued steady declining.

Speaker 3 (32:43):

Yeah,

Jeff Buchbinder (32:43):

That's a big one. That's probably more important than the GDP report, which is backward looking. And economists, you know, all expect north of four percent, which is just a booming Oh yeah. Not going to we won't get a repeat of that <laugh>, right? It's going to be unusually large. There's probably going to be a point of trade and inventories, which is kind of noisy in there. And we could be, you know, we could roll back over and be, you know, looking at one or 2% in Q4, if that. So, don't translate that to economic boom. It's kind of a quirk in the numbers. And you know, the fundamentals just don't support consumer spending to continue at the pace that we've been on here. And that fiscal stimulus is starting to wane a little bit too.

Jeff Buchbinder (33:38):

Right? I mean, consumer, we'll see it in the personal income and spending. Consumers can't keep spending more than they're making forever, right? At some point spending has to cool down and we're going to get you know, slower GDP numbers. We'll, applaud this one, great, more growth, better than less growth. This GDP number is not going to really scare the Fed. It's really more about the outlook and about inflation and you know, on that they think they have a little more work to do. So beyond that, I think the earnings is the other big story of the week, Quincy. So we talked about that. I'm going to be fascinated by what we hear from big tech. I think we all are going to be.

Speaker 3 (34:21):

Oh,

Jeff Buchbinder (34:22):

Fascinated by what we,

Speaker 3 (34:22):

Oh my God,

Jeff Buchbinder (34:23):

From big tech and AI. So that's going to get the most attention. It's 40% of S&P 500 earnings that'll be reported this week. 40% of the earnings. That's, that's huge number.

Quincy Krosby (34:34):

It's huge.

Jeff Buchbinder (34:35):

160 companies. And I'm also, like I said before, I'm going to be interested in what we hear from industrials because that's been very messy, unfortunately. And so we're kind of you know, on watch with our positive industrial sector view. So lot to watch this week. We'll go we'll keep watching it <laugh>. We'll you know, we're already, it's already an interesting day today. Of course, we'll watch the Middle East headlines. Of course, we're watching yields. Good to see the 10-year yield back off of 5% here today, at least as we're recording this. So with that, we'll go ahead and sign off. Thank you Quincy, for joining. Thanks everybody. Thank you for listening to another edition of LPL Market Signals. We'll see you next week.