What Could Stocks Do in 2022?

Ryan (00:00):

Hey, everybody. Welcome to the latest LPL Market Signals podcast, Ryan Detrick here. And as always Jeff Buchbinder. Jeff, usually I have something to start with. I don't really have anything to start off with. How's life up in Boston. Let's start with that.

Jeff (00:16):

Oh, life's good. Well, rainy and cooler maybe then we'd like to be, but that comes with the October date on the calendar. I guess the, maybe the big focus here today is Red Sox, Yankees playoff game. That that'll be a fun one. Certainly a lot of people here in Boston would love to see us knock the Yankees out of the playoffs.

Ryan (00:40):

Now those two teams and fan bases, don't like each other. Am I correct? Is that putting that mildly?

Jeff (00:46):

No love lost. Yeah. I guess you can relate with your Michigan Ohio State experiences, but yeah, it's up there as one of the biggest rivalries in sports. No doubt.

Ryan (00:57):

One could argue the Ohio State versus that team up north is not even a rivalry. If you look at the way it's gone for two decades in a row, but I don't want to upset everybody. So we'll just, we'll just go ahead and move on. Jeff, I saw this trending on, I guess it was LinkedIn. I thought it was hilarious. Monopoly explains it all. If you read the instructions to Monopoly from the 1930s, here's what they had to say. What if the bank runs out of money? Some players think the bank is bankrupt if it runs out of money, the bank never goes bankrupt. To continue playing, use slips of paper to keep track of each player's banking transactions until the bank has enough money to operate again. The banker may also issue new money on slips of ordinary paper.

Ryan (01:46):

Let's read that again, but put in U.S. government. What if the U.S. government runs out of money? Some players think the U.S. government is bankrupt if it runs out of money. The U.S. government never goes bankrupt. To continue playing, use slips of paper to keep track of each player's banking transactions until the U.S. government has enough paper money to operate again. The banker or the U.S. government may also issue new money on slips of ordinary paper. So we're going to talk a good deal about Washington policy. I just thought that was kind of funny because we're likely going to kick the can once again on debt ceilings and blah, blah, blah, and go all in. You ever seen that one Jeff? The instruction from Monopoly in the 30s, they nailed it, didn't they?

Jeff (02:29):

I might've read them in the 70s, but I certainly haven't seen them in quite some time. That  fits because essentially, you know,  we don't think the U.S. is going to default on its debt. It's almost impossible to envision a scenario where that happens, but if it did hypothetically, they would just be writing IOUs on paper. You know, we'll eventually get you your social security check. We'll eventually pay you, you know, soldier, but we just can't right now. I mean, it's just ridiculous to even think about.

Ryan (03:01):

Well that's right. So, so that's kind of a fun way to start. But this week in the LPL Market Signals podcast, we are going to start off talking about Washington and Washington drama, kind of the latest. And honestly, by the time people listen to this, it could be all different. That's why we're doing this first because it might change by the time this podcast is over.  We finally had a 5% pullback going to kind of combined the 5% pullback volatility theme with Jeff's going to dust off his crystal ball and talk a little bit about where he sees equities heading into or through 2022. Then we're going to finish the conversation on kind of, again, combining things, talk a little bit about supply chain issues continuing, but also overlaying that with some recent economic data that we've seen. So, Jeff, again, let me see if I can move my slide here.

Ryan (03:43):

There it is. We're going to talk about Washington shenanigans and if you are watching along on the YouTube channel, I thought this is  pretty cool. It's a $5 bill, $10 bill. What does that, I guess a $20 bill and a $50 bill folded over matching up against the monument or the building, I guess I should say that that's on the back of that dollar bill. Just kind of, kind of cool, but the Washington shenanigans, we avoided the government shut-down, which I guess that's a kick the can until December, but Jeff, I want to dive a little bit more into the whole debt ceiling conversation. By the time people listen to this, our friend and colleague Lawrence Gillam, a friend of the show, wrote a really good blog on LPLResearch.com, taking a look at the debt ceiling. Janet Yellen, in charge of the Treasury, said that the Treasury estimates October 18th, that's the big day that the U.S. government will run out of money and we have to do something. Jeff, what are we going to do by October 18th?

Jeff (04:37):

But I know we're going to raise the debt ceiling. These are obligations that Congress already took on and they need to be paid. And, you know, and again, as I just alluded to, if you don't give people the social security checks if you don't pay the military you know, that in and of itself is enough of a problem that suggests this will not result in a default. However, if you look at the potential ramifications of you know, the U.S. failing to raise the debt ceiling, we saw a little bit of a glimpse of this in 2011, right? When S&P downgraded the credit rating of the U.S. from AAA. You saw a lot of market disruption there, essentially caused a bear market. Certainly no one in Washington wants to see that again. And we won't. The question is how they do it, whether they do it with 50 democratic votes, or they do it on a bipartisan basis, it looks like it's going to be done, which is 50 votes and a reconciliation. The Democrats look like they're going to have to go it alone because the Republicans are standing their ground, but it almost doesn't matter how it gets done, it's going to get done.

Ryan (05:46):

Yeah. And here's the other way to look at this, just when we read some of the information that's been shared about this. Every president since Hoover has increased the debt ceiling at least once. They've also, everyone had added to the national debt. Also the debt ceiling has been increased 60, I'm sorry, 78 times, just since 1960. There's a good chance within a week or two, President Biden will join that illustrious club and be another president to increase the debt ceiling and go to 79 times since 1960. So you bring up a really good point though, Jeff, because I mean, it's not a laughing matter, but it's almost like, well, you know, it's, we’re going to increase it. And we, we all kind of agree there. But remember 2011, right? 10 years ago, some new people might not be around.

Ryan (06:34):

I remember because I was on CNBC, I think the Thursday, Wednesday, the Wednesday before that debt downgrade. And that downgrade happened like it, I don't know, 4:30 on a Friday, I guess they thought they'd sneak it by everybody. That didn't happen. Because then we saw almost a 20%, I think it was like a 19.8% correction in like four days. I go on CNBC the Wednesday before it's, ah, things looking good and market strong, blah, blah, blah. And then the market got killed. That's when I learned a saying that had been around way before me, “news trump's charts”. When the news moves, markets move. That downgrade clearly surprise people. Now, if you look, that was S&P, Fitch is actually saying they might downgrade the U.S. from AAA rating. If Congress can't get its act together, I don't know. I mean, I put the odds of that pretty low. What is your take on Fitch actually pulling the trigger and downgrading, or is it just an empty threat to maybe push Congress to get this done? What's your take on that?

Jeff (07:31):

It's not an empty threat. If this political game of chicken goes too far, then sure. I would expect Fitch to make the same move that Standard & Poor's did, but again, very unlikely. I mean, the chances of that are not zero, but they are really, really close to zero.

Ryan (07:49):

No, absolutely. So, so that's there. Let's see. Maybe a little, let's talk about, let's talk about the Fed for a minute. I mean, this that's what one part of Washington, we don't expect that to rock the boat too much. What could rock the boat though, is, you know, when you look at the Fed there's some potential changes at the leadership of the Fed. All right. Just about a month ago, Jerome Powell is  a 90% chance to still lead the Fed coming, come this upcoming February. Now he's down to 60%. Honest to goodness, I’m not sure who makes these odds, but the truth is, he’s  odds have been going lower. You know, the general consensus is, well, he is a Republican and things are just, you know, Washington is, you know, left and right anymore. Maybe you get someone like Brainard in there who leans a little left, maybe a little tougher, if you will, on banks and regulation.

Ryan (08:33):

Also, oh, by the way, we've got multiple Fed members. Let me see if I wrote it down here,  Rosengren and Kaplan, both are stepping down early due to some trading issues there. So I think I saw something like six out of the 19 Fed spots. Federal Reserve spots could be up for grabs if you will, over the next six months or so. So what I'm getting at Jeff, and I'm finally going to ask you a question as I try to formulate the question as I just keep talking. Could the Fed look a lot different? Could we have a super duper dovish Fed this time in six months if Joe Biden gets to pick who he wants, which he does. He's the president.

Jeff (09:09):

Oh, sure. It's almost certainly going to turn more dovish, even if Powell stays. Biden could have cover for reappointing Powell, if the rest of the Fed is, is built out with tough regulators, because clearly that's what the progressive wing of the democratic party wants to see. We certainly know how Elizabeth Warren feels. So you know, Powell is still most likely going to be appointed, but Brainard would even be a little bit more dovish than Powell has been. I mean, it's hard to imagine more dovish. I mean, look what the Fed has done. Right. it's been about as dovish as anybody could have imagined that it would be even, you know, at the onset of the pandemic. So yeah, more dovish sure. But you know, Powell is still the favorite. Yeah,

Ryan (10:02):

No, he is still a favorite, good point. And again, Elizabeth Warren a week ago, to his face pretty much, called him the most dangerous man to head up the Fed. She supported, let me find it here, Khan, the new person in charge of the FTC and then the new person in charge of consumer financial protection bureau. So maybe Warren has the, well, clearly she has a lot of pull in Washington, maybe the ears of President Biden potentially, cause she's been supporting some of the more left leaning, obviously, people that have taken some of the big time jobs in Washington, also Vice Chair Clarida is that how you pronounce it, Jeff, Clarida, right is that how you pronounce it?

Jeff (10:41):

I believe so, yeah.

Ryan (10:42):

I'm an equities guy, you know, this is a little, it's a little foreign for me. But it's very interesting. He also, he's the one that's really in charge of the banks, right? He's the guy in charge of the banks. He was, he was like had bipartisan support a couple of years ago when he came in. Now it's likely he's out the door, probably I think maybe around the 18th, also, right around the time of the debt ceiling. So, you know, the makeup of the Fed really could be something that we're going to continue to watch very closely, but that's probably enough about makeup of the Fed in Washington. Let's move forward, Jeff. And this one, I don't even know, there's no easy way to do this. We lost a great one in the industry, Tobias Levkovich.. Oh my goodness. I forget where he was. He was at Citi Group, rights? I should know this.

Jeff (11:21):

Yes, for a very long time.

Ryan (11:22):

Yeah. So, Tobias tragically passed away. He was hit by a car about a month ago and just news came that he passed away fairly recently. I had the pleasure to see him present live. Everything's a blur, within the last 10 years or so. And it's just kind of interesting because you know, when you see somebody speak, you don't remember anything they said maybe about an hour after you leave the room, especially years after you leave the room. But what you do remember is kind of how you felt and how they made you feel. And I just thought, he’s an  equity strategist, strategist guy, kind of does the stuff that Jeff and I do. And just the way he made me feel and just kind of the memories of being in that room and just how he, he knew his stuff, but he was confident he was calm and cool. And honestly, he was really funny too, which I think is sort of sometimes pretty important when you're talking for an hour to a room full of people that are probably tired and hung over from the night before. But Tobias is just a really special person. I mean, Jeff, do you have anything you want to add there? Just a real shame. And we lost a great one clearly in our industry with him.

Jeff (12:24):

I mean, the fact that he held this position for so long at the same firm is kind of rare, right? So I think that speaks to his talent and kind of person that he was. He's actually, you know, kind of with us now because we have an earnings models that we use within LPL Research that he helped build, call it 15, 20 years ago that had been sort of passed down from multiple market strategists. That predates your time at the firm Ryan. So he really did some great work on you know, S&P 500 earnings and, you know, adjusting those numbers, building a long history that allows us to make investment decisions. You know, not just on what happened over the last 20 or 30 years, but even further back than that.

Ryan (13:14):

Absolutely. Like I said, he's kind of one of those people, everybody's got CNBC on mute for the most part, but you'd see him come on. I would quickly hit unmute to hear what he had to say. So just our, everyone from LPL and LPL Research, our thoughts clearly go out his family and his close friends. And obviously employees, geesh everyone impacted by this. And in a way we all were impacted by it. So there's no easy way to go forward, but maybe the way to go forward, I put the equity discussion after that. So let's make Tobias proud by talking about equities. Jeff, it finally happened. We had a 5% correction. Stocks can actually go down. And on the YouTube channel, we're sharing, what I think maybe is one of the most important charts period, right now. I mean, believe me, things change.

Ryan (13:57):

But you know, the idea that pullbacks happen. All right, the average year since 1980, I've seen that about a 14% peak correction throughout the year, that's peak to trough correction. And here's, so I was just doing some numbers. That's 41 years since 1980. All right. 21 of them. That's about half my math is right. So a 10% correction. We're not out of 10% yet. Maybe we'll talk about if we think we can get one of it next, but that's half of a 10% correction. All right. Out of those 21 though, 12 of those finished higher on the year. So they had a 10% correction still finished higher. The average return, this is wild, when you have a 10% correction and still finish higher, 17%. So those are the big years and a big moves higher. You have a good sized pullback, but they still are stronger. So I think it's just so important to remember after a 104%rally, a seven month win streak, a six quarter win street, blah, blah, blah, whatever you want to say, this has been a huge run. We were due for some volatility, it's happening, and this is actually normal. So Jeff, here's the million dollar question to you. We've pulled back by 5%, give or take, from the time we're recording this. Can we get to 10% you think?

Jeff (15:10):

Oh possible. But I would say unlikely. I want to first say that

Ryan (15:15):

Spoken like a true strategist. Excellent. You're covered all around. Very good, very nicely done.

Jeff (15:20):

40% chance. How about that? Put a number on it that, that this sell off goes to 10, but if we did get down 10, I think we would bounce and we would end the year higher than we are now. So there's a little bit more in terms of specific, putting myself out there. I want to first say though this is absolutely my favorite chart of, of any chart and, you know, Ryan, you and I, over the years have created hundreds of charts, maybe thousands of charts to highlight this one is as a favorite is, is meaningful. It's a great lesson for investors that, you know, the typical year, you're going to be up eight, 9% in stocks. And the typical year you're going to have, you know, three, maybe on average, 5% pullbacks. And you know, usually you get a 10. So that is normal volatility. I almost think about it as you're paying a toll, if you want to get on the highway, right? The toll is you got to stomach the volatility, but once you pay that toll, you get to ride and that ride is usually a profitable one for investors. So this is kind of you know, stay the course, even if things get a little bit bumpy, kind of a message, which is a great one for investors.

Ryan (16:26):

Absolutely. That's clearly, if you've listened to his podcast for a while now that has been our message, right. We've been bullish for, for a while now. Well off pretty much the last week of March 2020, as we discussed in this podcast live, why we upgraded our view on equities to overweight equities. We've been there ever since. Right. And we still think overall the upward trend is higher. But let's, let's, maybe that's a good segue. Let's talk 2022. Jeff, the fourth quarter is not even over yet. Barely even started. Now we're talking 2022. And that is because we are literally writing our 2022 outlook here at LPL Research. But our recent Weekly Market Commentary, just released on Monday. You took a look at what could happen with your crystal ball, with earnings and stocks. And I guess that's the two things you're really focused on. Oh my goodness. I get so choked up talking about this stuff. I just love it. Can you tell us, Jeff, what do you see? What do you see happening from an earnings and a stocks point of view, a return basis, I should say in 2022 here?

Jeff (17:23):

Well, I just mentioned that on average stocks are up about, you know, eight, 9% in any given year. But if you're not near a recession, right, and we don't think we will be in 2022, we'll be certainly a good bit past the last recession. You know, that ended in the spring of 2020. And we think will be quite a bit of ways from the next one. If you're in that environment where you're not near a recession, on average, stocks are up 12% per year. So I went through and looked at all the years back to 1960. If you're not near a recession, that's the average game and you're up over 80% of the time. So I think that's a good starting point.

Ryan (18:04):

Right now.

Jeff (18:05):

Oh, absolutely.

Ryan (18:06):

Absolutely.

Jeff (18:08):

You know, and it's, you know, that that pattern holds whether you, you know, had a big bear market during the past recession or a smaller bear market, you just tend to get what we would call mid-cycle gains. The, you know, the middle of an economic expansion tends to produce on average, low, low, double digit type returns. And then, you know, so that right there gives us a lot of confidence that that's what we're going to see. But then when you add the earnings momentum, which is really strong now, it's not as strong as it was last quarter, just to be clear, right? We're not going to see these mind-blowing upside surprises from corporate America again. In our view, we'll see upside surprises mostly, because that's what we see pretty much every earnings season, unless you're in recession, but there's a big difference between, you know, 5% upside and 25% upside. Right? So nonetheless, there's still enough earnings momentum here that we think stocks can go higher next year. And, and maybe add a little bit this year as well.

Ryan (19:09):

Absolutely. We talked last week a little bit about how October can be volatile. We will talk a tad about October here in a couple of slides, but the fourth quarter is the strongest quarter or quarter of the year as well. So all in all, you know, definitely a great piece, you should read Jeff's Weekly Market Commentary that we will link to today's show notes that sums up kind of where we see 2022. Now, Jeff, let's see here. Okay, here we go. So here's here. I think I might've hinted at this last week, but I've got the numbers now. So the S&P is up six quarters in a row. We barely made it in the third quarter. I think it was a 30 basis points gain or 20 basis points gain just barely, but accounts paid accounts six quarters in a row.

Ryan (19:47):

What happens next? Which kind of leads to the fourth quarter discussion and maybe even into next year. That next quarter is higher six out of seven times. The second two quarters later, higher every single time, the S&P 500 is up almost 8% on average, a year later after a six quarter win streak. So again, that clock started like a couple of days ago. The S&P is up over 15% on average. So again, these are things that we, this is called Market Signals for a reason, we've been sharing these signals for a while. Unfortunately, the majority of the signals we share on this podcast for a long time now have said that this is a major structural market that, hey, the risk is to the upside. All right. I mean, the surprises will be higher in all likelihood and this does little to change that. Also we're up, we're up.

Ryan (20:34):

I think like 14% for the year, we just barely missed 15% at the end of September. When you're up 10% for the year at the end of September, the fourth quarter has been higher 11 out of the last 12 times, going back to the late 80s, up 5.6% on average, again, just doing very little to dispel anything other than any pullbacks, you probably want to be a buyer. Now, Jeff, I'm going to turn it to you now. Small caps are one area that we're saying are not so small. That might be one area when it'd be a buyer. What do you think? Do you still like small caps out into 2022? Or give us your thoughts on that, that group right now?

Jeff (21:08):

Yeah. We still liked him in the near term, but at some point during 2022, as the economy transition to midcycle, that's where you tend not to see out-performance from, from small cap. So, you know, we’re riding them now, but we're certainly you know, we'll say keeping them on a short leash as we you know, move into 2022.

Ryan (21:30):

Yeah. Fascinating about small caps there. The Russell 2000 Small Cap Index was up like 24 or 25%, all-time record, fourth quarter last year, literally have gone like nowhere all year, just sideways. People say, oh, the market is up a lot, and it is, we’re not saying it's not, well, there are certain pockets of the market that's not up that much and small-caps one that's really gone sideways, but all of a sudden, you know you know, we're starting to see some strength from the cyclicals, from the small caps. Merck came out with a, the viral pill that you can take or a pill that you can take for, for COVID that could drastically cuts down deaths and hospitalizations thinking maybe reopening can come back and that could help small caps, but Jeff, we've got maybe 10 minutes to go. One final thing on stocks. Now, don’t know if you saw this, “Rich Dad, Poor Dad”, that author came out, I guess, late September and gave a very big warning about October.

Ryan (22:17):

Now, the beauty, I guess we'll say, by the way, a big fan of the book, great book, the beauty of the internet is it's forever. So people found all the other times, the last 10 years, he's given similar major warnings starting way back in 2011, right after that debt downgrade. And obviously it had been a very, very big bull market. So you can say he necessarily hasn't been right overall. In fact, maybe you could say kind of led some people the wrong way with some of these over glaring warning signs that he's been pointing out, but the market keeps going higher. What do you think? Will we have an October crash? And we did talk about this last week a little bit, but what, what's your, what are your spidey senses saying here? Will “Rich Dad, Poor Dad”, I jokingly called it “Poor Dad, Poorer Dad”, if he's right, on the YouTube channel ,which we don't think he will be. What's your take on October?

Jeff (23:05):

Historically you just got to get through the first couple of weeks, right? And then you're usually in pretty good shape, but I mean, we all know there's a lot of risks. There's always risks, right? We've all heard the expression, stocks climb a wall of worry, right. So, you know, we don't think  the Washington D.C. drama is going to drive a sharp correction from here. The economy is, you know, potential to grow, COVID situation getting incrementally better. We think we'll get really solid earnings growth in Q3 and Q4, even though maybe it won't be quite the blowout that, you know, we saw earlier this year. So you know, you might get some bumps around, you know, the tax increases that are still likely coming, not necessarily coming, but more likely than not. And then we've got inflation and, you know, sticky, we've got rising interest rates potentially as a concern. So there are a number of concerns as there always are, but we look at all those individually and we do not see the makings of a sharp correction. We see, you know, some swings, a few percent here or there. Yeah.

Ryan (24:07):

Well, we're sharing on a YouTube channel now is just breaking up October, by even and odd years. Obviously this isan odd year., You go back the last five times, October is higher in odd years. Look at all the even years and you've seen some negative returns. It's like, well, is that just random or not? Maybe not, because what happens in even number years, you've got an election or midterm election. In other words, pre-election jitters. When you don't have those October seems to do just fine in recent memory. So just some things to think about, but Jeff, we need to move forward. The final thing we're going to talk about is the shipping concerns that we have, and then overlaying that with , some of the reason economic data that we've seen. Barron’s had an excellent front page story. And by the way, once something's on the cover of Barron's, I'm not just picking on Barron's, any financial magazine, you might say to yourself, well, that's probably priced in a good deal, or maybe we're near a peak, but they pointed out that 88 vessels are currently just sitting there in the California port complex, the L.A. and Long Beach complex, the most ever. And a 40 foot shipping container, before COVID,

Ryan (25:12):

so 18 months ago, cost two grand to ship from Shanghai to L.A. it's now $20,000. And they also pointed out that it used to take a ship two days to sit there in port before it was unloaded. Now it takes six days and then it goes to a warehouse and it used to take three days on load at the warehouse. Now it takes eight days and you see what Nike said recently, they don't have any truckers, right? They getit off the boat,. it takes forever. The ship I should call it. And then it takes forever, sits in a warehouse. So these are the real world things. And then, oh, by the way, it's the holiday season. Everybody wants to buy their stuff early because we're all hearing the same stuff about shortages all over the place. So it just doesn't seem Jeff to me, like this is going to work its way out. And this is kind of that sticky inflation potentially that we're talking about. You want to talk a little bit about the shipping container issues that we're seeing and how it impacts the economy.

Jeff (26:00):

This is why I think earnings season is not going to be quite as, as good as the last couple, right? Supply chain issues that, you know, it's a problem for two reasons, right? You know, one, you got higher costs, you just outlined that, until you can't meet the demand to generate the revenue that you want to generate. Right. It's good news that we have demand. It's good news that the economy is, you know, experiencing the, what I'll call the last leg of the reopening. Right. But if those orders can't be filled for whatever reason you know, you're not going to see the economic growth and earnings growth that you want. So, you know, and then you ended up getting a little bit more inflation, of course, in that, you know, could worry the Fed depending on how persistent it is. So, so sure. You know, this is probably the biggest risk to earnings season is the cost pressure from all these supply chain disruptions. But as you know, we move further past COVID, we hope and pray, these issues should resolve themselves. And that's why we're thinking, you know, inflation's a concern now, but you know, in a year it probably won't be.

Ryan (27:05):

Yeah, we're going to go to inflation in just one second, but Jeff, you pointed out some really interesting data I thought. The ISM manufacturing data came out or number came out last week. The headline was, I think 61.1, all you got to know is that was higher than expected. People said, oh wow, manufacturing strong. But as we like to say on this show, you peeled back the onion and maybe it was playing with the numbers a little bit. You want to, you know, I mean, we don't have a lot of time, but in a minute or two kind of describe what you were seeing when you looked at that ISM manufacturing number.

Jeff (27:34):

Yeah. The 61 reading is, is great. You know, that's a really strong economic expansion kind of number, but, but the components that drove that up are not really encouraging shall we say. I don't want to scare people, but you know, it's the point I just made, right? There's a lot of backlogs, there's supplier delivery times are lengthening because of those port delays, among other factors that you just alluded to. That actually pushes the ISM manufacturing index up. The index is basically measuring demand that's not being filled. So, you know, if you ignore those issues, maybe it's a mid-fifties reading. That's still a solid economic growth kind of reading. But it's not, it's not a boom. 61 is a boom. So I think it's really important to look at the components of this report.

Ryan (28:25):

Excellent point. And Jeff, we're going to finish things up with inflation. The Fed's favorite measure of inflation, the core PCE came out last week, highest number we've seen in I believe it was 30 years, a 3.6% year-over-year, the month-over-month number was higher as well. Now we did see some calming of the CPI inflation data a couple of weeks ago. I mean, Jeff, you've had a couple of days to think about it. Are you a little more worried about inflation because this PCE, the Fed's favorite way to look at it, still a little hotter than everybody expected.

Jeff (28:58):

I'm not any more worried about it than I was. I mean, what's disappointing is that it's, it's probably going to take us close to a year to get through all of this, right. It's you know, there's a good chunk of this inflation situation that is not going to be resolved in the next few months. For example, you've heard executives from the semiconductor industry, for example, talk about it. It might take more than a year. You can’t just build a semiconductor plant and create more chips overnight. A lot of Asian countries have zero tolerance policies for COVID, it's creating a lot of disruption, so that raises prices. And we're going to unfortunately have to deal with that for a while. But if you just look at the, what we call the stickiest pieces of inflation, it's actually quite a bit calmer than, than this. It's more in the mid twos and it hasn't really moved the last few months. So hopefully that continues. And you know, this may be as bad as it gets.

Ryan (29:57):

Yeah, absolutely. I mean, you know, what got us, the big jump was hotels and airline tickets and rental cars. Those all soared higher on a year-over-year basis, really the last four or five months be honest. And a lot of those have drastically come down. So inflation is still there. It's still a concern, no question about it. But again, we all called it transitory for a while and they were realizing transitory, either transitory is not the word we thought it was and transitory means maybe about a year, but we still think it likely will be there. So, Jeff, I mean, you know, we are at the end, what are you watching for this week? I'm going to take a while to guess it starts with a J what's the big thing you're looking at this week.

Jeff (30:35):

Not J for Jeff, J for jobs. We're looking at about a half a million jobs consensus for Friday. I think that might be a little low, but we would look for an upside surprise there. Just given the you know, the fact that kids are back in school, more people are able to work, the COVID situation again, incrementally getting better. And then the expiration of the supplemental unemployment benefits probably provide a little bit of an incentive to get people to work. So it's not quite the million plus probably that we want to see, but certainly upside to consensus would be welcomed by the markets.

Ryan (31:17):

Yeah, we're still 5 million jobs approximately away from pre-COVID levels. Most of the other economic data that we're seeing and have been seeing is above  pre-COVID levels. GDP just made it actually this most recent quarter as well. So jobs normally that's how it works. They are usually the last part to kind of get back to the pre-level from the, I guess we'll say, the pre-economic growth, the period before, what I'm trying to say. So nothing out of the ordinary, but still taken a little bit longer than we expected, but that's kind of maybe par for the course if we look at the situation that we're in. So Jeff as always, excellent stuff there. Appreciate it. Thank you to Neil, our producer, who helps us get this out every single week. And I'll thank you all of you, the listeners, you continue to listen, you guys keep listening, we'll keep doing it. So Jeff, you you're back now. You're on next week, right? As far as, you know, famous last words,

Jeff (32:05):

As far as I know.

Ryan (32:05):

I am as well, but I will, the following week, I will not be because I will be on my 15 year anniversary. Emily and I are going to the Dominican Republic. So I thought about doing the podcast from the beach there. And I said, no, I really don't care. So someone else can do it in two weeks.

Jeff (32:25):

I think that is a good decision.

Ryan (32:26):

There you go. But Jeff and I will be back next week to discuss the latest in Washington. And I'm guessing earnings. I'm guessing we're going to dig a little bit more in the earnings next week as well. So guys, thanks again. Give us a, like, give us a follow. It goes a long way. We really appreciate it. If you want to help us continue to build this podcast. And with that, we'll see everybody next week. Have a good one. Take care. Thanks. Bye-bye.