Putting Tariffs and Rising Interest Rates in Perspective

Jeffrey Buchbinder:

Hello everyone, and welcome to LPL Market Signals. Jeff Buchbinder here, your host this week, with my friend and colleague, Lawrence Gillum. Lawrence thanks for joining. I think this is another one of those weeks where the bond market matters more than the stock market. What do you think?

Lawrence Gillum:

Maybe. It's been a pretty volatile ride in the fixed income markets, which we'll talk about in just a second. So hopefully you know, the fun is behind us, so to speak.

Jeffrey Buchbinder:

Yeah, I guess you bond guys don't want too much fun.

Lawrence Gillum:

We do not like fun.

Jeffrey Buchbinder:

Hopefully we'll have a nice smooth, calm week in the bond market, and that can help us calm the equity market jitters that we saw last week with the S&P down about 2%. So here's our agenda for today. It's Monday, November 18, 2024. We're going to recap the market, as I said, you know, jittery bond market, while that was at least in large part related to the Fed. So we'll talk Fed. We will get Lawrence's take on just where we are in the bond market now, kind of now that the dust has settled post-election, and we've had this sharp sell off in the treasury market. Where are we now? Third is Weekly Market Commentary content on Trump's trade policy or potential trade policy and tariffs. Jeff Roach, our Chief Economist, did a really nice job kind of putting those in perspective.

Jeffrey Buchbinder:

And, you know, I don't think the goal was just to minimize the impact or potential impact, but I think that's kind of what he did. It made me feel better anyway, about about potential inflation impacts on tariffs. And then we'll finish up with a preview of the week ahead where as I say here, it is Nvidia time. I would argue that that's really the most important event of the week. Maybe I'm biased as an equity strategist, but that is certainly a big report and we'll have that on Wednesday. So we'll start with the stock market recap. The S&P 500 started last week at an all-time high, and then proceeded to drop the 2%. The NASDAQ fared worse. The NASDAQ 100 actually was down all five days, which our friends at Bespoke tell us has only happened 25 other times in the NASDAQ's history, which goes back 40 plus years.

Jeffrey Buchbinder:

So that's kind of a rare event. I mean, the NASDAQ was only down 3.1%, so not a huge decline considering that the index was down five days, but still outsized. And then the Russell two got hit even harder. You know, a lot of folks have crowded into small caps as a Trump trade. You know, our view maybe is that's gotten a little bit overdone, but nonetheless we're still neutral small caps, and we certainly recognize the potential for Trump's policies to be positive for small caps. But just keep in mind, they're rate-sensitive. In terms of the the sector mix, I mean, I guess two sectors stand out. Financials and healthcare. Financials a big winner. Certainly there's another Trump trade with deregulation for the banks being positive. And then as Lawrence will talk about, the yield curve helps.

Jeffrey Buchbinder:

And then on the other side of the coin, you had a really tough week for healthcare. A large part of that was the RFK Junior appointment as, or nomination, as the health secretary. But you know, he still has to be approved which I mean, maybe it's more likely than not, but it's not a slam dunk. And then you know, that caused the vaccine makers to sell off because he's certainly widely known as an anti-vaxxer. So that is certainly the big laggard of the week. The healthcare sector. It wasn't just the vaccine stocks, it was also AbbVie, which had disappointing trial results and that stock sold off almost 20%. Pretty big holding in healthcare and, and certainly big enough to to weigh on the sector. So turning over to international, we had a strong dollar last week.

Jeffrey Buchbinder:

So you see lagging in the EEFA. You see lagging in the emerging market index weakness in China. Certainly there's another Trump trade to be careful with China weakness in Hong Kong. It was a tough week, I mean, for global markets, but certainly even more tough for international. So, of course, the jitters around the Fed, Lawrence, and that caused rates to move higher. You know, how much of this is just you know, what Powell said last week, and how much of it is good economic data or Trump policy implications?

Lawrence Gillum:

Yeah, so it was a challenging week last week for the fixed income markets. We had CPI data came out that showed perhaps that disinflation narrative has stalled a little bit. So the inflation expectations had crept up a little bit in the fixed income markets. But by and large, the move higher in yields since, and we'll talk about this in just a second, but since September 16 when the 10-year Treasury yield hit its kind of recent lows. Most of the story has been higher yields because of better economic growth which is a good thing for the economy, of course, good thing for consumers, good thing for the equity markets in general. Not so great for the bond market because the bond market has continued to price out rate cut expectations after what was really aggressive rate cut expectation by the bond market that has been priced out largely.

Lawrence Gillum:

We'll cover that in just a second. But in the meantime, that does mean higher yields, lower prices for most fixed income markets. Last week, the AG, the main index for fixed income investors, down 80 basis points. Big laggard there was the investment grade corporate bond sector down 1.1. The investment grade corporate bond sector tends to be a bit more interest rate sensitive. That sector has a lot more kind of duration risk. So the increase in in Treasury yields caused that sector to underperform broadly. Looking at plus sectors. Preferreds down 80 basis points. Still up 16% over the past 12 months. So still a good run for a fixed income like sector. We've taken some chips off the table there. We still like the preferred sector.

Lawrence Gillum:

We had a strong overweight for two preferreds. We have an overweight recommendation for that sector now. But it has been a good year. We don't expect another 16% out of preferreds on a go forward basis. But, you know, high single digits is likely possible. Other than that really the the muni market outperformed which is good to see. I've been I've been waiting for the muni market to start to outperform. November tends to be a pretty decent seasonal period for munis. So the muni bond index in general, up 80 basis points. Still lagging on the year but I do think that the the setup for munis going into 2025 is as good as it's been in quite some time. So by and large though a challenging week for fixed income markets because of the expectation of slower rate cuts out of the Fed, which was further confirmed last week by Chair Powell as well.

Jeffrey Buchbinder:

Yeah, the odds of a December cut have gone down about 30%, I believe. Was that right, Lawrence?

Lawrence Gillum:

We were around 85-ish percent. You know, it's been a volatile market for forecasting rate cuts. We're about 60% now. So it's come up a little bit today. But yeah, I mean, the probability had really come down over the past week or so as better economic data, and as the Fed has really started to maybe push back a little bit more forcefully than what markets were expecting in terms of rate cuts. There was the expectation of a sure thing in December for rate cuts. It's call it a coin flip at this point.

Jeffrey Buchbinder:

Yeah, that'll be an interesting meeting. These coin flip meetings, where you've got folks on both sides, are a little more fun to watch. There's more fun in the bond market. Just keeps on coming. So there wasn't a whole lot of fun in the commodity markets last week. You had you know, the crude market down about 1.4%. You had industrial metals and precious metals down similarly. The strong dollar was certainly part of it. The you know, as the market factors in the election with a strong dollar, I think the market interpretation has been favor cyclical value and maybe fade gold. So you know, we've seen maybe a little bit of rotation out of precious metals and into equities. It was a good week of flows last week, which might surprise people, or at least the latest data week that some of these data aggregators are capturing very strong flows kind of into the peak anyway.

Jeffrey Buchbinder:

So you know, we are certainly seeing a lot of folks kind of play these post-election trend changes. The dollar and, certainly gold are part of that complex. So let's keep rolling. Here's the S&P 500 chart. So we talked about this last couple weeks, how we were at the top end of a rising price channel. Well, look what happened right at the top. You know, it's like textbook. The market rolled over, and now we are, you know, in a position to maybe test the 50 day moving average again. The S&P is about, well, at least based on the latest pricing, not 110 points or so, 120 points above the 50 day. So we've got a little bit of room there, but it certainly seems reasonable to expect that test to happen.

Jeffrey Buchbinder:

You know, given how far we've come. We're still overbought a little bit. But you know, certainly the breadth of overbought conditions have eased as we've had this pullback. You see here in the bottom panel, the percentage of S&P 500 names with an RSI 14 over 70, that's the overbought breakpoint, has come down under 9%. It was over 20% when we spoke to you last week. So we're kind of cooling off which was needed frankly. We thought we'd get the volatility pre-election. We maybe are starting to get it now, but it's, I mean, we're up here as we're recording this Monday afternoon. We'll see when it comes, it will come eventually, but it's, it's really hard to say if this is you know, going to amount to something maybe bigger than just a few percent. Certainly technically it could, but the momentum is strong.

Jeffrey Buchbinder:

We're above these rising moving averages. The momentum looks pretty good here still. So you know, up here Research is sticking with the call to be fully invested in equities in line with your target. And actually, that's the recommendation on the fixed income side too, Lawrence, to be neutral and then maybe take some cash and shift it over to alternatives. So let's go back to the bond market, Lawrence. So you titled your section here as a bond market update, "After the volatility, where are we now?" You know, I assume you're talking about the post-election volatility. So we'll start out with the Fed, just like we were talking about. Expectations of change.

Lawrence Gillum:

Yeah. So it has been a lot of volatility. If you think back to the first Fed meeting back in September 18. Since then, yields have pretty much only gone one way, and that's up. So, and that's, as I mentioned, primarily a function of just better economic growth. The 10-year treasury yield was around 3.60 on September 16. It's around 4.40 this afternoon. So about a 80 basis point move higher in Treasury yields. About 70% or so is based upon better economic data. We did see a bump higher in inflation expectations after the election. That's kind of moderated a little bit, but it's really been about better economic data. And that's really kind of showed up as well in terms of just how many or how few, at this point, rate cuts are priced into the markets. If you go back to, again, September 16, two days before the Fed meeting where they kicked off the Fed rate-cutting cycle with a 50 basis point cut markets were expecting 10 rate cuts before the Fed even cut rates once. So there was a lot of news priced into the fixed income markets, again, that correlated with around a 3.6% 10-year Treasury yield.

Lawrence Gillum:

But as that economic data has come in, the need, so to speak, for aggressive rate cuts has come down. Now, markets are only suggesting around three cuts throughout 2025. So as we just talked about, it's a coin flip for December. But then after that, markets are really only expecting, call it two more cuts throughout 2025. So maybe the pendulum has swung too far in the other direction in terms of too few rate cuts into from the Fed this year or next year. So, you know, that's why we're neutral fixed income. We do think that there's an optionality that you get with fixed income that you don't get, and things like cash. So if something bad does happen to the economy and the Fed needs to cut more than what's priced in, so if the Fed needs to cut three or four or even five times for whatever reason, that's not priced into the fixed income markets.

Lawrence Gillum:

So that should provide some price appreciation if the Fed does in fact need to be more aggressive than what's priced in. But the move higher in 10-year Treasury yields has been unrelenting on the back of that stronger economic data. Unfortunately, this week we don't get a lot, which we'll talk about in just a second, and there's not a lot of big economic news. So I think we're kind of stuck at these levels for the foreseeable future. So again, maybe the fun is behind us. Maybe the big increase in Treasury yields has already happened. So 4.40, 4.50 on the 10-year kind of feels right, given what's priced in the markets currently. So the next chart looks at the yield curve just broadly. And the reason why we could drift a little higher over the near term is that the yield curve is still pretty flat.

Lawrence Gillum:

So what we're looking at here is just the difference between the two-year Treasury yield and the 10-year Treasury yield. The yield curve is only, or it's only kind of upward sloping by about 15 basis points, meaning the 10 year is higher than the two-year by only about 15 basis points. Historically, you get around, you know, 85, 90, you know, a full percent difference between the two-year and 10-years. So if this starts to normalize based upon, again, stronger economic data, we could see you know, the 10-year drift higher from current levels. But if you look back to the beginning of this year, and in parts of last year, we had a very inverted yield curve. So there's been a lot of progress made in kind of writing that shape of the yield curve.

Lawrence Gillum:

But I still think throughout 2025, that could be a bigger narrative for the fixed income markets. Now, that doesn't mean that the 10-year Treasury yield has to move higher in order to get kind of a steep yield curve, the two-year Treasury yield could fall on the back of rate cuts, which I think most of that steepening is going to, because of that two-year falling versus the 10-year rising. But it is a risk that we could see a you know, a slightly higher 10-year if markets are right about the Fed rate-cutting campaign that's going to go throughout 2025 and '26.

Jeffrey Buchbinder:

Yeah, certainly some risk that, you know, the Fed ends up even tighter. You know, not our base case but you know, I've been sort of waiting for this Fed-related market volatility to end, and I'm not sure we can fully put it behind us just yet.

Lawrence Gillum:

Yeah, unfortunately you know, there's... I mean, I say unfortunately, but I mean so far, the economy has really been able to digest these higher rates. So, you know, so far so good. And, you know, when we talk about the economic data being better than expected that's really the aggregate data. We know that there's kind of separate cohorts within the economy that are really struggling with high yields right now. Credit card yields, higher mortgage rates, et cetera. So you know, the goal for the Fed is to keep lowering rates that should help offset some of those higher rates for some of those, you know, consumers that are struggling. But in general, in aggregate, the economy has been able to digest some of these higher yields. So I think, you know, we've been kind of thinking the economy would slow down a little bit over the past year or so, and it frankly hasn't done that just yet. But you know, again, so far so good with interest rates and the economy being able to digest these higher rates

Jeffrey Buchbinder:

Could be... I guess you could make the argument the first time ever that the yield curve has completely failed as a recession predictor. Because, I mean, we, obviously, you don't know when the next recession's coming, but I think there's a good chance that it's not in 2025, and then you're looking at what? That would be like four years post-inversion. Yeah, I don't think you could say the signal worked because we had a recession that started four years after the inversion.

Lawrence Gillum:

Yeah, I actually think the yield curve as a predictor kind of failed last time it was inverted as well. So that's the red lines there. We had a recession because of Covid, right? And the yield curve was kind of forecasting a recession. So I think that, you know, anytime we have these types of kind of rules, I think markets can get ahead of these things and kind of price in, you know, these events before they actually happen if they do happen. And I think that was what took place this time around too, I think just markets were expecting something to break. It didn't happen. And I think, yeah, I think the yield curve as a recession forecaster has lost some credibility here.

Jeffrey Buchbinder:

Yeah. Even Campbell Harvey, who's credited with, you know, identifying this relationship initially, my business school professor actually, or one of them even, he admits that it's not a great signal. Kind of like Claudia Sahm right? And Sahm, she admits this. It doesn't necessarily fit. So let's go to credit spreads. I mean, we've been tight for a while. Just keeps either staying tight or getting tighter.

Lawrence Gillum:

Yeah, the corporate credit market has been extremely resilient. So what we're showing here is just the additional compensation that investors want or demand for owning riskier debt. So this is kind of the difference in yields between corporate credit and Treasury securities. And right now blue line suggests that high-yield investors are only requiring about 2.6% above Treasuries, which is the lowest it's been in decades. Similarly on the high grade side, the investment grade side, investors only are only asking for 78 basis points of additional compensation for owning corporate credit. The lowest it's been since 1997, I believe, is the last time we got rates spreads this low. So not a lot of value in my view, in our view, with regard to corporate credit. Spreads are just incredibly tight.

Lawrence Gillum:

You know, we talk about what's priced in the markets all the time, and markets have really, or the credit markets really have one outcome price in, and that's that soft landing. No concerns whatsoever about an economic slowdown or any sort of geopolitical event or election or anything like that. It's really just been, you know, a market that has not really cared about much and continues to offer we think really not a lot of relative value to take on the risks associated with these markets, but it is also one of those we just talked about the bond market as a kind of recession forecaster or a market signal, so to speak. You know, the credit spreads this tight are suggesting that there, again, there's not a lot of economic risks on the horizon to suggest that credit spreads should be wider than they are currently either.

Jeffrey Buchbinder:

Right. It's an asymmetric risk, but until you see those spreads tick higher, I mean, it's hard to be too afraid of high quality corporate bonds here, I guess. So I know we've been cautious for a little while here, remain so.So Lawrence, I assume there's been no change to your view that bond market or bond portfolio should be very high quality with, you know, limited credit risk.

Lawrence Gillum:

Yeah, that's right. I mean, you're just not getting compensated to take on that additional risk. There's also the concern that if rates do stay higher than, you know, what we've been expecting and what companies have been expecting that some of these high yield companies are going to have a challenging environment ahead of them to pay these higher coupons when they go to refinance. That's not a 2025 story. It's probably a 2026 story. But you know, high rates are good for investors, but not necessarily good for issuers especially for these lower rated companies out there.

Jeffrey Buchbinder:

Yep. So take advantage of them and, you know, be fully invested in fixed income relative to your targets. That continues to be our stance. So thanks for that, Lawrence. So let's talk Trump trade policy here next. Again, this is the topic of the Weekend Market Commentary this week, which you can find on lpl.com. The commentary is author by Jeffrey Roach, our Chief Economist, and he really took kind of a data oriented approach to assessing tariff risk, which is really interesting. So, of course, we know that Trump put in his tariffs in 2017, 2018, the first go around. And you know, if you look at what happened with the PPI versus the CPI, so, you know, the CPI being consumer prices, the prices that we pay for stuff, PPI, the prices that wholesalers pay before they sell it to us, right?

Jeffrey Buchbinder:

If tariffs were being passed on, then you would see a sort of stable kind of gap there, right? You'd see higher producer prices, higher consumer prices, and you know, those prices, the higher-cost being passed on, well, we didn't see that. And that's what this, the left hand side of this chart, the 2018 2019, and the red box shows because look at the CPI. It was below the PPI and didn't really budge all in 2018, 2019. It actually fell a little bit before ticking higher. So the CPI, in other words, producers didn't really pass along those additional tariff costs, plus the tariffs were narrow. It wasn't universal like Trump's talking about this time, but nonetheless, pretty narrow. And then if you look at the PPI retail trade and wholesale trade, the PPI lines are quite a bit higher during this period.

Jeffrey Buchbinder:

So you know, this kind of gives me some comfort that if the Trump trade policy looks similar to how it looked, then that we might not get much inflation out of it at all because of course, as you know, Lawrence as well as anybody, the bond market cares about sustained inflation. It doesn't care as much about, you know, either a one-time cost, right? Like a tariff. It just kind of goes in one time and then it's, you know, the year over year change kind of becomes stable, right? Or it's just not passed on, and then it doesn't hit CPI at all. Market doesn't care about that either.

Lawrence Gillum:

Yeah, I think there's more, I mean, there's more nuance than just tariffs are bad. I mean, you have to take into consideration exchange rates and all these things as well as the ability to raise prices from a producer perspective. So, but I think that Jeff does a really good job here of kind of illustrating that even though other Jeff described that tariffs were implemented in 1718, and a lot of of producers weren't able to pass those costs along to consumers. So it really is more nuanced, I think, than what's perhaps suggested out there. So it's one of those things where we'll wait and see. To your point, bond market hasn't really suggested that tariffs are a concern just yet. Maybe we'll get some additional details in 2025, but the bond market hasn't really reacted there.

Jeffrey Buchbinder:

Yeah, and that's a great point in and of itself. This is a long way off, so sure the market's reacting to it now, but predicting, I think Jeff said there's something like, there were 2000 exclusions or something last time. The lobbyists are going to be working long hours here over the next year, not just on trade policy, but on tax policy as well. So, you know, don't pay too much attention to this right now and don't trade on it necessarily right now because you really don't know what it's going to look like, and the impact might be more muted than you think. So you know, stepping back, I mean, as you know, Lawrence, the inflation pictures gotten much better. Now just this last month's worth of data was a little sort of, let's say the trajectory stalled out. But that doesn't change our view that inflation's going to continue to moderate from here, right, Lawrence?

Lawrence Gillum:

Yeah, that's right. Next week I think it's, yeah, next week we'll get PCE data and that's going to be a bit more productive for the Fed. If economists are right, we should get, you know, around a 2.2 PCE headline, PCE number. I think it's around 2.6 for core. So certainly much better looking than what we've seen out of the CPI data. There's construction differences and there's different methodologies used. That's why you're getting different numbers. But yeah, the trajectory we think is still on that path to 2%. It's going to be bumpy, it's not going to be a straight line, but we do think by the end of of next year we're going to be a lot closer to that 2% target that the Fed is maintaining.

Jeffrey Buchbinder:

Yeah. And you know, it's been rent that's been really stubborn and you get a little less impact from that in the PCE. So from what I've seen as everybody tries to translate CPI PPI into PCE we shouldn't see an uptick. You know, I think, well, I think consensus going to be 0.2 month over month. I could be wrong on that, but I don't think we're going to see an uptick an acceleration in the PCE like we saw in the CPI. So Jeff also makes the point that as we negotiate with China, that's, you know, one of the goals of tariffs is to get better trade deals with other countries and certainly China at the top of the list. So Jeff makes the point that our trade deficit is smaller with China than it was before. So I mean, that's what Trump said he was going to do, right?

Jeffrey Buchbinder:

And you know, it's obviously partly been achieved in the last four years but nonetheless, you know, kind of mission accomplished. So that might set a different tone for the negotiations in part. You know, maybe that would make Trump a little more willing to compromise. Maybe it gives us a little more bargaining power a little bit more leverage coming in. We'll have to wait and see how it goes. Also, that's a good point to just remind everybody that, you know, during Trump 1.0, a lot of times he would start with from a very aggressive point, and then back off of that point once either, you know, he decided that was his way to the best deal, or once his people, you know, went through the process of negotiating and that was the best deal they could get.

Jeffrey Buchbinder:

So you know, keep that in mind too. Some of these proposals, like a 10% universal tariff, a 60% tariff on China, actually the 60% tariff on China could happen. But the 10% universal, probably unlikely. It's probably going to be more surgical. There's a reason a lot of these things were surgical in 2016 or 2017. Those reasons haven't gone away. So I think that's good to keep in mind. So the other reason that we think we have a little more leverage in this negotiation is because our economy is doing much better relative to China now than it was when these negotiations started in 2017. So this just shows, you know, the growth rate of China, GDP, which actually had a tough comparison coming out of Covid. That's the orange line. So China's GDP on a year over year basis actually is not growing as fast right now as the U.S. GDP in real terms.

Jeffrey Buchbinder:

So you know, this gives, again, gives us maybe a little bit more leverage. If we have to hurt our economy a little bit to get a better deal with China, then I think we can do that. So that's more on that, that's just very high level. But that's quick summary of Jeff's Weekly Market Commentary on Trump and tariffs and trade policy. So check it out. It's, it's a really good one. So I'm going to quote Jeff again here when I get to the week ahead because he shared some interesting comments about the University of Michigan survey. But I think Nvidia, Lawrence, is the biggest event of the week. I mean, you, I mean the G 20 matters. If you want to make a case for something else, totally fine, but you know, I think the earnings picture is we're going to get more information about that than we're going to get about the economy this week.

Jeffrey Buchbinder:

Now we'll get some information about housing and obviously housing matters and the University of Michigan survey is less interesting than it normally would be, because apparently Jeff tells me they closed the survey period the day before the election. They would've normally closed it on Tuesday and actually surveyed people on election day, but they didn't. So when we get the next reading a month from now, we're going to get the full impact of the post-election reaction. It'll be very interesting to see if the inflation expectations rise a little bit next month. But you're not going to see any impact of the election in this month's University of Michigan surveys. So what stands out to you, Lawrence?

Lawrence Gillum:

Yeah, and that's why you have an economist on staff is to get those nuanced little points there and

Jeffrey Buchbinder:

I didn't know that before today. Yeah.

Lawrence Gillum:

Yep. And kind of help expectations. No, I mean, this week is a light one on economic data. It's a big housing sector week. But other than that, we got some Fed speak, but it's not highlighted by Chair Powell for example. So as I mentioned, or as we talked about, hopefully the volatility in the bond market settles down this week because there's really not a lot of things that could, I'm jinxing myself here. Hopefully there's not a lot of things out out there that could move yields meaningfully in either direction.

Jeffrey Buchbinder:

I was close to being part of Fed speak on Friday because I did an interview at the Boston Fed with Bloomberg, and you know, because I'm not a big deal, they put me on first at 7:00 AM and then Susan Collins, they let her sleep because she's much more important than I am. So she got on like 10:30 or something. So I kind of, I was the opening act. I was kind of the warmup band. But it was cool to be at the Boston Fed. Some of you may know I started my career at the Chicago Fed. So that was a little bit of a homecoming. I can tell you the offices are much nicer now than they were 25 years ago. But I digress. It was a great. It is a great event they had there. Their annual economic research conference focusing on FinTech.

Jeffrey Buchbinder:

So if you're interested in that, you can actually go to YouTube and find it. The Bloomberg podcast feed. They do archive those and you can see all of those interviews there. Didn't intend to promote Bloomberg, but I guess I just did. So back to earnings real quick, obviously Nvidia matters. We all get it. It's certainly going to matter what they say about their production timeline for their new Blackwell chips. because There's been a lot of analysts attention on that. And then just over the weekend, I guess a story about the chips causing overheated servers or something. So that obviously is an important, if that creates a delay or adds cost. So analysts will be focused on that. But the point here that I want to make with Nvidia, really with the whole Mag Seven is that the earnings growth that they are driving is enormous in the S&P 500.

Jeffrey Buchbinder:

It's going to slow over the next several quarters, but it's still going to be enormous. So, you know, I don't have final numbers obviously because Nvidia hasn't reported yet. But we're probably in a situation where, you know, 75% of the earnings growth of the S&P comes from the Mag Seven this quarter when all the numbers are in. So, and that's part of the reason why we still like growth. Very small overweight to growth style. The growth style versus value that we're recommending in LPL Research. But that's really why we're there. That's still where the profits are coming from. Even though policy maybe tilts a little more value oriented, and even though growth is expensive, more so than it normally is for now, we think it makes sense to stick with that. We'll see if we stick with that for the 2025 Outlook. We're writing the draft of that. My guess is at this point, we're going to stick with that. Nothing's been finalized but our 2025 Outlook publication will be out in just just a few weeks. So more on that to come. So any final remarks, Lawrence, before we sign off?

Lawrence Gillum:

No, I think that's it. I mean hopefully it's a quiet week. We got Thanksgiving next week and hopefully we can kind of coast into the rest of this year without a lot of you know, big market moves, at least on the fixed income side.

Jeffrey Buchbinder:

Amen to that. If the bond market calms down, there's a very good chance that the equity market makes another run at highs. We're still on a very good seasonal part of the calendar. And certainly there's a little bit of a bias when you implement these potential trade and tax policy changes and regulation changes that we might see under President-elect Trump. We're going to, there's an upward bias to, to equity markets. So watch rates closely this week. Certainly we'll be watching Nvidia closely this week. And then some of the retailers, including Walmart, that report as well. That'll be an interesting look into the consumer as we approach holiday shopping season, which I guess for me kind of started yesterday because I took my daughter to the mall and we bought some stuff. I don't think it had anything to do with the holidays. She just wanted to buy stuff. Hey, teenage girl wants to buy stuff. Lawrence knows how that goes.

Lawrence Gillum:

That is it, exactly. Keeping the economy afloat.

Jeffrey Buchbinder:

But there's certainly some folks starting to think about that. I saw some Black Friday sales signs around, so yeah, it's coming. Hopefully I didn't scare anybody. So get ready to go out and shop here over the next few weeks and support the economy. So with that we'll wrap. Thanks Lawrence for joining this week. Thanks to all of you for listening to another episode of LPL Market Signals. We will see you next time. Have a great week, everybody.