Tariffs Delayed, Not Done – Market Implications

Jeffrey Buchbinder (00:00):

Jeff Buchbinder here with my friend and colleague, Lawrence Gillum. Lawrence, thanks for joining today. People care probably just as much about fixed income these days as equities, so I am glad that you are here. Happy June to you.

Lawrence Gillum (00:13):

Happy June to you as well. Yes the bond market is front and center these days in all markets, so happy to be here and discuss everything that that we're seeing in the fixed income markets.

Jeffrey Buchbinder (00:24):

Wonderful. We'll, of course work in some equities too, but yeah, lean to more bonds today. Well say bonds and tariffs. So as we always do, we'll recap markets. Just touch on the most important drivers of market action for the week with a little bit of the month. Next will be Lawrence on bonds. Then we'll go into our Weekly Market Commentary, which is a market reaction to tariffs, basically. And in particular, the latest news that the majority of the Trump tariffs were deemed illegal by the international trade court. Some more on that in a minute. And then we will finish up with the week ahead. It is jobs week, but we also have the ECB, Lawrence's thoughts there and and some earnings. Still not many companies, but some biggies. All right. Market recap.

Jeffrey Buchbinder (01:21):

So the S&P 500 was up over 6% in May. It was actually the best May since 1990. You know, I went back and actually looked not even believing that headline. And it is true that that is actually the best May, what we just had since 1990. But over the last five days, the S&P 500 is up 1.2% over the last four days in the holiday shortened week, it was up just a little under 2%. So a solid week. Certainly the week got off to a good start because the Europe tariff threat was pulled back then, you had good results from Nvidia, and you had pretty good inflation data on Friday. But you know, there were some sources of volatility mixed in the tariff ruling on Wednesday which initially drove markets higher, but then markets may be reconsidered and came right back down again.

Jeffrey Buchbinder (02:17):

So still a good week but certainly several cross currents. The mix of cyclicals and defensive sectors has been pretty balanced over the last week. But if you look at May, it was led by tech and some of the more cyclical growthy areas of the market, while the defensive sectors lagged in particular healthcare, which has had a very tough time lately. The, the leadership on the growth sectors, of course, translated into growth, outperforming value last month. It also, when you have big tech leads, small caps tend to lag, and they did and then you generally had a little bit of dollar weakness. It varies currency to currency, but dollar weakness certainly helped drive gains in most international markets. So turning to bonds is your area of expertise. Lawrence a pretty good five day rally. So Friday plus Tuesday through Friday.

Lawrence Gillum (03:19):

Yeah, that's right. We did have some positive returns last week and some positive returns this year for most fixed income markets. Despite all the volatility that we've seen over the past month or so. Ag up, Ag Index, the Bloomberg Aggregate Bond Index up 90 basis points for the week up, 2.4% for the year-to-date period. The laggards over the past couple weeks have been the rate sensitive area parts of the market. So treasuries, your mortgage backed securities have they, they underperformed in May. They performed relatively decently over the past week. But it's been a tough income market to, we'll talk about more in just a second. But by and large, a pretty decent week out of the fixed income markets. One other thing to point out real quickly. Munis up only 40 basis points on the five-day period, still underperforming treasuries. We've talked a lot about munis over the past couple months. Given the valuations within that market, I still think that there's a good opportunity for these for these higher tax bracket investors to take advantage of these still high yields. It just hasn't translated into near term performance yet. But I think the starting point for Munis is a pretty solid one <affirmative>.

Jeffrey Buchbinder (04:35):

Yep. Still staying high quality and fixed income, still pretty neutral across equities in an environment of uncertainty, we think it just makes sense to be pretty close to benchmarks. So that's where we are. We do still like precious metals. Boy what a great period for gold. Gold, the precious metals index largely gold up for 15% over the last three months. Gold well into the three thousands. And we think with the combination of dollar weakness and geopolitical and policy uncertainty gold can continue to work, even if it is still a little overbought. So, turning to the S&P 500 here I just showed the 200-day moving average breadth. So percentage of stocks in the S&P above the 200-day moving average was 51%. That is a good number, not a great number.

Jeffrey Buchbinder (05:29):

You can see from the chart that it's you know, kind of middle of the range, and that suggests maybe this is a place where the S&P 500 at the index level can pause. If you look at just the S&P 500 line you see this is from Adam Turnquist. He drew a little red dashed line here, which is where essentially it looks like we might be getting a little short term double top. So this is as I've said on this chart here, a logical place for a pause. We've got a lot of gains to digest. I will note, though, that historically, when the market's rallied this, this strongly in a short period of time, you do tend to see more gains over the coming year. So this, you would interpret this chart, maybe bullishly for the next six to 12 months, but perhaps in the very short term, maybe even weeks we think maybe there's a little more downside risks than upside potential. All right. Moving to bonds. The headwinds intensify, that was my title, not yours, Lawrence, but I think you agreed with it. And I think the problem here is we need people to buy these long-term treasuries to keep our 10-year yield and our 30-year yield down. So how should people think about that?

Lawrence Gillum (06:54):

Yep. So that has been the challenge of late. There's just been not a lot of demand, not a lot of interest for longer maturity treasury securities. And we'll explain why in just a second. But the first chart really is a chart of the 10-year treasury yield over the course of the past year. And it's been in a trading range over the last couple months, right around four 40 has been kind of the near term average. The average over the past year has been around 425, so above our target for the end of the year. So coming into the year, we were expecting a 375, 425 type range for the 10-year treasury yield. And that was predicated on probably three interest rate cuts from the Federal Reserve that that may not come to fruition.

Lawrence Gillum (07:42):

Certainly a lot of time between now and the end of the year, and a lot of data could sway the Fed pricing of Fed rate cuts. But you know, we're probably going to say above that 425 number and it's going to probably going to take a lot to get down to that 375 number. So this is a long-winded way of saying that we're right in our mid-year outlook right now, and there could be a change to our target. So keep that in mind. As you're thinking about fixed income investments, I think we're kind of at these, these levels for a while. You know, despite what's going on with tariffs and supply demand imbalances within the treasury market, I think we're kind of around these levels for the next couple months. But the big challenge for the market as we kind of alluded to at the opening slide here and on this next slide there's just not a lot of demand for duration.

Lawrence Gillum (08:33):

So there's not a lot of demand for longer maturity. Government bond yields, government bond securities, and this is not just a U.S. thing. So for showing four 30-year tenor bonds for the U.S., Japan, the U.K. as well as Germany. And frankly, since September of last year, there's really been almost a one-way move higher in bond yields globally. And it really comes down to a number of things, right? So it's debt and deficit spending. Germany got into the fiscal I don't want to call it irresponsibility, but they've increased their spending as well for defense and infrastructure. And that pushed bond yields higher. Japan, of course, is in the process of re-normalizing its interest rate policy over there. And we're seeing yields spike higher within the Japanese government bond market, the U.K. has a similar type of story.

Lawrence Gillum (09:33):

I think it really comes down to just still sticky inflation globally. So if you look at the the inflationary dynamics for a lot of these countries still above central bank targets maybe that means a, you know, a less active central bank calendar for in terms of rate cuts. But you know, so far, these higher yields haven't really attracted a lot of demands which you would normally see some sort of demand pick up when you get higher yields, but that just hasn't been the case. Case in point, we've seen a couple of these auctions, these treasury U.S. treasury auctions, as well as auctions in Japan. They're just not, they weren't well received. So in Japan, for example, they had a 20-year auction and a 40-year auction over the last couple weeks. And there's just, there hasn't been a lot of demand for these, these longer maturity securities yet. There probably will be a level where it makes sense to own some of these securities. You know, we're in the camp that it just doesn't make sense to own these securities right now either. So we're not going to be making a bid on these securities anytime soon. So we think that there's still room for yields to grind higher in the near term for these 30- and 40-year, or even 50-year government bond securities.

Jeffrey Buchbinder (10:49):

Well, you know, I'm not a bond guy, Lawrence, but I'll tell you I'd make a bet with you that those Japanese yields are going to be lower in a couple of years than they are now. We'll see.

Lawrence Gillum (10:59):

True. Yeah, no, that, I think what's going on over there is pretty problematic for a lot of the financial banks and, and insurance companies, et cetera. So, and then, you know, because of that lack of demand, and this is something that we're, that our treasury secretary is dealing with here there's discussions about limiting the amount of these longer maturities securities. So, you know, maybe Japan and, and the U.S. and other countries continue to fund these deficits with shorter maturity securities, which would be, you know, less supply of 10- to 30-year securities out there. So that would be a tailwind for prices. But we're just not there yet.

Jeffrey Buchbinder (11:41):

Well, they say that higher yields are the cure for higher yields. It's just going to take a little bit more time, it seems.

Lawrence Gillum (11:46):

That's right. And well, I think one of the challenges too, and, and I can't remember when we started talking about things like term premium or shape of yield curves, but it's been a while. And right now the treasury term premium isn't overly high. Meaning there still isn't a lot of compensation for owning longer maturity securities. And if you look at yield curves globally, there's still not very steep. So I think there's going to be continued steepening in these curves which could put pressure on the long end of curves, as well as provide some a tailwind to some of the, the shorter maturity securities. It's just, it's not worth the risk reward right now to own 20- or 30-year government bond securities.

Jeffrey Buchbinder (12:31):

Agreed. and we still have two Fed rate cuts priced in, and that is not enough to keep long-term yields down.

Lawrence Gillum (12:39):

That's right. And one of the, the big challenges, and this is what we're showing here, is that because of the backup in yields globally 10-year U.S. Treasury yields are just not that attractive to foreign investors anymore on a hedged basis. So what we're showing here is the blue line is, I call it the yield pickup for Japanese government bonds. That's the blue line. The copper line is with German tenure bonds. And the gray line is the 10-year U.K. gilts. And on a hedged basis these foreign investors are being disincentivized to own these, these 10-year treasury yields. So a lot of these institutional investors these foreign investors, they'll buy a 10-year treasury, a 10-year treasury bond, for example. But because that's in dollars they, they tend to hedge out that currency exposure because they don't want to have that volatility.

Lawrence Gillum (13:32):

And when you do that, when you hedge out that that currency component you end up getting a less attractive yield, a less you know, a lower yield for investing in 10-year treasury yields than you would by investing in your home country yield. So this is important because foreign investors, as we know, make up about 30% of the, of the treasury market. So if there's really no incentive to own treasury securities for these foreign investors, that means that the U.S. investors are going to have to pick up that slack. U.S. investors, as we've seen are pretty price sensitive. So that could mean that we're, you know, likely to keep yields elevated to attract this demand.

Jeffrey Buchbinder (14:15):

But as you've said, Lawrence, our markets are much bigger and deeper than any other bond market in the world. And so, doesn't that just, you know, naturally cause assets globally to just, or capital globally to gravitate to the U.S. treasury market?

Lawrence Gillum (14:34):

It does. A lot of foreign buyers are invested in kind of the shorter maturity parts of our treasury yield curve. I think only about 30% of foreign demand is invested in 10-years and out. So a lot of that interest is in the shorter parts of the curve. A lot of these investors, they don't need to take that duration risk here in the U.S.. So they just haven't.

Jeffrey Buchbinder (14:59):

Got it. That makes sense. Alright, good stuff. Well, you're not done yet, Lawrence, because you wrote part of the Weekly Market Commentary, so don't, don't check out just yet. Our weekly commentary was on the implication of tariffs for frankly, the stock market and the bond market. And that's where we get into deficit spending and the tax bill. So I'm going to save all the tough questions for Lawrence. I'll give myself the softballs on this. But first of all, the court ruling last week that struck down the tariffs, its appeal, it's on, there's a stay was granted. And so those tariffs can stay in place. But if the, it may go to the Supreme Court if that appeal is denied, and if those tariffs under IEEPA are deemed illegal, International Economic Emergency Economic Powers Act, if the reciprocal tariffs are deemed illegal and the fentanyl tariffs because of the IEEPA basis for them, then the Trump administration will have to pivot and find another legal basis for tariffs if it wants to continue to use them, which we think they do.

Jeffrey Buchbinder (16:13):

So that's why I've titled this section "Delay or Do Over Not Dead," the tariffs we think are going to stick. Actually I was quoted in Barron's saying the same thing over the weekend. Tariffs are going to stick. We think we're going right back to the 13 to 15% tariff range, regardless of what the Supreme Court says about the basis for the original Trump reciprocal tariffs. There's a couple different ways they can do this. I won't go into all of the specifics but you know, one way is to basically prove that, that we've been treated unfairly by a country. It's similar to what was done with the 301 with China and the tariffs under Trump 1.0. You could just expand those, but you could, there's tariff legislation, I guess we'll say a tariff law that states that if you think you're treated unfairly, then the President does have tariff powers that could actually be used to restore all of the tariffs that potentially will have to come off under the IEEPA.

Jeffrey Buchbinder (17:23):

But there's another way they can do it, where they have 150 days where they can use these tariffs. And then after that ends, they can use investigations to, as a basis for the tariffs. And of course, those investigations would be likely to allow the administration to continue to use tariffs. So that's kind of complicated, a little messy, but you could piece together 150 day tariff authority plus a more permanent tariff authority after that using a couple of different tariff related laws on the books. What's interesting though, the easy way to do it, just saying you're treated unfairly, has never been done before. <Laugh> The law's on the books, but it's never been used. So who knows what the legal authority will be on that. Actually we have a contact who said that you might violate WTO rules, the World Trade Agreement, World Trade Organization treaty, if you use the easy way <laugh>, which I don't think we're going end up using because it's never done before.

Jeffrey Buchbinder (18:33):

And maybe it's a little more tricky. So we'll probably see the Trump administration string together, these two authorities to get Trump to get tariff rates back to 13 to 15%. But if they don't, they're going to be at six. Because the tariffs that are in place now that have different legal authority are about six points. So that's a lot. I know it's kind of messy, but that's where we're at. I guess you could say that the Trump administration has a little less negotiating leverage in the short term while they work all this stuff out. So maybe those July 9th deadlines or July 12th deadlines around the previous trade, detente will have to be pushed out. We'll see. But if we know it, everyone knows it, that Trump still has a lot of tariff authority and he can still use that to encourage countries to come to the table. Alright, that's, that, that's all spelled out, by the way, in the Weekly Market Commentary on LPL.com, so you can get details there. All right, back to you, Lawrence. This is related to the tariff story because tariffs are being used to offset some of the costs of this Republican tax package. So again, we think that tariff revenue is still going to be there, but even if it is, we still have a debt problem.

Lawrence Gillum (19:59):

Yeah, no, I think that's, that's fair. To say that we have a debt problem and we're going to continue to have a debt problem for the foreseeable future. The tariffs were, or are, I don't want to say in past tense because we, again, we do think that these are going to come back you know, come back to a higher level than current levels. So the tax receipts and federal interest payments is what we're showing here. The federal interest payments as a percent of tax receipts, it continues to climb and it's going to continue to climb as well, even if these tariffs come back into fruition back to these, these 13 to 15% levels. And the reason why that is because as the existing debt matures, that needs to be refinanced.

Lawrence Gillum (20:48):

And the weighted average coupon rate for current treasury debt stock is still less than 3%. So you have the, the entire U.S. treasury yield curve, kind of 4% and above. So as that existing debt matures it's going to be replaced with higher coupon paying debt which means those federal interest payments as a percent of tax receipts are going to continue to climb. I guess the remedy that tariffs help satisfy is that this is another source of income. And to your point, Jeff, that was expected. The tariff income was expected to offset the deficit spending with this new big, beautiful bill that's going through Congress. So if that's delayed or reduced, I mean, certainly that's going to have a negative impact on the, on the fixed income markets.

Lawrence Gillum (21:39):

But if we're right in these tariffs, go back to that, you know, 13 to 15% range then that should offset a lot of the deficit spending that that's expected to take place with this bill. And which should hopefully be a you know, a kind of a less scary thing for the bond market. Right? We still have six to 7% deficits every year. That's always going to that's going to be a concern for the foreseeable future until that, that's going to be a concern for the foreseeable future until that, that 3% deficit as he's, as he talked about you know, before , that's going to be a concern for the foreseeable future until that, that 3% deficit as he talked about you know, before he, before his appointment but six to 7% deficits every year is still high by historical standards. So, you know, until that gets fixed, there's still going to be some concern in the bond market which is another reason why we're not big fans of duration right now, because that's going to be kind of the area of the market that's likely going to need to fill these deficits with these additional coupon securities that, that have to be issued. So bottom line is that we have a debt problem, we have an interest rate payment as a percent of tax received problem but hopefully the tariff income could help offset some of this, these issues that we're seeing currently.

Jeffrey Buchbinder (22:55):

So this chart shows that the last time we were here was, you know, 1990, 1991, and we know famously Bill Clinton and Congress did sharply reduce the deficit and got this statistic that we're looking at here, the interest payments as a percent of tax receipts down by half. Now, you had a few things work in there. You had the tech boom, we got a little bit of one now, but it hasn't really helped our deficit problems yet, <laugh>, right? But you had the internet boom, which attracted a lot of capital here, certainly and you know, help with tax receipts in terms of asset appreciation, right? And I guess you, you know, you run really a nice run until you hit the early two thousands recession, then it kind of bottomed out and started moving higher. How would you draw some parallels, Lawrence? I mean, rates were high back then still, right? I mean, they were higher than they are now, right?

Lawrence Gillum (23:52):

Yeah. And that's the, that's the kind of the takeaway is one of the big reasons why federal interest payments as a percent of tax receipts fell throughout that period is that you did have falling interest rates as well. So back in 1991, the 10-year treasury yield was above 8%. And it, you know, it fell down to, you know, four or 5% by the 2000s. So that helped out with a lot of these interest payments as that existing debt got refinanced at a lower coupon rate. We're facing the opposite right now where you know, unless yields fall significantly from current levels, we're probably going to replace low paying debt with higher coupon paying debt. So I don't know that we're going to have that that tailwind that we had in the nineties until rates get lower.

Jeffrey Buchbinder (24:44):

Yeah. And this is why Scott Bessent is targeting the 10-year treasury yield. The whole Trump administration, right? It is going to be so important to fixing this problem in addition to spending less clearly.

Lawrence Gillum (24:55):

Yeah, and I mean, I guess the natural question is why is this important? And I mean, we've talked about this a lot internally and, and we've written about it as well, but when your interest payments start to eat up more and more of your budget that crowds out the ability to spend elsewhere that are more productive uses of capital. So Bessent, and the Trump administration we think are right to target this issue because, you know, this could spiral out of control pretty quickly if it's not addressed. Not to be a DOR here but you know, I'm a bond guy, so I'm always, you know, a DOR. But, you know, this is a real concern I think for a lot of folks and including us.

Jeffrey Buchbinder (25:36):

Well, Jamie Dimon's not really a bond guy, and he was pretty doom and gloom last week on that. So yeah, we'll have to watch the bond market very closely. I think even as an equity guy, I would've said at the beginning of the year when all this tariff uncertainty really started that the 10-year yield was more important than the equity market <laugh>, right? For the equity market will follow the lead of the bond market. And I think that's, you know, generally speaking, what we've seen, certainly artificial intelligence has helped just not really bond market related. But yeah, bonds kind of calming, I would say, and the market getting comfortable with, for now, deficit spending has been supportive of this market. And market is starting to look, we've talked about spinach, you know, market has to eat its spinach and its vegetables with the tariffs, but then it gets to dessert later with, you know, the suites of the pro-growth tax policy.

Jeffrey Buchbinder (26:35):

Well, the tech, the market is starting to focus more on, on the so-called big beautiful bill. And I think I think the next month or two is going to be really critical there. I mean, they're not, I don't think they're going to get this done by July 4th, but they're going to probably get it done by August. And you know, that will further the market's ability to focus on the pro-growth policies and less on the tariffs. We obviously still have tariff uncertainty to work out, which is one of the reasons why LPL Research has not increased its equity waiting to overweight. But certainly after we clear up some more of this uncertainty and the market gets more toward pro-growth policies and less toward tariffs you might see us make that move. Although of course we'd like to do it lower. The last piece of the Weekly Market Commentary is on the technicals.

Jeffrey Buchbinder (27:26):

This is Adam Turnquist. So Lawrence and Jeff Roach teamed up to write the deficit piece and the bond market piece. This is Adam's take on breadth for the S&P 500, starting with October 2024 when breadth was really, really strong. That was kind of the, you know, the heart of the rally up to the highs in February. We're not quite that strong in terms of breadth, but we are stronger than we were at the February highs of this year, right? 51, roughly 51% of stocks and uptrends now are then versus 60 now. So the point here is just that the market has a pretty good technical foundation. It's not just a narrow group of stocks working, although they have been leading on the way up the narrow group of big techs. It is the broader market helping as well, and certainly responding to at least some increased comfort with the tariff situation on top of a pretty resilient economy.

Jeffrey Buchbinder (28:31):

And as we just talked about fairly stable bond yields. Stocks are still expensive relative to bonds, but at least you've had stability in bond yields that have allowed stocks to continue to work higher. So it'll be tough to break through all-time highs this year, but it's possible. And certainly this good breadth environment is helpful. Alright, I think that is all I have on that. So again, please read the Weekly Market Commentary on LPL.com, the week ahead. I titled this section "Jobs Week" because everybody's going to talk most about jobs, but we also have a really important earnings release, and that is from Broadcom, huge player in AI, huge chip maker, and a top 10 S&P 500 name. And we have the ECB. So I guess expectations, Lawrence are for a cut from the ECB, but then maybe slowing down from there. Any thoughts on the ECB or of course, the jobs report?

Lawrence Gillum (29:41):

No, those are the two big highlights for the week. ECB, they are expected to cut interest rates which may not make our current president happy as the Fed is not supposed to be cutting rate or not expected to cut rates anytime soon. But the ECB is expected to cut rates. Their inflationary dynamics are a little different over there than they are here, of course. So we'll have to see kind of what their forward guidance is in terms of future cuts. because Right now as expected or markets are expecting a cut this this week the jobs number you know, it's one of these things where the economic data is, you know, it's backward looking in a lot of ways, of course so, you know, the expectation is that you're going to have a soft job print.

Lawrence Gillum (30:30):

But I don't know that going to compel the Fed to do anything, right, because of all the, the concerns about tariffs that are still out there and the uncertainty with that come with a trade war. So we'll have to see what the jobs report looks like. Now. There is a big range of expectations. So the, I guess the, the median expectation is 125,000 jobs created in May. But the range of you know, forecasts go from 90 to 190,000. So there's just a lot of uncertainty in the, in the economic forecasting market or profession as well. So we'll have to see if you know, if this changes the Fed's behavior at all. My guess is it probably won't, unless it's negative which we don't expect. But we'll have to see how this plays out on Friday.

Jeffrey Buchbinder (31:20):

Yeah, the I mean, I guess the only angle I really saw that somewhat resonated with me on the job support is that the, the weather was a little bit disruptive in some parts of the country on the month is maybe get a slight miss on weather. Who knows? I do think we're going to see a good enough number to where people aren't going to worry so much about DOGE related job losses or AI related job losses. Those are, I mean, the DOGE job cuts were just not big enough to really register and AI related job losses are a, that's a long-term trend that we'll have to follow. Not something that we would expect to see month to month. I mean, probably not even for another year or two at least. As you know, more and more companies implement AI and can be more productive with, with fewer people, the first phase of that is probably just going to be not hiring as many people. So not job loss, but just, just slower hiring before you actually get to the point where you would have attrition and not replace people that, that voluntarily leave. And then we'll see where it goes from there. So how about the ECB Lawrence? I mean, you know, they have lower inflation, lower growth generally speaking than we do, right? What else do people think about in terms of trying to compare the ECB to the Fed?

Lawrence Gillum (32:47):

Yeah, I mean, I think the challenge that the ECB is, is facing right now, I mean, because you, you still have Germany that wants to increase their fiscal spend to support defense and infrastructure which could be inflationary and help with their growth. So there are some similarities with you know, what's going on here and what's going on there in terms of just the fiscal spend part of it. But it really comes down to the inflationary dynamics. And with tariffs now there's still a lot to work out as it relates to the EU and tariffs. I think there was another shot across the, the bow here a couple days ago with, you know, higher tariffs for the EU. So it just makes the central banks, you know, the central banker's job a lot harder dealing with that uncertainty.

Jeffrey Buchbinder (33:40):

Yeah, no doubt. We got a potentially doubling of the steel and aluminum tariffs. Europe's negotiation's going to be tough, so that right there should support cuts for them.

Jeffrey Buchbinder (33:52):

More likely to be on our side, at least in the short term, I would think.

Lawrence Gillum (33:55):

Yeah, and what's challenging too is that these numbers can change with a tweet, right? So it's you go ahead and you make plans to cut interest rates and then something happens and now you're potentially offside. So it, I mean we've talked about this, you know, the head of the Federal Reserve, Jerome Powell, I mean, it's just, and the other central bankers, it's just almost a damned if you do, damned if you don't time in their career right now. because it there's so much uncertainty out there, you can't really do anything.

Jeffrey Buchbinder (34:25):

Mm-Hmm <affirmative>. Yeah. And inflation's probably going to tick up even if tariffs are largely eaten by the importers. There's enough upward pressure there that at least it's going to stall the progress. And so yeah, that's not, that's not something that's going to help the, the Fed hurry to cut. It's, they're probably going to have to see some job weakness fairly soon, otherwise they're just going to have to wait until, I mean, maybe it's late summer, maybe it's even early fall until they start to see evidence that inflation related to tariffs has passed, or at least mostly in the numbers. We'll, just, again, like you said, we'll just have to wait and see. Very uncertain, which keeps us a little bit cautious in our approach to investing in equities and fixed income for that matter. So thank you for that, Lawrence.

Jeffrey Buchbinder (35:17):

I guess the, you know, beyond that, I don't think anything here is going to be market moving, but the Jolts report, Job Openings and Labor Turnover survey is always interesting. So we'll certainly keep an eye on that. And with that, I think we'll wrap. So thanks Lawrence for joining this week. Really appreciate your insights on fixed income. I guess we're, we're hanging in there for now, but it is tough sledding out there in fixed income land. So thank you, thank you to all of you for listening to another LPL Market Signals. We will be back with you next week for another edition. Take care and we will see you then. Thanks so much.