What the Economy is Telling Us About the Election

Jeff Buchbinder:

<Silence> Hello everyone, and welcome to the latest LPL Market Signals podcast, Jeff Buchbinder here, your host again this week with my friend and colleague, Jeffrey Roach. How are you today, sir?

Jeff Roach:

Hello. Hello. Happy to be with you.

Jeff Buchbinder:

I am happy to be online because I was not on Friday morning because I was a victim of the biggest IT outage in the history of the world. So I cannot tell you all how happy I am to be with you because there was certainly a point where I didn't think I'd be working for a little while, although that's, that's good and bad, right? <Laugh>,

Jeff Roach:

And I'm happy to be back in the office. I was out with a regional workshop or presentation, and I was, thankfully I was not impacted by the flight problems that I think are still going on. So, happy that that was the case.

Jeff Buchbinder:

So you dodged trouble. I did not. So, hopefully most of you listening were not more impacted than I was. But at any rate, it's Monday afternoon July 22, 2024, as we're recording this. The agenda here, you can see on the screen for those of you watching, we're going to start with a of course, as we always do, with a recap of what the markets did last week. The biggest story being the rotation from tech into small caps. Next, of course the biggest news of the week was Biden dropping out of the race. So we'll talk about what that means for the Trump trades. We talked a little bit about the Trump trade last week. Go into a little bit more depth there. And actually the odds of a Trump victory have dropped just a bit here since we've gotten the switch from Biden to presumably Kamala Harris.

Jeff Buchbinder:

Next I'm glad Jeff's here for this one. The there's a relationship between the economy and the election, of course, there has been for as long as I've been paying attention to elections. So we've got a couple of studies that can give us some insight into what we might get in November. And then finally, of course, we'll preview the week ahead and there's some big data on tap, the GDP report for Q2 and the Fed's preferred inflation measure, the core PCE. So let's start with the recap. You know, I mentioned the rotation was the big story. You can see here in just this weekly look how dramatic it was. The S&P down about 2%. That was the biggest decline, weekly decline, since April. Nasdaq even worse down about three and a half percent.

Jeff Buchbinder:

Of course, that's the rotation out of tech. But then you see the small caps, were a beneficiary of at least some of those proceeds. So we got an almost a 2% gain in the Russell 2000. It's really hard to say if that rotation continues. We'll talk a little bit about small caps as a Trump trade here in a moment. But you know, big tech earnings are coming up, that may support large caps. And as Jeff, you'll get into in a bit, there's some economic factors that may be suggest that you know, small caps have some headwinds. And, you know, this might not just be a straight line up the rest of the year for the Russell two. So more on that in a moment. You see the tech sell off even more dramatically when you look at the sectors.

Jeff Buchbinder:

The tech sector was down almost five or down a little over five on the week. And then of course, you've got some tech-oriented big caps in comm services and consumer discretionary. So the sectors were down three. We at LPL Research have been kind of splitting the difference between growth and value for just this reason. We didn't want to get too out over our skis on growth, you know, for once the rotation came. And sure enough, it came. So you see that in the styles, down four on the U.S. growth index. Up almost one last week on the value index. And then turning to overseas. I think the way to sum it up is that it's just got, you've got dispersion all over the place, but in general, a stock market that prices in Trump as the favorite is unlikely to see much outperformance broadly in international markets. So you know, we saw some weakness in Japan. You know, they're exposed to the global semiconductor sell off here recently. We got some weakness in Hong Kong. We've got political uncertainty still in France. We got some weakness there. Germany. It's really a, you know, a tough trade environment for international. Anything to add there, Jeff?

Jeff Roach:

Well, it's just a reminder, you know, for our podcast listeners, the reason why we stay on this slide for a little bit longer than normal is, you know, there's a lot of good information here. You know, as we talk about a little bit of the rotation from last week, it's important to remember, well, what's the bigger picture, the three-month year to date numbers, obviously the one-year numbers. So, that's why you see a lot of numbers on this page, but we're just trying to be comprehensive in the way we present it. Yes, a turn turnaround. It certainly had that uptick in claims that comes out 8:30 Eastern time on Thursdays, Thursday morning. And last Thursday there was a little bit of a disappointment in terms of the rising number of initial folks asking for benefits.

Jeff Roach:

And then there's also been a steady rise in those that are what we call continuing claimants. Those that are on not just for the first week, but second, third, fourth, continuing to collect unemployment insurance because they're looking, at least they're supposed to be, in order to collect and, and qualify for these benefits. They got to be looking for a job but not finding one yet. So that uptick last week certainly was a little bit of a unsettling metric for the markets. That was part of some of that change in consumer sentiment last week, but very different when you look at longer term metrics here, Jeff. Another thing I'd like to highlight is we're looking at the top number here. The top part of the chart, top left is domestic markets, bottom right is internationals. And we've certainly been a little more heavy on the domestic side, and that's been, that's been beneficial given the headwinds, Jeff, as you highlighted earlier.

Jeff Buchbinder:

Yeah, still have that view, favor the U.S. over international and emerging markets, for sure, for tactical investors. Turn to the bonds well bonds, commodities and currencies. The Bloomberg Aggregate Bond Index was down a little bit last week, that ties to this so-Called Trump trade because, you know, Trump is perceived as being bullish for rates or bearish for bonds. Those are the same thing, of course. And so you got a little bit of a weakness there. But what's I thought was interesting is high yield was actually you know, pretty good last week, even though the equity market was down, and rates rose a little bit. Of course, high yield, not as interest rate sensitive as you know, the traditional Treasuries, traditional corporate bonds. So that certainly helped. And you know, energy started to do better.

Jeff Buchbinder:

There's some energy lift in the high-yield bond market. Turning to commodities, the crude oil, you know, in the 80 to 81 range, crude oil has actually entered into a weaker seasonal period now. We're past the best seasonal time for crude. And then China growth, has weighed a little bit on that commodity. You know, I guess what's tough here, maybe we'll bring up the dollar here, Jeff. Dollar didn't do anything last week, but you know, of course the election is still several months away, and obviously we don't know who's going to win. It's not even a hundred percent certain who's running, but it's fairly certain <laugh>, but not a hundred percent. This has really been the election season, if anything can happen. Some people think that a potential Trump victory would be bullish for the dollar, but he and J.D. Vance had talked about a weaker dollar, right? They want a weaker dollar, they want to compete better with international you know, other countries outside the U.S. of course, on trade. But if the policies are going to push up the dollar, it's really going to be hard for him to be a weak dollar president if he is elected. Thoughts on that?

Jeff Roach:

Well, you know, I think we know pretty, pretty solidly that there's this desire for rates, at least central bank target rates, to go down, right? Pressure to cut, you know, we remember what he did while he was in office. Good point. And so, you know, if we know that there's that bias you know, that's certainly going to weigh a little bit on the dollar. And that's been kind of really the story so far in 2024, you know, Fed saying, hey, we're going to be on this patient pause, and meanwhile we see European Central Bank cutting. So, that's explaining a lot of that divergence between dollar euro. And then of course same thing in terms of the yen as well, that dollars has been strong given the fact that Powell's been so consistent on wanting to keep target rates unchanged. At least now we're in a new environment, so perhaps, you know, I could see dollar weakness maybe by the next, you know, end of the year as rates start to normalize a little bit and come down as Fed can begin legitimately cutting some rates.

Jeff Buchbinder:

Yeah, we know, we know Trump likes low rates, so that certainly is dollar negative. Here's the S&P. We know we said last week, this might be a convenient place to pull back, and sure enough, that's what happened and probably not over. The 200-day is still something like 500 points below where we are right now. That would be maybe a reasonable target to look at for a pullback or a correction. But we'd still have the 50-day moving average of support at 5,409. So, you know, that's about a hundred, maybe call it 130, 140 points down from where we're trading at the moment. So watch that for support. And then the rotation out of tech and into other names is kind of evident in the bottom panel here. The percentage of stocks in the S&P 500 with new 52-week highs is up to 15%.

Jeff Buchbinder:

That's a pretty good reading, and certainly up from where we've been lately. So that's it. Let's turn now to of course, the biggest news over the weekend, which is Biden dropping out. And, you know, the question, I think, I mean, we're, you know, we're market folks. We're, you know, we're studying the economy, we're not political strategists, so, and most of you probably don't care about our opinion on who's going to win. But we will report the facts, <laugh>, which is what the you know, PredictIt website, you know, the so-called betting markets is saying, and so Trump's odds of winning got about, got to about 70, I think, yeah, right around 70% at the recent high after the failed assassination attempt then have dipped back a little bit. So now this is a 61/39 kind of race. So Trump's still the favorite, but some of the you know, bloom off the Trump trade rose, I would say, you know, over the weekend and a little bit today maybe is you know, in part because Trump's odds have fallen, also, Harris is considered to be friendly to tech maybe a little bit more friendly than Biden.

Jeff Roach:

Well, you know, it's interesting, Jeff, as you go back to that slide, you know, you have the, you know, if you're focusing on the Kamala line, you're like, oh, wow, things have really changed with that large spike. I think the better way to look at it is saying, okay, there was a decisive switch that happened at the debate, right? That infamous debate that will, it certainly will go down in history. And then maybe just a little bit of normalization when we say, okay Trump's not going to be you know, campaigning against the person that was his debate partner, but someone who's actually a little bit more you know, lively and able to, you know, to engage a little bit better than his former debate partner. But at this point, you know, you think these are pretty high odds where we're sitting today. But then again, as we like to say, anything can happen. It's only the middle of July. A lot can happen in the months ahead.

Jeff Buchbinder:

No doubt, no doubt. It's been a, been a crazy few weeks, needless to say. So, we'll operate under the assumption that you know, Trump is the favorite at this point. But certainly, Harris versus Biden, there are some differences. They're pretty minor, but some, and maybe the friendliness to tech is one difference. Mm-Hmm, <affirmative>. We'll see if that comes to pass. But anyway, so let's get into Trump trades. I think this is probably the one that's gotten the most attention, Jeff, just because we've had this rotation into small caps at the same time that, you know, people are assessing the Trump trade. So small caps have had a really nice run. In fact, the seven days through last Tuesday, which I think was the 16th, was the biggest seven day period of outperformance ever for the Russell 2000.

Jeff Buchbinder:

That is saying something because the Russell 2000 has been around for a long time. <Laugh>, I think goes back to the late 1970s, if I'm not mistaken, or certainly goes back at least to the mid-eighties. So we've had this nice breakout, really strong performance from small caps. The top panel just shows you the breakout. We're not quite to the 2021 highs for the index, but we're close. It's been a very long recovery to prior highs for the Russell two. They say the bigger the base, the more room and space, that is a long base. So after we get that breakout to new all-time eyes for the Russell two, you might see the technicians jump in. Just like with the S&P, we've had a lot more 52-week highs in the small cap index. The this is actually the S&P version of small caps, not the Russell two, but you'd see similar dynamics.

Jeff Buchbinder:

And then on the bottom panel, you see the relative strength is sort of repairing the damage, right? So we're not quite at a breakout on this relative strength downtrend, but we're really, really close. And so I think when that happens, if it happens, you're going to see a lot of technicians recommending even more small cap exposure. So right now, research view at LPL is neutral. I mean, the technicals were terrible, just a <laugh> a few months, or not even a few months ago, a month ago. The technicals were terrible, but we were still neutral. We moved up to neutral about, I think it was March. And the reason we did that is because high quality small caps, like you get in the S&P 600 are cheap. And they had just been unloved for so long, we suspected that there would be a turn at some point. Obviously, timing hard to predict. But you know, so right now we think neutral is the place to be. And Jeff, the economy is probably the reason we're not more optimistic right now, I would say. In addition to the fact that we haven't gotten a relative strength breakout.

Jeff Roach:

Yeah, yeah, you got a couple factors that have some competing forces going on. You know, you have a weakening economy not dramatic per se, but clearly weakening in terms of people's interest to spend as you know, as we're coming into the middle part of this year. But on the other hand, you do have the chances for a weaker dollar and lower interest rates. Yes. So you think, okay, well, in that sense, those things could help. Those smaller firms don't have quite the arsenal of cash as perhaps large cap firms do, most likely interested in tapping credit markets. And so, if that remains, you know, credit markets remain attractive for those coming in to borrow, you know, that's certainly going to be a competing factor against some of that slowdown of small caps.

Jeff Roach:

I do want to remind you know, some of our listeners might, you know, wonder, okay, why are we talking about Trump trades? Basically, you know, what we're trying to get at is we're saying, okay, there's a potential for a change in administration. What parts of the markets could most likely feel, and actually change because of that change in administration. So, that's kind of the logic. And I think, Jeff, you did a great job as you're putting these slides together to say, okay, of the various ways in which you could try to trade and invest for a new administration, you'd break it down into our top three likely candidates.

Jeff Roach:

That could be interesting to, to think about as you prepare for a new administration.

Jeff Buchbinder:

Yep. That's exactly right. Now, we have the added variable of, you know, a guaranteed change in the President of the United States. <Laugh> For sure, for sure. So, you know, maybe that'll be for next week where we, or maybe shortly after that <laugh> when we could talk about the differences between Harris policy and Biden policy and what that might mean for markets. But again, I think the first thing to think about is maybe a little bit less pressure on tech, although there was going to be pressure on big tech regardless. J.D. Vance certainly you know, talked about potentially breaking up big tech in the past. And you know, Trump has had a kind of love hate relationship with some of the big techs in the past certainly, particularly the social media giants.

Jeff Buchbinder:

So you know, maybe the dynamic for tech hasn't changed too much with the switch from Biden to Harris, but that's one thing that's changed. You know, I guess it's also important to think about small caps as, like you said, Jeff, play on rates. So it was the benign CPI reading we got couple weeks back, and the mm-hmm, <affirmative>, you know, the subsequent firming of the Fed rate cutting expectations that really started the small cap rally. And then the Trump trade kind of added to it because Trump is more pro-U.S. than, and more you know, let's call it we'll call it a little bit of anti-international. I'm not talking about just, you know, he's not necessarily adversarial about all international economies. My point is, say if he increases tariffs and he is talking about increasing them a lot, then that is more of a U.S. market that, you know, pro-U.S. market than international market.

Jeff Buchbinder:

And it's, we all know that he's tough on China and he'll probably be tougher on China than Harris would be, although she'd be tough on China too. That is certainly a huge part of the emerging markets index. So it'd be probably tough sledding for EM, although rate cuts and a potential weak dollar would be pro-EM. So something there's a lot there, but I think those are some things to think about. Alright, so let's move on to energy. This requires some nuance, right? Because in 2016, you know, drill, baby drill, Trump was good for energy, but then the sector stunk <laugh>, right? And why did the sector stink in 2016? Because there was too much production and prices went down. We may see that again. So how do you counteract that? If you want to play a possible Trump victory in energy, you probably want to look at energy services or energy equipment because they are tied to volumes of energy production, right? More so than tied to oil prices, right? Because oil prices might come down if Trump wins. So that's why we're nuanced plus, of course, alternative energy would be, you know, certainly a loser in a Republican administration, that almost goes without saying.

Jeff Roach:

Well remember the ripple effect too.

Jeff Buchbinder:

You probably want to look at industries, Jeff.

Jeff Roach:

Right. Right. And then one of the things, you know, when we talk about this and, and debate about it, you know, there's ripple effects, right? So high production energy prices go down perhaps tough for the energy companies that are most connected, but then you think, okay, what about the secondary impacts, you know, lower cost for fuel on airplane you know, air carriers, et cetera. Perhaps, you know, a little bit better competition in that regard. So yeah, there's a, you know, second and third degree impacts to think about.

Jeff Buchbinder:

Yeah, the airlines need a break, so maybe they'll get it <laugh> in the form of lower jet fuel prices. And of course, that can be supportive of consumer spending. The Biden team, the White House is going to do everything they can to get oil prices down. So, Harris can run on a you know, stronger economy, better consumer spending environment. So, going back to this chart. So you see here, you know, energy's had a nice little bounce. This is just the broad sector S&P energy sector. So of course it has the majors, which are very price sensitive, but it also has services. So we've got a nice little bounce here, and we're maybe making a run at those recent highs. That's the top panel. The middle panel is relative strength, and we've stabilized, but certainly the moving averages and the trend are not yet positive.

Jeff Buchbinder:

So energy has some sort of damage to repair, I guess. And then the last panel is percentage of stocks in the energy sector above the 200-day moving average. That has weakened a bit, but it's actually still pretty good. So, believe it or not, energy's still kind of holding onto this uptrend. It's just an uptrend that's been losing steam. And, and certainly it needs a catalyst, either higher energy prices, maybe better earnings, should get some earnings growth out of energy this quarter. Maybe it's something in policy out of Washington, D.C. So let's go to the last one here. And this is banks. This one is interesting one too, Jeff, because there's a few things going on, right? I think the biggest thing is the yield curve. And if Trump does win, he is probably going to put pressure on the Fed to cut rates, and then you'll have potentially a steeper yield curve because Trump is a deficit spender, by the way, so is Biden and Harris <laugh>, right? That's the way the wind is blowing. So if you have deficit spending, which means more deficit spending, which means higher interest rates, potentially, but Fed rate cuts, that's the recipe for a steeper yield curve. And then you also have deregulation. Jeff, what do you think?

Jeff Roach:

Well, you know, it's interesting. We did a piece several months ago now on regional banks, particularly when, you know, that was front center with Silicon Valley Bank, et cetera. I think it's, I think it is a fair exercise for investors to go back to some of that work that we've done and to assess what's happening there. And if we, you know, if we can argue for that steepening yield curve that's certainly going to help some of the exposures that these regional banks have. So, that's a really interesting dynamic. So you're exactly right. You got the short end of the curve, meaning you're, you know, you're three-month, six-month, all that two-year very sensitive to Fed policy that goes down and say your 10-year and on up are pushed up because of deficit spending. That normal quote unquote normal as we say normal shape of the yield curve, which is typically upward sloping up into the right. That would certainly be beneficial for some of those assets held on bank balance sheets, particularly those regional banks, smaller banks.

Jeff Buchbinder:

Yeah, we think we're largely past the regional bank troubles, but certainly a little bit of rate relief from here would help those that are still a little bit strained.

Jeff Roach:

I like that, rate relief. I like that. You need to, you need to write on that one, Jeff. I like that.

Jeff Buchbinder:

Yeah. All right, I'll write on that one soon. By the way, if you, if you want to copy that regional bank piece, reach out to us and, and let us know. So yeah, I guess it's about the yield curve. It's about deregulation, which, and certainly you've seen the response, right? Look at this nice breakout on the regional bank index. We've broken through several areas of resistance. We have this nice kind of head and shoulders, bullish head and shoulders pattern, I guess. And then the but the group is overbought. There's been so much excitement. An RSI 14 of 75 is hot. So, you know, maybe they need to digest some of those gains here before making another run. So now here I'm going to hand it over to you, Jeff, for a discussion of the relationship between the economy and the election. So we've got two studies here that you know, I think investors should keep in mind.

Jeff Roach:

Yeah, it's interesting. So, you know, going back to several decades ago you think, so it goes back to the 84 election. Basically just saying, hey, if you look at how the economy is and how people are feeling, so inflation rate plus unemployment rate, when you have such a low, a decreasing misery rate, meaning inflation's easing, unemployment's easing, that's the year over year change in the second from the left column there. And then you, then you look over and you say, well, that's typically good for the incumbent. Now what's a little bit confusing, <laugh> is we've had an unusual experience post-COVID in the re-openings where unemployment is extremely low, right? Challenges in the economy, certainly, right as people are kind of, there's been so much retooling in the economy as people have moved around and both geographically and occupationally.

Jeff Roach:

So it's a little bit distorted, but raw numbers certainly favorable for the incumbent party. And I think that's kind of another way of looking at it. Another angle is the next slide, and that is when you look at just the overall growth of the economy. So, we had strange things happen, right? Economy shut down, reopening, you know, growth rates in the high double digits, that's never happened before. And then kind of this modest decelerating in growth. So sub 2% growth in Q1, probably sub 2% growth in Q2. So we're kind of getting a little bit below trend, but you know, when there's no recession in the years leading up to the re-election, this is, this is good again for those that have been managing quote unquote, right?

Jeff Roach:

So, there's your green on the left side no recession reelected. Yep. They got in, good for the incumbent. Another angle for the previous slide. Again, this is a challenging time. Because you think, okay, well, no technical recession a lot of consumer spending, right? A lot of people actually are getting paid more, even though we're paying more for stuff, we're getting paid more for what we do. And so, hence you know, you're kind of offsetting, there's no recession yet, and inflation is decelerating with a fairly low unemployment rate and tight labor market. Traditionally that says, good news certainly bolsters the case for the incumbent. But again 2024, coming out of the previous two years you got to look a little bit deeper past the headlines, underneath the hood, if you will, to see what other factors might be driving voter sentiment.

Jeff Buchbinder:

Yeah. So we, you know, Trump's a favor. We've talked about what investment implications you might have from a Trump victory. But both of these studies suggest that the Dems have a shot, right? Actually a good shot based on this study, right? We've had no recession in you know, 2023 or 2024, and we're not going to get a recession before November, right? We can't guarantee anything, but if we do get a recession by the end of the year, people won't even know about it when they go to the ballot box <laugh>. So, this study suggests Democrats have a good shot, and then the misery index, you know, we could still tick a little higher and be kind of in that neutral zone, right? Because unemployment might tick up, Jeff.

Jeff Roach:

Yeah, exactly. Unemployment might tick up, but inflation is certainly going in the lower direction as it's decelerating. So, yeah, you're exactly right, Jeff, and this is why it's worth highlighting that this would be such an unusual dynamic and an unusual experience. Now, granted, the debate was pretty unusual. <Laugh>, the dropout yesterday was unusual. But, but

Jeff Buchbinder:

Candidate nearly getting shot was unusual.

Jeff Roach:

Exactly. So, you know, when you think about what the Dems can do in the sense that, hey, look, we have low unemployment, if you want a job, you can get a job. People have the flexibility, you know, to work where they want to work. You know, perhaps you know, that's going to be certainly their battle cry in order to solidify those risks. But, I think it's important at this point you know, you saw that graph earlier, Jeff, as you highlighted it's kind of a, you know, it's a 60/40 kind of dynamic right now.

Jeff Buchbinder:

Yep, that's right. So the misery index right now, is right kind of on the line pointing us to Democrats as a slight favorite. But, you know, every <laugh>, every cycle is a little different. This one is more different than certainly I think any of us have ever lived through. So we're not going to have any conviction on any outcome, frankly, but just know that the economic data points to maybe the Democrats having a better shot than the polls suggest. So let's transition to the preview the week ahead. It's a big, big week, Jeff. I mean, we get 138 S&P 500 companies reporting results, including big names, Alphabet and Tesla tomorrow. Then we have GDP and the Fed's preferred inflation measure, the core PCE. So what should investors be thinking about this week?

Jeff Roach:

Yeah, so most of it's going to be the latter half of the week. We're recording here on Monday the 22nd. And it's a light day today, tomorrow fairly light. And that's really because, you know, the focus will be on Thursday and Friday because of those very, very important numbers, as I suggested. Second quarter growth again, kind of sub 2% is expected, perhaps even a little bit softer than that. But that's after you know, 1.4% growth, Q1, so clearly consumer slowing down. We're going to get a really detailed look on Friday morning on spending, everything from, you know, where consumers are spending on recreational services and financial services, durable goods everything that, you know, under the sun here on the spending side, but more importantly, probably for markets, particularly bond markets, will be with embedded in that Friday morning report will be an inflation metric that's extremely important. More valuable and more comprehensive than the CPI metric.

Jeff Roach:

So Jeff, as you highlighted that turnaround in small caps and banks as well, due to the very benign CPI number. You get a benign deflator number, what we call it, the PCE price index, how much we're deflating nominal, turning it into real figures, that could be very, very supportive for the markets and solidifies the fact that the Fed's meeting in September will be the first meeting where they start indeed cutting rates. And that's certainly going to be a fairly positive, I think opportunity for markets as yields tick a little bit lower. So it's mostly Thursday and Friday. Those are the big ones.

Jeff Buchbinder:

All right. So maybe folks can hit the beach between now and then, unless of course you want to watch the earnings results stream in between now and Thursday's GDP. I also like the University of Michigan one year inflation survey, got that back down below three, so we'll be watching that. And then I also think it's worth noting the headlines on core PCE Jeff could be really positive because if the number hits expectations, I think that's a three-month annualized number of below two. Is that right?

Jeff Roach:

Yeah, exactly. So we're getting very, very close to the comfort zone for the Fed. So we know from a number of Fed officials that when we talk about that 2% figure that everybody hears, hears about in the news, it's a long run average, meaning many times inflation runs below 2%, sometimes it's running a little bit above 2%, but kind of on a longer term average, if you're hitting that 2%, if you start dicing it in various increments, even when you think about where we are currently in the summertime here of 2024, you might say, hey, the Fed's getting even more comfortable that the rate of inflation, not the price levels, but the rate of inflation is getting a lot closer to their long run goal of 2%.

Jeff Buchbinder:

Yeah. And certainly. The markets have responded, we have seen optimism about inflation reflected in not just small caps, but you know, the rate environment as well, certainly just in general supporting the equity markets. So if that trend, that disinflation trend continues, you know, we could potentially see some gains ahead even though we still think we're due for a pullback. So thanks for that, Jeff. Big, big week, a ton of earnings and two really, really important data points. So we will all be watching closely. So with that we'll go and stop. Thanks everybody for listening as always to the LPL Market Signals podcast. Thank you Jeff for joining, and we'll be back with you next week. Take care, everybody.