What Fed Chair Nominee Kevin Warsh Could Mean for Markets

Jeff Buchbinder (00:00):

<Silence> Hello everyone, and welcome to LPL Market Signals. Jeff Buchbinder here with my friend and colleague Lawrence Gillum to talk a little bit Fed. Hey, Lawrence, I hear a rumor that the Fed has a new chair, at least an appointee or a nominee, anyway. How are you today?

Lawrence Gillum (00:18):

I'm good. Still trying to dig out from all the snow we got over the weekend, but I heard that rumor too about the new Fed chair. So maybe we should talk about it.

Jeff Buchbinder (00:29):

Maybe we should. Yeah, there's rumor also has that there's been a little volatility in the precious metals markets too, so, we'll weigh in a little bit on that. But frankly, our focus is more on just traditional stocks and bonds. So as always, we will talk mostly about those two topics after you, of course, read these lovely disclosures very carefully. So let's get to it. It is Monday, February 2, 2026, as we are recording this a little bit after lunch. Markets are up nicely. They've been up most of the morning, but we did have a little bit of a reversal, I think, in line with the reversal in Oracle shares. We also got a reduction in tariffs in India, which certainly isn't hurting. And software stocks are actually doing pretty well today, which is something that we have not been able to say for quite some time.

Jeff Buchbinder (01:27):

So maybe that selling is overdone and we'll start to get some stability out of that group. Anyway, we'll as we always do, start with a recap of last week's market action. Can't talk about last week's market action without at least mentioning the precious metal moves. Next of course we'll talk about Kevin Warsh our next Fed chair. We certainly expect him to be confirmed. And then lastly, week ahead, by the way breaking news, at least as we're recording this. We just found out that the jobs report will be delayed because of the partial government shutdown, which is really, I think only a couple of days. It could be completely ignored I think virtually for every reason, except for your jobs report, will now be put off a week. So, I don't know if we have an exact date yet for that Lawrence, but it's not going to be Friday.

Lawrence Gillum (02:19):

No, I've not heard anything yet, but yeah, unfortunately we'll have to wait a couple more days until we figure out what's going on with the jobs market.

Jeff Buchbinder (02:27):

Just when we thought we were in the clear on government shutdown delays we are not. Alright, so starting with the market recap. So, I mean, the metals mania, we'll call it, was certainly the biggest story of the week, but you had maybe a close second in terms of Microsoft double digit declines continuing this period of software weakness where a lot of folks are worried about AI eating software as we're hearing. Which, you know, which makes sense if companies can just vibe code, right? Do their own coding with AI and they don't need to pay software makers as much money, of course, that is an issue for software companies. So we're just looking for stability. We have warmed up to tech. If software can just kind of hang in there in the near term then we think that can allow semis to do the heavy lifting and get that sector higher.

Jeff Buchbinder (03:23):

The valuations actually look pretty good. So yeah, technology was an underperformer last week down 0.4%. But the rest of the market, led by energy and communication services, that was earnings driven. Communication services, got a benefit from not only Meta's well received results, but also AT&T and Verizon. So that was your leader. Those winners last week were just more than enough to offset the losers. And we ended up with an S&P 500 up 0.3% and year to date we're up 1.4%. That is not including dividends. So what does that mean? Well, it means the January barometer is positive. If you're up in January, got more than an 80% chance of an up year, and the average gain for the year is about 16%. Certainly much better than if January's down. We recently wrote about that, Adam Turnquist on lpl.com.

Jeff Buchbinder (04:24):

So check that out if you're interested, you can go a step further and say, well, what if we're up in January and we're up in the first five days, which we were, then your chances of an up year are over 90%. So we came into this year thinking we'd be up. I think it's fair to say the odds are probably even higher than we had thought previously. So, good week for the equity markets last week, continuing the trend of 493 working equal weight S&P 500 working and helping offset some of the weakness in tech. So let's go to your page, Lawrence, and then we can talk about the precious metals. The bond market didn't do a whole lot, yields still kind of hanging in there at the high end of our year end 2026 range.

Lawrence Gillum (05:13):

Yep, that's right. So kind of just a flat week across the board for a lot of these fixed income markets last week. The Agg up or Agg flat on the week ,Treasuries flat on the week, mortgage-backed securities up about 20 basis points. We've been pretty constructive on mortgage-backed securities. Valuations aren't great anymore. We've seen a pretty significant tightening with regard to mortgage-backed spreads. So on a relative value basis there's not as much value in that area of the market right now. Conversely, IG Corp down about 10 basis points on the week last week. Not a lot of value in that market either. So if you're looking at spreads for a lot of these fixed income markets we're still around or close to secular tights for some of these fixed income markets. So still pretty attractive yields. Not great from a valuation perspective though. So we're kind of thinking about what we should be doing next in the fixed income markets. Kind of moving into munis. Munis started off the year hot they underperformed last year, but this year they're up about 90 basis points versus the down 10 basis points for Treasuries. So just released our 2026 Muni Outlook publication and

Lawrence Gillum (06:33):

On the Resource Center. And you know, LPL advisors should check it out and I think we're in for a pretty decent year for munis, and certainly this quick start has helped that narrative. So but to your point, we're, yeah, we're still around 4.27 on the 10-year Treasury yield now down from around 4.29 that we hit sometime in January. But it looks like from a, you know, a kind of a path of least resistance method or you know, yields are probably still going to be headed higher, not too much higher. I think the inflation story is still okay, but it's going, I think it's going to be a while before we get back down to 4%, especially without the labor market data this week.

Jeff Buchbinder (07:21):

Sure. Well, we have time, a lot of time between now and year end. So yeah, that doesn't mean that we can't go to 4.50 on the 10-year before we go to 4.25 again or lower, certainly. We'll, I'll show you the 10-year yield chart here in just a minute. But this is a good place to hit on the precious metals. So the, you know, these are some of the biggest moves we've ever seen in gold and silver. In fact, I think it was the biggest one day drop ever in silver prices. For gold, I think it was the biggest drop in more than a decade. So silver was down about 30. I think gold was down about 10. You know, just on Friday alone. The, I mean, the cause of the steep sell-off is really twofold.

Jeff Buchbinder (08:07):

You know, one, people had had such massive gains that a lot of people had their finger on the sell button, right? So you start there, then you had some levered players that essentially got margin calls, right? And so that exacerbated the selling because the amount of leverage in, for example, the silver market is much bigger than the physical market. So, in fact, I think some people were citing 10 x, essentially had speculation that was 10 times as big as the actual amount of silver in the entire market. So that just had to break at some point. I mean, frankly, we thought it would break a little sooner and maybe not quite as hard <laugh>, but it broke later and harder. So that's the other piece of this. And then what I think people are really blaming the Warsh pick. So I'll be interested in your thoughts on this, Lawrence,

Jeff Buchbinder (09:04):

because you certainly know Warsh better than I do. Warsh was considered to be bullish the dollar because of his, at least that's the way I understand it, because of his views on what he wanted do with the Fed balance sheet, right? He wants to shrink the Fed balance sheet that's very clear from past comments that can put upward pressure on the long end of the curve. And that can mean and sort of tighter money, I guess we'll say, maybe no more QE. That sort of line of thinking got folks scared and then they ended up chasing the dollar couple percent higher. What do you think?

Lawrence Gillum (09:45):

Yeah, I think that's right. So yeah, his stance or Warsh's stance on the balance sheet is they want it as small as they can make it. Right now, it's still pretty elevated, around six and six and a quarter trillion dollars. Which is a still pretty big Fed balance sheet. It's going to be a challenge to restart quantitative tightening. Remember quantitative tightening is when they're trying to allow bonds to roll off the balance sheet and not reinvest those proceeds back into the market. We ran into some issues within the short-term funding markets. It's one of the, you know, the reasons why the Fed started buying Treasury bills again, is these you know, to kind of support markets and support liquidity in the markets. We'll see how this plays out. I know he's made comments about wanting a smaller balance sheet in the past. It's going to take some work to get, you know, significantly lower than it is currently without imposing some pretty harsh penalties within the banking system. So again, we'll see if this indeed plays out as he has talked about it.

Jeff Buchbinder (10:51):

Yeah, I think it's fair to say that the dollar was a bit of an excuse for the precious metal sell-off. Because if you look back, I mean, a 2% move in the dollar does not correlate to a 30% move in silver <laugh>, right? Or a 10% move in gold. It should be much smaller than that. So clearly the leverage breaking was the biggest story. But the market needed a reason and, or an excuse, and that was it. So we still fundamentally like precious metals but certainly we, as we've pretty much always said, keep our allocations fairly small because generally we like equities exposure certainly more in a broad diversified portfolio. But carving out a little bit for alts and a little bit for commodities for your traditional mass affluent investor makes a ton of sense.

Jeff Buchbinder (11:46):

Maybe more for more high net worth folks where certainly we see and are comfortable with alts exposure up even north of 20-25%. So here's the S&P 500 chart. So, seems like seemingly, I've been talking about the 7,000 level now for the past four or five pods we've done, but we still cannot break through that. We traded above it intraday briefly, but it didn't hold. We're pretty close to it now, actually. Let's see where we are right at the moment. 6,987. All right. So 12, 13 points shy of it again. I love the old Sam Stovall quote, "It's like a rusty door, you gotta kick it a few times before it opens." We've now kicked this rusty door four or five times. I think we're going to have to kick it another couple times just because there's kind of a lot of headlines swirling still a lot of discomfort with that major psychological level. We'll see what happens. But once we break through that, we think the market's going to take this market's going to take the S&P even higher couple hundred, possibly a couple hundred more points. So we'll be watching that closely. But still the uptrend is intact. That is very, very clear. We, you know, we bounced off, supported the 50-day a few times. We've got uptrend from rising moving averages and you know, we're kind of holding that support from the October, November highs.

Jeff Buchbinder (13:19):

All right, well, you're going to get your fixed income charts here next, Lawrence, including the 10-year yield. I put it in the Fed section because they're all kind of related. Talked a little bit about the 10-year yield, but we'll add some color to it. So we have a new Fed chair, Kevin Warsh. And the question is, what does this mean for markets? Well, we talked about what it means for the dollar but I think the more important question is what does it mean for the bond market? And then in turn, the stock market. So here's your chart of the 10-year Treasury, Lawrence, you know, mentioned we're up just a tick from where we closed Friday up to 4.27. This chart looks a little bit bullish for yields. So bearish for Treasuries. What do you think?

Lawrence Gillum (14:02):

Yeah, no, that's right. So I'm not a chartist, I'll leave that up to Adam Turnquist our chief technical strategist. But I think he would agree that the charts do look pretty bullish for yields, meaning higher yields are probably more likely than not. I think the number he's thrown out is that now that we've kind of broken through some of this, some of these you know, moving averages and what have you, I think he said 4.50 is another potential landing spot for the 10-year Treasury yield. I think that's probably realistic especially since we've had still pretty decent economic data. So this morning we had some manufacturing data that came out, and yields are higher on the back of a stronger manufacturing print. So and that means fewer rate cuts get priced in. And right now markets have priced in fewer than two cuts this year, just a tad under two cuts this year. So you know, we'll see if Kevin Warsh can talk to a very divided committee still within the FOMC, with the Federal Open Market Committee. We'll see if you can talk them into potentially more rate cuts that are priced in. But in the meantime, the charts do suggest, you know, maybe marginally still higher yields.

Jeff Buchbinder (15:20):

Yeah, higher short term. And we're going to have to wait for those cuts, right? Assuming they come, which most people expect probably June. At least, that's, I think what consensus is, that's still seven months away. And then we probably have at least as we've talked to Jeff Roach about, we probably have a period of a couple more months maybe of sticky inflation, hopefully not much longer than that. And then we're going to see the inflation reading start to come down. We probably move past the tariff effect, but there's still some of these lagging components of inflation that are going to take more time. But by the time you get to the middle of the year or even further, like 3Q there's going to be reasons for these yields to go down. I think just have to be, have to be patient. So short term, maybe up a little bit, but medium term probably right back down. So yeah, back to the Warsh pick, Lawrence. I mean, at some point he was the favorite, right? I guess he was the favorite, like <laugh> a few weeks ago. And then everybody started to get excited about Rieder. So did the pick surprise you? You know, what does it tell you about, I don't know what Trump and Bessent maybe expect from monetary policy?

Lawrence Gillum (16:46):

Yeah, so it, what's interesting is we're showing betting markets on who markets really saw as the next Fed chair. And we were told that there were four finalists for the job. Rick Rieder, who is the CIO of fixed income at BlackRock, Hassett, Warsh and Waller are all call them economists and with Warsh and Waller with the Fed experience. Christopher Waller is on the Fed FOMC now. But throughout, call it the last eight months, markets elevated every one of these individuals as the favorite. So markets really had no idea. You know, we kept going back and forth between Hassett, Warsh, Rieder and, you know, at the end it was, it turned out to be Warsh. And I'm a little disappointed it wasn't Rieder, if I'm being completely honest.

Lawrence Gillum (17:37):

I think that would've been interesting to have a fixed income practitioner leading the Fed, kind of like a Scott Bessent leading the Treasury Department with market experience. But nonetheless, you know, Warsh has the pedigree that they were looking for and you know, they made the announcement last Friday. Well, he still has to get confirmed by Congress. It sounds like the, you know, that shouldn't be a problem. So, if, assuming it's not a problem you know, he'll take over the Fed in at the end of May, beginning of June to lead the Federal Reserve. As far as kind of what expectations, I think, you know, to be frank, I think all four of the candidates have talked about the need to lower interest rates. So I don't think that that's going to be a surprise when Kevin Warsh gets confirmed and gets into the chair and starts talking about the need for lower yields. You know, they've I think, fully bought into the notion of productivity increasing and being able to run a slightly hotter economy without the inflationary pressures that typically come along with a hot economy. So I guess his next challenge is to convince the other folks on the committee that they can cut interest rates without reigniting inflationary pressures.

Jeff Buchbinder (18:56):

Yeah, that's those two really, really important points here. This maybe the skeptics or the people playing politics would say, well, he just turned dovish after being hawkish because he was auditioning for the job, right? I understand that. I'm not, I don't believe it, but I understand that. It seems like, you know, the AI productivity boom, which mirrors, I guess he was not at the Fed yet, right? But mirrors the late 90s tech boom and the productivity there and how Greenspan handled that, that's enough to grow the economy with less inflation, right? I think, and that, I think that's a really key point that probably explains more about his pivot than anything else. But on the q not liking QE, right? Not liking a massive Fed balance sheet, it seems like he's had that view for, for a while.

Lawrence Gillum (19:49):

That's right. And that's what, you know,

Jeff Buchbinder (19:52):

A decade.

Lawrence Gillum (19:53):

I don't want to call him a politician, but I mean, you know, a lot of these individuals, their views change over time. The balance sheet view from Warsh has stayed pretty consistent. And like we talked about, I think shrinking it significantly from current levels is going to be a challenge, at least initially. Maybe that means that they have to cut rates more aggressively than what's priced in, to kind of keep the financials system you know, without getting too stressed there in terms of just bank reserves and what have you. But yeah, that's going to be interesting to play out and to see how, if in fact, he does continue to keep that belief just given the size of the balance sheet currently, and just the challenges of shrinking it meaningfully from current levels. Mm-Hmm <affirmative>.

Jeff Buchbinder (20:41):

So maybe here's the bigger question. Do we have to worry about Fed Independence anymore?

Lawrence Gillum (20:49):

I don't know. We've talked about this internally. I mean, Fed independence, there's always been presidents that have tried to push their views on the Fed chair. You can go back to Arthur Burns before Paul Volcker and you know, with Nixon and making, you know Arthur Burns kind of cut rates and keep price controls or, you know, there's, so there's always been pressure from the president to have lower interest rates. It's just you know, there's always been that notion that lower interest rates means a better economy, better economy means, you know, higher approval ratings from the president. So I don't think that the Fed independence narrative was a real one other than just, you know, the discussion that we're having on, or that they're having on, you know, the true social and acts and all that case.

Lawrence Gillum (21:40):

So, it is more visible, I think, these days, and it has been in the past. I think the takeaway is there's 19 people on the FOMC committee and they all have their own views. They all have their own votes. And I think, you know, having one person in there that is ultra dovish in terms of getting rate cuts passed, that's not, that isn't, and he still has to prove his points to the rest of the committee in order to get buy-in, otherwise, he'll get voted down. Like, you know, what typically happens in a committee structure that, you know, that is allowed to vote how they feel. So I think his appointment is a good one. It probably isn't going to upset the apple cart too much, but I think he still does have a tough job ahead of him trying to convince the other 18 folks on that committee that rates need to be much lower,

Jeff Buchbinder (22:33):

Reminds me a little bit of STAAC sometimes in our Strategic and Tactical Asset Allocation Committee. Somebody makes a pitch and the committee doesn't buy it, so happens on pretty much every committee. So that's a really important point too, Lawrence. Thanks for that. So the Weekly Market Commentary, I mean, I think you started writing it before Warsh's name, I guess bubbled up to the top on Thursday of last week, but the Weekly Market Commentary on lpl.com is really, there's really two pieces to it. There's the Warch piece, and then there's the sort of Treasury supply, Treasury issuance piece, right, which obviously relates to the deficit. So this just shows you the deficit in dollars, not in percentage GDP. So what's the message here? It's I mean, we're going to end up right back where we were the last couple of years, <laugh>, I'd imagine, right?

Lawrence Gillum (23:24):

Probably, yeah. So one of the takeaways from the Fed meeting on Wednesday too is Chair Powell was asked about the sustainability of U.S. debt. He talked about how it wasn't an issue right now, but the path is on, I guess the trajectory of debt is on an unsustainable path. And that's because we do have these large budget deficits in peace time and with a full employment picture. So, it's one of these things where we should be addressing budget deficits right now because we can but it does you know, seem to be an impossible hill to climb for politicians. But ultimately that just means that, you know, bigger budget deficits means more Treasury issuance. There's 38 and a half trillion with a T of outstanding Treasury debt outstanding currently that's likely to continue to grow by $2 trillion every year.

Lawrence Gillum (24:23):

So that trajectory is on a unsustainable path. And you know, the Fed and the Treasury Department have become almost inextricably linked here because of how the Treasury Department is funding these deficits. So the next slide is kind of how, it is really the important takeaway. Right now, Treasury is opting to fund its deficits using Treasury bills. 22% of total issuance is right now in Treasury bills at, sounds like it's going to head higher. You know, the 20% floor is, or ceiling rather by the Treasury borrowing advisory committee. That was kind of their recommendation, kind of keep bill issuance below that. Given the shape of the yield curve and the potential for rate cuts Treasury Department has opted to continue to issue bills. This is important because it does have implications for the Fed. The more Treasury bill issuance that you have, the higher correlation you have to the Fed funds rate, right?

Lawrence Gillum (25:33):

Because Treasury bills are securities that have one year of maturity or less. So the yields on those securities are highly correlated to the fed funds rates. It's one of the reasons why Trump has been pushing and Bessent have been pushing for rate cuts is they want to issue more Treasury bills and have lower rates versus issuing more longer maturity securities and paying a higher interest expense on that debt. So that the, I think that narrative is going to continue in 2026, 27, as long as frankly, as long as the fed funds rate is above zero, I think Trump and the administration is going to keep calling for rate cuts because of the fact that the amount of debt that's going to be issued and continue to be issued is going to increase. And that's going to have implications on our ability to service debt right now.

Lawrence Gillum (26:22):

If you just think about the interest expense, about 20% of tax revenues right now go to servicing the debt. So, you know, we do need to reduce interest expenses in this country. And you know, one of the things that we've talked about on this podcast and elsewhere is the tariff revenue has helped bring down some of these costs by closing some of those deficits. But frankly, it's not enough. So the administration is going to have to come up with new ways to reduce that interest expense because it continues to grow.

Jeff Buchbinder (27:00):

Yeah, I mean, the best one would just be to reduce the amount of debt, but that is going to take <laugh> some time. Maybe a generation, but certainly lower rates can help reduce the cost of servicing that debt. So that's really an important piece right now. My question on this, Lawrence, for you is, you know, what's the downside, right? We know the upside of issuing the T-bills, it's not putting pressure on long-term rates, therefore you're not increasing the government's cost to service the debt. Is the downside just that you, you know, have to keep sort of raising the money and finding the demand for Treasuries every few months?

Lawrence Gillum (27:41):

Yeah, so the downside, yeah, that's right. So you'll have to, I guess the shorter maturity of your debt stock, that means you just have to roll it over more frequently. So you're more beholden to short-term interest rates. But with the Fed likely cutting rates with the inflationary dynamics largely behind this you know, I think, you know, I think it's safe to assume that, you know, short-term interest rates are going to be lower than they are currently. So your debt financing costs should go down as well. The one risk in all of this though, is right now there's a ton of demand for T-bills because there's a ton of demand for, or there's a ton of assets in these money market funds. The risk is if you cut short-term interest rates aggressively and term out your debt using Treasury bills, what happens with that, with all those assets parked in money market funds?

Lawrence Gillum (28:33):

Do they go somewhere else with a higher yield and then you lose that demand for Treasury bills? So there's always going to be a supply demand story in markets, and by cutting rates aggressively to help finance your debt, maybe reduces the demand for that debt. So you'll have to see how that plays out. Now the Fed is buying T-bills again so that is another source of demand that's there and can always increase based upon however the Fed wants to structure its balance sheet. But yeah, there is a tradeoff between supply and demand, especially if you start cutting rates aggressively, maybe that demand if money market assets goes away.

Jeff Buchbinder (29:17):

Yeah. And we probably don't want to rely too heavily on foreign buyers. Have you seen data on foreign buyers of Treasuries lately? Has it been fairly steady in recent months?

Lawrence Gillum (29:28):

It is, it has been steady and last year was actually a pretty good year for foreign investment in the U.S. despite that whole, you know, sell America narrative. Treasury bill purchases by foreign investors actually increased last year. A lot of their ownership is in kind of the short to intermediate part of the Treasury yield curve. They don't buy a ton of bills just because of the fact that you have to roll those over so quickly. But, you know, 3, 5, 7 and some 10-year type purchases by foreigners are, it's kind of the sweet spot, much less on the 10-year tenor, but 3, 5, 7 years of the Treasury tenors are where a lot of the foreign investors park their assets. But there still is a, like I said, there's still a ton of money in short-term money market funds and, you know, foreign investors invested in money market funds too. So you know, that's the big key. If that demand goes away, then you're in a dynamic where, you know, you do need to find additional buyers for this debt.

Jeff Buchbinder (30:33):

Yeah, a lot of that demand just kind of has to be there <laugh>, because the rest of the bond markets can't handle it. But we need to do a little more than that than just be the only game in town. But that's still encouraging. We want that foreign demand. Did you tell me that 20% of treasury ownership is foreign or is it 30? Is it,

Lawrence Gillum (30:55):

It's 30%. Yep.

Jeff Buchbinder (30:56):

Okay. It's 30%. That's huge. So we got to watch that piece for sure to keep rates in this range. But again, the whole backdrop we think can help keep rates in this range or lower, but we need some help from productivity for sure, as we talked about last week with Jeff Roach. So thanks for that, Lawrence. Good stuff. These are really the hot topics I think everybody's talking about right now with the Warsh news. So turning to the week ahead, I mean, we were all excited to talk about the week ahead and that jobs report <laugh>, and then before we even had a chance to change the slides we got no jobs report this week, but nonetheless, the expectations from Dr. Roach and our team kind of in this 50 to 75,000 kind of range my sense is that you'll probably see better private and maybe some modest job losses on the government side. But other than that I think it's just sort of a stable, kind of a job market that's low, kind of bumping along the bottom of the range that we want, but stable job market. Your thoughts, Lawrence?

Lawrence Gillum (32:09):

Yeah, that's fair. You know, I know Jeff Roach has talked about kind of the low hire or low fire job market. Fortunately we won't get to see that in the official data on Friday, but there are other employment data releases this week. We got the JOLTS and ISM services. So there will be some data but unfortunately the kind of the top tier data has been pushed off pushed off a week. But the you know, the narrative that it's still a low hire, low fire job market, I think is still a real one.

Jeff Buchbinder (32:51):

Yeah. The ISM employment component was actually pretty strong. 48.1. That was 2.1 points above expectations. The manufacturing number too was much stronger than expected, 52.6 ,this morning. So yeah, that was part of the reason, the other part of the reason probably why stocks bounced a little bit beyond the points that I mentioned earlier. So yeah, I mean, the job market and inflation, right? Tho any data points around those two things are what we want to pay attention to.

Lawrence Gillum (33:29):

We'll have to see if the CPI data gets pushed as well, because that comes from the BLS, the Bureau of Labor Statistics, that's the same group that does the payroll data. So who knows when that's going to be released. We'll, have to defer to Jeff on that one too.

Jeff Buchbinder (33:48):

Yes, absolutely. So we know the drill now we <laugh>, right? We didn't gosh, in that last long shutdown, when was it, like right before the pandemic? We had a pretty long one, if I remember right. I don't think we delayed major economic reports. So <laugh>, this is kind of a new thing we're all getting used to, but yeah, we'll at least we'll only have to wait maybe a week, not not a month or two like we did the couple months back. So the other thing to watch this week, of course is earnings. We're really off to a good start. I'll do more on earnings probably over the next couple weeks. But we started tracking to 8% earnings growth and now we're over 11, which is excellent. And the guidance has been good enough overall to keep forward estimates from falling.

Jeff Buchbinder (34:42):

They are unchanged since January 1st. That is a very positive development and frankly, one that I did not anticipate. Tech is a leader, growing earnings, 30%. Industrials had a really good couple weeks. They're now tracking to 25% earnings growth year over year. So we would call tech and industrials the winners so far. It's still fairly early. I don't even know if we're past half of the market cap of the S&P 500, and we're certainly not through half the companies. Only about a third of S&P 500 companies have reported. So this is a big week. Amazon and Alphabet on tap in addition to some other big names, Lilly, AMD, Palantir, we got Disney today, which was, I guess, kind of mixed. There's a lot of cross currents going on there, but anyway, a lot of big names still this week.

Jeff Buchbinder (35:34):

So look for that 11% growth rate to maybe go to 13. I think 13, 14% is probably a good guess as to the final range. So solid earnings season so far and we would expect that to continue, even if you still have this undercurrent of skittishness about the AI investment, whether it'll come through and whether it'll be productive. That is certainly a key risk to watch for markets. Although, so far the capital investment guidance has come up. In fact I think we're up about 20 billion in hyperscaler capex expectations for 2026 versus where we were before those Mag Seven names last week reported. So it's something to digest, but certainly these companies continue to be very optimistic about AI and in turn are funneling into earnings expectations for the tech sector, which are still leading the way. So with that, we will go ahead and wrap, again, more on earnings in the coming weeks. Thanks so much, Lawrence for walking through your thoughts on Kevin Warsh, the Weekly Market Commentary, the Treasury market yields, it's all tied together and all certainly very, very important for the stock market as well. So thanks everybody for listening to another episode of LPL Market Signals. We will be back with you next week. See you then and take care.