Quarterly Check In May 2022

BODMay2022.mp4

[00:00:04] Thank you for joining us today for Burnett Okanski Dale Financial Group's quarterly check in. For our meeting today, Tom Burnett is going to provide an update on the state of the markets, followed by Andrew Dale, who will talk about valuations and volatility. Then Tom Okanski will wrap things up by talking about the energy transition. If at any time you have a question, you can type it in where it says Q&A or where some of you may see a speech bubble with a question mark in it, depending upon the version of teams that you have running. If you would like to remain anonymous, there is also an option of posting the question anonymously. Thank you so much for joining us. And now I'm going to turn it over to Tom BURNETT for an update on the state of the markets. Tom.

[00:00:53] Thank you very much, Ann, and welcome, everybody. This is our second call, I believe, of 2022. Spring has sprung, at least it has. In London, Ontario, we have green shoots and green leaves coming now. So hopefully that's a good omen for us all. I'd like first off, just to go over a recent market statistics and we'll also go over a couple of charts to show you the state of state of things at the present time. So these are numbers from Bloomberg. And as of last night's closes, the Toronto Stock Exchange is down almost 5%. It's actually down 4.8% as of last night. Dow Jones, New York is down 11.32 year to date. S&P500 is down 15.9. And the NASDAQ, which is the home of many of the tech stocks, also known as Fang, is down 25.45% year to date. These are large numbers, EAFE, which is also known as Europe, Asia and the Far East, which is pretty much everything outside of North America, the major markets, is down 16.68% year to date. So you might ask, what is up this year? Well, oil's up this year. Oil year to date, as represented by West Texas Intermediate, the Cushing is or Cushing spot price is up 48.3%. All you have to do is go to the gas pump and actually you can see that two gases over two bucks a litre here in London, and depending on your metric conversion to Imperial, we're pushing well over eight bucks a gallon.

[00:02:23] Hasn't been this high, I don't think, in our lifetimes. Gold, interestingly enough, is flat year to date. As of last night it was zero in US terms, depending on the futures contract you're looking at. I was looking at Bloomberg. It's very interesting with all this talk about inflation, that gold is flat. Also, if you look at the grains, wheat is up 59% year to date, corn up 35%. A lot of this has to do with the Ukraine. That's one thing that we can say is happening there because we're a breadbasket of the world, but so is the Ukraine. I just thought we'd also go over a few other things here. I'm going to look at the first slide here, which is going to be a little chart on the bond market. This is the Bloomberg Aggregate Bond Index, annual returns from 1976 to 22, 2022. This is as of, I believe, May 10th this year. This is an index, an intermediate term bond index, which is two to a maturities from 2 to 10 years in US investment grade bonds. So this is not junk, junk bonds or high yield bonds. These are investment grade bonds that we would put in portfolios or you would buy and feel comfortable with as far as the credit quality, like a bank bond or a big corporation bond. As you can see, this is down over 10% year to date and it's the worst in history.

[00:03:43] This is going to be addressed by my two colleagues after they'd be talking about certain things about inflation and things like this. But this is the state we're in right now. And on this chart, you can go back to the beginning where you see periods in the late seventies, early eighties, and that's when we had old timers remember rates in the teens. You had a massive mortgage rate maybe of 14 to 18%, depending on if you're lucky to buy one at 18, that's not a good thing. We're nowhere near that right now, but what's caused a lot of this is the acceleration or the rate of change in the rates. Usually after a bad year like that, you're due for a good one. So that's just one thought. The next next slide, if somebody can move that on for me, is of the Nasdaq stocks above the 200 day moving average. What this is about is basically the stocks that are trading above an average price over the last 200 days. And this is a metric or a measure that a lot of portfolio managers look at to see what the long term trend of the market is. And we're down there in a low range of around 16%. Again, this is as of May 10th, so it's a bit out of date, maybe small. It probably went actually lower in the last couple of days.

[00:04:57] But you can see other measures on here at previous lows, like '07, '08, '09. Then we had this little bit of a meltdown in 2011, and then we had other smaller sell offs. But the NASDAQ represents all where all the growth is. So again, this is where FAANG is Facebook, Amazon, Netflix, Google. Also, you can throw in Tesla in there and Nvidia. So these stocks are what are representing this to a large extent, this index and they are down. But this is also a measure, measure of pessimism. And right now we are very pessimistic, as in the average investor is ,usually it's the sign of a bottom approaching or something close to it. The headlines aren't good as we know. The next slide I wanted to go at, which kind of coincides with this as well, and this is one of these seasonal studies, but there's usually a cycle to the presidential, like the US presidential cycle, which applies to the markets. We're in year two right now. So this is what the average cycle is over many years. But we're basically right now in the second quarter of year two and year two is not necessarily a good year. If you can see by this chart, the best year is usually year three. Year four has a bit of a downtick and sometimes, that's basically based on the, I guess the what people are looking at is the uncertainty who is going to be the next leader.

[00:06:22] You're going into an election and then once you're out of that, usually there's a big run up. But year two is historically where unpopular or things that are maybe not good for the market get passed through the Senate, through the House. The president tries to push stuff through that maybe are not good for the capitalist system. Who knows what the what the excuse is du jour. It's also basically the year where the honeymoon is over. Other things are happening that he's doing that people are not happy about or the party in power is not happy about. The other thing that happens in this year is there's a midterm election and usually there is a change, sometimes in one part, form of the government or another. We'll see. And that also leads to uncertainty. So I thought that is typical of a presidential cycle. We're in the year two, but if you throw on to that a war in Ukraine, the interest rate and the inflation inflation situation that we're in which my colleagues will talk about and valuations is where they are. You can see where we are right now. Maybe it's not a good time, but I think what we'll see is out of bad times comes good, come good times. Anyway, that's a little bit of an update of where we are right now and I think I'll pass it back to you Ann.

[00:07:37] Thanks, Tom. We certainly live in interesting times. Let's keep things moving. Andrew was going to speak about fluctuations in volatility, Andrew.

[00:07:51] Thank you, Ann. I'm going to split my time talking about both the valuations and the volatility we're seeing in the market this year. And I'll begin with the P/E ratio and if we put that up, thank you very much. It's relatively basic valuation concept. Price to earnings ratio, more commonly referred to as the P/E ratio. It is the price of a stock divided by their earnings per share. And we generally use the forward P/E which looks at the projected earnings 12 months out. Now the P/E is not the be all and end all for valuing a company. It has many shortcomings, but it is a good starting point. In general, the higher the P/E ratio, the more overvalued a company or market is. And for this discussion, I'm going to look at it from an overall market perspective. The broadest market in the world is likely the S&P 500, so that is the one I'm going to talk about. If we look at the chart here and the chart is from FactSet and the numbers I'm going to talk about going forward are all from FactSet as well. So the five year average P/E ratio for the market has been about 18.5, which is well above the longer term 15 year average of 15.5. As of May 5th, the forward P/E ratio in the S&P 500 was at about 17.5. So we are cheaper than the five year, but more expensive than the longer term. The S&P 500 closed on May 5th, a little under 4150, which corresponds to aggregate earnings per share for the market of approximately 235.

[00:09:33] If the earnings estimates do not change, for better or worse, and the P/E for the market was to return to the 15 year average of 15.5, it would correspond to a level on the S&P 500 of almost 3650 now. Full disclosure, I don't have a crystal ball and I'm not making a call that the S&P 500 is heading to 3650. It might get there. It could drop even further or it might not get that low at all. The main variable in the equation is what will earnings be going forward? They're unlikely to be static. Many companies will be able to pass along the inflationary cost pressures that are facing, higher than expected revenue growth in nominal terms for these companies. And some of these companies will actually have a better bottom line as a result. Now, if we estimate that the earnings forecast for the S&P 500 will be revised upward by 11%, then that 2.35 EPS forecast, earnings per share, would increase to 260.85, if we're if we're getting specific, and if we multiply that by the 15 year average market P/E ratio of 15.5, that would give you a value of 4043, which is more or less where we were last week, realizing we were higher and lower than that last week. If earnings are revised lower, then obviously that would correspond with further weakness in the market. The big takeaway is that just about every market in the world is having a bad year and it could get worse before it gets better.

[00:11:03] We know it will get better. The market has rebounded from every decline in history. We know it will happen. We just don't know when. Now, I've been speaking about the stock market, but the weakness we have, we have been seeing has been happening in just about every asset class. Negative returns and above average volatility has hit the equity market, preferred share market and the bond market. The bond market in Canada is actually down more than the stock market, which also happened last year, but last year the stock market did great, so most people didn't care that their bonds were a bit negative. In 2022, so far, everything has been down. Now, getting back to the equity market, I should mention that there's an inverse correlation between the P/E ratio and the interest rate. If you look at the chart that we have up there, the the huge drop there in March of 2020 was, you know, market crashing due to fear with the pandemic. But it also went along with, as the rebound will show you, as rates were being cut to essentially nothing, the P/E got an incredibly elevated from a historical perspective and remained elevated until it became very clear that rates were not going to be be staying at, you know, half a percent on the ten year, they were beginning to come back down and pardon me, go back up. There's an inverse relationship. The chart is going back down.

[00:12:30] So with that, if you use a discounted cash flow model or really any time value of money calculation, the discount rate is going to be in the denominator and it will be some version of the risk free rate. Often the ten year US Treasury bond. The higher the discount rate, the lower the present value of the future earnings. And you can see how lower present value for future earnings would equate to a lower stock price for a company and that higher discount rate will affect every company and the market. Now, the other thing affecting stock market valuations and may continue to affect stock market valuations has been the death of TINA. And Tina is an acronym for There is No Alternative, and it applied to the stock market because nobody really wanted to invest in a bond paying you pretty much nothing. So the expression TINA or acronym TINA came around and there is no alternative to the stock market, which could also explain a little bit of the the froth we got in equity markets over the last two years. That has changed this year. Well, rates are certainly not an exciting level compared to the 1980s, nor are they keeping up with the current level of inflation, they're much higher than they had been. On that note, I'm going to turn it over to Anne, because I know Tom is going to get, Tom O, is going to get to that in a little more detail. Over to you in.

[00:13:54] Thank you, Andrew. Last but not least, Tom Okanski is going to talk about the trek to neutral. Tom.

[00:14:03] Thank you. I'd like to spend some time on this topic to explain what it means and to highlight some of the potential effects on the financial world. And why? Why is this important? Well, we have an inflation problem. We all acknowledge that. And the issue of where interest rates are going addresses this problem. For for our understanding, we really focus on what the US central bankers are conveying and the reason the Federal Reserve Bank, i.e. the US central bankers, are so important, well, there's still, can you mute, please? So the reason for the central bank is so important is the US is still the most important economy and most powerful economy in the world. More recently, the it's even takes a higher ranking given the instability caused by this war. The US and its currency have been and continue to be to this day, the safe haven of the world. Thirdly, the US monetary action has been an important leader in dealing with world crises, i.e. the dot com bubble of the late nineties, the 2008 financial crisis, and the COVID response in 2020. By driving interest rates upward or downward, they have responded to crises in the world and help the world get through those crises. So that it's understandable then why we watch the Federal Reserve and what it's doing as it plays a really this world leadership role in tackling this now big issue in the world of inflation.

[00:15:46] So what is this thing that we call neutral or natural or for the academics in the crowd, the r star rate that is, simply put, the interest rate that both supports the economy at full employment, and maximum output, and also keeps inflation constant. A nice little wrapped up package of ideals. So that rate is is viewed as a tool for accomplishing these three goals. The US Central Bank really began using short term interest rates to control inflation and stimulate the economy in the late eighties, and so this idea of a natural rate began to be studied at that time. This rate that is so carefully followed by all in the financial world is natural rate, neutral rate. It's the benchmark from all other rates are also set. So what then is this rate in terms of numbers that mean something to us? Well we have to, first of all, understand that there's a lot of disagreement on what this rate actually might be. The only consensus seems to be that the rate has descended over the years. For example, the rate in mid 1994 that the Fed modeled as the neutral rate was 5.25%. Now that, remember, is a nominal number. The nominal rate will always be higher than the real rate due to whatever inflation is at the time. The chart that's been posted and you're looking at right now is a picture of the neutral rate in real terms.

[00:17:22] And you can see then from the eighties through the nineties how that, into this decade, how that neutral rate has has drifted down as as I indicated earlier, it's descended. So I mentioned in 2004 that the nominal rate was 5.25%. So if you were to go back to the 2004 number, you'd see that that the real rate was somewhere around 3% and inflation back then was probably around 2%. Now let's look at where we are today, what are current rates. Now the US federal rate is targeting 0.75% to 1%, having moved up half a basis point or 50 or 50 basis points or half a full percentage point a couple of weeks ago. Now, remember that this what we're seeing is the nominal rate. And more on that in a bit. The Canadian equivalent known as the Bank of Canada overnight rate is currently 1%, also having moved up by half a percent in mid-April. Again, that's a nominal number. Now, about that time, the prime borrowing rate in Canadian banks moved to 3.2% from 2.7%. That's the rate that you and I will go to if we're prime borrowers will achieve at our at our at our bank for our prime borrowing rate. So if we accept the proposition that the natural rate or the neutral rate is a real 3%, you can see that there's a long, long way to go to get to neutral.

[00:18:51] And why do we have to get to neutral? Well, the background, quite frankly, is an economy that has weathered the COVID, effects of COVID, remarkably well. And because of the actions taken by monetary authorities in 2020 to drive interest rates lower, really almost to zero, ensured that this medical disaster did not cause a recession. We really find ourselves in a too hot economy now with inflation pressures persisting. Now, recall what I said earlier about this neutral rate being one that supports the economy at maximum output and full employment and keeps inflation constant. So the inflation part of that problem right now, is the problem right now. We have really full employment. No secret about the numbers of jobs that are falling, unemployment levels, we have maximum output. And now some might argue that this has not been quite reached due to supply restrictions and so on. But those two components of this tripartite goal are pretty much fulfilled. Now this inflation thing comes to roost now. You may recall late last year, there's a lot of division of opinion. A number of the key bankers in the world were saying inflation would ease without much problems or much control or much issues, inaction from the central bank. Now the assumption was that the supply chains disruptions of COVID would be solved. And and of course, plenty of goods would then be made available and the prices would start to fall.

[00:20:21] Instead, what has happened is that that rebound in demand from people not able to spend in the lockdowns has put pressure on supply, combined with an ageing and reduced workforce where workers are hard to find to help supply that demand, a sudden war that's disrupted supplies even more so, and you have an inflation problem that persists. So given this this persistence and even acceleration of inflation, inflation numbers in the recent months, the view of inflation just rolling over has changed. And what do we conclude? Well, once again, that the policy bank rate is far too low, nowhere near neutral. Now currently. And this is an important thing to understand. All central bankers in the United States are uniformly calling for this key interest rate to hit neutral by year's end. That's a dramatic turn of opinion from a few short months ago. So we saw a few weeks back a 50%, 50 basis point or half a percent move in the in the federal rate with a distinct promise for more. Now as we move along this curve somewhere to neutral or at least something higher than what we have now, at 1%, the markets react. So why and what more can be expected? Please understand that in all of this process, this trek, as I call it, there's a lot of talk, a great deal of communication, communication going all over the place.

[00:21:56] This open talk and demonstration of strong intention can itself solve some of the problems. That is, if people think that interest rates are going to rise, they might do the following. They might buy less on credit. Consumption is being greased by low interest rates, and some of that's consumer loans. Less consumption will hopefully occur from credit users that have backed off and therefore relax prices because it would be more supply than demand. Investment leverage. A great deal of investment in stocks and real estate has occurred using low cost borrowed money. This has created what we understand to be evaluated, elevated valuations and really even bubbles in some sectors. So if the view is that it will cost more to finance that investment purchase, demand from the borrowing sector diminishes and therefore prices may cool. As a result, interest rates may not have to rise as much because the economy, and therefore inflation, may have cooled in advance of the actual rate getting to somewhere near neutral or so. So acknowledging this need to get inflation under control and start the move back to neutral, the Fed made this rare half percent move a couple of weeks ago. The market had been expecting that, and we'd already seen a bit of experiencing price adjustments downward in the stock market, about 9% to that point in the US stock market.

[00:23:23] Now on the day of that move, Federal Reserve Chairman Powell indicated that that was a pretty large move and that perhaps continued aggressive moves of that quantity might not be needed. On that day then, the market felt interest rates might not move much more up, and so the market rallied 3% that day. That's a huge daily move. Alas, the following day, the market rethought that idea based on some skeptical comments from some economists and some other federal bank officials and it gave up 4% the next day. So within one day, optimism from communication up 3%, pessimism the next day, also from communication down 4%. So now we turn the conversation to wondering, well, is this a repeat of the eighties? When we had inflation kept running and running and fed by wages and we had this wage price spiral and the Federal Reserve had to overcompensate by large measure, it really pushed the interest rates way, way above the neutral rate, eventually causing a significant recession. So if we don't get the message early from all this communication, here's how a story of how how that unwinding might happen in a little kind of microcosm, that sort of way. So we understand that the the price of what drives a piece of real estate or a business or a stock is really an estimate of the cash flow that it will provide, as Andrew alluded to earlier.

[00:24:49] And we put a multiple on that. When interest rates drop to what was recently near zero, that cash flow from even more risky assets that might promise a big cash flow in the future, it looks even more attractive to buy. Up go the prices and at the end combined with the low cost of financing because interest rates aren't a barrier to entry, a frenzy happens, the cash flow is being ignored, but rather the expectation that prices will just keep rising because of the world piling into a limited, limited supply. Then this is of course, something that we've seen in stocks and we've seen it in real estate. So borrowed money plays a large part in these excesses. And what I want to do is give a little illustration of how the first part of the unwinding happens and that's and that's the downside to leverage. Let's examine $1,000,000 investment with $40,000 annual cash flow. And this doesn't have to be a piece of real estate. This could be a stock with a dividend or a private business that's looking to value. So we're not looking at whether this investment goes up or not or down in price. Right now, we're just looking at the cash flow because we're going to use some borrowed money to do the deal. I'm going to walk through the first scenario.

[00:26:04] This is back in 2021. We see the Fed funds rate, they're at 0.25%. The closed mortgage or a line of credit with the five year interest rate roughly 2%. Many of you, if you had mortgages in your life, were happy to lock them in, perhaps, or 2% or less last year. So the cost of this investment is $1,000,000. Now we're going to put down 20%. We're going to put down $200,000, and we're going to go and borrow or line of credit or a mortgage or something for $800,000. So here's what the income scenario looks like. The income from the investment, from the share or the property, the dividends, $40,000, the cost of the interest that we're paying is 2% on our $800,000 loan. That $16,000, our net income then after costs is $24,000. So on our investment, which is $200,000, we're earning $24,000 after all costs. That's a 12% return. Sounds pretty good, right? Interest rates that low, people are piling in. Let's go to the next slide. Today, 2022 so far. The Fed's Fed funds rate is now at 1%, having gone up a substantial amount, still not a very high number, but having gone up. Closed Mortgages, line of credit now are at 4%. Cost of the investment is, again, $1,000,000 our down payment or equitie's, 200,000, our mortgage or a line of credit cost is going to be 800,000. What's the income situation? Well, the income from the investment is still $40,000.

[00:27:43] Cost of the interest on the mortgage is 4%. Now it's $32,000 on our $800,000 loan. So our net income after costs is $8,000. So a return on our investment is not $9,000, but $8,000 divided by 200,000, which is 4%. That's down from 12. So a small move in interest rates, a little bit more cost of borrowing. Our borrowing deal and our leverage play is down to a 4% return, looking a little less attractive. Now, let's go to a third scenario here where interest rates are. Let's call this neutral, the Fed funds rate at 3%. Now, as I said, that's the real return. I'm saying no inflation out there whatsoever. Fed funds rate, if we add on current inflation, would be somewhere closer to 10 or 11%, which is which is, of course, a ridiculous number. But let's say the Fed funds rate gets to 3%, which is which is 2% more than is being talked about right now. In reality, we're at 1% going to three. So when does this happen? Does this happen by year end? Does this happen by next year? What we know is that the direction is certain. The federal bankers are communicating very clearly. It's going on. So let's look at this million dollar investment producing $40,000 in cash flow. What if we use the same tools, our down payment of $200,000 and our mortgage or line of credit now of 800,000 is costing us at least close to 6%.

[00:29:22] Income from the investment is $40,000. The cost of our interest on the mortgage is 6%. That's $48,000. Our net income after costs is now we're losing $8,000 a year. Our return on investment is 8000 -8000 divided by $200,000 investment. We're losing 4% on our money. So with a loss of 4%, what's going to be the outcome in this in this situation? Well, first of all, borrowers start to exit the market. Some may have to sell urgently because they're being called for extra cash to put in the into the bank because their mortgage values are a little bit less. So they may be asked for more money or they can't afford to take a loss of 4% on their on their loans. So some may be selling urgently. So secondly, by that happening, the value of the investment starts to fall, both because borrowers are exiting and cash buyers want a higher return than the original 4%. The cash buyer coming in a couple of years ago, 4% was getting a good deal, but maybe that cash buyer now wants to earn 6% or 7%. Well, if that cash buyer wants to earn 7%, that cash flow, that same cash flow of $40,000 means that that that buyer will be now willing to pay only about $700,000. So will the price of that investment, that was in 2021 being snapped up for $1,000,000 on borrowed money and cash buyers that were out there, will it fall from 1 million to $700,000? Or further based on panic selling that pushes the investment into bargain basement territory, as Andrew alluded to earlier in the stock market. Well, we'll have to leave that answer to the mystery of the marketplace at work. So in summary, it's not a nice scenario for us to be realizing that the homes, the shares, the businesses, where we were all recently amazed at how ridiculous they'd grown to in our pricing to have them mark down by 30% to 50%, is a huge shock and huge disappointment, but it's not an unrealistic possibility. And I turn to The Globe and Mail today's headline in the business section. Some economists are predicting that the real estate market may fall off exactly that number, 30%. Well, the only thing that we really know is that rates have to go much higher and with some concerted, rapid effort to solve the inflation problem. The total uncertainty about all of this is what is that moving target of neutral? What is really neutral going to be that sustains full employment, full capacity and keeps inflation in check? Well, I hope we all get this message as we walk through this and the history of the eighties won't have to repeat itself. Back to you Ann for any questions that you might have.

[00:32:21] Thanks, Tom. We do have some questions today. If the real natural interest rate is 3%, what might the nominal rate be if we have some inflation? Over to Tom Okanski for this one.

[00:32:38] As I was mentioning, we're dealing with the nominal numbers because that's what we're seeing the Federal Reserve do currently at about 1%. If the real natural rate is 3% and we add current inflation that talks about a nominal rate of 11%, well, I think we could all conclude that if borrowing rates were were now 11% from the central bank, we would have a major depressions, not just recessions going on out there. So we don't personally think that the Fed is going to be pushing rates anywhere near that number. Our sense that maybe a nominal rate of somewhere around 5% or so will probably be more than enough to have erased this excess leverage problem, brought prices down to reasonable numbers and can cool the economy substantially. So 5% is the prediction from here. We'll see. It's a long way to go from the current 1%.

[00:33:40] Thanks, Tom. Okay. Question number two, how long do bear markets last? I think I'll go to Tom Burnett for this one, Tom.

[00:33:49] Thank you, Ann. It's a good question. One good thing we can say about bear markets, there is historic precedence- They do end at some point. From a quick study of Thompson One, Value Line or Market Smith or any chart service, basically what I could glean was there's been about 26 bear markets since the 1920s. That's 100 years. A bear market is defined by a decline of 20% from the peak level. So we have one or two of our markets right now in the process of going through the bear market. The average bear market over this period of time has lasted about 290 days. Some have lasted much longer and some much shorter. For example, in 2020, with the onset of COVID, the bear market there lasted about six weeks. Was probably one of the shorter ones we've ever seen. And that was basically from the end of February into the beginning of April, May, depending on which metric you were looking at. In 1987, it was one of the more famous ones, for those of us who were around then, there was a crash in 1987. That's when the market went down over 20% in one day. But that whole bear market lasted from about August until right there into October, November of 87 was three or four months. It only was about 33%. So it was actually not that deep. It was just one big bad day in there. And interestingly enough, 13 months later, the S&P 500 was making new highs. So it took it took time of 13 months to get back. There's two more prolonged ones in history, and they had different nuances.

[00:35:30] In 1929, the market went down after the Roaring Twenties. And some people have parallels or made parallels, including myself previously to the 1920s, the Roaring Twenties, and then you have an aftermath that's not good. But in that period, from about 1929 to 1942, there was multiple 20% bear markets, but there was also many, many uptrends. The same thing happened again from about 1966 to 1982. And in that period, the market itself, represented by the Dow, really didn't go anywhere and went basically sideways. But there was all kinds of new sectors, new industries, new companies, and basically new opportunities coming to the fore. And part of being in a diversified portfolio, you should be having exposure to some of those things anyway. There's there's always an adage that's been out there for quite some time, and it was it's akin to or attributed to Martin Zweig, who just passed away a few years ago. And it was "Don't Fight the Fed". And this alludes to what Tom O just talked about, if rates are going up, certain things don't look that good. And historically, rates going up has not been good for bonds and stocks. But again, there are parts of the sector and parts and sectors that will perform well in bear markets once we figure out where the new the new path is. So at some point, the Fed will ease up. The rhetoric about inflation will change and then the cycle will reinvigorate and start going back up. Back to you Ann.

[00:37:07] Well, if there's no more questions, that will conclude our quarterly check in. Thank you so much for joining us today and we hope you will join us again in August for the next one. Thanks again, everyone, and have a great day.