Talking Markets with RBC's Michael Reid
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Visit us at pgm.com forward slash ETFs. This is Barron's Live. Each week, we bring you live conversations from our newsrooms about what's moving the market right now. On this podcast, we take you inside those conversations, the stories, the ideas, and the stocks to watch so you can invest smarter. Now, let's dial in.

Hello everyone and welcome to Barron's Live, our weekly webcast and podcast. Thanks for joining us today to learn more about the markets, the economy, and stocks in the news. I'm just back from a two-week vacation and as usual I feel that everything has changed and nothing has changed. You probably feel that way too when you're away and we'll see what our guests think about that.

Speaking of guests, I would like to welcome Barron's Deputy Editor, Ben Levison, and Michael Reed, Senior U.S. Economist at RBC Capital Markets. It's a good time to get an economic update, and Ben and I are eager to hear from Michael.

And with that, welcome, Michael and Ben, and let's get started. Thanks for joining me today. Thanks, Lauren. Thanks for having me. Excellent. So, Michael, we like to start with our external guest, and we've got some questions about the economy. I thought we'd begin with a broad look at your economic outlook for this year and next, and then we can drill into the labor market, tariffs, inflation, and all the particulars underlining that.

So give us your big picture view of GDP. What's what's driving economic growth? What might not drive economic growth and where you see things heading? Sure. So the name of the game right now is uncertainty. And unfortunately, that's really been driving our outlook, whether it's due to revisions or just how we're thinking about the world these days.

Right now, it is worth noting that we do see below trend growth in the US economy. We saw that in Q1 and we expect that trend to continue throughout 2025. We're looking for around 1.5% growth for GDP this year. And that's really below that typical 2% growth trend that we see historically.

And the unfortunate thing is 2026 doesn't look much better. And so, you know, that is to say we're not looking for a recession, but we are looking for this below trend growth to continue.

And a big reason why is the consumer. We think that higher prices are going to weigh on consumer spending. That is the largest component of GDP growth here in the US. The consumer accounts for around two thirds of economic growth. So if you see a pullback there, that really starts to weigh on economic growth in general.

Then when you add on things like uncertainty around trade that can impact the trade deficit, as we've seen in the past couple of quarters and even months, that's been very volatile.

And then we also have this uncertainty surrounding government spending, whether it's the cuts coming from Doge or some of the cuts that are proposed in this current budget that is currently sitting with the Senate. All of these kind of present some headwinds relative to our baseline forecast that we came out with prior to, I would say, everything going on, especially the trade war that's broken out.

And yet it is very hard to find a recession forecast on Wall Street these days. It is. And again, I think the key here is the US consumer. And what's really interesting there is there's a very strong portion of the consumer segment that's holding up quite well. And by that, I mean, it's the high income folks we've been talking about in terms of this K shaped economy. But when you think about who's driving growth, who's spending money right now in the economy,

It's the higher income households, those who have survived kind of this impact from inflation. They're not feeling the inflationary pressures as much as lower income households. So that's been a kind of a tailwind, especially as it relates to things like spending on services, which are quite important for the US economy. Also, you have to look at the stock market. It must be driving a big wealth effect, which helps these people.

Absolutely. And that's a great point. It's the wealth effect that you mentioned. It's income coming from your non-labor sources. We've been focusing on that. So a prime example is

in the last personal income spending report from BEA, one of the biggest drivers of the gains came from social security income. That really ties to this demographic story we've been talking a lot about. We are seeing a record number of retirements. We're at peak baby boomer retirement age. So you have a lot of folks now kind of entering in this period of life where their savings rate is going to

move close to zero, they're going to spend a lot, whether it's from that social security income or their portfolio income, whether it's their 401ks, whether they're getting dividend income from stocks that they own or the bond market where yields have remained quite high in this environment.

Go ahead, Ben. Yeah, I was just wondering things. I was wondering is also it seems like the for when it comes to GDP, that there might be a little more volatility in the numbers as well. I was I know we had a week first quarter. I was looking at the Atlanta Fed's GDP now, which has the data coming in at like a three point eight percent clip for the for the second quarter. And I was just wondering, is that is that just a feature of the economic data going forward in this environment?

It is. And a big part of that is the trade story I mentioned earlier. We saw a huge pull forward of trade activity in the Q1, and this started as a result of all the tariffs that were announced. So if you kind of think about how that plays out in terms of the math and GDP contribution, that the amount of imports that we saw in Q1 surge that subtracts from headline GDP growth. That's why we got that slight negative.

When you look at the final sales to domestic purchasers, it was more in line with that traditional norm. I think it was just below 2%. But moving forward, when we're thinking about what we're going to see in Q2, we are expecting that trade activity to really slow. So the trade gap, in fact, the most recent data showed that the trade got really narrowed.

And that will be all else equal kind of added relative to Q1. And then you add on to that the consumer holding up and this inventory buildup that we're seeing when you see inventories rise, that also increases GDP growth.

So I wanted to go back to last week and talk a little bit about the job market report on Friday, which, of course, feeds into the consumer's health and everything we've been talking about. And when we look back at it, nonfarm payrolls grew by 139,000. That is a decent result. It was above consensus. The unemployment rate held steady at 4.2%.

Yet, as you pointed out in a recent report, the labor force participation rate fell. It was actually 62.4 percent down from 62.6 percent, which seems to be insignificant, but isn't. So, Michael, can you unpack all this data for us and tell us what it means and where what it suggests about the the job market going forward? Sure. And, you know, for us, we were expecting an above consensus print rate.

Part of that just stems from some underlying momentum we see in the labor market, namely coming from healthcare. Healthcare hiring has been kind of the backbone of the US labor market for the past three plus years. And part of that story relates to why labor force participation rate is so low. And it's the aging of the population, the demographic story that I mentioned earlier.

What you have going on is now the peak baby boomer retirement age. You have folks retiring in record numbers. We're on pace to see maybe 1.7 million retirements this year. And when you think about that, what it does for the labor market, it kind of benefits it in two ways. Number one, it creates a demand for certain services, whether you're thinking about a

kind of financial services, legal services, all those things that are kind of tied to a later stage of life, but also importantly, health care services. And that's one thing that has been, again, the primary driver of growth. It's accounted for about half of the payroll growth over the past couple of years. So that's one thing we don't expect to slow down. It's not cyclically driven. This is a structural force. You're making me think that demographics is destiny here.

We just happen to be at this kind of peak thing. In my career, I started talking about this. And when you think about 20 years ago where we were, it was something where you were aware of, but it wasn't really impacting the data yet. Now we're really starting to see it show up meaningfully. So you mentioned the labor force participation rate ticking down. That's an important concept. And I think that's one that hasn't been talked a lot about. But the way that kind of helps the economy is

When you have somebody who leaves the labor market, that pushes the labor force participation right down. And again, we're seeing that with the record number of retirements. And it also creates job openings and what we refer to as replacement demand. And that's a really important concept because when you think about replacement demand and what it represents, when you're thinking about the payroll report,

When somebody leaves and then somebody comes in to replace that worker, that retiring worker, the net impact is zero. So that doesn't show up as a payroll gain in the jobs report, but it does help keep that unemployment rate low. So kind of looking forward, this range that we've been in, whether it's 100,000 to 200,000, in our view, that's comfortable enough to help keep this unemployment rate steady around 4% for the foreseeable future.

Yet you also wrote that you think the rate could go up to 4.5% later this year. So is that something to worry about? It is. And why we have that baked into our forecast right now is related to the flow of goods slowing that are coming into the U.S. So when you think about this trade war we were discussing earlier, the increase of tariff rates, that's going to slow goods being imported into the U.S.,

What that means is there's going to be job losses in trade reliant sectors. There's a very high correlation between the flow of goods coming into the US and sectors like transportation and warehousing, retail trade, wholesale trade. And those are likely to see job losses as a result of the impact of tariffs. So it's a tariff related phenomenon.

Yeah, absolutely. And as we said, when we wrote about this in the last jobs report, we're already starting to see that show up. It's really the services that are continuing to propel growth. And just as a good example to kind of contrast the demand that we still see in the service space, you know, we mentioned healthcare earlier, but another one that's been holding up quite well that isn't facing tariff pressure necessarily is leisure and hospitality.

And that's another sector that tends to be disproportionately beneficial as a result of kind of that 65 plus consumer spending. So there, you know, think about things dining out and hotels where they're not really inputting a lot of their goods, a lot of their inputs into the cost of doing business more relate to wages and labor availability. I think you have things like Viking cruises.

Exactly. So and that's just one thing we've we've been keeping a close eye on, because, again, we think, you know, that sector, along with some of those others I mentioned earlier, are really reflective of the momentum we have right now. Now, things start to turn there. I would be much more concerned about wider spread job loss. But right now we're just not seeing that.

All right. So let's talk about this week's economic data. We're going to get two inflation reports, the CPI on Wednesday, the PPI on Thursday. Inflation remains well above the Fed's annual target of 2%. What do you think the data are going to show and how will the market interpret them?

We're looking for a few things this week in the data. First, I'll talk about perhaps the PPI, producer price index, because I think that's where we're starting to look for signs of the tariff pressure showing up first. And, you know, we had a very kind of encouraging report in the prior months that was down four tenths on a month over month basis. We're looking for a bit of payback this month, but generally we're not seeing that upward price pressure just yet.

You might see it in construction costs now that we have that additional 25% tariffs on steel and aluminum that could also filter into your inputs for things like appliances and other home goods that use metals. But importantly for the consumer and what we're expecting in CPI is, you know, rather modest print. We're looking for a two-tenths print month over month.

And largely looking for that year over year pace to kind of stay flat. That is to say, we're not expecting improvement, but we're not looking for it to reaccelerate. And partly because we're just not seeing the higher input costs for businesses show up on the consumer side just yet. So one more important economic topic before we go on to talk about some companies.

The president has been urging the Fed to cut interest rates. You might even say he's been demanding that Fed Chair Powell lower rates. Yet the Powell Fed sees little reason to budge on rates, with the labor market still decent and inflation seemingly somewhat entrenched. So what is the path ahead for the Fed in your view? And how do you think investors should interpret the tension between the president and Powell?

Well, you know, first of all, I think it's important to note that the Fed is independent and, you know, they're going to make the decision based on the data that they're seeing. So that is to say the Fed has been very clear about how they're very data reliant. They're going to look at the totality of the data, as Powell often says. Yes. And they're going to weigh what's going on in the labor market.

against what's going on in that inflation backdrop that I described earlier. So, you know, for them, we did see some mixed signals, you know, even as recently as last week when we had things like the ADP report showing sluggish growth. We're starting to see things like jobless claims drift higher, especially in the continued claim space. That's a sign that folks who are currently unemployed are having a harder time finding work.

And these are factors that could be an early signal that the unemployment rate will continue to drift higher. And that's something that the Fed is sensitive to. At the same time, you have this continued upward pressure coming from tariffs. And it's hard to say exactly how that will play out, given the uncertainty. We have all the court rulings going on right now. We have trade deals with various countries coming into play here.

But for us, I think the key takeaway in 2025, when we look at what the effective tariff rate was in the U.S. in 2024, which is around two and a half percent, that effective tariff rate is now up to 13, almost 14 percent. So all else equal, goods prices are really going to be pushed higher. And that's going to start to filter into the consumer price index later this year.

And the balance for the Fed is, you know, which side of the mandate do they want to protect? We think it's going to be labor. We are expecting the Fed to cut starting in September as we do see the labor market continuing to weaken there. So if we do see

layoffs continue and we don't see hiring pick back up, that's kind of a recipe for the Fed to start cutting in our view. That'll be an important Fed meeting. What do you expect from the Fed meeting in June? That takes place next week. We're going to get the dot plot update on Fed officials rate decision. We'll get their rate decision plus the dot plot update on their forecasts for interest rates, inflation, unemployment and GDP. What do you think we'll learn?

We don't think much is going to change in their view. If you look at the Beige Book that was released, it generally states that economic growth is slowing, but it's not turning negative. So for them, they're going to have to remain data dependent here when you're thinking about things like the hard data, which is more important in our view than some of the soft sentiment data that's out there.

that's what the Fed is watching for and that story hasn't changed all that much since their last meeting they'll likely revise down their Outlook in terms of GDP growth we think they mark up slightly the unemployment rate but they're also going to have to mark up perhaps the the inflation that they're looking for so for them we we don't think they do much in this June meeting

But maybe they could start signaling which side of the mandate they're focusing on here. And there's a meeting in July and then there's Jackson Hole and then there's September. So a lot of a lot of interesting things between now and then. Close your eyes. Exhale. Feel your body relax and let go of whatever you're carrying today.

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So I want to turn to Ben for a moment and talk about some companies reporting earnings this week. It is not the heart of earnings season, Ben, as you know, but we've got some interesting

companies out there. We have some interesting stragglers indeed. Indeed. All right. So GameStop is one. The company reports quarterly results tomorrow. And it turns out the company, which is a video game retailer, is now a crypto play as well. What are we going to learn about the core business, which has been pretty bad? And what will we learn about the company's Bitcoin strategy?

Well, I'm just amazed we're still talking about GameStop. It's over four years, I guess, since it really went all meme crazy back during the pandemic. And really, the company is kind of, it's two things. It has the game business, which really does seem to be a, the retail business seems to be a melting ice cube.

You know, this quarter, they're actually expected to have an $0.08 profit.

Um, that would be, uh, up from a 12 cent loss. Um, but their sales are declining, uh, to be on sales of 750 million is the expectation that would be down from 882 million. Um, and you know, they're going to get, they're going to get a little bit of a boost cause we have the, um, the Nintendo switch two is coming out. So they'll sell, that's going to, uh, probably boost sales for them during the second quarter. Uh, some of the gaming, uh,

Games that came out in the first quarter are going to make the sales decline not as bad as some of the other quarters have been. But it's still like the hope for this company is that it actually has that there's something else. And right now that's something else is Bitcoin. Remember, it's tried lots of things. It's tried NFTs.

That didn't really work out. And so now it's basically trying to run a similar strategy to MicroStrategy, buying Bitcoin, issuing a stock to buy Bitcoin, preferred shares and whatnot. And we'll have to see how that goes. Right now, it's a very small, it has about 1% of MicroStrategy's Bitcoin holdings.

but it's still getting a very similar premium on those bitcoins that MicroStrategy gets. And so, I mean, it's not the only company trying this, but what they say about that is probably more likely to actually and they don't do conference calls, so I'm not sure how much we're going to learn. But any information about the Bitcoin strategy is more likely to move the stock than I think anything about the business itself.

We're living in very strange times. Very odd. That's what I think. Anyway, moving on, Chewy, the pet food company, has run rings around most other stocks this year. It's up 45% in the past three months. It's actually up more than 100% over the past 12 months. The company reports Wednesday, you are a dog owner. You understand these things more than I do. How much more can people spend on their pets?

A lot more. I mean, yeah, as you said, we're a dog owner and there are things that we get, you know, our food gets delivered from Chewy. We get these things called Greenies delivered from Chewy. They're like, they're dog treats that are supposed to help keep their teeth clean. And, you know, and we probably are at the low end of their customers who are probably buying lots of toys and things for their dogs as well. As you said, the stock has been fantastic. It's more than doubled over the last year.

The company is supposed to report a profit of 33 cents. That'd be up from 31. Sales are supposed to increase to about 3.08 billion from about 2.9. And I think the biggest risk here is that even with sales expected to grow about 7%, the stock has moved so much that you have to worry if expectations are too high.

And so one of the things that people are watching are active customers. That's supposed to increase by about 150,000 to bring the number to about 20.7 million and that they're going to have more growth. And so that number, the folks over at Evercore actually think that that number of active customers is the most important one for Chewy's stock performance. And that'll be the one to keep an eye on.

I know my son has a dog and spending on this animal is knows no bounds. It's the worst decision we ever made. But a very good one, too, I'm sure. She's a sweet puppy. Let's talk about Oracle. It has undergone a significant and successful transition in recent years, becoming a major player in the cloud and data analytics. The company reports on Wednesday. Tell us, how is the business progressing and what will we find out?

Yeah, I mean, it's become a very real AI player. You know, it gets mentioned alongside some of the big AI companies when the president talks about the AI plans for the country and things like that. And, you know, why not? They do have all these business. There's

The profit is supposed to increase or not a lot. Actually, their earnings are supposed to increase to a buck 64 from a buck 63. Sales are going to rise to 15.6 billion from 14.3, though. And I think a lot of this comes down to, you know, they're spending on, you

on the company's AI business. That's going to put short-term pressure on margins, according to Guggenheim, but they actually think that it's going to play out well for it. They think that this money is money well spent, that it's going to lead to, that already we're seeing the acceleration in revenue growth, and that'll eventually lead to an acceleration in profits. They actually call it a best idea approach.

And so we'll see how that plays out once the earnings are in. The stock is up about 38% over the last 12 months and 12% over the last three. Interesting. All right. Adobe has gone the other way. The stock is down about 10% over 12 months. It used to be a very popular stock, but less so now. How is the company doing among its graphic design customers? And what can we expect when it reports on Thursday?

It's a very interesting case. I mean, this is a stock that we picked a while back after it had gotten beaten up, thinking that it got knocked down too much. The fear is that AI is really going to make Adobe's products not necessary anymore, that you're just going to use an AI agent, some AI tool that will do everything that Adobe can do for you and at a lot lower cost.

And that hasn't really shown up in the numbers yet and really isn't expected to. It's supposed to report a profit of $4.03. That's up from $3.44. And sales are going to dip a little bit to $5.082 billion from $5.309 billion. But...

what Evercore again was saying about the stock is that the numbers really don't matter right now as long as this debate about AI continues.

And so what really needs to happen is they got to, they're calling it survive an advanced quarter. Basically, they need to give a, you know, get good numbers, give good guidance and really try to convince investors that there is a future for Adobe in this world where, yeah, we can ask AI to do a lot of the stuff for us.

It's an interesting predicament. It is. We will be covering it when the company reports, obviously. So one question for you, Michael, and then we'll go on to some listener questions. What does your economic forecast mean for the stock market? I know you're not the firm's stock strategist, but surely you must look at the market in the context of the economy. What are you expecting? What do you see? What does

What do your colleagues have to say? Yeah, absolutely. And we talk a lot about this with Lori Calvisina, who's our head of equity strategies. And, you know, she she I think really focuses on what I mentioned earlier is GDP growth and whether or not it's going to be below trend or above trend. So while she did recently upgrade her outlook for the market this year,

I think it's still rather sluggish when you take into account that below 2% trend that we are expecting and the market generally is expecting that. So there are going to be companies that suffer as a result of what's going on due to the tariff and trade uncertainty. There are going to be companies that suffer as consumers pull back. But it is worth noting there are still pockets out there that will benefit

benefit in this economy, again, from that aging of the population, that demographic story, those are non-cyclical forces. So you just have to kind of consider where the tailwinds are coming from or headwinds and who the target consumer base is there. And that really, for us, is a big part of the story. Let me ask you, once you look beyond this enormous retirement bubble, what do you see?

Well, we have a few more years where the big boomers are at length. Hopefully, hopefully if I can retire that soon. But I think the really interesting question further out is going to be what happens to the housing market? Because we're really talking about a demographic here that has a high rate of homeownership. Often cases you'll see these households own more than one home, you know, often a vacation home or something like that.

So what's going to happen for the demand for those once that generation passes on? Is the next generation going to hold on to those vacation houses? Or how might those homes and areas where you have a concentration of retirees turn over? That's really interesting. Do you have any early read on things?

Not yet. It's still hard to say. I would say if I had to posit a guess, I would say Florida would be at risk just given, again, you have that concentration of older households down there. And when we're talking about kind of a mismatch of demand, it's really a size story. So you're you're

home buying age, the folks who are anywhere from kind of 10 to 20 right now in 10 years are going to be entering that phase of their lives where they're really buying a lot of homes. And if the demand where they want to live doesn't match up with where the homes are for sale, that could depress prices at a regional level. So I think that's going to be a really interesting dynamic.

And we will be covering that as well, but not for a while. All right. So let's go to some listener questions. We had a question from Dean who wants to know whether your growth forecast accounts for any of the positive benefits from passage of the so-called big, beautiful bill.

For us right now, it doesn't account for too much. And by that, I mean, when you think about the consumer and really the tax rates there, it's not as though taxes are being cut. We're just kind of keeping the current tax rate unchanged. So this isn't a windfall for a lot of folks in our view. There are certain pockets when you think about

about taxes on tips that will certainly benefit those kinds of workers. There were talks of cutting taxes on Social Security income, and that would benefit the older demographic. But by and large, these are small groups. And from a macro perspective, that's not really going to move the needle all that much.

More importantly, where we do see some potential benefits coming, and it remains unclear ultimately where this rate will land, but it's the corporate tax rate that is more important to us and kind of how we're thinking about the world right now. And how are you thinking about it in the context of proposed changes? Yeah, absolutely. So we're really thinking about what a lower corporate tax rate could do, kind of

with respect to what's going on with tariffs. So if you think about companies and their ability to absorb some of the price increases that we're already seeing, this is being talked a lot about whether it's on company calls in a lot of the surveys that we look at. The fear is that the prices, the higher price pressure that businesses are facing are going to have to be passed through to the consumer.

If you see the corporate tax rate lowered, that does give the opportunity for businesses to absorb some of the impact of higher prices resulting from tariffs. Okay. Interesting situation unfolding in Congress. We had a question from Steven who wants to know what the 7% decline in the dollar index this year means for CPI this year and next. Any thoughts there?

Sure. I mean, all else equal, it can kind of benefit domestic manufacturers here in the short term. But when you're thinking about the consumer, when you're buying goods from overseas with a less valuable dollar, that's going to put upward pressure on that consumer price index. So how that plays out, again, kind of

with the businesses that are making those imports, whether or not they're kind of financially able to absorb that decline in the dollar if they were using any kind of hedging techniques to kind of...

take that on. But if not, if they're kind of in a place where they're simply importing goods with a lower cost or a lower dollar, at some point, someone will have to pay for that. And right now in this environment, typically that's been the consumer. Okay, for sure. We have a question from Peter about the deficit.

And it's a multi-part question. When will the massive and growing out of control deficit impact the equity markets? How will it manifest itself or will it ever affect the equity markets?

Yeah, it's a tough one. This is one that I think has gotten a lot of attention over the past few years, certainly coming out of COVID. So I think what's important to note is, you know, look at what CBO has put out. And that is to say the deficit itself isn't necessarily worsening, but it's not getting better. So how are markets kind of digesting that right now?

And there's been a bit of back and forth on this. Is this sustainable? Not in the long term. Is it sustainable in the short term? Yes. There are some things that could happen in the near term. For example, if the Fed starts cutting interest rates, that would generally benefit what's going on with respect to the deficit. Longer term, though, when you think about

The amount of borrowing that's going on, I think at some point you do have to think about the path and continue to look for ways to improve it. So that's not a process that starts or finishes in one year, I should say. It's a process that needs to be started now and really worked on over a number of years. The most difficult part, I will say, of the deficit is thinking about entitlement spending.

And that's really things like Social Security and Medicare and Medicaid, where that just has those demographic forces at play right now. So it's going to be really hard to change that trajectory here. I was thinking about that when you talked early in the call about the amount of spending coming from people on Social Security and how that's been fuel for the consumer economy.

So it really points out why it's so difficult to touch these things. Right. And two, you know, when you have high rates of inflation, one thing to consider is a lot of those beneficiaries will get the cost of living adjustment.

And so when you have colas, as we call them, that are 3%, 4%, that just adds further stress to that particular system. Right. Kind of like when rates rise, adding stress to paying the interest on the debt. Exactly.

All right. I have to ask Ben a question. We've got quite a few. You really don't need to, Lauren, but that's fine if you want to. Yes, I do. It's kind of stock related, but we've had a lot of questions about the energy market and energy stocks. And I wonder if you could give us your two cents on the outlook there.

And it really is going to come down to oil prices. I mean, it's been what's really made it tough is that, you know, oil has been has been weak and it doesn't help that OPEC is increasing production and it's going to really force oil.

companies to make some tough choices about how much they want to drill here in the United States and whatnot. But right now, the sector, I mean, it doesn't look expensive, which I think is great. But we had an article by Avi Salzman that raised the possibility of a $40 barrel oil. And I don't think it needs to be said, that would be terrible for the stocks. And so I think

The good news is that you're seeing a lot of bad news priced into energy stocks right now. But it remains to be seen how much worse it gets. There are always things that could cause oil prices to rise. You know, if there are four heats up in the Middle East again or something like that. But for right now, it just looks like a tough, tough sector to invest in.

Of course, $40 oil would be very good for inflation. Yeah, it'd be good for consumers who'd spend less on gas probably and have more to spend on other things. Right. But it would bespeak other problems in the economy. Yes, it would. All right. Back to Michael. We have a question, another question from Stephen. If President Trump appoints a new Fed chair fairly soon while Jerome Powell is still in office...

quite a number of people have posited that this could happen given the dispute between the president and the Fed. Should one focus on the new Fed chair if that person becomes more vocal? How should investors kind of thread the needle here?

Well, we do want to make one thing clear. The president can't fire Chairman Powell. So now we're looking at what happens once his term as chair ends. I think one thing that would be interesting is Powell's decision to stay on the board because he does have further time that he could exercise and stay on the board.

And when you think about the FOMC, it's really a group decision. It's not just the chairman who is making these decisions about interest rates. So the committee itself and a lot of the kind of estimates that are put out are reflective of the broader group. And I think that's what you want to keep an eye on for the next year.

chair, I think what would be interesting, there probably are some folks that President Trump is already considering

who are within the board, you want to look at whether they're already on the board now, whether they're coming from some other field, whether it's banking or academia, and understand their background in terms of what's important to them. Oftentimes you can look back at research or other types of public comments to understand if perhaps they might be more sympathetic to inflation or labor. Good point.

All right, we're going to close with a question from Lee who wants to know, should the rate on the 10-year Treasury bond be a focus for policymakers? And put in other words, he writes, how relevant is the rate on the 10-year Treasury bond to the annual performance of the U.S. economy?

We do think, you know, when you're looking at the 10 year or further out, the long end of the curve is important in particular for the housing market. And that's one area that, you know, it's been frozen for quite a while now. And we just don't see it making meaningful progress out of this freeze until something happens at that long end.

And so that is a key kind of area that we're focusing on there. And when you do think about kind of the longer end of the yield curve, it does have a more important impact on larger scale projects when you're thinking about things like infrastructure investment, the types of loans that aren't taken out for a year or two when you're talking about five, 10 years out, that has a much more meaningful impact there.

Okay. Unfortunately, we have hit time. I feel like it was a very quick call today. I turned around. It was 1240 already.

So, Michael, thank you so much for sharing your insights with us. And thank you, Ben, for yours as well. And I want to thank our listeners. Terrific questions today. And thanks for tuning in. Ben and I will be back next week to discuss the market, the FOMC meeting, and the economy and more. And please watch the sign-up page for news of next week's guest. Thanks again, everyone. Stay well and have a good week.