Muni Bonds' Moment Has Arrived
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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. I'm Lauren Rublin, Senior Managing Editor of Barron's.

Thanks for joining us today to learn more about what's happening in the markets. The short answer, nothing good. My guests today are Barron's Deputy Editor Ben Levison and Paul Malloy, Head of Municipal Investment at Vanguard. Ben and Paul, it is great to have you on Barron's Live today. Great to be here. Agreed. Happy to be here.

All right, Paul, we know something good is happening, but it's not happening in the stock market. Even as the market is melting down, you are feeling pretty upbeat about the muni bond market. And partly, I suppose that's your job. But there are also other factors at play. You have spoken to me about the municipal bond trifecta for 2025. Namely, that's a combination of attractive yields, strong fundamentals, and ample rainy day funds for state and local governments.

So I'm going to ask you to give us a more detailed look at those three factors, which collectively bode well for this asset class. Yeah, absolutely, Lauren. So you really hit at the heart of what makes municipal bonds really attractive. And it starts off with the fact that they are fixed income assets. So we were sitting at yields that are at decade highs.

So you've got more yield that you've had in the market for a very long time. Combine that with exceptional credit quality. The municipal market is predominantly A, AA, and AAA issuers, all of critical infrastructure. And then you've had a really strong fiscal position over the last four to five years. And state and local governments have really improved.

Use that money wisely. They've built rainy day funds. They've given themselves some buffer for turbulent times that, you know, like you're seeing today in the market. So you've got a lot of yield to sit there and wait. And then it plays all of the

diversification benefits of broader fixed income in terms in when you receive some market turbulence like you are seeing today in the stock market, bonds are doing well and municipal bonds are doing well alongside of the broader fixed income asset class. So we're living what we've been saying for munis for quite some time that you've been paid to wait and it gives you downside protection in the event of volatility.

Unfortunately, we have the volatility. I guess that's the downside. But I wanted to ask you, that famous R-word recession is in the headlines again. The stock market seems to be in full panic mode about the possibility that the Trump administration's tariffs

and other policies are going to tip the economy into recession. How would muni bonds stack up in a recession scenario? And I suppose I should ask, what is your economic forecast as well? Yeah, municipal bonds would do very well in a recession scenario. As we talked about, it provides all of the benefits of fixed income.

And municipal bonds would move right alongside treasury bonds. The traditional response to any sort of economic slowdown is the Federal Reserve cutting rates. And you're seeing that already in the markets with a little bit of a pickup in recessionary fears. Fixed income has been doing much better in recent weeks. As far as our economic outlook goes,

We're not making the recession call. With that said, economic scenarios vary. We still think that 2025 will still be a year of growth. But as with any sort of economic forecast, there are upsides and downsides to it.

And that's why we believe that you need to look beyond the economic forecast and really think about portfolio construction. And that's where municipal bonds come in because they play a very, very critical role at a juncture like this in the markets where we've been in some level of restrictive monetary policy for some time. We've got increased geopolitical uncertainties.

And, you know, these are the times where, you know, bonds play play their most crucial role at times of increased uncertainty. Does Vanguard have any formula for what is the best muni bond allocation within a bond portfolio?

It really comes down to the individual and your risk tolerance. So if you're a longer-term investor that can handle a little bit of volatility, a long-duration municipal bond fund would be really great. Like our long-term tax-exempt fund is something that has a little bit lower credit risk, but a little more duration risk, interest rate risk associated with it. So that's a good one for those who have some extra interest rate sensitivity, but don't like...

you know, some of the additional credit risk, or you've got the limited term tax exempts where if you want a little less volatility, but want to pick up some extra yields via credit,

Those would be two different products for two different purposes. And if you're really just looking to get some broad credit exposure and broad municipal exposure, we've got our core tax exempt bond ETF. And I would say that would be our all weather flagship ETF. What's the ticker on that? So that would be VCRM is a way to get a little bit of everything in an ETF structure. Yeah.

So speaking of policies, I wanted to ask whether you foresee any change in policy toward muni bonds, in particular a change in their tax exempt status. There's been some rumors about that, but nothing concrete. Yeah, we see the probability of full scale tax exempt loss to be pretty small at this point. It's such critical infrastructure issues.

such a critical financing avenue for critical infrastructure across the United States, regardless of political party and elected officials are very close to their state and local government counterparts. So we don't believe that that risk is terribly high. With that said, anytime there's any tax law changes,

There's always something that gets tweaked within the municipal markets. What that is, it's too hard to say at this point. We're still in the middle of the beginning of this entire process. So something will change. What will be, unsure.

But that's ultimately why we really recommend investors don't go at this alone. And they rely on professional management of municipal bonds because there's a lot of nuance in the weeds of municipal bonds.

Even more so these days. We had a question from Charles, one of our listeners, who wants to know whether potential federal cuts in disbursements to states increase the riskiness of city and county debt obligations. No, not really.

you know it'll it'll have some impacts at the margins and you can find you'll always find one individual issuer that that might be more reliant on federal funds than another but but broadly speaking you know it's important to remember that you know states and local governments are separate constitutional entities from the federal government you know they've got their own taxing Authority revenue raising Authority that there's a lot of difference um a lot of different levers

state and local governments can pull that are outside of the federal government. All right. One more question for you, then we're going to go on to some other topics and circle back. But what do you think is the best way for people to invest in municipal bonds? You've mentioned mutual funds. You mentioned ETFs. There are also individual bond holdings.

What's your take on that? Yeah, to me, it's really it's mutual funds and ETFs, you know, for for a couple of reasons. One, diversification or actually number one, first and foremost, is cost. Every dollar in cost that you pay is every dollar that's not invested in the market. You know, you can't compound off of zero. Right. So every dollar not in doesn't compound. It has long run implications. So you need to be something that is that is low cost carte blanche.

You know, number two is diversification. You know, that's as good as anybody can be in picking individual issuers. There's always going to be the unforeseen. Diversification is the

best and only way to protect against any individual idiosyncratic risks. It's important because those idiosyncratic risks typically go uncompensated. You're really not paid for taking idiosyncratic risks. Having some low-cost commingled structure to get diversification low-cost, I don't see a better mousetrap out there at this point.

And returns prove it, that the mutual fund and the ETF structure puts up the best total returns. If I think back to Jack Bogle, if we take a look at our VTAP, for instance, our index ETF, that should be the minimum investments return that you should get. So look to an index fund. That should be your minimum. And then go from there. What kind of returns are you seeing this year? Maybe I should have started with that question.

Yeah, so, you know, we're seeing pretty strong return profiles, you know, expected, you know, this year, given that if I think about it from a total expected return standpoint, you know, when you're looking at a taxable equivalent yield. So taking the taking the current municipal yields and factoring in, you know, the top marginal tax rate.

you're getting near 6% just on yield alone. That's close to long run equity risk premiums. So you're getting equity like returns with downside protection. So I think that's what makes me so excited about municipal bonds is that statement right there. And it comes at a higher credit quality.

All right, we're going to come back to some of the things you like, but now I want to turn to Ben and ask you, Ben, about the economy. President Trump declined to rule out the possibility of a recession on TV this weekend. I guess, how would he know? How would any of us know? But what is your take on the recession outlook, and which economic indicators are you watching this week to try to get a better read on the economy's performance?

well i i think uh trump actually took a very realistic approach um to the economy um there's a lot going on now in terms of how the economy is structured and the way it's changing um that we don't know how it's going to respond um and the economy was probably already a little bit weaker heading into this year um you know the the the years of uh the high fed rates um you know we'll see to that uh but then also you start throwing in

tariffs and you start throwing in Doge and what it's doing. And that has a chance to really shake things up. So I think it's fair for him to come out and say, I don't know if there's going to be a recession. There very well may be. I think the bigger takeaway is I'm not sure he sees that as a bad thing.

But we're going to get a lot of indicators this coming week, and I think they're all going to be worth watching. We're going to start with jobs. We're going to get jolts, which is the job openings. And, you know, that's supposed to tick up a little bit. That's good news. That's good, a very little bit, but it's supposed to tick up. But we'll see if that actually happens. You know, that's why we're watching the job market closely because, you know, people have jobs they spent.

When they start losing jobs, that's the problem. And it's one of the things that has helped the economy get through so much is that people have not been losing their jobs. They've first found it very easy to get jobs and now they still haven't been layoffs. But if we start to see signs of weakening in the job market, that's a problem. So we'll be watching the jolts to see about company planning, but we'll also be watching the continuing claims, which will be even more important.

We want to see those jobless claim numbers not tick up too much. They're expected to tick up to 225,000. That would be from 221. But if we start to see that move higher and move higher quickly, that'll be a real problem for the economy. It'll be a real warning sign. So I'll be watching that. We're also going to get two inflation readings this week, CPI and PPI. Both are supposed to drop.

With the CPI, the headline dropping to 2.9% from 3%, and core CPI dropping to 3.2% from 3.3%. And then with PPI, it's supposed to drop to 3.3% from 3.5%, and core PPI should drop from 3.6% to 3.5%.

Those are all above where the Fed wants them to be. But if the direction is lower after, especially you get these January numbers that often seem to be kind of problematic. We've seen spikes in inflation in January in recent years. Then if we see these come down, we can worry less about inflation. But the ones that I really want to be watching are the sentiment indexes that are coming out on

This week, we get this NFIB small business on Tuesday. And then the University of Michigan Consumer Sentiment, their preliminary reading, we get that on Friday. I think the biggest thing we have to fear with the economy right now is just what the level of uncertainty is doing to companies and to investors. We saw in the Fed's Beige Book this past week,

The word uncertainty was mentioned 47 times, which is just a massive jump. You don't get to that kind of level in the Beige Book, which is a collection of anecdotes from businesses across the country about how they're looking at things. And the other part is that small business confidence index. In January, in December, it actually spiked up to 105.1, which is the highest it's been in years.

But in January, it pulled back to, I think, 102.8. And we'll have to see again what happens there. But, you know, we always talk about how small business is what makes America go. And if they're feeling this sentiment, if they start to feel very uncertain about the economy, they're going to stop spending. They're going to stop hiring. And that could be a huge problem. So we'll be watching all of these.

sentiment surveys, 'cause we wanna avoid the worst case scenario. I was reading some Julian Emanuel over at Evercore and he's saying that prolonged tariffs and what Doge is doing could actually raise core PCE, that's the Fed's favorite inflation gauge.

They could raise that by half a percentage point by the end of the year and also reduce monthly nonfarm payrolls by anywhere from 30 to 70,000 a month. And he says paralyze the private sector. Those are his words. And then he states the obvious. Those are strong.

Those are very strong words and all of which could weigh on GDP. And it's like, yeah, we get that. But this is the this is the huge issue there is like, are the policies going to cause that kind of sudden stop in the economy because people don't know what to do? Do we have tariffs? Do we not have tariffs? Is Doge going to be able to do that?

going to make is so that we can't run our business the way that we used to because we just can't get things done. So, you know, it'll be interesting to interesting. I think that's probably too nice a way to put it. But there's a lot more risk here than there would have been there than there had been recently. And it's just this risk that we just don't know what's going to happen.

That's those 47 or whatever mentions of uncertainty. Yeah. All rolled up in one. So what do you do about the market at this point? Stocks went up Friday, but it was a big aberration. The market has been selling off day after day after day. The mag seven are considerably less magnificent. Yeah.

Is it a time to think about bargain hunting or is it a good time to get out of the way? Maybe buy some muni bonds as well. I think it's both. I mean, I think one of the things that people, one of the things we've been witnessing is a real sell-off in the market's riskiest stocks. Those have been some of the best performers around. I'm looking at an ETF called SPHB, which is the S&P high beta ETF, which

It's from the Invesco S&P 500 high beta ETF. And it's not one I would recommend buying because it is buying the market's most volatile stocks, which is great when markets are going up and not so good when they're going down. And they actually had a fantastic 2023, but not such a great 2024. And this year, they've been terrible, down 7% to start the year.

And I would make sure that, you know, if you're heavily invested in a lot of these stocks and these are a lot of the stocks that people know very well and love a ton, you know, big positions in there include Supermicro, NVIDIA, monolithic power systems, Micron Technology, Broadcom, Tesla's in there. You know, these kinds of stocks had very strong runs and have had very strong pullbacks. And I think you want to have a portfolio that is less

skewed towards that beta. Doesn't necessarily mean going into the alternative to this is the SPLV, which is the low beta, the low volatility ETF.

And that owns a lot more of what you would expect to see, like staples and things like that. But its biggest holdings are Coca-Cola and Berkshire Hathaway and Procter & Gamble, exactly what you would expect to see. But there's something to be said about those kinds of stocks right now.

What I'm actually finding very interesting is watching health care, because there are a number of biotech stocks that seem to be on the move that had really been out of favor for a long time. You have some that are approaching 52 week highs, things like Gilead Sciences, but you have others who are just starting to make moves right now. I was looking at Regeneron today, and I'm guessing there is probably news on it, though I'm sure I missed it.

But Regeneron is up 4.6%. And here's a stock that's been trading near a 52-week low. And it's all of a sudden starting to bounce off of that. So that's going to be interesting to watch. But healthcare has been the best performing sector this year, despite everything going on with Trump's policies. And that could be an interesting sector to watch.

I think we have to have a healthcare call one of these days. Definitely. That's the message to me. So let's talk quickly about a couple of companies reporting earnings this week. We'll start with Oracle, which reports after the close today.

Yeah. You know, Oracle's gotten beaten up with the tech and AI stocks having getting knocked down, which is actually, you know, that's that's probably a good, better setup for it than it would be otherwise. It's actually down 19 percent in the past three months, even though it's still up 38 percent.

over the last 12. It's expected to report a profit of $1.49 a share. That'd be up from $1.41. People aren't super excited. Evercore was saying that they expect the results to be largely in line. There's going to be some foreign exchange problems there. But that actually could turn into a tailwind if the dollar keeps falling in the current quarter.

But so much of this is also going to revolve around the Stargate project that it's a part of, this AI project coming out of the Trump administration. But there's just a lot here that is unknown. They have to just show that their business is more than these hopes for AI with Stargate and other things.

and that they're actually starting to make money with it. I do think with the stock down a lot already, it's looking pretty interesting heading into the print. And actually, that's what Evercore says. They said it's the recent sell creates a more interesting risk reward for the remainder of the year. And so if the revenue can start picking up, the stock should do pretty good. I think more interesting risk reward is a phrase we're going to be hearing a lot in coming months.

So, all right, what about Adobe? The company reports on Wednesday also has not had a great three months or a great 12 months. Yeah, they've had a really tough time. This was a bear in stock pick and we got it wrong. We basically thought that it had sold off a bit last year on concerns about the impact of AI on its product offerings that it would allow

other companies to really cut into the moat that Adobe has. At the time, we thought that maybe that was a little too overdone, that those fears were a little too overdone, but it looks like we were wrong. The stock just hasn't bounced back. And I think that this is, again, this is exactly what people want to see. They want to see

how Adobe is actually able to use AI to drive its business and can it actually make, help boost its margins and can it boost its address, total addressable market. And so these are the things people are going to be watching for. They want to know that there are plans to sort of get those margins growing again, that they're going to be able to fend off these AI challengers.

And so Evercore, again, was talking about how they need to go ahead and say, hey, we're going to be buying back shares because the stock is actually looking pretty cheap. They actually want to see Adobe also initiate a dividend. It doesn't pay one now, but it probably could. It has a lot of cash flow. But the stock is at around 21 times earnings, which is, I think, just under a market multiple. And that's crazy.

pretty cheap for adobe i mean you're looking at the last time that it was kind of around these levels um was during the bear market in 2022.

And, you know, we're there and everything got it never became this cheap even during the COVID sell off, which is I find kind of fascinating. So I think there is room to bounce here if the company can convince investors that it's not going to get its lunch eaten by all these AI competitors.

You mentioned buybacks. Has there been much in the way of corporate buybacks since stocks started selling off this year? Yeah, I think companies are still doing, you know, that's for the companies that have their, you know, they have the free cash flow. They've just kept buying back stock, I think, the way that they normally have.

And it's been a pretty good strategy. I mean, last year, it's what separates, let's say, a GM from a Ford. GM just keeps buying back all its stock and as much as it can. Ford pays dividends and GM has been rewarded and Ford has not. And I think that as you see stocks get beaten up, those buybacks will probably come into play even more.

That would be my suspicion. All right. One more we'll go through quickly and then we'll get to some questions for Paul again. Dollar General, the company reports on Thursday, if I am reading this correctly, the stock is up almost 50% over 12 months. I thought it might be a typo. The stock is here. Let me double check that number because I think I typoed that. You know, the stock was a pick recently. It was,

from Andrew Barry. Sorry, that should be down 48%, Laura. That's why I said if I'm reading this correctly. Yeah, no, that was my fault. I missed the minus or blended into the, oh, there is a minus there, I think. It's just blended into the equal sign. I don't know. Whatever. The stock is down 48%. Whatever the stock is down and it's not pretty. We've done actually, Andrew Barry picked this stock and he did a very good job of sort of picking the bottom in it.

We're up on it since he made that call. And the stock has really started to bounce a little bit off the bottom. It's up about-- I think the bottom was around 71. It's now up around 83. And the hope here is that in an environment where people are scared of spending, worried about recessions, they will go to a place like Dollar General. And their natural audience is going to be stuck spending there.

And so that could in the near term be very good. I was actually reading an interesting note from BMO that worries about actually the impact of Amazon, that with its new ultra low price service haul, which launched during the fourth quarter, that that could be pulling money away from places like Dollar General. It's more competition for Dollar General.

What Dollar General does have going for it is that, you know, it has it's just doing a better job of running its business than Dollar Tree right now. And I think that will be helpful. But with the stock down so much recently, looking cheap, you're in this kind of recessionary fear environment, a growth scare environment. But that's probably a good setup for Dollar General heading into earnings.

Its day may yet come. It may yet be up plus 48. We will see. We'll see. We'll see. Thanks so much, Ben.

Paul, I wanted to go back to you while we're on the subject of different tickers and different names. We put five Vanguard tickers in the chat box, and I wanted to go through the funds very quickly and ask you to give me a thumbnail sketch of each and tell me what does the fund do? What type of investor is it suited for? And we'll start with VWLUX, Long-Term Tax-Exempt Fund. Yeah, Long-Term Tax-Exempt Fund. That's one that has invested further out the curve.

So you're taking on a little more interest rate risk, but it's also at a higher quality point. So it's a little lighter on low quality credit risk. So if you're really looking to invest for the long term and keep your credit risk down, long term tax exempt is a really great option. Next one is VMLUX.

VM is supposed to be W limited term tax exempt fund. Yes. And the VWSUX, the ultra short term tax exempt fund. Yeah. So those two really focus on the short end of the curve. So if you're really looking to limit your interest rate risk exposure, those are two great options.

with the additional benefit of having a little more credit risk associated with it. So you still get some really good tax exempt income without taking on a whole lot of extra interest rate risk. And whenever you're thinking about the municipal market, defaults are extremely, extremely rare in the municipal market. So short-dated credit risk is some of the best credit risk I believe you can take in the marketplace today.

Interesting. All right, now we move on to the VCRM, which is the core tax exempt bond, and the VSDM, the short duration tax exempt bond.

Yeah. And so these two funds, I'll start actually with a short duration, VSDM. You know, that is really just an ETF version of the limited term tax exempt, the one that we talked about previously. You know, so if you're looking to be able to get it in and out of it through your through your financial advisor, you know, you can trade it. It's just an ETF form of the of of limited term.

And then we move on to VCRM, the core tax exempt bond ETF. And that one is something that covers all curve. It allows us to really put our best ideas regardless of constraints.

without without constraint into the uh into the portfolio so you know the fact that we like um you know duration at the longer end of the curve given the steepness of the admissible curve and we like credit um in the shorter end of the curve we're able to put both of those strategies into this single uh into this single product and it's got the benefit of being into an etf you know etfs um

in the municipal market are growing and growing rapidly. They carry a lot of the same benefits as mutual funds, such as diversification, but also easier access through your financial advisor. They're low cost and they've got greater tax efficiency.

Okay, so five to consider depending on what you're interested in. Now we're going to get to some listener questions. And I'm going to ask a question from Stephen that has been asked in various forms by others, depending on the state. And Stephen asks, this is for you, Paul, for California residents, is it better to buy lower yield California munis or to go national for higher yield? Okay.

I mean, it really depends on your individual tax situation. But generally speaking, it does. There is benefit to being in a state specific ETF like California, like New York, like New Jersey, you know, some of the higher tax states, even though they do trade a little bit richer versus the national universe. You know, most times it is advantageous to be in in a in a state dedicated fund.

We had a number of questions like that, depending on the state. We also had a question from Adnan. What's the advantage of munis for residents in states with no income tax? Yes, states with no income tax, munis still provide a level of high quality munis.

You know, opportunity. You know, there's still the federal tax rate that it is exempt from. You know, so if you're in the top tax bracket of the federal bracket, you know, that's, you know, 40%. So, you know, there's still plenty of benefit to municipal bonds, you know, especially given the relative cheapness to other parts of the fixed income universe.

Okay. Another question we had, this goes back to Ben's discussion of stagflation. Are bonds a good decision during a stagflationary period? This is from Gary. Yeah. So I think we have to define stagflation. You know, stagflation can mean a lot of different things. And, you know, when, when you say stagflation, I think that inter, and, you know, brings up in a lot of people's mind, the eighties, we are not, or I'm sorry, the seventies, eighties, the, the, the last period of real stagflation is,

I don't think we're anywhere close to that. Hooray, hooray. So what we're really just talking about is some inflation that is a little bit above the Fed's comfort zone and an economy that is coming off of

a relatively hot period. So I would call this still part of the normalization process. And then given that the Fed has already moved rates into somewhat of a restrictive territory, they brought that back a little bit. The real downside for bonds

that we had in 2022, I believe is past us. And we've got enough yields in the marketplace to more than compensate for any small rises in rates that could happen. So I do believe that municipal bonds have enough buffer to help still have positive total returns if rates backed up. And if rates move lower, like we're seeing today, there's a lot more upside than downside to municipal bonds.

All right. We had a question about bankruptcy. You had mentioned that it's very rare, and John wants to know what are the prospects for municipal bankruptcy in the age of Trump and Musk. But I wonder if you could speak more broadly about why municipal bankruptcy is so rare and whether you see any chance of heightened risk at this point. Yeah, I don't see any chance of heightened risk in the investment-grade municipal space. If you start going into the deep reaches of

high yield municipal bonds and project finance. That's a whole different story, but we're talking about broad, broad based municipal investment grade exposure. You know, it's got such low default characteristics, one, because they're generally high quality. You know, if you look at the municipal markets, it's got 8% triple B's versus the taxable market at 40% triple B's. You know, so it's just an overall higher quality part of the market.

And municipal bonds are issued for essential services. So there's a lot of incentive to keep things going and work things out. That even if a municipal bond gets in trouble, its recovery rate is 80 cents on the dollar versus a corporate bond at 40 cents on the dollar. So there's a lot of economic incentive there.

to work things out when they get into trouble. And when they get into trouble, it's actually relatively rare in the grand scheme of lower quality investment grade bonds. That's a good point about the recovery. So we had a question from James who wants to know, what is the benefit of separately managed muni portfolios versus muni mutual funds? What are the advantages and the disadvantages?

Yeah, so get this question quite a bit, SMAs versus funds. SMAs are really about customization. And that's about all I can really figure the SMA is doing is customization. The mutual fund gives you a lower cost structure. It gives you better diversification.

Yeah, and from the bit of research that we've done, a better all-in total return profile. So unless there is really a need for investors to have some level of customization, and I would highlight this, a need versus a want, that we prefer to see investors in mutual funds and ETFs. Okay. I cannot leave Ben out in the cold. So, Ben, I've got a question for you from Pallavi.

who says, I have one portfolio heavily invested in the Magnificent Seven. He is probably not the only person. What to do at this point? Do you have any suggestions? Well, I think I'd have to treat it, you know,

Holistically, look at your entire portfolio. And if you're, you know, if you have an S&P index fund already, you know, this means you're doubling down on these stocks. And, you know, I'd be looking to, you know, if that's the case, I'd probably be looking, you know, and this is something you should definitely talk to a financial advisor about.

um but if you're feeling like you have too much you know use the bounces to uh move into other things um if they get bounces and i think they probably well were pretty oversold in the market um but i i do think that you know we have to remember that the concentration of these stocks you know came to near record levels the uh concentration of the us and the global markets reached record levels and so

I think we have to remember that there is a point to diversification. And so I say talk to a financial advisor. But with these stocks, you do want to make sure that you're not doubling down on them because you already have a lot in your index funds. Good point always.

All right, back to munis, Paul. We have a question from Mark. Are you favoring munis compared to tips at this time? I suppose you are. But more important, what is each telling you about the equity market and long-term rates and inflation?

So when you look at the two different parts of the bond market, what are they telling you? Yeah, when I take a look at the two different parts of the market, I think what meters are saying is it's a broader reflection of where interest rates are overall. So it's saying, you know what, valuations are total rate. Total rate valuations are pretty solid. Yeah, when you start to look in the tips section,

the tips markets you start to look at what are what are inflation expectations um doing and what it's telling you is that there's you know a little bit more uncertainty as uh as break-even rates have been have been bouncing around um you know a little bit but it's also telling you that inflation expectations are not going out of control um and i think that's the most important thing for the for the long run is that's you know

it's reflecting noise and generally speaking, markets don't like uncertainty. Yeah. So if you're, if you're looking at the, at the, I'm kind of moving away from muni bonds here for a minute, but if you're looking at, at stocks in general, it's reflecting the uncertainty. Um, and you know, you're seeing that in the tips market. So as long as we're going to have elevated uncertainty, you're likely going to see elevated volatility in the stock market. Um, and, uh,

Yeah, and that's why you get back to working with your advisors or whatever professional you're working with is to have a portfolio set up to navigate a range of outcomes. That volatility is, I like to describe it as turbulence on an airplane. It's uncomfortable, but it's not dangerous. The only thing dangerous is acting upon it in an unproductive way.

So, to me, we're seeing all the indications that this is right now just a lot of noise and shouldn't be a catalyst for action. It should be a catalyst for one of my favorite Jack Bogle lines of stay the course. All right. Buckle up and put your headphones on.

I think that's what you're telling us. Exactly. And we're going to leave it there. It's a good message. I want to thank you for joining us today. And thank you, as always, Ben. Thank you, Lauren. Thank you very much. And thank you to our listeners. My pleasure. Thanks to our listeners. And thanks for your amazing questions today. You were well prepared.

Ben and I will be back next Monday, same time, same login. Please check the registration page for information about our guest speaker. We should be posting more information tomorrow or Wednesday about who will be joining us next week. Thanks again, everyone. And try to tune out the noise if you can. Be well. See you next week.

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