Our monthly live Q&A with Wealthion’s endorsed financial advisors.
Transcript
Adam Taggart 0:01
All right, we’re hopefully live. Welcome to another monthly live q&a with Wealthion endorsed financial advisors. I am joined by lead partners from new harbor financial, John Lowe, Dre and Mike Preston, Portfolio Manager from real investment advice, Lance Roberts, and Jonathan Whelan, CEO of rock link, financial. These are the folks that you see on this channel with me week after week, Jonathan, relatively new addition. And again, Jonathan, very happy to have you in your team. Join this table here. We’ve had a lot of great feedback from folks in Canada, who are very happy to now have a financial advisor in Canada that is like minded and contributing to this series. So Thanks all for joining me today, guys. We got a lot of ground to cover, not a ton of time to do it. And so we’ll just kind of jump right in folks watching. If you’re watching live, you’ve got the opportunity to ask questions here. Use the live chat to do that. I’ll be monitoring that throughout the conversation, trying to pull in as many questions as I’m able to, I do have a starting list here from folks that got to jump on asking questions over Twitter. So we’ll start with a few of those. If you’re watching this recorded. Welcome. And folks, if you’re watching live and can’t watch for the whole time, don’t worry, this is going to turn into a recording right afterwards, so you can rewatch it at your leisure. All right. Well, gentlemen, let’s get started here. The main focus of the main theme of this discussion is what’s in store for the second half of 2023? I would say the first half had a few surprises for us. As we move into the second half of the year here. What kind of second half of the year are you guys currently positioning for right now? your guys’s game is a game of probabilities. So what do you think is most likely? And how is that impacting your portfolio strategy? From here? New harbor? Why don’t we start with you, John, we’ll start with you.
John Llodra 1:59
Yeah, thank you, Adam. And hello, everybody. And hello to the viewers here. Thank you for joining us, this really helps us to reach out to you and share our viewpoints. To speak about our views on the second half of the year, we must pay attention to the first half of the year. We’ve talked about it. I think all of us in our own way have talked with you, Adam and your viewers about the narrow nests of the market year to date. And, you know, that’s basically been the story. What we have seen of late is some broadening of the market. And actually some sectors starting to pick up the the weight, if you will from we talked about the Magnificent Seven stocks the the new videos that the Facebook’s the Google’s the apple, they have disproportionately driven markets this year. We’re starting to see underneath the surface, other sectors start to pick up the weight. For example, the industrial sector, we’ve added some exposure to the industrial sector in our client portfolios. Just as one example, I do have one, one chart I’d like to share with you just to kind of put it in context here if I could. And I’ll see if I can go over here. Let’s see here.
Adam Taggart 3:14
Great. And while you’re while you’re pulling that up, I’ll just note, I’m seeing the contributions from folks on the side here. So thanks for chiming in. Folks, we are seeing your comments. One of them here is from Gary, who’s watching this from inside a semi truck. Looks like he’s a long haul trucker. To Gary, thanks for listening. And I do hear a lot from folks who have jobs or long commutes or whatever. That you know, I guess that’s one of the things that’s nice about these long Wealthion videos is that help them miles go by genre, right? I see you’ve got your, your image up here. Let me just add it to the stream. Right. Can everybody see that?
John Llodra 3:55
So so this is an Hello, Gary, I as a kid, I want to be a trucker. And I still have a soft spot in my heart for big rigs. So thank you for joining us here today from the road. So this is a chart showing year to date through yesterday the performance of the broad sectors of the market. And what you to see here as a bifurcation, you have this big gap here between basically the sectors that have carried this market so far this year have been technology and communications. I will point out this communications sector ETF almost 50% of that is Facebook and Google. So again, we’re back to these mags, seven stocks which have also been a disproportionate weighting of these these stocks by the way. earnings by large and the video maybe not not included, have have stagnated their single digit year over year earnings growth type companies, not no way should they be commanding the kind of multiples and appreciation that they’ve seen this year. The consumer discretionary sector has been very strong but we’ve seen a dramatic you know kind of clouds form on the horizon with With the consumer declines in consumer credit, the pent up savings from from COVID stimulus is exhausting itself. So these two these three sectors have carried the market. You look most sectors are flat down on the year. I’ll note the industrial sector here that we’ve just had some exposure to is up at a decent fit but very narrow market and that’s really what we see in the in the, you know, even though we have a broadly tremendously overvalued market, we’re going to be looking for opportunities emerging in sectors that have not caught up in the frame your energies, starting to show some signs of resilience. But that’s our theme for the year ahead. Still very defensive, but very careful selection of of some sectors and areas that are here and hopefully start picking up some weight here.
Adam Taggart 5:48
All right, thanks, John. Great kickoff here Lance, why don’t we go to you next, how are you guys at raa positioning right now?
Lance Roberts 5:54
I’m pretty much the you know, when you have momentum in the market, the momentum is going to carry and you know, right now the FOMO chases on so you know, you have two sectors that are going to perform three sectors are going to perform well in a disinflationary environment. This is the whole theme of things stocks weren’t dead back in October of last year when we were writing about that. In a disinflationary environment growth stocks are gonna roll because those are long duration assets. So I wouldn’t expect anything different through the end of the year, I’d expect this momentum to carry in the cyclical sectors, I think you’ll get a pullback of three to 5%, somewhere along the way. And if you do, I’d be, you know, adding weight accordingly to cyclicals versus defensive. Our portfolios, you know, kind of split right now between cyclical and defensive, but defenses, we’re gonna lack they just don’t have the earnings growth to keep up with where we are in the markets right now.
Adam Taggart 6:43
All right, I’m Jonathan, I’m coming to you in a second. But I do want to ask Lance about the tech space here for a second because you talked about earnings growth, and that’s why people are piling into big tech right now. Right because they think it can outgrow and in a deflationary, or sorry, in an inflationary environment. This disinflationary environment. Sorry, I’ll get one of those words, right. Eventually, I hit hit each one. Here is a chart of the tech sector. And the the trailing EPS is basically flatlined.
Lance Roberts 7:16
Right, that’s trailing, that’s not forward.
Adam Taggart 7:19
It’s not forward. Exactly. Yeah. We’re seeing massive
Lance Roberts 7:23
forward earnings expectations for tech sectors are expected to grow between seven and 14%. As opposed to about 2% for most other sectors in the market. So markets are going to follow earnings estimates not trailing.
Adam Taggart 7:38
Yep. So just to speak to this, though. So right now we’re seeing PE expansion, you know, basically explode higher in the space because of this anticipation of future earnings. What is going to be driving? That? Is the expectation right now that it’s all AI? Or is there any other credible reason to expect additional growth?
Lance Roberts 7:57
Yeah, I mean, you’re seeing services sector turned up over the services sector expansion, that’s 80% of the economy, that’s turned positive now. So you know, you’re back in expansionary, territory and ITSM. And you’ve never had a recession historically, with ITSM and positive territory. So it says it’s 80% of the economy. That’s where your earnings growth potentially comes from. Now, I’m not saying that’s that I’m not saying that that’s going to occur. What I’m telling you is that that’s what the markets are expecting the markets expecting. And markets, trade forward expectations. Now, when those four expectations change, then you’re going to get a differentiator in the markets, but that will probably not be until next year.
Adam Taggart 8:39
Okay. All right. Great. And now Jonathan hadden, do you? How are you guys at rockling positioning right now? Or what type of second half of the year you guys positioning for?
Jonathan Wellum 8:49
Yeah, and it’s a good question. I mean, going back to what John had mentioned, that part of that is just understanding where we’re where we’ve been the first, the first part of the year, we still are very conservative, very careful interest rates, it certainly appears they’re going to go up another once or twice. With that, I think we’re going to get started getting a peaking and interest rates as we get into the second half. And that should provide a little bit more opportunity to extend start to extend the duration. If we’re looking at some fixed income, we’ve been very, very, exceptionally short, more money market. And so some of our clients who are just looking to get a little extra return will extend a little bit the duration going forward into the second half of the year. Also, some of the infrastructure companies we own a number of a lot of our clients like to have pretty consistent dividend income. We’ve been careful about companies that are trading off of dividend yields because the interest rates have been going up as interest rates start to settle reach a higher point, and we don’t again, another one or two increases, then I think some of those companies that we we’d like to own we’re going to continue to nibble and AdAway some of them have come off of a fair bit and some of them are trading inexpensively largely because their cost of capital has gone up and you know the leverage In the businesses become more expensive with increasing interest rates. And as that has also been mentioned already with the other two individuals, trying to look for companies that are in the technology space, but not necessarily the big names, but going down further to find companies that can continue to grow quickly, software kind of companies, we’ve owned Roper for no reason many years and looking for good free cash flow businesses that can redeploy back and continue to grow much faster than the economy. But were We were you expecting, though that it’s going to be a tougher slog in terms of just the economy, the interest rates are going to continue to pinch people, there’s a lot of debt. And if it wasn’t for all the fiscal stimulus, the big budget deficits that the governments are running, I think things would be a lot softer in terms of the economy. So up here in Canada, with the the indebtedness of the average Canadian, it’s even far worse than the Americans. And these interest rates are really starting to impact the housing market, and areas within our economy. So we’re being pretty careful there. And certainly staying away from banks, the Canadian banks, which have a tremendous amount of exposure to mortgage debt that is just outrageously high in Canada.
Adam Taggart 11:13
All right, and I do want to get to the housing market a little bit, and specifically to talk with you, Jonathan, in Canada, because in many ways, I think you guys are giving a preview to the US and what the US can expect, because you have so such a greater percentage of your mortgages that are rewriting this year, because you generally have much shorter us mortgages than we do in the US. Alright, so listening to two you guys, I don’t want to put words in your mouth. But Lance, it certainly sounds like listening to you, you think that the momentum that we’ve seen in the first half of the year, is going to continue into the second half, TBD, with the magnitude of that is, but but probably you’re seeing positive Ford momentum carrying forward from here,
Lance Roberts 11:53
right. But that’s what history tells you. When the markets are up 10% In the first half of the year, historically, the second half of the year. So you know, it’s just momentum, its momentum game, once you start getting price momentum, once you start getting FOMO back into markets, which you clearly have, once you get investors back on the bullish side of the camp, which is clearly happened, exposures are now pushing up into more extreme areas. You know, sentiment, bullish sentiment is rapidly rising, that’s going to carry for all it takes, it takes a bit of time to change that momentum. It just doesn’t turn on a dime. And this is why every time the Fed talks about hiking rates, the markets go yeah, we’ve heard that before then they keep going up. So it’s, you know, will these things eventually have an effect? Yeah, absolutely. But it won’t be probably anytime this year, it will probably be next year before we start seeing the impact and lag effect, catch up with the overall economy and markets.
Adam Taggart 12:43
Okay. And that’s one thing I just want to dial through here is again, expectations, Lance, you seem to think momentum is going to continue. Jonathan, I heard you sort of say economy’s going to struggle a bit more. But but probably, I got this a general sense, you think momentum is going to continue, you’re still looking for additional growth companies that you might be able to safely put some money in and correct me if that’s wrong,
Jonathan Wellum 13:05
you know? Absolutely. I mean, the reality is, is we’re looking for the next three to five years or longer term business owners, we’re more value investors, and there’s always opportunities. And so as Lance has pointed out some of the other folks, it’s been a very narrow market. And so we’re not interested in chasing the video. But there’s behind the video. And below that, if you look hard enough, you’re gonna find companies that are still trading at good free cash flow yields, and have great prospects going forward, even if the economy’s tough slugging. And so we’re trying to look through tough slogging economy and find businesses that are very resilient, have a tremendous moat around them, and will just do just fine. But today are trading at very attractive price, especially as we get close to a peaking of interest rates, I think the market is going to start looking forward and look for some of those opportunities. So in a broadening of the market, we would expect as it is very narrow. And so we have no interest in chasing just the fast performing stocks. That’s not our game. We’re not good at that. And we’d rather sort of say, Okay, what next three to five years where some of the great businesses and one of the companies that can grow at a high single digits, low double digits consistently and at high returns on invested capital.
Adam Taggart 14:17
Okay, and then Mike, just come to you to close this out. I know you guys that new harbor, perhaps maybe a little more conservatively positioned. But from a momentum standpoint, do you expect you know you’re going to be playing in this market the second half of the year or are you more nervous that we could see a change in momentum?
Mike Preston 14:35
It’s hard to say what exactly is going to happen in the second half. Nobody really knows. But it’s true. There is momentum and the breath is broadening a little bit. Still very narrow. We spent a lot of time at our investment committee meetings, doing our best to stay open minded and scour the charts for good ideas. And you know, the charts and we do rely on the charts quite a bit when it comes down to picking Actors and individual ideas. We look at our broad indicators. And they’ve reversed up about a month or two ago in terms of telling us that the you know, the market was at least bullish in the short term. And so when then we start to dig into sectors. And we look at charts and then we look at relative strength of certain sectors or all sectors against the s&p. And really, it’s been very difficult to find leaders, he looked back at the chart that John shared and there wasn’t really there’s not really much leading this market except for a handful of stocks. But industrials was one of those, and we decided to add that position. Biotech was another we decided not to do that at this point. Gold itself is a leader in the chart looks really good. So we’ll see what happens if we continue to broaden out and more sectors start to break out? Absolutely, we will enter, probably do it in a hedge fashion, when we don’t really believe it. We don’t really believe in this market because of the macro factors. But that’s what’s difficult as a money manager, you have to, you have to do something, right. That’s always the that’s always the pressure of the belief. But I think a big value, what we bring to the table for our clients is that we have a system and emotional control. Now, we might get criticized if we go straight up into a blow off top here, because I don’t think there’s any way that we’re going to participate in a big way. But we’re trying to tactically add some exposure here and there when the ideas present themselves, but they haven’t been that obvious, nor have they been that prevalent. So far. It’s unjust rules. And we’ll keep looking for more opportunities.
John Llodra 16:35
We’ll just add a little Sutter. Next to that. So this all comes down to position sizing to you know, against the backdrop of massively overvalued markets, no matter no matter how you look at him, especially on those metrics that are timelessly indicative of future returns held a lot different to be at a Shiller P E of 10 versus about 30, approaching 40 Depending on how you look at margin adjusted adjustments. At the m&a We work with real people that have retirements and financial security to worry about, you know, having 100% following a momentum trade is is very reckless. And I’m not saying anybody here is advocating that. But it all comes down to position sizing and, and keeping in mind the big picture landscape here as relates to our clients lives.
Adam Taggart 17:27
All right, great. And I’m looking forward to getting into some of the questions here from folks that are kind of, you know, real world questions about okay, how does this going to impact me as a regular person? Real quick there, just because we’ve talked a bit about how tech is still really just the big thing that’s pulling this market along with it. Lance, I wanted to ask you a quick question about a chart that you just put in a recent article. Here’s the chart, right, which is showing the dominance of these big seven tech companies in the NASDAQ 100. And apparently, the NASDAQ 100 is going to get rebalanced. I think in like a week or two, on July 24, okay, yeah. So can you just talk about that rebalancing, and if you expect that to impact pricing and all in the markets as apparently the seven stocks are gonna get sold? And that capital is going to move over to the other? Less love part of the index? The other 4093?
Lance Roberts 18:27
Yeah, no. And so rom at the NASDAQ is going to rebalance. And yeah, they’re going to take money out of those top seven stocks. So if you’re an index fund, there’s nothing you can do about it right now. Because you’re you have to map to the index every single day. So on the 24th, they will rebalance those seven stocks at the time that the NASDAQ 100 rebalances. So that’ll occur. What you’re seeing yesterday, you’re seeing a little bit more today, you’re seeing some selective rebalancing. And most stocks are ready Apple stock markets up today. But Apple, Microsoft are down AMD is down here a little bit, you know, but you’re starting to, you’re starting to see a little bit of pressure on those stock prices, just from the standpoint that other active managers are rebalancing ahead of that, it’s not a deal. This isn’t going to be the thing that triggers the market to a big decline, etc. The markets are aware of this, they know about this, and it’ll between today and the 24th. It’ll all be priced into the market, active managers will rebalance ahead of time index funds will rebalance on that day, and then we’ll go on with life. But you know, that’s, you know, it’s everybody’s wanting to make it a big deal. Remember, the whole the spread between the one month and the three months was going to with the determinant, that everything was going to fail in the credit markets when the Treasury had to rebalance. And it didn’t happen with the market knows about it. It’s not a thing to worry about. And this is just the market working through that process. So yeah, don’t worry about it.
Adam Taggart 19:54
Okay. We do talk a lot though about you know, the past sieve investing algorithm that, yeah, the giant mindless robot that Bill Fleckenstein and Mike Green talk about, but by no means is this diminishing in any major way, the impact of these top seven stocks, but it does take a little bit off right it is tweaking those algorithms right. So for every dollar that goes in several cents now will will not go into those top stocks as much right,
Lance Roberts 20:27
you know, roughly seven cents. So those tops that list the top 10 stocks make up 33% of the s&p 500. So now you’re talking like the top 10 stocks will make up 30 cents of the s&p 500 when it rebalances. Right. So it’s going to debt basically shift some of that exposure to other areas, but it’s not large enough to make a major impact.
Adam Taggart 20:47
Okay. All right. Um, two other quick questions, and then we’ll start really pulling hard from the the live chat here. One, I had a really nice conversation this past weekend, with your partner there, Lance Michael Leibowitz. But we talked a lot about the lag effect. And whether it was still something that we really needed to keep in mind, or whether it was going to prove to be sort of the nothing burger that markets are currently pricing it at. I want to pull up this tweet from Sven Henrik. Just to set context here. It says lag effects of rate hikes typically take a year to year and a half to filter through the economy. Remember, you know, last time this year, I think this this tweets from May but last time this year, the Fed funds rate was at less than 1%. Of course, we’re now about 5%. Now, the hammer is still coming. So Jonathan, why don’t we start with you? In concluding the conversation with with Michael. He said, You gotta respect the lag. How big of a factor do you think the lag effect is going to play in? If indeed, it we haven’t seen the full expression of it yet? And in when do you expect we’re going to really begin to see the majority of that, is that is that now more of a 2024 thing? Or is that something we’re going to be seeing increasingly through the second half of this year?
Jonathan Wellum 22:11
Yeah, I mean, we we’ve been anticipating, you know, a greater impact from the rapid rise in interest rates. I mean, the the percentage change in interest rates has never been this, this this large, largely because they were at record lows, of course. And so we’re, I guess, I must say that I would, we’d be a little bit surprised, we’re a little bit surprised that we haven’t had more impact in terms of the economy than we’ve already had. So I’m a firm believer that I want to be positioned, I’m not saying it’s going to occur, but I want to be positioned conservatively carefully, that if the leg effect does hit, and I think it will have a greater impact, then we want to be prepared with some cash with short term securities that we can deploy and take advantage of that dollar cost average by some of our favorite stocks, and also continue to find new stocks. In Canada, if you’re looking at that lag effect. And we look at the real estate market just not to jump in the real estate market. They’re looking at about mid 2024, to latter part of 2024. And you’re going to have a lot of Canadians over, you know, maybe up to 50% of the market in the mortgage market having to refinance that double and triple the rates. And so this is I think, going to have a definitely going to have an impact in Canada, in the US. Also, I think that these rapid rates increase in interest rates are going to start to have a greater impact. So we’re just being cautious, careful, well positioned, making sure we’re in companies that can weather that and also take advantage of the slower economy and this lag effect impacting so I’m a believer that there will be more of an impact there has to be the indebtedness, the level of debt to GDP, the level of debt to disposable income, for people has never been higher, and these changes have never been larger. So we’re cautious. We’re careful, continue to incorporate that into our valuation metrics.
Adam Taggart 24:05
Okay, and just reading into what you’re saying, it sounds like you’re thinking, yes, it’s going to be a real thing. It may still be a while before we begin to see it fully expressed. But sounds like you’re sort of expecting sort of like a Rolling Thunder, which of course, the lag effect should be given, you know, a year of continued raising interest rates to be sort of playing out
Jonathan Wellum 24:24
in as you say, we’re surprised it hasn’t had a larger impact. I think part of that is best as I can look, look at looking looking at the economy’s that you still have a lot of money flooding in from the COVID days, and you’ve got a lot of government spending still very elevated levels. But that too also has to slow at some point. I mean, these deficits are completely out of control and the cost of financing the government now is going up substantially. So these are all things that you know are certainly front and center in our thinking when it comes to investing and trying to protect people’s capital.
Adam Taggart 24:56
Okay, John, let you guys from new harbor give a quick A quick chime in on this, and then we’ll move to one last topic, and then we’ll start polling questions.
John Llodra 25:06
Yeah, so absolutely we agree with this, this stuff takes time to work through, you know, whether it’s corporate debt or mortgages or whatever, until, on the margin, though, those borrowers need to face a refinancing or pay down of debt. It’s not an issue and that that comes over time. And one thing I wanted to share, you know, I referenced, the consumer starting to look stretched in many ways, I’m just gonna pull up one chart as an example, this kind of gets to the leg here. So again, I’m going to pull up a chart here, let’s see if we can find that. Okay, so hopefully, you can see this Adam, if you can put that up. This just shows some May, we saw a pretty large miss in in the expectations for month over month, US consumer credit, outstanding, you know, the expectation was for 20 point 3 billion month over month came in at 7.24. So in February of 2022, that’s when the rate increase has really started in earnest. And you’ve seen a steady flow of a steady decline in the month and month over month rate of consumer credit. So this is slowly moving through the system. But you look at charts of credit card debt and overlay where interest rates are, it just shows this this kind of flow train wreck that that is starting to run through the system, in our opinion, and we don’t, we’re not we’re certainly not in the camp, that we think the Fed is going to pivot and start lowering rates anytime soon. That will only come in our opinion after some pretty severe record wreckage.
Adam Taggart 26:32
Okay, that’s a good segue into this question here from user charger Mopar. Why wouldn’t the Fed restart QE and lower interest rates to prevent the markets from collapsing? Or, you know, as you’re talking about credit, beginning to slow and whatnot, there’s no downside to them from financial repression? Right. So it’s why don’t we go to you on this? I mean, I would think one quick answer to this would be, well, inflation, they don’t want to rush to restart QE until they’ve got inflation where they want it to be. But what else would you say?
Lance Roberts 27:04
No, that’s it. If the markets are collapsing, yeah, absolutely, they’ll they’ll stop to T, they’ll go back to QE, they’ll start cutting rates. At the end of the day, they’re gonna protect the financial markets, first and foremost, because of the knockoff effect that it has on the overall economy. You know, it’s they, you know, inflation is definitely coming down now. So CPI will come in tomorrow, probably barely above 3%. And, you know, it’s on a trajectory, well, back to 2%. Now, that’s going to continue to kind of work its way through as housing prices, which are coming down, start to get filtered into the CPI index, that’s going to keep a lower pressure on CPI. So now the Feds got room at this point to both cut rates and to do QE, but there’s no reason to do that, until you either get a recession or some type of market related event. Now, as far as the lag effect goes, you know, that’s, you know, the market is aware of the lag effect. Again, you know, we’re all kind of expecting this lag effect to show up one night where I wake up one morning, and the whole floor is going to drop out of the markets and the economy and everything else. And that’s not going to happen. You know, there are risk out there, the student loan repayment issue we’ve talked about before, you know, that’s going to reach those student loan repayments are going to start in August, September, theoretically, that’s over $300 of persons. So that’s about $15 billion a month and retail sales will go away literally overnight, if that would occur. But you know, the administration is trying to figure out a way to circumvent the Supreme Court decision on that, and we’ll see what they do. But you know, there are certainly risks. There’s not, but the lag effect is going to show up, it is going to slow economic growth, it is going to cause issues. But this is unless there’s a credit related event, the model at the bottom is not going to fall out of the market.
Adam Taggart 28:50
Okay, and you just went to where it was going to go. That was the student loan repayment, what type of implications you think are likely from that. Lance? You kind of gave your statement there. Let me just ask you, let’s say the administration’s current plan B, is not allowed to go through, right? How big of a deal? Do you think this?
Lance Roberts 29:16
That’s a big deal. I actually wrote an article on this. It’s on our website, real investment. vice.com. I think it was last Friday, talking about student loan repayments, but it’s 15. It’s roughly 12 to $15 billion a month in potential retail sales, because that’s where the money goes, right. So if I don’t have to make a student loan payment, what am I doing with money? I’m spending that money elsewhere in the economy services primarily going out to eat, you know, doing whatever, paying on credit cards, you know, and that’s been a big so that’s been one of the reasons, to Jonathan’s point why the economy has been a lot more resilient than people have expected. You had $1.7 trillion from the federal government come in in terms of this infrastructure spending package that’s been helping industrial companies as you know, As municipalities around the country have started gearing up for projects, and then the factor has been a moratorium on student loan payments. And remember, a lot of those extra benefits that people were getting from stimulus, you know, in 2021, and 2008, do like extra child tax credits, those type of things. Those didn’t end until just this past December. So to Jonathan’s point, there’s been a tremendous amount of money in the economy still is from all the COVID programs. And that’s been one thing that’s kept the economy from from from lagging as much as people thought and why the recession hasn’t shown up yet. But this cut of spending, if student loan payments restart could be the trend. This is the point of the article, that could be the thing that actually triggers the economy because it’s big enough to hit retail sales, which is 40% of PCE, which is 30% of GDP. So if you want to trigger that’s potentially
Adam Taggart 30:51
All right. And I imagine that, you know, monetary policy takes a lot longer to impact the economy because it sort of has to filter its way into the real economy. Whereas, fiscal stimulus, much more stimulative, immediately stimulative because you’re pumping directly into the economy. This is basically reverse fiscal stimulus, right? You’re removing it directly from the economy here, right. Okay. Jonathan, new Harper, guys, anything you else you want to say about student loans? Alright, if no one’s dying, too, don’t worry about it. Okay, so another question here has been around interest rates? Both Where do you guys see interest rates going? But also really the whole Tara, Tina versus Tara scenario, right, where all of a sudden, you can get a really pretty nice supersafe return in bonds? Government bonds at least? And is that going to influence capital flows from here in any material way? Let’s see, Jonathan, why don’t we start with you on that one? Well, I
Jonathan Wellum 32:02
can I can speak from our experience and from talking to other advisors and I haven’t looked at the, you know, the large flows, and Lance might have been more there. But no, I think it will, it has already has had some effect on flows that we have more and more clients. And as they say, talking to other advisors are saying, look, if I can click 5%, with very little volatility, no volatility and a guaranteed return, that I want to have more of my money going after that kind of return a guaranteed return. So we definitely have seen more flows into shorter term bond market. Our view, again, is the Fed and the Bank of Canada, the main major central banks around the world are probably, I mean, they’ve already telegraphed this another one or two increases, and I do think they’ll probably try to hold them up there for an extended, you know, for a relatively extended period until there’s a problem, then, then that means that I think there’s also an opportunity to start to go out a little bit in duration. Again, we’re not big bond traders. We’re not bond kings. And we’re not trying to anticipate all the yield curve moves. But I do think that as we start to get close to the end of this, it just makes perfect sense for people who can’t hold bonds, three, five years or more to start looking out the time corridor, and then hopefully getting a bit of a capital gain if rates do come off, looking out another year or two from here.
Adam Taggart 33:27
Okay, great. And, Mike, when are we going to you? How is this new environment of attractive bond yields, impacting how you think the markets might behave from here, but also to how you guys are positioning?
Mike Preston 33:41
Yeah, as others have said, Here, there is an alternative and we’re still close to 40% 35% or so in short term treasury bills, because they’re yielding 5.1 5.2%. On the six month t bill. I don’t think they’re going to stay there. It’s it’s tough, a murky picture, like everything in the market right now. Because the 10 year just broke 4% I think it might be just back below it. I didn’t look at it today or yesterday, but and long term bonds have been very weak TLT continues to be weaker than we expected broke through 100 is trading right about 99 and change right now. So yields have gone up a little more than we than we thought they would. And so short term, they’re technically bullish, and we have to respect that to some extent. And to do that, and to respect that brave we have hedged our TLT position with an options color, which basically means if yields continue to go up and and long term bonds fall, then we have at least a line in the sand or a floor to protect that position. Still think that long term yields are going to go down a lot, maybe even the 10 year could go down to 2% again, but I think that happens when we see a big drop in the market, you know, maybe even a collapse in the market and or an economic crisis. then I think the Federal Reserve and other central banks revert the full on quantitative easing. And you know, adding 10s of trillions more to their balance sheet, I think that’s likely to happen. Eventually, the valuations that we’re seeing are not sustainable. Shiller P e’s are sky high margin adjusted P e’s are sky high, just about any reliable measure of valuation is sky high. at or above levels, we’ve seen it other bubble peaks like 1929 in 1999. The problem is evaluations can stay that way, for a long time. And honestly, valuations have been relatively permanently elevated for all of the century for the last 20 years with a couple of excursions to try to correct so who knows how long that can go on maybe can go on longer. But in terms of yields short term, we’re hedging long bond positions, however, we still think it makes sense to nibble on long bond positions, if you don’t have any 10 to 15% can make sense in either an ETF that buys long term bonds, or you can even buy the 10 year treasury bond directly, I think it’d be a good thing to do here for 10, or 15%. The two year looks increasingly attractive here, we’re considering adding a piece there, if if individuals only own short term stuff, maybe add another 10% of the two year and keep most of the rest of the bulk of your stuff, or your cash at around the six month mark six to 12 month mark. So you know, maybe 6060 70%, short term and other 10%, two year and other maybe 15% 10 year plus, that’s what we think makes sense right now. And ultimately, we think long bond yields are going a lot lower, just have no idea about the timing,
John Llodra 36:45
I’d like to just quickly add on to that. So if you look at, you know, not only have nominal interest rates risen, but a real interest rates have have risen, obviously, with the cooling off of some of the inflation extremes. You look, for example, right now, the five year real, nominal yield on real yield on treasuries is like 2%. And as you look over the last year, typically when that rises, stocks will drop. And what we’ve seen over the last several months here is since April is is real rates have risen at the same time, the stock market has risen mostly in the form of multiple expansion stock market, and again, very narrowly driven stock market. So, you know, we’re starting to see a breakage of a pretty tight correlation there. We think the stock market’s gotten broadly speaking way, way ahead of itself, relative to where real real rates have gotten.
Adam Taggart 37:40
All right, great. Very well said. All right, I got a couple of curveballs here. And let’s just dive into them. I’ll let anybody take them. But I’m going to pitch the first one to you, Lance, because I saw you yawning there and so you’re gonna get punished for that. All right, here’s a fun one. Is AI gonna replace financial advisors?
Lance Roberts 38:02
Probably, to a large degree, at some point, you know, look, you know, we’re in a market where it’s more and more, where people are just trading stocks now mean, you know, Robin Hood, you’ve got robo advisors, you’ve got all this. And, you know, it’s all about cost and efficiency and, and, you know, if AI can do a better job picking stocks to chase markets, then, yeah, there’s gonna be I’m not gonna say all financial advisors, that will be a there will be a cut out a financial advisor to manage larger amounts of wealth, but for the younger generation, they’re going to grow up with this stuff. Yeah, probably, there’s gonna be a lot of financial advisors to get replaced by this.
Adam Taggart 38:41
So you’d have a robo advisor who is literally a robot or an AI?
Lance Roberts 38:46
Yeah, yeah, pretty much. And there’s advanced you, it takes all the emotion out of it, right. So the advisor will just tell you what to buy or sell.
Adam Taggart 38:55
You know, what’s interesting about that, and I’ll let anybody else chime in on this, but as you sort of think about investing is is trying to find an advantage, right? Because you’re trying to beat an index. But if everybody is using the same formula, how can you have an advantage? Right? I mean, wouldn’t it just at that point, you’re just buying the index? Well,
Lance Roberts 39:14
look, this is the whole passive investing robot, right? It’s already the passive investing problem is already affecting the markets. This is why you have seven stocks driving the market this year. This is why the markets didn’t fall as much as last year as everybody thought it would. Because the big stocks were holding up the market is all it’s all because of these passive flows. The trick with AI and what will be important and this will be the job. This is why I’m encouraging my children to go to college to get mathematics degrees is it’ll be who can program it better. And who can program it to find those opportunities in the markets as these things are occurring to find those differentials? Because you can do that. It’s all about programming and says how will you how well you can program and versus everybody else. So Be certain programs that work rates are programs that look just like financial advisors?
Adam Taggart 40:04
Well, he’s gonna say so that I mean, that’s kind of like what we have today with quants, right with building a model, right? It’s just who’s going to have the best AI driven solution here. But even to your point, I mean, even if, you know, folks below a certain asset level, everybody’s getting the same black model T version of the AI trading thing. I mean, for a lot of people, that’s probably all they really need early on, right? Because it’s more of sort of the forced savings and putting their money to work for them. And then once they get above a certain threshold, where the advisors can start doing more interesting things with the money, you know, maybe they graduate from the AI only solution there, and the other guys who want to touch this before we move on to the next curveball.
Jonathan Wellum 40:42
But I would just say that, you know, I agree with Lance’s basic comments that it there’s no question in my view that the the role of the advisor is going to continue to change and become less important for quite a few of the clients out there. And we’ve already seen that if you and I know in Canada, if you go to the banks control much of the fight financial advisory distribution up here, the banks and life insurance companies, and they’ve already automated everything and turned every one of their clients into a number already. And so you really don’t need to be seeing a person to get the kind of investment advice that you typically getting from the banks and life insurance companies up here, as they say, who control the vast majority of the distribution. So if you can add an AI component, then I think it’ll make the work of financial advisors even less, even more redundant, I guess. And so for us as active investors that we I think we’re looking at it as an opportunity to differentiate even more, and as you say, stay away from these algorithms and actually, you know, take a longer term view use time arbitrage, in terms of the businesses and personal service. And so you’re going to spend time with clients, you’re gonna, you know, educate them in terms of investing, and people still, in our view, want the personal interaction, and they don’t want to be treated as an institutional number. And that’s, that’s critical to our business.
Lance Roberts 42:00
Yeah, that’s, that’s, that’s a valid point. I mean, it’s going to be the personal relationship, the financial planning, you know, those type of things, you know, outside of just the stock picking any investment management that that separates financial advisors from Ai.
Adam Taggart 42:13
Right, when at the end of the day, you know, people go to a financial advisor, because they want help with their life goals and needs and whatnot, and you don’t want to be shoved into a one size fits all, you know, be a number two them you actually want to
Lance Roberts 42:26
that’s what they say the market goes up with seven stocks, why they’re not in seven stocks.
Adam Taggart 42:32
And that’s the emotional part, right? Yeah. All right. Here’s the next one. And I will direct this to you guys that new hardware, but anybody can chime into it. This is the most family friendly version of the question that this guy asked. Anyone talking? How come no one’s talking about one of the best performing assets of this year Bitcoin? His his related questions had to do with, hey, gold gets a ton of love. And yet it’s not really done that much this year, and Bitcoin has basically doubled and nobody’s talking about it, at least on this channel. So new harbour guys, how do you want to tackle this one? What can I
John Llodra 43:12
want you to kick us off there? Mike?
Mike Preston 43:14
Sure. It’s, you know, Bitcoin. It’s a difficult topic to completely understand. To be honest, it’s true, the chart has looked pretty good this year, it’s nearly doubled from its bottom. Look, we love the idea that it’s a an alternative currency that it’s outside the control of central banking. I know that Bitcoin proponents believe the same thing. I’d love to believe that it’s the Nirvana that’s that it’s the solution we’ve chosen, frankly, the answer is that we’ve chosen a new harbor to focus on gold, you know, and it’s just something that we trust, more than, you know, the market has been around for 1000s of years, the charts look beautiful, and I can share a monthly chart of gold. And I maybe I can do it here quickly while I’m talking. But the monthly chart of gold over the last 20 something years, you know, looks wonderful. And I could do the same thing for Bitcoin. It’s just that, you know, Bitcoin is difficult to spend directly and I guess you could say the same about gold, gold is difficult to spend directly. And maybe both currencies would be easier to spend directly if we’ve entered some kind of crisis period. You still have to rely on other exchanges for gold you got to sell to a broker. For Bitcoin. I know you can trade it directly, but it’s not really that widespread. You still have to sell through an exchange and convert to dollars, that’s the real problem is that you have to convert to dollars. And you know, I just think that gold is a better option. I think I’ll probably in the sake of time not share that chart here. But I don’t really have much else to say I’ve got I know there’s a lot of reasons to own Bitcoin. We’ve studied it extensively. We haven’t placed position other than a very small position that we have in a diversified commodities fund that holds about 1% Bitcoin we’ve got a very negligible exposure.
John Llodra 45:00
If I could just quickly add on to that, when we talk about gold, we think about it in two ways. One is a kind of an insurance policy. And that typically we’re referring to physical precious metals and things like that monetary, you know, insurance, if you will. But we also talk about his investment. And we’ve talked plenty about, from a big picture standpoint, we think the precious metal mining stocks are very, very good by here, even though they’ve they’ve struggled recently. They’re very low valuations relative to historical balance sheets of clean up quite a bit. From an insurance standpoint, we’re pretty practical. Governments are pretty obviously honed in on Bitcoin and the threat that that has to fiat currencies. And, you know, there’s plenty of movement going on with Central Bank digital currencies, quite simply, we think, you know, governments are going to try to really clamped down and either through outlawing or taxing or, you know, controlling of the internet or energy systems that support digital currencies, we think that’s going to be under the crosshairs, frankly, is as an insurance policy, so we prefer kind of good old fashioned precious metals for that role.
Adam Taggart 46:12
Okay, I got a follow up question on good old fashioned precious metals, just Jonathan Lance, anything else you guys want to say on Bitcoin or should we move on? But okay, yeah. All right. So, in Bitcoin folks, I, it has been a while since we’ve had a discussion on the channel, I think the last one was Dan Tapi. Arrow about two months ago, about Bitcoin and Kryptos. I will commit to bringing on another Bitcoin expert, crypto expert on the channel relatively soon. Just we keep that discussion alive here. We are not intentionally ignoring it. I will say it’s not a topic that I get asked a ton about by the Wealthion. Audience. We, from previous surveys and whatnot. We don’t have a ton of crypto owners on the channel. But it’s not a topic we should be ignoring. I totally agree with that. All right, I was trying to there were questions about this. There’s just so many bananas. Now I’m having trouble finding it. But there just been news articles coming out in the past couple of days about a new BRICS trade currency that is apparently gonna be announced at the upcoming BRICS meeting in August. And it’s going to be backed by gold, presumably. So curious just to hear any general thoughts you folks might have on that, but specifically, and maybe new Harper, I’ll go back to you guys first and then we’ll go to you Jonathan. Because you guys I know have gold fairly prominently your gold miners prominent in your portfolio’s do you expect to see any response to gold from that? And I guess, presumably, we may already should have, because it’s the news is now out. But anyways,
John Llodra 47:58
just I’ll just chime in quick there. I think this is, you know, one step in a bigger, bigger trend, I wouldn’t want to make overly over and over splash about that news. You know, India, for example, I think, you know, very quickly came out said that they’re, they’re not anytime soon going to jump into that into that boat. But it does speak of a bigger picture. You know, kind of riot, if you will, against the US Dollar as a reserve currency. And these are huge tectonic shifts that take time to play out. It’s something that will play it over years, I think, not over months. But I wouldn’t, I wouldn’t make over, over over hype about that news coming out of the BRICS meeting.
Adam Taggart 48:45
Okay, Jonathan, any comments on that? And then also, whether you do or you don’t I just give us your current assessment of the precious metals mining sector? Because I know that that’s something that you’re fairly invested in, we’ve talked about on this channel. And I know that a number of our viewers follow that space relatively closely.
Jonathan Wellum 49:03
Right. Yeah, I mean, I agree with John’s comments in terms of the BRICS currency and collateralizing, that with gold, I think we’re dead on that this is just one of a number of steps that are being taken, as the world tries to at least many countries try to extricate themselves from the dominance of the US dollar. But that is much easier said than done. And the only reason they’d want to back it by gold, as we know is that most of those currencies, whether it’s Brazil, or India or the Chinese, you would not want to own those currencies, you know, even less trust in those governments than we would have in our own North American governments. And so, of course, you’re going to want to backed by gold because otherwise it would never even work. But I think that’s it’s a trend to watch. And so we look at it as a trend to watch. It’s just, you know, geopolitical events taking place in the world. The US clearly has stepped on a lot of toes as has politicized the SWIFT system and taken you know, use that to you know, sort of hammer different countries and people in So there’s no question that other countries will want to try to as best as possible get around the US dollar. But that in our view is very difficult, very difficult. And so we’re not going to build gold positions around that. It is interesting, I think it’s just another factor that plays into, you know, the long term strength of gold and the precious metals in terms of the gold and precious metals. I mean, I think silver in particular is very inexpensive, it always seems to be, we continue to just pick away very carefully on some companies that have exposure to silver, gold, I also think, given the money supply and the the monetary policies and the incredible deficits and debts that we’ve accumulated, is also relatively inexpensive. In particular, and we don’t own a lot of the miners, as we’ve talked about before, we have a lot of the royalty companies. So the you know, the Franco Nevada would be the more expensive one, and the larger player, but the wheaton precious metals or oil gold, a sandstorm, the old Cisco did who just had a change in CEO there is relatively cheap. But definitely the miners have just done terribly over the last little while. And so companies like Agnico Eagle, for example, which is a very well run gold company is very inexpensive. And I’d suggest that if you were into the miners and wanted to take positions, this wouldn’t be a bad time just to dollar cost average and to pick away at them. They are very, very inexpensive when you look at them on a basis of you know, free cash flow, and costs are coming down, the energy costs have come way off. And they’re running their facilities much more efficiently. So I think there was some opportunities there. And there’s some good, good, good bargains.
Adam Taggart 51:38
I’m just curious, given that list of positive elements you just talked about? Why do you think they’re sort of slumping right now?
Jonathan Wellum 51:46
That’s a good question. I wish I had the answer. I mean, I think it look, interest rates are going up the US dollar has been pretty resilient. And it’s you know, it’s come off a little bit versus last year, but not much. You can say global currency. So as long as the US dollar is strong, and interest rates are tending to go up, I think that just keeps a bit of a damper on the gold price will will. So we’re expecting that as interest rates peak. And if there is weakness in the US dollar, then that certainly could put a little bit more air under the gold price.
Adam Taggart 52:16
Okay. In our last couple of minutes here, I just want to bring it to the housing market. As I said, I’d get to earlier in the discussion here at Lance, I’ll come to you with this. Real quickly. Just want to let folks know, I just recorded a great interview with housing analyst Nick Gerli. Yesterday, Nick, as always brought a ton of charts. That interview is going to go live later this week. So if you want to do a real in depth, dive into the latest stats on the housing market, just stay tuned for that. Basically, I want to ask your guys’s thoughts of where you think the housing market is gonna go from here. And then what implications you think that’ll have for the economy. Before I do real quickly, Lance, before I get to you, I just want to put up two quick charts here. So housing prices, in theory should be a function of what local incomes can afford. In many ways. Home prices should be based on what those homes could be rented for. Right? That’s why, you know, in the CPI calculations, they use the owner equivalent rent, right. What’s interesting, and this stat really caught my attention when I was talking to Nick yesterday is that 57 of the 100 largest US cities now have negative year over year rent growth. So we actually are beginning to see rents come down and they’re coming down in the majority of US cities right now, I need to get a bunch of folks in the comments saying well, I’m not seeing it here right now. But apparently, the data is beginning to show this tied with that as well is a rise in rental vacancy. So you can see here rental vacancy plummeted, you know, coming out of the pandemic, but it’s now been spiking again. And it’s back basically now to pre COVID highs and the momentum seems to be continuing upwards. So, you know, when you look at those two data points, it’s, you know, it’s sorry, let me hide this here. It’s, you know, racism cause for concerns. Like I said, Nick’s got a ton of other charts. If you want to see those go watch that video. But let me come to you, Lance here. Where do you think the housing markets headed?
Lance Roberts 54:23
Well, first of all, you’re talking about rental properties, multifamily is super overbuilt. You know, there’s that was a problem that was created by this opportunity zone and the tax credits that were given that everybody went to run out and invest money into building multifamily properties in underdeveloped areas. And that’s a whole disaster that’s going to wait to happen for those people in the next year. So commercial real estate still a big problem was well, just because you got 2 billion square feet of occupied office space, and that’s not coming back anytime soon. So the housing market though is still caught in this point. problem that you’ve got baby boomers that have 3% mortgages that would like to sell their house, but they can’t, because if they go to buy another house, then they’re going to wind up having a lot higher interest payments. So you have a supply problem in the housing market, that new homes are coming on the market, they can’t Come on fast enough, because you have a dearth of of inventory of existing homes. And that’s keeping these prices more elevated, they are correcting. But they’re not crashing, like everybody thought they were going to because of this supply problem that was caused by higher mortgage rates and locking people into their houses.
Adam Taggart 55:34
Yeah, you know, on that, Nick, Nick was saying that you were comparing and contrasting the the new home market versus the existing home market. And essentially, new homes are selling, you know, at a much more aggressive clip. But it’s because the builders are doing two things at once. They’re they’re discounting the price by around 15%. Negative saying, and they’re doing mortgage drawdowns. So they’re essentially offering people like high for low 5% mortgages versus the current mortgage rate, which I think is like 7.3 right now. So what he’s basically saying is the new home market is giving us a preview of where the existing home market is going to need to go. Right? If you if you want to move transactions, you’re gonna have to basically do the equivalent of, you know, price declines and or better mortgages, right.
Lance Roberts 56:27
And I have a suspicion that if prices can only kind of hold up and mortgage rates come down, then you’ll have a big inventory, you know, your big jump of inventory and the existing home space. But, you know, it’s just gonna be a question of how this works out over time.
Adam Taggart 56:40
Yep. All right. So Jonathan, like I said, you’re you’re there in Canada, and just for our US viewers, we’re used to having 30 year mostly fixed mortgages. In Canada, you guys have fixed mortgages, but they go variable after five years, at which point most people go and get a new mortgage. So in theory, you have about 20% of the country that’s rewriting their mortgage every year. Right. So you’re on a much more accelerated schedule than we in terms of the lag effect, people experiencing the lag effect there, because they’re going to rewrite from a relatively cheap mortgage to one that’s maybe more than twice as much Correct?
Jonathan Wellum 57:21
Yeah. So I mean, we have the adjustable in terms of Canadian markets, people can have an adjustable rate mortgage. And so then they can adjust as the as the rates change, they can also take out 1234, and five year mortgages, and but typically, the longest you can go typically is around five years. And then it resets, whatever the rate is, when that five years is up. So you’ve got a whole, you got a whole group of people that have quite a variety of mortgages coming due. But at the end of the day, yeah, there’s at least 20%, and there’s actually more than 20%, they’ll be coming due every year. So we’re starting to see that you don’t have to move, higher and increase. So we’re starting to see that impact. Now, what’s interesting, again, go back to what Lance was saying about supply in, in Canada, we have a real shortage of housing. So not only do you have the prices way too high, and interest rates have been way too low, and now they’ve come up. And so the funding costs are high, we still don’t have enough housing. So we did see it, you know, housing prices dropped about 20% or so over the last sort of year over a year, but they’ve largely stabilized over the last couple of months in Canada, believe it or not, and it’s quite interesting to see them stabilized despite people just having a real tough time making payments. What we talked about, I think, on the previous q&a, is that the banks have extended the the term of the mortgage, and now you have amortizations, going from 25 years, up to 35 years. So the banks are working with some of the people, but we’ve got a massive amount of immigration. So we’ve got, you know, just in our own province of Ontario, but 15 million people last year 405,000 new immigrants came into Ontario, and there’s not enough housing. So I it’s very difficult to predict, I think it’s what it’s going to cause is people not spending money in other areas, and, and just a lot of pressure on our overall economy because people are going to have to dig, dig, dig, dig to make those mortgage payments. And I think housing prices will be sloppy, and they certainly won’t go up much. But the supply demand characteristics are so out of whack in this country. It’s unbelievable. And the regulatory regimes here that’s, you know, inhibit housing and building of houses and the costs that are added on to the housing costs are just outrageous, despite the fact that we’ve got more land than anyone, right, we have more land to expect to build on. So I think because of all of that we’re going to see sloppy prices probably down a little bit, but it’s going to hurt our overall economy, big time because people will not be able to spend in other areas. And that’s what I think is concerning, you know, the Canadian, the Canadian population, certainly beginning in government and Bank of Canada, his bank account has been tried to lag the interest rate increases by the Fed because they know we’re we just got way too much debt in this country. And it’s going to it’s going to hurt. Yeah. All right.
Adam Taggart 1:00:11
So it sounds like a contractionary force on economic growth. Yeah, that’s being added to the contractionary force of the higher interest rates, that in the US is being added to the potential contractionary force of the student loan repayments going into the process there. Now, of course, we’re gonna have a slower burn in our housing market than you because we don’t have this massive rewriting every year. But it’s still not negligible. Alright, guys, well, fantastic discussion are at the end of the hour, so we’re gonna have to leave it there, folks who are watching, thanks so much for participating. Thanks so much for asking such good questions. Just a reminder that if you want to talk to any of these advisors, get a free consultation from them. Again, they don’t cost anything. There’s no commitment to work with these guys. It’s a public service, they offer to help people position themselves as prudently as possible for the futures that they see ahead. Just go to wealthion.com and fill out the short form. They’re just working there to put in my little magic URL there at the bottom of the screen. So, guys, thanks so much. I will see y’all later on in this channel. John and Mike, I’ll see you guys later this week. Same with us, Jonathan. We’ll have you back on again soon. Do a deep dive into Canada, and resource investing. Guys, thanks so much for joining me, everybody else. Thanks so much for watching.
Jonathan Wellum 1:01:30
Thank you. Well,
John Llodra 1:01:30
thank you very much.
Mike Preston 1:01:32
Thanks, everybody.
