Mike: Welcome everybody! I must say that we have the best bumper music in town. Certainly worth turning just for the tunes. Today is July 22nd and then again, thank you all for joining us! My name is Mike Hengehold and I’m here with Doug Johnson. Everybody’s familiar with Doug. Doug is one of my partners here at HCM and he is the chief investment guru at here as well.
First, some basic housekeeping issues. There is a Q and A box at the bottom of the screen if you don’t see it. If you hover around down there, it’ll pop up. If you want to submit a question during the presentation, feel free to do so. Slides will be available at your request after the presentation. If you’d like to get a copy of the slides, we certainly can provide that for you and we should have a replay up on the website sometime in the next few days. That does it for the housekeeping.
You know I feel a little bit like a broken record here, and that’s because it’s for the last year and a half or so, all of these conversations we’ve been having have been focused around Covid and today it’s going to be no different in that regard, especially as some of the variants, this Delta variant, seems to be rearing its ugly head. You remember back when the vaccine news started to come out and then the vaccine news was good. What we talked about a lot was reshaping the portfolios to take advantage of reopening stocks. And reopening stocks are the types of companies that would benefit from people’s willingness to travel, people’s willingness to go to restaurants, the simple ability to go to work, get kids into childcare, and things of that nature. Another big element of this had to do with the fact that the government has modeled a lot of its stimulus efforts around these types of events as well. What’s the likelihood that the economy would be slowing down because of Covid? What’s the likelihood that we’re going to be coming out of it with vaccines? All those things have a bearing on the financial markets, obviously. Yes, things did start to improve. We allocated funds to these reopening stocks and away from defensive companies, and that turned out to be a pretty good decision. Now however, we find ourselves in what at this point I guess we’re expecting a half time or an intermission. But what we’re seeing is is that the Delta variant and quite frankly the threats of inflation, that’s another thing that you see in the news a lot lately, but these are creating some drag on the financial market and potentially creating some risks that that the spike in growth is behind us and that the trend in growth will begin to decay. We see that in confidence surveys There are several conference surveys have shown that since June consumer conference has been coming down a little bit. not a lot, but again that the peak might be behind us. Asset class performance is demonstrating this to some extent. market breadth to some extent. But I don’t want you to think we’re forecasting bad news because before we jump to any conclusions, we have to address the fact that this could really just be short term noise. You have to remember that in the United States and in most other big countries now we’re enjoying relatively high vaccination rates and we have very effective vaccine. Even though people might be getting sick, they’re staying out of the hospital. and obviously the mortality numbers are way down. And one maybe upside of some of this activity could be a refocus having those who are not yet vaccinated. Think about this again in order to help protect themselves and their families. And of course, the more that we get closer we’re going to be to that herd immunity that the doctors have talked so much about. The reality here is it’s very possible that we just might be in the process and I hate this term because it’s been used or abused and used and overused. but we might be approaching a new normal where we are watching a world adjust to what post pandemic or post crisis world would be, where we’re simply living with the Covid virus, we’re keeping it in check with vaccines and potentially booster shots and things of that nature, and we’re just going to go about living our lives. The thing is, this is going to be a herky jerky process as we get there, but the odds are that’s probably what’s happening There’s an article in the paper in the Wall Street Journal today talks about the fact that in England, Boris Johnson has decided that’s the experiment they’re going to run. They’re basically telling people to go live their lives individually, people to decide if they want to go to the big gatherings or not, if they want to wear a mask. They’re seeing about 50,000 new cases per day, but their hospitalizations are very low. So, these are evolving issues and that the reality is, we’re never going to know a final answer here, because again, it’s something that’s going to be something that’s constantly developing at HCM. Our goal is to understand the cycle and position ourselves accordingly. Again, thinking about, we’re going through a phase where we’re in the reopening phase, so we want to lean in that direction. Now, if we’re in it in an intermission phase or a half time phase, we’re going to see if the vaccines can keep this new variant check that’s going to require some adjustments, then presumably we’ll go through and get back into the reopening phase Again, that idea of being in sync with the cycles is really where our focus is. So, with that said, those are my opening comments. So, Doug, where are we going from here?
Doug: Well, for the movie buffs on here, they can notice a Delorean on the screen, relate that to the movie Back to the Future. One of the underlying themes of this presentation is “are we going back in time? Are we going back in time with Covid? Are we going back in time with economic growth? Are we going back in time with the leadership from the market?” And really, when we say go back in time, we’re not going back to 1984, 1985 or whatever year they went back to talking about, just going back to 2020 because the environment that we saw for a good portion of was very different than the one that we saw for the beginning of this year. And you mentioned the reflation theme and that’s something we’ve talked about quite a bit over the last. I’d say six to eight months and now we’re seeing things in the market that are maybe giving us a little bit of pause there and saying okay, is this in fact an intermission or are we starting to get into this time machine and go back to what we saw last year?
You’ve seen this chart before. This shows Covid case counts in four separate countries. Now we chose these specifically the first three because there are three of the highest vaccination rate countries in the world. You have the United States and let me just pull up my laser pointer. just a second. There we go here. In the top left, you have the United States. We can definitely see an uptrend here in cases over the last month and a half. Certainly, nowhere back to the peak that we saw at the beginning of this year, but a trend that’s moving higher nonetheless. United Kingdom. Same story, a much more aggressive rise in cases almost back or surpassing the highest level that they had at the beginning of the year. And then you have Israel, which has seen, I’d say a much flatter increase in their case counts. But again, these are three of the countries that have the highest vaccination rates in the world, and we’re starting to see case counts move higher in those areas. The market has looked at that and said okay, as this Delta variant spreads around the world, how has the vaccine going to hold up and effectively keep the reopening that we’ve seen on a more permanent basis as opposed to seeing anything more regressive which was actually seen in some of the other areas of the world. But one chart that is worth paying attention to here on the bottom right is India. If you remember back two three months ago, India had one of the worst outbreaks that we’ve seen since this has started. They topped out at an average daily case rate over 400,000 for about a week, and there was concern that the outbreak there was going to just overwhelm the country, overwhelm the medical system. Their vaccination rates were very low and there was concern that it was going to overwhelm everything. Well, if you look, they reached that peak and then they came down very aggressively and very much normalized back to the levels that they were at before the spike happened. Now they’re still trailing the Us and these other countries and vaccinations, but it does show a little bit of promise here. If we were to see a spike in cases, I don’t know that it’s going to be a permanent issue that’s going to stick around.
More importantly, if we go and look at hospitalizations, we see maybe a different story. Now understand that there’s been a natural lag between case counts and hospitalizations. But if you look here the three countries that we highlighted in the last slide, you have the United States, the Uk, and you have Israel. all of them still showing very low levels of hospitalizations. This is important because if you remember, the initial lockdowns and the subsequent lockdowns were very much based on the case counts, but they were also based on the fact that the medical system was being overrun, that hospitals were up to capacity, and there, there had to be a way to lessen that burden so to speak. Not being in the medical field, it feels like what we’re seeing is that as vaccination numbers continue to increase just because the case counts are going up, it seems like the hospitalizations so far are staying somewhat level. I think that’s an important thing to note if we’re trying to map out whether or not we’re going to see a permanent reopening and maybe the continue of reflation trade. or if we’re going to go back to more regressive measures in that respect. Now, as we move on from the Covid picture, we go into some more of the economic data. Now, this chart shows Pmi output, which is just kind of a measure of business growth in the Us. So, what you can see is from 2010 up to the pandemic, you have fits and starts. This gray bar here denotes GDP growth and everything kind of stayed in this I would say 65 to 45 range. For the most part you had your ebbs and flows, but nothing really significant. Then obviously we run into the Covid situation. here. you’ve got a huge drop in Gdp, a subsequent drop in output, and then we’ve had this boomerang recover all the way up here. If you can remember back to the last presentation that we did. We talked a lot about base effect and basically what we’re seeing with the base Effect is we’re starting to roll off the year over year comparisons that we saw at the very bottom trough of the Covid outbreak. so to speak. Here, we’ve seen really good rebound numbers, but there’s now concern in the marketplace that we may have reached a peak of that growth. Not that the growth isn’t going to continue, but that the rate of change or the rate of growth is not going to be as fast or accelerated the level that some had predicte. Again, this doesn’t mean that everything’s going to turn around and we’re going to all of a sudden go into this recessionary environment. all it means is that when people look at the reflation trade and the things that were going to be the biggest tailwinds for that, if we have reached peak growth and we’re starting to decelerate a little, that’s going to cause some investors to maybe begin to back off some of the investments that they’ve made in the reflation trade and start to consider some other options going forward. or at least take a more neutral stance until there’s a little bit more clarity in terms of not only the Covid cases, but also in what we’ve seen in economic growth. Now we’ve mentioned travel. Mike mentioned it earlier. We’ve used this chart before as well. This is the Tsa checkpoint travel numbers on a seven day average. It really just denotes the amount of people that are traveling via planes in the country for a given week. The 2019, the light blue is the normalized level of travel so to speak. You’ve got the dark blue line here with Covid all the way at the bottom and then you have this 2021 line in red and then the dotted line. Here is a percentage of 2019 what we can see is that since the beginning of the year, this number has continued to trend up and at a pretty good rate. What it shows is that even with the advent of the new Delta variant, we still have people getting out. We still have people traveling, and when we’re looking at pros and cons of reflation, we can argue that this is certainly a pro and if this trend can continue, we’re moving back to the level that we saw pre Covid.
Now a kind of a complimentary thing to this would be hotel occupancy. Same story with this chart. The blue line here denotes the median level from the year 2000 to 2020 and you can see the red line is almost all the way back up to that level. Again, people are willing to go out, they’re willing to travel by air, they’re willing to go to hotels. They’re willing to go out to eat. So, the reopening that we’ve seen, although it may be slowing slightly, it’s certainly showing the momentum that we expected to see as we talked about reflation for the past six months. Now one of the concepts that we’ve run into over the past I’d say month and a half is as we’ve seen worries about the reflation trade pop up, you’ve seen a change in leadership in the market so to speak, whereas the first four months there you had your cyclicals, you had small cap, you had very value-oriented things, leading things that were very sensitive to economic growth. What we’ve seen recently is kind of a counter shift to that. You’ve seen the stay-at-home names start to advance more than the deflationary or if we’re looking at it, value versus growth, more of the growth names. This chart does a good job of of showing that ebb and flow and this has maybe on a little bit shorter timeframe. But what you’re seeing is the blue line here would denote a reflationary trade going up, whereas the blue line or the I’m sorry the green line down here would note the deflationary trade going down. These have come and reach this point now and we’re not saying that these are going to continue to ebb and flow like this for the foreseeable future, but for right now they’re seeming to kind of crisscross back and forth with each other based on the message or what day of the week it is as we talk about portfolio positioning and kind of what we’ve done recently. we’ve tried to neutralize our exposures a little bit more before we can get a little bit more clarity on what the future might hold. And once we can get that clarity, we’ll have a better idea of what the market leadership might be on a more sustainable basis.
Mike: This is probably what you’re about to get into that what we refer to as the reflations, right? Those types of stocks were rocking and rolling all year long. And then when the Covid variant Delta began to scare people, we just went back to not as drastically, but basically went back to the game plan for last year when Covid was slowing things down, basically because the fear of the unknown was driving people just to pull back a little bit not be quite as aggressive.
Doug: Yeah, that’s a great way to phrase it. And here you can see the year-to-date equity performance, the green and blue line here. Value in small cap. You can see the gap over the market, international and growth here. Through the end of March and then all of a sudden we started to see that leadership change. Small caps started to move lower. you have value still maintaining a pretty wide margin, but over the past few weeks specifically starting to work its way down. while the laggards for the beginning of the year are starting to move their way back up, things are starting to cluster back together a little bit. But if you take it on a year over year or year over year basis really going from the election which is this inflection right here, you still can see that small cap and value where the reflation assets still have a pretty good lead over some of those growth assets and then certainly in our national down here. We were able to participate in that reflation trade at the beginning of the year, but as we’ve moved and seen the data point shift and some questions pop up, we’ve certainly taken the opportunity to take some of those profits and readjust portfolio exposure a little bit there. Mike, you mentioned in your last blog post the possibility of the Fed talking about a taper coming up. Now I’m going to show a very brief clip here of Chairman Powell and we’re only going to watch about 10 seconds of it, but I want everyone to listen closely to what he says here. And this is pretty recently when this came out. “we’re not even thinking about raising rates, we’re totally focused…” for those who might not have called that. Basically, what Chairman Powell said was they’re not even thinking about raising rates. Low rates forever. Now this was pretty recently, but a few at the last Fed meeting in June. all of a sudden, you got the introduction of the possibility that because of inflation rates may have to get raised sooner than they thought. Here’s Chairman Powell again looking at his watch, he’s saying, well, I guess it’s time to start thinking about thinking about tapering. And as we’ve kind of alluded to in the Taper blog that Mike put out, I don’t know that the Fed wants to raise rates, but that they’re looking at the inflation data out there and they’re having a hard time continuing to say with a straight face that this is all transitory so to speak. Now, they may be proven right eventually, but the market in a way is saying this is not transitory. The supply chain issues that we’re seeing the inflation numbers that we’re seeing; it’s going to eventually lead to an environment where it may be too late. And when we look at this rate chart here so the Cpi index is in purple and you can see from the beginning of this year, this number is shot up pretty aggressively. You’ve got market inflation expectations here in green, but oddly enough, you’ve got the ten-year treasury here in orange. You have the treasury yield curve spread between the two and the 10-year bond and blue and those seem to be going in the opposite direction. And they seem to be doing this in the face of the headline here, inflation spikes in June to the fastest pace in 13 years. Okay, normally you would see a headline like that and you’d think okay rates are going up, but they’re actually doing the exact opposite. As we’ve talked about some of the things that have given us pause in terms of the reflation. This is one of the things that really needs to be paid attention to closely because the Bond market is telling us that this reflation trade may in fact, I don’t want to say it’s over, but it’s certainly reached a level where Mike he the word you used was an intermission so to speak. Where does that leave rate for the rest of the year? Here is a scatter plot this goes back to 1991 and the bottom shows us core CPI, which is just one of the measures that we use for inflation. and it’s a year over year number from zero to 6%. And then here on the left we’ve got the U’s ten-year Treasury. and then you have a regression line that just runs right through there and just shows basically the trend of all these dots. What you’ll see is at least historically, when CPI is high, the 10-year treasury yield is subsequently high as well, denoted by all these dots. Now, the red dots here show the last five years under a very aggressive accommodative policy when we’ve had any level of inflation, they’ve all been fairly low. Now what you’ve got is April, May, and June. The last three months that we’ve seen, we’ve got Cpi at three year-over-year, then close to four, and now four and a half in June. Yet all of these dots remain very much outliers in this area. with the ten year treasury yield where it is, a lot of strategists us included have looked at this and said okay, is this telling us something about the recovery? Is it telling us something about the market? Is it telling us something about the leadership or has the Fed just distorted the treasury market so much that it’s impossible to gauge any level of predictability from what rates telling us right now? I would say that we’ve certainly seen going back to the theme, are we going back in time? We’ve certainly seen the trends that were dominant for a majority of 2020 becoming market leaders over the past few months. You’ve got your growth, names, your tech names things along those lines. But even on Wall Street, most of the strategists I mean this is Goldman Sachs, a very well known Wall Street Bank. Here’s their rate forecast for the ten-year Treasury for the foreseeable future. Currently when they ran this the rate was at 1.24%. Their prediction is for a 1.9% ten-year treasury at the end of this year, 2.10% at the end of 2022 to 2.3% in 2023 and then 2.4% by 2024. By now the futures market which is just basically a market aggregation is a little bit lower than that. but nonetheless the rate trends here are still higher if Goldman Sachs ends up being correct with their forecast. Not saying that they’re in the know better than anybody else, but let’s say that they’re correct the 10-year bonds got a long way to move in terms of yield higher and we would have to expect that if that does take place, it would be under the umbrella of inflation and some sustainable level of growth in the economy, which what we saw at the beginning of the year should be a tailwind to those value cyclical reflation assets. The idea that the reflation trade is completely dead is a little bit premature. At the same time, we also have to respect what the bond market is telling us right now, knowing that these forecasts can change based on certain things that we might see pop up along the way.
Mike: before we leave, this, a point or an observation about this to be aware of is, remember that when rates go up, bonds go down. Pretty simple concept. And we have a situation right now where the official 10-year money is one worth what today?
Doug: Today the 10-year bond closed around 1.3%
Mike 1.3% when inflation is substantially higher than that means the real interest rates are negative that that is an unnatural state of existence and it only exists in states of great fear. We certainly don’t have that, or when in this case, the government is generating forces that we either appreciate or don’t appreciate. And so, saying this is the conundrum in the market now among strategists is exactly what are those forces Because it shouldn’t be this way. Can you go back? One slide. This kind of reminds me of watching Sesame Street with the kids when they were little and you have to pick up the thing that doesn’t belong. There’s a lot of observations on this chart and then find June of 2021, and it just doesn’t belong there. But that’s where it is and so something has to change.
And so, we talk a lot about stocks, but you might want to just talk for just a few seconds on what we’ve done on the fixed income side based on these observations as well. Doug sure to touch on that. Here is a composite of fixed income returns this year. As you can see, the only line on this chart that’s positive is the high yield bond etf everything else with a negative return. depending on how much duration the investment has, the more negative their return is. Now this is a problem with duration. Duration is just a fancy way that to describe the way that rates and bond prices move duration of five in a bond, rates go up 1% the price of that bond should go down about 5%.
Mike: You’re just using words I don’t understand. A 30-year bond has more duration than a one-year bond.
Doug: So, the better way to phrase it as if rates are going up you don’t want a lot of duration, that’s bad, and vice versa. We brought up this conundrum at the end of last year. We we’ve talked about it a little bit before then, and we were pretty active in adjusting fixed income allocations at the beginning of the year to battle the idea of rising rates and negative real rates. We took some of the duration in our bond portfolios lower and added some more alternative fixed income products into the portfolio. That gives us a little bit of latitude to move in to other areas of the market that maybe don’t have as much interest rate risk in them so far that those decisions have paid off well and for the time being we’re going to continue to let those do their job until we can maybe get a little bit more clarity on what we’ve seen in the rate market as we transition out of the fixed income world. I wanted to just spend a real brief amount of time here talking about what we might expect for the rest of the year. If you’ve heard me talk about outlooks and things like that, you’ll know that I’ll almost never give a a defined number to anything just because it’s more of a guest than anything else. But what we have noticed is that expectations from investors are starting to become extremely distorted. Natixis Investment Managers recently did a survey of 750 US individual investors and found that the expected annual equity returns of this group was 17.3% per year. This was up from 10.9% expected in 2019, it’s almost double the average of 7.1% since 1926. So, we’ve got this cartoon on here and it reads Watching cartoons growing up gave me unrealistic expectations of how often pianos fall out of the sky onto people. What is happening here is investors are extrapolating the returns that they’ve seen over the past few years and essentially assuming’s going to be the environment for the foreseeable future. Now let me be the first one to say if they’re right, that will be an absolutely awesome environment and I don’t think anyone will complain about it. but history has shown us that there’s a high likelihood’s not going to happen. In fact, it’ll probably be the opposite. and as we make those considerations, it’s important to realize that planning is a very important aspect of the total relationship that we have with our clients. We spend a lot of time focusing on the investment side of things, but the plan kind of uses the portfolio as a way to determine whether or not a client’s going to be able to reach their retirement goals. As we start to look at plans going forward, we need to make sure that we’re considering all the scenarios and not assuming that hey, we’re going to have 17% equity returns going forward because we can all agree is probably not a realistic way to look at the world. Even though we’ve seen really good returns over the past few years, what can we expect for the rest of the year? This is a good chart that shows historically if the Dow has a positive performance in the first half of the year, what we can expect as a full year return. These are broken out into number of years going back 124 years all the way back to1896. A lot of data on here, but the Dow is up double digits that through the first half of this year we go right here. Whenever we’ve had a year where the initial gain is between and 10% and 20% 23 times in history, we had a full year return that was positive. Only one time we had a return that was negative. What I can tell everybody is that the chances of the returns being positive this year are probably pretty good. We don’t know exactly what that number is, but we think that with the accommodative policies that we’ve seen with the trajectory of economic growth that we’ve seen, with projections for earnings growth that we’ve seen, there’s a good possibility that this environment is going to remain accommodative for equities going forward. Does that mean we’re going to get another 10% at the end of the year? Could be. Well, we stay right where we are. I don’t know, but history would portend this year is going to end up being a positive year overall in the market. Lastly, as we get a lot of questions about valuations and concerns about things going forward, there can be a tendency to use valuations as not only a timing tool, but as a way to determine how bad a particular correction or a bear market could be. We look at valuations now and that we would all agree that they’re touching some very historic levels in terms of the normal things that we’ve looked at, and some people look at that and say, well, if things are this high, the downside of this is going to have to be and that’s not necessarily the case it could be, but that doesn’t necessarily mean has to happen here. This breaks out market losses. Bear Markets that began when the Pe ratio was the lowest actually produced the largest drawdowns in terms of bear markets and the highest produced a lower level. Now, granted, 30% bear market is still a significant drawdown, but this is the exact opposite of what most people would expect. Same thing with the cape ratio. Now, the cape ratio is just another way to express price to earnings. It’s an inflation-adjusted measure and goes back about 10 years in terms of looking at earnings and adjusting those for inflation. But again, same story. The lowest Pe ratios for the market overall led to the steepest drawdowns in terms of Bear Markets and vice versa. And then when we look at the length, same story. Lowest Ps led to the longest Bear Markets where the Isp led to the shortest Bear Market Understanding that we can look at valuations and see that they are high. It doesn’t really give us any indication on short term timing and doesn’t mean if we do get a correction that it’s going to be any better or worse compared to if Pe levels were any lower from the starting. That’s an important consideration to look at right now as we can see many charts and graphs that show take your pick said fundamental ratio, look at it and say wow, Things are really, really crazy out there in terms of of questions. That’s the end of the prepared presentation so we can get into some Q anda Mike One question is maybe priding us a little bit on the issue that we just looked at. Is there anything more specific we can provide for maybe outlooks for the remainder of the year?
Mike: Oh wow. Look at the time. we obviously talk about this a lot. Reality is, we have these unknowns that we’ve talked about, but for planning purposes, our belief is we are in this intermission stage where we have this learning period to deal with these new variants. Unvaccinated people have a higher probability of getting sick. Now because this thing is three times as contagious as the regular or the original Covid, Those people can get ill and they can get very seriously ill. But among the vaccinated, it seems as though this experiment that I mentioned that England is on should be fairly supportive of returning to normal. There are a number of reasons to believe that the inflation scare that we are all being discussed is transitory and that’s currently our base case assumption. There are a lot of reasons that wasn’t thrust of today’s presentation, but there are a lot of reasons to believe that’s going to be the case ultimately. but again, the market has to work its way through that to get to that conclusion. There’s this mystery force that’s keeping the Bond market, particularly the treasuries that Doug was discussing at negative real levels and just the 1.2%, 1.3%, 1.4% as it moves around. In a world where inflation is more than twice that, and that’s the guiding hand of the Federal Reserve and a theory that surfaced popularly during the last election. I believe it was Andrew Yang. is that right? The Mmt who proposed modern monetary theory is a concept that’s gaining some momentum and essentially at the core, I’m oversimplifying, but it says that deficits don’t matter. Well, that’s a very new way of thinking about money, and then the forces of the government printing funds wildly. we are about to see, presumably if politicians do what politicians do. We’re about to see an infrastructure bill where either the republicans cooperate with democrats on the first tier in order to provide the traditional infrastructure. and if they do. The President has said although he walked it back because it didn’t play well in the polls, but he has said that the first round of stimulus in the second round, the $3.5 trillion bill is linked, so they will hopefully pass the first one with bipartisan support and then do the second one on their own. When you weave all these things together, the notion of the world being awash and money, and I would say that we’re a little bit ahead of the curve in terms of talking about tapering and raising interest rates. When you look at the U, for example, they’re still loosening up and looking at a lot of stimulus. The odds are that what we’ve been through, we’re going to be able to take advantage of a typical cycle there as well. But the moral of the story is there’s going to be lots of money with this Mmt concept floating around that should allow equities to be productive for much longer than they would typically be in a traditional cycle that doesn’t respect any Black Swan events and so forth and certainly a lot of things can happen. But if the world stays safe and basically all we have is a new version of the flu, we’re awash in funds. The Fed keeps its promise and doesn’t raise rates or taper anytime soon. This party could go on for some time. I would just say that we would expect volatility to go back to at a minimum normal. This week. The markets sold off something like 800 points on Monday. If you were on vacation for a couple of days and checked your account today, you wouldn’t even have known it happened. It’s not that volatility is bad, in fact, this notion of volatility versus risk is going to be the subject of our next video. But again, as Doug said, we’re not going to pin numbers on it. But we’re optimistic that the party has a way to go yet. Doug: Anything that I missed there. Doug: Well, the only thing that I add to that is in August, the Fed is going to have a meeting in Jackson Hole which will be scrutinized beyond belief for anything that can be taken out of that and if they were to give any hint or indication that their rate hike timeline has moved up, you could see increased volatility in the market because the last time the Fed tried to raise rates or normalized rates, the equity market did not care for it. and even the mention of moving up the timeline by one year for a 25-basis point hike caused a lot of volatility. Just a few weeks ago, a lot of eyes will be on that meeting and I’ll be interested to see what the outcome of that is.
Mike: So that underscores this notion of volatility. there’s I was reviewing data the other day that the number of days since we had a 5% correction a 10% correction 50% correction, we’re getting pretty long in the tooth would be except for the Nasdaq which in this whole value vs. growth discussion did swoon earlier this year. Of course, it’s now coming back again but we’ve mentioned in many of our blogs that should this occur at this point we’re going to view those as opportunities rather than threats. At this point we expect the volatility. In fact, I’m kind of sorry we haven’t had it. It’s those times when others are panicking that you can get your best positions, they kind of disarm some of this issue. While the market’s expensive, if we can have a nice or 10% or 15% pullback would create some opportunities that we would love to take advantage of.
Doug: We’re right at time here. No other questions Mike if you want to take us out.
Mike: Alrighty, well, obviously I want to thank everybody for spending these 45 minutes or so with us. With summer activities, we are going to. our next scheduled event will be for September 23rd. Obviously the promise is out there if news breaks, we’ll be back for a call if that was needed. and I would also say as always, if you have any questions, certainly feel free to reach out. As Covid is breaking, we’re doing a lot more in person meetings again, so if Yoi’re comfortable with that, we’re good. Otherwise, we’re always open for video conferences and so forth. I was hoping to have tax news for this meeting, but as the expected date of the infrastructure program got punted yesterday, we’re still probably weeks away from seeing what the actual tax proposals will be. That’s going to be very important as we get into the end of the year tax planning, especially for higher income clients, those that are still working for those that are in transition to retirement. We do expect there to be a change in the required minimum distribution age. This year, that deal was pretty much already been agreed to on a bipartisan basis. It’s having trouble getting signed, but it will happen and that’ll take the RMD age to 75. Otherwise, if you have questions give us if there’s somebody you know that’s planning retirement and could use our help. We’d love to chat with them. We’ll help them any way that we can. that doesn’t everybody. Again, thanks for tuning in! Bye bye.