Key Wealth Matters Podcasts

00;00;00;00 - 00;00;39;15

Unknown

Welcome to the Wealth Matters weekly podcast, where we casually ramble on about important topics including the markets, the economy, human ingenuity and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, March 14th, 2025. I'm Brian Pietrangelo and welcome to the podcast. This past week I was on the road again and actually had some time to spend with family and I wanted to say thanks for the wonderful quiche prepared by my cousin Marilyn, especially when the Department of Justice just opened a probe on the surge in egg prices.

00;00;39;17 - 00;01;01;05

Unknown

As inflation on eggs has basically doubled over the past year. We'll talk overall inflation with our panel today as CPI for February was released this week. In addition, as we head into the weekend, Saint Patrick's Day is on Monday, so maybe a little luck of the Irish can provide a proverbial pot at the end of the rainbow relative to recent market volatility.

00;01;01;07 - 00;01;27;29

Unknown

With that, I would like to introduce our panel of investing experts here to share their insights on this week's market activity and more. Steve Hoedt, Head of Equities. Rajeev Sharma, head of fixed income. And Dan Serrano, director of Multi Strategy Research. As a reminder, a lot of great content is available on Key.com/Wealth Insights, including updates from our Wealth Institute on many different subjects and especially our key questions.

00;01;27;29 - 00;01;58;09

Unknown

Article series addressing a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor. Taking a look at this week's market and economic activity. The economic release calendar was fairly light this week. We only have two updates for you. First, beginning with the JOLTS report, job openings came in at roughly 7.7 million for January, which was up mildly from December, which was at least somewhat good news that employers were willing to post jobs.

00;01;58;11 - 00;02;33;16

Unknown

And second, we've got both inflation reads with CPI and PPI. The consumer price index and producer Price Index reports for the week. We've got, CPI coming in a little bit better than expected. So overall, on a year over year basis for the month of February 2025, all items in the CPI report came in at 2.8%, which was down from 3% in January and core items, excluding food and energy came in at 3.1% year over year, which was also down from 3.3% in January.

00;02;33;19 - 00;02;55;26

Unknown

Outside of the economic calendar, there was a lot of market activity, as has been the case recently with the conversation around tariffs. We also have the Federal Open Market Committee meeting next week, and we've also had some significant market volatility to begin the week. So, with that, we'll turn our conversation first to Steve to get his reaction on the market volatility and his thoughts for the week.

00;02;55;27 - 00;03;31;26

Unknown

Steve or Brian you know it’s been an interesting week especially as a market technician because these are the weeks when I get lots of questions from everyone about where is support for the market. Right. So, we hit a 10% correction, this week, officially, down from the peak. And, you know, when I take a look at the chart, the chart says to me that, the August lows back during kind of the Japanese yen fluctuations last year where we got done around 5400, it looks like that's where support is.

00;03;31;26 - 00;04;02;08

Unknown

Okay. That being said, I don't know that we'll get well that, that will have to go all that way. And I say that because there, there are indications within the market that we're starting to see some stability here. In terms of the decline, there are a handful of indicators, though, that we're looking at that we have not seen, that we typically see improve when we get to what would be called a tradable low or a durable bottom for the market here.

00;04;02;08 - 00;04;32;19

Unknown

Namely, we haven't seen sentiment get overly, cooked to the downside. So, if you look at call ratios, that's one way to gauge that. Typically, when we get into a period of market stress, you see the put call ratio expand up above 1.3. Right now, that's a little over one. So, it shows that there are some, fear that is creeping into the, the buyers of, of options, but not a lot.

00;04;32;21 - 00;05;06;20

Unknown

So that's something to watch here as we, try to try to try to go through this bottoming process. The other thing is we watch market internals, internal calls are, data points that are created by aggregating the performance of the various individual securities in the market to create an aggregate indicator. So, the one that I watch for this, importantly, is the number of S&P 500 constituent issues that are making new 20-day lows.

00;05;06;23 - 00;05;36;08

Unknown

Typically, when you get to a durable, tradable low for the S&P 500, you see that number spiked to over 50%. So, in other words, 50% of the stocks in the S&P 500 are making a new one month low on the same day. That typically has gotten to the point where we're flushing out all of the, thing, and you're getting to a kind of a I don't want to say panic, but you're getting to a point where the market is capitulating to the downside.

00;05;36;10 - 00;05;57;11

Unknown

The highest that we've gotten to during this most recent move is 40%. And right now, we're sitting around 35%. So, we really have not gotten to that point where we've seen the 20-day lows flush. Now, that doesn't mean that we can't bottom without having that occur. It just means that it's going to take more time if we don't have that occur.

00;05;57;11 - 00;06;17;03

Unknown

So, you know, markets are just two ways they justify a price or they in terms of a move up or down and markets adjust by a time, they can just mark time sometimes. And, you know, it feels to me here, over the last week or so that we've gotten to a place where the market is starting to mark time.

00;06;17;03 - 00;06;51;28

Unknown

We've been going back and forth a little bit, trying to establish, a new a new trading range as we adjust to the realities that have come out of both, Washington and, and other places around the world. When I look at the earnings numbers for the S&P 500, one of the things that I think has been really interesting during this downturn is that, you know, we were concerned earlier in the year, when we saw the earnings line for the S&P 500 on a forward 12 month basis heading downward.

00;06;52;01 - 00;07;16;15

Unknown

It had been a couple. It'd been a few years, actually, since we'd had a downtrend. There. As we moved through earnings season, we actually saw the 12-month forward earnings line for the S&P 500 move higher. And it's actually at new highs as we sit here and speak today. So, all of the decline effectively has been the market taking price to earnings multiple out of the out of the valuation.

00;07;16;18 - 00;07;49;19

Unknown

So, we came in with valuations that you know not cheap levels for sure. To this situation. And what we've seen is multiples come down due to the increase in uncertainty out of out of Washington. As the market gets more comfortable with the situation and uncertainty lifts, that multiple should stabilize. And again, that's what we started to see this week after the precipitous decline where we've seen two and a half to three turns come out of the S&P 500 multiple over the last six weeks.

00;07;49;22 - 00;08;12;27

Unknown

So, our feeling is that, you know, we're getting we're getting pretty. It looks to us again like we're getting it's pretty late in this move to start making a lot of portfolio changes. We don't think that that's wise at this point. The tariff stuff, it can change on a dime. We've seen all of the stuff out of Washington.

00;08;12;27 - 00;08;38;17

Unknown

The policies can change tomorrow on this. I think that investors need to focus their horizon on their long-term stick to the plans that they have. And you don't make good decisions when you're making panicked, emotional decisions. And, and I think that when you look at the way the market sets up today, you know, it was rational for the market, to react to the level of uncertainty that we've seen.

00;08;38;19 - 00;09;02;20

Unknown

It has reacted to that. We've now come down enough where we've gotten back to what I would say is five-year average multiples. So, the markets no longer extended. And now we'll see how things go. And are uncertainty lifts. You know I think we're set up pretty well into the back end of the year. And that was really our forecast as we came into 2025.

00;09;02;20 - 00;09;23;16

Unknown

We thought the first half of this year would be a difficult one. It would be a period of adjustment. Granted, we've had more adjusting to do that. I think any of us thought, but I think that the, the plan that we had or for the year where down first half solid second half still remains in play.

00;09;23;18 - 00;09;45;07

Unknown

That's great Steve, appreciate the summary. And with 30 years plus of experience in this business, your words of wisdom for our audience are very appropriate. So, thanks for that, Steve. Keep in that line of thinking as to what's going on in the world. Let's move to Dance Inferno. Dan, what's your take on what's happening in the international markets that are a little bit different right now than what we're seeing on the US front?

00;09;45;09 - 00;10;07;18

Unknown

With the exception of this tariff battle? Thank you. Brian. Yeah. And just as Steve was saying, you know, in the US we're seeing compressed multiples. And we're going to talk about Germany and the European Union, where multiples are actually stable and actually rising. There's a reason for that. In Germany we're seeing the changing winds.

00;10;07;20 - 00;10;39;26

Unknown

Germany has been the largest economy in the European Union basically since inception. And they've shouldered a big burden since the EU became a single, currency area. Germany has a new chancellor now, Friedrich March and Friedrich Mertz. has actually been instrumental in reducing the debt break, that Germany has been subject to for years, basically since then, great financial crisis.

00;10;39;28 - 00;11;07;27

Unknown

The debt break puts a cap on government deficit spending. And that hard cap has probably caused a lot of European underperformances in the equity markets since the GFC. Over the past couple of weeks, we've heard scuttlebutt about Germany, maybe, reducing the actual break on their spending. And just this morning, Germany had their whatever it takes moment.

00;11;07;29 - 00;11;59;06

Unknown

They've, they have, appropriated funds for deficit spending that's going to go directly into, defense spending and also looking into, more infrastructure spend on transportation, helping the energy grid in Germany that is really reliant upon Russian energy and also in housing within the, within the country. And what this says about greater Europe, if we use Germany as the bailiwick here, we could see the rest of Europe kind of following the leader here, reducing the constraints on fiscal spending and maybe, maybe continuing the outperformance that we've seen in the equity markets so far this year because as the U.S. has struggled, struggled in the equity markets with the compressed multiples and the flurry of activity from Washington, in Europe, we've actually seen multiples expanding and the equity markets increasing. That that could be a big deal. And it's, it's interesting that this flurry of activity in the US, these new threats of tariffs and, a different view of the US compared to the rest of the world, that might actually be the catalyst for, the rest of the world's equity to, to increase relative to U.S performance.

00;12;35;06 - 00;13;05;25

Unknown

That's great. Dan, any quick thoughts on what's happening in China? Sure. And in China, we're actually seeing, the Shenzhen, the Shanghai, Shenzhen index, at Ise year to date, as of the close today. Now, granted, that's only 2% up year to date, but the index is up about 12% over the past year. And we're we are seeing, gee puts maybe, coming to fruition in the Chinese equity markets.

00;13;05;27 - 00;13;38;17

Unknown

That's a backstop, where we think equity can fall, based on what the government has come out and said and the new policies, the new stimulus policies they've put in place, in fact, Germany or, China actually has the biggest stated, budget deficit over the next year that they've had, in, in, in memory. And what this is going to do is it's going to provide stimulus for, for more consumption within China.

00;13;38;21 - 00;14;06;17

Unknown

And could be a catalyst for, continued equity performance and continued equity outperformance moving forward. And last for you, Dan, what's something that you've seen in your research that's not really hitting the radar, that's being talked about by everybody else that you're seeing that might be important for our listeners today? Sure. Brian. Mergers and acquisitions, it was a hot topic in the election cycle, and it may be a hot topic moving forward as well.

00;14;06;19 - 00;14;31;09

Unknown

Mergers and acquisitions were supposed to increase under the new regime. And in November and December of last year, we saw a big jump in the spreads were a big jump in performance of hedge funds and performance of other funds that, were involved in merger arbitrage. The big jump in performance was due to tightening spreads in deal flow.

00;14;31;12 - 00;14;58;23

Unknown

And it was expected that there was going to be less regulation, less hurdles for, acquisitions to occur, just based on the new, more conservative government coming and coming into office here in the US. That has not happened. In fact, with, increased rhetoric about tariffs and increased volatility of activity within Washington, we've actually seen the reverse.

00;14;58;27 - 00;15;38;22

Unknown

We've seen deal flow dry up and we've seen, the volatility of potential mergers increases. So, spreads have increased. And one reason for that, or one thing that could, that we could see actually, increasing in the M&A front is, foreign companies buying US companies. So, this would be a replay of what we saw during the Reagan era when there were quotas on Japanese cars coming into the U.S back then we saw, Japanese companies buying us manufacturing firms and starting to build the cars here in the US to avoid those quotas.

00;15;38;25 - 00;15;58;24

Unknown

We may see something similar here if the tariff rhetoric continues in the current marketplace. Thank you, Steve. And Don, appreciate that. On the equity and international update. Now let's move to fixed income with Rajeev. It seems to be a little bit more calm, a little bit more stable. Rajeev, what are your thoughts on the fixed income markets and the upcoming fed meeting next week?

00;15;58;26 - 00;16;17;09

Unknown

Well, you're right Brian. I mean, in the grand scheme of things, credit spreads, they've remained pretty resilient. Both investment grade and high yield spreads all the wider on the week. They're still not really showing any signs of the volatility that we've seen in the equity markets or in the news headlines. The riskiest parts of the credit market continue to show this resilience.

00;16;17;09 - 00;16;39;13

Unknown

They continue to be really well behaved. And I've spoken about it before about supply demand technical that are really supporting credit spreads. There's a lot of demand for high quality paper. There's a lot of demand for, corporate bonds. And there's just not enough supply. Even though we've been seeing amazing amounts of supply coming to the market, still not enough to satisfy that demand, but here to go a little bit beyond that.

00;16;39;13 - 00;17;02;10

Unknown

And I think something that's very important to keep an eye on is the liquidity of the markets. Liquidity has been exceptionally good. You can only have a well-functioning bond market and risk asset market if there's an abundance of liquidity. And as long as that lasts, the credit markets will remain well positioned to handle this market noise of fiscal policy or even some of the growth scares that we've been, speaking about in our calls.

00;17;02;13 - 00;17;22;11

Unknown

The most important thing right now is that investment grade funds, you're seeing this flight to quality. You're seeing a lot of inflows into these funds. You see yields on ten-year treasuries. They're hovering around four and a 3:45 .31 percent. It's a very comfortable level. Given the CPI number that we saw there pretty much came a little bit better than expected.

00;17;22;13 - 00;17;41;05

Unknown

The direction of treasuries this week has been pretty much led by equity market volatility, fears of a government shutdown. We will see more corporate supply coming to market in the upcoming weeks. And we're expecting about 35 billion of fresh, front loaded debt supply next week. This could put some pressure on yields as we move, into the week.

00;17;41;05 - 00;17;56;00

Unknown

And I'd start to see maybe some, pressure for yields to move a little higher. But the reduced likelihood of a government shutdown to take some of the steam out of this recent bond rally. We've been on this story many times before about a government shutdown. Generally, what happened is there's a flight to quality, there's flight to safety.

00;17;56;07 - 00;18;13;23

Unknown

You see yield start to go lower with all these fears of a government shutdown, and then nothing happens. And you basically in the 12th hour a deal is made, and the government keeps running. I think that that playbook is kind of getting old now. And I think the markets kind of, moved beyond it. So, you're seeing a little bit more pressure on yields to remain at these elevated levels.

00;18;13;23 - 00;18;33;07

Unknown

Around four and a 3:45 .31 percent. As I mentioned, you have other factors in the market right now as well. The fed meeting coming up next week. Nobody's expecting the fed to cut rates next week. But what's happening right now is many people are expecting, a fresh look at the summary of economic projections that will be released during this, this next fed meeting.

00;18;33;09 - 00;18;50;07

Unknown

In that summary, economic projections are to be very important to see what the fed is thinking as far as rate cuts for 2025. Last time we saw the summary of economic projections, the fed pretty much signaled two rate cuts for 2025. It'll be very interesting to see if they cut that down to one rate cut for 2025.

00;18;50;07 - 00;19;16;28

Unknown

Just a few weeks ago, that's what people were expecting. And then you had this big, fear of the R-word, recession when that started to creep into the market. If you look at what market expectations are for fed rate cuts for 2025, we are pretty firmly at three rate cuts for 2025. So, when you see the summary of economic projections and you see the fed coming out and saying what they feel as far as 2025 projections go, if that doesn't line up with the market, expect more volatility.

00;19;16;28 - 00;19;34;08

Unknown

And I think all eyes are on that. Rajeev, what do you think the read is. We got CPI and PPI inflation reads this week. And it seemed to be favorable. That may lead into a favorable PC e at the end of the month. Or it might continue to go sideways. How do you think that'll factor into the Fed's decision making?

00;19;34;10 - 00;19;54;17

Unknown

Well, the fed has been very, very clear about their dual mandate inflation and jobs. Any type of numbers that really support inflation headed, in the right direction toward their 2% target goal. I think that would be very well received by the fed. But what I thought was really interesting was, you know, we've been so fixated on inflation and inflation numbers.

00;19;54;17 - 00;20;10;25

Unknown

And if they're out of whack, the market doesn't like it. And this time we actually got numbers that were a little better than expected on CPI, PPI. And as you mentioned, it should feed well into but for some reason, I think this whole growth scare narrative has kind of taken the grip of the market right now.

00;20;10;28 - 00;20;30;06

Unknown

And I think that's what people are really focused on. So, I can imagine the fed coming out, fed Chair Powell having his, news conference, his press conference and pretty much saying, you know, inflation is going in the direction that we expect it to go. But he is going to be bombarded with questions about growth, about where we think the economy is going and what the impact of tariffs are going to be on inflation.

00;20;30;09 - 00;20;49;25

Unknown

And really does feel the tariffs are inflation stoking. So exactly how the Fed's going to handle those kinds of decisions with fiscal policy as it shapes up. It's going to be very important. Might even be more important than inflation at this point. Well thanks for the conversation today, Steve, Rajeev and Don, we appreciate your insights and thanks to our listeners for joining us today.

00;20;49;27 - 00;21;12;01

Unknown

Be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always. Past performance is no guarantee of future results, and we know your financial situation is personal to you. So, reach out to your relationship manager, portfolio strategist, or financial advisor for more information, and we'll catch up with you next week to see how the world and the markets have changed. And provide those keys to help you navigate your financial journey.

00;21;12;07 - 00;21;48;12

Unknown

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00;00;00;00 - 00;00;24;04

Unknown

Welcome to the Wealth Matters weekly podcast, where we casually ramble on about important topics including the markets, the economy, human ingenuity and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, March 7th, 2025. I'm Brian Pietrangelo, and welcome to the podcast as we head into the weekend.

00;00;24;04 - 00;00;49;27

 

Unknown

It's a good reminder that on Saturday night, early Sunday morning, it is Daylight Savings Time again adjustment. So for the spring we spring forward advance those clocks. So we will talk to our panel today on a number of topics. But again major issues are whether or not tariffs and other economic policies will spring the economy forward. Or will we take a step back and turn the clocks back to other areas where there might be inflation or a downturn?

00;00;49;27 - 00;01;13;01

 

Unknown

So let's have a good discussion with our podcast panel introducing them. They are George Mateyo, our chief investment officer, Stephen Hoedt, head of equities, and Rajeev Sharma, head of fixed income. As a reminder, a lot of great content is available on Key.com/Wealth insights, including updates from our Wealth Institute on many different subjects and especially our key questions.

00;01;13;01 - 00;01;37;27

 

Unknown

Article series addressing a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor. Taking a look at this week's market and economic news. We've got three key economic releases for you this week, beginning first earlier in the week with the Manufacturing and Services purchasing managers, indices, or PMI data from ISM.

00;01;38;00 - 00;02;07;19

 

Unknown

The Institute for Supply Management reported that the overall manufacturing PMI data did drop from the previous month in January to February, and that indicates slowing, but is still slightly in an expansionary territory. However, the bigger component is that manufacturing PMI has been in a decline for more than 26 months, and in particular, new orders dropped into contraction territory after expanding for three months.

00;02;07;22 - 00;02;31;26

 

Unknown

And on the services side of the economy again, PMI data indicate a continued expansion going all the way back to roughly almost five years of continued expansion, with a couple of months here and there that weren't, but overall five years of expansion in the services component of the economy. So good news there. And second, we had the release of the Federal Reserve's Beige Book report.

00;02;31;28 - 00;03;01;18

 

Unknown

Again, this report comes two weeks in advance of the next upcoming meeting to provide data on the economy that the fed might take into consideration for its policy decisions. The national summary of overall economic activity showed that activity rose slightly since mid-January, and if we divide it up between the 12 districts that the report covers across the 12 fed districts in the United States, six or half of them reported no change for reported modest or moderate growth and two noted slight contractions.

00;03;01;20 - 00;03;35;09

 

Unknown

Overall, consumer spending was lower on balance, with reports of solid demand for essential mixed goods with increased price sensitivity for discretionary items, particularly among lower income shoppers. And finally, the major report for this week is the Employment Situation Report, released at 8:30 a.m. just this morning from the Bureau of Labor Statistics, which showed two key components. First was new non-farm payrolls, which came in at 151,000 new non-farm payrolls for the month of February, which was slightly lower than expectations.

00;03;35;16 - 00;04;01;07

 

Unknown

And right around the three month average, revisions for January and December were modest. Only at 2000 less so good reports there in terms of revisions, the second part of that report is the unemployment rate, which ticked up to 4.1% from 4.0%. But not a big deal there, folks. If we go all the way back since May of 2024, for roughly the last eight or so months, it has been in this range between 4% and 4.2%.

00;04;01;07 - 00;04;21;17

 

Unknown

So it stayed there. So that's pretty good. Not a lot of reason to have a discussion when things go up 0.1 or 0.0% for any month over month reads. So let's start our conversation this week with George in terms of his commentary on the overall economy, what's happening with tariffs, and other thoughts on your mind, George? Well, Brian, I think I'll take the other thoughts first.

00;04;21;17 - 00;04;37;29

 

Unknown

I mean, we can come back to the U.S. economy and the US market as we should, given the centricity around our client base and the focus on the US markets. But I think I'd probably say to me, this kind of say, this is kind of reminiscent of that phrase that says there are decades when nothing happens, weeks when decades happen.

00;04;38;01 - 00;04;53;21

Unknown

And I think this is kind of one of those weeks when it feels like decades kind of happened. And it kind of started last Friday when that meeting, of course, with the president of Ukraine was in the Oval Office, and it kind of escalated. We'll just sort of say, I think it kind of signaled maybe a really significant shift of the US's role in the world.

00;04;53;21 - 00;05;19;03

Unknown

And I think maybe even some of the kind of started maybe a few weeks prior when the vice president was, was in Germany and talked a little about security issues and some other things that, again, foreshadowed the idea that maybe the US's role in the world is changing quite profoundly. And I think that also is kind of cognitive this week, essentially, is what's happened in Germany, more specifically where they've really kind of taken a really significant, departure from this austerity, meaning a lot of belt tightening.

00;05;19;05 - 00;05;42;19

Unknown

And they've also been signaling a lot of defense spending, which is something was also, heretofore really not part of their, their DNA for the last several decades. So there's a big, big shift happening in Europe right now. It's kind of a global reorder. Advised you not to be, overexaggerated about it, but I think it does suggest us, as we've been talking about on these conversations for some time now, that people really should really consider international assets as a way to diversify their portfolio.

00;05;42;22 - 00;06;00;11

Unknown

Now, we've been saying for quite some time that with inside your equity portfolio, you probably want to have 20 or 30% of your show portfolio represented by none, US assets. And it's fair to say that the US markets have just been so strong that many people might have, frankly, just disregarded that because the US market has been, such an outperformer late.

00;06;00;13 - 00;06;23;16

Unknown

But I do think this is a pretty seminal moment. And, again, I don't want to overstate that, but I think what we're seeing, essentially, is that the rest of the world is really getting more comfortable with deficits. They're really kind of spending more aggressively. They're spending more defense than they have in the past. And at the same time, it seems pretty clear to us anyway, that the US is doing the exact opposite where they're starting to tighten the belts a little bit, maybe pull some of their, their spending in a little bit.

00;06;23;18 - 00;06;43;11

Unknown

And so if we have that kind of reversal of, of reordered things, I think that the overall international markets might be poised for some outperformance that we've seen already happen. That's happened this year. So that's one big thing that I would kind of take, take note of, I guess, of going back to Brian, the other thing you talked about, despite what's happened, you know, back here at home, of course, is the labor market remains a key center point.

00;06;43;14 - 00;06;57;23

Unknown

We saw some news coming into this week and some statistics that said that maybe the labor market is starting to weaken a little bit. It's kind of in fits and starts. I mean, to be fair, the overall claims situation, people that are filing for insurance, actually those numbers ticked down this past week, which was kind of a good news story.

00;06;57;25 - 00;07;17;00

Unknown

Conversely, people that are unemployed actually seem to be unemployed longer, which is not maybe a bad news story. So again, some credence there. And I think the key readings this morning essentially were kind of there was no news to really say no news. And so no news was no news, frankly. But what I mean by that, essentially the numbers kind of came in largely as expected, by all accounts.

00;07;17;03 - 00;07;35;29

Unknown

Now, that to say, it's fair to say that the, the overall job count, story in the report was put together before some of these numbers around the government payrolls were tabulated. So, in other words, all these things we're hearing and reading about with respect to those and some overall spending cuts and so forth, those were not captured in this this past month unemployment report.

00;07;35;29 - 00;07;53;24

Unknown

And we'll probably see the waning of the month to see that. So again, we're probably this bit of time where some, some really interesting things are happening at the macro level. And the macro level is probably softening a little bit, but we're still saying pretty sanguine overall, and I guess that I would kind of point to one thing, really, we should talk about credit spreads, because that's often an interesting early barometer of what's happening the economy.

00;07;53;24 - 00;08;10;16

Unknown

So maybe if you don't mind, really kind of catches up on credit markets. Then we can talk about the fed. Sure thing, George. I mean, what's very interesting about the credit markets is that they've shown so much resiliency through all of this stuff. The fed talk rate cut expectations, tariff news, any fears of recession that started to creep up.

00;08;10;18 - 00;08;32;27

Unknown

But investment grade and high yield bond spreads have remained pretty well contained. Although we have started to see some cracks there, there's some widening, nothing to get alarmed about. But in the last two weeks we have seen spread, credit spreads start to widen a little bit in investment grade and high yield. It's still fairly tame, but if you focus on high yield spreads, they have not really shown the same level of, movement that we've seen in the equity markets.

00;08;33;01 - 00;08;52;24

Unknown

And you look at high yield spreads, particularly, credit default swaps. These have all started to widen a little bit. But again, we are well inside of where the wise were, years ago. And I really do think that spreads as long as a supply demand technicals remain there. And you still start to see investors continue to look for high quality names.

00;08;52;24 - 00;09;17;12

Unknown

Investment grade spreads should do very well in that environment. I'm a little concerned about high yield spreads being as resilient as they are, because bankruptcy filings have also gone up. They're talking if you start thinking about the R-word recession, then high yield spreads should start reflecting that. But they really have not. And, I think it's could be very important for us to continue to monitor why these spreads continue to be well contained and not really responding the way the equity markets are responding.

00;09;17;15 - 00;09;37;22

Unknown

A lot of this, again, has to do with the fact that there's still a lot of cash out there that is continually funneling into, investment grade spreads for, for high quality or even high yield spreads for the yield pickup. You even start to see some widening, in spreads for private credit as well, which was the darling of, last year, continues to do extremely well this year.

00;09;37;24 - 00;10;00;05

Unknown

But, it's starting to, show a little bit of widening again. I don't think it's anything to be alarmed about, but it's something that I think bond investors continue to put money into credit, credit markets. And as long as that continues, we shouldn't have an issue here. Foreign investors have also played a very big part in keeping, credit spreads, where they are, because they continue to funnel money into the corporate bond market.

00;10;00;12 - 00;10;25;23

Unknown

They're a big part of the corporate bond market. We haven't seen any outflows from that area at all. So I do think that credit spreads is a story that needs to be watched. It's very interesting. That remains in my sense. You know, vacuum compared to all the noise that we're seeing in the market. And some of that noise that we are seeing in the market has a lot to do with, you know, the immediate reaction to the news story surrounding tariffs, trade wars and what the overall implication has been in the bond markets.

00;10;25;23 - 00;10;49;14

Unknown

And if we focus on the yield curve, yield curve is actually steepened, where short term Treasury yields are falling at a faster pace, then longer term Treasury yields, there's growth concerns and renewed fears of recession. That's kind of move some of these expectations. You want treasuries in those kind of environments as a safety haven assets. But you also believe that, the fed will have to cut rates if there is any recession or any real slowdown in growth.

00;10;49;17 - 00;11;07;17

Unknown

And the market now believes the fed will cut rates three times this year in an effort to stimulate the economic growth. If you recall, just about three weeks ago, the market had, believes the fed is done cutting rates for this cycle. So, as we said before, the market and the fed are both data dependent, fiscal policy dependent.

00;11;07;19 - 00;11;27;12

Unknown

So every single piece of data, particularly inflation and jobs data, any use of tariffs and trade policy will continue to move this fed rate cut expectations. And you start seeing big swings here and this trend will continue. It's going to add more volatility to the market. Bond investors are viewing a trade war as having some short term inflationary implications.

00;11;27;12 - 00;11;45;10

Unknown

But the impact to growth has created this bias towards lower yields on the Treasury curve and could continue to lead to the steeper bond curve. If you look at the benchmark spread between a two year Treasury note and the ten year Treasury note yield, it's wider by about five basis points. That's the most this year, and it's topping around 26 basis points.

00;11;45;13 - 00;12;07;11

Unknown

Now, you had mentioned the jobs report Georgia largely in line with expectations. The initial reaction, was for Treasury yields to move a little higher. But as they as investors start parsing through the details of the report and they start analyzing everything, the forward looking aspects of the report should continue to, cause a Treasury rally. The data, again, has set market expectations for it.

00;12;07;11 - 00;12;28;14

Unknown

It's really firmly set it after the data came out, the three rate cuts by the end of the year. And again, that is due to recessionary fears. And this tilt, continues towards that bullish bond market. Now what's going to be important is we do have an information meeting coming up on March 18th. And at that meeting, you know, no one's expecting the fed to cut rates at that meeting.

00;12;28;17 - 00;12;55;28

Unknown

Most in all likelihood a pause at that meeting. But I'm sure Fed Chair Powell is going to get questions about the independence of the fed. With all of this talk about cutting, federal agencies, all of this talk about, Doge and kind of cutting costs and cutting departments. This question is going to be front and center. I think one of the first questions, I think that Chair Powell getting this press conference is, where does this take the independence of the fed and obviously has already got the question of whether his job is in jeopardy or not.

00;12;55;28 - 00;13;23;01

Unknown

He's answered that pretty much emphatically, that it's not, any talks about taking away the independence of the fed. They these talks start around will take away some of the, powers of the fed, some of the monetary policies that the fed can implement. They will be taken under control. But the actual fed, the actual fed and their monetary power, they all say that's kind of that will be separate.

00;13;23;01 - 00;13;44;27

Unknown

It really cannot be separate because policy and having somebody in that position cannot be separated. So it's a really dicey question. It really comes up. It doesn't really move the market too much. But the question often does come up. Now, if you look at swap markets, they're pricing the first rate cut to be not at this March meeting their pricing, the first rate cut to be at the June FOMC meeting.

00;13;45;00 - 00;14;02;10

Unknown

So we still have some time before them. And I'm sure these, odds are going to change a lot of where the fed is going to go and where rate cuts are going to go. But we got a taste of what other central markets are doing. Other central banks are doing, namely the European Central Bank. They came out, they cut rates at their latest meeting.

00;14;02;12 - 00;14;25;15

Unknown

They also tweaked their statement in their language. And they believe that monetary policy has become, quote unquote, meaningful, less restrictive. And that's after cutting rates 150 basis points. So that was that. Since the beginning of the ECB monetary easing program, they've cut rates 150 basis points. So overall the markets need to factor in less not more rate cuts from the ECB in the coming months based on the statement language.

00;14;25;17 - 00;14;52;21

Unknown

And what's this done is it's pushed European bond yields higher and the euro rose. Also German bond yields have ticked higher as well after the ECB cut rates. So after tweaking their policy language. So again I think the bond market right now is in two parallels. One, trying to digest this high level of information that's coming out, daily basis on an hourly basis almost, and trying to figure out exactly what implications this has on future rate cuts and where the yields will be.

00;14;52;24 - 00;15;11;04

Unknown

I think the yield curve continues to steepen in this environment. And I do think, bond spreads will remain contained at the point, as long as supply demand technicals remain as they are. Any slowdown in, new issuance? I think we will have a good cause for spreads to continue to move tighter. But right now we have seen some widening.

00;15;11;04 - 00;15;34;12

Unknown

But it hasn't alarmed anybody. Ten basis points of widening for investment rate in two weeks compared to the amount of volatility that we've seen in other markets. Is not that bad. So in terms of volatility, and I guess one thing you pointed out was that the jump in German bond yields, I think we saw the biggest jump in German bond yields this this past week since the German reification occurred back in the early 90s.

00;15;34;12 - 00;16;01;12

Unknown

And so maybe, Steve, I'll get your thoughts on this. I mean, I know you're a follower of geopolitics as well. How were you thinking about kind of what's happening overseas and how are you thinking about what's happening back in the U.S. markets? I think it's been a fascinating week, George. I mean, when you take a look at what's been going on with the dollar and the impact that the trade policy changes here have had on that, you would expect that with tariffs, typically you would see the dollar rise.

00;16;01;15 - 00;16;29;06

Unknown

And we've seen the exact opposite. And at the same time, you had whatever it takes, a moment in Germany. And the whatever it takes or whatever it cost. Yeah. What I yeah, a couple of whatevers. Right. And, you know, it just seems like you're on the cusp of a sea change in the way that the Europeans, handle their fiscal situation.

00;16;29;06 - 00;16;52;19

Unknown

And if that's the case, then you'd expect that the dollar to strengthen relative to the euro. So, like, it's been a kind of a really crazy market with crosscurrents there on the international space here domestically, you know, I've been focused on the fact that the market got finally to, what, what technicians call an oversold condition earlier this week.

00;16;52;21 - 00;17;17;24

Unknown

Oh, and that kind of creates a moment of truth where, the markets should rally and bounce when you get to an oversold condition, and we really haven't yet. And that is kind of concerning. And it goes to kind of the growth scare dynamics that we talked about earlier on the call. And it seems like that has really become the dominant narrative.

00;17;17;24 - 00;17;41;19

Unknown

The market's hanging out basically for the last 3 or 4 days, right in the area of the 200 day moving average. And the confluence of that with early November lows. So right around 5700, give or take a few points either way. And, you know, from our perspective, you know, the market is holding where it's supposed to, but it's supposed to be bouncing here given the oversold condition.

00;17;41;19 - 00;18;06;29

Unknown

And I would tell you that, you know, my spider senses are still tingling in that they gives you kind of the bias here is that the market feels like it wants to work its way a little bit lower. Given the, the kind of the macro dynamics in the uncertainty, the, the chart that jumped out to me this week is this trade policy uncertainty index, which rose to an all time high at the end of the month of February.

00;18;07;02 - 00;18;28;02

Unknown

It's kind of mind boggling to think. And then the actual numbers on that index, I it's kind of weird. So like but at the end of September, just to give people an idea, that index was around 100 and today it's around 24.5 to 2400 plus. It was up 500 points in the last month alone from January through February.

00;18;28;02 - 00;18;54;29

Unknown

So it it's kind of a very mind boggling looking chart. The data series goes back to the mid 80s and it's never been higher. So I think we all kind of understand what we're living with there. The, the, the uncertainty that's crept into the market has kind of freaked the market out. We've had this pullback. Now the question is what happens to get our, get us into a better place.

00;18;55;02 - 00;19;19;00

Unknown

And, you know, I think that for the next couple months or so, we're still going to be struggling with this, uncertainty as we adjust to the. So the new sheriff in town. Well, thanks for the conversation today, George. Steven, Rajeev, we appreciate your perspectives. And again, our final reminder on our national call coming up next week on Wednesday, March 12th at 1 p.m. eastern.

00;19;19;02 - 00;19;40;22

Unknown

Be sure to tune in if you can. Again, if you have not received an invitation and you are interested, please reach out to a financial advisor or your relationship manager to get an invite. Again, what is the topic of our conversation? What has happened since the first 50 days of the new presidential Trump administration? And what's the read on the five year anniversary of Covid?

00;19;40;24 - 00;20;18;07

Unknown

So again, please remember National call Wednesday, March 12th at 1 p.m. Well, thanks for our listeners for joining us today. And be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always. Past performance is no guarantee of future results and we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information and we'll catch up with you next week to see how the world and the markets have changed, and provide those keys to help you navigate your financial journey.

00;20;18;10 - 00;20;57;11

Unknown

We gather data and information from specialized sources and financial databases, including but not limited to, Bloomberg Finance L.P., Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange Volatility Index, Dow Jones and Dow Jones NewsPlus, FactSet, Federal Reserve and corresponding 12 district banks, Federal Open Market Committee, ICE Bank of America MOVE Index, Morningstar and morningstar.com, Standard & Poor's, and Wall Street Journal and wsj.com. Key Wealth, Key Private Bank, Key Family Wealth, Key Bank Institutional Advisors and Key Private Client are marketing names for Key Bank National Association or Key Bank, and certain affiliates such as Key Investment Services LLC, or KIS, and Keycorp Insurance Agency, USA Inc., or KIA. The Key Wealth Institute is comprised of financial professionals representing Key Bank and certain affiliates such as KIS and KIA.

00;20;57;13 - 00;21;37;04

Unknown

Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual authors and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates. This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product, or to employ a specific investment or tax planning strategy.

00;22;12;01 - 00;22;42;01

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00;22;42;03 - 00;23;17;10

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Investment products, brokerage, and investment advisory services are offered through KIS, Member Finra SIPC, and SEC registered Investment Advisor. Insurance products are offered through KIA. Insurance products offered through KIA are underwritten by, and the obligation of insurance companies that are not affiliated with KeyBank. Non deposit products are not FDIC insured. Not bank guaranteed. May lose value, not a deposit. Not insured by any federal or state government agency.

00;23;17;13 - 00;23;28;11

00;00;00;00 - 00;00;31;07

Unknown

Welcome to the Key Wealth Matters weekly podcast, where we casually ramble on about important topics including the markets, the economy, human ingenuity and almost anything under the sun. Giving you the keys to open doors in the world of investing. Today is Friday, February 28th, 2025. I'm Brian Pietrangelo and welcome to the podcast. This past week, I was fortunate enough to be in multiple cities giving economic updates for a lot of client events.

00;00;31;07 - 00;00;52;22

Unknown

I just wanted to say thanks to the three locations and the three market leaders that were able to host those events. In addition, I got to meet a lot of great clients and prospects that were really engaging during those sessions. So thanks to Derek Ransom in Columbus, Steve Rake in South Bend, Indiana, and certainly Juan Gonzalez in Indianapolis.

00;00;52;25 - 00;01;15;18

Unknown

The events were energetic. And certainly if you're a college football fan, you know, Ohio State, the Ohio State University national champions are located in Columbus, Ohio. The runners up, Notre Dame Fighting Irish, located in South Bend, Indiana. And if you like basketball, the rich heritage of the Indiana University Hoosier team located just south of Indianapolis lives in Bloomington.

00;01;15;21 - 00;01;43;08

Unknown

Interestingly enough, Gene Hackman recently passed away this week. And if you remember seeing the movie Hoosiers, he was the star. Which rumors have been that this was a little bit of a biography on the Bobby Knight story way back in the day. You can be the judge of that. But, nonetheless, fantastic movie. Anyway. And lastly, one of my colleagues in Indianapolis, Mike Harris, introduced me to a famous donut that is cinnamon dusted.

00;01;43;08 - 00;02;09;06

Unknown

And so we will think about that. Thanks a lot, Mike, for doing that. What a great taste. And it will also tie into one of our topics today, which is all about consumer spending and what consumer spending habits are, what's going on in the consumer industry. So we'll look forward to that later on here in our podcast with our guest speaker and with me today, I would like to introduce our panel of investing experts here to provide their insights on this week's market activity and more.

00;02;09;11 - 00;02;35;23

Unknown

George Mateyo, Chief Investment Officer Stephen Hoedt, head of equities, Rajeev Sharma, head of fixed income. And Brad Thomas, managing director of our consumer and retail sector research within KeyBanc Capital Markets. As a reminder, a lot of great content is available on Key.com Wealth Insights, including updates from our Wealth Institute on many different subjects and especially our key questions.

00;02;35;23 - 00;02;54;25

Unknown

Article series addressing a relevant topic for investors. In addition, if you have any questions or need more information, please reach out to your financial advisor to get a look at this week's market and economic news. You've got three key economic updates for you, beginning first with the weekly initial unemployment claims report that came out earlier in the week.

00;02;54;26 - 00;03;18;16

Unknown

Yesterday, the number was 242,000. Initial claims for the week ending February 22nd, 2025. Now this was an increase of 22,000 week over week, which was a little bit more sizable than we have seen in prior weeks. However, the number remains fairly low and stable as it has been in the same quarter for roughly the last 15 to 18 months.

00;03;18;18 - 00;03;43;25

Unknown

If this number is not an anomaly and continues to be a trend in the upcoming forward weeks, then we'll look at if this is a little bit of a softening in the overall employment market. The second data point also came out yesterday from the Bureau of Economic Analysis, which was the second estimate for the fourth quarter of 2020 for real GDP, and it came in at 2.3% for the quarter.

00;03;44;02 - 00;04;23;16

Unknown

Now, this was the same amount as the initial estimate we got last month. So no change there. And finally, the third estimate just came out this morning at 830, which was probably the most important economic factor for the week, which was the read on the personal consumption expenditures or PC inflation. And that number on a month over month basis came in at 0.3 for overall headline news and 0.3% for core, excluding food and energy, year over year for the month of January, that came in at 2.5% for headline inflation and core inflation, excluding food and energy, came in at 2.6%.

00;04;23;18 - 00;04;50;01

Unknown

Now, the reason this news is important at 2.6%, because it is the first time in seven months that this annualized core PC number was lower than the previous month, and in this particular case, at 2.6% versus 2.9% last month. So we will get our reaction from our panel on the discussion of overall inflation, consumer spending and a number of other factors.

00;04;50;01 - 00;05;24;29

Unknown

But first, we will turn to Steve to get an update on what's going on in the stock market this week, specific volatility around a few stocks and the overall trend in the area. So Steve, what are your thoughts. Well Brian, it was certainly an interesting week. You know, when you take a look at how the market was set up, coming into what arguably was something everybody had been focusing on, which was the Nvidia earnings on Wednesday, you would have thought that we would have gotten a bigger reaction out of what was reported, which was actually pretty good results.

00;05;24;29 - 00;05;56;29

Unknown

And the pretty, pretty bullish guidance for the foreseeable future for spending on AI and infrastructure. But you know what really seems to have taken the market, taken hold of the market over the last two to say, three weeks. Plus, is this idea that there's been a rotation away from beta and toward defensives, as we've seen fears of recession start to creep into the market.

00;05;57;01 - 00;06;14;17

Unknown

I think that this is kind of looking to me like a classic growth scare at this point, because if you go under the hood, and Rajeev can speak to it as well, I'm sure. But like if you look at credit markets, there's no sign in the credit markets that the credit markets are pricing anything that has anything to do with a recession.

00;06;14;19 - 00;06;32;13

Unknown

You're still near all time tight on both high yield and when you look at Double B's versus Triple B's or you look at Triple B's relative to treasuries, I mean, we spend an awful lot of time for equity guys looking at it. Credit, because credit has been such a good tool for what's happening with the equity markets.

00;06;32;15 - 00;06;59;18

Unknown

So you know with that as a backdrop, you know, we finally have gotten to levels on things like the Nasdaq 100 where we're, you know, in technical parlance, oversold. So we should start to see the market get a bit of a bounce here. And, and you know, maybe over the last day or two, post the Nvidia numbers, we've seen things start to stabilize, as we've had this kind of adjustment period over the last month.

00;06;59;19 - 00;07;23;16

Unknown

The other thing, too, is it's like it's very clear the market is adjusting to these lower earnings expectations that we've been talking about on the on these calls now for what feels like at least a month or two, how, earnings guidance has been coming in week. And we were expecting that that, high single digit earnings growth for the years, more probabilistic than 15%, which was where the market was coming into the year.

00;07;23;17 - 00;07;40;04

Unknown

So, you know, we talked in our outlook, how we thought that this first half of the year was going to be pretty, pretty choppy touch and go. And so far that seems to be playing out exactly as we, had had, surmised.

00;07;40;07 - 00;08;02;00

Unknown

Right. Steve, thanks a lot. Rajeev, what are you seeing in the fixed income markets in relation to what Steve just shared? I mean, it's a very good, backdrop for what Steve said. I mean, we've seen treasuries rally across the board this week and actually over the past couple of weeks, if you just look at the ten year Treasury note yield, it's fallen 30 basis points since the peak that we saw in February 12th.

00;08;02;02 - 00;08;21;13

Unknown

And much of this decline in yields, it's justified, by not only a run to safety haven assets like treasuries, but also since the decline we saw in services PMI for February, consumer confidence has taken a beating. So that's really led to this decline in Treasury yields. But it's not just the ten year, the five year Treasury note yield.

00;08;21;16 - 00;08;45;21

Unknown

It's dropped 44 basis points since February 12th. The 2/10 curve is flattened from 27 basis points to 19 basis points. And guess what? After all this time we've talked about inverted yield curves. We find the UN inverted. The three month ten year curve is inverted again. And the three month T-bill provides you a yield of 4.29% today compared to the ten year, a 4.25%.

00;08;45;23 - 00;09;02;25

Unknown

So again, those talks of recession start to creep in. Again. When you look at the curves, the other reason why treasuries are rallying is that the market is, again, pricing in several fed rate cuts for 2025. And this seems aggressive to me. But with any growth concerns that you see in the market, you're going to start getting those rate cut.

00;09;02;25 - 00;09;28;09

Unknown

Expectations start to rise. When optimism starts to wane over growth concerns, you can have an overbought market. And I feel like that's where we are right now. For the for the bond market. If you look at the ten year at 4.25%, the next resistance point after that is 4.13%, and we've already tested the bottom of the recent range where we are at the 200 day moving average, at 4.25% on a ten year.

00;09;28;11 - 00;09;44;28

Unknown

And it's going to be very interesting to see how much momentum you have to go even lower in Treasury yields compared to going higher. Just about a week ago, we were at 4.5%, and I think the market was very comfortable there. You saw a lot of buyers step in at 4.5%. So now buyers don't want to miss the game at 4.25%.

00;09;44;28 - 00;10;05;03

Unknown

They're thinking should we step in? Are we going to go lower if we start to really test some of these lows? I think that bond markets are going to rally and they're going to continue to rally. And today's PC report, it should be welcome by the market. It shows an in-line reading, after that CPI report that we just had a little while ago, we did see the market react negatively to that.

00;10;05;03 - 00;10;26;16

Unknown

But today's report seems to be taken well by the market and points to, you know, a number that's in line. It's the PC is exactly what the fed looks at when they think about inflation is their preferred measure of inflation. And after a string of, of kind of weak economic reports pointing to stubborn inflation, you would think that the market would kind of, take today's PC report.

00;10;26;19 - 00;10;44;25

Unknown

Very well. But instead what's happening is I think the market is, is really parsing through all the data, personal income, surprise to the upside and that points to a strong labor market. So the Treasury reaction has been kind of muted this morning. And I think what's going to happen now is again, you're going to try to look for all the information you can get on data reports.

00;10;44;27 - 00;11;04;24

Unknown

It's not enough to shock the market. But in my opinion, the fed still stays in a wait and see approach. And they're going to probably have that narrative going forward that they're not ready to cut rates right now. So any of this over optimism of several rate cuts for 2025, we're just about a week ago the market was thinking we have no rate cuts in 2025.

00;11;05;01 - 00;11;27;18

Unknown

It shows you how volatile this market can be based on reports. Now in this environment, Steve alluded to, credit spreads are extremely important. They have remained one area of the market that's almost operating in a vacuum. Even with the greater uncertainty, talks of tariffs, economic reports, it remains extremely well-behaved at these tight ranges that we haven't seen for a very long time.

00;11;27;18 - 00;11;46;12

Unknown

They've been these are high grade and invest and, high yield, spreads that are at their 20 plus year tights. If we see any cracks in this credit spreads, if we start seeing spreads, blow out wider. That could send another really bad signal for the risk assets. And we could see them move lower. So we continue to monitor credit spreads.

00;11;46;12 - 00;12;07;24

Unknown

But I think this is really a question of supply demand imbalance. You're not seeing any investors really shy away from taking part in, the credit markets, corporate bonds. They still feel that we have good yields on these blue chip companies. And you're going to see a lot of this gravitation again towards fixed income assets, not just as a safe haven, but also as an income generator.

00;12;07;26 - 00;12;31;00

Unknown

That's great. Rajeev. And I'd like to bring George into the conversation now with sort of his reaction in his comments and then a broader discussion around a lot of the information we've got this week on unemployment claims on GDP for the second quarter revised estimate, as well as PC spending and inflation. It all kind of aggregates into what might be happening in the overall consumer sector and consumer industry.

00;12;31;00 - 00;12;54;03

Unknown

So, George, I want to bring you and Brad Thomas into the conversation to get us, what are your thoughts on the consumer and anything else that you see? George? Well, I'd love to get Brad's insights, too. I mean, he's our consumer expert. And I appreciate. And joining us this morning, for a special conversation here. But just to kick it off, I'd say that, you know, in the last ten days or so, you know, maybe plus or minus, we've seen some weakness in the overall macro data.

00;12;54;05 - 00;13;08;17

Unknown

It's kind of what people refer to as the soft data. And that's a little bit of a kind of nebulous term, but it kind of refers to a lot of surveys, a lot of anecdotes and things of that sort. So again, I think Brad's insights will be very key. But, you know, I think what we're kind of seeing is what we kind of thought would happen kind of this year.

00;13;08;17 - 00;13;24;18

Unknown

This kind of aligns with our 2012 outlook, in which we discussed the fact that there's a bit of maybe too much optimism, kind of the back half of last year, maybe just too much optimism around deregulation and taxes and frankly, maybe not enough pessimism around tariffs. Many people thought the tariffs at the time would be kind of a negotiating tactic.

00;13;24;18 - 00;13;40;09

Unknown

And now we're kind of seeing some of those things kind of take hold. And we also have suggested on some of these calls in the past that people might have been actually buying ahead of that. So there was kind of like this artificial pulling forward of demand. It seems like, in some of the overall economic activity. And again, I could kind of say, you know, see some evidence of that this morning.

00;13;40;15 - 00;14;00;26

Unknown

You literature review the fact that PC inflation was kind of in line with expectations. You know, inflation actually has been kind of one of the things that it's hard to gauge. But frankly, you know, we have CPI, PPI, things can kind of get try and get it that way. So PCO is kind of expected. But the bigger number this week or this morning rather was the fact that overall incomes were pretty elevated.

00;14;00;26 - 00;14;21;09

Unknown

So actually consumer income, personal income actually expanded, at a faster than expected rate. But in the same report, consumer spending fell by faster than expected rate. So actually it suggests that maybe consumers are kind of holding onto their wallets so that longer, than they were just a few months ago. Again, I think we have to kind of wait to see the really kind of maybe a few more months before we can call this a trend.

00;14;21;11 - 00;14;36;29

Unknown

But I think it's notable nonetheless to kind of see that that play out. And then, Brian, as you mentioned, jobless claims has been one of our indicators that we watch pretty closely to see if there's any significant deterioration in the labor market. And yet it's getting a little bit worrisome. Again, our metric number is kind of at 300,000 level or so.

00;14;37;02 - 00;14;55;29

Unknown

This week it popped up to about 242,000. So we're still a little bit away from 300 K. But I think it's something to be mindful as well. So I guess in this better backdrop, Red, it's a great way to kind of pull you in this conversation. And given your insights and your expertise and focus on the consumer sector, what are you seeing out there from your perspective and through your lens?

00;14;56;02 - 00;15;16;12

Unknown

Thanks to Brian. Thanks for having me on. You know, first of all, I would characterize the consumer as, still chugging along. We just had a very good holiday season, as reported by many retailers, and it's shown up in the data. The government data for January clearly showed a bit of a slowdown. And our proprietary data.

00;15;16;12 - 00;15;35;18

Unknown

KeyBanc. Does show that that's has continued through February. Now, some of that may be the weather or some of that may be distractions from what's going on in Washington. That could just be temporary. And so I don't want to say if there's any trend going on. It's some major slowdown. But we're clearly watching the data very closely going forward.

00;15;35;20 - 00;15;59;02

Unknown

I think the consumer is pretty bifurcated here. The affluent consumer has been benefiting from the wealth effect from a stock market that has done very well the last several years, but that low income consumer is still really struggling, from elevated inflation. We did hear from two, very important retailers in the last week and a half, about the state of the consumer that I think was very positive.

00;15;59;04 - 00;16;27;22

Unknown

The first was Walmart, who talked about, the consumer really being still pretty steady, while the stock sold off and the media, made it out as though Walmart is signaling that growth was slowing. And the reality when you talk to them is that there really hasn't been a lot that's changed. They may be taking a bit more cautious approach just at the beginning of the year, given the, broad number of outcomes that could occur from what the current administration is doing.

00;16;27;24 - 00;16;48;15

Unknown

But as it relates to the underlying outlook, there's really no change from Walmart. Encouragingly, on the housing side, we actually saw both Home Depot and Lowe's post positive comps for the first time in two years. So some nice green shoots and home related spending after two years of, Americans really spending on experiences rather than things.

00;16;48;17 - 00;17;24;19

Unknown

So that was encouraging. As we look forward, there's a couple of aspects of policy that we're watching very closely here. The first would be the, those government efficiency initiatives. Just this week, Elon Musk, had said that he believe they would hit $1 trillion of savings from these initiatives. While many of us are excited about what that could mean for the government, and deficit, it could be a drag on spending, unfortunately, just to put it in perspective on the stimulus checks that we sent out during Covid totaled a little over $800 billion.

00;17;24;22 - 00;17;56;29

Unknown

And we're very good for consumer spending, sort of cut $1 trillion. You know, could put some pressure on spending over the next year or so. Finally, you alluded to tariffs. And, you know, these are not good for consumer spending. They're generally, passed through by the retailers to the consumer would be inflationary and could also put some more pressure on consumer spending and profits for consumer and retail companies.

00;17;57;01 - 00;18;20;00

Unknown

What do you think the margin impact is, though, for the actual retail themselves? In other words, if you think about tariffs spread, you know, we often talk about and you're right to call it some of the impacts and knock on effects that the consumer feels. But in terms of businesses, are they likely to also experience the pain or the just pass these prices long as you mentioned, the short answer is that they're going to push through higher prices.

00;18;20;03 - 00;18;45;05

Unknown

A slightly longer answer is that first, they push really hard on their vendors. They try to get the manufacturers in China, in other countries to take some of the pain, and, and, pay some of the tariffs themselves. You also then sometimes see a bit of a mitigation from effects from where the dollar has strengthened versus some other countries.

00;18;45;08 - 00;19;07;26

Unknown

And then finally you may see, retailers switch suppliers, and then finally, you know, pass through higher prices. But if you looked back at the first Trump administration, where it was really China that was focused on and now there are many other countries that are being focused on, it did lead to higher prices for every retailer that's sourced from China.

00;19;07;29 - 00;19;29;25

Unknown

And then going back to consumer for one last question, I'm kind of curious to know if the consumer is any behavior inside their spending budget changing meaning? Are they are they trading down or are they shifting away from services back to goods or other things? I mean, what do you look at when you what do you see when you look at some of the data underneath the hood and maybe next layer down in terms of the actual activity and what they're spending on or what they're not spending?

00;19;29;28 - 00;20;01;02

Unknown

I think there's two really interesting things happening right now, George. I would say the first is values are always important, but it's been even more important than usual over the last few years as we have anniversary, the really robust balance sheets that the consumer had coming out of Covid because of all the stimulus checks, as the months and quarters have gone by, and many Americans, particularly low and middle American spending, go back to work.

00;20;01;02 - 00;20;25;02

Unknown

And, and it spent through those stimulus checks. We've seen retailers like Walmart greatly taking share as that value proposition has really mattered. So it's more pronounced at the low end. We don't expect any of that to change here in, in 2025. The second big dynamic that's been going on is all the wonkiness in consumer spending that occurred with the pandemic.

00;20;25;05 - 00;20;52;07

Unknown

Of course, when it happened, everyone was staying at home. They were spending on stuff, not experiences. And then when the pandemic ended, you had a reversal of all of those trends as everyone was going on vacation, going out to dinner, and, and doing that at the expense of spending on stuff, if you will. Sitting here today at the beginning of 2025, looks like most of that has normalized.

00;20;52;09 - 00;21;14;29

Unknown

And these green shoots from Home Depot and Lowe's are pretty encouraging about, knock on wood. The trough being in on some of these, durable goods, starting to show some signs of recovery. Great insights. Brad, thanks so much for coming by and sharing your thoughts on this. And again, thanks for listening again. We're still in the view, as she pointed out, that this is more likely to be a growth scare than an outright recession.

00;21;14;29 - 00;21;55;23

Unknown

So we're still trying to stay balanced and risk, seeking out opportunities where we can and again, really staying fully diversified, throughout this market environment going forward. Well, thanks for the conversation today, George, Steve, Rajeev and Brad, we appreciate your insights. As a reminder for everybody. We've got our upcoming national call on Wednesday, March 12th at 1 p.m. eastern, where George and the team will discuss what's been happening since the first 50 days of the new Trump administration, as well as the five year anniversary of Covid, will have a robust dialog again, if you're looking for that and have not yet received an invitation, please reach out to your KeyBank wealth representatives again Wednesday

00;21;55;26 - 00;22;28;13

Unknown

at 1 p.m. March 12th. Thanks for our listeners for joining us today. Be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app, as always. Past performance is no guarantee of future results, and we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information, and we'll catch up with you next week to see how the world and the markets have changed, and provide those keys to help you navigate your financial journey.

00;22;28;15 - 00;23;37;13

Unknown

We gather data and information from specialized sources and financial databases, including but not limited to, Bloomberg Finance L.P., Bureau of Economic Analysis, Bureau of Labor Statistics, Chicago Board of Exchange Volatility Index, Dow Jones and Dow Jones NewsPlus, FactSet, Federal Reserve and corresponding 12 district banks, Federal Open Market Committee, ICE Bank of America MOVE Index, Morningstar and morningstar.com, Standard & Poor's, and Wall Street Journal and wsj.com. Key Wealth, Key Private Bank, Key Family Wealth, Key Bank Institutional Advisors and Key Private Client are marketing names for Key Bank National Association or Key Bank, and certain affiliates such as Key Investment Services LLC, or KIS, and Keycorp Insurance Agency, USA Inc., or KIA. The Key Wealth Institute is comprised of financial professionals representing Key Bank and certain affiliates such as KIS and KIA.

00;23;37;15 - 00;24;22;04

Unknown

Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual authors and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates. This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product, or to employ a specific investment or tax planning strategy.

00;24;22;07 - 00;24;52;07

Unknown

KeyBank nor its subsidiaries or affiliates represent, warrant or guarantee that this material is accurate, complete, or suitable for any purpose or any investor, and it should not be used as a basis for investment or tax planning decision. It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal or financial advice.

00;24;52;09 - 00;25;27;15

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Investment products, brokerage, and investment advisory services are offered through KIS, Member Finra SIPC, and SEC registered Investment Advisor. Insurance products are offered through KIA. Insurance products offered through KIA are underwritten by, and the obligation of insurance companies that are not affiliated with KeyBank. Non deposit products are not FDIC insured. Not bank guaranteed. May lose value, not a deposit. Not insured by any federal or state government agency.

00;25;27;18 - 00;25;38;16

Welcome to the Key Wealth Matters weekly podcast, where we casually ramble on about important topics, including the markets, the economy, human ingenuity, and almost anything under the sun, giving you the keys to open doors in the world of investing. Today is Friday, 02/21/2025. I'm Brian Pietrangelo, and welcome to the podcast. And this past Monday, we celebrated Presidents' Day. Hopefully, if you had an opportunity to take the day off from work or your kids were out of school for Presidents' Day, you had a good time spending time with them.

Presidents' Day was originally established in observation of George Washington's birthday, our first president, but since then has added on a little bit, somewhat referencing Lincoln's birthday, although it was never official holiday, and all wrapped into one now honoring all presidents. With that, I would like to introduce our panel of investing experts. Some might say we're a little bit of a Mount Rushmore of Key Wealth chief investment office team, here to share our insights on this week's market activity and more. George Mateyo, chief investment officer, Steve Hoedt, head of equities, and Rajeev Sharma, head of fixed income. As a reminder, a lot of great content is available on key.com/wealthinsights, including updates from our Wealth Institute on many different subjects and especially our key questions article series addressing a relevant topic for investors.

In addition, if you have any questions or need more information, please reach out to your financial adviser. Taking a look at this week's market and economic news, the economic release calendar was very light, so we'll have just three quick updates for you this morning. First, initial weekly unemployment claims for the week ending February 15 came in at two hundred and nineteen thousand, which was fairly stable roughly from the last fifteen to eighteen months. So good news there that we're seeing the jobs market remain resilient with regard to unemployment claims. Second, housing starts declined mildly for the month of December.

And third, we'll talk to our panel about the release of the Federal Open Market Committee meeting minutes from the January 29 meeting and see what we can glean from that, specifically talking to Rajeev as well as the panel. With that, let's go to George first for some general observations on the economy and his thoughts as to where we might be headed. George? Well, Brian, aside from a lot of interesting, movements in the capital markets this week and and, really, there wasn't anything that really stood out to me as really noteworthy. I think the bigger thing that's kinda taking place right before our eyes is the fact that the new administration is moving pretty quickly as we know on multiple fronts and nothing like this too much about the political.

I think it's interesting to see that I think as one person described it, the president is changing the role of the government in America, and he's also changing America's role in the world right now and kinda ripped four eyes and moving at a pretty fast clip. And I think the implications that are are still to be to be determined, I think it's a little bit too early to kind of least speculate as to what that might mean. So I wouldn't really recommend any major portfolio changes based on, some of these announcements. But I think it's, you know, an an interesting point in time that we have to keep our eyes open in the sense that the world order is is slowly shifting and maybe even quickly shifting in front of us. And I think that's not lost on me, and and I've probably read more about foreign policy this past week than I have in quite some time.

And how America is approaching its stance towards foreign policy, I think, is also quite quite notable. So, yeah, not to make this too much about the political environment, but, Steve, I think there is this notion around the Mar A Lago Accord that's kind of been floating around in Wall Street terms. And, maybe if we don't if you don't mind, maybe we could spend just a few minutes kinda defining what the Mar A Lago Accord means, what it is, first of all, and what it might mean for for us as investors going forward. So do you mind just kind of providing just a brief description first so we can kinda get into there? Yeah, George.

So I and I would I would put Mar a Lago Accord in quotation marks for now. Right? It's not nothing Yeah. It's not anything in Cornwall, but it it's just this this idea that's being talked about. Yeah.

So the the the idea is that the one of the core beliefs that the administration has is that the US dollar is overvalued and that we need to have some kind of a reset in order to, better set up the the the trade balance between ourselves and our our our trading partners, because if the dollar is too strong, then it has a negative impact on on US manufacturing. And one of the key tenants that the incoming administration ran on was that, there needs to be a US manufacturing renaissance, and we need to have more stuff made here as opposed to imported from other places. So the Mar A Lago Accord essentially, talks about or is is theoretically, proposed to be a a debt swap where, foreign holders of US treasuries would be asked to to swap their treasury for one hundred years, zero coupon US Treasury bonds that are nontradable. So what essentially that does is it kinda locks in your your alliances, your alliance partners by they would be owning nontradable long super long term, ultra long term zero coupon bonds. And what that would also do in in the way that it would work is that the the dollar would be, would be modestly revalued lower on on global markets.

That would help to stimulate US manufacturing and, at the same time, put us in a a a better place from a term that that from being able to to to make our debt payments and all that kind of stuff because you're you're you know, one of the things that we've had some issues with is the fact that the interest payments on a debt are now getting to to levels where they're very high in terms of the percentage of overall government spending. And, you know, if you've got zero coupons instead, that that changes the whole way that stuff works. It becomes an accounting entry instead of a cash flow, situation. So, you know, there are a number of different boxes that the administration could check here if they were to, if they were to do this. And if you go back historically and look, the the dollar over the last couple years has reached a level where on a ten year year, a ten year rate of change basis, and we look at it like this in order to put put the long term in perspective, where we reach levels in the past where there's been kind of structural things that have happened in The US economy in order to reset the bar lower.

The the Plaza Accord in nineteen eighty five, eighty six is one, and then the the tech bubble was the other time where the dollar has reached, you know, forty, fifty, 60 percent, 10 year, year over year change. So, there there is some, historical precedent for action here, and it and it does I I I would tell you, look. If I I know the market is saying, hey. You know, maybe we don't may we shouldn't put a high probability on this occurring, but, I think that the one thing that the administration has proven over the last month and and what's crazy to think about is we're literally coming up on month one. Right?

Today, I think, is month one, and it feels like it feels like it's been a lot more than one month. Take them at face value for what they say, and, you know, they said that a lot of this stuff was was what they were were thinking about. So I would put a higher probability on something like this occurring than not at this point, to be honest. Well, you're right to kinda point out the fact that it's only been one month. And, to kinda to to that reference point, most people are talking about Trump's, first one hundred days.

We're actually gonna be holding a special conversation in early March talking about Trump's first fifty days. So stay attention, stay attention to that. We'll have some more to say about that in the weeks ahead, but I think it's penciled in right now for March 12. But, you know, advertising aside, I guess, Steve, I think it is fair to say that this could have some really big implications for ass allocation policy. And one thing we've been talking about too is the need to really think about diversification probably more so than you have in the past.

And if we do get a weaker dollar, it would seem to me all is equal that maybe this international trade that we've kinda seen take place so far this year. I mean, I would say they're running away from it, but international stocks are still outperforming US stocks by a decent amount. And, many people have kinda given up on that idea in the sense that US has been so dominant and the returns have been so, incredibly strong relative to the rest of the world that maybe playing some catch up, continues. So I would think that it's probably fair to say that you still wanna have a diversified portfolio, include some international exposure where appropriate. And I think it's also noteworthy, Steve, to see some of the outperformance in emerging market technology companies where we think that there's many technology stocks that are dominant in their interest, and they certainly are, and they have been in the stock market.

But we can't forget the rest of the world in the sense we've seen new technologies emerge in other parts of the world too, and we have to give, give acknowledgement that as well. So do you think international markets are poised for some continued gains, or what do you think about that? I mean, it seems to me, George, that the if if we were to get a period of prolonged dollar weakness, which, you know, if we if that ends up being engineered, like, historically, that has been the the best case scenario for international markets relative to The US. And, you know, The US has been in a place where for the last ten years, because of the the growth and importance of the technology stocks, they've it's become kind of the indispensable market in terms of, asset allocation. Right?

If you didn't allocate to The US markets, you didn't own those tech stocks, so you were doomed to underperformance. It I it's not that I think that that's, that they're uninvestable here, but we are seeing decelerating growth in the the the the mega caps here. At the same time, we're talking about potential, downward adjustments in the value of the dollar. So I think that that sets a much more level playing field at in a worst case scenario for international stocks. Best case scenario creates a a tailwind for them for outperformance, especially when you get into the to the idea that, you know, international stocks have a higher, concentration of financials in them.

And if we get into a place where you've got that that rate cutting cycle going on in Europe while we don't have one going on here, that that puts you in a place where financials can outperform, and it helps that sector, the sectoral balance as well too. So, you know, I think the international markets look pretty attractive right now, and it seems to me they're set up for, at least for the intermediate term, you know, which is, basically a year forward. Looks like they're set up for outperformance relative to continue. So, again, to be clear, we're overweight US markets relative to international ones, but it is a lot of discussion we're having to to your point, Steve, and we're considering it all the time. The other thing we've been talking a lot about too, Rajeev, is the fact that the credit markets have remained quite strong and quite healthy irrespective of some of these headlines.

And we've overweight credit, which has also benefited our portfolios. But how are you thinking about the credit markets today? And I guess as a correlate to that, one thing we've also seen is that now it seems like the DOGE movement is moving closer towards the Federal Reserve, and there may be some questions around the Fed, the Fed independence, which I think has been a big hallmark of their that institution for the last hundred and ten years or so. So what do you think about the credit markets, and and what do you think about the Fed's independence going forward? Yeah.

Well, George, it's been really amazing. The credit markets have been extremely resilient. I mean, we have all this noise in the market we've talked about. It's only been about a month, since we've had the new administration. And every day is a new headline, but the credit markets are unraveled by it.

And I think a lot of that continues to be the supply demand imbalance that we're seeing in the credit markets. You have a lot of money chasing supply, and you do have a lot of supply coming to market, but these deals are getting done at very, very attractive levels for the issuer. And the, investors taking advantage of opportunities to get very high quality names. If we're talking investment grade, very high quality names at decent yields. This whole notion of being higher for longer at this point, with rates, I think it it supports the credit markets.

You still see some very high quality blue chip companies that are coming to market, getting deals done, jumbo deals done, and investor just can't get enough of it. So unless there's some kind of, increase in default rates or some kind of systemic event that occurs, I don't see really why, spread would start to widen out any in any big fashion. And I think that's very good for the risk assets, including equities. So we continue to, you know, monitor this. And I I do think that, what's gonna be really important is if we do see any kind of slowdown in supply, which is not anticipated.

But if we do see any slowdown in supply, then maybe spreads go even tighter. But we've talked about spreads being very well behaved at their twenty plus year tights, and we just seem to grind tighter. We haven't seen any blowout in spreads in the last several weeks. Even last year, when we started getting to these tight levels, many people thought it would not be sustainable, but we continue to stay at these levels. I think that's that proves to help the credit markets right now.

But, there to your other point, there's a lot of noise out there of the independence of the Fed, and I think it's very important, that, you know, people don't get tied up with these headlines because, basically, what they're saying with Doge is saying that we would not take over monetary policy. We would wanna take over everything else. But everything else is connected to monetary policy, so I don't know how this would be even practical. And I think for the financial stability of the markets, it doesn't make a lot of sense to really go deep into the Fed and start to cut things there and take over the Fed. Fed chair Powell has been pretty adamant on the fact that the Fed remains independent, and I don't think it's good for the stability of the financial markets to even have these kind of conversations.

So we're gonna see a lot of noise. I think there's a lot of bold statements, a lot of bold headlines that are coming out, but the Fed remains independent, and I think they're gonna keep pushing that narrative. Rajeev, keeping the moment on the Fed, the minutes from the meeting on January 29 came out this Wednesday. Did you glean anything new, or is it the same story that was delivered in the press conference? Well, you're right, Brian.

The, FOMC minutes came out for the January FOMC meeting. There wasn't too much surprising, to take away from this. Really, the the minute stated that the number of Fed members remarked that the current readings of monetary policy and the current readings of twelve month inflation were boosted by the first quarter of last year, which is very interesting that they keep going back to the first quarter of last year when they do a twelve month look back, and they're saying they may skew the numbers on inflation. And so they do see that there's been progress over the last three, six, and nine month readings. And it seemed that some members are pointing towards a seasonal bias.

So but if we focus on the last CPI report that we had, the progress to inflation to lowering inflation seems to have stalled. According to the minutes, various Fed members noted that it might be appropriate to consider pausing or slowing the balance sheet runoff. So I thought that was one of the big takeaways that I had because, generally, we haven't heard a lot about this QT and balance sheet runoff. So many Fed members have started talking about the balance sheet runoff. Should we slow it down?

Should we pause it? Because right now, there are considerations about, the debt limit discussions that are happening. Either raise the debt limit or suspend it. So the Fed has been kind of winding down its balance sheet holdings for almost the last three years now. And now officials are saying, what are the future plans for the wind down?

Some Fed members expect that the wind down should the balance sheet wind down for the Fed should end in September. But the reaction in the market on the minutes, it re really didn't seem much. We saw the front end treasury yield move higher I'm sorry, lower by about three basis points, and long end yields were were hardly changed. So right now, the ten year is still hovering around four and a half percent. We're probably gonna be in this area for a little longer.

Now what was more important, I thought, that really impacted the market was we had a lot of fed speak during the week. We had Fed Reserve Atlanta president Bostic speak. The major narrative from all these speakers there are about five speakers this week, that hit the tape. And the the major takeaway from all of them was the Fed has to be cautious. They have to be patient, and there are no rush to cut rates.

And I think every single one of those Fed members said, we're looking at inflation. Inflation would be the most important factor. And everybody's gonna have their eyes on the PCE number that comes out on the twenty eighth because that's gonna give us another picture of inflation, and that's really what the Fed is focused on, that PCE report. Which should be a very interesting time when we get that report. So I think you said something kind of interesting there, Rajeev, which you talked about the Fed being so cautious and patient.

I think that was the phrase you used. And that's probably a pretty, apt analogy for us to think about as investors too, where, as we acknowledge, there's a lot of things that are happening in the world today. Some are just being speculated. So we have to be clear that this is some of these things we talked about are not official policy yet, but this is somewhat speculative. And it's probably not why it's expected too much, but we still have to be prepared for a wide range of outcomes.

That's been a central theme of ours this year too, expecting more things to happen, but also the the range of outcomes, the scenarios are a lot wider. And with that comes more volatility perhaps in the capital markets. Now that doesn't mean, again, taking a big, making a big adjustment to your portfolio. So focus on your long term goals and really focus on quality and focus on diversification. I think those things will be continued to be, important in portfolio construction in 2025.

Well, thanks for the conversation today, George, Steve, and Rajeev. We appreciate your insights. We'll also have a reminder here just now on our national call upcoming on Wednesday, March 12 at 1PM eastern. So please join us if you wanna hear some more updates on what's been happening since the first fifty days of president Trump's administration and the five year anniversary of COVID. So thanks to our listeners for joining us today.

Be sure to subscribe to the Key Wealth Matters podcast through your favorite podcast app. As always, past performance is no guarantee of future results, and we know your financial situation is personal to you. So reach out to your relationship manager, portfolio strategist, or financial advisor for more information, and we'll catch up with you next week to see how the world and the markets have changed and provide those keys to help you navigate your financial journey. We gather data and information from specialized sources and financial databases, including, but not limited to, Bloomberg Finance LP, Bureau of Economic Analysis, Bureau of Labor Statistics, Exchange Volatility Index, Dow Jones and Dow Jones News plus FactSet, Federal Reserve and corresponding 12 district banks, Federal Open Market Committee, ICE Bank of America Move Index, Morningstar and Morningstar.com, Standard and Poor's, and Wall Street Journal and WSJ.com. KeyWealth, KeyPrivate Bank, KeyFamily Wealth, KeyBank Institutional Advisors, and KeyPrivate Client are marketing names for KeyBank National Association or KeyBank.

And certain affiliates, such as Key Investment Services LLC or KIS and KeyCorp Insurance Agency USA Inc or KIA. The Key Wealth Institute is comprised of financial professionals representing KeyBank and certain affiliates such as KIS and KIA. Any opinions, projections, or recommendations contained herein are subject to change without notice, are those of the individual authors, and may not necessarily represent the views of KeyBank or any of its subsidiaries or affiliates. This material presented is for informational purposes only and is not intended to be an offer, recommendation, or solicitation to purchase or sell any security or product or to employ a specific investment or tax planning strategy. KeyBank nor its subsidiaries or affiliates represent, warrant, or guarantee that this material is accurate, complete, or suitable for any purpose or any investor, and it should not be used as a basis for investment or tax planning decision.

It is not to be relied upon or used in substitution for the exercise of independent judgment. It should not be construed as individual tax, legal, or financial advice. Investment products, brokerage, and investment advisory services are offered through KIS, member FINRA SIPC, and SEC registered investment adviser. Insurance products are offered through KIA. Insurance products offered through KIA are underwritten by and the obligation of insurance companies that are not affiliated with KeyBank.

Nondeposit products are not FDIC insured, not bank guaranteed, may lose value, not a deposit, not insured by any federal or state government agency.