Bernstein Private Wealth Management Webinar on Tariffs

Speaker 1 (00:06):

<silence> Hello everyone. Uh, welcome to our impromptu webinar. I'm Alex Schoff. I'm Chief Investment Officer at Bernstein, and thanks for joining us this afternoon. As markets have turned hostile over the last couple of days, we've pivoted from writing, uh, the informational flashes as we call them, the, the news pieces, the commentaries that we've been producing over the last week or so, and move to, uh, as in person as we can get in a moment's notice over Zoom. Um, we wanted to give you a real time read on, uh, our perspective, give you a sense of our outlook, and connect you with some of the key investment decision makers through the firm. Um, if you want to ask a question, we've enabled the q and a chat, but I just ask that you enter your name and, um, because if we don't get to it during the session today, uh, there's no way that I can follow up with anonymous attendee.

(01:03):

So please include your name when you're asking a question in a minute. I'm going to ask two colleagues to join, uh, Sri Singhi, who's Chief Investment Officer for US strategic equities, uh, and Matt Norton, who's Chief Investment Officer for our municipal bond investment platform. Um, so we've got a lot of chief investment officers joining today. Um, first I wanted to briefly level set where we are and align our viewpoints about where we go from here. And I'm reminded as we put the webinar together at a moment's notice earlier today of the last time that we did this in 2020 in the midst of the pandemic. This time it does feel different. I don't know if it's that there's colleagues in the office and, uh, things feel a little bit more normal at the margin, but just like we were able to navigate you through Covid, we will get through this cycle as well.

(02:07):

So let's bring up the slides and we can get started today. I'll move quickly through a couple of exhibits that we've put together. Uh, these slides in a more detailed version of them, will land in your inbox later this week. And really the only thing that's certain today is that the path forward is uncertain. So on the first page, I've laid out the key controversies today, and I've put a big fat red box around the items that are most salient to our conversation. Can the economy make it through the tariffs? Now, you'll see we've taken up the likelihood of a recession as a result of the tariffs. Uh, we could talk about what that means and what the probabilities are. What will tariffs do to inflation? What will they do to profits? Our view is that inflation does move higher from here and growth slows.

(03:06):

And what about where to invest? We've, we've talked a lot about, uh, US exceptionalism since the election. Is that still the case? And our view is the US is too big and too powerful to be undermined by the effects of the tariffs alone. But as long as they remain in place and the longer that they remain in place, you know, we've seen isolationists economic policies can be harmful to economies no matter how big they are. The key question here is duration. How long will the tariffs be in place and at what levels? And that's really the the lens that I wanna look through on the next page. How long will these be in place? And I'm gonna walk you through this page, a a key summary of, uh, economic and market indicators. And I'll go from top to bottom here. So our new US GDP forecast for 2025 is for zero two little growth this year, two weeks ago, that number was a 1.5% growth rate, um, and connected.

(04:18):

We've taken the odds of a recession in 2025 up to 50%. Now that 50% recession probability assumes that the tariffs remain in place at their current levels. And this is really consistent across Wall Street. This is not an outsider or an outlier view, I should say. Um, others are, are right in our camp. And by the way, it's important to think about where we go from here as it relates to that duration point that was making. Every month that the tore the tariffs at their current levels stay in place, think about adding another eight to 10% to that probability level, and that would put you basically at a hundred percent likelihood of a recession or close to it in about five months. Now, this activity will not go unnoticed by the Fed. And even though Chair Powell has said that they won't step in, the Federal Reserve won't step in to rescue the economy just from tariffs.

(05:21):

He and the Federal Reserve Board remain data dependent. They said it a hundred times over the last few years. They're data dependent, and if the data weaken, they will take action to support the economy through cutting rates. We think that they cut rates at least three times this year. That's why I've got that cut of point 75 with a plus sign next to it. Markets for what it's worth are currently pricing in five rate cuts this year. Uh, as such, in in, we expect rates have been very volatile. Today's a great example. The tenure was jumping all over the place, but net net over the coming period, we see, uh, lower rates from here. And as I noted on the prior page, we think inflation runs higher from here. We've added more than a full percentage point to our forecasts. Now tariffs, and we've been saying this since the election, since November, are a one-time move in prices.

(06:23):

The impact is more like an impulse, uh, as opposed to something that you then get layered on next year and the following year and so on and so forth. So we think it's a one-timer, but it does hit the inflation rate and picks it up this year. And the way that that flows through to the markets on the s and p, you could see that we've got a forecast of 5,700 on the s and p, so about 10% higher than where we are today. But importantly, that number was 6,400 just a couple of weeks ago, and we've taken it down as we've taken our earnings estimates down. And that 2 56 number for s and p earnings for this year reflects that haircut about a 10 to 15% reduction in earnings. That also is consistent across the street. Um, much of Wall Street views a recession outcome as taking earnings down by 20%.

(07:16):

So the 10 to 15 is in line with that 50% probability. Um, now I want to double check on inflation. We, I spent a second on it. Let's spend a little bit more on the next page and, and double click on that. Um, I'm showing you forecast for inflation levels over different timeframes as of different dates. So the one year inflation break even the five year inflation break even the 10 year as of the beginning of the year is the blue. The mustard is, uh, right around inauguration 1 21. And then, um, the purplish number is just as of a week or so ago. And you can see the one year inflation break even has come up over the last couple of months. It's higher than it's been earlier this year, but the five year and the 10 year number lower, reflecting that point that I made about inflation from tariffs being a 2025 story, not a five and 10 year story, inflation levels are closely connected to bond markets.

(08:18):

So lemme flip ahead one more page and share how we think about municipal bonds in this environment. Bonds have stood up and done a great job over the last few weeks generating a positive return on many of the down equity days. Today was a tough day in Munis, but over the last couple of weeks we had a good outcome. Now, here are forecasts under three different scenarios for the 10 year treasury. You can see roughly flat in the middle, a higher, uh, 10 year, all the way up at 5.3, and then a lower down to 3.8. Uh, our base case will put us somewhere, uh, with an expected return of about 5% for an intermediate duration municipal bond portfolio. But even if we're wrong and rates move higher, there's still lots and lots of protection coming from Munis. All right, let me wrap this up on the last page before we bring in Sri and Matt and have a conversation.

(09:13):

Uh, the first point, market volatility is retrenched about 12 months of equity returns. We had a great period coming into this. We've given it back. We know earnings estimates are going to come down, but it might take us another couple of quarters to have real visibility on what that's gonna look like. Uh, another part of that uncertainty is, is frankly part of what's giving investors angst today. Um, many have already said, by the way, that this quarter of earnings results, the first quarter that'll come out over the next 45 days or so, is probably the most irrelevant quarter ever. And that's because the tariff impact is not yet in those numbers. And there could also be some accelerated buying from some consumers that try to front run, uh, get out in front of the tariffs and, and, and purchase before. So we're gonna watch the quarter, we will pay attention to the quarter, but don't be surprised if markets don't move necessarily on first quarter results because everybody's waiting for what the earnings impact will be from tariffs going forward.

(10:13):

In the meantime, in the middle of the page, as I said, bonds have been so solid. Uh, Matt will give us some more color. And then I would just comment that diversification is still the right approach. Not all investments move up and down with the stock market. And there's other ideas that, that we've had certainly investing outside the US investing into fixed income, looking at alternative investments, thinking about risk management strategies. Not all investments go up and down with the market, but the stock market is front and center. So, uh, Sam, let's take down the slides and we'll start with a, a couple of questions to re who, uh, full disclosure, uh, has a cough. Um, I know that, that he's gonna do battle and, and, um, will answer our questions, uh, as best he can. But if he's got a go off camera to drink some water, please excuse him. Okay. Sre, uh, question number one for you. How are you assessing the fundamentals and appropriate valuations for companies with so much uncertainty around the policy regime that, that we're in?

Speaker 2 (11:20):

Alex, first of all, thank you for having me. And, um, I'll start first with echoing, uh, to the group here. That this situation is really, really dynamic. And so we have to be very humble, as well as nimble with as we get more information because there is still uncertainty around reciprocal tariffs, how, what the response is going to be, as well as section 2 32 tariffs, which would be very specific to sectors like, um, healthcare, pharmaceuticals, um, and, and technology companies. Uh, but having said that, what myself and the portfolio teams are really focused on is very specific industry by industry and company by company assessing both the direct and the indirect impact of the tariffs as well as the short term over the next three to 12 months, as well as long longer term impact on the companies and their profitability. So what do I mean by that?

(12:18):

So let me talk about the four key dimensions of our framework by which we are assessing the impact. So the first is the direct tariff impact that would be tariffs put on the raw materials or the goods the companies might be importing. So if you are a Nike or a Lulu, you're making these shoes or apparel in Vietnam and you're getting tariffed on it. So that has very direct impact on your profitability, on your cost structure. The second impact of tariff that we are gonna see is on companies that may face reciprocal tariffs. That is, for example, China putting, uh, tariffs on our ag exports, if you will. So these companies may not be importing anything in, but they may be hit by these reciprocal tariffs. Uh, the third component, which is again, directly related to tariffs, is then how do these companies react to it?

(13:09):

Do they try to pass on these price increases to the consumer? Uh, so how much of that margin impact can be alleviated? And if they do pass on those prices, what is the resulting elasticity or impact on demand? Does it get lowered? And that, again, can have impact on their profitability. So that's the direct impact of tariffs. The the second critical thing which you raised is the indirect impact of tariff that broadly goes through the economy, through inflation and growth shock. So that increases the odds of recession. And so that can impact companies indirectly. So for example, if you are a bank or a credit card company, you aren't necessarily importing anything from, from China or Europe, but if it slows down the economy, there are job losses, your credit costs rise, your earnings come down. So that cyclical impact on companies indirectly is also critical.

(14:08):

Uh, the third piece is to then assess company by company. What are the buffers they have to manage that direct and indirect impact? The best defense against these tariffs or these kind of shocks is the high margins. If the companies have 30, 40% operating margin businesses, for example, like software companies, they have greater ability to manage these indirect or direct impacts in some cases versus companies that that don't. And so here we are really looking for companies with good balance sheets, good industry structure, so they can play offense when everybody's playing defense. Um, and then the final question, uh, which was part of your question, Alex, is valuation. So is this all priced in because what market has reacted so far is the companies that are impacted by these tariffs directly or indirectly, cyclical stocks in technology and consumer and industrials have sold off really hard, whereas the low volatility stocks in more defensive sectors like Staples, pharmaceuticals, utilities have outperformed. So now there is a two standard deviation gap. And so a lot of this stress or anxiety is, is kind of already priced in. So when we are doing our analysis, we are really trying to find that pricing anomalies relative to those, um, direct and indirect risks.

Speaker 1 (15:34):

Got it. Thank you Reed. I'm glad to hear you have a framework for thinking through this. Um, you mentioned some of the sectors, and I'm gonna come back to thinking about, you don't have to mention the names because I, I, I don't wanna have anybody front run your, uh, portfolio and also look, you, you, you run our flagship US equity portfolio, but a lot of our Bernstein investors invest in other strategies as well. But, but I thought it would be interesting just from a theme standpoint, um, what are some of the actions that you're taking to either defend against what's going on or take advantage of what's going on in pricing?

Speaker 2 (16:10):

Yeah, so, so Alex, like our approach has been, and actions have been very surgical and not some kind of a blanket repositioning of the portfolio to be more risk on or risk off. Because as we recognize even today in the, in the, in the morning with just one tweet, a number of stocks went from being down 5% to being up 5% and then being down again. So this is a pretty volatile environment if you'll, so the approach that, you know, we have taken is we have bucketed our holdings and new ideas into three baskets, uh, a high risk basket, a medium risk, and, and a low risk. And, and the way we define that is the high risk baskets are companies that are negatively impacted both by tariffs and are cyclical in nature. So they will get double whammy hit because if you get a recession and you have the impact of, of tariffs on, on, on the profitability, then you go to the medium risk baskets where companies are either they're in defensive sectors, um, but they may be impacted by tariffs like healthcare tools or medical devices.

(17:17):

They, they're not impacted, their demand is not as cyclical, even if you have a recession, but they may have to re-engineer their supply chain. So there may be some temporary dislocation, um, in, in their profitability. Or on the other hand is the software companies, because they don't import import anything. But those businesses are cyclical because the companies start spending less on software. So those kind of are the medium risk, if you will, they're impacted by one or the other. And the lowest risk companies are where there is there direct exposure to tariffs and our defensive. So these would be more in service oriented businesses. A good example is like a medical diagnostic lab. Like no matter what people are getting their blood tests done and, and they're not importing any goods, I mean, on the margin there's some chemical reagents they may import, but that's not big part of their cost structure.

(18:09):

Um, so, so what we are doing really is, is looking for, for two things in, in our portfolio to the extent if it's a low or medium risk bucket stock that has sold off indiscriminately, given, you know, how some of these selloffs work, there's an opportunity to pick those up and manage the risk profile during the turbulent times we've been adding to those kind of stocks. The, the second element is really looking each one of these individual risk buckets, um, and really trying to upgrade the quality within. So even within high risk bucket, if we can rotate from a, a name which may not have as good growth prospects as to one which may have, um, particularly that could be very valuable, I think quality and growth can be very valuable if economies slowing down because people are willing to pay up for that growth. So we are rotating into those kind of names. And so what I wanna leave our clients with is, it's really important in times like this to play both offense and defense. Like you just don't wanna hunker down for one kind of outcome because you can anytime be surprised by, by something that goes the other way on a, on a tweet.

Speaker 1 (19:21):

Agreed, agreed ri and, uh, thank you for your work here. Um, um, I know you're, you're doing a terrific job of doing just that offense and defense. Um, I wanna bring in Matt Norton, who as I said is chief investment officer for our municipal bond business. Matt now oversees over 80 billion uh, dollars in, in municipal bonds. And so Matt, kudos to you for a terrific job that you've done. I've got a couple questions about what's going on in the muni market, and I wanna start with, with talking a little bit about what's going on in corporate market. There's been, um, a little bit back and forth, a lot of volatility and, and corporate spreads and how investors have addressed corporate bonds as it relates to recession probability and so forth. How's the muni market holding up?

Speaker 3 (20:06):

So the muni market from a fundamental perspective continues to be really, really strong. Um, when you look at the credit under credit fundamentals, you know, the things that you own munis for, you know, low default rates, uh, tax free income offset the equity volatility, you know, that's generally still there. Um, so muni spreads have hung in, at least from a credit perspective, hung in better than corporate spreads. Corporate spreads, high yield spreads and widened over well over a hundred basis points. Um, muni credit spreads have started to widen, but not nearly as much as you've seen in the corporate market, which makes sense because muni default rates are substantially lower than corporate default rates over time. That being said, um, Munis do look attractive on a valuation basis. Um, so you've basically had this environment where there's been substantial supply in the muni bond market, particularly as people try to front run the tax, uh, cut bill.

(21:01):

Um, it's at the same time that there hasn't really been a lot of coupons and maturities in the market. So municipal bonds over the last six weeks or so have cheapened up relative to treasuries. And now from a ratio basis, they actually look very, very attractive actually. So attractive that investors who don't usually buy municipal bonds, you know, people at lower tax rates, uh, corporations, banks, insurance companies are starting to step in and, and, and dip their toe in the water and buy muni. So the, the stability and safety over the long run is absolutely still there. The valuations are pretty cheap and the fundamentals from a credit perspective are strong because you have rainy day funds that are all time highs. And, um, municipals have generally managed their finances fairly prudently.

Speaker 1 (21:46):

Got it. Okay, thanks Matt. Let's, let's pivot to rates. So lots of rate volatility, uh, over the last couple weeks. Today, you know, overnight last night we were below 4% for those of us who were working on Sunday, and now we finished up around four 15, which may not seem like a lot to some, but that's a massive move in the tenure. What, how, how should investors think about rates going forward?

Speaker 3 (22:10):

Rates are going in the short term. In the intermediate term, there's going to be exaggerated moves in interest rates because we're living in an environment where, uh, you know, you know, whether it's tweets or economic data that's going to have impact on, uh, rates to a substantial degree. Our view, and Alex you talked about it earlier, we do think the fed ultimately will be able to cut rates, um, potentially three times this year. And the reason that they can potentially cut rates even as inflation ticks up in the short run is that longer run inflation expectations have remained pretty anchored. So if you do see terrorists have the negative economic growth impacts that you might think, uh, might occur, and you see the unemployment rate tick up, the Fed will be able to look through kind of short-term increases in inflation and cut interest rates to try to keep the unemployment rate lower, offset any negative impacts to tariffs.

(22:59):

The main thing I, I do think though, when you look at bonds in general is that nobody knows exactly where interest rates are going to go. So you have to play out various, various scenarios and that slide that you showed earlier about interest rates going up, even, you know, substantial amount, you're still positive in municipal bonds, interest rates going down, you're fairly strong, uh, returns in municipal bonds, five or 6%, you know, the asymmetry of bonds, the bond math is very, very powerful today. And if nothing happens and rates stay where they are right now, you're still collecting over a 4% tax free yield, which is 7% on a tax equivalent basis for something that has low default rates over the long run. Should have much lower volatility. There will be blips and there will be days where moves are exaggerated, but that's a pretty attractive yield one that we haven't seen a lot in the last 15 years.

Speaker 1 (23:47):

Yep. Yep. Matt, you opened a can of worms, so I'm gonna come back to you with a bonus question. You talked about tax equivalent. There is some discussion in Washington that every few years we come back around to it, the taxability of municipal bond income. What's, what, what's been the current scuttlebutt and what's our view?

Speaker 3 (24:06):

Yeah, so it it comes up, it comes up every so often in budget negotiations and whatnot, you know, so taking a step back, municipal bond interest has been tax exempt since 1913, since the dawn of the income tax in the United States. And every so often it certainly comes up taxing municipal income. Uh, the reason that we think it's very, very unlikely, uh, is because when you do the math, the math doesn't necessarily make sense. There is a small benefit to the federal government if they started taxing municipal bonds, a small benefit, uh, as a percentage of their budget. But there is a huge damage to municipalities and state and local governments if they were a tax municipal income and it would disproportionately hurt. Um, the smaller units of government across the country, uh, you know, large states, you know, Texas and you know, New York City and California and Florida, they're all gonna be able to issue an access to municipal bond market.

(24:59):

But smaller regional economies, if they need to build a critical access hospital or refurbish a school, people aren't going to look at those bonds if they were not tax exempt and heading into a midterm election year. Where I think ultimately if you're, if you're thinking about, you know, building factories in the United States and bringing back certain industries to the United States, you need infrastructure to be able to do all that. And the municipal bond market finances 75% of infrastructure. And I I think throwing that into chaos in a midterm election year next year would, would, is not likely the outcome. Um, could, and if they were to do anything like they've done in the past, they would grandfather in all the old bonds. So the current portfolios would be like gold because, you know, you, you would be very, they'd be grandfathered in, they'd still be tax exempt in all likelihood it would be the go forward bonds that would likely be changed. Uh, but we think that's pretty unlikely. They may nibble at the margins. Private universities, for example, you know, maybe lose was the ability, a certain part of university maybe lose the ability to issue tax exempt, um, stadium bonds, things like that. But the bread and butter of the US infrastructure, uh, you know, airports, hospitals to roads, schools, those finance through the municipal bond market, and it would be very negative to the US economy to take that away.

Speaker 1 (26:15):

Yeah, espec agreed Matt, and especially at a time where we need to be investing in our infrastructure. And so, uh, our view is, is as Matt described, that we continue to have, um, the security blanket around municipal, uh, income. Thanks, Matt. Uh, Sri let's, let's, uh, bring you back in and do a little bit of q and a. There's a few sector discussions. Uh, banks typically when we worry about recession, we worry about banks. What's our view on banks? How do we, how were we coming in and, and where do we go from here?

Speaker 2 (26:48):

Yeah, Alex, um, that's, that's a fair question. Um, at the end of the day, banks are a levered bet on the economy. And so anytime there's a fear of recession, uh, banks tend to underperform. Uh, where it impacts banks is first if, if you think one of the big sources of income for banks is net interest income loan growth slows down. If there is expectation of interest rate cuts, which may come from the Fed, it puts pressure on net interest income. Uh, the fee income side, which typically comes from capital markets, activity, asset management kind of businesses, uh, that income also comes under, under pressure. Um, and the third piece that investors in particular really focus on is credit costs. Um, and, and if this is turns into a recession where there is stress on consumer and, and, and businesses, then credit costs would, would tend to rise.

(27:41):

And so earnings come down multiple shrinks. Now, what I would caution against is, like for people not to think of this as a repeat of global financial crisis, because for a number of reasons, first, for consumer and businesses, we are coming in with much better balance sheets than we went into global financial crisis, as well as for the banks themselves, the amount of capital buffers they have are much, much higher than what we had during GFC. So this is not a capital event for the banks, but it's more of an earnings event, if you will. Uh, but having said that, we will see pressure on, on, on cyclical sectors like banks, uh, if a recession is expected.

Speaker 1 (28:25):

Got it. Okay. Thank you. I'm gonna try to, thanks everybody for the questions that you're asking. I'm gonna do my best to try to put them together. And Matt, there's just a, a, a question around, or a handful of questions just around how people should think about duration today, whether it be from an investor type or just from a a portfolio perspective. You talked about rates and, and I provided our view on rates. What's the, what's your perspective on putting duration on or investing in short duration? How should investors look at bonds?

Speaker 3 (28:56):

Yeah, I, I I think it depends a little bit on your, uh, risk appetite and the volatility in your time horizon that you're investing for. You know, if you're investing for one year time period, we wouldn't say go long duration because, you know, you certainly could have volatility over the next year if you're having a multi-year time horizon in municipals. I, I think it is time to take, you know, a little bit longer duration than you usually would, you know, tilt the portfolios long, uh, for a couple reasons. One, you know, these tax equivalent yields that you see today, uh, they may not be around two or three years from now. So tilting longer and duration means you're locking in these higher tax equivalent yields for longer. And I think that's important. The other thing is that the longer you are on the municipal curve, it is the cheaper, um, where it looks from a relative value perspective versus treasuries. Um, the ratio. So how much municipals ratio to tre yield ratio to treasuries, that's basically 90%, usually municipal yields relative to treasuries yield closer to 80% in the long end. So you're getting a lot more additional yield relative to treasuries than you usually do. Um, and that's at multiple parts of the curve. So what I would say today is tilting longer, um, the course, it depends on time horizon, uh, but if you have a longer time horizon, I think tilting longer, logging these tax equivalent yields for a longer time period. Makes sense.

Speaker 1 (30:18):

Great, thank you. Um, Sri, I'm just gonna try to have you answer a question around the timing. I, I said that it might take a couple of quarters before the impact of tariffs works its way through. Do you think this quarter guidance will be paid attention to, do you think that it's really a wait and see game and then no one's asking you to call the bottom, and I would certainly never ask you to call the bottom, but, um, just give us a view of, of your perspective on where we are relative to, uh, price discovery in, in the market. That's, how long will it take? Sorry, lemme throw two of you. How, I'll summarize how long you think it's gonna take, and then we know nobody's got a crystal ball, but what's your view?

Speaker 2 (31:02):

Yes. Um, so, so couple of things. You know, Alex, we, we are talking to companies every single day pretty much. And, and one thing was clear that even before the tariff announcement, um, in early April, the companies were already seeing a bit of a slowdown in their business from all the uncertainty around policy, if you will, because we had heard the noise around Doge, um, what would happen with the tariffs. Um, and that had already resulted in, in activity slowing down. So the expectation was that coming into the quarter, we could see some of weaker results or guidance for the next quarter, uh, from, from the companies. I think the way to think about this is this tariff, uh, news has put another added layer of uncertainty if you, uh, if you will, for the companies. Um, the other thing is a lot of companies when they guided for the year, they had some sort of second half acceleration built in as there was more policy clarity as we, as the new administration took shape.

(32:08):

Um, I think there, that's a risk, um, that some of the companies may start adjusting, uh, their forecast for the year, but still some of them will wait because they'll say like, look, there is not enough clarity around that. There's qualitative commentary. We'll tilt possibly more negative in, in terms of when this becomes clear. Um, it's, it's difficult to forecast. Uh, just actually, um, on Friday we had a, a retailer, uh, a mall based retailer that sells candles and fragrances in, in our office. And, uh, we were talking to them and 80% of what they source is actually, they, they make their stuff in us and 20% is China. Um, and one of the questions I asked them, so there's a short term, but like, what about the long term? Are you gonna reposition your supply chain? Um, and, and they were like, look, we don't know yet. And we, that's the work all companies are starting to do. Um, and so based on how things evolve over the next few weeks, we will know how significantly do companies have to re-engineer their business model. So this is going to be very difficult to pinpoint kind of where the trough is. It just depends on how long and how drastic these tariffs stick.

Speaker 1 (33:27):

Yep. And that, that key, that question from the company representative is the most honest thing that someone can say. And that's what I would say is the answer to that question. We don't know yet. We, we know a lot, as Sree said, there's work that you can do to find some defensive characteristics. There's work you can do to, to get aggressive on the municipal bond portfolio. We're always conservative and careful, and Matt continues to operate the portfolios in that fashion. I was told I had 30 minutes we went over. There's lots of questions in the chat, but thank you for putting your names in because your advisor will follow up with you. Um, please for the rest of the week, look out for a more detailed version of the exhibits that I shared. Uh, that will come probably the middle of the week. You can expect more flashes to come if there's a market events warrant.

(34:19):

Uh, the quarterly letter that I authored is still valid today. It was called Regime Change and that's what we're living through. So I think that still provides information. If you haven't seen the video, it's a eight minute video that we published on Thursday that describes the mechanics behind tariffs and the market's initial reaction. It's a helpful view and reach out to your Bernstein advisor for more. So thank you everyone for joining us today. Look, I, I would say I look forward to seeing you again, but in a non impromptu video conference setting. And thanks very much for your trust that you have at Bernstein. Wish you all the best. Thank you.

Speaker 2 (34:55):

Thank you.