Three Out of Four Ain't Bad
Rob Almeida and Brad Rutan discuss how investors are pricing in a favorable outlook for the economy, interest rates, inflation and earnings and the implications for markets if some of those fail to live up to expectations. 

Rob Almeida: Brad Rutan, welcome back to the podcast.

Brad Rutan: Good to be back. Happy new year.

Rob Almeida: Happy new year to you. All right, let's jump right into it. So I love the quote from Miles Law that reads, "Where you stand is a function of where you sit." Correct? I'm not telling it exactly right, but something along those lines.

So as we enter 2024, where does the market stand as a function of where the market sits? So I think about the last two years. We had the inflation ambush of 2022, where all financial assets derated because your cash rate went up and now everything's worth a little bit less. Right? Okay. So 2023 comes along, you have falling inflation, which is a function of the base effect. So there was going to be falling inflation.

Brad Rutan: It's expected.

Rob Almeida: Yeah, expected. But you also had a significant amount of destocking, not in services, but in capital goods. So, here we are today, and what we've seen particularly over the last three months — tremendous strength and risk assets, from equities to credit. I'd like to note you didn't see commodities participate in that, but we'll shelve that for a second.

Brad Rutan: Separate topic, yep.

Rob Almeida: Yep, separate topic. Yields came down dramatically and those two things are related. So where does the market stand? What the market is telling us — and that's where I want your view on — is the market thinks it's going to get a bunch of rate cuts next year. The market believes inflation is going to fall. The market believes we're going to avoid a recession and you're going to get an acceleration of earnings growth. Now, one of those things, or two or three of those things may indeed happen, but I find it very unlikely you're going to get all four.

Brad Rutan: That'd be winning the lottery if you got all four.

Rob Almeida: Yes. So what are we missing?

Brad Rutan: Right. I think when yields went down late last year, that was based purely on Fed pivot messaging. They took that and ran with it and — maybe too much — they probably priced in too much of a Fed pivot. And that obviously allowed risk assets from equities, bonds and everything to participate.

Rob Almeida: Which was just a rerating because there wasn't earnings growth. Earnings estimates were actually coming down. So you had a massive rerating, which was all rate fed, pivot driven.

Brad Rutan: All based on that.

Rob Almeida: Okay, go ahead.

Brad Rutan: So then, for one, is all that correctly priced in? So do we price in too much. And for it to continue for rates to go down, it would be based on economic weakness and Fed cutting. But how do you get earnings growth . . .

Rob Almeida: With economic weakness?

Brad Rutan: Exactly.

Rob Almeida: Right. Those things don't really live together.

Brad Rutan: Those things don't match to me at all.

Rob Almeida: So volatility is the market adjusting for mistaken assumptions?

Brad Rutan: Correct.

Rob Almeida: So there's a lot of positive assumptions being made, a lot of things that have to come together. And my inclination is always on the more cautious side. I think that's somewhat evolutionary. So you had that hunter-gatherer who was always cautious, that gives you word about a saber-toothed tiger.

Brad Rutan: It served a purpose.

Rob Almeida: It served a purpose, so I think that's in our DNA. But when it comes to financial assets, particularly late cycle, it's the opposite. It seems that the evolutionary bias is very positive. What's going to break will matter. And it's going to matter a lot in terms of what specific break.

So for us, let's talk about rates. We're recording this podcast early to mid-January, 10-year Treasury somewhere in and above 4%, give or take. I'm not going to pin you down to what's the right terminal value for this, but just maybe walk us through where should long rates, generally speaking, live.

Brad Rutan: I think you're plus or minus 50 basis points of that, right? It's hard to believe that the 10-year could get back to 5% and stay there.

Rob Almeida: Well, then let's walk through why. What would have to happen for that?

Brad Rutan: I mean, I think you would need to see incredible . . .

Rob Almeida: Acceleration growth.

Brad Rutan: Acceleration growth, right.

Rob Almeida: Inflation.

Brad Rutan: You'd also need to see the supply-demand metrics change. But if you got . . .

Rob Almeida: So you mean term premium?

Brad Rutan: Yep.

Rob Almeida: Yeah, okay.

Brad Rutan: Yeah. But if you got there, could you stay there? Do you think the 10-year could stay at 5.5% for a full year?

Rob Almeida: Right. So for technical reasons, you can flirt up there like it did in mid-summer?

Brad Rutan: It can flirt. And then what happened, right? It just came right off it.

Rob Almeida: When I think about the 10-year trade, I think of it like any other financial asset. It's the expected rate of growth and inflation over the next 10 years. And I think a lot of investors anchor it to its fed funds out 10 years, but it doesn't work like that, at least not in my experience. And what kind of environment where you're going to get the economic growth or inflation backdrop where you're a sustained 5% looking out over the next 10 years. It seems hard to reach.

Brad Rutan: It's hard to imagine. I mean, we haven't even fully felt the effect of the most aggressive Fed tightening. You've made some great comments about rates over a longer period of times. We had 5,000 years of rate data out there or I think . . .

Rob Almeida: Yeah, that's right. Yeah, Bank of England did that work.

Brad Rutan: Yeah. And it's incredible work, but we haven't fully felt that. Because when mortgage rates go to 8%, it doesn't mean everyone's buying a house. I mean, most people didn't buy a house. So a lot of people haven't felt the effect of those higher rates yet. It's just hard to see. I think maybe the deeper recession’s off the table, the hard, hard landing might be, maybe — or that's what maybe the market thinks. I mean, I think worst case scenario, right now, is a mild recession, I'd say.

Rob Almeida: Yeah. And I am not an economist, you're not an economist. I don't think that's an incorrect view from the standpoint of, I've got to keep it really simple, but a recession, something's receding. So what recedes economically is something that was overbuilt, overbought, overproduced in the real economy.

And throughout the 2010s, the reason you had economic stagnation, disinflation, if not deflation, was the consumer retrenched, banks retrenched. Your two major engines of economic growth and inflation. So as people and banks were repairing their balance sheet, that's not where the excess is today. So I think for that reason, it just strikes me as you can take the deep economic recession off the table, but then where was the excess? The excess, it's elsewhere, and I think — or we think, if we've talked about it before — it was in balance sheets and financial leverage. So you can have a mild or maybe avoid an economic recession. And maybe now we're jumping ahead to different topic, but it doesn't mean you can't have a profit recession.

Brad Rutan: No, and it doesn't mean that there aren't plenty of companies that are going to suffer. I mean, I actually used that quote, Miles Law, because when you're staring at a wall from five blocks away, you see a brick wall. When you get up close to it, you see bricks. And is there a maturity wall? That's one thing we talk about. Well, maybe, but more, it's the bricks.

So there's plenty of companies that aren't going to be able to handle the stress. They're in a race against time. Can the Fed bail them out by cutting soon enough and enough to basically save them? So yeah, hard recession, hard landing, maybe it's out. It doesn't mean that there aren't going to be a lot of opportunities to avoid companies that are in pretty bad health today.

Rob Almeida: So let's pivot. So from a rate dynamic, so we're taking maybe a collapse in interest rates off the table — assuming we're going to avoid a deep recession — we're going to take the five handle plus off the table because this doesn't seem to be the growth catalyst for that. So let's maybe jump to credit, corporate risk, balance sheet risk, which you are alluding to.

I guess what strikes me, and I've been using this, I love the fable that David Foster Wallace used in his commencement speech, which, to me, it just screams that ubiquity of the environment that you're living in. So the fable, if I remember real quick, there's two little fish swimming along, older, more mature fish coming the other way. He says to the two younger fish, "Hey, how's the water boys?" The two fish, look at them, confusingly, ignore them, swim along. Later, one fish says to the other, "What the heck is water?"

And what that screams to me is the paradigm that you're living in, just like the two fish in the water, it's hard to realize. What's even more difficult to realize, more ubiquitous, is when it's changing. And if you think about the paradigm that owners of capital or investors or maybe society lived in, it was one of disinflation, one of central bank repression of interest rates, which transferred wealth from savers to borrowers’ leveraged income streams. And I think this is where you're going with this, is balance sheets that maybe flourish under that regime are going to struggle under a different regime. And not that the Fed won't cut interest rates, but we're not going back to the prior regime.

Brad Rutan: Right, we're not going back to zero industry policy. And you make a great point because I think a lot of investors, and clients even, the Great Financial Crisis is the beginning of their memory of the markets. What was that? 15 years ago. And that paradigm, that ubiquitous, that's what we lived in and it's changing. And we're not going to go back to zero interest rate. And let's say the Fed cuts four times this year, that's still very a different environment for companies to live in, that need capital, and consumers too.

Rob Almeida: And even if they do cut rates, that doesn't mean the long end is going to come down.

Brad Rutan: It doesn't.

Rob Almeida: Right? And that's where companies borrow.

Brad Rutan: And I think it's personally ridiculous to think they could cut in March. Why would they cut in March? I mean, this whole pricing of cuts, starting in March and six cuts next year, it doesn't make any sense to me if we can get into it.

Rob Almeida: Yeah, it seems aggressive.

Brad Rutan: It's very aggressive, but they're going to cut. I think we can agree that there's going to be a few cuts, but that's not going back to that paradigm.

Rob Almeida: So that's where it just strikes me. So the two fish in the fable who don't know what water is, we were in an environment of suppressed interest rates, which makes everything more investable. There's less discretion. So we really don't know-

Brad Rutan: It's easier.

Rob Almeida: It's easier, right? We really don't know the extent or the level of bad ideas that got funded. But we're going to find out, to your point earlier, about the delayed effects of interest rates.

Brad Rutan: Right. And that's the beauty of it, right? I mean, that's why you and I get up in the morning, is eventually those bad ideas get found out. And eventually, you get rewarded for avoiding them.

Rob Almeida: Well, in economic terms, capital is moving from . . . you're taking away from an incompetent person, give it to an incompetent person. I mean, that's effectively what happens.

Brad Rutan: That's exactly what happened, but this is exciting. I mean, listen, we can agree that this year might . . .  Looking back, let's say we have a recession, the market itself might be down, and I have no idea, but it doesn't mean there aren't going to be great opportunities, both to avoid and to invest it in companies.

Rob Almeida: Well, and this is where I think I get accused of being too negative or being too bearish, and because they hear the concern I have about profitability, balance sheets and valuation.

Brad Rutan: They're not hearing you correctly then.

Rob Almeida: Well, thank you, very nice of you. No, but when you, I guess, unpack that, so if you take an industry — and we'll just keep it generic — an industry that makes widgets, a made-up term, and there's 20 companies in industry that make up widgets. When you suppress interest rates and you allow weaker companies to compete in an industry that they otherwise would've been competed out of, now they're competing for capital, they're competing for labor, they're competing for customers. So inefficiencies get created. And I think what we're trying to argue is, well, we obviously want to avoid the financial assets of those enterprises because they're just not economically viable in a more normalized world, whatever the next regime we're in is going to look like.

The positive aspect to me, and it's more of a long-term view, is now you've got competition going away. So if you've got less competition for business and value propositions, you've got greater returns on capital. And there's no law in finance, but one consistency is financial assets follow returns, period. It's been that way for centuries. So if I've got 20 companies in an industry that make widgets, and now I have 13 — maybe you're supposed to have eight, whatever the number is — if you now just have fewer competitors, those companies that, let's call it, maybe survive or benefit from those that get distinguished away, they take that market share. Presumably, now they're importing incremental revenues greater than cost. So you get operating leverage, you get higher returns, and much better financial outcomes.

Brad Rutan: And then I'd say, even then, now take that 13 and now throw in other paradigm shifts like reglobalization, deglobalization, whatever you want to call it. Artificial intelligence, obviously, we know it's a big trend. And now that 13, maybe it's seven, that can leverage those other paradigm shifts and really rise. And that's where it gets exciting.

Rob Almeida: Let's drill down on both of those, and I want to make sure we come back to your views on credit asset classes. So let's talk about globalization first. So some economists, or people, call it deglobalization. I think that's probably an overstatement because it's just shifting.

Brad Rutan: Reglobalization.

Rob Almeida: Yeah, it's changing, but here's how I approach it very simply. So 30 years ago, China was a near bankrupt country — and countries can't claim bankruptcy, but just from accounting standpoint. And globalization allowed them to become a massive manufacturing engine of the world. And I would argue it didn't allow developed market companies to become asset, it basically forced them because you're not going to be able to compete with our cheap labor. So what it did was it created huge economic growth in China, but it deflated capital spend in developed markets. It deflated labor prices, which has an inverse relationship with returns on capital, which is why financial asset prices did so well. So a lot like the paradigm of interest rates, what's also changed now is obviously globalization. So tell me your perspective on that and your views.

Brad Rutan: I mean, I think ever since World War II, we added that massive trend of globalization you talk about. And it's really been, I think, since maybe 2011, 2012, we started to see that come off. First, maybe due to some nationalism. COVID really kick-started because supply chains broke down. And now you have a situation where Chinese wages are up 300%, 400%. And now Mexico is the number one trading partner with the US as of today. Canada's number two. China's not even . . . They're behind the European Union. And whether it's onshoring, nearshoring, friendshoring, reglobalization, whatever you want to term it, if I'm a CEO, I want to secure supply chain. And is it really that much cheaper to produce it in China? It's probably not. I can friendshore to Mexico or to Canada. And then throw in recent events in the Red Sea. It just makes all the more sense for companies. Now, what is that? Is it inflationary or disinflationary, right? Inflationary may be short term because it takes capital to onshore.

Rob Almeida: Yeah, and people.

Brad Rutan: And people. But longer term for those companies that can successfully create a better supply chain. An Airbus A380 has 14 million parts. They come from 1,500 different companies from 30 different countries. Is that really the best way to produce an airplane? I don't know, you don't know. But it seems like a pretty huge spiderweb supply chain that, I think, companies are trying to manage down away from China to other countries.

Rob Almeida: Well, and it just strikes me, you went from a paradigm of very low growth and very high returns on capital. And those two things are absolutely related. So as growth was falling weak, post Global Financial Crisis, because people weren't spending money, banks weren't lending, and there was a vicious cycle taking place as labor and production was being moved offshore, all that drove up returns.

So now, what's happening is you're going from just-in-time delivery to just-in-case, right? And that was a function of COVID, right? I much rather have a product on the shelf at a slightly lower margin than not have it on the shelf at a maximum margin. It takes something like 5,000 or 6,000 parts to make a car, it takes one part to not. So to your point, reshoring or reglobalization, it's for supply chain resiliency, but there's going to be some margin give-up in that because of the spend.

Brad Rutan: Right. Returns, it's the opposite. To your point, the fish isn't in the water anymore. You go from a low-growth, high-return because you're outsourcing. Now, that goes in reverse. And again, that 13 companies, how many of them, in your example, can manage that process?

Rob Almeida: Yeah, well, do they have the capital? If they don't, can they borrow it? And what's the price? Because capital is no longer scarce and cheap.

Brad Rutan: No. And some are still relying on China, they have to be, rare minerals. But all this is what . . . And I know you and I can geek out about this, but what's so exciting about meeting with companies right now and asking them how they're addressing this, "How are you handling AI and then creating that mosaic of information across industries to see how is this all playing together?" To your point, it has to be a lower return overall environment. It doesn't mean you can't make money, but that artificial . . .

Rob Almeida: It's hard. It requires discretion, I think. When you mentioned AI . . . let's go there, then we'll jump into expectations on asset classes, so there's always two sides to every coin. And I think what's not being discounted in financial markets . . .

Brad Rutan: Not always, my son's magic kit has a one-side coin.

Rob Almeida: Oh, no kidding. Well, I'd like to see that.

Brad Rutan: It's a good trick.

Rob Almeida: Well, perhaps then AI similarly just has a one-side coin, which is that it's going to increase productivity for everyone. Now, I don't discount the step function change and production powers that it's going to bring to society. I don't know what they are exactly, and I don't think anybody does, but it's going to be terrific, I'm sure. The flip side to that is what is technology. It remove something. It removes frictions in society.

Brad Rutan: Makes things easier.

Rob Almeida: Makes things easier.

Brad Rutan: Less expensive.

Rob Almeida: So what gets lost in, I think, the current AI conversation is the revenue strain that's associated with the frictions of the past or that we live with now that go away. And then more importantly, who are the companies tied to that?

Brad Rutan: Exactly. And then it gets to, we talked about the Mag Seven so much, right? I mean, those are companies with massive moats and their sole goal is to protect those moats at all costs. You can make a case, some will and some won't.

Rob Almeida: Yeah, some will, some can't.

Brad Rutan: It's more interesting. Yeah, those other companies, those non-Mag Seven, how are they going to fare? And are those revenue streams, to your point, going to disappear?

Rob Almeida: Well, the market to me . . . maybe this is why the market is discounting both falling inflation, interest rate cuts and elevated EPS growth, because it believes that there's going to be massive productivity gains from AI. And I guess what I would rebut with, or what I do rebut with, is productivity gains typically get competed away.

So in other words, back to the widget example, you've got 20 companies and maybe three of them are gone because they were over-levered and they've got an imbalanced balance sheet that just can't be corrected. Maybe another three of them go away — to your point earlier — or they can't re-globalize appropriately. And maybe another three go away, not because they have an over-levered balance sheet or because they've got stretched supply chains and without access to capital, but simply because their product isn't good enough because somebody else's product is made better by their AI.

Brad Rutan: Right. And it is everywhere from health care to financial services.

Rob Almeida: Oh, every industry.

Brad Rutan: It's every industry.

Rob Almeida: Every industry.

Brad Rutan: But that's where, I think, and obviously we're biased, but to be able to then cross that information and find out what's the second derivative effect of . . . What's the next cash flow attached to that cash flow, in the supply chain that could be affected, and then aggregate all the information.

Rob Almeida: Yeah. Well, yeah, you're selling coffee, and just hypothetically, you're selling a widget, how are you going to use AI to make the widget sale more efficient? But perhaps, that allows you and I, who've got a better widget, but we didn't have the capital to create the widget company, but now AI allows us to compete or it lowers the barriers to entry, I think, in what was probably seemingly before uncontestable profit pools.

Brad Rutan: Yeah, and it's going to be interesting. And I'm by no means an artificial intelligence expert.

Rob Almeida: No, me neither.

Brad Rutan: But reading the research being done, it's just been fascinating to see the scope and how quick it's happening compared to past paradigm shifts.

Rob Almeida: So let's switch to credit. So we talked about rates, so maybe the tails are probably off the table, deep recession, inflation that drives high-, mid-, single-digit rates. So your rate market's fairly priced, reasonably attractive. Let's talk about credit.

Where along the credit spectrum, in the context of everything that we've talked about today, where are you talking about with clients? Where's there opportunities? Where's the risks?

Brad Rutan: I mean, if you're looking at 12-month view, and we have mild recession on the table, it's possible that you see some spread widening that's larger than you see rates coming down. But I just think that that falls short of the opportunity because when you're buying, let's say, a fund or an ETF with a yield to worst of 6%, it's not a 12-month yield. That's baking in the price of the bonds and the coupon . . .

Rob Almeida: To maturity?

Brad Rutan: To maturity, right. So it's called to six years. So if you can look out past this year, I mean, I do think there's an opportunity in bonds. That being said, high-yield investment, they're not pricing in recession. I mean, there's mispriced, if we are having a recession. And I think it could be rocky between now and year-end, but from a yield perspective, when's the last time we were given this opportunity with a starting yields, 6%, 7%. So short-term, high-quality short investment grade bonds, if we can push out the time horizon a bit, multi-sector bond funds right now, we think of great opportunity.

Rob Almeida: Yeah. Well, as you know, I work on a couple different multi-sector income funds, and just for compliance purposes and disclosure, I'm not going to mention the names and any of that, but I've been overweight fixed income and underweight equities for some time. So how I'm positioned is consistent with what you're talking about. Similarly, within that, the bulk of the overweighting is in the rate market, which we talked about earlier. I just have a hard time envisioning a sustained elevated, mid-single-digit sovereign bond yield. So I like that market, particularly from the standpoint of risk versus reward.

Brad Rutan: So what's then your concern with credit?

Rob Almeida: Default. You were highlighting the area, but that said, I'm overweight, investment-grade corporates, so I'm overweight there, just less so, but that won't last. Meaning I will aggressively move into that as spreads start to widen out a little bit, and I think reflect more of a balanced risk versus reward reality.

Brad Rutan: I think that's the secret, right, is you have some dry powder, we think things will get moderately worse. You're going to get a better buying opportunity. It's the default. How many of these companies are going to be able to survive that race with the Fed? That's what keeps us slightly pessimistic.

Rob Almeida: Yeah. It just seems though that there was a lot of projects got funded. I use that term as a catch-all, right? Businesses, projects, ideas, et cetera. A lot of projects, everybody got capital. You needed capital? You got it. And so whether it's public, private, I think there's more of that risk in the private space. But nonetheless, there was a lot of excess funding. And so even though you might have a high quality asset in high yield, it will get dragged out with the rest of the market as default rates start to pick up.

2023, we ended with significant number of bankruptcies in the United States that — it wasn't as high as it was during the pandemic or as high as it was in 2008, but it was pretty close. So I think what's already happening, not at the S&P 500 level, is, well, default rates are quietly rising in high yield. You're seeing increasing bankruptcy rates in the United States, and the size of the companies filing for bankruptcies are rising too. There was a big one this week too. I won't say it for compliance problem, a massive one. And I think that manifests itself.

But to your point, yes, there's very, very good attractive bonds. I trust that we're going to pick those right ones. But as those spreads start to widen out a bit, I will be aggressive, and I'll shift from rate market into the credit market.

Brad Rutan: And I think, to your point, I don't think investors are ready for that. I don't think they're expecting . . . Obviously, if they're expecting significant rate cuts, inflation to come down, earnings worth to go up, then de facto, they can't be expecting high yield default rates to be 6%, 7%. And I'm not saying they're going to get there. What gives me hope is that there's going to be plenty of companies that default, but it's avoiding them. I mean, that's our job.

Rob Almeida: Yeah, discretion.

Brad Rutan: Discretion.

Rob Almeida: That makes sense. Anything we didn't cover that you want to talk about, in fixed income or market sentiment? Things you're worried about, things you're excited about.

Brad Rutan: I mean, I'm still worried, the amount of cash out there, just the amount of cash that is not invested, and I get it.

Rob Almeida: Worried from the standpoint of . . .

Brad Rutan: People staying in it for another year and missing out on opportunities. I'm not saying that this year is going to be the greatest year for investing, but if you don't get it . . .

Rob Almeida: Oh, I see. The opportunity costs for those investors that are . . . Yes, yes, yes.

Brad Rutan: Correct, because cash rates are going to go down. I think investors today will be better served investing versus waiting until the end of the year for the all-clear. That's something, but that's from a client-facing and market-facing perspective.

Rob Almeida: Yeah. I understand that with credit markets. I don't understand that view as it pertains to equity markets because price is what you pay, but valuation is what you get. And the price is really high in the equity market and the quality is not very good.

Brad Rutan: It's a different conversation.

Rob Almeida: It's a different conversation.

Brad Rutan: Yeah. I guess deficit is something, obviously. Debt in the US is something that keeps me up at night, both as a dad and investment . . .

Rob Almeida: Well, from a market-risk standpoint, what doesn't get talked about a lot is financial repression round two.

Brad Rutan: You think it's possible?

Rob Almeida: Oh, yeah. Well, rich and powerful people will do anything to stay rich and powerful. So I guess what I worry about is not the ability to cut rates, because I don't think the bond market will allow it, but you rewrite the loss, so you force your government, forces saving in institutions to buy their debt to cap. So that's kind of one reason why I don't think yields are going to go to those levels that some people were worried about because, I think, policymakers will just rewrite the letter. I mean, you saw that in 2008, so you forced saving institutions to buy sovereign bonds. So if you're going to buy something, you have to sell something on the other side.

Brad Rutan: It's really not outside the realm of possibilities, right?

Rob Almeida: It's not a zero probability.

Brad Rutan: It's not. Yeah, it'd be interesting to see.

Rob Almeida: Yeah. So I think that would create some volatility for certain in risk markets. But again, water finds its right level. So as long as the cash flow generating capability of the enterprise that you're financing, they're able to generate revenues and meet and fulfill debt obligations, those bonds might widen out to your point earlier, but they're going to be fine. So you're taking a short-term view by sitting in cash and not thinking about what a high-grade corporate bond portfolio, or what-have-you, can offer.

Brad Rutan: You might be down 4% by the end of the year, but is that bond going to pay off in five years is the real question, right?

Rob Almeida: Yeah. And when you look through that over in your example earlier, a six-year period, you're doing materially better.

Brad Rutan: Right, than if you had done this back in 2011, 2012, 2013 when rates and spreads were so low. So that's my kind of backdrop for credit is . . . I get it. There's a ton of default risk and credit risk out there, if you can avoid it, which is our job.

Rob Almeida: Yep.

Brad Rutan: And your starting point is attractive and you can look out five years. I see the opportunity. Equity market is a different animal.

Rob Almeida: Right, makes sense. All right, Brad, let's put a bow on it. Thank you.

Brad Rutan: Let's do this again.

Rob Almeida: Appreciate it.

Brad Rutan: All right, happy new year.

Rob Almeida: Happy new year.

Speaker 2: The views expressed are those of the speaker and are subject to change at any time. These views are for informational purposes only and should not be relied upon as a recommendation to purchase any security or as an offer of securities or investment advice. No forecast can be guaranteed. Past performance is no guarantee of future results.

57173.1