The Dividend Cafe - Market Outlook w/ David L. Bahnsen - Conference Call Replay - August 30, 2021

Episode Date: August 30, 2021

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Well, thank you, Erica. And thank you, Scott. Thank you, Brian and Glenn, handling our production from across country. I actually am in the same spot in the conference room here in New York City that I was two weeks ago. And I've done plenty of things over the last couple of weeks in our new studio, but we're working on some things in the studio today. So we decided to record me again here in the conference room. I don't think it makes a difference to you all.

We're going to keep today nice and short. We do have a few topics we want to hit up on. Some of you have sent in some questions we're going to be sure to address and definitely send questions live in the middle of the call to questions at thebonsongroup.com. And Erica will get those over to Scott in real time. And speaking of getting things over to Scott in real time, I'm going to hand things over to you to drive today, Scott. Well, David, thanks so much. Great to be with you as always. And as we tend to start these calls off with your broader views on the market, and I think for today, the markets are still kind of digesting what we heard on Friday from Fed Chair Jerome Powell at the annual Jackson Hole meeting. So

I'll just start with your broader reaction to that and also the market reaction, because we know that there was a lot of interest in what Powell had to say, but a lot of what he said was expected and perhaps already priced into markets. What do you think? Well, I certainly agree with the latter portion, but the whole entire topic is one of great interest to me. And I want it to be of great interest to the clients at the Bonson Group, because I think it is such an incredibly misunderstood and underestimated, underappreciated story for investors, which is the larger topic of Federal Reserve relevance to economic outcomes and Federal Reserve relevance to investment outcomes.

economic outcomes and Federal Reserve relevance to investment outcomes. And I think that the hype going into Chairman Powell's talk last week is a symbolic indicator of what it is I'm talking about. I think it's reasonably embarrassing and problematic. But more than that, it is, I think, systemic. There is this sort of general assumption in a point of crisis. At the point in September of 2008, when Lehman is going down and all eyes and cameras and microphones are turned to, at the time, Ben Bernanke and the Fed, there's a certain understandable nature to that. During the point of COVID, economic lockdown, the uncertainty that we lived in for that week or two, the unbelievable run on the bank that was taking place in capital markets

with deleveraging in March of 2020, it's understandable why there were so many eyes and ears and microphones and cameras pointed at the Fed. But it isn't just those moments. It is not just the moments of crises. It is not just emergency times that the Fed becomes the centerpiece of economic life and American conversation anymore. It's 24-7 and 365. It's during peacetime and wartime. It's in recessions and expansions. And so I believe that we have to understand how that came to be and what it means in terms of overall outcome. And I devoted

last Friday's Dividend Cafe to this topic, what I think some of the downsides are to the elevated role of the Fed in economic management. But to your question, just very specifically about what the comments he made, there weren't any comments really made. There was a reiteration that we're watching everything and we're going to do something when we do it, which is the same thing, of course, as saying nothing. But that's not to say the Fed isn't signaling anything. They are. They're signaling very clearly what they have been for a couple of months now, which is we're not going to get away with continuing to expand the balance sheet, meaning the same level of quantitative easing, which for those counting is right now about $120 billion a

month, $80 billion in treasury bond purchases, $40 billion in treasury bond purchases, 40 billion in mortgage bond purchases. The Fed is buying these at auction or from banks, open market. With money, it doesn't exist. So this is an expansion of excess bank reserves. They credit cash to the banks and put those assets on their balance sheet. This is something that they know they can't do forever. And so they want to make clear to markets. They intend to slow it down. And they want to make that clear to markets months and months and months before they slow it down to the point where I do feel this is something I indicated rather heavily a few months before

that the point of tapering, which is slowing down the level or pace of quantitative easing, is not a story to markets now because markets all know it's coming. The only thing markets don't know is if it's going to be December or January. Could they go a little heavier than expected or a little lighter than expected? Will it be composed of a slowdown in mortgage bonds and treasury bonds proportionately? Or will they first seek to slow down mortgage and then accelerate the slowdown of treasury later? But if they tapered from 120 to zero, which of course they're not even going to come close to doing. They're going to really slow it down. The only time they've ever tapered before QE3,

the tapering was announced in June of 2013. Let's see if I can get the exact date here. June 21st, 20, it would have been June 18th, I believe of 2013. It was a Tuesday. They announced it and tapering was coming. And then they didn't actually go forward with it until the very end of 2013. In October, they told us, so hear me out. In June, they hinted it was coming. In October, they said, okay, we're going to get going. And then they got going in

December. And then it kept going all the way through 2014 until October of 2014. So soup to nuts, that was a 16-month process. But if it was at zero, they're not tightening a dollar. The tapering means slowing down the pace of the monetary expansion of the accommodation. Now, I do believe tapering amounts to tightening in the sense that it's less accommodation than was there before. But I just want to make clear, all they're talking about doing is reducing

how much of this expansionary monetary tool they're implementing. And I would guess that they won't start until early 2022 and that they will take start until early 2022, and that they will take all of 2022 minimum to slow it down. Then when they're done doing any more bond buying, Scott, they will be back to what they were doing for all of 2019 and the first couple of months of 2020, which is a balance sheet in place, not either going higher or lower. Whereas in part of 2017 and all of 2018, they were reducing the size of balance sheet, still not then by selling bonds, but by allowing bonds to mature and not reinvesting the proceeds.

And they were able to get a few hundred billion off the balance sheet in about a year and a half. And obviously now the balance sheet has doubled. So I guess my long answer to this and the strong feelings I have about it is if we really believed and if the media really believed and if market actors really believed that the key ingredient that we have to look to for how well things are going to go in risk assets is if they're tapering or not, we have a really big problem. Because if the market was actually that dependent on this little amount of buying of treasury bonds that sit on excess reserves of bank balance sheets. No question it adds

liquidity into the financial system. No question it is a sign of accommodation and a Fed just saying, we don't really know what works and doesn't work, but we want to try everything. There's a kind of Fed put component to it. But I mean, as far as the notion of that being the driver of corporate profits and corporate profit growth and multiple expansion, it's preposterous. It's a completely indefensible viewpoint. So I think that it's a misplaced priority that doesn't appear to, by the way, to even be all that relevant to traders anymore. It was most certainly relevant to traders previously. I think if we start talking about that combined with raising interest rates, then markets care a lot because all of a sudden

you're talking about repricing risk assets. You start talking about a full-blown tightening and the fear of inverting the yield curve and signaling a policy mistake before the economy is ready for it. The 10-year is telling you the economy is not ready for much tightening on the rate level. And if the Fed funds rate were to come higher with the 10-year so low, the long bond so low, you risk you're going to have a very flat yield curve and possibly an inverted one. And that could very well become recessionary. I don't think there's any chance that they're going to be raising the Fed funds rate anytime soon. And I don't care a lick what their stupid dot plots say. I care what they do. And so all the posturing is somewhat irrelevant. And yeah, I think traders can try to front run it, but they

didn't really get the front run much last week. And you had 180 point down day on the Dow the day we had 13 Marines killed in Afghanistan. Then you had 200 point rally the next day. I mean, come on, this isn't gyrating markets. We have got to get past this point of total dependency on the Fed. We have to get investors to quit thinking that this stuff matters because there is stuff out there. It does matter. Some of it's good and some of it's bad, but it all matters. And we're not talking about it because everyone's so obsessed with what a few of these Ph.D. people are doing that I think is really during times of non-crisis, very low on the totem pole. Well, just on this notion of the obsession with the Fed, we hear a lot of market participants talk about the Fed providing the punch bowl for the markets, the punch bowl at the party.

Do you think that phrase is sort of oversimplified, especially when we talk about the Fed's tapering. You'll hear people say, well, the Fed's going to remove the punch bowl from the party. What's your take on, in my opinion, the sort of ubiquitousness of that phrase, if you will? Yeah, it's a bit misused, but there's two different things we're talking about. There's a sense of a punch bowl that isn't really a punch bowl where it's just simply knowing that if the buzz starts to wear off, they'll bring the punch bowl back out. And that's what we call the Fed put. We don't really need the Fed to be pouring gasoline on the fire. We're going to use four different cliches here and mix them all up

together and really kind of make a mockery of the English language. But bear with me. The Fed does not need to be accelerating things to really make markets happy. What markets love is that the Fed telegraphs if things get too troublesome, we'll be there to backstop it. So it's almost more like when the buzz starts to wear off, we'll bring the punch bowl back out. I don't know if there's a market actor out there who doesn't think that that dynamic exists. I'd like to meet that market actor because that has been so embedded. And I don't say that as a good thing. Now you would think I wouldn't say it as a good thing because

I'm a risk asset investor. I've managed professional risk assets for a living, and there's just absolutely no question it's benefited the total return of risk asset investors for more or less my entire adult life. But I don't necessarily believe it's all a good thing, partially for some of the reasons I wrote about in Dividend Cafe Friday. But the question is to whether or not the Fed would be there with a Fed put during a time of tremendous distress, I believe is non-negotiable. The question then of, well, what about just keeping the sort of punch bowl thing going, your proverbial analogy around accelerating risk taking? I think that the ZERP policy, the zero interest rate in Fed funds, is far more significant than quantitative easing. It's very difficult to get a straight answer from

anybody as to what they think quantitative easing is there to do. I was blessed to participate in a panel with Danielle DiMartino Booth and Richard Fisher, who was an actual voting member of the Federal Open Market Committee, a Federal Reserve governor out of the Bank of Dallas. During the financial crisis, I participated in a panel with them a couple months ago. that Bill Dudley and Tim Geithner and Ben Bernanke presented QEU originally was that it would be a six-month short-term stopgap to help reliquify credit into housing. And I'm more than willing to assume that that was a perfectly legitimate policy response at the time. Now, even then, I'm incapable of ever believing there's such thing as a policy response that doesn't have a trade-off. And I think that's a law of economics. So even then, I think there was a trade-off to it. But let's just suppose adjusting for trade-offs

that we thought that was the right policy. I don't know that anyone would say that we need QE right now to reliquify credit into housing. So what is it we're doing with it? Well, I think they would say it's a general, non-specific assist into financial markets. At the point of the COVID crisis, you had a tremendous liquidity mismatch in financial systems. And there's a lot to be said for what they're doing at QE and all the different liquidity facilities they set up in March and April of 2020. But no, I don't think that right now QE would be defended by its defenders as providing emergency liquidity in the financial system, certainly not housing market support.

So what is the reason? What is it? I don't know. And yet we're told, well, financial markets are on pins and needles wondering what they're going to do about tapering. The punch bowl of the Fed right now is more to do with interest rates and it has more to do with the Fed put. Interest rates are staying near 0%, largely for the reason I talked about in Dividend Cafe Friday, the markets are dependent on it, government debt financing is dependent on it, credit markets are dependent, and home borrowers are dependent. So they're somewhat stuck with a short-term zero bound or lower bound. That's definitely my comment here over the next year or two.

But I think it's very possible that's a generational comment. We've basically stayed in the lower bound of the Fed funds rate nonstop for 13 years now. And I don't believe that's going to change anytime soon. So that counts as punch bowl to me. And knowing the Fed put is there, So that counts as punch bowl to me. And knowing the Fed put is there, it counts as a backup punch bowl. And David, somebody just wrote in agreeing with you that the Fed is not exactly what matters, or at least there are many other things that matter to markets right now. And they want your opinion on some of those items that matter for markets, at least over the long term? So that's a pretty broad question, but maybe you can name one or two items that people should be thinking about for the long term in terms of their impact and importance to markets. It's always in forever corporate profits. If we're talking about the stock market,

what always drives the stock market is earnings. And in the periods of time where earnings are not driving the market, it's only because noise is driving. And so the old Ben Graham line about in the short term, you know, markets are more of a popularity contest or voting machine. But in the long term, a weighing machine, a scale and what they're weighing is earnings. Though that is a truism that will never change. But of course, earnings are impacted by economic growth. Earnings are impacted by a number of different things, top line revenues, the ability to grow profit margins. We've been living in a period of really impressive margin expansion. And all those who have forecasted peak margins have been wrong for a long time post-crisis.

And so then you get a subset. The high-level answer is that what drives market prices is earnings. And then some of the things that drive earnings are tax policy, are economic growth, are the kind of idiosyncratic events to various companies and sectors. But ultimately, it's the supply side. You need more production to drive more economic life. And you get more production when you get more business investment. The only way to get more business investment is to have more savings that then translates into investment. And our savings rate is hampered by excess debt. And so what happens with the debt picture affects markets

to the extent that it has a top level, a high level economic impact. And then within the margins of earnings production, you get a lot of competitiveness when you don't have things like rates going from 5% to 0%. That's different than rates just being at 0%. The move down from 5% to 0% boosted valuations. You don't get more valuation boost once they've achieved that level of maximum valuation. they've achieved that level of maximum valuation. And you don't get the indiscriminate dynamic that was so beneficial to index investors where there was no real reason to parse out individual

company competitiveness and superiority because that tide was lifting all boats together. I think you now are in a period, and I don't mean this month or next month, but I do mean the next 10 years, the next five years, that active management becomes very crucial because the very dynamic that created such an easy ride for passive indexing has largely been priced away. David, I want to switch gears and talk about some specific moves or portfolio changes that you may or may not be making. One person writing in wanting to know if you're doing anything to hedge against the possibility of sustained levels of inflation above 5% year over year. We've been seeing a few readings over the past couple of months,

a few inflation readings north of 5% year over year. Well, I disagree that we've seen any readings over 5%. I think that when you see the CPI at six or seven and strip out the idiosyncratic element that seems to have lasted about 90 days in new and used car sales, it takes away 200 to 300 basis points from that inflation rate. So I don't think we've had that. And then, of course, with the base effect of how low price level was in the COVID lockdown, I've repeatedly in the DCtoday.com tried to show a two-year running level of inflation indicators, not just the one year, to take away some of those idiosyncratic distortions in the numbers. And you're getting something just with a two handle. Now, that's

higher than we've been getting because the Fed has been stuck between 1.1% and 1.9% in their PCE, the personal consumption expenditures, and they want 2% to 3%. But right now, you're still something well south of 3% on a per year basis for the last two years with these five sixes that the question is talking about from CPI. And so I very much dispute that we have that level of inflation. I think we've had a tremendously burdensome supply chain disruption and various idiosyncratic pieces coming out of COVID. However, to the question of whether I'm hedging about inflation, the answer is always and forever yes. And the way I'm doing it is by buying the greatest inflation hedge that God ever made, which is dividend growth equities. The ability of

companies with pricing power to pass on the impact of inflation, to pass on the impact of a higher price level of higher input prices into their pricing mechanism so that consumers pay it and their profits are able to be unimpacted. And you have seen it time and time again, a period of inflation, the dividend growers are actually able to price through the inflation level and grow the dividend higher than the level of inflation. And we have never had a year of dividend growth where the percentage of growth of dividend was not higher than the level of inflation. And that's in periods of very low inflation or periods of higher inflation. And that's in periods of very low inflation or periods of higher inflation. And so I believe dividend growth is the great hedge against inflation, and that it is proven to be a better hedge against inflation than almost anything

that people generally believe is a hedge against inflation. But when we talk about hedging against 5%, 6%, 7% inflation, which our country has seen once for a couple of years in the late 70s, there is no hedge against that level of high single digit inflation that would not be a full on bet for inflation. It would become the investment thesis. The price of hedging 7% inflation is investing as if there'll be 7% inflation, in which case, if there's not, you've made a one-way bet and you can do brutal damage to brutal erosion of capital. And so I want to hedge, and it isn't just a hedge. I fully assume that there will be inflation that is somewhere around the 2% range. And that level, I believe we can hedge against by using something that can actually grow the income stream at or above that level. So it's a crucially important element of dividend growth investing. And then, David, sticking with this theme of what you're investing in, we know the energy sector is a sector that you have a good amount of exposure in for clients.

Someone writes in wanting to know your thoughts on oil prices versus the oil pipeline stock. Sometimes they're correlated in price and sometimes they're not. And they also want to know how you would play the oil pipeline sector as an investment theme. Yeah. So you're probably reading straight from the question. So I'm neither being critical of you with the question or the person who asked the question, because I do know what the verbs mean. And yet I'll just do my own little pet peeve. The word play always perturbs me a little bit because we're not playing with this. This isn't a trade. It isn't a tactical gamble. This is a very fundamental

and philosophical investment thesis that we're executing with a high degree of conviction. So I get what people mean, but I just want to reiterate. That was my word, not the questioner. Well, so it's better that I'm insulting you than the question asker. I should know better, David. Yes. No, those words get kind of baked into our vernacular. And so with that caveat aside, we only want to be invested in the pipelines through a quality and selection process that allows us to focus on the names that are what we believe possessing financials of durability, balance sheet, debt ratios, dividend coverage, cash flow generation, capital discipline around their capital expenditures, that they have a path of sustainable growth of distribution. And the way to have a sustainable

growth of distribution in the MLP or oil and gas pipeline sector is no different than any other sector. It's to have a managed, fiscally responsible debt level and ample liquidity and credit worthiness that enables you to have access to borrowing facilities for CapEx as is needed for low cost growth expansion. So we use an actively managed ETF to do this. I won't give the ticker name here on air because it alters the compliance profile, but we are heavily invested in the position. And it has something in the range of between 17 and 20 names at any given time. And those can include companies that are C-corps, MLPs, meaning they're master limited partnerships. So they're taxed as a partnership, not a corporation.

And then even Canadian companies where there are some very high quality oil and gas pipeline companies. So this midstream energy infrastructure story, a lot of the companies in the space are not merely pipelines, which means they get paid a toll for the volume of oil and natural gas. But a lot of them are even set up as terminals, as refiners, as gathering to send to refiners. There are peripheral businesses that feed into their profitability as well. that feed into their profitability as well. The storage side became a big deal last year when storage was very hard to come by. And so there's a diversification and revenue model as well. But fundamentally, we accept them as companies that are there to make money

in the transportation and storage and mid-level infrastructure between the producer and the distributor of oil and gas. We're not overly focused on crude oil. We are overly focused, in fact, on netty gas. The bulk of our companies actually, from a volume standpoint, ship more in natural gas than they do in crude. So that's the way in which we're exposed to the sector.

The joke that we have had at certain points in time about correlation between oil prices and midstream energy is that they're not correlated at all because when oil goes down, midstream goes down. And when oil goes up, midstream goes down. But the fact of the matter is midstream has been on a tear. It had a bit of a setback earlier in the summer. It's had a good recovery here lately. But still on the year, it's up substantially. And since it's COVID lows, more or less, most of 6%, 7%, 8%, 9% for the good names,

for the higher quality names. He might blend to something in between 6% and 7% that's still roughly 400 or 500 basis points wider than historical averages. So we're just nowhere near achieving what we believe will prove to be full value. And David, somewhat of a related question, maybe, but let's talk about just in our final couple of minutes, why use mutual funds in portfolio allocations at all? Yeah, I think it should only be done very rarely for investors who have enough money to achieve diversification without it. But there's a couple of cases where it's really important. I think the person who asked the question was one of their kind of particular focuses was in the high yield bond area. classes, including very illiquid municipal bonds, where an ETF is basically giving you second by second liquidity of something that the underlying assets often don't trade at all in a

day, or even in a few weeks. And so I did a really extensive subject, Dea Pernas helped me with this, who's the deputy CIO at the Bonson Group. And we looked heavily into what the risk level would be in a full-blown liquidity crisis by having some of these more esoteric and illiquid asset classes that are backed by a second-by-second trading vehicle. And by the way, Carl Icahn himself has brought this issue up numerous times, never got an answer to his satisfaction. But this is not some fringe thing that I've come up with. I fundamentally believe that one would be very exposed to excess risk in a vehicle that is trying to price illiquid assets second by second.

I also believe that we have never seen that truly tested. During the financial crisis, there was a tiny fraction of the assets and ETFs that there now is. And so if we were to have another point of real distress in the credit system and a massive imbalance of sellers to buyers, I fear for what could happen in the ETF space that is trying to index something that is really intrinsically non-indexable, such as high yield bonds. So with a actual mutual fund, you get overnight pricing, mark to market. The sponsors, the actual fund managers have credit lines. They can extend liquidity on daily redemptions that could last 30, 60, 90 days that the SEC allows far more than would be needed in that minute by minute and day by day potential liquidity crisis.

So we see mutual funds as a more stable vehicle in an asset class that we just think a lot of ETF owners have never been tested in what could structurally happen. Now, why not just own the individual bonds? Well, basically, we always want to own the individual bonds. When there's enough money in the portfolio with treasury bonds, with corporate bonds, with municipal bonds, well, basically, we always want to own the individual bonds. When there's enough money in the portfolio, with treasury bonds, with corporate bonds, with municipal bonds, that's always our bias. But when you start talking about high yield bonds, there's not enough inventory, you can't go out and buy enough high yield bonds, and then one issuer gets taken down, and the next client needs a high yield portfolio the next day, you have to have a robust secondary market.

And this has always been something that has existed since the days of Milken within the institutional professional managers. You also want diversification. You also want expertise on the individual credits. Clients would not pay the fees that we would have to charge to do that ourselves. So we stick to what we know best, which is dividend growth, US equity, and we want to use outside managers. And in an asset class like high yield, you really can only capture high yield management in a mutual fund construct,

unless you go to ETFs, which is what I've explained, I think, as structural impediments. Other asset classes that I think are as structural impediments. Other asset classes that I think are really favored towards mutual fund versus ETF would be small cap equity and emerging markets equity. With emerging markets equity, you can't get most companies buying directly because very few third world countries list an ADR in the New York Stock Exchange to make it viable in the US. Whereas within a mutual fund, you can actually go all over the world, have managers that specialize in South Africa, in Indonesia, in Peru, in Chile. They're domestic experts that then can buy in a fund that can be

bought in the United States, but they're buying off every stock exchange in the world. Where if you're only limiting yourself for US investors to those trading on New York Stock Exchange, you're going to be very, very limited. Then you say, well, what about an ETF? Emerging markets are an asset class that has largely seen active management always outperform passive, a much higher rate of active managers outperform. But the ETFs also are incredibly China centric because of market cap. And they can become very sector centric as well. And we don't want to be top down in that sense. There were a couple energy related names and commodity names and mining names of companies that were the huge weighting of the index 13 years ago. And two of those three companies literally went bankrupt.

They became, I think, 10% of the index and all three put together were 24% of the index. Now that's flip-flopped. It's more Chinese internet companies. We know what's been happening in that sector. So at the end of the day, we just have never found the ETF to be a compelling way to be exposed in emerging markets. And almost the same principle in small cap. We don't want to go out and buy an institutional money manager who's going to buy 150 names. And a client might have a certain dollar amount in small cap that's small enough that 150 names, they're going to own $300 of a bunch of different stocks and so forth. $300 of a bunch of different stocks and so forth. The mutual fund gives us institutional management,

high liquidity, great diversification, but we can actually have conviction and actually have concentration from best of breed managers. That's up to us to do that due diligence. And all the asset classes I've mentioned here today, I think we have done an incredible job over the years at that due diligence. The track record is really impressive, but there's a combination here of the best vehicle, liquidity, mechanics, and then end result to a client. All right, David, we are just about out of time. Good place to leave our conversation for today. Great info as always. And we'll look for DC Today later today, your daily market commentary note. Well, yes, the DC Today is going to have quite a bit in it. I still have a few more things to be adding in. I've been digesting a lot of information throughout the day and obviously

over the weekend. I see a couple of questions that have come in as we're on the call that I'll try to address indirectly through DC Today. And then in Dividend Cafe coming this Friday, we're going to pick back up with more discussion of our viewpoint on China and what we want to avoid and what we want to potentially embrace and just kind of seeing what the risks and rewards are out of what is arguably the second largest economy in the world and what is going of what is arguably the second largest economy in the world and what is going to impact everybody for many years to come. So there'll be a lot more coming throughout the week. The month of August is going to end in a couple of days, and then we're in the final four months of the year. Hopefully those of you listening have kids or grandkids,

they're back in school. Hopefully they're on campus. And I think some schools may not be starting into September, although a pretty high percentage of schools seem to have started early this year because of a lot of the disruptions that they went through the last couple of years with COVID. So we're getting into a wonderful time of year. I love the fall. I certainly love the winter. And more than anything else, I love football season. So I'll be in a really good mood for the next four months, I promise. No matter what Chairman Powell says at any press conference, I'll stay in a good mood. I don't know, David, we have a few more Powell press conferences this year.

Yes, we do. Let me close this out close this out by saying it's certainly thoughts and prayers with this, this hurricane now tropical storm down in Louisiana and Mississippi. The damage looks quite severe. We're hoping very minimal human tragedy, but certainly there's going to be a lot of economic and personal pain and suffering. It's, it's awful. And, and, and I mean it when I say thoughts and prayers to that whole region of the country. But Scott, thank you, as always, for leading the discussion. Some great questions today. Anyone who didn't get their questions answered, if it's sitting in my inbox, I'll get to it generally near the end of the day when I'm ready to leave the office.

But that's where we are right now. No big significant changes expected. We're in that little lull that takes place in the last kind of five weeks of every calendar quarter, where pretty much everyone has already reported prior quarter's earnings result. However, there's always possibly a special announcement, special M&A, unexpected things developing within given companies. But we really like the way our portfolio is positioned right now. And we also believe that the market faces it kind of got delayed a little. But there is a point coming where we really aren't even talking about COVID anymore. where we really aren't even talking about COVID anymore. And we have to just really analyze what the rationale is for ongoing economic expansion. As we live in this very difficult period of muted, sub trend line, sub optimal business investment, and capital expenditures, that productivity we want to see into the next decade. That's a question mark. And it was one we were asking in 2017, 2018. And we really liked the answer that we were getting there throughout 2019. And then all the COVID stuff kind of just

put a timeout on all this. And that conversation is coming back, but it gets delayed and there's hems and haws along the way. But that's where we think ultimately the macroeconomic conversation will go. So with that, I really will end this and send it back to Erica to dismiss us. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with Hightower Advisors LLC, a registered investment advisor with the SEC. Thank you. or investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable.

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