Global Data Pod Weekender: Much ado about oil

Welcome to the JP Morgan Weekender. I'm Bruce Kasman and with me is Joe Lupton. Hello, Joe. Hey Papa Bear. Okay, so Where are we? Um pretty big news today if it's actually uh follow through on, which is uh we might be starting to open the Strait of Hormuz, we might be moving towards a broader US Iran agreement. Um and I guess I'll I'll start by saying that kind of takes us off the conversation flow of um

you know, worrying about this kind of potential clock ticking disruptive tail uh with the supply um pressures starting to to build as the straits stayed closed. I don't wanna ignore that in the sense that this is not a

uh clear resolution at this point. But I do wanna in my mind focus this conversation on sort of s taking stock of where we stand in our baseline, which which is a baseline that would have anticipated some Some relatively quick opening of the strait, sometime I I imagine this month or by early next month at the latest. So let me if I could, Joe, throw out what I think are

the building blocks of our baseline at this point and then like we can stress test them. You can give me your assessment of where you feel more or less confident or what you think um you know, really matters here. So let me just say the first part of this is energy and what we've been effectively saying is if we um peak close to the levels we started this week at um and then reopen, then what we have is effectively a somewhat uh more modest energy price spike than what we've seen in the past.

But the fact that prices have spiked a lot less than supply would have suggested, uh, the fact that there's been some damage to energy infrastructure, what that means is we also don't get that quick uh unwind to the shock. So oil prices stay elevated, not that far from where they've been in the last couple of weeks, somewhere above eighty dollars a barrel through pretty much the end of this year. And therefore we're looking at a something which has less of a spike.

and but less of a unwind as well. Um the second thing um I would um uh incorporate as uh building blocks here is that um while the Drag on growth in the near term is still material even with this more modest shock. You know, the perspective that we've had that there's a pretty good amount of global growth momentum at the start of the year means that the shock will probably not push growth below trend, that we're gonna get down probably in the second quarter, maybe second and third quarter.

in our forecast to something closer to trend. Um, but we won't kind of break into a period of of weak growth, which has been

uh oftentimes a catalyst off of uh of an energy price shock. And and perhaps as important as anything else that we're not viewing that drag as um uh effectively short circuiting the recoupling that we've got, which is not only that growth holds up, but that growth holds up in a way it gets more balanced, balanced in terms of non tech business spending, doing better, balanced in the sense of um

uh hiring picking up and that that may be the most important part of that story overall. Uh and then I'll just say finally on the inflation side, um our baseline forecast obviously builds in a pretty decent pop in corn f and in in headline inflation here and particularly concentrated in the March, April period. Um, but it still has a decent amount of underlying divergence in the core where we still have in Canada, in continental Europe,

Um inflation getting down towards two percent this year, core inflation. Um and at the same time we have in the US uh core inflation ticking up a bit to get to three percent. So that that divergence And still is in our forecast. And I I'd emph I'd kind of in c think about it as a storyline where the Growth shock is limited, um and the pass through of uh higher energy and other commodity prices is also limited and the two are broadly speaking offsetting.

Uh so there's a lot to unpack here, perhaps in more than anything, to kind of stress test where our confidence levels are in these things. So rather than go through all of them, why don't you kind of pick up on where you think In that kind of a baseline scenario you feel like there's most to challenge uh or um or you can take it at the one you have the most conviction and confidence in, whichever way you want to do it.

Yeah, I mean I I I guess, you know, I I kinda start by just the the the framing that I have is we we had two parallel conversations going on in the past couple of weeks. One was this this big downside tail that consumed most of the oxygen in the room um and was certainly something we worried about and as as usual uh you know I probably worry about a little bit more. And A little bit. And then certainly certainly more than markets, right? Um downside tail, uh

certainly not out of the woods, but that certainly gets uh trimmed a little bit. But then I think we we both agreed that whatever that tail risk is, which was the most important conversation to have to to try to get our hands around that. Um there was this other conversation around okay, well where are where are things

tracking in in our outlook. And of course the data flow through the first quarter was tracking, you know, fairly well. Um and as we look into the remainder of this year now, as those downside tail risks fade.

I think we have to assess, you know, what's the incremental shock of this kind of modest energy price shock? That's the new element on the scene, you know, the idea of you know, business caution fading, labor market picking up, kind of growth getting uh uh a handoff from wealth effects from last year to more

labor income driven growth this year. That was that's been our story. And we're gonna go back to our knitting of of of trying to to track that story with the added piece that this energy shock um is n not nearly as big, but it's still there, right? I mean, we don't think oil prices are are going to go all the way back to to sixty and our forecast was maybe even dipping below sixty by by the end of the year. So we have to grapple with that.

And what I think that does is is reinforces uh a theme that we have been pushing and and and I think more than than you, which is that more hawk is tilt that this is something that probably is not going to be doing um significant damage to a growth outlook that if anything was probably getting a little bit of uh upside uh momentum as the tech

uh boom just continued to have even stronger legs than than we had thought. Um and you know as the whole can't have your cake and eat a two story gets amplified a little bit in a world where you throwing a little kind of an accelerant on this in the form of this this energy price shock. So All of that is to say that, you know, I I think while the downside tail risks um, you know, certainly are there, but they trim a lot, it leaves us in a world with an inflation

problem that I think tilts the tilts the direction towards um you know relatively less dovish, more hawkish um uh central banks. So that's kinda

Pick, if I'm look, what what you're telling me is the most conviction part of your story is Is that 'Cause you're not really pushing this on the European side, are you? This is really a Fed story you're talking about, right? Well, it's definitely a Fed story. I do think that Um You actually arguing European core inflation is gonna be significantly above two percent this year?

No, but I I think y I mean you and I were talking this morning, right? Uh uh and I think you even put the numbers on it, right? Like if we're talking about two point two and it goes to two point four. You could easily see an ECB starting to talk a little bit more about not feeling very comfortable with that. So That's what I think is gonna be a part of the conversation. Now that wasn't there before we had this this uh oil price.

But anyway you're you're you what you focused on and I and I wanna just make clear if it's right is that your biggest conviction part of this story is the fact that this this event combining with our baseline forecast more generally is a more hawkish tilt from central banks. Thank you. Yeah. And it look I i the the funny thing ab I mean, I don't know about funny, but um Maybe there's a a bit of an irony. I I pushed back at the the hawkish tilt when I thought this was gonna be a big

growth shock, right? The idea being that this is gonna be, you know, anything that's gonna be big enough to to really give you an inflation scare is going to be something that I'm gonna be more worried about the growth shock than the inflation shock.

Um now we're coming out the other side of this. And um, you know, I uh I have to move away from my normative sense and more towards just the positive view of this, uh, saying Okay, if central banks are telling me they want to worry about this a bit more, I don't see the growth part of the uh to worry about.

I see a little bit more inflation, not something I would particularly worry about, but if central banks are saying they wanna worry about this, then I have to respect that. And so that makes me think they're gonna end up Well, just let me make sure I get you right,'cause last week when we talked about this and we both put our odds on what the probability

that the Fed would hike over the next twelve months, my probability was higher than yours. So are you kind of saying that that is now adjusted because uh You're taking out the tail to the downside of a much bigger negative shock. I was like third one I was one third, one third, one third. You were a little lower than that on e on Yeah, yeah. I think I I was actually as as probably most listeners uh re uh know by now that when for as much as we argue our probabilities aren't that much different.

Yeah, I mean I don't I just want to make sure you're Yeah, for sure. What you're saying is that once you take out the downside tail, you put uh a bigger weight on the next move from the Fed being a high. What is the probability you put on the next move from the Fed being a hike? Um I guess I would say I think I I had What did I do? I think I did forty, twenty, forty and you were one third, one third, one third. Uh so if I if I take out that downside and I'll take twenty Forty?

No, no, the tw the twenty was on on hold. Um and so um You know, I I g or maybe I I'm forgetting what the numbers were, Bruce, but uh I would take I would take the cut down by half probably at this point. Give me a number. Don't I don't care where you started from, what's your numbers now? Yeah. Um

You can think about that a bit. We can go on to something else and you can let that marinade in your head a bit. I don't wanna put you too much on the spot. I like on the spot, but not not What would you put it at? I I'm still pretty much where I was, the third third, third. You still think a third that they cut.

Yeah, I think there's still some downside risk here. May maybe you know, we'll see where we are. I this gets me to the other point. I still wanna see how we get through the next couple of months where there's I think a need to make sure that we haven't done more more damage. Not only that, Bruce, we should be we we actually I I maybe I'm being too I'm I'm moving too much because we haven't said the obvious elephant in the room, which is This is

six hours of of tweets from the president, which and and there's more than that, right? There's stuff on the other side. I this is definitely seemed like something is moving, but this could also easily fall apart. the next but that's why I wanna I wanna swing to something else. Let's not talk about things falling apart, but I do think we have a a test here. Um

In a world in which um we have had some hit to sentiment, uh we we have to stress test our view as to whether I mean which I think is in in some basic sense probably the biggest out of consensus call we have.

Which is the idea that US job growth is going to get up above a hundred thousand a month here relatively soon on a more sustained basis. I'm not sure you believe that one'cause you sometimes have pushed me on it, but um maybe that's my view and not the not everybody else's view, but I I firmly think US job growth is gonna average private sector job growth is gonna average over a hundred thousand a month this year.

Um and that to me is the primary catalyst for uh feeling that the Fed's got a good chance of tightening.'Cause I think if the Fed is sitting here with core inflation running three percent this year, but having a lower second half than a first half.

Um it could it could stay on hold if it could comfortably convince itself, which isn't too hard for these guys, that core inflation is gonna move down in twenty twenty seven. Uh I think what makes it If we're averaging a hundred thousand on private, I would say the odds are ninety percent that ninety percent of their hiking over what period? Not not in the next six months. No, but uh Yeah, that the next move is a pipe. Sometime between no starting in November through the first half of next

Okay. I think that I mean, I think that's a bit bit high, but nonetheless I'm in the same I mean remember you've got to do that. Let me finish my thought, Judge. Close to zero at this point. Your unemployment rate's gonna be down to probably Something like three eight. I I think that's that's extreme because I think you're missing the point that even if you put a zero on breakevens.

The idea that you're getting a pickup in labor demand is going to elicit some pickup in labor supply. I think there is underutilized labor in the economy and I think you'll see

with better labor demand that will come back onto the uh the scene. But nonetheless I think the move is towards a lower unemployment rate, not not not a not a stable or or rising unemployment rate. And I think that's the that's the distinguishing factor in the forecast that becomes the catalyst that doesn't allow the Fed to look towards twenty twenty seven and say, Oh, all right, we've been

You know, we're in the same place we were for the last three years with core inflation sitting close to three percent and then we can um you know, look through that'cause it's gonna come down. There's obviously the idea that the policy rate is closer to neutral also at this point. And there will be a a pretty um

aggressive debate as to whether people think um policy is restrictive enough to allow you to just sit through this or you actually have to respond to it. But I I do think the realization of that outcome of the labor market recoupling and getting job growth above a hundred, I'm a hundred percent there that if that were intact and in place

Then we'd be changing the conversation about how likely it is that the Fed's next move is a hike. And that would change the market perception, of course, as well. And that becomes a a key element of what our baseline view is. But we need to track it because the reality is we don't have that in the data. The reality is that and you you You know, you will emphasize this that the PMI surveys, the ISM survey, all of the latest business surveys from the US are pretty weak on the hiring front.

I mean for the what you're talking about that's so far PMIs aren't gonna tell you what's gonna happen six months from now. Um Talking about button hall of what you think's going on and From my perspective, we're gonna have a hundred thousand jobs on average in the second quarter. Oh, okay. Yeah. Well you've already It's also consistent with getting to the same place at the Fed. I'm not gonna fight that and I'm not gonna put my

stake in the ground on getting the timing right within a month or two. Um but I I think it's supposed to be happening now. There's supposed to be some lifting. And my questioning in the context of the last couple of months of news is to what degree does the energy price shock, even if it's fading quickly from the scene, what degree does that change the

the dynamic and even if it's only for a short period of time. And that's that's one of the things I'm kinda trying to get my hands around here. Does does that does the fact that oil went up to $100 a barrel for four or five weeks. The fact that we started a war, even if it only lasted for six or eight weeks.

Does that take something off the path of the economy here? Uh even if it's only for a quarter or two. But if it's a quarter or two, it does matter from the point of view of the timing of all of this stuff, right? That does have an impact. Yeah. Yeah. I mean so there's again, there's that what's the kind of the downside part of the tale. But like once you But it's not the tail. I know you're saying Yeah.

Takes a little bit off. It takes a little bit off in a way that has an impact on the pressure on the labor market, takes the pressure on core inflation, uh, which could be offset by some cost pressures as well. It takes a little bit. you know, takes pressure off the Fed, right? That's the the questioning I'm asking. There is of course the bit the a deeper issue of whether there's enough damage that you actually want to worry about the tail to the downside, which I don't really

No, I understand. So let I'm sorry I mentioned the tail. You're right. You're you're talking about what's this this kind of near-term headwind. I don't think we would be having this conversation if None of the Iran war happened and oil was sitting at eighty seven dollars a barrel. Saying this is like we're we're starting to get out of bed. It's about a 15% move in oil prices from where they were. That's not that should be.

But Joe, you're being a little too cute there because if if we didn't have Supply shocks and we saw oil moving up, we'd probably be attributing it to stronger demand, and that changes dramatically the way we interpret the If we knew one hundred percent we had a supply shock that pushed prices up fifteen percent. So it's a big fire in Yeah, exactly. Yeah, yeah, I'm just saying. Okay. Well th these are things that we're kind of throwing in the mix as being some type of headwind.

That's a that's an important point, Joe, which is to say 'Cause then it starts to open up another side of the conversation. Well before before you say that, I want to finish the point, which is Okay. This is not a big headwind. You're saying I think private payrolls are going to be over 100,000 this quarter. And what I'm saying is if you're getting the big tax refund and the consumers are waking up, payrolls are running over 100,000 for four months straight.

Then I'm going to change my call and say that, yeah, the uh they're gonna be hiking sometime in the third, third quarter, early fourth quarter. How could they not in a world where inflation's gonna be sitting above core PE inflation? I'm laughing, Joe. 'Cause we're back where we started at the start of the year. No, no. That's not why I'm laughing. Okay. Because you just you just swing so emotionally from one extreme to another.

Because for the last two weeks we're talking about, you know, a clock ticking, we're gonna run out of oil and the world is gonna fall apart. Now you're saying, Oh, we get a hundred thousand payrolls for three or four months, the Fed's gonna be tightening in Q three or whatever. Bruce, that does that makes total sense in a world where you had this big negative tail risk. And if we're if you said for the sake of this conversation, we're gonna take that off.

Then I think, okay, well, let's look at the world. And then the bombshell you gave me was that we're going to be tracking over a hundred thousand on private paper. I've been saying that for a while. Whatever. Okay. I guess I didn't maybe I didn't hear you say it on this call. So over a hundred thousand on private with core PCE running over three percent with the tax refund.

I I I look I think qualitatively we're in the same place. I think you're just compressing the conversation that goes on at the Fed and the dynamics is how they assess the outlook. into too short a period of time. Um Well, I uh there there was a comment from from Myron this week that I w thought was kind of interesting, right? R Myron the the Uber Dove came out and said even before the war He was thinking he probably had to reassess his thinking on inflation.

But he still says it's appropriate to cut rates. He's still gonna vote for rate cuts at the next meeting. Right. So we took out twenty five. So anyway, what uh uh the I think the the conversation in my mind what's interesting here is um That in some ways there was The market turned more hawkish on the Fed because it got more worried about the oil price shock. I've been saying that that that I agree that it's it's crazy. Like to me the oil price shock was a dovish

And I did not uh the markets took out Fed Fed cuts. They did the right thing for the wrong reason.

So let's let's fli swing here a little bit because there's um You know, there's an E C B and a B. O. J. meeting coming up as well before the Fed. And the Fed is not gonna do anything. We don't we don't think the Fed's gonna do anything at this meeting. So they're they're in in the immediate sense the interesting calls our other central banks where we've actually had um you know hikes in in both the B O J and the E C B. Our uh Greg Fazesi took out his E C B

hike uh for uh April this week. But the the B. O. J. uh we still have a hike in. Um and I kinda put our cover contribution together last Friday saying all signs are in the direction of the B O J hiking and the market now longer prices in an April hike. Uh Shows you your influence, Bruce. Since you were since you weren't here when I wrote that to to to edit me, why don't you tell me w how wrong I was and why I was wrong? E emo Bruce. Yeah.

No, it's emojoe. You call me something else, but it's emojoe. Okay. Go on. So give me my give me my come up and on the BOJ call if you want. Look, I I don't know. I d I I think it's fair to say that they've been gearing up to to pre war to to hike and I I ICO's been pushing that and I think e a strong case could be made and I think the community

uh pre-war from from the BOJ, uh from UADEC was was pointing in that direction, uh from the the macro data as well. And the macro data is is actually pretty pretty strong. So all of that is supportive. I all I think the only thing that's happened is they're one of the few central banks like the Fed that are reacting

there that have reacted to this big negative downside tail risk, the way a central bank should react, which is to say, I'm really worried about the growth here and I don't care what inflation's gonna come from this. If we're gonna be going down, we're gonna go down. And we should be cutting here. So it it just put a threw a lot of uncertainty into the picture. And it's no surprise Japan, who has this big exposure to kind of Middle Eastern uh energy supplies.

you know, is is worried about this. And I'm sure the government is probably there kind of whispering in their ear saying, we gotta worry about this here. So let's not let's not rock the boat. Guess my my counter to that, yeah that um and I'm I'm I'm probably gonna be wrong here, is that the E C B is so far from neutral and when you have two sided risk. You have to bias your policy actions towards what? No, you said ECB, you meant BOJ.

Meant B. O J, yeah, I'm sorry. Um the so the B O J is so far from neutral. And in a I think in a world in which you recognize you have elevated risk but it's two sided, you should have a bias towards um getting closer to neutral. So that's why I feel like, you know, the Perfect. Well the Brazilian central bank easing makes sense here. The BOJ hiking makes sense here. Everybody else who's bunched around neutral

in that context, probably caution is the is the right word. Um and, you know, both you and I have been feeling the E C V shouldn't be moving in April and we finally got our economist on board. But the B O J I felt like the case is stronger. uh too uh too high given that that positioning. But you know, the politics are there. Um And I think the signaling is starting to become more um cautious.

Uh, let me ask the following question, Joe. Let's assume that the B.O. J and the E C B do not hike in um Uh April. Who's the next one? advanced economy, central bank to hike. What's your what's your bet on that? I mean in our forecast to just make it clear, the one that we would have is the Aussies in um in May, right? We still have a hiking hike from the RBA in A in in May.

Yeah, we also have um I think we have Rick's Bank and Norge's Bank. I think we've got the uh right. Yeah, the Nordis Bunk is probably a good Good bet for for one one of the ones that do follow through on a hike. Yeah, I mean, yeah. Sure. Uh I think, you know, the the the RBA has been kind of a close call for a while. Um and so I I guess maybe there'd be a little bit more uncertainty around that one. Um I was gonna kind of go emo uh emo Joe on you and say the Fed. Ha ha. That's cool.

Note something else which is given the way the market has moved here. I don't think we have any um EM central bank outside of Columbia, which I'm willing to put in a different box entirely. I don't think we have any EM central bank. hiking policy in the next three months.

We don't, but what's interesting there is first of all you did have Moss tighten the the band this week and what's interesting is that e the I think things are leaning in the hawkish direction across a number of banks, including the Bank of Korea. Philippines, um and uh uh Indonesia. Um so you know, I think things are looking a little bit more um But do you think that with uh that leaning we were talking about was before the news from today?

And I wonder, given the Fed I'm assuming your email call isn't gonna be right and the Fed's gonna hike in the next three months, but assuming the Fed stays on hold here, assuming that the path of crude oil prices may not be largely down, but we are at least feeling we are opening the stray. Uh, you know, the the pressure I would imagine from the on the Bank of Korea, um, on Indonesia are gonna go in the other direction here, no?

Yeah. Yeah, I think that that that's fair, Bruce. I I do think and it it's it's coming back to where we Korea certainly doesn't have a fundamental problem with inflation at this point, right? I mean I'm not sure I know the what's happening there is their economy is kind of like just on fire just because of the tech story. blowing up and uh I think there's there's always I I feel like Bank of Korea is always a a little bit more sensitive to financial conditions and overheating financial markets.

But I think you would also anticipate here if we're um actually moving past this conflict that a bunch of these EM um energy imported dependent countries will start to see some firming in their currency here. No, y I I w I was taking that into account when you were making that point, which is a fair point. Some of the Pressure um does does come off a little bit. Uh similarly, I would say um, you know, we we do have uh India, another one of the EMs that we have.

uh on whole, but I think the odds were probably a little bit more on the hawkish side. So I think what's I think what's interesting and and I wanna kinda throw this out as a risk scenario here is given where our financial conditions are given That central banks are gonna possibly Um stay on hold for a little while.

fight you on the Fed at the moment here, just let's leave that as a baseline. I mean, is it possible that if you know, this thing does recede as markets are anticipating That we might see a quicker turn towards upside momentum and and putting in the mix of that conversation is just what the indicator flow was coming into the war, which was looking pretty darn good around the world. I mean I'm are we I mean I guess the other way

I started my response to you, Bruce. I was saying, like, if you're taking the tail out, then as pre as we were going. I thought you were pushing that from the Momentum was was picking up and I think we were probably looking to raise sites on things. Okay, let me just make sure I'm clear because I felt like through most of our conversation in recent weeks you were kind of downplaying the upward momentum story in global growth. So if if we I understand your Hawking

bias on the Fed with with what the the labor market story might deliver. But are you comfortable as I am now saying that if we do move through this our second half growth forecast globally, which really don't have growth much more than trend like, uh, that the risks on this are starting to skew uh Clearly to the upside. Are you okay with that message or not? No, no, no.

Wait wait a minute, you just you s I set you up for that. You were giving me all of that all of the body language on this and now you say no. We had already marked up Q one. And we've already got like what a two five or two three uh uh second quarter. two two. Yeah. It's already pretty we've been marking things up already. Do I feel like the odds are for something more? I mean we're marking we got the second half of the year at two two. Globally. Yeah so for the second half of the year I do two.

And the th second quarter as well. We got basically growth stable. What I'm saying is I can see the second quarter getting a bit hit here, but I'd kinda be inclined now to think the second half gets pushed up. I apologize, Bruce. I I think I misheard you. I thought you were talking first half. I I just totally misheard you. No, I talk about the second half. I apologize. You were confusing me there, Jim. I know, I know, I know, I know. Uh

Yeah, yeah, of course. I mean I I would probably more you take out that downside tail, then yeah, I would I would start to to see more more growth. I remember when we came into the year I definitely was more worried about some of the downside headwinds, even though it wasn't my modal view, particularly in the US. uh things around uh uh immigration.

Well Joe, let me just say I can't remember the last time that you were kind of pushing the upside on global growth. So I'd be really happy and you come into that mode and we have conversations and you're pushing upside. So let's let's get there.

Uh well let's see. What do we have for the US Probably one uh one and three quarters roughly. Yeah, one average. A little less. One six, one seven. It's it's it's pretty it's it's not a bad outcome. It's trend like, I'd say, but Yeah, so I'm kind of... Not exciting. And uh and I think there is a dynamic here which could set yourself up for something that would be

more cyclic. I mean, I in some basic way, you know, and I'm I'm I'm guilty of this every day of the week, you know, is I'm cyclical in my thinking. So Yeah, yeah. So here's the thing, Bruce. I'm I'm now remembering what had me cautious on the second half and I I wanna know your thoughts on this. Because I I remember you've always pushed this kind of cyclical uplift story in the second half and and I think I But

Yeah, yeah. Um well yeah, you're right. Certainly on the US. Um my the the what I worried about in the second half was that you're gonna get a strong first half because you got all this fiscal coming And that you're gonna get a little bit of a hangover in the second half from Well that's fair, especially in the context of what we saw from China.

And then the other thing I worried about, Bruce, is and and frankly, we haven't talked about this at all, but we have taken out roughly sixty basis points of In the second.

We haven't hit financial conditions. The equity markets at a high. I mean there's a there's a connected but let me let me ask you another thing here, which I'm confused by Joe, and we can maybe end on this. It's the China story. Yeah. You know, y what you're saying is quite you know, important for the China story, which is we thought we're gonna get a first part of the year which is going to be boosted a lot by

fiscal, and then you lose that um and the economy kind of turns weak. But I I I I guess my reading of the first quarter is that the first quarter was boosted by global, not fiscal, because the domestic side is still weak. Yes, the global stuff is going to soften somewhat here, but that that point you were making a minute ago of front loaded fiscal, I just don't see it in the China data. Am I missing something? Well, I think e again I'm gonna this is what uh Classic.

Which of course has some legitimacy to it, is which is you don't know the counterfactual Right the gap. The point is is that the domestic would have been even weaker and therefore GDP would have been weaker without the fiscal. But then if you take the forecast uh into the second half and we have some possible uh support from the the global stuff, which I don't I think our guys that probably have a pretty decent softening in terms of the global backdrop in export.

Then you really do need the fiscal stuff to come off. You need the domestic side to be pretty darn soft to get the kind of outcomes we have, which is growth sort of averaging three percent or so, just a little over three percent. Yeah. Just I'm not I'm con I have to say I'm a little bit confused on how to make sense of the motion in the China economy right now. Um

But I'm gonna I'm gonna leave it at that. I'm gonna feel good, Joe, that for one of the first times in a long time we had a conversation which we actually didn't get to dominated by talking about the US and the Fed, although we did have we did give a a decent amount to that. standard if I go back and look at this conversation. We'll have more to say next week after we see uh Walsh's uh nomination hearings, which should be some fun. Yeah. And the E.

word Joe. Don't say another word. I'm gonna close it here. And thanks everybody and hope we can continue the conversation next weekender.