Global Data Pod Weekender: Another week into the unknown

[MUSIC] Welcome to the JP Morgan Weekend, their Ambrus Caseman. And with me this week is Joe Lopton, a Joe. Good afternoon, Papa Bear. How are you doing? I'm tired and confused. Among other things, but- It's a fact arranged and confused. I guess where I'm kind of coming at this is that, you know, we have, I think, on one level, a tension in what we're seeing, which is there's this building drag from the energy supply shock. And as we look at that and, you know, think about what kind of adjustments to make to our forecast, we're kind of balancing that against a global economy that's been doing better as we turn into the new year. And we have had this conversation and should have the conversation about how how these two things balance against each other. And I, you know, I can get into a conversation that says, okay, the, you know, the drag from keeping oil somewhere close to 100 for a couple more months and then coming back down to something close to where the forwards are now would be one where the overall drag on growth this year is pretty, pretty modest. But I think this is, this conversation is just missing the bigger picture here, which is that we are starting to enter into a more dangerous phase here. The, you know, the conflict doesn't look like it's going to resolve itself immediately. I mean, I don't want to come out here and say I understand what's going on on the ground or with politics, but it doesn't feel that way. We're seeing more damage being done to energy infrastructure. And I think the combination of the concerns about a more extended kind of constraint of oil and natural gas flowing from the straight of Hormuz, both raises concerns about much sharper price increases. It raises concerns about quantity constraints starting to become a factor. And it also is now starting, and this is perhaps something I certainly hadn't expected this week, is now starting to play out in financial conditions where interest rates are moving up as we're now beginning to price in central bank tightening. So the bottom line from my point of view is that we have more reason to be concerned about tail risk even as that balance between, hey, what is a hundred dollar oil price to and what is the actual numbers on the ground mean are kind of, you know, not far from offsetting. I'm not suggesting they are fully offsetting. So that's kind of what's on my mind. And I know we will get into the central bank story, but I'll stop there and let you kind of, you know, give your two cents to start us off. Well, I think we kind of do a couple things, right? So we there's a point at which we have to start moving into thinking about how what's the damage going to be from this. And I think you noted, we're starting to put some of this stuff into our forecasts. You know, my take is we're far to kind of timid in the way we're pushing through kind of forecast changes here. I fully agree we shouldn't spend a lot of time on this because, you know, things are very fluid, but I do think in the coming kind of week or two, as this thing is sustained, we're going to have to really start taking kind of a hatchet to some of these numbers. Now, how much is going to be an open open question? That a hatchet. That's a that's it. That was a harsh not right. Do you going to jump on that? I don't mean like but let's let's be honest here, Bruce. I mean, the scenario that we're thinking about is $100 per barrel in the in the second quarter, then 90 and then 80, that alone would take a half a percent off the level of GDP globally. So far, we've only done I just looked it up by the way you were saying too. It's only one 10th. One 10th, but okay. There. And so we have raised inflation a lot more. We've raised at six 10s. Our models would say eight 10s. So the funny thing is I feel like our team is being very reactive to the inflation numbers, but being incredibly agnostic and reluctant to kind of push through. But Joe, let me sort of just, I don't want to focus on this part of the conversation because my thinking would be, let's say you thought that you should be taking growth down by a half a percent because of this. And we're only one 10th down. Part of that is the better news on growth that we're seeing. That is part of it. So if the difference here, if we say let's add, let's take a tick or two off that five 10s from a better growth momentum at the start of the year, then we're talking a few 10s. It's not it's it's almost a rounding error. That's not that's not the important. A few 10 a year is rounding here. I certainly if that's all we're talking about, but what I wanted to get into was not on the actual point numbers. But to say $100 per barrel assumes things start improving right now, right? I mean, we're already at 110 and I don't, the every news feed that comes through suggests this thing gonna last longer. That's not quite the case because what it's assuming is $100 a barrel for the second quarter average. We haven't even started the second quarter. So it doesn't are improving right now. It could it could improve a month from now and still at that number. Yeah. I mean, again, I just I want to say I don't feel this conversation gets us very far and addressing the bigger issues, which is whether or not some of these magnifying nonlinear elements of the story are going to kick in. I think, you know, and here I'm kind of I'm leaning into your your your your I'm kind of including all of that in it, Bruce. I mean, no, so let's get away from these model estimates, which don't include those nonlinearities. Let's get away from them in a world in which right, that was my starting point, which is my point of all this was to say my starting point is that we haven't done enough to a very benign type linear shock. We're still not doing enough yet. But the difference there is small. That's hard getting worse here and that there are linear nonlinear effect and a start to kick in here. So I mean, I'm torn here, Bruce, because like I think last week I was asking you when should we start making revisions. You said, I don't want to make revisions at all. Then suddenly this week we come in, you're like, oh, we should start pushing through some revisions. So we're starting to do that in a very timid way. You know, I don't know when are we going to start making more changes. Like is it after one week? Is it after two weeks? Well, I think we I think when we're talking about the potentials for nonlinearities, for things that magnify say again, what I'm saying is, look, if we're going to say that our team should have been two tenths lower on 2025 GDP growth, you and I might have been, you know, kind of comfortable seeing that happen, but it's not an interesting conversation. We're saying when is it that we start to think about things that are happening here that are going to significantly magnify these effects, that's really the conversation. And I don't think we're there yet, but I think we have every reason to be worried about certain things and let's sort of identify what those certain things are. There's at least three or four things that are on my mind. One being that $100 oil price could be off by 50% or even more in a world in which you are removing anywhere between five and 10 million barrels a day from energy supply globally. Those numbers, as you know, in the way we tend to to think about it should get you much higher than 100. It should be twice as big as 50%. Yeah, so there should be more like $150 crude oil. So we have that risk that the size of the price shock begins to increase in a way that itself is not only increasing the drag, but starts by itself to have certain non-linearities associated with it. I think it becomes a lot harder for consumers to do the normal smoothing. I think it has a much greater chance of having a negative impact on sentiment, but that's not the only one here. I think there are at least two others that I want to kind of mention. One is that when I talk about the energy shock from a US point of view, people oftentimes want to highlight the fact that the US is an energy producing sector. It's got a large energy producing center. And I think from the point of view of a price shock, I don't think that's going to help you very much in the short term because I don't think you're going to get investments or output increases that are going to, by any way, offset the purchasing power squeeze to energy consumers, both businesses and households that do that. But I do think the fact that the US is a net energy exporter, the fact that we might be sitting here with a prolonged period of disruption to supply does help us an awful lot because we're not exposed and whoever over else is an energy. Yeah, I think in the medium, if you start changing policies around to kind of force energy products to stay in the US. And we have to be very careful because you and I are not kind of, there's a lot of quantity aspects of this stuff. We are not. But, you know, I think if we can start to like focus things like natural gas and you saw this in Russia, Ukraine, right? I mean, the US obviously did not get the same type of hit. Exactly. This was a Western European story because of those constraints that came in the natural gas sector. And right now, I think where the central focus is is more as you look at Asia here, there still is reasons to be concerned about Western Europe as well. But Asia is the, and what we were musing on a little bit earlier is the question, are team in Asia is telling us, yeah, these are potential non-linearities, but there's a reasonably good buffer in crude oil prices, certainly in China, but also in some of the other big, big economies in the region. And while natural gas is a bigger vulnerability that there is actually some cushion here, cushions that may last as much as a couple of months here in terms of preventing the supply constraints. So that's a big call. It at least gives you some time here to see this thing get worked out before it really starts to become a serious problem, but it's a problem for Asia. It might be a bit of a problem in natural gas for Europe. It's not a problem for the Americas to speak of in that regard and possibly a couple of other energy producers outside the Middle East. But, you know, so that's one issue. Asia is the one that is the most exposed here, and they have varying degrees of reserves of this stuff. If you want to look at LNG, then you'd probably say Taiwan is the most vulnerable, then maybe Japan and then Korea probably has at least, and I'm talking like weeks here, like levels of weeks, right? So Taiwan may be a few weeks. You know, Japan may be kind of four to six weeks of kind of deeper reserves. I think Korea may be as much as, you know, a couple months. But, you know, this is a region that I think it relies very heavily on the Middle East. I think that what is striking to me is that you hear a lot of chatter about, oh, well, this is, you know, Russia, Ukraine was also one of these situations where it was like this existential threat and this shock that, you know, all the different commodity channels that we had known about or appreciated. And yet, we kind of made our way through that. So I keep grappling with like, well, what's different? One key thing that I think is different. I want to finish. I want to finish. I want to say in that environment, you had Russia that was actually very much willing to export its resources. And so it was by the allowance because the, you know, the U.S. wanted that oil on the market. You had this kind of generally this free flow of oil coming out there. This is very different, right? Iran is actually in the driver's seat and they are deciding to shut this thing down. And so that, to me, is it makes the Russia-Ukraine story quite a bit different. The other thing that I think was different was that you were in full blown recovery mode over that period. And central banks, if anything, were caught on their heels where they kind of rates were actually quite low. You had a lot of fiscal stimulus still in the pipeline. You had a lot of monetary stimulus still in the pipeline. And so when you put those together, I think the comparison to right now is very different. I just feel like we're a lot more vulnerable from a global cyclical position than we were during the Russia-Ukraine event. So those comparisons, I think, don't add up. Well, I mean, I think it depends on which part of this we want to talk about. I'm going to step away from where we are cyclically and where is the broader inflation outlook for a minute. What I think, to me, is relevant in this part of the conversation at least, is the idea that Russian oil never get off the market in 2022. It was a fear that it was going to come off the market. But we never really had an energy supply shock of any magnitude. We did have, though, is we did have- >> I'm careful, Bruce. That's not right. I mean, when you say an energy supply shock, you had a massive existential energy supply shock and natural gas to Europe. >> Well, that's exactly what I was going to say. That is a relevant part of the story in terms of thinking about it now, which is you had a natural gas shock, which did affect supply, which did, of course, have a much bigger price effect. And is a reasonable thing to think about in terms of how you got through it and the fact that Europe didn't go into a deep downturn off of that. That part of it is relevant for the current conversation, I think. >> Well, I mean, yes and no, definitely all the downstream factors, whether it's natural gas or it's naphtha or it's sulfur, helium. I mean, all these things that seaborne trade coming through all the petro-industry, petrochemical industry is going to feel the pain in a way that we don't really think about it at our global macro level, because these things all move together. But suddenly, these things start to matter. I think one thing that was different on the natural gas side from right now, and you're trying to say that they're kind of similar because this is still a real threat, is that you had infrastructure destroyed, like significant infrastructure destroyed in Russia, Ukraine. You had Nord Stream 2 that was blown up, and effectively, you're up saying we are done with the relationship. So far, obviously, this week's news of the Qatar energy field being hit, I think we're in a kind of tit for tat mode. You know, Iran is saying if you hit us, we're going to hit you, and in the meantime, we're going to keep the straight clothes forever, and the wire to just hitting the wire now, as we're talking, is that Iran is sticking with this hard line position on the straight. So, you know, but leaving aside the straight, I think the infrastructure part of this is still a, you know, it's a threat, but it could get a lot worse. And I don't think it's as bad as what was happening in Russia, Ukraine. I'm in natural gas side. It's not, but that's the risk, of course, is that that is, becomes what this event turns out to be, maybe more focused on on the Asian economies, without getting into the broader macro backdrop of what 2022 was, which had very different developments in place. Let me switch gears here a little bit now. Yeah, can I just, you know, in terms of switching gears, I think we all agree and we started this by saying it's really hard to kind of forecast this thing and what we should do with our own economic forecast and so forth. And we really struggle with how to, how to kind of lay this stuff out in a world of such great uncertainty that's evolving so quickly. One thing that is happening is financial markets have to discount this stuff and that is going through to interest rates and central banks are kind of- I was going to go. That's where I wanted to go. Yeah, central banks are having to react to this as well. And, you know, frankly, I'm a little surprised at some of the responses that we're seeing so far. I think you less so, or maybe even your, your, your think they're doing the right thing, but I, my sense was always that central banks look through supply shocks. I understand that we're, as I've been saying for a long time, five years of above target inflation, you know, you have to worry about inflation expectations. So I'm sympathetic to the US side. The, the fact that, you know, the Europe is, Western Europe is the place that's seen the most pressure, you know, without right hikes in there seems, I mean, frankly, quite, quite crazy. And I think, you know, ECB is like here we go again. They're, they're going to, you know, make similar mistakes likely like they did. They're going to hike. And if inflation is bad enough that it has to get them to hike, then I think inflation's bad enough to push them into recession and they're going to be cutting. So I don't understand this, this dynamic. You can, you can paint me on that side and, you know, our team is looking for hikes in April. That seems very, very early. I'll, I'll take the other side of that, but I'm happy. I think here, I think there's, I think there's two points here, at least two points. You know, from my point of view, there's the, the immediate issue. And this is where I am somewhat surprised, especially in the context of our guys now thinking we're going to get hikes in April, which is it's still as our conversation up till now, very early in this dynamic. There are clearly two-sided risks here. You're not sitting in a world in which your inflation anchors are really, we can debate the bank of England, perhaps a little bit more than the ECB, but for the ECB for sure, your, your, your, your, your, your, your, your, your, your, alien measures moved up, right? The one year, one year and, and, in, uh, in, uh, your area, the barrier, would that make sense? You've got an energy part, so, sorry. One year, I guess. Yeah. Yeah. I, I, I don't want to interrupt your flow, but I, I'm just, I'm shocked by the one year one year, right? I mean, I would think I don't know why inflation should get this extended pass-through. And the ECB zone models show this, like what they published this week, like I'm really scratching my head over this. And maybe I don't appreciate how indexed the Euro-area economy is. Maybe it is like an EM economy, right? The EM economy of old, where everything was indexed, so inflation just immediately jumps into the long-run underlying inflation. And inflation expectations become unanchored. And the ECB just doesn't have a good hand on that. It feels like a very EM response. And the irony of all ironies is the EM is actually not, they're not reacting this way. In fact, if actually the irony of all ironies is that Russia cut today, like the one country that you would have thought is actually getting some growth benefit. I think you want to break this down into two or three different pieces, Joe. The first one is that I do think that there's a reasonable case to be made that in the face of this kind of a shock in a world in which your anchors are not really at threat here, in a world in which policy stances are not super easy, like they were in 2022, that you at least give this some time to play out. I don't have any problem with the central bank saying, "Hey, we're going to be very attentive to our inflation targets. We're going to tighten if we need to." I think that's fine, but I think you wait till you see the nature of the event in this world where there is clearly two-sided risk. Having said that, if we follow the forward curve on energy, and I'm not arguing that's what we're going to do, which is to say that this is a shock which doesn't blow the world up and starts to fade sometime in the next couple of months, but it doesn't bring us back to where oil prices were, and it doesn't prevent some disruptive effects feeding through to things like food prices and others. I think there is a reasonable case to be made that central banks are going to need to till-talkish. The inflation impulse is going to be negative as soon as oil prices start coming down. The headlamp inflation. Talking about the core inflation, Joe. We're not going to be headlight, but the level of prices will be higher. The core inflation rates could be higher from already high starting points. That's the answer to these things we know is very, very limited. I mean, this is the thing. Maybe Europe is just indexed. Maybe people are going to say, "Oh, well, that's not quite true, Joe. I think if you think about this event as a potential event that has some impact on supply chains and things of that, it's not hard to think about a world in which we start to not putting 2022 into the picture in the same frame, but it's not hard to think about a world where we begin to put some upward pressure on goods prices globally. Right. But then what happens when immediately starting in the second half of this year, oil starts coming down. Don't you get the negative impact? You don't have oil going back. It doesn't matter. It's still a negative impulse. I understand it's a negative impulse on headline, but the elevated level of core and the disruption level of core prices, core inflation, will not stay elevated. It shouldn't. You should get a one-off. Here's the funny thing about this, Bruce. This is not right, Joe. This is not right. I don't agree with you on this. For the past year, we've been more on the hawker side for a while. I don't know, maybe where I am relative to you. I feel like we've both been on the hawker side. The argument from everyone from all Fed officials, Waller, certainly, all the way through the marketplace was, "Tariffs are a one-off. We don't need to worry about them at all. The level of prices go up and stay there, so it's not going to have any effect on underlying inflation." I would argue, and I think you were arguing too, that tariffs are kind of, they get into everything. This does run the risk of actually lifting inflation expectations, so we need to be a little bit more careful. But neither here nor there, markets didn't want to hear that. Central banks didn't want to hear that. It was just it's a one-off. Now we get something that is. But I've never said it's just a one-off, Joe. You're arguing a strong man of Waller. I'm saying to you that if you push oil prices up and keep them up, even if they don't stay at their peaks, if you have an effect on agricultural prices and other things, and you don't damage growth in a big way, if we're talking about numbers which are in that range of. I wouldn't call that strong man. where there's a modest increase in core inflation, and your starting point for that is that inflation is elevated in most places. Now you can argue, and I think it's perfectly reasonable to argue, that if the ECB is sitting here in six months' time, and core inflation is running two, three, or two-four instead of their earlier expectation that it was going to be two this year, whether that's a reason to tighten policy. I would personally say no, but I understand who these guys are, and this is the way they tend to react to those things. I don't think the Fed is going to. You know, off a half a percentage point of growth, why is there no. Why is there no effect of that on inflation? Well, first of all, we don't know what the effect on growth is. We come back to this issue of what the momentum is coming in. But you have to at least give a reasonable case to the idea that these things are not going to be neutral on inflation. I understand that there is. Are you like saying this? No scenario you can think in your mind where we're sitting here six or nine months from now, and core inflation is showing signs of being higher. There are no probabilities, and I think I set it up front. Like, I think any scenario in my mind that gives me sufficient inflation to cause an underlying core inflation problem is going to be inflation that drives growth down enough that you're going to unwind whatever that underlying. But you're totally losing one side of the distribution, which is, as was the case in 2022, people were surprised at how strong growth was in the face of that. And an important part of the. Let me finish. You have not been letting me finish today. An important part of the dynamic in 2022 was we were surprised at how strong demand wasn't how it interacted with these supply chains. Implicit in the way you're talking about things is you've already built in weak growth. Yes. That growth is going to be weak. So therefore, there can't be any positive inflation dynamic. If global growth stays trend, which would be consistent with a half a percent drag from what our baseline is, I don't see why you could not have a modest but clear cut pick up in court. Right. And I'm trying to go up. I'm trying to put myself in the shoes of the central banks that are in an outgoing 180 on me. And I. It was only a couple of months ago, the Fed cut twice, because they felt like the economy was in. But let's just be careful here. It's very different than 2020. The Fed did not talk about tightening this week, Joe. What's that? The Fed did not talk about tightening this week. You say it's a 180. The Fed was very neutral in its perception of how this energy price shock is going to be felt. What the Fed did do this week, and I think it is important, is it started to reflect the fact that the inflation numbers coming into the year were somewhat firmer. The growth numbers were somewhat stronger, and they did react to that, but they didn't change that. I shouldn't be as hard on the Fed, because I think the Fed is the one that is being kind of actually following the advice you kind of pushed, which was you should just sit on your hands and be a little cautious here. I have two problems. One is I have the market reaction of what they're saying about the Fed, which is just gone. What? Now, 75 basis points? They've taken out because of, I mean, close to 75. They took out the, from 60 to an hour up to, yeah, about 75 basis points. In a world where just three months ago, the Fed was cutting because they were worried about the labor market. You had kind of. Yeah, but let me channel my, let me channel my inner Joe Lepton. Yeah, I would say you want to. You said your handsomers. You've been sitting here for, God knows how many years saying, if inflation stays at 3%, the Fed should be hiking. Yes, that's me, Bruce. That's me talking about the markets. I don't, I, I, I despise hypocrisy, right? And I don't like the way the markets are suddenly putting in 75 basis points, what, for what looks like a supply shock. Anything that's going to be a big enough supply shock like that is going to make me more worried about growth. It's going to be the same type of one-off shock that the tariffs were. I put you just being, be careful now, even with everything that has been reprised on the Fed. The Fed is not being priced to have a hike. Yeah. No, it's not. My mistake in it's positive in terms of the pricing, but the, the implied change in Fed policy rates between now and the end of next year, unless I'm reading it wrong, is about nine basis points, which not even a, it's not even a half of a hike. Right, but you just said they're not pricing a hike. They're not the pricing less than a half of a hike. Well, but I still, the point is, look, I don't want to get hung up on base points, but point is we were, we were at minus 60 and now we're at plus eight. Well, I think the point here in some basic sense, and I think we come back to it isn't an involved. environment in which the data has been stronger on growth. The inflation news has been firmer. And even before the dynamics on oil came in here, we have been now looking for basically a 3% core PC inflation rate this year. We didn't think there was a real case for the Fed easing. And you could argue what's going on as the market is interacting. Some of the potential risks around the energy price shock with just generally a macro environment, which is making it less reasonable to have that 60 basis points priced in. Remember also this week we've gotten news that there's a decent chance. Wars is not going to be in the Fed for a while. Maybe. Yeah. But I think these are things that matter. You're not that everything that's going on here is because of the way they're responding to the energy price shock. The US, I would argue that the Fed messaging was was important this week in an environment in which basically they said, let's leave this energy stuff for a while to think about. But there's other things going on. There's their view on where underlying inflation is. There's a view on what the supply side is doing. There's things that are going on here that are having an impact on the Fed that are independent of the energy shock, which you should have an impact on the markets. Then you've got the politics that's going on here. Then you've got the energy shock. Don't get crazy about the market that's responding to multiple things here. Anyway, neither you nor I or the market is yet expecting the Fed to hike this year. Yeah. Funny thing is we're spending a lot of time on the Fed. As I said earlier, I have less issues with the Fed. The market pricing, I feel like the market has reprised correctly for the wrong reason. My bottom line is that I can see scenarios where a Senate steel bank that has an asymmetric reaction function very sensitive to inflation hikes this year. I could see the ECB and the bank of England hiking for that reason. Yeah. But I have a hard time understanding is why they would start so quickly and do it in April. That's my problem. Well, I have a problem with them hiking when they're probably going to be cutting within a few months. They're just going to be pulling a tree shade. Again, I keep saying, if it's a shock that's big enough, that should warrant some concern about underlying inflation expectations and underlying core inflation stain elevated, it's probably a shock that's going to be big enough to actually hurt growth. What's remarkable is if you look, Greg sent around a model that the staff has where you get this pass through on core inflation, which is pretty darn large, positive two, three years out, and you have a negative 1% output gap. It's like they have no Phillips curve in their model. There's no damage on inflation from this negative output gap. Again, as I said, maybe this is just such an indexed economy that like, hey, inflation goes up every one automatically gets wage increases and it just passes through. Wait a minute. I mean, the ECB's got in the scenarios that they're doing in the staff forecast. They got inflation, core inflation, two tens higher this year, right? Yeah. And I think it's something, it stays there next year if I'm not mistaken. Is that, I mean, is that so unreasonable of forecast where you're not hitting growth in a significant way? You can argue, well, they should have it growth a lot more. That's one argument. Exactly what I'm saying. Yeah, but you, again, you're not arguing on, you know, what you're arguing is not about their reaction function. You're arguing about their forecast, you're saying they're not negative enough about growth. Yeah. And to some extent, this starts to get, I would argue about their reaction function. I would not, but in central bank that's seeing a three-tenth rise in core inflation, she's going to say it gets epistemological in the sense that, you know, what you write down for a growth forecast in response to a shock kind of is a reaction function, right? You know, you're basically saying, like, I'm going to ignore what this is going to do to growth. And I'm only going to focus on the, you know, but the point is you're saying the shock is big. It's not big. They're basically downplaying the shock on both inflation and growth. They only have two tenths on core inflation this year. And they only have, I don't even know what they have on growth. It's pretty small. My point is you don't have a big effect in either direction and then you're biased towards hiking, which I don't, you know, I don't know why you should do that, except for the fact that you're the ECB, right? But anyway, okay, this is going to be one of these orange moments and I had to give you an orange last year, orange or banana, I don't remember. Orange, which you never gave me, by the way. Yeah, I did. I even outlawed, I gave it down the, on the weekend, or the strength of the consumer, which definitely impressed us. Maybe this will be a case too. I'll get Greg on here. Well, I would be surprised if they hike in April also, but I've got too much here. What? He's going to get two oranges, one from you and from me. I think that's fair because I don't think they're going to hike in April. But I wouldn't be surprised if they hiked in June, given macro developments that don't really. I think by June, oil prices are either, this is resolved in oil prices. They're moving back down to 70 into the 60s and they're not going to be talking about this. Or if oil prices are still at 110 and natural gas prices are starting to be much bigger concern, you're going to be talking about potential recession risks. Oil prices, though. Maybe you'll like. You think oil prices at 110 are going to cause a recession? No, sorry, sorry. I shouldn't have said 110. I'm talking about that one, that 125 to 150 range that you and I start to get very uncomfortable. Yeah, I'm very uncomfortable already, but let's let's. Right now. Yeah, I'm uncomfortable. I just think there's too much uncertainty and too much tail risk in the world right now that I don't quite know how to how to gauge. So anyway, let's leave it here. We do get what is interesting and just to end on maybe the positive note where we started, which is the momentum in the first quarter was pretty strong. Everything is pointing in that direction. I guess other than the US labor market, but noisy data. Our cat-backs now, Kaster, by the way, is running upwards of 7% globally now. So it kept revising up over the course of the kind of weekly and data comes in. So that's strong. And then I was going to end with the fact that we do get the Flash PMI's next week, which will be interesting to watch. I was a little, I don't know what I should have expected, but I've been noting the Fed surveys have been really positive. Right? They're not showing any hit from the war yet. I think what's interesting here is to look at the European obviously Japan, because I think the US business sector is still somewhat removed from this, at least in its initial state. You're right. If the way these are being answered is just purely on what are they seeing? If there's any sentiment component, I don't think you can underestimate the shell shock of the electorate of this war kind of being very-- Well, the reality is both the Philly and Empire. Yes. I agree. That's a surprise. I'm not surprised by that. I don't think we should extrapolate that, but I think it's going to be more interesting to see what we get in the European surveys. To that note, I think we are forecasting US up and the rest of the world down. Yeah. So we'll see. Okay, let's leave it there. By way, you know there is-- You're not going to let this thing end, are you? Well, I do want to say this is news, is that an important part of the support through the first part of this year was going to be the fiscal refunds coming into the consumer. And it's very early, but the refunds are kind of surprisingly not showing up yet. I don't want to overstate it. I know you definitely don't want to overstate it. But we are about halfway through the refund period and with the biggest chunks still to come. But you would have thought-- we're talking about what? 120 billion? I don't know what the number is. You should be seeing that. We're not seeing it yet. So I'm surprised by that. Yeah, I'm not going to go down this road, but there's a complicated set of questions as to how this stuff may or may not show up. Well, the one thing I've been thinking about on this is that I wonder if we've not fully appreciated the tax-- tax is being paid on realized capital gains last year. Yeah, what I was going to say is that you're only counting refunds. So to the extent that there's a significant refunds, but-- I mean, it's not. No, my point is if you are getting a set of forces that are forcing you to pay capital gains taxes, that shifts you from someone who's a refunder to someone who's a payer, you could still have that tax cut in the data you're just not getting a refund. Yeah, but at the end of the day, how we care about is we were looking for a big refund lift. We were looking for income to be up. Well, income's not going to be up as much if we weren't appreciating the drag from capital gains tax. Okay, but just be aware it's a separate, it's not that you didn't get the refunds. It just isn't offset to it. I don't think there's fraud going on. No, I'm not. No, you could argue, well, the tax cut isn't. Oh, maybe. I don't know. Anyway, let's let's can I leak. Can I end now? Yeah, I guess so, Bruce. I just I just like talking to you. All right, let's let's leave it here. Thanks everybody. And hopefully we can continue this conversation next week on the weekend. Take care.