Under-the-Surface Employment Indicators to Watch (With Doug Ramsey)

LIZ ANN SONDERS: I'm Liz Ann Sonders.

KATHY JONES: And I'm Kathy Jones.

LIZ ANN: And the is On Investing, an original podcast from Charles Schwab. Each week, we analyze what's happening in the markets and discuss how it might affect your investments.

KATHY: So hi, Liz Ann. Well, we finally have the first rate cut behind us after weeks and months of speculation. What are we going to do now? Just look forward to the next Fed meeting in November to start worrying about that? Is there something else, what else about the path forward is going to be interesting? Not just interest rates, but say in the economy overall, I know we're watching for the jobs numbers coming up, but what are you going to be keeping an eye on?

LIZ ANN: And obviously early November brings something else aside from just the next FOMC meeting, lest we all forget that there's an election. I think there could be some volatility between now and then. I think, you know, what was interesting at the September FOMC meeting was not so much the decision that was made to cut by 50 basis points, although it could have gone either way, at least up until maybe a day or two before. But arguably maybe a little bit more of a focus looking forward as opposed to just the reaction function by the Fed to inflation data, which was certainly the M.O. when they were hiking interest rates. And I think in particular their focus on metrics like the quits' rate and the hirings' rate. So I think some of the maybe under-the-surface labor market data starts to take on a bit more importance than just the standard payrolls release and unemployment rates. You know, ongoing focus on things like the quits rate, which we get with the job opening and labor turnover survey, the hiring rate, hours worked, layoff announcements, which we get the next batch of those via Challenger next week, initial unemployment claims, continuing claims. So, I think it's the whole parcel of labor market data that probably takes on greater importance as we try to gauge the upcoming moves by the Fed. What's on your radar in terms of the Fed's kind of trigger finger and what they're reacting to?

KATHY: Well, I think you hit it on the head with the labor market is the big thing right now, assuming the inflation numbers continue to come in at sort of modest level, showing some modest improvement from month to month. I'm curious to see now that we have a rate cut, what the economic reaction will be. We should see some pretty rapid response in terms of, say money market fund rates, et cetera.

But on the borrowing side, I'll be curious to see how quickly bank-loan rates come down, credit card, if there's any relief on the credit card side or on auto loans, how that filters through to the economy. It takes a while, as you know. It's not going to be instantaneous. But I'm to be kind of looking at, the next time we get the senior loan officer survey I'll be very curious to see if they've loosened up credit at all.

And then just in the underlying economic data, are we seeing any response yet in the economy to the rate cut? Because that's clearly what we're going to be waiting for to see what impact it will have and how many more the Fed might be poised to do.

LIZ ANN: Yeah, and obviously longer-term yields tend to drive things like mortgage rates. Are you surprised at the move up in the 10-year yields since the Fed started their easing campaign?

KATHY: No, I think the response to the Fed rate cut was kind of as expected. It was the steepening of the curve. A lot of that had to do with positioning going into the report. I think the market was pretty much poised for a 25 basis points and not a 50. And that more aggressive move probably caught people the wrong way in those yield-curve trades.

But also, we've been saying for a long time, know, fair value on the 10-year treasury is right around 375, 380. So, we're likely, I think, barring some big surprise, kind of bounce around at the longer end of the yield curve here rather than having some reason to move one direction or another. I think the bias will still be down, but I'm not really surprised that yields moved up a little bit. It's really going to be the economic data now that drives the longer end of the curve.

All the actions should be in short-term rates following the Fed and anticipating what the Fed's going to do. 

So, Liz Ann, tell us about our guest today.

LIZ ANN: Sure, I'd love to. So, I had a chance to sit down and talk with Doug Ramsey, who I've known for many years. He is the Chief Investment Officer of the Leuthold Group and Co-Portfolio Manager of the Leuthold Core Investment Fund and the Leuthold Global Fund. In addition to Doug's CIO and portfolio management responsibilities heading both the asset allocation and investment strategy committees, Doug also maintains the firm's proprietary major trend index. That's a multi-factor model which evaluates the underlying health of the markets, both domestically and globally. I've been following that for many, many years. He is also the lead writer for the Leuthold Group's highly regarded institutional research publications, including their monthly Green Book, which I've actually been reading since the mid-to-late 1980s, believe it or not. Doug is a frequent presenter at conferences and has made appearances on CNBC and Bloomberg TV. He has been quoted many times in Barron's and is often quoted in other financial media. He is a member of the Charles Dow Award Committee and the Market Technicians Association. 

Doug, thanks for being here today.

DOUG RAMSEY: Thank you, it's great to be here.

LIZ ANN: So Doug, as we're taping this episode, we're two days out from the Fed decision to start an easing cycle. And I want to ask you specifically about that, but I want to maybe make it a slightly bigger picture question. I'm a long-time devotee of Leuthold's "Green Book" and the work that you put into that monthly publication. I'm pretty sure it was in the most recent one where you had a comment on this subject that I thought was kind of a funny quip—"And it was after Jay Powell took the punch bowl away, Janet Yellen and co replaced it with a bottomless keg dispensing a beverage of unknown side effects."

DOUG: Haha.

LIZ ANN: And I thought that was really funny. But related to that—and I know why you wrote that—I wanted to ask you, maybe if you just want to, you know, opine on what the Fed did. But also one of the things that we've been writing about a lot too, which are just the muted effects of what was the tightening part of this cycle on the economy. And then I'd maybe turn the question around—do you expect similar muted effects now that we're in the easing part of the cycle? So start wherever you want and take it away.

DOUG: Well, first, I was not surprised by the 50 basis points rather than 25. I think that was telegraphed through the Wall Street Journal and elsewhere. But what's troubling—if you're Powell here—is I think some notable weakness in a number of labor market indicators. The JOLTS Survey—which is the Job Openings and Labor Turnover Survey, conducted by the Bureau of Labor Statistics—was very weak. That was for the month of July. That one is really more dated than any other employment report we get.

But this trend we've been seeing for several months now in full-time employment is very concerning. Full-time employment is down—this is through August—down 0.8% year-over-year. And it's a reason, I think, why real, personal disposable income growth has dropped from about—it was about 4% coming into this year—it's 1% now. We've replaced a lot of full-time jobs with part-time jobs. So, it gooses the numbers for non-farm payrolls, yet the benefits and the pay associated with part-time relative to full-time, much lower. So you're seeing a slowdown in income growth. So it's sort of this vicious cycle, right, that gets a downturn going. Loss in income, loss in demand, which we haven't seen to the same extent we have with the jobs and income.

We're also—even including the part-time jobs—we're pretty close to a stall speed when it comes to non-farm payrolls, which themselves have been the bright spot of all the jobs numbers for months on end. But year-over-year, non-farm payrolls are up only 1.47%. When that number has dropped below 1.4, with the exception of one time—I think it was in 2017—you've either had a recession that was imminent or already underway.

And then a final factor, I think, which helps adjust for, you know, this debate about the labor participation rates, the influx of migrants and their impact on unemployment growth—it's just the sheer number of unemployed now is up year-over-year by 16%. So that's the number of unemployed workers still in the workforce, or still seeking work. We've never had a number that high where we weren't already in recession. As a matter of fact—just to illustrate sort of how out-of-sync some of these jobs' indicators are with the past—usually by the time that the number of unemployed workers has spiked up that much, it's time to buy stocks. You're in the middle of recession. The exception would be that didn't work out too well in 2001 and 2008. But generally, in the shorter, cyclical downturns—you know, garden-variety recessions—by the time you see this sort of job weakness, you're already in recession and it's time to buy.

So, you know, that's just one of a number of indicators, I think, that fired way too early in this cycle. And you can go back to the leading indicators, which we have a lot of different decision rules based on the LEI—or the Index of Leading Economic Indicators put out monthly by the Conference Board—but the LEI have been down 29 out of the last 30 months. I think the issue, Liz Ann, is that among the 10 components of the LEI, the one that has been the strongest has been the stock market. The stock market, I believe, is a more important economic indicator than ever before, simply because of the size of the stock market relative to GDP is so much larger than it's been other than, you know, in '21 and early '22.

So, I think the wealth effect—we've been writing about this a lot over the last year—both the wealth effect, and then this new era—some people are calling it "fiscal dominance"—are offsetting, muting, but I don't think in the end we'll be able to fully counteract the monetary tightening now we've seen for a little over two years.

LIZ ANN: Are you still a believer in long and variable lags and just that they might be longer this time, or are there unique aspects to this cycle that—maybe permanently is too strong a word—but had long-lasting muting impacts on the economy? I mean it was an incredibly aggressive cycle on the upside by the Fed. And is it because we saw the terming out of debt on the part of homeowners or corporations? So what caused the muting of that impact? And do you think either the move of 50 by the Fed—and let's assume the start of an ongoing easing cycle—will there be those same muted impacts in the other direction?

DOUG: I do think with respect to just some of these reliable recession tools—including the yield curve and including the LEI and just a lot of different sort of rate-of-change-based measures that we saw beginning to trigger as early as mid '22—I think those suffered from just the impact of the amplitude of what we'd been through—you know, I guess, officially just two-month collapse in the economy in March and April. That's the official recession. But then the subsequent rebound and people exiting the labor force saying, "I had enough and by the way, look at my stock portfolio soaring"—and the pulling forward of demand thanks to the CARES Act—it just resulted in an unbelievably, well, for one, extremely tight labor market which a lot of indicators of production and consumption were skewed so that anything based on a slowing in a rate-of-change—which of course the leading indicators are, and many others—were premature. I think that's a piece of it.

But I certainly think there's been muting from both the wealth effect, and then just, I mean statistically, we looked at sort of I guess what we would call the cumulative offset from fiscal policy relative to when we believe monetary policy became tight. And just objectively we just say, "it became tight when the yield curve inverted," because the yield curve up until this cycle has been 8-for-8 in forecasting economic downturns. This ninth instance, I think the jury is still out. But since November of '22 when the yield curve inverted, we've had cumulative fiscal stimulus amounting to 10% of GDP. I mean, the average in the past—the past eight business cycle peaks—you had a cumulative offset of just about 2% between the yield curve inversion and when the economic expansion peaked out. So five times the offset from fiscal, and then, you know, far and away, more of a stimulus from the wealth effect that we've ever seen.

And just, you know, one observation, Liz Ann, to put this in perspective in terms of the rally we've seen just in the last year—I mean, the market's up about 25% year-over-year. During that time, it's gone from market cap, as a percentage of GDP, has moved from 159% to 196% the day of the big, you know, nearly a 2% jump—September 19th. So an increase, relative to GDP, of 37%. That's the same increase we saw during the Great Bull Market from August of '82 to August of '87—the pre-crash peak. The market was up, what, threefold, yet the increase relative-to-GDP was only 37%. What I'm getting at is the size of the market relative to the economy matters. It means that the stock market, which has always been a very good leading indicator of the economy—we would argue, in part, because it plays a role in economic outcomes—and that latter piece of it is more true than ever because of its sheer size relative to the economy.

LIZ ANN: I wanted to stay on the labor market here given the comments that you made about full-time employment and the number of unemployed.

I happen to think that we're now in a part of the cycle where we need to focus on a lot of those under-the-surface kind of indicators, beyond just the monthly headline of payrolls or the weekly headline of unemployment claims. You mentioned JOLTS. You've got the quits rate therein, I think the hiring rate is important, layoff announcements, again, full-time versus part-time employment, the number of unemployed, hours worked. So we know based on—and we could all infer it heading into the Fed meeting—but we certainly know throughout the course of the press conference how much more focused the Fed is on the employment side of their mandate relative to the inflation side of the mandate, the latter being the driver of monetary tightening—and I think employment being more.

What are the indicators that you're keeping a close eye on prospectively, either in terms of just health of the economy or the reaction function on the part of the Fed?

DOUG: Well, you've already sort of tossed out unemployment claims as a fairly crude measure, but we do like tracking unemployment claims and also continuing claims. You know, claims have been well-behaved. They've looked poised to break out above—you know, let's call it like last summer's lows—a number of times, but they refuse to do so.

It's interesting—you talk about getting down into the weeds—there is a measure looking at the exhaustion rate of unemployment benefits which last 26 weeks. That exhaustion rate, off the top of my head, is something like 36, 38 percent, but there's been a steady increase in that exhaustion rate—you know, the people who are running through the entire 26 weeks of benefits without finding a job.

And by the way, I think what's interesting as money managers with economics being a significant input, if I look at our economic database where it had been pretty weak relative to everything else—which tends to be more leading oriented—we've beefed it up quite a bit. That's in part, Liz Ann, because I think this is a cycle where, you know, if we're going to have a recession, it's allowed you to see more of the whites of its eyes than any other preceding downturn, right?

LIZ ANN: That's for sure.

DOUG: I've already cited all of these statistics on the job market that, well, by the time you get this confirmation or that confirmation, it's sort of too late to run for cover in the equity market. But I think because of just how unusually tight the labor market became in 2021, '22, that's why so many of these have misfired. But I mean, make no mistake this recessionary spiral of a weakening job market, weakening incomes, weakening demand, I mean, that is in place. And I think it's certainly played into that decision to go 50 basis points rather than 25. I mean, it's just very clear, especially if you smooth things out—like on a three month basis—it's just a very steady decline that, to me, is above and beyond a normalization as the economic optimists would call this.

LIZ ANN: One other economic question tied to something else you mentioned when discussing the leading indicators, and then we'll get into more market stuff, was the yield curve inversion—the incredibly lengthy span of time during which it was inverted. One of the things that I've often said about yield curve inversions historically is that the inversion, if you want to use a weather analogy, is sort of the watch…

DOUG: Mm-hmm.

LIZ ANN: …and the un-inversion is often the warning. So what do you make of this recent un-inversion, at least in the case of the tens-twos? Will we be able to look back and say, "All right, it was a really long span of time where the inversion didn't cause any serious economic dislocations or pain, but maybe more people should have heeded the warning of the un-inversion of the yield curve?"

DOUG: I'm conflicted on that. There's no doubt—now, you know, the twos-tens is especially popular among bond investors. I think it's a very important psychological indicator. And you're right, the un-inversion in that spread very often has indicated that recession is drawing near, if it's not already underway. From a statistical standpoint, it's not the best of the various yield-curve measures. As a matter of fact, it's near the bottom of the rung. And I'm just pointing…I guess what I'm citing here is not the inversion itself, but there's information at every level of the curve. I mean, when it's very steep, the curve tells you we're likely to have pretty solid real GDP growth in the year ahead. When it's deeply inverted, not only does it say recession, but it also tells you something about the likely depth of that downturn.

But there's a measure that we've really come to appreciate, and it's one of Jay Powell's favorites. I mean, Jay Powell introduced us to this near-term forward spread. We tested the near-term forward spread's economic forecasting ability on a one-year forward horizon, and it blows away any other measure of the yield curve that we've tested.

LIZ ANN: Hey Doug, can you share with listeners what the near-term forward spread is?

DOUG: Sure. It's the spread between the three-month bill, 18 months out, and today's three-month bill. The spread today is about 140 basis points. So the expectation is even after Wednesday's 50 basis point cut, we're still going to have almost three more 50s over the next year and a half. And to me, it's hard to imagine that's going to happen without an economic downturn. At any rate, its correlation with one year ahead GDP growth trounces even what we would consider the old gold standard, which was the 10-year bond yield minus the three-month bill rate. And again—2s versus 10s—it's an important measure psychologically, but in terms of forecasting the economy, it's not that good.

The other reason we like near-term forward spread is because it really gets down to the bottom of what the yield curve is all about, which is future expectations versus current conditions. So when you have the near-term forward spread still deeply inverted as you do today, it says that expectations 18 months out are much lower than currently good future conditions. And it also debunks an argument that—I mean, to get into the weeds a little bit—some people have dismissed the message of the yield curve arguing that, "Well, typically you use a long-term bond yield minus a short-term bill rate." They would argue, "Well, because the Treasury has really pulled back on the mix of long-term Treasuries in the mix at auction, it's depressing the yields on the 10-year." 

In other words, what they're arguing is the artificial suppression of the 10-year, and I mean, effectively they're arguing that it's yield-curve control—ergo the yield-curve message is misleading. And we're saying, "No, it's really always been about expectations for the intermediate term future versus today." And I would argue it's those reduced expectations that more or less become self-fulfilling. And we're seeing that with companies cutting back on CapEx, and again, substituting part-time employment for full-time employment. And it's just kicking off this spiral that causes a downturn.

LIZ ANN: All right, time to switch to the equity market more specifically. You recently wrote a report that was essentially paying tribute to this bull market. So give us some of the highlights of that in terms of how this most recent bull market stacks up. And I'm assuming the start point of the bull market is October of 2022?

DOUG: Right.

LIZ ANN: Yeah.

DOUG: The key point of that tribute is that this is a bull market that was born under very humble circumstances—I mean, not circumstances that have given rise to a long life.

For one, the prevailing unemployment rate back in October of 2022 was 3.5%. We've never launched a major advance, let alone, statistically a new bull market, when the economy has been at an unemployment rate that low. We launched it with our S&P 500 PE using our five-year normalized earnings estimate—was 22.7. That's by far the highest valuation we've ever seen at the bottom of a cyclical bear market, you know, by about 25%. The previous record was the COVID low. That maybe made more sense because the government came in with $5 trillion in fiscal stimulus, which was underwritten by a $5 trillion expansion in the Fed's balance sheet. So the Fed basically bought that bear market low in 2020. But despite the hostile monetary conditions that were already developing in October of 22, we still were able to bottom the stock market with record high valuations, the lowest unemployment rate we've ever seen at the beginning of a new bull. The yield curve inverted just a month later. It's been amazing what this bull market has been able to overcome in that respect. But it also raises questions about its longevity, which were there from the beginning.

LIZ ANN: You know, the October 2022 point is interesting because memories seem to be short. And I find this when talking to our investors. That bear market—which was concentrated in 2022, starting at the beginning of the year—the weaker performers were groups like the Magnificent Seven.

DOUG: Mm-hmm.

LIZ ANN: I don't think that moniker was as popular back then. I think Netflix was in the mix, and it was like the Mega Cap 8, I think was the…

DOUG: Right.

LIZ ANN: …the most common descriptor at the time. But we're talking about a similar subset of names, and they were the underperformers. And then obviously we launched into this era starting in late 2022, into 2023, and arguably into the first half of this year, where you had so much concentration and so much dominance and performance at the cap-weighted indexes of those names. But I know your recent thinking is kind of a bet against Big Tech—a bet against, you know, NASDAQ 100. Is that valuation related? Is it just the way cycles work and too stretched in terms of overbought? Was there a sentiment component to that? So I know that that is of great interest to our listeners because of still how much enthusiasm there is around those names. So I'd love your thoughts on that change in concentration and how you look ahead at mega-cap tech, NASDAQ 100, Mag 7—whatever subset we're talking about.

DOUG: Sure. In terms of what informed that thinking—and you asked valuation, sentiment, technicals—all of the above, I would say. Well, for one, in terms of the broad market—and this is not specifically Mag 7—but the Mag 7 are what have inflated the cap-weighted S&P 500 valuation measures. So in late June, early July, we have a relative valuation metric looking at the comparative valuations of the cap-weighted S&P versus the median S&P stock. So as those Mag 7 get to be more and more dominant in the S&P, it's more and more representative of just how outlandish their valuations are. But it came close to triggering a valuation buy signal—and hey, this is valuation, right, very often not too timely—but that was right around the July top, which was just exceeded on September 19th. So we do think the valuations on those leaders have been stretched. That's been true for a long time, but now they've reached an extreme that in the past has been associated with a turning point within a few months.

Another factor, just statistically—and this is more like value growth, which again is driven by those mega cap leaders—but we saw an extreme collapse just in the daily correlation, the trailing one-month correlation of value-versus-growth. It went negative for only the third time in history. The first one was near the value reversal in 2000. The second one was around the time that value reversed to the upside in the Fall of 2020. And we actually had what we would define as a value leadership cycle. It was pretty muted, but it was it was enough statistically for us to consider that a period of value leadership until the…

LIZ ANN: Hey, Doug, let me just jump in. How do you, when having this discussion, define growth and value? Are you talking about at the index level and certain named growth and value indexes, or are you talking about the factors or characteristics of growth versus value?

DOUG: It's a mix, because at any given time you may have one measure that's become very distorted. So when I'm talking about the return correlations, we just use Russell 1000 value versus growth. In terms of internal benchmarks, for decades we've been looking at, we call them the Royal Blue PE tiers—so the top 100 institutional-grade stocks, dividing them into thirds, where we do some work on normalizing the earnings to adjust for the cyclical companies. But our Royal Blue growth and value would be the top and bottom third, so 33 stocks in each of those indices. Incidentally, that doesn't look all that stretched, growth doesn't, based on the Royal Blue high PE tier, because we're looking at medians. And this is a market that's become so concentrated that looking at median valuations—whether it's for our high PE growth tier, or even for like the median technology stock—it just doesn't cut it in terms of capturing what's going on. So it's a number of different measures.

And in terms of sentiment, we're seeing very heavy call-buying among retail investors on the Nasdaq 100 Index that reached an all-time extreme in July—which is still a high for Nasdaq. And it really hasn't abated all that much. That sentiment is more significant when we see the so-called smart money, and here we look at big players in the stock-index futures markets. What's been happening—I want to emphasize this background indicator—but we've seen the commercial hedgers in the Nasdaq futures selling into market weakness in the Nasdaq 100. Very unusual. Usually they're buyers. They buy the dips. So we have that juxtaposition that we like to see between the retail money getting very euphoric at the same time the smart money is getting cautious.

And just one last point on Nasdaq in terms of technicals—for a while now, for a number of months, we've seen a situation in which the number of 52-week highs and 52-week new lows, they're simultaneously very large numbers. And that's just, you know, the picture of a split market—a lot of stuff up near its new highs and a lot of stuff down near lows.

LIZ ANN: Let me ask a final question that is, I guess, the opposite. You've discussed in fantastic detail the "why" against the prior mega cap leadership names and the Nasdaq 100. Where do you see leadership residing then? What are you optimistic about?

DOUG: What's emerging in our work are some of the staples groups which have long been out a favor in our group selection scores, but you know, we still have fair exposure to some of the, I call it incumbent leaders. We've been in home builders, which in my mind have been one of the great contrarian economic plays of all time when I look at our group work. I mean, to think that you'd raise mortgage rates from three to seven and that you'd plummet existing home sales. Well, with the benefit of hindsight, we see that it resulted in a tight market that the home builders—the new housing market—benefited from. We have a big position in home builders. It makes me nervous. It's made me nervous for the last two and a half years. And just very often, when you get a group that sort of flies in the face of economic skepticism, it can be a really powerful move. So in terms of our industry group exposure, we're not yet in, you know, sort of that fetal position of owning a lot of staples, health care and utilities. We're also still in the semiconductor equipment stocks, which we've owned for seven or eight years.

So the way we prefer, I guess, to manage market and economic risks in our core strategy is through moving around net equity exposure. But I do think what we'll see emerging in our group work is maybe financials starting to bubble up in our rankings to the top, and also energies—just sort of the classic value sectors. Although, you know, we're focused at the more granular industry group level. But it hasn't happened yet, but if it's a turn that's sustainable, it will happen soon enough. And we're happy to, you know, let the market tip its hand to us and get in, you know, as a move has already shown itself for a few months. It's very rare that we would buy a group that, you know, is just crashing to a new multi-year relative strength low. It's like, well, if it's created a good value opportunity, then we don't worry about missing the first 10 or 15 or 20% of outperformance if it's going to be a multi-year outperformer.

LIZ ANN: Well, Doug, this conversation has been fantastic, and we covered an extraordinary amount of ground going big picture down to smaller picture—and so much appreciate the generosity of your time. So thank you so much for joining us.

DOUG: Thanks so much, Liz Ann.

KATHY: Well, that was great, Liz Ann, thanks. So, looking ahead to next week, we're already into October and the fourth quarter, which is kind of hard to believe it's already here. What are you watching as we close out September?

LIZ ANN: Yeah, so we get another couple of regional Fed reports next week and they're increasingly important. They're not all telling the same story, so that may be one interesting aspect to it. You get some regional surveys showing more strength and less strength, but you got Chicago and Dallas coming out next week. The final reads on the S&P Global version of the PMIs, which is purchasing managers' indexes and in that note, we also get the more widely watched ISM readings on both manufacturing and services. We mentioned in the beginning of the show the job opening and labor turnover survey. So we get that data, which is inclusive of openings and the quits rate. We get Challenger layoffs next week. So given that the hiring rate is what is down quite a bit, but we're not yet seeing a big increase in layoffs. I think that's increasingly important to watch.

We get some cyclical readings on the economy, factory orders, and durable goods, and then, of course, the big one, the jobs report at the end of the week. What's on your radar aside from probably many of those same reports?

KATHY: Yeah, pretty much all those reports. I am curious about the upcoming PCE report that is a deflator for personal consumption expenditures indices that come out. That's the metric that the Fed uses in forecasting inflation. So those will come out on Friday as we're taping this a little bit ahead of time.

So always important numbers because this is the one that is targeted in the forecast that the Fed provides. So we've been sort of waiting for some of the components there to really, really roll over. It has come down quite a bit, but it'd be interesting to see if we're starting to get some more momentum on the downside. And then I'm just more closely attuned to these regional surveys as are you and some of the comments from the various Fed governors. You we've got, I think, 13 speaking in the next couple of days. Getting the message out now that the meeting is over. They're out talking, so they met, they cut, now they're speaking. And we'll get the perspective, I guess, of the various Fed officials and why they voted as they voted. And I think that gives us a lot of insight as to what might be coming down the road from the Fed.

LIZ ANN: Yeah, in essence, the Federal Open Mouth Committee, as we've often jokingly renamed it.

KATHY: Well, you know, it cuts both ways. So you can criticize them for not telling us what they're thinking and what they're doing, and you can criticize them for talking too much. So and they get criticized for both. So it's a tough one to navigate, I think, on their part.

So that's it for us this week. Thanks for listening. As always, you can keep up with us in real time on social media. I'm @KathyJones, that's Kathy with a K on X and LinkedIn. And if you've enjoyed the show, we'd be really grateful if you'd leave us a review on Apple Podcasts or a rating on Spotify or feedback wherever you listen. You could always follow us for free in your favorite podcasting app.

LIZ ANN: I'm @LizAnnSonders on X and LinkedIn. I'm not on Facebook. I'm not on Instagram. I'm not on WhatsApp. I do not have a private stock-picking club. So if you see me on any of those channels, that is not me. That is just some crafty imposter. So make sure you're just following the real me. And we will be back with a new episode next week. So stay with us.

For important disclosures, see the show notes or visit schwab.com/OnInvesting, where you can also find the transcript.