The Jon Sanchez Show
09/23-How do the markets perform when interest rates fall?
[MUSIC PLAYING] Now at T-Mobile, get four 5G phones on us and four lines for $25 a line per month when you switch with eligible traders, all on America's largest 5G network. [MUSIC PLAYING] Minimum of four lines for $25 per line per month without a paid discount using debit or bank account, $5 more per line without auto pay, plus taxes and fees and $10 device connection charge. Phones would be at 24-month in bill credits for well-qualified customers, contact us before canceling entire accounts to continue bill credits or credit stop and balance on a required finance agreement, too. Credit to end if you pay off devices early, ctmobile.com. Good Monday afternoon to you. Welcome to the John Sanchez Show, one new stock, 780KOH. It's a pleasure to be with you and a pleasure to be with my co-host, Mr. Jason Gone, who's Sanchez, wealth management. Happy Monday, my friend. Yeah. I know. Happy all-time highs. Yeah, exactly. Happy all-time highs. There you go. I still waiting for my fireworks and champagne bottles. Yeah. I fought hard to get this down there to this level, Jason. You just don't even-- Don't even acknowledge me. The S&P's there, too, right? I know, and now it's a crowded trade. Yeah, exactly. It's a crowded trade. Like gold, gold feels like a crowded trade. Yeah, there you go. There you go. I'll give you your gold. How about that? Yeah, I'll give you the gold. I'm a seller, short term of gold. I think it's done what it's going to do. Maybe it goes a little bit higher. But I think there's a lot of folks on one side of that boat right now. So that's my call on gold. Tilt into the port side. I can feel it. I can feel it. All right, let me tell you what Jason and I have lined up. Poopy had a great Monday. They are still continuing to have a great Monday. Let me tell you what we do have lined up for you this afternoon. Well, the store reserves big interest rate cut last week. Caught mini off guard, right? I was calling for a quarter percent. Where were you finally? Were you a quarter or a half? I can't remember. I think I settled at a half. You just held a half on the fence? I was right on the fence. OK, yeah, that's why I kept running. I wanted a quarter. Right, maybe that's-- But I think at the end it was sort of like a half. It's just to given that they had the election-- a rather no cut before the election might as well just get a little more out of the way. Yeah, exactly. All right, perfect. So with that said, we now, again, as we started to discuss last week, remember, the Fed decision was on Wednesday. We mentioned this briefly on Thursday with the boys. And then Jason and I on Friday as we did our market recap. We need to now be focusing on how does the market historically perform after a Fed interest rate cut, or really the beginning of an interest rate cut cycle. And I'll tell you what, Jason, there is a ton of data out there. And like anything, you can make numbers look any way that you want to. But the bottom line is this. The markets tend to go up over various time periods that we're going to share with you after the Fed cut. I'll give you just a brief example here. I didn't even send this to you. But I dug this up right before the show. Hartford Financial Hartford Funds, they reviewed 22 occasions from 1929 to the year 2019 with the Fed first cut rates, bonds and cash performed-- or they reviewed how bonds and stocks and cash performed over the next 12 months. After inflation returns of stocks averaged 11%, but returns diverged when the cut was associated with a recession. And so that's not bad. And again, I've got, Jason, so many other bits and pieces of data. What you're going to find today is the market tends to go up. But the key, of course, is this recession, right? I think we touched on this before the Fed interest rate decision. The key, of course, is how does the data look when a recession is called? And remember, folks, we're not going to know if we have a recession until months, sometimes even close to a year, after it actually happened. So it's kind of a moot point. But this is now what we want to really try to help everybody focus on is positioning yourself. How is the market performed? What areas do well? What areas do you kind of stay away from? We touched on this briefly on Friday. As far as what areas do well, which ones do we want to stay away from? But I thought it'd be really important for everybody just to kind of understand historically, and again, Lord knows we are in different historical times with an election looming and so on and so forth. But if history repeats itself, which many times it does, tonight's show should give you a really good idea of, again, how these markets perform in the different asset classes. Jason touched on gold. We'll touch on that one. What bond yields tend to do? You may think that they go down. All of us at the cat out of the bag. No, they tend to actually go up after a Fed interest rate catch. So that's what I mean. There's a lot of things that people think should happen, but many times don't from a historical standpoint. I think the biggest thing to take away, too, is remember markets are discounting mechanisms, right? I think that's probably why you're color on interest rates, which we'll get on later. It doesn't do what one would think. It's because it already did, right? And oftentimes you talk about retail versus institutional hedge funds. They try to be out in front of the news versus oftentimes people on the retail side see the news and react to it like, oh, gosh, I read this headline. I'm going to sell whatever. That's already out there, right? And I think that's the biggest thing, is you don't want to sell yesterday's news. And so that's a lot of the color from here. Moves in the dollar, moves in interest rates, moving gold. A lot of it is just a function of A. Has the market already expected something? And then are we in our recession? Because I think that's also the part that tends to be your backward-looking indicator worse. Yeah, it always works unless. And I think the R word is the one that ends up driving everything after the fact. Well, I think you would agree with me. This was probably one of the most telegraphed interest rate cuts. Maybe in history. That's their game now. Yeah. What probably, geez, at least six months this market has been predicting a cut. Whether it started off, of course, a quarter. And numerous cuts this year, obviously, they were wrong on that. But if you just look at it, did the market, as you were indicating, become accurate as a forward-looking indicator for future interest rate cuts? The answer is absolutely yes. Again, it was kind of mixed as far as how many-- we're going to call for half, how many for a quarter. But regardless, that's behind us. Now all we need to do is look forward. And again, kind of explain what this market typically does or markets, because again, we're going to get into gold and yields and so on and so forth. So you can start to position. Because I got to give you kudos. Go back to Friday. If you missed the show, listen to our podcast. Jason did a great job explaining that I kind of gave the basic analogy, right? It was the kid under the Christmas tree with a shiny red bike, and he got that. And now it's like, what now? And that's what investors are saying and feeling. And you nailed it right on the head that today and probably for the next, what, maybe a week or so, if not more, we're just going to kind of trade almost in a sideways fashion. Because there's not a lot of activity going on. But you went much deeper than that. So I think it'd be good to start the show by kind of going back to what you said on Friday as far as why this market tends to kind of go a little bit on the sideways side as we go into kind of the end of September, beginning of October and after Fed cut. Yeah, we've talked about that option effect, the gamma effect, really, in my opinion, the reason that the market goes up and down most days. It's much less about data that Google beat earnings or this jobs number happen. There's a resultant effect when that occurs. But ultimately, it's what's the loaded spring look like? Is it loaded to keep markets pinned in a range? Is it loaded to break markets up or down after data? That is the most important part, in my opinion, as to what is positioning look like and how is the market set to respond post the data that we have now, by and large, lost for a couple of weeks. You've lost that pent up demand and supply from the more technical traders or the near term option, because, remember, a quarterly expiration is a big one. That was September, that just happened. So now, October options expiration really were far enough away from it now that it doesn't really have a strong force on the market in either direction. In a couple of weeks, it will start to, and again, that's why the back half of September, typically, is weaker because you've lost your option event and you've also lost the big buyer in the market who is companies doing their own buyback. And so, borrowing data to move us in one direction, the other, or a geopolitical event, or something that is an unknown, there's no real catalyst right now. So I think it's healthy that the market just batted around up 15, 20 basis points, but it's great. This is good. That means that there's more buyers than sellers when you don't have those market forces sort of dominating the game. And that's really where we're right now is until we have, which probably Friday will be our first economic catalyst, Thursday, Friday, but certainly Friday with PCE, as to the next non-mechanical output of, okay, what's inflation look like? Oh no, the Fed's too early, the Fed's too late, and we'll get all that back and forth, et cetera. But right now, there's really no said unknown force behind things pushing us higher or lower until we get closer to, I'd say mid-October. And along those lines, we really haven't had, from looking for something negative, not that we want to do that, but we also have to look at both sides. We really haven't had many companies give pre-earnings warnings, right? We're just seven days away, theoretically, of the third quarter wrapping up. And typically, this is the time or maybe a week or so ago, where companies will pre-warn if things do not go look good. There really hasn't been anybody major doing that, so I think that's another positive for the market. And I feel like they've, for whatever reason, gotten the pass on that, don't you? Like, one's the last time somebody whipped. Like, now they just blow up on earnings, like, what the heck's that garbage, right? It's the game that we always talk about, right? And then all this just lowers their expectation, you know, months ago, and then the company comes in, yeah. Why the hell, it seems like the companies don't whiff any more mid-quarter. Like, and then they all of a sudden come out and cough up a hairball and earn it. Like, that didn't, that didn't used to happen. It used to be like, we're like five to 10% outside of our range on the upper downside, and that creates more of that, you know, let's say inter-month catalyst, right? Which we just don't get as much anymore. - Well, I think, I think at some point, you're gonna see that catch up. - Yeah. - Obviously, the markets have been so crazy with, you know, after COVID and, or COVID, during COVID, and then after COVID, and like you said, they really got a pass card, right? And so, I think to your exact point, generally, you know, you and I growing up in this business, we would look back, how a company did a year ago. Now, how did the company do last quarter? No one even cares about how they did a year ago, and I think many times that's a really a fair comparison, because a company can get really good or get really bad in one quarter, right? We've seen that with numerous companies. But, you know, take me back a year. How did you do a year ago compared to now, and you just don't hear that anymore? It's like, that's an eternity anymore. That's, you know, the zero-day till expiration option, right? Has morphed, unfortunately, morphed the investing part into more of a gambling aspect, and that's the toughest part. It is, no more than an investor's market. It's a trader's market, no doubt about it. All right, we're just getting warmed up. We'll continue our markets recap for you today, and then, once again, get under our topic, how do the markets perform when interest rates fall? But first, I'm gonna do my welcome back to Kristin Snow, and Jack Saban did do a great job in your absence, Kristin, but there's nobody like you. Welcome back, my dear. Welcome back to the John Sanchez Show, a new stock 780K awaits with Jason Gaunt. We finished as follows a 61-point gain on the Dow to $42,124, a record close. And as I, just a modest $26.8 increase, closing at $17,974, and the S&P, a 16-point gain, .28%, to a record finish there at $5,718. Pretty quiet on a well-down, 9/10 at $70,37 a barrel, gold up $6.30, $2,652.50 an ounce, and a one-basis point increases all on the 10-year treasury. 3.74, where's our close? Take it away, my friend, how do we do overall? Yeah, I mean, again, at sort of a sideways tape in general, it was nice to see. We had partial buyer margin three to one on the New York Stock Exchange, the market, as some would call it. We had, these good numbers are good data today from Boeing, some thoughts that hopefully they can clear up this machinist contract sooner rather than later. I think that helped industrials. But energy was strong, discretionary was strong, real estate continues its trend, given the thought that interest rates are probably gonna go lower over the near future. PMI, both on the services and manufacturing side, say probably a little bit better than expected, the services PMI, which is before, we were worried about wage price spirals, et cetera. It seems that inflation is not a concern anymore. We want to see positive data points as far as jobs are concerned, and I think the color out of PMI was broadly pretty positive as far as the markets were concerned. So not a lot today that was gonna be a real big needle mover, as we mentioned. Tomorrow we're gonna get a little bit of case-shiller consumer confidence as well, and then new home sales on Wednesday, but it wasn't a ton of data overall to drive things today. Definitely. All right, Exxon Jabba, let's see. Let's get down to our topic. We have a lot to talk about, so we're gonna get a head start on this thing. All right, here we go. How do the markets perform when interest rates fall? Okay, so I want you to, again, as I mentioned earlier, just keep this in mind as we go through this data. Everybody can slice and dice data any way that you want. Don't get so hung up on specifics that, oh my gosh, the S&P always does this, or the Dow does this, et cetera. Look at the trend, right? And the trend that everybody can agree on, no matter how you slice the data is, the markets tend to do very well after the interest rate cuts have begun. Again, the caveat is gonna be if we are in a recession, right? And again, no one knows, as we said earlier. So let's get down to this, Jason, and then we'll get into some of the specific areas. But let me share with you this data in regards to our friends over at Hartford, and what they discovered in their research work, okay? So hard for funds is suggesting one simple thing, as we do, be optimistic, right? Historically, this is a good time. Now, its work indicates that US stocks are higher 11% after factoring in inflation one year after the Fed begins slashing rates. So think about that for a second. One year from now, after factoring in inflation, which inflation again, a little over 2%, so really you're looking at a 13% return and then net out inflation. If we hover right around the 2% as the Fed wants, that's not bad. One year from now, up 11% historically. Now, the team reviewed 22 occasions. Going all the way back to the year 1929, through the year 2019, when the Fed first cut rates, and they looked at how stocks, how bonds, and how cash performed the subsequent 12 months. The after inflation returns the stocks averaged 11%, but returns really diverged when the cut was associated with a recession, okay? Now, when the rate cuts occurred and no recession took place, stocks averaged a return of 17% in the following year. But even when a recession took place, stocks were 8% higher. Now, a particular note, return for stocks following the June 1995 cut and the September 1998 cut, we rocked it. Stocks hit a 23% gain and a 25% in the following year, respectively. And like today, the mid '90s was characterized by modest slowdowns and met a generally robust economy. So, many are focusing on that side of it, okay? Now, what about other asset classes? And we'll drill into these in more detail after the bottom of the hour break. A year after the Fed started cutting rates, the after inflation returns for other asset classes, not quite so good. And we kind of been mourning you about this, but here's the data. Government bonds were 5% higher a year later. Corporate bonds were 6% higher a year later, and cash was a modest 2% higher a year later. Now, some of these periods saw stocks underperform the average, but the 22 periods that Hartford reviewed, just six of them saw negative after inflation losses. So, think about that for a second. At a 22 years after the Fed began cutting interest rates, only six of those had negative after inflation losses. So, Jason, overall, history is on our side. And then, like I said, when we come back from this break, we'll start getting into some areas, how gold has historically performed, as Jason mentioned. We touched a little bit on the bonds, so on and so forth. Any final comments you want to make on that Hartford data, I thought that was pretty fascinating. - No, I think it's good info. I mean, unfortunately, like we've said, but that's big asterisks of as long as there's not a recession. We don't know that yet, but yeah. Now, I mean, the headwinds, I think, will... The headwinds to cash access, the headwinds to being an investor in businesses, the headwinds to borrowing money for, be it homes or any other items are going to be diminishing, and those come with them pros and cons, right? It invites risk, but it also invites, so hopefully some entrepreneurial spirit, which is also what the Fed tries to take advantage of, to keep employment strong, right? That's what they're concerned is they don't want companies to feel like they should be belt tightening, they want them to theoretically feel like they should be loosening their belt vis-a-vis hiring or retaining current employees, and that's just a little bit of why they do what they do. - You know, it's going to be very fascinating to look back. Let's say a year, definitely two years from now, and again, depending upon how many rate cuts we get, and again, the street focuses price, and then depending upon whose data you look at, anywhere between a half to a full 1% for the rest of this year, and then about one and a quarter next year, again, that's the current pricing, our guesstimate, as I like to call it, but it would really be interesting to your point to see how many people really are going to start businesses as the government wants, or do this or do this, do that to expand the economy and stimulate the economy. I'm talking to a lot of people that want to start businesses and entrepreneurs. I never hear that brought up. I never hear that brought up. Hey, I'm going to do it because the Fed's going to cut rates. I think maybe when they go to the bank, or SBA or something to get a loan, obviously, they'd make it a little bit more enticing for them if the banker goes, "Hey, good thing you weren't here "six months ago, rates would have been, whatever, "seven percent, now there's six and a quarter, "or six and three quarter." But your theory, I love simply from the standpoint, we need to do another show just about the psychological impacts, right? We're giving you hard data, but the psychological impacts have a Fed rate cut. Maybe compared to a lot of people as you are. People are excited about it. And again, just that excitement alone can create a lot of economic activity. All right, I mean, if you're a home buyer right now, right, you're at least of the assumption that whatever rate you lock in today, you're most likely going to be able to refinance lower to the tune of 50 to 75 basis points a year from now. And that's being conservative, right? And because the Fed, you know, the market's already priced in 50 BIPs cut, right? You know, so that's part of a two, why a, you know, what's a 30 year at six-ish percent right now? Right, where it was seven and a half, or close to seven, right, right, right. So the market's already priced that part in, but there's still more to come, which like it said, you know, it's a nice backdrop for a home buyer versus, "Oh my gosh, I can't afford this rate, it's only going up," you know, so. - Yeah, 30 year fixed today, quarter mortgage due daily, 6.2, five basis points, but the 30 year FHA, Jason, 5.73, 30 year VA, 5.75. So love those sub, in 15 year fixed, I should throw in 5.55. So those have come down very nicely here over the last few months. All right, now what areas tend to do well, so we're gonna hit stocks, we're gonna talk about bond spreads, the US dollar, we'll talk about gold, how all these different asset classes and slash investments perform in a declining interest rate environment. But first, Greg Neff has news, traffic and weather, hey Greg. Welcome back to the, excuse me, welcome back to the John Sanchez show on News Talk 780KOH with Jason Scott. Once again, we finished with a gain of 61 on the Dow and a close of 42,124 record close there. Nezek, a 26 point rise, 17,974, SMP up 16 points to 5718, pardon me one moment. Just my microphone there. All right, hey, quick reminder. We told you about this on Friday when we launched it and we're gonna continue telling you every night, 12 months to retirement webinar, Jason and I are putting together, here's the question, are you 12 months away from retirement and wondering, what's next, what is next, right? This is a critical 12 month window that you cannot afford to make any mistakes. So we want you to join us on October the 2nd, 6.30 p.m. for our 12 months to retirement webinar. We're gonna cover what you need to know in this crucial one year window from medical and life insurance to Medicare, filing for Social Security, asset protection strategies, creating the estate plan. We're gonna cover tax strategies, asset allocation, as well as sustainable retirement income. All of that in our one hour webinar. We want you to join us, no charge of course. Just go to our website at Sanchez, wealthmanagement.com and click on the live events tab. We can't wait to see you there. Again, Wednesday, October the 2nd at 6.30 p.m. You guys excited about it, that one as I am? - Yeah, for sure. And I've actually had some folks ask, you can be more than 12 months away from retirement to attend, you know, sort of something that, you know, try to keep a timely for you, right? If you're, you know, two to three, four years away from retirement, it's probably gonna be more relevant. - Even better. - But yeah, if you're six months from retirement, definitely join us. It's like getting on the rollercoaster halfway through. So, you know, it's, because you'd mentioned on Friday, you know, to make sure it was something that you were truly interested in. But I think, like I said, we're within, you know, three to four years. It's probably going to be good relevant information. - Right. But those within 12, again, can't make any mistakes. We see way too many people doing that and that's why we're doing this. We wanna make sure you don't make those mistakes. It's a beautiful time period in life and we want you to, every one of you to be successful when it comes to retirement. But gotta do some of the leg work ahead of time. Gotta be ready, gotta be ready. Speaking of being ready, how do the markets get ready? How do they perform when the Fed has cut interest rates? As we experienced last week. So now, we gave you some data that historically, the market does very well after the first Fed cut and going forward over the next 12 months on an inflation-justed basis. Again, as long as we're not in a recession, then the numbers get a little skewed. But what we wanna focus on now is this. What areas do well in more specifically, how do the areas perform? Because a lot of people are sitting back chasing going, hey, you know what, yeah, okay, the markets do well, but where do I go? What areas do I look into? So let's kind of start off on the stock side of things. And if I remember correctly, we touched on this on Friday. We went through small caps and the utilities and areas such as that. - Yeah, I mean, those small caps would be one that people would historically feel that they have floating rate debt exposure, right? Remember small caps are companies that don't have the heavy cash flow that a large cap would. So they probably need to borrow to fund their business, biotechs, you know, small technology companies, et cetera, small financial companies. They have a lot of interest rate exposure and so lower interest rates tends to benefit their borrowing and allows them a little bit longer of a runway to go do what they do versus hire interest rates that if you're a biotech and you need to borrow to fund your business, you better get your drug figured out pretty soon 'cause you're paying much higher interest rates to borrow money to go fund that effort. Obviously they get grants, et cetera, but just as an example, excuse me, but small caps are certainly very, very sensitive to interest rates as a point. I mean, you mentioned utilities. Utility stocks tend to outperform merely because of that dividend yield part. You can get a more sustainable income from a utility through its dividend. If it's paying 5%, when rates are at 5, 6%, it may continue to still pay that same yield when rates are at 3. So you're better suited sometimes to park money in something like that. It's merely just a case of what's the typical reaction function of lower interest rates to any asset class, you know, commodity, dollar, you name it, what's the expectation for its move and then what are gonna be the repercussions of said move and how do they benefit certain companies versus each other? There's not an always, but you know, there tends to be little tilts to cause an effect of cheaper borrowing, help some groups, cheaper borrowing tends to make other groups less desirable. It's just, you know, kind of thinking it through. - Absolutely, yeah. I think that's the key thinking it through 'cause we could do a multi-hour show telling you the different areas, but just kind of let your common sense work. Now, a couple of things to throw into that also and we touched on this on Friday and that is we should start to see some pickup and activity in investment banking, right? Corporations or businesses that wanna go public, they tend to like a lower interest rate environment for various reasons. Again, let's let your imagination wonder. I'm thinking also, Jason, we could potentially see some of the major Wall Street investment banks doing very well because that activity should pick up and that's a big profit center for them, so on and so forth. Now, one area that's very interesting and I don't think we touched on this on Friday, the financials, right? So, you can really look at the, in chime in if you disagree with me on this 'cause we didn't prepare on this point, but you can really look at the financials in a glass half full or a glass half empty scenario in a declining interest rate environment, right? So let's look at the glass half full. More borrowing should be stimulated, right? People are gonna be knocking on the door of the banks and I wanna get a mortgage, I wanna get a house, or I mean, a car, whatever the case may be. All right, that's obviously positive for a bank 'cause they make money on the interest that they charge you. Conversely, they're also seeing interest rates go down where you could start to see depositors taking money from the financial institution where they were enjoying the four and a half to five, maybe a little bit higher CD or high yield savings account and now investors are gonna go, "Hey, you know what, I can go down the street "and go park it like you were saying any utility "or something that's still paying around that 5%, "but you're only renewing my CD at 4%. "Obviously, there are different risk levels associated with it." So you could start to see that happen way too soon on that because hopefully, all of you listen to our advice and those of you that are CD buyers, you locked in your CDs when the times were good and maybe extended out the duration a little bit, so on and so forth. So it's kind of a hit and miss for the banks, but overall, I think we should tend to see the banks do fairly well just from, again, an uptick in borrowing activity. - In another one, too, along the negative side, is it going to be harder for banks to lower their interest rates to savings folks because of the asset base? You want the sticky assets, right? So I'm looking at Capital One, for example, and a full disclosure, I am a user, and their current rate is still four and a quarter, and it was four and a quarter for, I mean, six, eight, well, a year, right? And so they didn't drop their rate, day one, could they drop it tomorrow? Hopefully, I didn't just jinx it, but they're not quickly changing which historically, they probably would have, right? And so they are waiting for some of their competitors, like a Goldman or a Merrill or someone else to see, what are they doing? Do we need to change our rate or keep our rate higher? That then squeezes them on the profitability side, too, right? So those are interesting things as a negative, and the positive on financials just to add to what you'd mention. They do net interest, right? That's their whole game of borrow, short, land long. If interest rates are upward sloping, which now the yield curve is now positively sloping versus before two year rates were above 10 year rates, now two year rates are below 10 year rates. So if you can borrow at a cheaper rate and land at a higher rate, that's how banks make money. So typically upward sloping term structure tends to be beneficial for the bank's longer term, but it depends on the bank. Morgan Stanley isn't the same as Goldman, right? So as you're picking your banks or Bank of America isn't the same as Wells Fargo, you need to pick through your banks as to who's sensitive to what one yield curve environment may hurt one or help the other. It's not just blindly by the banks 'cause they all do better or worse during a certain interest rate environment. - And we'll wrap up on the interest rate side of things before we go to break and keep in mind that people tend to think, oh, the Fed's cutting rates, that means yields are gonna be coming down? Not always the case. Here's a little historical data for you. Going back to how the 10 year treasury yield has performed one year after the first series of rate cuts. In the first rate cut in September of 1984, or I should say a year before that, rates a year later in September of '84 were down 1.82%. June of '89, they're up a modest 12 basis points, July of '95, up 60 basis points, January of 2001, up 130 basis points, September 2007, up 23 basis points, then of course we had the financial crisis, so rates came down almost 1%, 98 basis points, and then July of 2019 again, economy is struggling down 149 basis points. So really, going back to these last major Fed cuts, you only had rates lower a year later, three times out of, let's see, one, two, three, four, five, say, out of seven times. So again, the majority of the time, rates are actually higher than they are lower after the first Fed cut. Let's wrap it up with Kristin Snow in the right now, traffic center, Kristin. We'll go back to the John Sanchez Show in his talk, 780-Q, it's what Jason got. All right, we've been talking again about how do the markets perform when interest rates begin to fall? Now, let's move over to the Treasury side of things. As we all know, when bond yields go up, bond prices go down and vice versa. Now, a couple things to keep in mind when we start talking, as we did before the break, where people will start searching for yield, maybe not right now, but as CDs come due and rates aren't what they were, they're gonna be searching for yield. So keep in mind that corporate bonds are one yield alternative. Now, the spreads, of course, when things are, the spread meaning the risk for you, rate of return, i.e., a government bond versus a corporate bond, those spreads begin to widen out when the economy goes into problems, right? A recession or a looming recession, et cetera. So you will see people wanting to get compensated much more for a corporate bond or bond fund or bond ETF, then, of course, when things are good. So we can start to see these spreads come down now because we don't have word of a recession at this point. So that's another area. Now, Jason, let's move on to one of your areas of a fund and that's the US dollar. We definitely see a lot of movement in the US dollar when rates start to come down. - Brian, we've talked about this, right? The reason that the dollar moves up and down is just because it's the dollar against everything else, right? So if US interest rates are higher than Europe, for example, a European investor would like to sell their currency to buy US dollars, to buy US bonds and earn a better rate of return on the flip side. As US rates fall, then it becomes less desirable and you're reversing that trade. You're selling dollar because you've sold your US bond and you're buying back into euro, which is the counterholding to that dollar, which makes the dollar weaker. So watching dollar positive negative, and that's part of why gold has acted as well as it had to because of the fact that US interest rates are going lower. I mean, you can throw all the tomfoolery about China buying and so on and so forth. Ultimately, it just comes down to a cross currency bet, weaker dollar because of rates, make dollar less held. Therefore, if gold is priced in dollars and the value of the dollar is decreasing, then the price of gold is going up. Again, we can do a whole show on that part, but it's always an interest in one to keep a close eye on, but that's how that mechanism works. I mean, dollar moves through the entire economy. Exactly that it does. All right, so there you have it. Some areas good, some areas bad. Just continue listening to the show each day. We'll try to guide you in the right direction. Have a great evening, God bless. This program was sponsored by Sanchez Wealth Management. The material in this program was intended as general information only and should not be taken as specific investment tax or legal advice. None of the information on this broadcast was intended to be a solicitation for the purchase or sale of any security. Further information is available by contacting John at Sanchezwealthmanagement.com or 775-800-1801. John Sanchez offers securities and advisory services through independent financial group LLC, a registered broker, dealer, and investment advisor. Remember FINRA SIPC. 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