[00:02:13] Rebecca Hotsko: Thank you so much for coming on. I’ve been really looking forward to this conversation to get your outlook on what’s happening because coming into 2023, it seemed like the biggest risks that were facing the market were surrounding earnings downgrades that were not yet embedded in prices.

[00:02:29] Rebecca Hotsko: Inflation being sticky in the Fed’s ability to get us back to this 2% target on time. And so what’s been really interesting to me is that the main narrative just a few months ago seemed to be that the first half of the year was going to be. And then the later half would likely be a rally or get better.

[00:02:45] Rebecca Hotsko: But we haven’t seen this play out this way so far at all. In fact, the market has done quite well for the first part of the year. So I wanted to get your thoughts on what’s happening and your current outlook for the market, as it seems like things just haven’t turned out as bad as some initially expected.

[00:03:01] Sam Burns: Yeah, no, you’re absolutely right that a lot of what, you know, you saw looking at the news and, and what I was, you know, hearing even from clients late last year was pretty negative. They thought, you know, it was a bad year last year and was going to basically keep going. It’d be a bad first half of this year.

[00:03:14] Sam Burns: The economy was slowing rapidly due to the Fed and that earnings were going to fall off a cliff and that the market would fall, you know, to much lower lows. and that that was kind of the picture of the setup, you know, going into, you know, from October, November and in December. And I think, you know, what’s happened is that partly the economic data has been so volatile that it’s hard to get a clear read on what’s going on nowadays.

[00:03:34] Sam Burns: And that a lot of people were kinda looking at some of this, you know, slightly slower data last year and say, and extrapolating that kind of overly. In a negative way into the first half of this year. And also probably extrapolating from, you know, seeing the Fed hike rates so aggressively. Well that must be going to, you know, crash the economy any day now.

[00:03:51] Sam Burns: And so I think what’s happened is that the economy has actually been holding up better than people expected. It’s not fantastic, but it’s, it’s, you know, holding up fairly well. And I think that’s a difference from past cycles to some degree, but also just the fact that the data, you know, in January was much stronger than the data in, you know, November.

[00:04:08] Sam Burns: And some of that is just, like I say, the volatility of the data, seasonal things, covid s impact, a lot of things going on that confuse people and make the data harder to read. And I think a lot of people assume that they don’t fight the fed mentality. That if the Fed is raising rates, then stocks go down and that’s all.

[00:04:24] Sam Burns: And it’s not really historically been true. At this phase it is not true. Now, I think in part because you know, fiscal policy is kind of acting as a countervailing force and a lot of what’s been going on the last two, three years has been very unusual and not a typical economic cycle. And so it’s hard to apply the usual rules of an economic cycle to this scenario that we’ve been saying in the last year or two.

[00:04:44] Sam Burns: So I think that’s part of what we’re seeing now. And so when everyone gets very, very negative about anything, you know, more likely than not, any piece of good news will turn things and you get, you know, kind of an uplift. And that’s what we’ve seen in the market, certainly in the first, you know, six weeks of the year that just things were too negative.

[00:04:59] Sam Burns: And if things are less bad than expected, that’s all you need to get a rally. And that’s what we’ve gotten. 

[00:05:04] Rebecca Hotsko: Okay. Yeah. Let’s break this down a little bit more. The economic data and then the financial data. We’ll get into the earnings estimates and the revisions a little bit later in the discussion, but on economic data, so you mentioned it’s been volatile and the most recent data that came out today as we’re recording it on March 10th is the jobs report.

[00:05:24] Rebecca Hotsko: And so can you talk a little bit about what we’re seeing there and why this good news is actually bad news. 

[00:05:32] Sam Burns: Right, right. And we definitely have been in that situation in the last few months where any signs of better than expected economic news is interpreted negatively by the markets because that assumes, that means the Fed has to keep raising rates even more aggressively and for longer than what otherwise have been the case.

[00:05:47] Sam Burns: And that, that’s the risk that investors are really focused on is, is the Fed, you know, going to Overtighten policy? Are they going to go too far and cause a recession rather than simply responding to, you know, inflation. And so that’s kind of the situation we’ve been in, but I think today’s, you know, economic data from the jobs report.

[00:06:04] Sam Burns: Was maybe one of those kinds of confusing ones where the headline data, the, the, you know, 311,000 jobs created was above the consensus expectations from economists. So it looks like another, you know, better than expected, stronger than expected report, and therefore a reason for the Fed to keep raising rates.

[00:06:18] Sam Burns: But then if you look at the other pieces of the data, the unemployment rate actually rose to 3.6% from 3.4, and the average hourly wages that they tracked were slower than before, only at 0.2%. And the average number of hours worked in a week ticked down, and the labor force participation rate rose slightly to its highest level, I think in three years.

[00:06:39] Sam Burns: So all those measures that are below the headline actually suggest that the labor market is maybe a little less tight and the wages aren’t growing as fast, and that maybe things are not as worrisome from an inflation standpoint as you might have. So, you know, if you’re looking for bad news, you could find it.

[00:06:55] Sam Burns: If you’re looking for good news, you could find it there too. And so the debate is now, well how will the Fed interpret this? And will they use it as a reason to raise rates, say, you know, 50 basis points in a couple weeks when they meet again or stick to a 25 basis point hike. My view is probably that the 25 basis point hike, kind of that case, got a little bit better today.

[00:07:13] Sam Burns: And so I think that’s probably what they’ll do. But that’s really the way the market’s been trading. Betting on how the Fed will look at the data as it approaches the data itself. This data by itself would be, you know, pretty good job market’s, pretty strong. Most people still have jobs still growing, just not as fast as before, and that’s really what you want.

[00:07:29] Sam Burns: You don’t want things to be overheating, but you don’t want them to stop, you know, or go into recession. And so if you’re just looking at it from the economic standpoint, yeah, pretty good. Not bad. And that’s why I think stocks have kind of been able to hold. Whereas the bond market has been much more concerned because they’re more directly tied to what the Fed is going to do.

[00:07:45] Sam Burns: And so that’s kind of what they’ve been responding to. Now today, of course, the market reactions have been kind of skewed by what’s been going on in the banking sector and you know, some of the tech related banks that are blowing up and things. But overall, it’s been, you know, driven by fed perceptions, and that’s the lens that they’re looking at the economic data form.

[00:08:01] Rebecca Hotsko: And I guess I just want to ask you then, the way things are heading right now, do you think that this suggests we could see higher highs by the end of the year, and I guess, have we already seen a market bottom then in your view? 

[00:08:13] Sam Burns: Yeah, my guess is that the bottom last year in October and the major indexes in the US was probably hold, we probably won’t go below those levels, would be my, my guess the indicators that I use to kind of, you know, look at, you know, how bullish or bearish I want to be on stocks, which I kind of, you know, constantly update on a rolling basis, looking at, say, one to three months at a time, are still positive.

[00:08:34] Sam Burns: They look like they’re, you know, the things got very negative last year and they’re still kind of in the process. Of turning up, certainly in terms of investor sentiment and in terms of the price behavior, but also the outlook for the Fed that were much closer to the end of the fed sighting cycle than the beginning.

[00:08:47] Sam Burns: Whether it’s, you know, two more hikes or three or whatever it turns out to be, it’s much less now than it would’ve been, you know, a year ago. So my indicator suggests that we should at least be able to hold steady, maybe in a trading range or grinded higher over the course of the, you know, the next few months.

[00:09:01] Sam Burns: And so, I dunno if we’ll hit a new high in the indexes. Should at least hold up. And I think stocks will probably outperform bonds over the, as they have been for a while, but will continue to do so over the next, you know, few months at least. So I’m still, you know, a little more glass half full than probably some of my colleagues out there.

[00:09:18] Sam Burns: Do this sort of thing and think the stocks should still outperform bonds and can probably hold up okay. And grind higher unless there’s another big shock of some kind, you know, whether you know that we got through Covid and we got through Russia and China, you know, if something else comes along, then I guess that would change things.

[00:09:32] Sam Burns: But right now it looks. Earnings are going to be okay. The Fed is probably going to, you know, hike rates a couple more times and then be done, and then inflation will be lower, you know, six months from now or nine months from now than it is now. And so, that will be a supportive backdrop for equities.

[00:09:46] Rebecca Hotsko: So from the conversations that I had a few months ago with a range of people, it seemed like a lot of people were expecting the market to fall by 20 to 30% based on the fact that earnings needed to be [00:10:00] revised down. Now, we have seen earnings revised down, but we haven’t seen that drop in the market. And so is that just a factor that it was less negative than expected?

[00:10:10] Sam Burns: Right, exactly. I mean most of the, you know, impact of earnings and, and estimates and things like that is really how it relates to expectations. And is it better or worse? Not really. Is it up or down in absolute terms? And so, certainly, yeah. Earnings in, you know, the first, in the fourth quarter and eventually even in the first quarter will be, you know, lower than they were a year ago and, you know, got revised down.

[00:10:29] Sam Burns: But to some degree, that’s to be, that was expected and the actual results turned out to be not as bad. And the guidance from companies about, you know, the next few quarters was not as bad as a lot of people who hadn’t been anticipating, you know, late last year. They’re very much a, you know, a question of relative to expectations.

[00:10:46] Sam Burns: If expectations are very low, it doesn’t take much in the way of, you know, good news or even sort of less bad news to boost things. and the reverse is true if things expectations are very high. So we’ve set a lot of estimated cuts. You know, analysts reduced their forecast pretty aggressively for  months and months and months, all last year and, and even kind of early this year.

[00:11:03] Sam Burns: And that kind of has now priced in to some degree, some of that negativity. And yeah, there, there are people that are arguing for, you know, more, that they’re still not, they haven’t cut enough. There’s still more downside to it, and I suppose that’s possible. We’re getting closer to the point where analysts have probably cut enough, or at least the pace of their cuts has gone far enough.

[00:11:22] Sam Burns: And so if they cut a little bit more, but it’s at a less intense pace, again, they’re moving in the right direction rather than the wrong direction, and that’s what we’ve been seeing recently. My data is showing that they’re not cutting as much as they were before, and therefore that sort of headwind to the market has been reduced.

[00:11:38] Rebecca Hotsko: Okay. I want to get into your data and research in a second. I just have one more question about the economy, which is on the yield curve, because this is one thing I can’t wrap my head around. What’s going on with this? We’ve seen it increase even further, the two 10, it’s become even deeply inverted, even more deeply inverted.

[00:11:55] Rebecca Hotsko: So what’s going on here and what’s this telling us? 

[00:11:59] Sam Burns: Yeah, that’s definitely been getting a lot of attention. It’s, you know, historically inverted between the 10 year and the two year back to the early 1980s, I think is the last time we saw something like this. And I think it’s, you know, partly a result of the wide gap between what the market expects from inflation going forward or the next year or two say, and what the Fed is looking at in terms of, you know, trailing inflation or current inflation and how they think they have to respond to it, both in terms of having rates be in line with what they.

[00:12:26] Sam Burns: Inflation is now, and relative to the fact that maybe they were a little late raising rates, you know, last year when inflation had already started to rise. So I think that there’s the assumption that the Fed is having to sort of catch up where they should be, and that that means the short end, the, the short term interest rates two year has to be high, but that, that’s going to slow the economy.

[00:12:45] Sam Burns: Inflation will probably be coming down naturally and come down maybe faster now that the Fed is so tight and therefore that rates will say in a year or two be lower than they are now and so that it doesn’t make sense to price long-term bonds, you know, up at 5% or more if you’re pretty sure that.

[00:13:01] Sam Burns: Short-term rates will not be that high in a year or two. And so it’s a relatively unusual scenario right now that the market is looking ahead and pricing in what they think the Fed will do. And the Fed is still kind of talking like it’s going to stay, you know where it is for quite a while now, you know, the bottom market has been wrong before and the Fed has been wrong before.

[00:13:19] Sam Burns: So you have to assume that this is, these all things will all change as things develop, but I think that’s kind of what’s driving things right now and the fact that we have high inflation really for the first time in 40 years is you kind of confuse people to some degree and has made people question what the fed’s real policy, you know, parameters are, you know, they’ve been trying to get inflation to go up for a long time and now they’ve got it and it’s got got too much.

[00:13:41] Sam Burns: Are they going to change their inflation target? Are they going to keep it where it is? You know, how aggressive are they going to respond? And how does it interact with fiscal policy and, you know, what’s going on globally and all the other things that affect inflation in the economy and, and, and cause the Fed to have to respond.

[00:13:54] Sam Burns: So I think the question is what is the Fed’s real kind of reaction function right now? And the market has a different view of what, from what the Fed has officially been saying when they, you know, speak publicly. 

[00:14:05] Rebecca Hotsko: Okay, so then in a sense, is this widening gap maybe not as bad? It’s saying that the market expects inflation and economic growth to come down then.

[00:14:15] Rebecca Hotsko: So it’s basically saying they have faith in the Fed’s ability to get us there. 

[00:14:20] Sam Burns: Yeah, no, the market definitely expects the inflation rate to come down and that the economy is slow and that what the Fed is doing to, to have an effect. If you really thought that the Fed was not going to be effective in bringing down rates, and you thought inflation would stay high, you certainly wouldn’t be interested in buying a 10 year bond, 4% or less.

[00:14:37] Sam Burns: So, If you really believe that there was going to be a big, you know, kind of seventies style inflation, you know, spiral, then you would not be seeing long-term rates doing what they’re doing. So I think people are looking at it as the Fed will eventually be effective. It might take a little longer than they had hoped, but that will work.

[00:14:53] Sam Burns: And it’s a longer term structural driver of inflation and the economy in terms of, you know, population and productivity growth and things like [00:15:00] that are still tilted toward lower inflation, lower growth. They’re not like the seventies and sixties and, you know, and even the early. When conditions were very different from that standpoint and so that the, you know, kind of the pre covid conditions that we’re used to will eventually come back assuming no major world crises.

[00:15:17] Sam Burns: And then it’s just a question of how long it takes to get there and what policy, you know, levers have to be pulled to get there, but that they, they will, you know, get there in the next day, 12 months or maybe 18. And that’s why the yield curve is priced that way, but it also reflects the volatility of the economic data.

[00:15:32] Sam Burns: it’s just hard to get a clear read, and therefore there’s more distortions in the bond market than usual. More volatility than usual. 

[00:15:39] Rebecca Hotsko: And there’s been research that shows stocks don’t typically bottom until the yield curve turns positive again, and it doesn’t bottom until later in the Fed tightening cycle.

[00:15:50] Rebecca Hotsko: And so what’s happening? Could that be different this time? Could we, like you mentioned, see stocks bottom without that positive inversion? 

[00:15:59] Sam Burns: Yeah, I definitely think  it’s possible. I think I mean you’re right that there’s a tendency for that, the yield curve to lead in that way, but it’s also, there’s a lot of variation in the historical, you know, tendencies that way.

[00:16:09] Sam Burns: And I think in this case, the fact that, you know, nominal growth is still fairly high. And the fact that fiscal policy is still relatively supportive compared to, you know, historical tendencies that you got the fed tightening in some sense, and fiscal policy still, you know, being somewhat supportive that, that they’re kind of offsetting each other rather than both being pointed in kind of the tightening or the negative direction, which has been the case a lot of times in the past.

[00:16:34] Sam Burns: That you’ve seen is that you, you see monetary policy tightening and potentially over tightening which is what an inverted yield curve tells you. The market thinks the Fed is overdoing it and physical policy at the same time, you know, cutting the deficit, cutting spending, all those things happening alongside tighter policy.

[00:16:49] Sam Burns: And that’s not happening now. Now it could, but right now it’s looking like the fiscal support that we saw from Covid is kind of still lingering around. And the other thing, infrastructure bills and some other spending things that are going on at the federal level are still, you know, being supportive and keeping the you know, one of the metrics you can look at is the federal treasury deficit deficit to GDP ratio.

[00:17:11] Sam Burns: Just kind of how much is the government spending relative to G And that’s still on the higher side. It’s, it’s way, way below where it wasn’t during Covid, of course, but it’s, it’s still on the higher side, relative history outside of crises. And so I think that’s helping to balance out kind of what the Fed is doing.

[00:17:26] Sam Burns: And will help mean that the inverted yield curve won’t have the same negative economic implications, at least not right away as history might suggest. And that if earnings hold up and if the banking system holds up. The other problem with an inverted yield curve is that it causes, you know, problems for banks, if they’re lending at lower rates and they have to pay on deposits, then that’s, you know, that’s negative for them.

[00:17:46] Sam Burns: They start to lose money. But for the most part, they still have, they can still lend money, profit. And they have good balance sheets. Again, certain exceptions for those lending to the, you know, technology or crypto side of things. But the major banks are still in good shape. They’re not a problem. And so the yield curve is not going to bring the banking system, you know, down and is also, like I say, probably being offset to some degree by fiscal policy.

[00:18:08] Sam Burns: And so I think all those things together mean the yield curve doesn’t mean what it meant, you know, in the past. 

[00:18:14] Rebecca Hotsko: One thing I want to touch on with you before we jump into the stock side of things is inflation, because I’ve also had a range of views on what the inflation picture might look like ahead. So you talked about what the market’s expecting.

[00:18:28] Rebecca Hotsko: What are you expecting? Do you think that we’re going to get back to this target nice and easy, or do you think we could potentially see waves of inflation? 

[00:18:36] Sam Burns: Yeah, it’s definitely going to be, you know, a little bit of a bumpy road as it’s been for a while. Certainly at least judging by the, you know, the published data, my guess is that, yeah, inflation will work its way lower, and certainly by the end of this year it will be substantially lower than it is now.

[00:18:50] Sam Burns: And now some of that is sort of mechanical in the sense that, you know, the way, you know, housing prices are incorporated into the CPI and things like that. They’re known lags and the way they calculate it and things like that. But I think even the underlying inflation pressures will moderate, partly because, you know, income growth will slow.

[00:19:05] Sam Burns: And, you know, the labor market will, will get a little bit more balanced. You know, companies are already starting to kind of cut costs and consider how many employees they need and what they’re paying them and that sort of thing relative to say, you know, 21 and 22, where there was a lot of hiring going on.

[00:19:19] Sam Burns: And so I think the overall picture for inflation is going to get back to, you know, closer to normal. And, and you can see that in commodity prices, which are the most sensitive and the most easy to measure, kind of, you know, measure of inflation, they haven’t shown any signs. They peaked, you know, last June and have really been kind of trending low, flat to lower ever since, and are, you know, the lowest they’ve been in a year or so.

[00:19:39] Sam Burns: So, you know, energy prices, food prices, you know, other commodity prices. They’re up and down, but they’re generally trending kind of flat to lower. And so I think the prices of goods, things you buy at the store are, you know, kind of being flat to lower already. It’s really services and, and labor things that are where the source of the inflation really is.

[00:19:57] Sam Burns: And I think that’s going to moderate over the next, say, six to 12 months. And then, you know, that’s certainly the Fed being tightened, the housing market slowing down, those are all things that will have an impact on the. Over the next, today, six to 12 months. So I don’t see any big driver for why you would get a new sustained wave in inflation unless there’s a big supply shock again from, you know, wars or you know, pandemics or something else that would be, that really disrupt the ability of the economy to supply things like we’ve seen the last few years.

[00:20:25] Sam Burns: Sincerely, hoping that’s not the case, but we’ve dealt with those, I think to some degree already, and I think there’s a better chance that those get better rather than worse. 

[00:20:34] Rebecca Hotsko: Okay. That was super helpful to hear. I want to jump back to the conversation on earnings revisions, because I know your specialty at Mill Street Research is looking at these analyst earnings revisions, and I guess given the concerns in the market about a possible economic slowdown recession, what have we been seeing so far on this for the year for revisions to these estimates?

[00:20:59] Sam Burns: That’s  right. Yeah. As I kind of alluded to earlier, the estimate of revisions so that, you know, the changes to the estimates we’ve been seeing for months now have been quite negative. There’s been a lot more estimates being cut than raised across the whole spectrum of US stocks and, and globally. And that’s been, you know, one of the drivers of the negative returns we saw last year.

[00:21:18] Sam Burns: And kind of drove a lot of the worries coming into this year. But what we’ve actually seen just in the last, say, month or two, is that the pace of estimate cuts has really eased, and particularly for the large cap stocks in the US where there was a lot of the, the really the worries, whether it’s the big cap tech stocks or some of the, you know, other more cyclical names, those have seen much less negative revisions.

[00:21:39] Sam Burns: And actually the technology sector in my work, if you just look at all the stocks in the whole, you know, tech sector across the. Not just the few mega caps, they’re actually turning slightly positive, which is, you know, the first time that we’ve started to really see anything, you know, kind of a, a green side of things rather than all red.

[00:21:55] Sam Burns: And so it is, and we’ve also seen, you know, better readings on some of the other more cyclical industries and, you know, industrials or consumer discretionary things that are more sensitive to the economy. So that tells me that, you know, a lot of the cuts that happened have already brought our instruments down far enough and that there may be, you know, some sign that they’re at least going to stabilize.

[00:22:12] Sam Burns: Or maybe you can move a little bit higher for a little while. And again, all you really need is to see the cuts stop, or at least slow way down to at least let the market catch its breath and stabilize and do a little bit better. And that’s kind of what we’ve seen. I think, you know, this year.

[00:22:26] Sam Burns: And so, you know, I’m looking at it both from the standpoint of overall revisions, just kind of which direction they’re going and they’re getting, you know, less bad, less negative. And then which sectors are the ones that are, you know, driving things? Is it, you know, is it really, is it like utilities and consumer staples?

[00:22:38] Sam Burns: The defensive side of the economy that you expect to do well in, in bad times? Or is it the cyclical side, you know, that are more levered to global growth or to, you know, economic activity? And that’s more where we’re seeing the strength. And then we even want to look globally. We say that, you know, the estimated activity in Europe is actually stronger than it is in the US, which has been unusual.

[00:22:57] Sam Burns: It’s generally been, the US has been much stronger than Europe for years. And we’re actually seeing, and, and Europe is more cyclical and less tied to technology. That’s been, you know, a sign of strength, even though everyone was assuming that Europe would be in deep recession by now because of the war in Russia, in Ukraine and everything else that hasn’t happened and China started to recover from Covid and everything they’ve been going through.

[00:23:15] Sam Burns: So a lot of things that people assume would be much worse right now have been less bad, whether it’s, you know, the US or Europe or China. And I think you’re starting to see that in the earnings revisions data as well. 

[00:23:26] Rebecca Hotsko: Okay. Yeah, that was something that I was quite surprised about was the Europe picture and how it is held up way better than expected.

[00:23:33] Rebecca Hotsko: And I guess on these revisions, do you tend to focus on the quarterly revisions more or the full year? What does your approach focus on more? 

[00:23:43] Sam Burns: It’s a great question and, and there’s a lot of people who do things differently, so my focus is very much on, well, what I call the, you know, year ahead, next 12 month estimates.

[00:23:51] Sam Burns: So I’m always wanting to look at sort of those slightly longer term and have a fixed, you know, kind of time window that I’m looking at for what the analysts are doing. So I’m looking at their annual forecast for this year, day 2023 and 2024, and then coming up with a kind of a rolling estimate of what the next 12 months looks like from the analyst standpoint in terms of earnings for.

[00:24:09] Sam Burns: I really don’t focus much on the individual current quarter estimates, because those can be very noisy and can be sort of gained a little bit. Meaning that the estimates are brought down to a level intentionally so that they, the companies can beat them for the current quarter because, you know, that’s how analysts, you know, maintain their relationship with their corporate management and all kinds of things like that.

[00:24:28] Sam Burns: And so the current quarter numbers are not always necessarily a reliable metric of what’s going on, on a, you know, slightly longer term basis for what they really think. You know, it’ll play a part in the year ahead number. You know, the current quarter is obviously part of that. But if they’re just kind of tweaking their current quarter numbers, they’re not moving there.

[00:24:45] Sam Burns: Full year numbers, then that tells you that, you know, that you really need to focus on the, you know, the 12 month numbers to get a clearer picture of what the real fundamental drivers are and what’s happening. So I, I’m always looking at the year ahead numbers and looking at, you know, kinda the, the ups and downs of that.

[00:24:59] Sam Burns: We tend to be more stable and more predictive of relative returns for stocks. I found it. 

[00:25:04] Rebecca Hotsko: Right, because I was reading all the reports on fact set in preparation for this interview, and I saw that for Q1 of this year, the estimates were lowered, estimates higher than normal, but that is a more volatile picture than you’re saying.

[00:25:19] Rebecca Hotsko: So that doesn’t really drive your investment process or anything as much as the full year. 

[00:25:25] Sam Burns: That’s right. That’s right. Yeah. Focus mostly on the full year numbers and you know, look at the facts of data like that as well. And you know, what they’re saying is true. The estimates have come down more than usual in Q1, but in some ways they say you then expect the numbers to beat that by a certain amount.

[00:25:40] Sam Burns: So they’ll be down less than what the current consensus calls for. Just because of the way the analysts kind of played that game and to some degree that was priced in and the negativity we saw, you know, in November, December last year. And then, it got investors and analysts saw that coming a little bit and you know, can anticipate that and price it in.

[00:25:56] Sam Burns: So it’s really more about what they are doing to their second quarter, third quarter, fourth quarter numbers, you know, or 20, 24 numbers. Looking ahead, it’s really going to drive, you know, if I’m making an investment today, I’m not basing it on what Q1 numbers are going to be or what Q4 numbers, you know, were last quarter.

[00:26:12] Sam Burns: I’m basing it on looking ahead a little further than that, and those trends are actually looking a bit, a bit better now in my work. And so I think that’s more relevant for, for looking at the kind of stock return forecasting as opposed to kind of explaining what happened, you know, over the last quarter and what analysts have done.

[00:26:28] Sam Burns: It’s like, what are they likely to be doing in the near term in the future. 

[00:26:32] Rebecca Hotsko: Right. So let’s dive a little bit into your strategy now. How do you use this approach of estimating what analysts will do in the future and previous estimates of earnings or visions to inform your investment process? . 

[00:26:47] Sam Burns: Sure.

[00:26:48] Sam Burns: So for the most part, I look at earning revisions on a kind of a relative basis. Meaning whether it’s across countries and regions or across sectors and industries or across stocks themselves,] I’m basically looking to see where are the strongest earning revisions, where are analysts raising their numbers most convincingly, and where are they cutting their estimates most convincingly?

[00:27:08] Sam Burns: And, you know, finding where those, you know, kinds of groups are, where the strong areas are, where the weak areas are. And, and then focusing, you know, the attention on the strong areas and avoiding the weak areas. because my research really corroborates the idea that on average over time the stocks or the industries that have the strongest earning decem revisions and then are then corroborated with the price momentum or the valuations that would support, that tend to outperform the areas that have the weakest revisions.

[00:27:34] Sam Burns: And so I’m looking for situations where the earnings estimates are going up and the price of the stock, the relative returns. Are favorable, meaning that the market is responding to those earnings estimates and the valuations of not are favorable, meaning they haven’t already priced in all the good news.

[00:27:49] Sam Burns: And so those three components are what drive my stock selection process, but also then kind of rolled up into the industries or the sectors or the, even the countries and regions that can all be kind of aggregated up. And so depending on whether I’m talking to a client who does more kind of big picture asset allocation, or a client that does, you know, stock selection, I can kind of focus on the areas.

[00:28:10] Sam Burns: Are relevant in that way, but applying the same process basically across the board to look for areas of relative strength and weakness. And then I have other tools that I use for kind of asset allocation. Do I want to be in stocks or do I want to be in bonds, or things like that. Kind of where you are in the cycle and you know, kind of what risk appetite is, things like that.

[00:28:26] Sam Burns: So there’s kind of two big parts to the puzzle, but the earning investment revisions are really for relative selection within the equity. 

[00:28:34] Rebecca Hotsko: So you mentioned three things that you look for there, and I’m super curious about the third thing that you mentioned on how you look for companies that haven’t priced in those expectations.

[00:28:45] Rebecca Hotsko: What information are you using? How are you finding this out? 

[00:28:49] Sam Burns: Right. So for, for valuation, what I’m really looking at is the, you know, the, the, the PE ratio based on the forward 12 month estimates that I mentioned. So, you know, what are analysts forecasting over the next 12 months and what is the, you know, valuation being assigned based on that, but also look at that, not just by itself.

[00:29:05] Sam Burns: But relative to what the stocks, any particular stocks own historical range is. So some stocks always trade at higher multiples, and some stocks kind of tend to always trade at lower multiples because of the industry they’re in or the way their accounting works, or whatever the case may be. So accounting for what’s typical or what’s normal for a particular stock or an industry is important to kind of scale or, or, you know, What you think a high or a low price earnings ratio might be.

[00:29:31] Sam Burns: And so I think, you know, the key is to look for, again, on a relative basis is this, you know, multiple, very high or very low relative to other companies or relative to its own historical kind of norms. And so if you find the stock where their earnings divisions are rising and the price momentum is positive, and the evaluation is maybe on the lower end of its historical range, then that’s a favorable setup That means, Investors haven’t already kind of assumed that the estimates will rise and price it all in, and that you can buy it at a reasonable price.

[00:29:59] Sam Burns: So it’s really more about avoiding the kind of the risks that come with buying very expensive stocks. Even if they look like them, you know, their estimates are going up. Sometimes that’s, you know, that’s been priced in. People have already kind of paid for that. And so you want to find stocks where that’s not the case.

[00:30:13] Sam Burns: And so so I look for that as kind of the the check against, you know, that if there’s stronger vision and strong price momentum, you might make sure you’re not overpaying and, and buying something with an extremely high, you know, PE ratio that it’s safer to buy stocks with, with lower evaluations.

[00:30:27] Sam Burns: And that’s how that kind of fits into the overall puzzle. So I’m not, you know, trying to say I’m an evaluation expert and then I know every company is, you know, ins and outs and all the details. But you know, on average you do better at owning cheaper stocks and more expensive ones, and particularly when you’ve aligned with their earnings estimates and their price momentum.

[00:30:45] Rebecca Hotsko: And I guess in terms of the current P versus the forward, so you’re looking for a current P that is lower than its historical range or relative to its competitors. And then the forward P, are you looking for it to be lower than the current P? 

[00:31:00] Sam Burns: Oh, I see what you’re saying. Yeah, ideally, right, because that would imply that earnings, you know, that are forecasted for the future would be higher than the earnings currently.

[00:31:09] Sam Burns: So yeah, that’s certainly typically, you know, ideal scenario and certainly anything that’s sort of a growth stock would, that would be expected is that the trailing PE would be higher than the forward PE. Now it isn’t necessarily required that that be the case in my process to be a favorable stock.

[00:31:24] Sam Burns: Even stocks that have negative earnings can still be, you know, favorable to some degree if their earnings estimates are rising. Meaning if their earnings are becoming less negative or maybe in the process of turning positive, but on average you’d prefer to see positive earnings and growing earnings. As long as they’re not priced, you know, too high, the PE is not excessive, then that’s the most favorable scenario is positive earnings that are rising price momentum, supportive, and a forward PE that’s relatively.

[00:31:49] Rebecca Hotsko: Is this kind of a reversion to the mean strategy in a sense? 

[00:31:55] Sam Burns: Well, the valuation component very much is, and because the other components, the, the earnings  estimate revisions and the price momentum are momentum or kind of trend following components. It’s good to have a balance that you have, you know, some components of the, the process that I follow is sort of trend following the, you want to go with, the stocks are doing well and they have strong fundamental momentum and strong earnings or price momentum.

[00:32:17] Sam Burns: But you also don’t want to get stocks that are too expensive or that are likely to revert to the mean and evaluation stand. So that’s what the valuation does for you is it avoids it, it lets you have some of that mean version or you know, stocks that are cheap and may be likely to rerate higher as, as a tailwind as well in addition to improving fundamentals.

[00:32:36] Sam Burns: So, you know, you have to kind of balance the tendency to get too, you know, that too much momentum kind of process will, will push you to stocks that are expensive. Too much emphasis on value or meaner version means that you can get caught in kind of the value trap where shocks are cheap, but they just stay cheap because something’s wrong with them and they’re not improving, they’re getting worse, and therefore you don’t ever really make that, you don’t ever see the meaner version.

[00:32:57] Sam Burns: And so, like I say, the ideal scenario is if it’s relatively cheap, but things are improving, there’s that catalyst, something to drive there, the multiple to go up, that’s when you get the best results typically. And so you, you know, it’s hard to find that all the time, but when you do, that usually tends to be the best 

[00:33:11] Rebecca Hotsko: And I wanted to ask you about the accuracy of analysts, earnings estimates, and these forward guidance, because my hunch would be that they tend to be overly optimistic.

[00:33:23] Rebecca Hotsko: Is there any data to confirm or dispute that. 

[00:33:28] Sam Burns: Well, you’re right there is a tendency on average for analysts for their, you know, longer term forecast, looking at a year or two to be somewhat optimistic. You know, their estimates are higher than what actually transpires now. It’s kind of the opposite. For the current quarter, we actually tend to low ball the estimates a little bit.

[00:33:43] Sam Burns: So because they want the company to beat them. So it kind of, it is sort of a shift. When they have a long-term estimate, they tend to be optimistic. But as you get closer to the current time and in reality, Actually tend to kind of shift to, to letting the, lowering the bar far enough for the company to, to hop 

[00:34:00] Sam Burns: So there is a kind of a pattern to that on average. But I guess what I’m, what’s important to me is not the level of their forecast, meaning if they’re too optimistic on average, that’s actually a, doesn’t matter. What matters is the direction, the change. And so that’s why the revisions to the estimate are really the.

[00:34:15] Sam Burns: If they were expecting one number and now they expect slightly more, that’s the important part. And if they’re cutting their estimates from whatever level it was, that directional movement and the magnitude of it is what’s important. So in some ways, I don’t really care if they’re too optimistic or not.

[00:34:29] Sam Burns: It’s whether if there’s news comes out and they raise their estimates for whatever reason, that’s incrementally positive news. And that’s kind of probably driving the stock price higher rather than lower. And that’s what I’m looking for. And the fact that they tend to be kind of predictable or persistent once they start raising their estimates in one direction, they actually tend to keep going for months at a time in some cases.

[00:34:48] Sam Burns: And so once I see that there’s a lot of estimates going up in the stock or this industry, then I know there’s a good chance they’ll probably keep doing that for a few more months. And when they do stock prices will respond to that cause that’s what they’ve historically done. And, you know, investors respond to estimates.

[00:35:01] Sam Burns: And so that’s the kind of how you use to estimate changes and analyst behavior, you know, to your advantage to take advantage of that, to make it somewhat predictable for stock returns. And so we find that the stocks that have the biggest upward revisions tend outperform those with the most negative revisions without really concerning yourself too much with the level of the estimates, because those kinds of wash out over time.

[00:35:22] Sam Burns: But it’s the direction that matters for, say the next three to six months. 

[00:35:26] Rebecca Hotsko: Right. And I guess, how long does it typically take stock prices to incorporate that information? And how quickly would you see that positive gain in this stock price following an analyst revision? 

[00:35:39] Sam Burns: Right, right. So it can take, you know, sometimes, you know, weeks or months for the kind of news to really filter through.

[00:35:45] Sam Burns: And because these analysts tend to kind of move incrementally and, and as a herd, you know, one analyst will raise numbers and then later another one might, and then, you know, they might kind of follow on each other for. A while, and each time that happens, you’ll get some impact on the stock price. So you’ll get this kind of, you know, persistent impact kind of, you know, over time as the news kind of filters through and the analysts respond to it, maybe the company updates its guidance.

[00:36:10] Sam Burns: And there’s also tends to be kind of, there’s momentum in the actual businesses of the companies. If the company comes out with a new product or service and it turns out well. It’s not going to just be something that happens in one quarter and then goes away. You know, they’ll probably have, you know, good, good trends in their sales and their earnings for a little while.

[00:36:25] Sam Burns: And so it may take a little while for analysts or even the company itself to catch up to that and to sort of, you know, fully incorporate the news that their new product or service or whatever it is, has caused. And the same is true on the downside. If things start to go wrong, they tend to kind of maybe keep going wrong for a while longer.

[00:36:42] Sam Burns: And so it takes time for those things to play out both in the market and for. So you can see, you know, three, six, sometimes, you know, months or a year before that trend really, you know, plays itself out. And so I think that’s one thing people may misunderstand is they assume, well, some news comes out today, the stock goes up, analysts have raised their numbers, it’s all over, everything’s, you know, already accounted for.

[00:37:04] Sam Burns: And actually in reality, there’s a good chance it will continue for a little while longer. Approach earnings announcement drift or the trend will actually persist for weeks and months sometimes, but it will get, you know, that’ll get overlooked once the news of the day is over.

[00:37:19] Sam Burns: So that’s what you’re, you’re kind of taking advantage of this kind of strategy. 

[00:37:24] Rebecca Hotsko: And then are you focusing on the revisions to earnings per share, or do you also focus on the revenue growth and margins, if even earnings per share doesn’t perform as good as the other two? 

[00:37:37] Sam Burns: Right. So most of the work that I do is focused on, you know, earnings per share estimates, kind of the bottom line number.

[00:37:43] Sam Burns: There are certainly estimates for, you know, sales or dividends or book value or, you know, other measures from the income statement or the balance sheet. Now, there’s one thing that analysts, when you look at what analysts actually forecast, what they publish and submit, you know, to the earning adjustment services, the most commonly estimated item is earnings per share.

[00:38:01] Sam Burns: So that’s where the most, you know, kind of estimates are. And they, and the mo, the, the highest quality or kind of depth of earning estimates. The other thing is that when they raise their forecast for earnings, they’re almost always going to be also raising their earnings, their forecast for revenues and for margins, or even if margins stay the same.

[00:38:18] Sam Burns: So if you’re looking at, again, the direction they’re moving, it’s very rare to see them raise their earnings but lower their sales numbers or vice versa. So if you know which way earnings are going, you pretty much kind of know which direction the other items are going, you know, whether it’s the exactly the same amount, percentage wise.

[00:38:33] Sam Burns: Yeah, that’ll vary. But if I want to know just directionally which way things are moving, the earnings estimates will generally get you in the right, right direction. And then you can go and then look more closely at, you know, what’s going on within the margins or the other, other measures to see if there’s, you know, a more complete story to tell There.

[00:38:50] Sam Burns: And so we can do that for clients as well. Look, look more in depth and certainly clients, you know, that they’re, A lot of my clients are, you know, professional money managers, they’re institutional investors and they’re doing their own research and they might be doing that themselves. But you know, I can help them narrow down the list of say, okay, here are the stocks where the estimates are rising, and things look fundamentally good and have good support from the price and evaluation.

[00:39:09] Sam Burns: So, you know, maybe go and do your research here and don’t bother with the ones that look weaker right now. And so I’m not going to be at the end of the story, but, you know, give them a good pond to fish in, in some ways. Or you know, a directional indication of which way, you know, things are looking for a company.

[00:39:25] Sam Burns: Basically if you get the AEPS numbers, kind of moving the right direction, the other things tend to follow along. 

[00:39:31] Rebecca Hotsko: I really like this strategy. It helps narrow down it’s, it’s a screening process essentially from top down on to help you find great companies. And so I guess I’m wondering on a sector level, now that we know your checklist, what you look for, what are some sectors that have the best prospects for you?

[00:39:48] Rebecca Hotsko: After we just saw some revisions come out from analysts recently. 

[00:39:53] Sam Burns: Yeah, so right now when I look through it, I see that I think I mentioned, you know, technology is actually surprisingly strong, but you kind of have to take out the, the, the mega caps, you know, the Apples and Microsofts and things that have a huge amount of weight in the technology related indices, but that the average kind of technology stock is actually doing relatively well on earning estimate revisions basis.

[00:40:13] Sam Burns: And we’re also seeing relative strength in things like the industrial sector, certainly transportation related stocks, you know, airlines. Things like that are holding up fairly well. You’re starting to see some of the consumer discretionary stocks hold up relatively well whether it be, you know, retail or some of the other areas.

[00:40:28] Sam Burns: And there’s been certain parts of the financial sector that have been holding up better when the stock markets and things do better than the things like capital markets and insurance have been relatively good. Now. The banking sector, the banking industry has been. Weakening it actually in my work for a couple months now and is having some troubles lately, but other parts of the financial sector are, are, are, have been doing well and so when I look overall I’m seeing generally, you know, those kind of more cyclical parts of the economy, you know, doing fairly well.

[00:40:55] Sam Burns: And at the bottom of the list, you know, you still see kind of real estate, which is, you know, under pressure both from kind of post [00:41:00] covid people from going to the office anymore. Or higher interest rates because they’re very insensitive. Some utilities, some healthcare, some consumer staples. Those are kind of the areas that look relatively weakest on earning divisions and, and the fun, the overall kind of scores and, and rankings that I look at.

[00:41:14] Sam Burns: So, you know, if I’m looking at it overall, I’m saying the more cyclical areas. Areas that are benefiting from a strong job market and that are either less interest sensitive or that are benefiting from lower energy costs. Oil prices have been coming down, gasoline prices coming down, natural gas prices have come way down.

[00:41:31] Sam Burns: So all the industries that use that, and that’s a fuel cost or an input cost, they’re actually benefiting. And same thing with consumers not having to pay as much to fill up their tank. All those things help the earnings for energy, you know, users but are hurting their earnings forecast for oil producers.

[00:41:46] Sam Burns: So they’ve been starting to weaken the last few months. So tho that kind of rotation from energy producers to energy users and companies that are very insensitive, have been under pressure. Ones that are less so, have been doing better and that the job market growth, the re, you know, retail spendings holding up, that’s all coming through in the, in the earnings for stocks and industries that are sensitive to that.

[00:42:06] Rebecca Hotsko: And then from there, once you’ve identified all those sectors, you go in and look at the list of companies and that’s where the valuations come in. And then you kind of can filter through those and do that. 

[00:42:17] Rebecca Hotsko: That is the second, I guess, step in this process. 

[00:42:21] Sam Burns: Right, right. Exactly. If you take kind of a top down starting point and you look at the king of the big broad sectors, kind of which parts of the economy and the market you want to be in, then you can drill down into specific industries.

[00:42:31] Sam Burns: Or do I want to be in software or semiconductors or you know, insurance or banks, and then you can drill down in individual companies. Because within any sector industry, there’s always a wide range of companies, some doing better and some doing worse. And so you can then filter in and say, okay, here are the specific names that have stronger revisions.

[00:42:47] Sam Burns: And their price momentum is, you know, relatively strong and their valuations are, are relatively favorable and therefore they’re more likely to outperform even within that specific industry. Versus stocks that are, that are weaker within that industry. And so, again, depending on how the, you know, the investor or the client is looking at this, is set up.

[00:43:03] Sam Burns: They might focus very, you know, much on the individual names within one specific or a few specific industries. Or they might look at the whole broad universe of US stocks and say, you know, I don’t really care what sector it’s in. Just gimme the strongest individual companies that have, you know, strong, you know, products and services and and have, you know, the, the most aggressively rising.

[00:43:21] Sam Burns: And focus on those. So you can kind of slice and dice it however you like and do it by, you know, by sector or even by, you know, by size. You can look at small caps and large caps or by style, you know, growth stocks and value stocks. So I can kind of carve up the whole list of stocks, however someone might want.

[00:43:37] Sam Burns: But the general principle is the same. You want the strongest stocks, ideally in the strongest industries, give you the most kind of you know, tailwinds behind you to kind of use the sailing analogy, to be able to find the, the strongest names, things that are most likely to outperform. 

[00:43:51] Sam Burns: So you mentioned this is kind of a momentum trade in a sense, or one part of it is based on momentum.

[00:43:57] Sam Burns: So how long are you typically holding these securities [00:44:00] for, and I guess what would the catalyst be to cause you to sell it then? Would it be a downward momentum? 

[00:44:06] Sam Burns: Right. That’s very much the, the, the principle behind a lot of this is the kind of momentum and looking for alignment between what I call fundamental momentum, the earnings estimates, price, momentum, and then, you know, evaluation is kind of the counter to that.

[00:44:18] Sam Burns: And so most momentum oriented kinds of equity strategies tend to be oriented in kind of anywhere from one to six months. In some cases, the trends in these stocks will go on for longer than. You can see strong momentum for a year or two. There’s certainly an example, plenty of examples of that, of, you know, growth stocks that just kind of keep outperforming, keep surprising.

[00:44:36] Sam Burns: It’s not the majority, but there are certainly those names that show up like that. But I would say kind of, you know, three to six months is typical. Sometimes, you know, nine months or a year. Now to be clear, you know, Mill Street Research does not manage money. So I’m not actually trading any of these.

[00:44:49] Sam Burns: But the investors that, that use it and the way that the models and the rankings tend to sort of turn over is that kind of, you know, intermediate term, you know, three to six to maybe nine month kind of horizon these trends play out on. 

[00:45:03] Rebecca Hotsko: And the last question I want to ask you for today is your longer term outlook for the market because, I heard you talk about previously how in a longer term model, when looking at, I guess this extended time horizon, the expectation is that real earnings growth is expected to be about zero over the next 10 to 20 years, or is in the past, or is more around 4%.

[00:45:26] Rebecca Hotsko: So is this something that you’re still expecting or could you paint some color on this? Because if earnings growth is expected to be zero, what does that potentially mean for longer term stock price appreciation. 

[00:45:39] Sam Burns: That’s right. That’s right. So I do have another indicator that I look at that basically tries to answer the question, what is the market pricing in right now in terms of long run, real meaning after inflation growth expectations for earnings.

[00:45:53] Sam Burns: So it’s answering the question, you know, what is the market thinking? What is it pricing in? And then of course you have to compare that to, you know, what I think or what you think about what’s really likely to happen. And so in some ways it’s a, you know, it’s a measure of what investors are doing or saying right now, and then looking for situations where, you know, if everyone is very pessimistic and expecting very low growth, then you know, any kind of good news or upside would, would be favorable for stocks.

[00:46:16] Sam Burns: The stocks, you know, participate in Longhorn Growth and, and bonds. Whereas if everyone is already expecting very high growth and they’re already very optimistic and think things are going to be great, then it wouldn’t take much disappointment for stocks to kind of underperform and, and get knocked down.

[00:46:28] Sam Burns: And so right now, or for, for several months now, the model that, that I use for that has been showing that based on, you know, current earnings and inflation and stock prices and bond yields that, you know, would only take, it wouldn’t take any, you know, about zero real growth or just slightly marginally positive real growth to make, you know, you kind of indifferent between stocks and.

[00:46:48] Sam Burns: That, you know, zero real growth would kind of make the outlook for stocks and their live work for corporate bonds roughly equal on a 10 to 20 year basis. And that seems pretty low to me, meaning that if the real earnings growth in the US tended to average anywhere from two to 4% over long periods after inflation, that zero would be much worse than average.

[00:47:07] Sam Burns: So you’d, you’d have to assume that there’d be very little economic growth and that US corporations would have no way of really growing earnings for a long time to make that a, you know, a, a reasonable or a, a good assumption. . So to me, what it tells me is that, you know, expectations are very low and that therefore, you know, it doesn’t take, you wouldn’t have to be convinced of particularly much growth coming along the line for stocks to be attractive.

[00:47:30] Sam Burns: As long as stocks will be better than what the market is pricing in or earnings growth is higher than expected. Stocks tend to do better. They tend to rise or at least do better than bonds to say that. And so to me, this is sort of a sentiment indicator in some ways, saying that sentiment is still pretty pessimistic based on current way things look right now.

[00:47:47] Sam Burns: And therefore there is potentially more upside than downside to high expectations as long as earnings growth is at least somewhat positive over the next 10 to 20 years, which I think it will be. I think earnings will still continue to grow, maybe not as fast as they have, but still positive, and therefore stocks have a better chance of beating that hurdle than missing it.

[00:48:06] Rebecca Hotsko: Hey, that was very helpful. That was such an insightful conversation. Thank you so much for taking the time to come on today and share all that knowledge with us. Before I let you go though, where can our listeners go to learn more about you and then everything that you do at Mill Street? 

[00:48:21] Sam Burns: Oh sure. Well, no, thank you for having me on.

[00:48:25] Sam Burns: And so, if you want to find out more, millstreetresearch.com has a lot of information about the work. It has sample reports and a lot of things on there. There’s a blog where they update every once in a while that gives some background and information about what I do. There’s also a report that I put out every week now that even individual investors might like.

[00:48:52] Sam Burns: It basically has sort of a slice of what I do for the institutional investors that I deal with. It’s called the Weekly Roundup, and it’s $50 a month. So it gives you a way to track what I’m doing without having to pay the rates that the institutions do. That’s on the website as well.

[00:49:15] Sam Burns: Then I’ve been posting on Twitter and LinkedIn reasonably often, commenting on what we’re seeing in the markets, and responding to economic data and things like that. I give just snippets and slices of indicators that I look at, so you can keep an eye on that by following @millstreetresearch on Twitter or LinkedIn.

[00:49:36] Sam Burns: Anyone can reach out by emailing info@millstreetresearch.com if they have questions or want to learn more

[00:49:43] Rebecca Hotsko: Perfect. I will make sure to put all of those in the show notes.

[00:49:45] Rebecca Hotsko: Thank you so much for coming on today, Sam. 

[00:49:48] Sam Burns: My pleasure. Thank you so much for having me. 

[00:49:50] Rebecca Hotsko: All right. I hope you enjoyed today’s episode. Make sure to follow the show on your favorite podcast app so that you [00:50:00] never miss a new episode. And if you’ve been enjoying the  podcast, I would really appreciate it if you left a rating or review. This really helps support us and is the best way to help new people discover the show. And if you haven’t already, make sure to sign up for our free newsletter, We Study Markets which goes out daily and will help you understand what’s going on in the markets in just a few minutes. So with that all said, I will see you again next time. 

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