War, oil and stagflation: The central bank stress test

Good afternoon, everyone. Thank you so much for joining us today as we take stock. of the global energy crisis and the way that this has been reshaping the outlook for global macro. and markets. Now, until fairly recently, the... The markets have been quite resilient through all of this shock until maybe Friday, but beneath this calm central banks are having to make some difficult decisions. The ECB is set to hike interest rates later this week. The Federal Reserve's been moving in a more... hawkish direction even the bank of england could be raising rates at some point this year as they all seek to contain inflation. But of course, it's not just about inflation. This is also... a growth story as well. So today we're going to be exploring all of this with our usual crew of experts who are waiting in the wings for us. We have Karsten Breski. in Frankfurt, who's our global head of markets. James Knightley is our chief international economist coming to us from New York. And then here in the studio. we have James Smith who is our developed markets economist and also Chris Turner, who is our global head of markets. I'm Rebecca Byrne. If you've got a question, you can put it in the questions tab and we'll get to them. at the very end. But for now, we're going to go straight to... a poll. We want to know your view of the ECB. How many... hikes do you expect this year from the European Central Bank? Your options are four or more. three, two, one, or none. So put your answers in and we'll come back to them because they take a minute or two. to come through. But let's go straight to Carsten. For your view, Carsten, you say that a dune hike is... pretty much a done deal, but there's a lot of uncertainty. what's the case for hiking rates now as opposed to taking a wait and see approach? That's a very good question, Rebecca. I think the main case or the main argument is that the headline inflation continued to increase a little bit since the last meeting We also saw that core inflation started to crawl up and also shorter. day that inflation expectations started to increase. And that I think where you can make a case as an ECB to hike interest rates. But I think, you know, what is even more important for the ECB this week is the... the institutional memory of 2022. So back then the ECB was too late in reacting to what back then was a much... bigger inflation shock. But I think this has so much burned into the institutional memory of the ECB. that they want to show the outside world that this time around. They are ahead of the curve, and this is why I think they're going to call this a kind of insurance rate. hike it uh it won't do do any big damage on the economy when they do it. but it could do more damage to their own reputation. If they weren't to hike this week. Now, there's a lot of talk about where oil prices are heading next, though. well above pre-war levels, maybe off their peaks, but how is this affecting the inflation outlook and what's your forecast for this year? Yeah, well, of course, significantly. and uh well for everyone listening right now we will be publishing our our next monthly update on on thursday we just discussed Plus actually different scenarios and also for oil prices as they've now been on the rise again. in over the last days For European, for Eurozone inflation, we expect... These so-called knock-on effects to materialize. So this is... It starts off as an energy price shock. People feel it at the gas station. then it will translate into higher transportation costs. We'll also see it in food prices. So these knock-on effects, in our view, will push up European inflation. towards 3.5%. Maybe we'll see a peak even at 4%. percent but not and i think that's important not at these double-digit levels. that we saw in 2022. And why is this not happening? Because here... fiscal policy is crucial. Back in 2022, I think there were more than 500. individual government measures to somehow tackle higher energy. prices, price caps, tax. tax cuts, subsidies, what have you. They all amounted to something like 3 to 4% of GDP fiscal stimulus. This time around, government measures amount to 0.2. percent of GDP. So it is really this big difference. that in our view justifies The much more benign inflation outlook for this year and also for 2017. You mentioned that the ECB is hiking as a sort of insurance. policy, that it was burnt by what happened four years ago, but could this actually turn into the inflation shock that we saw. four years ago in 2022. Yeah. I think everything's possible. But when you look at the data, the fundamentals, So it's not only this difference when it comes to fiscal stimulus or government measures to to tackle higher energy prices. there is another element that is very different this time around. than in 2022 and that is In 22 we came out of a lockdown. We came out of lockdown with very high saving ratios. and balance sheets of households were much better. than they currently look. So the willingness. but also the ability, the financial ability of European consumers. to pay the higher prices was much higher than it's currently. In other words, it will be very hard for European companies. to pass through higher import prices. to final consumption. People are simply not able to pay for it. So that is... That is, I think, the biggest reason, again, against expecting double-digit inflation levels. And the other argument is that yes, we criticize the ECB for having been late in 22. but also in 2022 they were not only late they also came from a very low interest rate level Remember, back then the policy rate was at minus 0.5. So they had to come from minus 0.5. Then to tackle an inflation rate of 8% going into double digit levels. Right now, we are in a neutral policy rate, 2%. percent so it's a much better starting point which I think also means that The There is not too much. too much fear that we would get a repetition of the 2022 experience. Now, of course, this isn't just about inflation. There are also concerns that these rising energy prices are hitting economic sentiment. They could hit growth. What's the latest on the German fiscal boost though? offer some support here to the rest of can it help keep the eurozone out of recession Yeah, well, you know what time it is these days if all your hope is based on Germany. The Let me start one step before Rebecca, because I think it's important that yes, there will be an adverse effect from higher energy prices on growth. And we see this and we're also we have. always gradually revise downwards our Eurozone forecast. This is not to say that we are heading towards a recession, but clearly when you look at where we stood at the start of the year, with expecting eurozone growth of more than 1%. and we're now at half of it. So this already shows you the adverse effect. I also don't get the ECB. be entirely because at the last press conference the ecb said well, this is not stagflation. Oh no, they are right. It's not outright stagflation. But these are, this is clearly sexflationary pressures. If inflation goes up, if growth comes down. I don't know how to call it otherwise then. and stagflationary forces. On drone, and indeed this is also in the longer run. Still, our main argument against the recession and in favor of some kind of cyclical Rebound because if you add. the plans for defense and infrastructure spending this year in Germany. coming from this special purpose vehicle. and the annual budget. You get to something of more than 200 billion euro that will be spent. this year. And yes, there's always been criticism. Are they spending everything? Aren't they too late again? And there's also so much pressure on government, on bureaucracy to really bring this money into the economy, that this remains. a strong argument against the recession and a strong argument in favor of this rebound in economic activity. in the second half of this year and then also in 2027. Okay, do we have the results of the poll? Let's see what... So people think when it comes to rate hikes this year, so 59%. I think we'll see two rate hikes and that's a majority there, 28%. think what 29% think one and Few people think three or none. What do you think, Carsten? Markets pricing almost... Three hikes this year. How likely is that? And, you know, what also what do you think the ECB is likely to say? about that at its June meeting. playing with file here and not I'll be a bit confident in ECB not to pre-commit myself. So this week's rate hike is a no-brainer. Done. done deal and then a lot will depend really on the communication on on thursday in our base case we only have one rate hike um but always saying that there is an increasing chance or risk that we could get. a second one and it could be either a kind of meeting by meeting so already a next one in july or waiting a little bit, wait for another round of staff projections and then... and hike again in September. So it's one, one or two. The, um... that markets have priced in. Is something that I would clearly label as a policy mistake. To really see an ECB hiking three times or even more. We would have to see a much larger fiscal answer, fiscal response. to the energy crisis. If we don't get it, Three red hives would clearly push the eurozone economy closer towards a recession. What will the ECB say on Thursday? In all honesty, I think they won't give away anything. So they will hike. and they will reiterate their story about this is all data dependent. This is going to be meeting by meeting. And they will try. not to pre-commit as they always call Because if they do that, if they keep hopes. or maybe doing more alive. but also not really pouring. oil into the fire of exaggerating. these rate hike expectations, they're fully fine because in that way... They also have the bond market doing. some of the monetary policy tightening that they then don't have to do. via policy rates. All right. Thank you very much, Carson. Well, there's less certainty about what the Federal Reserve is going to do. We have another. poll for you. I want to know whether you think the Fed will actually hike rates at all this year, yes or no? So just put your answers. We'll get to them at the end. at the end in a few minutes but we're going to go to James in New York because we have seen a big shift at the Fed over the past couple of months, haven't we? James, growing number of officials wanting to drop that easing bias. and markets pricing in a growing risk of a hike before the end of the year. What's driven that shift in thinking? Is it all related to the Middle East? Well, I think it's certainly understandable why the market has shifted so much. I mean, we've seen... From an inflation perspective, The price pressures have undoubtedly increased. Gasoline prices at the start of the The year we're below $3 a gallon. We peaked at $4.60. per gallon just last month. So big, big increases there. That's put up for... trucking rates as well. There's been a little bit of a spillover into some of the other areas. And at the same time, the jobs market, as we saw on Friday, remains very resilient. And the economic backdrop remains pretty strong as well. Business survey still suggesting. that the US economy can grow around 2.5% this year. So given that backdrop, I think it's... It's certainly very understandable why the markets have repriced. and why we certainly cannot rule out the Fed hiking rates. I think there's slight caution. about why we would lean a little bit against that. I don't think we will get a rate change this year. I think we'll still look for stable rates this year. is that We talk about the case-shaped narrative a lot in the US. and that's because you know around the the consumer spending side of things high income ...and households are dominating that spending narrative. We know... for example that real household disposable incomes have fallen for three months in a row. That's putting more and more pressure on consumer spending power and is leading to the household savings ratio really dropping back down to just 2.6%. So So that's an indicator of some stress. coming through. And at the same time on the inflation story. Yep, energy prices have been an issue. but we've actually seen gasoline prices fall back quite considerably. in the last couple of weeks. So we've gone from $4.60 a gallon down to about $4.15 a gallon. as of this weekend. So that's helping to tweeze some of the pressure. Also, natural gas, a very different story here in the United States to what we're seeing in Europe. Natural gas prices have actually hit new Lows because which has gotten a massive abundance. It's a byproduct for the extra oil drilling that's been going on here in the United States. storage is pretty much full and we just can't export quickly enough. So this is leading to a glut. in natural gas prices here, which is helping to keep a lid on utility bills. So the cost pressures tied to the Middle East story are not as intense. as they are as in Europe and Asia. Moreover, we've got to remember that housing is still the dominant story in US inflation in terms of its weighting. 40% of the inflation basket. And nationally, the evidence suggests that rents are starting to drop. That's going to be relieving a bit of pressure there. And also on tariffs, you know, tariffs have been a big story surrounding U.S. inflation, but that's actually moderating now. We've got these claims of... or for rebates on the tariffs really coming through now. About half of the 160 billion or so that was paid under the Liberation Day tariffs is now in the process of being reclaimed. 20 billion of that has already been been approved and that's going to be returned to companies. So we're in an environment where that is being returned. And at the same time, the new tariff regime is not as as pressuring on the inflation backdrop. So those factors all do help to mitigate and do perhaps suggest that the inflation story is not It's not going to be as challenging in the United States as it will be. in Europe. So on the basis of that, given that there are some signs of stress on the activity front and we are looking for inflation to gradually start moderating We think that the Fed will be of the mindset that it will try. and avoid a rate hike if it can. and instead we'll look at stable rates. But certainly can't rule it out, but for now our choice is... stable Fed funds for this year. All right, let's see if the audience agrees with you. because we did ask you whether you think the Fed will hike this year, yes or no. And well, 54, almost 55% think. that yes, the Fed will hike. but 45% say no. Do you think, I mean, given everything that you've just said, James, I mean, it sounds like there's... obviously you think there's going to be stable rates but the possibility of actually cutting at some point points potentially. Yeah, I think that would be very much a story for next year. We've got a situation where the Fed... is still forecasting, telling us that in the longer term... The Fed funds rate should be close to 3% than 4%. currently at 375 We've got a new Fed chair that's... Similarly, an advocate or a believer that military policy it can be loosened further as well. And also, you know, at some points this will be resolved in the Middle East. And we will be getting back to a normalization. in an environment where the US is drilling and producing more energy. than it's ever done before and that will help to dampen energy prices we think next year quite notably. So you could get a bit of a situation where there is some demand destruction. that helps to lower core inflation pressures over the medium to longer term. And then that inflation narrative is then amplified. by lower energy costs. So yeah, we would still lean in the direction of rate. cuts but it's eventual rate cuts it's not going to be anything in the near term. Okay, something for 2027. Now, this is Kevin Walsh's first meeting as chair. Obviously he's going to be under a lot of pressure to keep rates low. lower. He's previously argued that AI will lead to a surge in productivity and that that's We'll keep a lid on inflation. What do you make of that argument? Yeah, so he's a committed... Pro technology, pro... productivity gains uh view or has a pro-productivity gains view from from this technology he thinks that this will in the medium to longer term really helped to to boost US growth, making it more productive. So more growth without the inflation. And therefore, that would argue that the neutral level of interest rates can be lower. and to be fair to him I you know I There is some buy-in from the broader committee. If you remember at the March FOMC meeting, when the Fed updated its forecasts. It did revise its long-term growth forecast for the US to 2%. percent from 1.8 percent without changing its view on inflation, without changing its view. on interest rates. So that does suggest that there is... a tentative willingness amongst the broader Federal Reserve. to accept that narrative. But is that going to be a dominant driver over the next six months? I would think. Probably not. If anything, I think the tech rollout actually risks being a bit of an inflationary story. You know, we've got the price of chips coming into the United States rising about 150%. percent so that is a story that is actually contributing to a little bit of inflationary pressures in the very near term. And I don't really see that changing. before the end of this year. I think, you know, his idea that this is this productivity story is going to help. lowering the neutral level of interest rates. I think that's more of a two to three year story rather than something that can be used to. justify lower rates anytime soon. How do you think a Walsh Fed might differ from a Powell Fed? As an example, he said that he wants the Fed to talk less. Yeah, that's right. I think he feels that. He wants more debate, he wants more dissent, and I think he's going to get it. I think, you know, this idea that the Fed has to be a consensus driven central. Bank, his perception is that leads to slower policy change Well, slow decision making. And he wants the Fed to just be quieter, potentially provide a few more. surprises and therefore allowing monetary policy to be a little bit more influential. on directing the economy. But that does run the risk of more surprise, more volatility. as well so there is potentially a little bit of downside but he feels that that is a cost worth paying. if it leads the Fed to be able to influence the debate much more. All right. Thanks very much, James. We're going to go to James in the studio now. for a look at the Bank of England. And... The Bank of England is expected to keep rates on hold. in June, which is different from the ECB. Why is there this divergence? It's... Yeah, that's right. I mean, a few weeks ago, it looked like we might get a rate hike in June from the bank, but those hopes have... fizzled away and I mean Carsten mentioned that Comparison with 2022 in the ECB. be exactly the same for the UK and if anything even more so I mean one of the things we see is the UK jobs market is much much more fragile than it was a few years ago, more so than in other places as vacancies have come down. more and that just means the UK is less susceptible to these second round effects that that policymakers are so worried about. And we've seen some kind of evidence of this last year. We had big tax rights. Tax hikes for employers, big surge in the national minimum wage last year as well. And we had food inflation, headline inflation got to like 3.8% in the UK. Okay, and we had the same concerns back then, but none of them have kind of come to fruition. The latest inflation figures for April were pretty much well behaved. And the jobs market, you know, hospitality jobs are down 3% in the last year since those April changes, same in similar in retail. So we've got some experience of this. And the bank as well would argue that simply by not cutting rates, which is what it would have otherwise done before this, maybe twice this year. Simply by not doing that they are in effect de facto tightening. So all of that for now keeping them happy with their rates on hold. But it's often said that Britain is one of the most affected countries by these rising energy prices. Is that true? Is that not true? I think it's a bit of a myth. I mean, we hear it a lot. And certainly in 2022, in the last energy shock, the UK was among the most effective, right? You know, we did see inflation take off in a more meaningful way and stay higher for longer. At the moment, the big difference for this crisis is that it's an oil crisis and not a natural gas crisis. And last time it was both. And the UK is really exposed to natural gas. So about 32% of our energy consumption is gas. Compare that to Germany, where I think it's maybe more like 20%. I think France is more like 15%. They're bigger than you. clear obviously so we have more exposure there but at the moment you know prices are okay if you look at forward natural gas contracts for next winter, which is what UK household bills are based on. Yes, prices are going to rise 12%, 13% in July. At the moment, they're going to come down another 8%. In October, so at the moment we haven't got that pressure and actually if you look at sort of as the UK is a net energy importer, actually, it looks a little bit better than much of Europe. So for the moment, the UK is not different. Now our... colleagues, we've just had a big discussion this morning with all our energy colleagues, and they say, well, actually, this summer, it is a big risk that natural gas prices could spike. if that happens then yes it becomes a bigger problem for the UK so if I translate that into inflation but the current market prices for oil, for gas, Inflation probably gets to about 3.7%, 3.8% later this year. I don't think that's enough to hike. rates for the Bank of England. If we have a more problematic energy backdrop this summer, if those gas... As prices start to spike, if oil prices do go a bit higher, maybe it's harder to avoid a hike over the summer. So I think that's where we are right now. We have to talk about the political drama that's going on, Labour potentially heading into a leadership... contest over the summer. Could this affect what the Bank of England does? Yeah, it's really interesting. So we've got this big by-election next week on the 18th of June in McAfield in north of England. Andy Burnham, he's the... The current mayor of Manchester is vying to come back in. The poll suggests... he'll manage to get that seat and if he gets the seat he can he's made it very clear that he's gonna to try and contest Keir Starmer for the leadership. So let's see what happens there. But the point I would make, putting the politics a little bit to one side, is I think pretty much whoever's in number 10 this year... it's probably not going to change what the bank does in 2026. And the reason for that is... even Antti Burnham, who's to the more of the left of the Labour Party, he's ruled out big changes to the fiscal rules. The guidelines that kind of, you know, keep UK borrowing in check. And so long as he does that, and that was a move really to reassure markets. Actually, the UK fiscal backdrop looks better than most places. We're seeing the deficit come down quite a lot this year and next year. And this is all because of the freeze on income tax thresholds. We've got a bit of fiscal drag coming through. Now further out into 2027 and onwards, we're getting closer slowly to the next election in 2029. There's some tax rises planning to come in. The spending side looks quite austere. you can question whether any of that is going to happen and there'll be more and more pressure to ramp up borrowing. Labour's under pressure in the polls. So longer term, I think pretty much whoever's in number 10. And there's going to be more pressure to kind of keep that deficit higher. But for now, for this year, is it going to change the Bank of England outlook? I'm just not sure it will. Okay, let's turn the focus a little bit to markets now. And another poll for you. We want to know where you see your dollar. At the end of 2026, will it be below 105, suggesting quite a big drop for the euro, big rise for the dollar, 105 to 109? 110 to 114, 115 to 119, 120 to 124, 125 and above. Those are your options. And we'll get to them at the end of. end of this section maybe let's see um risk assets and currency markets um had been showing resilience until Friday maybe there was a big drop in the Nasdaq. This could obviously have wider implications for other markets, for currency markets. How do you see this all playing out? Yeah, I think particularly last week and the last couple of weeks, I mean, the Fed story, particularly kind of built last week with the Strong's jobs report and the market really firming up the view that there would be a sort of hike this year. But then obviously we've got this big tech. correction underway at the moment. We've seen obviously amazing performance of some tech stocks this year. I was looking at the Philadelphia Semiconductor Index. That was up 100% since late April, up until kind of last week. And whether it's some like indigestion before a new equity issuance, we've had this $85 billion issuance from Alphabet. We've got SpaceX could be $75 to $85 billion. the IPOs, blockbuster IPOs from Anthropic and OpenAI coming up, whether that's just triggering some sort of... portfolio adjustments in the short term. I don't think anyone can really claim. with any kind of confidence at the moment this is tech. story is over that the tech bubble is about to burst but how it plays out I'd say in FX. is the following. It comes at a time when the buy side is very overweight equities. very overweight emerging markets and if you are going to get a correction here I think emerging market currencies will come under pressure. ...to sort of correlate correlations with tech and all the big beasts in emerging markets are all... highly kind of correlated with risk in general. And they're talking about South Africa, Brazil, kind of Mexico, Asia themselves. The Asian currencies not only have got the kind of higher energy story, but... places like Korea and Taiwan, you know, their equity. markets very much dominated by tech and we've seen huge kind of set-offs there. And I think in general, that's providing support for the dollar across the board. So I think. The Fed story is very important. How long does a market continue swinging towards? a greater Fed tightening cycle that might be you know, might last another couple of months or so. And then also, let's see next week, say after SpaceX is out on the IPO. doesn't mark it so breathe a sigh of relief it's gone okay and get back to where it was so So yeah, I think the next week or so will be pretty important. Okay, let's look at the poll results and see. where you see euro dollar heading by the end of 2026 it looks like 51% just over half you think between 115 and 119. Well, Chris thinks that Eurodollar will rise to 1.20. 20 by the end of the year but given the the hawkish repricing and the strong dollar I think there are challenges. I mean, we've been doing surveys of these webinars for the last 18 months and people have been the respondents have been consistently bullish throughout. They've had a good call. I mean, your dollar has sort of... gone up this year and remember last year it was a de-dollarization story etc etc. I think though, what is a reminder over the last six weeks or so is that the cyclical story is so much is still important you've got you know, people talk about the sort of structural decline in the dollar, but when you've got a political story saying the Fed you know, might have to tighten and you get. bearish flattening of the yield curve, the dollar is still responding. So I think the dollar is very... very much a kind of cyclical currency and cyclical factors. still dominate it. 120 might be a bit too far now in light of what's going on. on with the Fed. I think, you know, James has talked about, you know, if the Fed is to keep rates kind of stable this year, but we're pushing. maybe an easing cycle back into to 2027, the dollar can come a bit lower there. And I think also some other factors, not necessarily built in yet, but... you say where is the next sort of 10 to 20 percent in energy price and we probably say they're probably on the upside rather than the downside for me in terms of talking about you know natural gas you know were they to kind of spike i think uh you know the european currencies would you know face a much more difficult environment so We're still in a multi-year view and assumption that the Fed does these policy next. next year with dollar bears but i think they're going to be challenges to that i might have to sort of modestly raise the dollar profile. Okay, what about sterling given what James was talking about the Bank of England and the politics and all of that? What's your view of Stella? So Stirling's been actually remarkably resilient, right? I think a lot of people have been focused on the politics. The leftward shift in the government, Andy Burnham's... So. potential arrival and actually you know sterling's held up pretty well even though The gilt market has had its own kind of pressures out there. One thing I was looking at is actually, you know, maybe UK assets are cheap. I mean, M&A. a stated kind of M&A into the UK looks like pretty. kind of high actually then sort of up to perhaps perhaps $200 billion announced of targeted deals in the UK, perhaps because of a weak pound and also kind of valuations as well. But I think. now if James was right here that the Bank of England will try and get away without tightening At a time when the ECB is like kind of turning more hawkish at the time when the Fed is priced to hike, even though we don't think they will actually hike. I think this kind of window Sterling can underperform. So quite comfortable with our forecast for like Eurostirling which is just above 86 now to move up to. to about 88 by the end of the year. And if we do get. a sustained easing cycle from the Bank of England. next year as well. I think Eurosterlin could be moving up to 90 by the end of next year as well. All right. Thanks very much, Chris. Let's take some of your questions now. They have been coming in thick and... Fast, there are so many of them. Let's maybe go to James Knight. to ask about the US labor market. and do you think that it actually can continue to keep this pace up? I know you often talk about... you know, the fact that these jobs are only coming from three segments of the economy. What's the outlook for the jobs market? Thank you, James. We may have lost James. Oh, okay. All right. Maybe one for you, Chris. If no deal. is reached within the next couple of weeks uh i guess um in terms of the I'm not sure what you mean by no deal. It must be Iran, I suppose, to your politics, right? Opening straight up to our moose. Do you think that we can... that the xy can push to 110 110 That's 10% higher. No, I don't think so. I think that's... Highly unlikely is the answer there. a huge move, I mean, potentially I don't know, tops got 2%, probably more like kind of 1% to 2%. I mean, the market has. I think the braced for this and is aware of this so I don't think It would be a complete shock and a surprise if no deal is reached. All right, one for Carsten, talking about the... What level will the ECB... tolerate inflation, I guess, as an aggressive approach would... would harm the growth performance which is still underwhelming. Initially, two months ago, I thought that it was 4% for headline inflation and 3%. percent for core inflation which would be the trigger point or the choke points for for the ecb2 act We are before that already. So I think we would have to say that where we are right now. 3.2% headland inflation, core inflation. to 2.5, 2.9%. It clearly triggered the ECB now to hike already this. this week. If you look beyond that, and what would trigger then more aggressive rate hikes. I think it's not so much than that. headline inflation it will be inflation expectations so far when you look at the survey based expectations for one year, two years, they went up. but five years ahead was hardly moving. So as soon as we were to see these five year ahead. Survey-based inflation expectations really moving away. from 2%, I think that would... Clearly spooked the ECB and pushed them. to hike more aggressively. I think we're experiencing A few technical difficulties here. Let's see what else we forgot. We've got so many questions. If the war continues... till the end of this year would USD CAD, Canadian dollar will it increase or decrease and by how much? So talking about the loony here. Yeah, I think we think the Canadian Dory is going to underperform. the two big obviously I think it's been lacking the other kind of oil I think things like obviously Brazil and obviously Norway have been doing pretty well in the back of the oil story. So the Canadian dollar has two big political challenges. One is... with the USMCA negotiations. from like Donald Trump um you know could weigh on the canadian dollar independence referendum in Alberta or you know, stage one of it anyway, happening in October and in my experience sort of it let's keep track of the polls but any suggestions that So the referendum or Alberta leaving Canada I think would weigh heavily on the Canadian dollar. I think underperforming and yeah, Dolly Canada, I think we'd see great... drop sniper is there All right, there are a few more questions coming in, but I think we're going to... maybe leave it there for now. We do have our... IGF, I'm monthly coming out. on Thursday where you can read all of our views on the US, Europe and... ...in fact around the globe. That is on our website at think.ing.com, so do check that out. But for now, thank you to Carsten, James, James and Chris. Thank you for tuning in and we'll see you next time.