RenMac Off-Script: The Great Separation

0:00That's a global problem. I mean, if at the margin, I mean, if you look at, if you look at nominal GDP growth in the US versus the level of interest rates, I mean, nominal GDP growth is running well above interest rates. A lot of other places can't say the same, right? Like the UK, France, Italy. I mean, these countries have relatively weak nominal GDP growth relative to their interest rates. So that means that R is running above G, which is never a good place to be. So, yeah, I mean, on a relative basis, I mean, the US has a pretty good performing bond market, I'd say. Are running above G never a good place to be? I feel like Pavlik might have said that back in his records. I'm so pleased. Ren Mac Offscript originated as a weekly internal research meeting designed to summarize and discuss what happened in Washington, the markets and the economic data over the past week. It was always intended to be and remains a free-flowing conversation with no discernible objective other than to extract the wisdom and opinion of our analysts and their expertise.

1:08This is a conversation among colleagues. Individual circumstances are unique and nuanced. Do not mistake these conversations for investment advice because it's not. Here we go. All right. Welcome to Ren Mac Offscript, where you open the discuss markets, economics, policy, history, and life. It is Friday, September 11, 2026. A somber day, of course, for us here and certainly for all those that have been affected by the events of September 11, 2001, now 25 years ago. I'm Steve Dutton, offer. I'm Jeff D. ref. I'm Neil Dutta. I'm Steve Pavlik. Let's talk a little bit about the inflation numbers because I think that is one of the big stories this past week. Neil, we had CPI, PPI, and of course, there's a follow through to the Fed's favorite inflation indicator, the PCE. What did we see this week? Yeah. I think it's interesting. Starting off the week, I saw a lot of people talking about how the September decision was a quote, close call.

2:19I don't really think it was a close call, even with today's data point. To me, when all you're doing is just kind of doing this sort of hyper data point dependence, you need to kind of tell a story for why you think inflation is going to moderate. It's one thing to say the last number was good. It's another to say why it'll remain that way. And that's what doves on the FOMC need to do. And frankly, I don't really see them as having a good rationale for that. If you look at, you know, sort of the checklist that we've been highlighting from the minutes, AI related inflation, Apple just raised prices on existing models because of chip shortages. Energy prices, mid-east tensions, we see what's going on with refined energy products. Teriffs were in a tit for tat trade war with one of our major trading partners, Canada. And financial market conditions remain relatively buoyant.

3:23You know, we're not too far from the highs in the S&P and credit spreads are still quite tight. And then on top of that, you had the ECB hiking this week and Lagarde basically talked about it as a no-brainer. She called the decision a no-brainer. Now, I get that it's the ECB, but does the Fed really want to lean into dovishness here with inflation above target already? I mean, this isn't like 2016. The US can't import, we're not in a position to import inflation. And so I think the Fed's hiking, I think that was the case before this number. I think it's more obvious after this number. I mean, the CPI data was a little bit on the firmer side. But I will say, I mean, the fact that equity prices are at least futures this morning continue to rise, even as, even though the number of the Fed is high, the CPI number, the number of the Fed is a sign that the markets have more work to do.

4:29And so, you know, right now, I think we're priced for about two. I can see that kind of trading up to three before long. But you mentioned that the markets have more to do, at least the equity markets. What about the fixed income markets, Jeff? I think you made the point this week that this is a Fed trade, not a deficit trade, because you marked the difference between what's happening on the short end and along into the curve. Oh, yeah, sure. It is. And I think it feels right. I mean, you've got to break out in twos and you've got a pretty significant momentum thrust, right, which implies there's usually more to go. Look, I mean, at some point, this hits aggregate demand, and that's what you see at the 30 year and at the 10 year where you get that flattening, right? And so we're not, I mean, we are seeing some of it. We're seeing it today for sure. But that's kind of what you have to watch for from an equity market perspective is, where does that tip over? And where do they start pricing out that contraction and growth? Look, we're already seeing it in the consumer.

5:33The question is, is it really about energy prices? Is it about a combination of these things, et cetera, right? But if you look at consumer staples, consumer discretionary, these are easily, you know, two of the worst areas within the market, we're starting to lose the relative performance of industrials. I wouldn't say it's terminal yet, but it's certainly on the watch list in the ICU. We've seen what's happened to tech. That momentum score has gone to, you know, from basically a hundred down to 48 here as a sector. Those are percentiles, right? So 50s right in the middle. And that's bifurcated. You've got more weakness in software, believe it or not, than you do for semis. But, you know, it's all of them are kind of going through that grind. So I think the markets are trying to find like water, trying to find a level. And, you know, and figure that out under this still uncertain regime when we've got, you know, tankers sinking and, and the Fed not communicating. But look, the good news is the equity markets are still in uptrends. We don't have much momentum, but the uptrends are still there.

6:38We're very close to an internal oversold condition, the percentage of issues. In fact, in some cases, you could say that we're there. The percentage of issues above the 20 day moving average is at 17%. We're not getting a big spike in 20 day lows. But there's, you know, there's, there's real softness underneath the surface there, which I think is is okay. It doesn't, again, it doesn't look to be infectious or anything other than rotation. Only kind of water finding its level. That's why I think about it. On that, on that growth side, utilities as a sector, you know, haven't been doing well. And you'd think, right, that if growth was slowing, that would be performing better as a sector. Yeah, that's part of that trade. I mean, you know, historically, you know, we've got some regime work that you need to kind of think about within there. Is it inflation areas or slow down? How does that work? You know, when we get, when we get yields, we get tenure yields in our, our 10th desial. So the, you know, most extreme that you can get historically utilities actually do very, very well. And people kind of scratch their heads saying, well, that's a bond proxy. Where would that be happening?

7:40It's because the, the extremes in the 10 year yield are likely to slow growth. And as that growth slows over the next three months, that shift happens as the relative performance in utilities actually starts to pick up. So they are not, you know, the disaster that you expect bombs to be in, you know, in that, in that regime. The other part of this, which I think is interesting is there's a lot of, I hate to use the word value because that's, that's a, that's a tricky word. But there's, there's good juice. You know, you got real rates that I think they're 240 or something like that. There's real juice in the tips right here. So if you're, if you're absolutely, you know, terrified about inflation. And getting away from you, I think, I think yields have to move to something like two, I mean, I don't want to misquote this like two, I'm sorry inflation has to move to something like two 13 or something for tips, for tips not to do as well as just a nominal treasury out the next five or 10 years. Like it's, it's, you know, you, you'd have to expect a real deflationary environment to hit and average that that return out. So, you know, I think there's opportunities in this market as it presents itself. And I, I don't see the,

8:47the bearish concerns, you know, from a technical perspective that are out there from a trend. I do see it momentum, but it just looks to be rotational and really not much, that much more than that. So for what that's worth. Well, I think the, the sticking point this week, obviously, as you talk about inflation, you'll hit on it. And I think you talked about it in your daily today, you know, the Fed can price money, it cannot reflow the tanker. Steve, what's going on in the, in the Middle East right now? And, you know, the follow through for that for the next three months right up into the mid term. Well, I mean, right now we're seeing an escalation. And I think what's more notable this time is that you have the Trump administration actually targeting Iranian oil vessels as probably adding to some of the supply concerns. It's not just Iran too. We have the Houthis flashing out with the Saudis and that's causing concerns with more supply restraint there in the Red Sea. I think, you know, just beyond Middle East, you have concerns with refined products with the Ukraine tax. And I think that's not going to be the case. I think the situation is going to be a little bit more. Well, I mean, right now we're seeing an escalation. And I think what's more notable this time is that you have the Trump administration actually targeting Iranian oil vessels as probably adding to some of the supply concerns. It's not just Iran too. We have the Houthis flashing out with the Saudis. And I think that the Trump administration is going to be able to provide the supply restraint there in the Red Sea. I think, you know, just beyond Middle East, you have concerns with refined products with Ukraine tacking Russian facilities there. Maybe that's hurting some of the diesel prices.

9:55But, you know, I think this is sort of to be anticipated. You had the hand sanctions announced by the Trump administration never thought that Iran would just sit there idle and say, oh, we have nothing to do. You know, I think that's why we're seeing them sort of respond as you might expect. And that's sort of lashing out at not only US allies there in the Middle East. But, you know, I think they're also concerned you talk about the dualing blockade. I mean, the Iranian blockade is leaky. We're getting some oil out of there. And I think that's frustrating them. From their standpoint, their political leverage is heading into the midterms. I could know that sort of acting as a restraint on Trump. So again, the thing to watch is after the midterms with the political restraint sort of removed at that point, just Trump's sort of approach to Iran escalator potentially to get a different direction. Well, you mentioned the midterms and we had our first ever midterm convention down in Dallas. Yeah, I somebody said, and I don't know this is true because I wasn't just not even a year old. I think in 82, they said Democrats may have attempted a similar midterm convention. So maybe when you guys who are the older than they could remember that or not.

11:03But, like, I think, was that for Neil? No, no. He was a different guy. Yeah. But look, when I think of the sort of the takeaways, I mean, one is sort of there's you have bipartisan agreement like selection is going to be about Trump. You have Democrats wanting to do that. Historically, they are referendums and major sort of Trump Republicans sort of coming to the realization. Like if that's going to be the case, then we need to try to go ahead and energize our base in order to get them out. So, you know, just sort of like recognize where it is and try to meet them there. Again, the burden on them is to try to create that contrast. I think that's what you saw in many of the speeches this week. But the thing that got a lot of attention was this $5,000 dividend that Trump said, you know, he would provide all adults in the event that Republicans maintain control of the House and Senate. I think it's difficult to do. Maybe when the reason he promised is because the nap to actually follow through on it. But it was easy. Republicans would have already done it. And they haven't done it because we have deteriorating fiscal situation. Just can make the cost of pursuing things like that. I think that hurdle rates can continue to be higher for policymakers.

12:06Just hasn't been that way before. That's just the way it's going to be moving forward. You know, and also we just want to have the votes as a result of that. So, you know, if it even were to come to fruition, you know, I don't see how you enforce that you have to spend it in the US. Again, you know, it's just meant to fuel to some voters ahead of the midterms. I wouldn't really read too much into that. The other takeaway for me was on the political side. You know, we had Senator Federer, men of Democrat from Pennsylvania actually introducing Senator McCormick as Republican counterpart, the other Senator from Pennsylvania and sort of begs the question is, why is Federer been doing this? Federer, men doesn't face re-election until 2028. But it's probably looking at, if you want to keep his job, the prospect of a Democratic primary challenge. And so just sort of give him some leverage after the midterms if he's going to be sort of the swing vote here and deciding which party has the majority. So, I guess he wants to preserve that option and increases leverage. And we'll see how the midterms shake out. But, you know, again, if he's the determining factor as to which party is going to control the majority here, I think that's something to watch.

13:13Now, remember, a 50-50 tie vice president vans technically gives the edge to Republicans, but they still have to come up with arrangements with Democrats as to how they're going to govern. If you have the 50-50 tie and then suddenly Federer, men makes it 51-49. Republicans don't have to get through that. So, I think that's sort of the map, sort of what's going into Federer, men's calculus there. So, the other political angle on this and I'd be interested in all your guys' thoughts is, you know, Secretary Besen spoke at the convention, right? The first time I think a sitting treasury secretary has done a convention since 1976. So, the one person it would appear that can hold this whole thing together in the bond market, which we talked about before, is now on a political stage talking about the campaign. Does that matter? Does that speak to where his position is in the administration or what he can do in the bond market? I'll just speak politically. Don't forget, Besen has a boss now and that's Trump and I think about the audience of one. I think he's very cognizant of that. I don't think he's jobs at Jeopardy, but, you know, DC, Proximity's power. I think he wants to maintain that power by remaining in President Trump's good graces.

14:21So, I guess that's sort of how I was viewing it. Neil, Jeff? Yeah, I mean, I've long believed that Secretary Besen is one of the two strongest cabinet secretaries that DJT has, the other being Rubio. You know, what I find interesting is that, you know, on the one hand, Secretary Besen is doing what he's doing because he, by his own admission, is trying to nudge rates to where equilibrium is. And on the flip side, Kevin Warsh thinks that the bond market is the best arbiter for telling him what to do. So, this whole notion of like, is Warsh playing the baller as he playing Besen? I think it's kind of ironic in a way, but so that would be my only thought. But, you know, I mean, last year we wrote a, we did a whole analysis on, on, on, on Besen versus Latinac, right?

15:30And basically the idea was that when Besen speaks, the market tends to do well, and when Latinac speaks, the market doesn't do well. I'm not so sure what that would look like if I updated it now. But, yeah, I mean, I think, for, for, yeah, to me, it would be, it would be very unwise to remove Secretary Besen. You know, I some have been kind of discussing. I don't think Trump should heed their advice. But when you look at yields, I mean, it's a, it's a global problem, right? We talked about the problem. Yeah, it's a global problem. I mean, if, at the margin, I mean, if you look at, if you look at nominal GDP growth in the US versus the level of interest rates, I mean, nominal GDP growth is running well above interest rates. So that would argue that, you know, I mean, a lot of other places can't say the same, right? Like the UK, France, Italy.

16:31I mean, these, these countries have relatively weak nominal GDP growth relative to their interest rates. So that means that R is running above G, which is never a good place to be, and if you're thinking about sort of debt dynamics. So, yeah, I mean, on a relative basis, I mean, the US has a, has a pretty good performing bond market, I'd say. Are running above G never a good place to be? I feel like Padlock might have said that back in his jacket. Exactly. Yeah, look, I think, I think it's, I mean, it's, it's, to me, it's easy. It's, it's like the whole inflation thing would have been in a much better spot if we weren't in this quagmire with I, I ran, I was, I was, I was, I was, I was mixed up. You know, I mean, you'd have diesel prices, not where they are, you'd have gasoline prices, not where they are, you'd have food prices, not where they are, you'd have confidence, not where it is. I think Secretary Besson is doing very well, being Delta paratuse here.

17:33And he's got to be, you know, as he said, the, the world's greatest bond salesman. And I think he's absolutely 100% up to the task and up to the job. But it is playing the hand that you're dealt and it's just a, it's just a bad hand right now. I'd, I'd push back a little bit on that. I mean, yes, it's true that energy prices are putting up and putting up with pressure on inflation. I agree with that, obviously. But one thing I would say is that it's not really just about energy. Okay, I mean, if you look at non-housing services inflation, right, so super core, that was up half a percent today. I mean, that, those are things that are tied to labor market dynamics. I mean, you know, there's no reason, I mean, what does energy have to do with the fact that college like education prices served or like telephone, like wireless carrier prices jumped or you know, so I mean, if you look at like sort of core services, I mean, it's firm.

18:33I don't know that there's much energy pass through into that. What what is going on is that labor markets are in a much better place than they were earlier this year. And so, you know, when you look at things like the median wage tracker from the Atlanta Fed or just the fact that the unemployment rate has been going down or that payrolls are running above the Fed's estimate for break even. You know, to me, that sort of demonstrates that it's not really just about energy. And the other thing I would say is that, you know, you always hear this argument, you know, the Fed can't print barrels, right, you know, the Fed. It can't reflote a tanker. Yeah, I can't reflote a tanker. The Fed's job is to balance supply with demand. Okay. So it's irrelevant at this point that they can't do that their job. So the alternative to bring inflation to target is to cool off demand, you know, nominal growth. And there are flaws with this approach. I mean, maybe nominal GDP isn't as strong as the data. I mean, income is is running a lot weaker as we've been pointing out, but their job is to balance supply and demand.

19:41So that means guess what? Demand will come down. That's what they have to do. That's their remit. So I think it's sort of, you know, this risk of just looking through every single supply shock, I think is finally catching up to them. And so that's why I think for us, that's that's kind of what's changed this year. I mean, it's just, you know, we've had basically a significant supply shock, like, essentially like once every 18 months for the last like five or six years. And, you know, I think, you know, you can look through one, you can look through two. But when you start looking through them all, then, then your credibility begins to get a little bit. People bring that into some suspicion, I guess. And that's not the market cycle clock. Right. So usually the market cycle clock moves counterclockwise. Right. So inflation is running, call it hotter than it should give in growth. And then it starts to cool and growth cools. And that whole thing, you know, kind of goes into that cycle.

20:43And it's gone just the opposite, right. So we've seen, you know, the inflation pick up and growth actually hold OK and pick up a little bit. But it's, it's swimming upstream versus its usual trajectory, which is when we go back and look at what, you know, what were the causes of that. The first principles are it's a supply shock. So that's exactly right. My point on inflation is not, you know, services find there are some of those things. I'm not saying inflation was not going to be, you know, relevant or there. It's just the overarching aspect that permeate, you know, this is what's anybody that permeates into every aspect of, you know, every day Joe six packs life is diesel prices and gasoline. And gasoline and that just, you know, when you have a variable that's so dominant, it's just hard to hard to play that off. You might not know it, but Renmack has a free newsletter where we provide many of the charts we're discussing on today's pod. Go to the link in the show notes and subscribe. It's quick, free and insightful. Now back to the show.

21:44So on that growth side, we've talked on this pod a lot about, you know, AI and data centers and what that is actually provided for for the growth side of the story. Steve, there's been what 250 or 500 or some kind of crazy number of regulations at the local and state level to make sure that data centers are not in my backyard. Is that an issue I know it's going to be for the midterms, but is that going to, you know, have so much momentum that data center build out all of a sudden stops and therefore growth really gets a wall. I'm skeptical that it's really going to stop. I think it may become more fragmented. And I think the thing to watch with the elections is less at the federal level. I don't think the Trump administration to your point where there are some economic growth right now that being so very much dependent on AI and the status center build out is going to change. I mean, even if you have a democratic sweep on the congressional level, I don't think in the Senate, they're going to find enough Republican support there to get to the 60 votes. I think Trump would veto it.

22:45I don't think there are two thirds support to override those videos. I do think what you may see can continue support growing bipartisan for BYUP bring your own power. And I think that's very much a sharp contrast where we're just a couple years ago where all these governors were lowering out all these incentives to try to get, you know, these data center developers to come into their states. So I guess is that's probably going to continue in that direction. That's probably going to raise, you know, CapEx cost and, you know, we're going to have to issue more long duration dead. And maybe that's going to impact some of the competition there for long duration treasuries. I'm not sure. But I'd watch these local elections because that's where again, the way the decisions are being determined there at these local levels. I think that's candidly the bigger risk. But again, I think looking ahead to next year, even if you have some of these local races that maybe move in the direction of Democrats, you'll be a little more outspoken here. You know, is the rhetoric really going to match the reality of governing once you're in there? There's a lot of money at the table knowing that your state could be behind.

23:53And I think that's sort of the thing to watch is sort of a way for once they're in office to work with these companies to sort of find a way to make this more palomor voters. And you'll all suggest that, you know, if these companies are going to reduce your tax burden, help build schools. Suddenly support for tennis centers isn't as bleak as it is without this thing. Well, the AI issuers have issued what are put out what trillion and a half dollars in paper in the bond market. So I'm not sure who's crowding out who here, whether it's the crowding out treasuries or the other way around. But that's going to be a lot of supply. Jeff, who's going to? Yes, I knew English guy. See, right? I'm actually surprised we got this far and you haven't mentioned Michigan football. And like, you know, you're little jokes about give me a second and all that kind of stuff. Maybe just waiting on that one. I know we're talking about. There you go. Thank you. Appreciate that.

24:53Let's talk about sectors, Jeff. I know we did a little bit on energy and utilities and market cycle clock. But when you think about, you know, going forward, healthcare, obviously getting a nice bit, we talked about that a lot. We talked about factor rotations and the momentum trade sort of coming way off. But you want to expand that a little bit? I don't know how much more I can expand on it. I would say healthcare, healthcare, you know, recently got oversold. And look, you do still have these kind of episodic landmines and healthcare right. We had Cooper yesterday, you had striker earlier in the week that were these were downtrends. These were not stocks that look like they were turning. So let's be very clear about that. And that's what happens. I mean, it's not every time right where we're here to play Blackjack against the market. This is, you know, you play the hands the same way every time and you're going to narrow those those odds more in your favor than not. So, you know, we don't buy things just because the group is moving, even if the chart suck, we're going to look for the best leadership names and the, you know, most recent breakouts, etc.

25:55So I think that's important and striker was a bad chart that got it was we like to say batter. And Cooper was a bad chart that as, you know, my, my English teaching mother would love to hear we say batter. It got better. So, you know, all that stuff is bad things happen in bad charts. Like that's the way it goes. Now do bad things happen in good charts? Yeah, but they don't tend to compound upon themselves, right? So, Amgine had a gap down this week. Actually, it looks pretty interesting to us here in the, you know, grand scheme of things. So, you know, those are the things that we're looking for. And I think as much as anything, we have a non-momentum market. It's the way that you need to play those names. And, you know, for us, the say high momentum names that we think, you know, still have to kind of go through the wristmill here. You know, names are going to make say 65 day highs. I'll buy those momentum names because those are telling me that the leadership kind of got wrapped up with the baby in the bath water in the last two or three months. Came down with a lot of the other things, but they're starting to separate, right? And you're starting to see that. I mean, think of a momentum crash as a centrifuge.

26:59You start separating the, you know, the oil from the water. And I think that's exactly what you want to be looking for here is what is separating and, you know, what's going up and what's not responding. And that's really what we're focused on. I don't think all the tech is dead. I don't think, you know, that's the case. But I think what we had was everybody thought that every AI stock was going to win, right? We talked about all birds changing their name to AI something, right? Because the stock was doing so terrible. They wanted to rebrand. That was a gimmick that, you know, didn't didn't end up paying off. But I think what we're going to separate here is not everybody's going to win. We're going to have a few winners. And they'll probably be big winners. But, you know, just kind of believing that every rising tide is going to lift all the boats. I think is what the momentum crash is going to separate as we, as we see. And by the way, the momentum crash is one of the worst in history, you know, in terms of it got to the hundred percentile. What do I mean by that? I mean the performance of high momentum names versus low momentum names that spread was higher. It's basically 84% on a 65 day basis was higher than anything we'd seen.

28:04That has reversed itself down to the last I saw was down 52% over 65 day period of time, which is phenomenal, phenomenally bad. But the period of time in which it took is what really is remarkable. It took about two months to do. And usually that grind is several months, you know, before it's all said and done. So, you know, I think you, you've hit that kind of acute stage of this and now it's the separation stage, right? Where are the winners? Where are the losers? Let's see what that looks like as we go forward. And you've had some great pieces on that whole timing and, and these are the momentum to trade the factor both in the reports that go out during the week to our clients and then on the weekends with those extended expanded reports that you're writing writing. I will say what does bother me? I will say that that momentum crashes when momentum is working, right? So you can have momentum crashes at a bottom that happened in 2008 because everybody's piled into, you know, soap and toothpaste and, and diapers and everything that, you know, they thought society would need regardless of whether you could pay for it with cash or credit.

29:09You know, that was different and when we had that momentum crash, what it was was kind of a relic-ifying of the banks. And so all the city groups that were trading at 50 cents and went to three bucks, those were all the Q5s that just absolutely, you know, flipped that script, right? So you can get momentum crashes at bottoms. In fact, that's about 50-50. This one is a momentum crash at a top. And what's uncomfortable is it does align itself with other ones that we've seen before that, you know, you'd want to know about as an equity investor. You know, you pull the alligator arms a little bit in as you see those. So that's not our call here, but it's certainly something that we're being mindful of because these momentum crashes usually have more reverberation. I was talking to somebody the other day and they were asking about whether that was, you know, what happened in a recession or not? Like you can't do that. Recessions aren't called for six months after a momentum crash. So you're playing, look ahead, bias and, you know, presuming that you've got some magical power that other people just don't, you know, exhibit consistently. So that's why we're watching that.

30:11Great point. All right. Time for the mailbag. If you're watching this on YouTube, the comments section is where this all happens now. So drop your questions in there and we'll pull the best ones for the mailbag. And also remind you if you're watching this on YouTube, hit the subscribe button. You'll for sure be able to see all the other episodes that are on there as well and hit the like button if you like what we do. I always helpful for for the folks at Redneck. Steve, Steve, I have a question for you actually. How much bread and water do they give you a day in your solitary confinement cell that you sound like you're coming from today? I mean, it's like you're in a folder scan. I will, I will say this that the most of the comments that we get are about how the year audio is. So I'm going to I'm going to I'm going to say from this point on, we're going to fix it. I just I can't I don't know. I don't know why I sound this way. Maybe it's a high sound. No, no, no, you don't have that rich booming voice that you usually do. Well, I'm sitting down. Maybe that's why Harry. I'll go, I'll go back to this. Harry, good morning. Hey, good morning, everybody. So today we have the question come from June. She and his question is, can breathe repair itself via sector rotations rather than and index. They will throw down. That's it. Thank you.

31:27Well, Jeff, I think that's for you. 100% again, you know, is it going to happen? I like I would point out a few things here. The first would be back, you know, when I was first in the business, people said, well, if Japan's going down, there's no way the global economy can hold up, right. We had, you know, 25 years of Japan not doing well. And, you know, the US did phenomenally well, right. We had the most recent iteration, can the market possibly hold up if mag seven isn't leading faults. The market did well. In fact, you've got new mag sevens now, right. So people went from loving Nvidia two years ago to really, I don't want to say not caring about Nvidia, but certainly Nvidia was not the top of the food chain. And people went to micron. So 100% that can happen. The most recent narrative is, well, if tech doesn't work, the market can't hold up faults. Maybe it will. Maybe it won't, but don't you can't use that as your jump off point to believe that that's going to be a problem for equities. If I have, I have, I'm going to have a bigger problem.

32:27You'll see it more broadly. And at this point, we're not seeing that. So, you know, there is a ying and a yang between tech and healthcare. That does happen. And I think that's exactly, you know, what you have to look for. Where when leadership starts to falter, where does it go? And if it's going within the market, that's a good thing. If it's leaving the market, that's a problem. This is why I love this podcast because, you know, it's not only guys talking to tin cans, but we got guys, you know, from the kennel. What are you got in the back? Why do dog parts? It's for audio quality. Can we? It is ridiculous. It's for dog. Well, look, without now we've lost them. Jeez, Louise. All right. Yeah, well, since you're still here and you got the con and you seem like you have good audio and there no dogs barking. Why don't you tell us what you're watching this week? Yeah, the dogs started their first week of school this week. So that's the other post. That's why it's so quiet right now. Hey, Neil, didn't I hear that the University of Michigan, they've got the the sentiment number out right at 10 o'clock, but I hear it's coming out at 10 o'clock in one second.

33:31So they can make sure that they get it right. Is that right? I hear that correctly. I want to a division three school, Jeff. These, these college football jokes are lost on me, but not lost on me. However, thanks. Rhymonal. I mean, you know how I always make the joke about cheating. I mean, this was like coming to like it was like, are you kidding me? Just for a reputational standpoint, you guys should have just taken the L and just said, you know what? We're above this. We don't need the extra second. We lost the game. You know what? And I'll leave it. I'll say you're absolutely right on this. I don't think anything. I don't think there was anything nefarious going on. I don't think there was like, you know, the refs were getting paid off, although the memes are fantastic about that. But I just think it's a poor look. It's it's horrible. They should they should take they should take the high road and say, you know what? This this was wrong. There we go. It wasn't even like a bad call. It was like, you know, technology. It's 2006. Really? We can't sink our clocks. Come on. That at least give Western a non-loss. Right? Just be like, you didn't lose the game. Fine. And you know what? Also, Michigan's also going to no grades at the first semester of your, you know, your college experience. So I have I have a very mixed feelings about that. She's not even at next. She's just yes.

34:44Because you're the thrived. Soft. All right. And you'll sorry. Go ahead. Yeah. Well, it's a week full of policy and also economic data. So, you know, the Fed meeting. The consensus has an updated yet. But the the futures markets are pricing in, you know, a pretty high probability of a rate hike in in September. And so we'll see that next week. We'll also get the the dots plots, the forecasts. You know, some reveganomic projections. Excuse me. And the chairman obviously will deliver the press conference. You know, after at 230 on Wednesday. We also have a lot of economic data coming out. So retail sales will be released.

35:44Markets are looking for a bounce back. Remember in July, we had that hangover from from the Amazon Prime Day. And so markets are looking for some improvement after that. And so we have a lot of things that are going to be available. Things kind of settle out here. And then we'll get a bunch of housing data as well. You know, housing is in the penalty box. I mean, with mortgage rates basically hitting 52 week highs. It's really difficult to see why builders will break ground on more units. We did see like existing inventories go up. And so the reason of the week housing situation is, you know, you do have pretty good manufacturing activity at the moment. Probably related to the AI build out. So we get data from the New York and Philly Fed for manufacturing for September. That should so show continued growth. We'll also be getting data on manufacturing production at the end of the week.

36:50In the last employment report, usually when that happens, you tend to see pretty good news on actual factory output. So I'm expecting a bit of a mixed tone to the economic data and the Fed to hike next week. Pabs. Sure. So busy week. Congress coming back. The last week for the House. So a couple things to watch on Tuesday. You're going to have the Senate vote on this clarity act. That's a digital market structure bill. They have to get six is just a procedural vote. I don't think they're going to get that. And I think once that becomes clear, the odds of legislation passing this year. At that point, I think will be as close to zero as you can probably get. So you may see the regulators do some things that they can to try to help. But again, that regulation is not really as durable through changes administration. We also have Treasury Secretary Besson. We talked a lot about it earlier. He's going to be for House lawmakers, part of an annual exercise. It's usually focused on international institutions. And I think he's going to get a lot of questions around sanctions trade, but obviously some domestic issues as well.

37:58I'm going to watch a Wednesday to see if that does hike what President Trump's reaction is. For a little more muted. It's compared to what these criticisms of J. Powell. Maybe that helps wash this credibility. I'm not sure. And then it looks like the House may vote on some AI legislation. It's called the Great Peer Protection Act. Again, it goes back to the BYUP, bring your own power, basically asking companies to clear the burden here. Pretty much codify what President Trump's doing. The thing to watch is in order to move a bill in the House, you have to have a rule. Usually that's pretty partisan. The way you get around that sometimes to expedite consideration is you suspend the rules. But you only do that if you have two thirds support. So I mentioned that is because you can have to get a lot of support for Democrats to do that. Do Democrats typically prefer more aggressive approach to AI? Absolutely. Have they been benefiting politically because of this division on AI? Absolutely. So do they want the issue or do they want to actually try to address this now ahead of the midterms?

38:59So that's sort of the dynamic at least I'm thinking about it. You got to love Washington DC, right? Do I want to solve the problem or do I want the issue for the election? You're a tax failure? Not at work. Jeff, what do you got this week? Well, I'm going to watch for that separation, right? I want to see what starts to emerge, particularly as we get into some oversold conditions and the overall market. So what responds to those, what doesn't, that's a really good indication of where leadership is going to develop and where we've got sustainability going forward. So you could just take your favorite semi-conductors and run those through and just see who's breaking out and who's not. And let's look at those as we go forward. So most of those are still enough trends, not all of them, but most of them are still enough trends. I think that's a really good litmus test to say, hey, are we coming back? And if we are coming back, where is the leadership and sustainability going to be?

40:00And I think one thing to keep in mind, a lot of this is about where is the kick in the hockey stick, right? So if the kick in the hockey stick, what do I mean by that? The Gordon Grove model, right? So you have this kind of hyperbolic growth that runs for say five years, maybe 10 years, maybe it's two years, who knows where it is? That's always the challenge and the creativity in my financial analysis is so hard because you have to really be able to see around corners. If you model that wrong, if you get that King-Know-Hockey stick, if let's say you think that King-Know-Hockey stick is five years out, it actually ends up being two years out, but you've just taken three years of exponential growth and shot it in the back. And that absolutely affects valuations, right? So what these breakouts are important for is that it's the market's message of telling you where that duration and the King-Know curve is. And so when you get those breakouts, those are the names that still have that longevity, the ones that don't, probably have a King-Know-Hockey stick that has come back more towards the present day, than what the expectations were in the spring. And maybe it's because of technology, maybe it's because it never existed in the first place, maybe they're being disrupted by substitution, who knows what?

41:07But that's what we'll be watching for. So I think the leadership that emerges from here will be very, very important for 2027. Gonna be a busy week next week. Let's wrap it there. I'll remind everybody, go to our YouTube channel, subscribe there. If you like what you hear, and you want to see more, subscribe to our newsletter. If you're an institutional investor, make sure you hit the Trial button if you're not already a client. Love to have you on board. So you can see all the things that we do here from our guys at RenMack. We'll be back next week. I think some of us are traveling, but we'll make sure we'll fix our audio by then. We'll get it top shelf. So until then, I'm Steve Duttenhoffer. Do you need a second before you sign off? Are you okay? I'm Jeff Duttenhoffer. I can't wait to this weekend. It's gonna be so good. I'm Jeff Duttenhoffer. I'm Neil Duttenhoffer. And I'm Steve Pavlik. And that is it. Thanks everybody. Have a great week. Hey, it's Steve. Thanks for listening to the show. Small slice of what we do here at RenMack. So if you liked it and aren't already a client, go to RenMack.com and request a free trial.

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