Leading during uncertain times

Our panel of investment strategy leaders will look at the systemic, long term challenges posed by global economic uncertainty, and will discuss how this affects the workplace, talent recruitment and retention, and the skills and mindset required by leaders to successfully weather this storm.

Transcription:

Chana Schoenberger (00:12):

Hi everybody. Love the color scheme up here. This is great. This is awesome. Okay, so let me just do a couple of quick introductions. We've got over here in the pink we have Rebecca Patterson from Bridgewater, the world's biggest hedge fund. She's a chief investment strategist. Then we have Ranjana Clark, who is the head of global transaction banking at M U F G, the enormous Japanese bank, actually the biggest Japanese bank, right? Yep. Okay. And here we have Meghan Shue, who is one of our next honorees. And you two used to work together, right?

Meghan Shue (00:48):

That's right, yes. This is such a pleasure. So Rebecca and I used to work, I used to work for Rebecca, so it's an honor to be up here

Chana Schoenberger (00:55):

from Wilmington Trust, which is M&T Bank. Now many things are M&T Bank now. Yes. Okay. So all three of you spend a lot of your time traveling and looking at global trends, and this is why we asked you to come talk to us today about what you're seeing in the world economy and what all of you as leaders can do about it.

(01:14)

So right now everyone is familiar with the economic headwinds we're dealing with Covid, the war in Ukraine, inflation, possible recession as Christian just mentioned, and it coupled with, it's also a midterm election year here in the US. That's happening next week. Next week, yeah. Okay. Vote by mail everyone, it's important two weeks, very important to vote two through your vote for, but definitely vote. It's your patriotic duty. And they're also political changes happening in other countries like the UK and Italy that are going to be pretty consequential. Let's talk about these first and let us know what you see as the biggest headwinds. So Rebecca, why don't you start?

Rebecca Patterson (01:51):

Sure. Well, first of all, thank you for having me up here and it's great to be with you all, especially in person. Really a treat to see so many faces. So in terms mean is as you said, so much going on right now, but if I had to pick one thing that I'd want you to stick in your brains, it would be what's not priced into the market right now from an investment perspective, we always want to look at where are the markets going to surprise.

(02:17)

And even though we're all talking about recession, when we look across a lot of different metrics, whether it's consensus forecast, whether it's expected equity, earnings, et cetera, we aren't seeing a recession discounted in the market. In fact, what we're seeing we think is very unlikely to prove out. What we're seeing is inflation in the United States that's getting back close to the fed's target in very short order. The Fed that's able to finish its tightening cycle by the first half of next year and start easing in the second half of next year without a recession in the process. And we just think that's highly unlikely to happen. Now, last year the relatively biggest mispricing in our view was inflation. We had the view, which at the time was not a consensus view, that inflation would be more persistent and stickier and higher than expected. We still think that, but we think inflation has peaked, it's coming down, but it's going to go more slowly than the market's discounting.

(03:12)

Even with the fed tightening we've seen in what's coming, the bigger dislocation in our view though is equities and growth. So if the Fed is going to be serious about it getting inflation down to 2% or near 2% quickly, we're going to continue to sees tightening. The Fed has to get wage inflation down, and to do that it's going to have to push the unemployment rate up probably to five, maybe even 6%. And doing that is going to weigh on the economy and that is not yet discounted at an aggregate level in earnings expectations. So we think there's another shoe to drop in earnings and earnings expectations. As we go into 2023, we are going to see a recession. Our best data today are suggesting that'll be somewhere in the range of 2% contraction in the United States and inflation 12 months from now, core US CPI is probably going to still be between four and 5%. So we don't think we're out of the woods. We think we have more pain to come. I'm sorry to be the bearer of bad news but I do think it's really important as you're thinking about your various business lines, even if that isn't exactly how it proves out the exact numbers, directionally if that's where we're headed, are you positioned to be resilient through that? So that would be the thing I'd highlight the most right now.

Ranjana Clark (04:28):

Well just to, should I go? Yes, please. Just to add to what Rebecca just said, and normally I'm a eternal optimist, but in this case I happen to agree with you. I think three things that I see and hear from our clients. The first is inflation is widespread and persistent to what you just said. The second is recession risks are real and the third is really that supply chains are vulnerable. And I know we'll get more into this, but let me just leave it there.

Meghan Shue (05:12):

Yeah. So I just sat with a client yesterday actually and did a three year review. They'd been with us for three years and in looking back to when they started with us, which was the fourth quarter of 2019, I was just struck by how much had transpired over those three years. So I think as we look at the challenging environment, inflation is clearly a big part of that and it's almost this stagflation light, if you will. So not stagflation, which would be contracting economy. And I agree with Rebecca in we don't think we're in recession now, the labor market's just simply too tight for that. But as an investor, nothing has worked this year. So if you look at a lot of our clients who are diversified in stocks and bonds and real assets and tips and different assets like that, very little has worked except for cash and energy stocks or oil futures.

(06:12)

And so we have a lot of clients who are looking at the last few years of just great tumult in the market between the pandemic and then the snapback and the surge and growth and then the rotation into value. So I think it's really been important for us to help reset those expectations but also guide clients back to that central anchor. What has not worked is a diversified portfolio, the 60 40 stock bond mix, the worst year-to-date performance that we've seen since the 1930s, which is just really incredible to wrap your head around, but that doesn't mean you abandon it going forward. And so I think focusing on the outlook going forward, maybe a recession is not fully priced, but I think we've gotten a good part of the way there. So if you're looking out over a year or two years, and maybe it does take lengthening that investment horizon but I think the picture for asset class returns is going to be more positive than what we've seen over the last nine months.

Chana Schoenberger (07:19):

That's all kind of scary. I'm a little concerned here, makes me worried a bit. Okay, so I guess we could say we're in the post pandemic economy now. What is that going to look like and what forces are we grappling with? You've talked about several of you talked about unemployment and the unemployment rate. So right now most people have a job, people who want a job have a job, people who have a job can get another job very easily and that's great for workers, but of course their paychecks are worth conservatively less because of inflation. So it sounds like consumer prices are going to come down, but a lot of people are going to be unemployed, so it's not really going to matter. This is a little frightening.

Meghan Shue (08:01):

Well, I think the, what's unique about this environment is that we do have a federal reserve that has a dual mandate, but for all intents and purposes right now, they have one mandate which is to bring inflation down.

(08:14)

And to do that, it probably will require pain in the labor market. But I think as you look forward, inflation has peaked. It will come down probably pretty quickly, but our view is that we're going to it. It's less about how fast it comes down over the coming months, but more about where it settles. And I think as you look out over the next year or two years or three years, and we do tend to look far out in terms of an investment horizon, I think you're looking at a very different interest rate and inflation environment than what we've just been through over the last decade. I don't think it's overly alarming. I think it actually probably looks more like what we went through in 2000 to 2010 where you have inflation that's two to 3% rather than 1, 2, 1 and a half percent on average.

(09:08)

And that probably will have spillover effects to interest rates and the Fed. But the labor market is the biggest challenge I think for the economy going forward. We have a very, very tight labor market, whether we're talking to investment partners or businesses, it's very difficult to hire right now. So I think that might turn the economic recipe on its head a little bit, if you will, because if you look at slowing demand going forward which is very much in the cards and well telegraphed at this point, I personally find it a little bit hard to believe that companies that have been struggling so much to find these workers and they finally found somebody that they're going to let them go right away. So we may actually have an environment where the economic landing is a little bit softer, but that probably means that companies have to absorb more of it so you have more of a margin compression from a stock perspective. So a little bit maybe of a different mix going forward than what we have seen historically.

Chana Schoenberger (10:15):

It's definitely cheaper to hold onto an employee that you already have than pay to hire another person.

Ranjana Clark (10:23):

I think what I would just add to that is what does a post pandemic future look like? Per your question, I would say in addition to what Meghan just said, I would say it needs to be more sustainable. And what do I mean by that? So more diversified supply chains from an energy perspective, more sustainable. And even from the overall ESG perspective, you see the tightness in the labor markets, companies are opening their apertures somewhat more and saying, who else around this table can I invite to the dance?

Rebecca Patterson (11:06):

So I think I'll take a different tack on this question. I think we talked about the us, we talked about supply chains. When I think about what's different today versus the end of 2019, aside from where I work I started at Bridgewater two weeks before we locked down, so that was fun. I want to talk about China over the last several decades. We've had a growth model in China where when the growth target was at risk, we saw a flood of stimulus and they got quickly back and especially after they joined WTO in 2001, you had not only strong growth organically as they were getting more integrated to the global economy, but also this focus on hitting those growth targets. And one thing that changed during the pandemic that the mindset of the Chinese government has shifted, they're now more willing to allow for lower rates of growth and have higher quality of growth, which has to do with making sure different types of households in China and companies benefit from that growth.

(12:08)

And that has a lot of important implications if you have slower rates of growth from the second largest economy in the world on a sustained basis, think about how that ripples through to commodity demand to emerging markets that do a lot of business with China. Frankly, I was in Netherlands yesterday to European companies that are highly levered to trade with China. So that is a huge change. Structurally that's happened since the pandemic started and with all the focus we've had recently here on our own country, it's easy to lose sight of that. The other thing going on in China, which comes back to the US and ties to your point on supply chains is that when you think about what drives GDP at the most basic level, you've got capital, you have labor, and you have an investment and labor in China has turned the corner, it's inflected.

(12:57)

So we're now seeing aging population, a shrinking labor market, higher wages. So that engine of growth is done. The second lever of growth investment has gotten China where it is now, but now they have very high levels of debt. They're trying to delever parts of their economy. So that engine of growth while it's still there, is likely to be smaller structurally than it's been in the past. So that leaves you with so we had capital labor, what did I forget? Productivity. That's what I meant. Productivity and productivity, when we think about China is tech. So if you can't get there with more workers or more hours worked and you can't get there by just issuing more debt, you have to get up the value chain. You have to be able to add more value with the workers and the hours you've got. That means technology and what is the US trying to do?

(13:49)

It's trying to slow that down as much as it can. And the announcement on October 7th, the chips related export controls on China is going to go down, in my opinion, in history as a huge moment in time for the relationship between these two economies. They have to get the tech to hit their growth targets and President Xi has a target of doubling per capita GDP by 2035. What the US is trying to do puts that target very squarely at risk. So when we think about what's changed from pre pandemic to today, how China is approaching growth, and the US response to that China focus has changed materially and I think in a way that I don't think the public still fully appreciates all the second, third and fourth order effects it'll have even to our day-to-day businesses.

Meghan Shue (14:37):

If I could just jump in there, I totally agree with the significance of what's happening in China today, and I think that just in addition to everything Rebecca said, I think we're also facing a little bit of a moment in time in terms of how investors approach China and emerging markets more broadly.

(14:57)

We all went to school and many of us took classes on investments and diversification and we have that instilled in us, but it's basically been a lost decade for emerging market equities. And going forward, I think it's becoming increasingly difficult to appreciate a lot of what Rebecca just said for US based investors because the last, call it 2000 to 2015, we were thinking China was opening, China was becoming more like the US and now with the party Congress behind us, President Xi now having a third term, I think we are, we're going to have to recognize that China needs to be approached from an investment perspective with a lot more appreciation for the policy dynamics, their long-term goals, their investment horizon. The US works on a two to four year political investment horizon. China is way further out in terms of their goals and what they're trying to do.

(16:04)

And so getting back to that three year relationship review that I had with that client and having questions about how do you invest in emerging markets should you invest in emerging markets going forward, and I think a lot of the growth dynamics Rebecca talked about and the policy volatility that could come out of that region is very real and tangible.

Chana Schoenberger (16:26):

Should you invest in emerging markets?

Meghan Shue (16:28):

Well, I think you do have to rethink it, and there's two points that I would make on how to approach emerging markets and China specifically, it's about a third of the emerging market equity basket by market cap. We're seeing more investment products and investment options that take emerging markets and peel out China, which is one way to approach it though there's significant risk because of the size of China in that basket. I think the lower growth rate or the quality growth over quantity means that you do need to rethink your allocation and maybe on a strategic or structural basis, reduce a little bit that allocation to emerging markets or shift it into other areas that have maybe a little bit more of a demographic tailwind like in India.

(17:17)

And when you're thinking about investing and how you invest in passive options versus active, I think this is one area where you need to be really careful about the vehicle you're choosing. And if you have a good active manager with a presence there who knows the system. A lot of the active managers we talk about who specialize in China have not been all that surprised by a lot of what they've heard. That doesn't mean they've been spared from an equity return perspective, but I think we are moving more and more towards these lower cost passive and that might be one area where you want to be thinking harder about having more intel on the ground.

Chana Schoenberger (17:56):

Yikes. We did a very interesting series of articles and live video interviews. Rebecca was on one of these about de-globalization and how the world is sort of uncoupling from all of the trade linkages that have been set up over the last few decades. And one of the video interviews we did was on the morning they announced these new trade restrictions on China and the analyst on the call, we had an analyst and then an investment banker, and the analyst was totally going bonkers about it. So you should check it out. It's on our site. It's pretty interesting. Okay. So in terms of the most important solutions to these problems, if you are a banking leader, what should you be doing about this? Hire everybody. You can now change your supply chain in some way?

Ranjana Clark (18:44):

I'm sorry, you were talking to me. So I think certainly the solutions have to address the issues that we talked about. So when I travel, when I talk to clients and when I sort of hear their pain points, absolutely. I think that diversifying supply chains, whether it is nearshoring, friendshoring, any shoring or no shoring, where you automate it, you bring the jobs back and then you automate it. So it's sitting in a box in the closet in robots or in the cloud for example. So diversification of supply chains to me is the number one concern. I think the second thing that I'm hearing increasingly from CEOs, CFOs particularly I'm based in San Francisco in the valley the smart are gearing up for M&A for taking a more strategic look because they know that inflation is more broad-based, more persistent, it's going to be a long time diversifying global supply chain. That's a three to five year journey, so it's not going to happen tomorrow. So where is growth going to come from that's going to beat, for example, inflation and what you're able to price up to the consumer? I think companies are thinking more broadly about where growth will come from.

Rebecca Patterson (20:24):

Maybe I'll add on that I agree that reshoring French shoring, whatever term we want to use at the margin is inflationary. And so even when we get cyclical inflation coming back down, one thing that's different from pre pandemic is that as companies look to have resilient supply chains rather than simply lowest cost at the margin that is inflationary, then the other secular inflationary pressure that I'd highlight is the climate transition to go from where we are today to where we want to be is going to be less efficient in the medium term as we go through that process. So when I think about what would you tell the banking leaders in this audience today, what should you be thinking about, Megan's point that inflation might settle between two and 3%? I think that's probably right. It's hard for me to imagine that the Fed would let it settle three to 4%.

(21:16)

They would be very fearful of their credibility, although it's not impossible. But if we have inflation settling in a slightly higher range, we have interest rates settling in a slightly higher range, we have a period of growth that's probably, and I'm not talking about the recession next year, I'm talking about beyond that could be in a slightly lower range because remember, we're exiting this period with much higher debt levels, much higher debt service costs, and we'll get the next CBO report coming out in early January where they do their long-term projection and they've already highlighted that it's going to be ugly. So if you're in that environment where growth is sort of meh, inflation is a little higher, interest rates are a little higher, feed that through, how is that going to affect each line of my business? And then plan accordingly. Investors are going to want higher rates on their money markets, on their CDs, et cetera, but you're also not going to have the same degree of growth that's necessarily going to drive some of the investment banking revenues that perhaps you've enjoyed before. One thing that I think could be helpful for those of you with trading desks is volatility. Clearly right now we're in a higher volatility environment, but I think there's a good chance that could be with us for a while.

Meghan Shue (22:29):

Yeah, I'll return to Rebecca's Econ101 lesson from earlier where productivity is so important in terms of a solution. And I do think that the tightness of the labor market is a structural dynamic. We've seen in the midst of the pandemic, a wave of or a pull forward rather of retirements, people who are questioning things, questioning what's important to them, all of that has had the effect of reducing the pool of available workers. So I think if we can't get productivity up, that's the simplest recipe for that higher inflation environment. Recent BLS paper came out Bureau of Labor Statistics, I believe it was, and looked at the productive capacity of the US and they actually looked back and said, well, we're going to have to revise the productive capacity lower, which means that the output we were putting out has been generating more inflation. And so I think the productivity is the key there.

(23:37)

It's worker productivity, it's leaning into technology, which I think we'll get to one of our later questions in terms of how do you lead through this? And I think that even though there is so much uncertainty and CEOs are so pessimistic and there's the writings on the wall in terms of recessionary risks, we also can't abandon those things that are going to help us generate that productivity, which is investing in people, investing in training, investing in technology to automate things to make people more efficient and have them lead more productive work lives. So all of that I think is really the productivity I think is the key.

Chana Schoenberger (24:18):

That's fascinating. Okay, so you folks do a lot of travel. Tell me what you're seeing as you travel around the world. So Rajana, you want to take this one first?

Ranjana Clark (24:26):

Yeah, I'll go with that. So <laugh> Anna tries to track me down and I'm always in a different time zone, but over the last few weeks, months, days have spent a lot of time in Asia, Japan, included in Europe, and I would say probably maybe three or four things. Number one, around picking up perhaps on the China theme countries, regions that are high beta to China, whether that's South Korea, Taiwan Australia, countries such as that. They are really worried, significantly worried about a long term China slowdown to the point that our other panelists have made for all the reasons that we have seen smack in front of us for a long time because China's demographic issues didn't happen overnight, but the impacts are now being priced in to how these countries, regions are thinking about their own growth. So I would say there's sort of that bucket of Southeast Asian, south Asian economies that are seriously thinking about the impact of an older China and a slower growing China.

(26:04)

I think in a lot of people's mind they're saying, well, China grow old before it grows rich. So I think that's one bucket of observations that are war gamed out right now that companies are actively dealing with. The second is of course near and dear to my heart. I work for a Mitsubishi financial group for MUFG largest bank in Japan, fifth or sixth largest in the world, depending on the rankings on a certain day. We are a large lender, we are a long-term lender, lot of finance and so forth from an inflation standpoint and a rate standpoint, there are over 90 central banks in the world that have raised rates in unison several, maybe three times 75 basis points. Some have gone a hundred basis points at a clip, but Japan hasn't and they are not there yet and they are feeling the effects from an inflation standpoint.

(27:14)

Heck, I just got back from Japan and loved shopping there and I did <laugh> the few shops at Marita that were open because I went before October 11th when non-Japanese need a visa. I still went in with a visa. And I think it's a question a lot of countries now see oil prices reversing still year over year, they're up 20%. In Japan, that's up more like 35 or 40% because of the effects of US dollars, right? The dollars and they purchase in USD, which a lot of it's also being felt in emerging markets. So I think those are two things. The third is around I think supply chain diversification, which I have talked about. I was sitting with a major commodities manufacturer somebody who is a company that's in the technology business a lot of IT services companies. A lot of the Japanese companies are obviously global multinationals, all of them. They're not thinking just doing peeling a little bit away from China and sending it to Vietnam. They're thinking of going to bigger countries like India or other countries like Indonesia or Nearshoring, some of it. But certainly it's around creating resiliency in their supply chain and diversification around that. And then finally I think across industries, inflation, even if it's sort of the oil and gas industry, which of course is minting and printing right now, but everybody is thinking about the cost of their inputs, which is just labor materials and so forth.

Rebecca Patterson (29:21):

Maybe I'll add one more region of the world we haven't hit on yet, which is Europe. I was in Singapore earlier this year, but a lot of the themes you brought up I heard too, so I don't want to duplicate. I had the chance to be at a conference earlier this week in Marick which is where the framework was set to start the European Monetary Union. And I was with a number of institutional investors from across Europe, but some in Australia, some as Canada and the United States as well. But the focus of the meeting was Europe, the war in Ukraine, how is this going to affect Europe, the different forces playing out there. And what struck me in the observation I'd like to share is not the cyclical one, which I think we're all pretty aware of. I mean, we're probably going to get a European Central bank, 75 basis point rate hike this week.

(30:10)

We're having struggles within Europe. We saw it most dramatically recently in the UK with trying to balance helping voters and households and businesses through this time, which if that's fiscal stimulus, that can be inflationary and then it makes the central bank's job even more challenging. How do those things work out that was talked about? But the bigger deal to me that I think is less appreciated is the structural. And you think about Europe and Germany is by far the largest economy in Europe. It's the anchor, it's the engine of growth for Europe. And it has been that engine in part because it's had cheap energy sources for the last several decades, and it's benefited hugely from China's opening up China's growth because it's been a major exporter to China, 50%, half of Germany's GDP comes from exports. So today it's not likely anytime soon if ever, we're going to have the same cheap sources of energy for Germany.

(31:05)

Now, Schultz from Germany is going to Beijing in early November and they're trying to work out some deals, but it's unclear to me how strong that part of their growth is going to be if the rest of the west is putting pressure on them to pull away. And so how does Germany restructure itself? How quickly can that happen? How successfully will it be? Because if it doesn't happen, you could have that engine of growth sputtering and as a result you could have sort of a zombie, zombie-vication. That's a good Halloween word of a lot of European companies in the years to come, which was not a prolonged recession per se, but just very stagnant growth, which I think could also result in even more populism in the country, which we're already seeing per percolating. So that would be the thing I would share today.

Meghan Shue (31:53):

Yeah, I'll take a little bit of a different angle. Admittedly, am not as worldly of a traveler as these two. I work for M&T Bank, which is a regional bank. So we have a significant presence along basically the northeast corridor. So I do a lot of travel between DC all the way up to Maine and a lot of work with small businesses some of which are our wealth clients, some of which are our banking clients. So from a small business perspective, there's two sort of issues that we've been hearing and one is related to competition. It does weave back into some of the comments on China and how small businesses have had a very challenging time competing with the manufacturing powerhouse that has been China and what the reshoring and the diversification of supply chains means for some of these small businesses. In many cases it's a big positive.

(32:56)

And then labor as well. So small businesses have been at a severe disadvantage in this very tight labor market. When we heard from some of the other panelists about how you have to pay well and provide good benefits and provide flexibility and if you're a small business, that's very difficult to fully compete on the same level. So I think just some of those challenges. And then we also have a significant asset base in terms of commercial real estate, and I think that's just one very, very interesting sector of the economy today. Flexible work arrangements, people who are moving out of the city back into the city rents rental inflation that we've seen. And I think there's a couple of things related to real estate. One is businesses that are rethinking their space, not necessarily doing away with offices, but rethinking how much space they need and the design of that space.

(34:04)

So flexible sort of desk arrangements where you're not necessarily coming into the same spot every day. And if you're only having a certain percentage of your workforce coming in, you probably need less space. Now this is slow moving because a lot of the rental agreements are very long term but companies are going to be thinking about this. So I think this is going to be one of those waves that could play out over time. And then just the inflation, a lot of the inflation that we have seen has been related to home prices and rental inflation increasing. And a lot of that is related to very tight supply and very low inventory of housing. I think that this is a challenge, especially for a lot of young people. I heard a stat, I'm going to repeat it and assume it's true, which is always dangerous, but the average rental price in New York City, about $4,100 and that today's interest rates, mortgage rates of 7% gets you about a $400,000 house in the us.

(35:14)

And that is very difficult because the median home price is north of that. And we know in the cities and in surrounding areas, it's much higher in many cases. So it's a challenging environment related to the real estate picture and how that will evolve. And then competition and even some of the regulation that could come out after the midterms. There's not a whole lot that's likely to get done if we do have divided Congress, but I think regulation around competition, monopolies just had Kroger announced that they're going to be acquiring Albertsons, I believe. So more consolidation in grocery and banking in a lot of these major industries and what that does to the little guy or the small companies.

Chana Schoenberger (36:05):

Very interesting. Okay, so we have time for one more question. Give us one more thing that our audience should be think about as they go back to their banks tomorrow. The last pearl of wisdom.

Rebecca Patterson (36:20):

I'll pick up on something that Kristin Lemkau said when she was up here before us, and that's overcommunication. I don't think any one of us could have a lot of confidence on exactly how the world is going to evolve over the next 12 months, 24 months. I think if anyone tells you they know exactly what's going to happen, probably fire them because you have to be humble. We're living in a situation, we haven't seen anything like this since the 1970s, maybe eighties, but it's got a lot of twists and turns. So I think communicating, here's what I know, here's what I don't know, here's what we're doing to figure it out. Let bringing people along with you on that. Obviously you want to instill confidence, but you also want to be realistic about what you know, don't know and then how you're going to figure it out to help the company and help your colleagues.

(37:08)

So I just think right now it's so easy to dash off an email, but I don't think that's nearly enough. It's necessary, but not sufficient. Really having great communication channels with your colleagues, even if you feel like you're repeating yourself. I think today there's so much value in that, given the uncertainty and the times we're in.

Meghan Shue (37:26):

So I love what Rebecca just said, so I'm going to jump in here because I think knowing we're, we want to know everything, we think we should know everything but I totally agree, you have to know what you know and what you don't know. And I would say, and what you can't know, and there's a lot you can't know right now, where, when is the market going to bottom? What is Putin going to do as his next move? What is going to happen out of China where you have so much consolidation of power now in one person, very difficult to predict and focus on what you, I would say focus on what you don't know and surrounding yourself with the people who do know and creating that network. And then also something that I think Kristein said from the PR last panel data to make decisions, and this goes to my earlier point about how we're going to have to invest through this slowdown. You have to have good data, especially for the banking industry, to know the return on investment for certain decisions and to be able to calibrate or alter the route going forward. And that sounds simple, but getting good data can be very, very challenging and it's really the key to making decisions and navigating through this really challenging environment.

Ranjana Clark (38:44):

So I'll just finish off with sort of a brief story from two of two people who have known for a very long time. The first of who was on this panel earlier today, penny Pennington who heads up Edward Jones. Penny and I started our careers together at Wacovia, which is now part of Wells Fargo. We were in the fledgling corporate finance or capital markets division. She was sort of a client generalist. I was a product specialist running derivatives and a few other products. And I loved what Penny said this morning, which is push for that change because you're going to irrelevance even less. So I, I'm like, oh, I'm going to use that line. So I'm glad I've used that one because I think it's very apropo. The second is really a management expert who in some ways I think is quoted less often now, but who I knew personally is Jack Welch.

(39:40)

And of course, he has passed on, but he... I think wrote this book called Straight From the Gut and he used a maxim, which I still remember, which has three E's, so it's easy to remember... energy, edge and energize, that as a leader. You show up every day with energy, show up with edge and retain that edge. Whatever it takes to retain the edge, keep learning to stay relevant, those types of things. And the final job of a leader is to energize. Leadership is a performance in many ways. People are watching you all the time. So regardless of how you feel, I'm not saying you don't bring your authentic self to work, do, but remember that part of your role. Really, the central part of your role as a leader is to give people that vision and to energize them.

Chana Schoenberger (40:44):

Wonderful. Thank you so much everybody. Really appreciate you having have a go up here. Thank you. Thank you. That's it.