FidelityConnects: How geopolitical and macro trends can influence asset allocation

[00:03:51] Pamela Ritchie: Hello, and welcome to Fidelity Connects. I'm Pamela Ritchie. Some of the largest questions about the direction of markets are researched by a very special Fidelity team in Boston. They set to music issues ranging from, will the tailwind set to come from USD regulation and tax cuts be evident over the medium term or will it be a much slower process? Things like, what does the diplomacy style of Donald Trump thus far in his administration tell us about the market's resilience to the upsets across the geopolitical playing field? Also, how will interest rate policy over the rest of this year stack up against what will need to be policy under a new Fed chair about a year from now? Fidelity's Director of Asset Allocation Research, Dirk Hofschire, is joining us now. He heads up this team of 12 researchers. Let's welcome Dirk to Fidelity Connects and to hear first about how his team informs decision making really across the entire company. How are you?

[00:04:53] Dirk Hofschire: I'm great. Thanks for having me today.

[00:04:55] Pamela Ritchie: We're delighted to have you join us here today. Do you mind if we ask you what you do with your team? How does it work, how is it set up?

[00:05:05] Dirk Hofschire: We have a really interesting job because we're coming at it at sort of a 30,000 foot point of view trying to make sense of really everything that's going on in the world. The objective here is for us to try to come up with asset allocation recommendations. All of our multi-asset class investment teams have the choice every day about investing across markets, whether it be in stocks, bonds, cash, commodities, all the things you can buy in all the places in the world, here in the U.S., other countries, regions, categories of assets around the world. We're supposed to try to make sense of what's going on and try to come up with some macro observations at the highest level about how we may want to position the portfolios both for the near term in terms of what can happen with the economy and other things cyclically near term, but also for the really long term about how we may want be diversified depending on what could evolve over decades and decades. It's a fun job. As you might have noticed there's a lot going on in the world right now so it keeps us busy but it really is that sort of big puzzle that we're trying to piece together.

[00:06:19] Pamela Ritchie: Oh, my favourite thing to talk about. I'm so excited. Okay, when we think about policy which has been an enormous driving force in the markets, there's no way around that, sometimes it is, sometimes it isn't, sometimes it is in countries like China, you hang on every single word that the government says but actually it's really shifted to a lot of countries that we live in right now. We're hanging on the policy words of leaders right now. It's monetary as well but I wonder if you can just kind of go over how carefully you hang on every word of the policymakers right now and how much we should.

[00:06:55] Dirk Hofschire: We sort of alluded to it there, monetary policy is always really important to the financial markets and, in general, the Federal Reserve and other central bankers are pretty active in decision making, talking about having regular meetings. What is different is the amount of economic policy change we potentially have on the table here in the United States, as well as a bit right now in terms of the uncertainty about how it's all going to settle out. Usually after we have an election, and especially an election that sort of changes party not just in the White House but in the complete ownership of the federal government, we always do get policy changes and there's certainly something to analyze every four years here in the U.S.

[00:07:37] I think this time it is even more significant from the standpoint that, as we know, since day one, since Inauguration Day, we've had a lot of new policy injected into the process in the trade area with new tariffs being announced. We have a very large fiscal package on the horizon. We also have a lot of deregulatory policies in the background and still being contemplated, as well as new immigration policies potentially on the table. There's a lot of crosscurrents right now, a lot of things to analyze, and while we don't know how all of this settles out we certainly are actively following it every day because these will be some important drivers as we think about that 12 to 18 to 24 month outlook for the U.S. and global economies. The U.S. has probably more latitude to a wider range of potential influence than we've seen for some time.

[00:08:31] Pamela Ritchie: It's incredible. I mean, there were sort of the three-legged stool, if you want, tariffs, the deregulation and the tax cuts. The world has been a bit upended, certainly, by various headlines and so on but are we still kind of on course for those three things? I mean, tell us how that is going to ... the Trump trade, essentially, which has had some interesting moments in both the bond and equity markets, is it still intact? Is that what's driving us? Are you finding that quite interesting in the way it's rejigging things?

[00:09:05] Dirk Hofschire: I think if you think about what the markets have been interpreting, I think after the election there was a bounce, especially in the U.S. stock market, that was very sort of pro-business focused. It was probably tinged with a little bit of concern around tariffs because the rest of the world didn't perform that well right after the election but it was very much juiced on the upside on those sort of positive deregulation, you know, business friendly tax cuts and whatnot that you're alluding to. I think all of that is still in play. If I use your three-legged stool now I think the deregulation one is maybe the hardest one to get at and measure because in many cases it might be less of a sort of big bang of reducing regulations and more about just not enforcing the regulations that are on the books. We'll probably get some deregulation in the banking sector and in the financial sector that'll help. We've seen some in the energy sector. There's probably not as much that we can measure to come and it's kind of already begun.

[00:10:08] I think it's the other two that are really interesting right now and probably taking most of our mind share as well as the market's. The first one is the trade. We started off with a bunch of announcements and then sort of went back and forth up until April. We had that sort of crescendo of massive tariffs sort of overnight around the world. We've come back from that. I think the market is trying to interpret this as maybe it's only going to get easier from here but we have to recognize that the amount of tariffs we've already put in the pipeline is a lot higher than we've been in recent memory. Really, if you sort of aggregate it up we'd have to go back all the way to the 1930s to find tariff rates that are this high. I think it will inject some sort of stagflationary feel into the U.S. economy as well as, obviously, have some impact on sectors and other countries around the world. That's a little bit of a negative. I can see you're going to jump in so go ahead and ask me the follow-up.

[00:11:06] Pamela Ritchie: I'm excited to hear a little bit ... the tariff level that we're sitting at now that we haven't seen since the 1930s, there seems to be this 10% blanket and then we've got sectoral tariffs. Canada's intimately aware of some of those and how they're different from the 10%. I guess, could you throw out a best guess of where we might land as an average here? I mean, are we higher than 10% around the world? What do you think, ultimately, the Trump administration would like to make from tariffs? What do they need?

[00:11:44] Dirk Hofschire: Let me just start with the calculation of today's tariffs. It is a 10% ... as we currently have it. If we just took today's tariffs, not count new ratcheting up or more relaxation  it is 10%, essentially, around the world as a starting point. China has gone up by 20 or 30% this year so it's higher, and then we do have an increase in those sectoral tariffs, as you mentioned, so aluminum, steel, autos and others. There's some exemptions for Canada and Mexico and some other things going on beneath the surface in some of the auto areas but long story short, if we put all this together it's maybe 16 to 18% tariff rate that we see right now. That's up from where it's been around 2 or so for the past couple of decades. That's a big increase.

[00:12:35] Now, what's my guess for where it's gonna settle out? I don't know. I can see that it may stay roughly at this level and maybe see some changes in the mix. The administration has said that they're going to introduce more sectoral tariffs, so pharmaceuticals, semiconductors and some other areas. I have no reason to not believe that they will go up in some of those areas. We'll have to see how widespread they are. It's likely to me that some countries, regions might see their rates come down from 10% if we do see some deals negotiated. You could see them ratcheted up in other areas. I don't have a great guess. It's been a little hard, obviously, to follow this in the first few months in terms of what the overarching sort of strategic objective is.

[00:13:24] I think what the administration's doing right now trying to negotiate many different deals at the same time with a lot of different countries is really, really difficult. I don't have a good guess. I think the way we gauge it more than anything is trying to figure out what the markets are expecting. I think that the markets seem pretty sanguine about it. On the margins I'm a little bit cautious that if things don't get better from here that the markets might have already priced in lower tariffs than we have today. As I said, the tariffs that we have today would be enough to provide a headwind to the U.S. economy and certainly would have some impact on the global economy as well.

[00:14:02] Pamela Ritchie: Take us through the tax cuts as part of the Trump trade. It was significant. There's been some watering down and some shifting around of that, whether it's just a continuation and what else could ultimately be added in or not, at the end of the day we're just sort of looking at what you think it means to the markets, essentially.

[00:14:24] Dirk Hofschire: Now we can turn to something that's probably a little bit more positive. Tariffs, it's hard to see a lot of you know pure absolute winners when they go up but on the fiscal side it should be a sort of market friendly package. The House representatives passed legislation and the Senate's currently considering it with an objective to get it done here in the next few weeks. I think it will be directionally positive and the question is sort of the degree of magnitude. The provisions right now have some tax cuts, especially for businesses, that are new in terms of writing down expenses, writing down R&D, new structures and factories that are put up would have a tax break. I think that that will all help boost the earnings per share of U.S. companies over the next 12 to 18 months. The question is by sort of how much.

[00:15:15] We don't expect that it's going to be anything like 2017 where you actually had an outright decrease in the corporate tax rate and sort of earnings went up 8 or 10% overnight just because of taxes. It'll be less than that most likely. It'll probably not be overly stimulative for the economy because there are some tax breaks but there's also some offsetting spending decreases. It's probably not going to be a sort of bazooka policy boost but, again, directionally positive. When you think about tariffs being somewhat directionally negative it has the chance to sort of cancel out some of the negative growth aspects and especially to be more business and earnings friendly which from a stock market perspective would be positive.

[00:16:02] Pamela Ritchie: That is happy days for company leadership if they can incorporate some of that type of new policy in. I'd love to ask you to just sort of take us through a few different maybe indicators as to how you're looking at the economy right now. How do you think the economic landing pad is right now? Sentiment, we know, was not good, still lots of ripple effects there but what do you think of the underpinnings? Are they strong right now for the economy?

[00:16:32] Dirk Hofschire: I think they're still pretty solid. We came into this year with really having the last couple years being sort of above trend growth. The economy is sort of fine. The consumer sector is by far the biggest part of the economy and the U.S. consumer has never had more net wealth, the labour markets are pretty tight, wages are still very solid in terms of growth, so a pretty good backdrop. I think now that we've introduced some uncertainty and we've seen just the really beginning effects of some of these tariffs we have seen some softening in some areas. We see some areas like the housing market and manufacturing that haven't really been terrific over the past couple of years, that haven't really accelerated so far this year. It's not an accelerating or getting better kind of picture but it's also one that's just holding up fine. That's why I think the policies that we've been talking about, it really is going to matter sort of the degree of magnitude to which these crosscurrents then are introduced into the mix.

[00:17:32] I don't think we're seeing big recessionary signals today and I don t think that we're likely to see them just from any single one of these policies coming out. But I think the longer the uncertainty goes on and if we do get an unexpectedly more negative mix of some of these policies, maybe heavier on tariffs and less positive on fiscal, you can see all of a sudden the concerns possibly for the market starting to switch to more of a growth slowdown. I think at this point sort of anything is on the table over the next 12 months but as of today the U.S. economy is in expansion and we're not seeing dramatic signs of significant weakness.

[00:18:11] Pamela Ritchie: How difficult, Dirk, is it to take a look at investing over a medium horizon right now? This will take us into the interest rate story but is there a lot of wait and see at this point? I mean, markets, as you say, have done very well in the equity side of things. There's been a, I don't know if it's a bounceback or a melt-up or whatever you want to call it, but it's been solid and it's strong and we're at all-time highs so that seems to be just fine. How are you able to, or can you, sort of look to the medium term at this point?

[00:18:49] Dirk Hofschire: It's never easy trying to lengthen the time horizon, especially in today's world, but we do spend a lot of time trying to think about how is the landscape shifting underneath our feet in sort of a slow way that maybe we're not noticing. Again, directionally, if we can get it right over time might be useful for us to think about always lurking there in the background. I think from this standpoint we can say a handful of things about that medium to longer term. One of them is just asset valuations as a starting point. Markets that are expensive, like the U.S. stock market has been for several years relative to the rest of the world, can get more expensive in the short term, and that's actually happened several times in the past decade. It's a really lousy sort of near term indicator but when you think about longer term over a period of years it is important how much good news is sort of priced in the market already, and we have seen quite a bit so far. As a starting point that's something that will give us just a little bit of caution about the U.S. equity market in particular maybe relative to the rest of the world and maybe even relative to the bond market where we've seen yields come up a lot so the expected return from fixed income is now a lot better than what it was, say, as a starting point three or four years ago.

[00:20:03] But we also see other things on the horizon. We, obviously, have a record amount of public debt here in the U.S. It's also true of other advanced economies in the world. We're going to have to digest more and more supply of Treasury and sovereign paper as a result which has the potential to put upward pressure on rates. I think we've seen some shifts in the global landscape even before this administration. We haven't been globalizing recently, we're seeing more friction on the global stage, we're seeing less disinflation from sort of manufacturing and whatnot that we had. Demographics, obviously, are older and we're seeing that create a bit of inflation in labour markets as well, sort of propping up wages even at a time when labour markets can sometimes soften because we're not getting that increase in labour supply like we used to.

[00:20:54] You put all those things together and there's plenty of things that can keep us awake at night. There's plenty of things that make us think that maybe we're in a more structurally somewhat higher interest rate in inflation market than we were over the past 20 years or so. There is reason to maybe put the brakes on outright exuberance but it's really hard to triangulate all that with the near term and make big Herculean sort of forecasts when we know there's so many variables that can come out of policy, geopolitics and other things, that can change overnight and can, obviously, take us in a different direction down the decision tree.

[00:21:33] Pamela Ritchie: One thing that has shifted in reaction to many things you just discussed is this sort of idea of safe havens where people put their money when the seas are pretty scary and so on. The U.S. dollar has been one, gold has been one, obviously, the bond market is there as well. I wonder if you could just discuss that shift. Some of it's been going on for some time. I mean, it didn't happen overnight and it certainly didn't happened on April the second only. Gold, for instance, has been going and running for a couple of years now for central banks. Just the idea of safe havens, can you give us a little bit of a framework perhaps to look through to figure out what that means now?

[00:22:18] Dirk Hofschire: To me, when you think about safe havens I think there's sort of two sources of demand from safe haven types of risks, or that safe havens provide to hedge those types of risk. One is global geopolitical. There, it's when you sort of have a lot of trust in the global system, the global financial system. Most of the post-World War II period has been building up that trust in institutions and having more rules-based trade and capital flows and other things. We've seen that erode in recent years and the geopolitical landscape has a lot more competition at the top with the U.S. from sort of different types of countries with different world views like China and Russia. That lack of global trust is playing a role in creating some demand for hedges like gold, for instance. The other part of it is the domestic side of things where it's much more financial, thinking about do you trust policymakers in terms of servicing their debt and not trying to inflate away the debt, do you trust the paper currency, the fiat currencies, and the Federal Reserve policies, central bank policies that sort of underpin the faith in the financial system?

[00:23:35] We've seen some erosion with that as well, not a lot because I think in general the Federal Reserve and central banks around the world are pretty trusted to do the right thing at the right time but when you think about the amount of debt out there I think we all have to acknowledge that monetary policymakers have less leeway than they used to when debt servicing was not a problem and interest rates and inflation were much lower. You put those two things together and we're in a more concerning world and, as you said, it's been happening over a period of years here. The dollar has traditionally been a safe haven, especially since World War II. We're starting to see maybe the beginnings of that being a little ... to a less degree a little less true. I don't think it happens overnight. I think the U.S. financial markets are the deepest in the world. The Treasury market is the most trusted. The dollar is the world's reserve currency  and there's no obvious second place that's looking to step in right now. I do think on the margins when you think about when people want to hedge those two broad risks, especially when you're thinking about adversaries to the United States, they don't want to put more money in the dollar so they're looking to diversify and it's helping some of those alternative assets like gold, like cryptocurrency.

[00:24:53] I think when you think about a U.S. or North American based investor you also want to think about other currencies around the world that may have more defensive properties if some of these countries start seeing capital flows repatriated to their home markets. In Japan, for instance, the Japanese yen has proven to be a somewhat more defensive foreign currency here over the last year or two. I think having that hedging in the portfolio is going to continue to be very important. Trying to find the sources of it is not easy because there's not that many things that can hedge really bad things happening. Really bad things happen is not our base case. We'd have to see a series of things go wrong for the dollar to fail and the U.S. financial system to ... or the fiscal picture to completely collapse. I think as investors, having some diversification in some of those hedges is going to continue to be of interest and will be important as a small part of diversifying a stock, bond portfolio.

[00:25:57] Pamela Ritchie: That's fascinating. Do you think that with some deregulation, which is one of the policy goals, that you might see the banking system more fortified? I think you kind of mentioned that before, taking off some of the regulations there and just the aspect of growth that that might provide. As you say, it may take longer but that's what you do, you do longer term views. I'm sort of curious where ripple effects there might be.

[00:26:31] Dirk Hofschire: I think we're likely to see ... and we're hearing a strong possibility of more deregulation in the financial sector. This can be everything from just loosening up restrictions on small regional banks and overly burdensome paperwork to things that will probably be more meaningful at kind of that global macro standpoint of freeing up some of the balance sheet in terms of the way how much banks need to hold in capital on their balance sheets that they'll be able to deploy for more lending et cetera. I think that should all be positive, no question. If you can free up money that you don't have to tie down to your balance sheet it's going to go somewhere else so that'll inherently be positive no matter where it goes.

[00:27:14] Will it be hugely stimulative or hugely helpful to the growth environment? I'm not sure. It's not clear to me ... you have a lot of different lenders coming into play, a lot more companies getting their lending from capital markets but also a lot more businesses getting their borrowing from private credit and other entities and sort of moved away from banks over the past several years in the U.S. financial system. I'm not sure how much unmet demand for new credit there is in the U.S. We'll have to see. Again, I put this down as one of those things that's definitely directional positive, it will help in some way, whether or not it's a big boost that really kind of changes the macro outlook I'm a little bit skeptical but we'll have to wait and see.

[00:28:03] Pamela Ritchie: Let's shift to the geopolitical landscape. Do you think that moment a few months ago when the Vice President went to Europe and essentially told Europe at a defence conference you're on your own, you've got to figure this out, what kind of moment do you put that into? Again, we'll look at it from investment but it was a departure.

[00:28:27] Dirk Hofschire: Yes, and I think not just that episode but sort of the tone of this administration, which we saw a little bit during Trump's first term but I think we've seen even more stark example in the first few months here that essentially moving away from the U.S. traditional post-war policy that we've had over the past 75 years, we placed a very strong part of your foreign policy on the relationships that you have with your traditional post-World War II allies in Canada, Europe and the Pacific region. You sort of start treating everyone a little more transactionally. I think that is a big departure, that tone is set. We'll have to see in practice how much of it is sort of rhetoric to try to incentivize greater defence spending, which I think it's been effective in doing that, but I think there's also been that element that as you're saying other things and making it clear that maybe you're not supporting Ukraine in the same way, maybe you are not as worried about Russian aggression, maybe you're making jokes about making Canada the 51st state, I think it does introduce a lot of concern among some of our allies that it's not just a negotiating tool, that it does put us in a new era and one, unfortunately, that makes the U.S. perhaps a less trusted ally than it's been in the past.

[00:29:58] We'll have to see, again, how that sort of shapes up going forward and the degree of magnitude, once again, is really important. I do think it does put us geopolitically in a somewhat different landscape that muddies the waters. Again, I'm not positive of then what that means strategically. We can see some sort of conventional types of activities against Iran and on behalf of Israel here recently in the Middle East but we've seen a lot of things like what you mentioned in Europe about really not playing the same type of role of guarantor or key ally for European and Western security that it has in the past. I think that this will have ramifications both geopolitically as well as potentially economically and from an investment standpoint going forward.

[00:30:47] Pamela Ritchie: Dirk, do you think the biggest risk is inflation? I mean, there are always bigger risks if you're thinking about war, I guess, but in terms of the market  is the call on inflation and the way that is handled, is that the biggest issue in markets right now?

[00:31:05] Dirk Hofschire: I think markets right now are feeling a little ... seem to be feeling a bit better that inflation is under control and moving in the right direction. I think that might be a little bit early and I think the caveat here, obviously, is where do tariffs end up. Some people are saying inflation won't be created at all with tariffs but at the end of the day someone has to pay the tariffs. The likelihood is that if we do keep tariffs in place, even at levels that they are today, is that some of that will get passed along to U.S. consumers. I think from the standpoint of other countries it's probably more of a growth hit to exporter but from the standpoint of the U. S. economy it has the potential, in our view, to add an extra percentage point or so to consumer price inflation over the next year.

[00:31:54] By our measure we still have core trends of inflation closer to 3% than the 2% that the Federal Reserve is targeting. I don't know if rampant inflation or a big acceleration of inflation is on the table. That's not the base case. From that standpoint I don't think it's the biggest threat face in the markets but I think this sort of persistent inflation that doesn't go away, doesn't allow the Federal Reserve to ease even though it wants to and it says that its policies are overly restrictive, I think that has the potential to sap some of the momentum from the economy in a more hidden form as opposed to sort of what we had in 2022 where it spikes up to 8 or 9%.

[00:32:38] Pamela Ritchie: Fascinating. So interesting to get your views on that and it could just sit there, this sort of higher for longer discussion. I'd like to end with AI and ask you a rather specific question about it because, again, it's something that's talked about all the time, invested in all the time. It seems to be a very structural change. I guess the question for you is just how quickly it really hits the ground outside of some of the obvious names in the stock market, obvious companies and they're doing amazing things and going great guns, just sort of the proliferation of it. What does your research team come to the conclusion of on that?

[00:33:23] Dirk Hofschire: Let me start with sort of the business implications in the equity markets and then move to your broader question around the economy and will it help on a more widespread basis. It's in the early innings, in our view, of what's potentially a transformational technology, but in these early innings what usually happens is you hit some minimum adoption rates and it's still fairly slow in the first several years but there's a lot of investment beneficiaries in terms of the buildout of the infrastructure. We're obviously seeing this with companies that are tied to AI and semiconductors and everything else. We're still somewhere in the earlier to mid-innings of that probably because of the standpoint that a lot of the potential still lies ahead. That's one of the reasons that the U.S. markets have continued to do so well, there's obviously a lot companies, and large companies, that tend to benefit from that continuing trend.

[00:34:18] When you think about is it going to help or is it helping productivity a lot, it's maybe adding a little bit of extra productivity right now as companies and even consumers every day are starting to use the technology more but it's maybe in sort of the couple tenths of a basis point type of a calculation. When we go back and look at some of these other transformational technologies throughout history, whether it be the internet or electricity or automobiles, they tend to take you a decade or more to sort of really disperse throughout broader society and then really start juicing the productivity gains for the broader economy. We're not there yet and we could still be at least 5 to 10 years away from that those higher adoption rates to hit and then maybe we get an extra percentage point or so of growth and it could be terrific down the line. We could be wrong in these calculations and it could hit five years earlier or five years later. I think it's on the horizon, it's helping now but it's probably, let's say, this cycle, over the next two, three years, that kind of an outlook.

[00:35:23] Pamela Ritchie: It's a cycle.

[00:35:24] Dirk Hofschire: It's probably not a game changer for U.S. productivity rates. It's probably something that we'll be looking forward to maybe in the cycles to come.

[00:35:32] Pamela Ritchie: That's so fascinating. Thank you for sharing that. Is there as a final question, wrap it up in a bow a little bit, I actually was just wondering if there's something your team has found that you've gone after, that you have been researching, that you've been looking at that we'd be surprised by, that you look deeper into a particular topic or subject or area of research lately that would kind of surprise everyone joining you here today.

[00:36:01] Dirk Hofschire: Well, I don't know what would surprise you because I'm sure your listeners follow all sorts of things as we are. We've covered a lot today, I'd say one of the things that we've spent more time on this year is started to really look at the institutional ... well, flows everywhere, capital flows throughout the world and try to look at different segments, different institutions of where they're investing in the world, when they make decisions to move money, why they make decisions to move money. When we think about the US as an example, the country and the capital markets here have been huge beneficiaries of foreign capital inflows over the past many years. That's sort of the flip side of that tariff discussion that we're having. The large trade deficits that we have here in the U.S. are essentially paid for by the U. S. importing capital from abroad. We sort of run about a $25 trillion net investment negative position right now versus the rest of the world, meaning foreign and non-U.S. investors own 25 trillion more of our assets than we own of theirs.

[00:37:10] It really makes sense to us then to sort of dig in on, well, if the U.S. becomes a little less exceptional or if these trade deficits start to go down, if countries find other reasons to invest in their home markets, whether it be for fiscal spending on defence or other growth opportunities, what if more of that capital starts to go to different countries outside the United States or, say, at home, who might be the relative beneficiaries? I think it gives us a lot of good ideas and clues. No definitive decisions right now in terms of how we play it but it's something that we really want to spend more time on because we're seeing, in my view, one of the more interesting periods for global diversification than we've had in quite some time. U.S. has been so dominant for so many years a lot of investors not really looking as far abroad and I think there's going to be more opportunities here on the horizon because of this.

[00:38:03] Pamela Ritchie: We'll leave it on that, Dirk. Very pleased to have some time with you. Thank you for sharing your time and we enjoyed speaking to you on Fidelity Connects. All the best.

[00:38:12] Dirk Hofschire: Absolutely, my pleasure.

[00:38:14] Pamela Ritchie: That's Dirk Hofschire joining us from Boston today. Coming up on the show, tomorrow we're off for Canada Day. We hope you enjoy some relaxation there on behalf of everyone at Fidelity. Enjoy your holiday.

[00:38:25] On Wednesday we're going to be catching up with Mike Foggin. He is portfolio manager of Fidelity Global Bond Fund. We'll kick off the Q3 discussions with a look at trends and themes driving global bond markets.

[00:38:39] Thursday of this week Fidelity Director of Alternatives Rory Poole, he'll be stopping in to discuss the growing demand for alternative investment strategies and to answer any of your questions about this growing space.

[00:38:52] On Friday equity Research Analyst, Claire Fleming, she'll be sitting in the chair here to discuss what's shaping the material sector for her in this new quarter that we're entering and beyond. We'll put lots of different questions to her about the material sector on Friday. Thanks for joining us. We'll see you in the days to come. I'm Pamela Ritchie.