Why Mortgage Charges are Rising because the Fed Retains Reducing

Dave:
Mortgage charges lately hit their lowest level in a 12 months. Issues have been trending in a superb route after which the fed cart charges and mortgage charges truly simply went up. It might appear complicated, however in case you take a look at the financial knowledge, what’s occurring does make sense. And on immediately’s episode, I’m going to elucidate what’s going on on the Fed, why mortgage charges have reacted the way in which they’ve, and share what I believe we are able to all anticipate going ahead. Hey everybody. Welcome to On the Market. I’m Dave Meyer. Thanks all a lot for being right here for yet one more Fed Response video. You’ve in all probability heard lots of people celebrating this Fed charge lower or predicting that this was the start of mortgage charges actually coming down and affordability coming again to the housing market. However sadly, a minimum of as of now, and I’m recording this on Halloween, so two days after the Fed charge lower, mortgage charges have solely gone up.
And in case you take heed to this present, you might perceive a little bit bit why that’s occurring to date, however I wouldn’t blame you in case you have been confused. The entire world’s saying the Fed cuts charges and mortgage charges go down after which they lower charges and mortgage charges go up. It’s a little bit bit bizarre, however I believe I might help you all perceive what’s occurring right here. In order that’s the plan for the episode immediately. I’m going to speak a little bit bit about simply what truly occurred on the Fed assembly after which I’m going to enter the why of all this and simply clarify among the financial background that’s driving these items. In order that’s what we’re going to do. Let’s leap in. First up, what truly occurred on the Fed? Effectively, they lower the federal funds charge 25 foundation factors. That simply means 0.25%. That is no shock.
That is what everybody was anticipating. They mainly mentioned that they have been going to do that and that’s why mortgage charges have been trending down a little bit bit heading into this assembly as a result of individuals have been anticipating and baking within the lower earlier than it truly occurred. That is among the humorous issues that occurs with these Fed conferences is that folks watch this so fastidiously that the banks and individuals who create mortgage charges or other forms of loans are planning forward for what they assume the Fed goes to do. They don’t watch for that precise resolution to return. And so you’ll assume, oh, the Fed did what they mentioned they have been going to do. Mortgage charges shouldn’t actually transfer in any explicit route, however they went up, they have been getting shut to six.1%. As of immediately, they’re about six and 1 / 4, in order that they went up 0.15%.
So it’s not loopy, nevertheless it’s a reversal of a pattern. We had been seeing mortgage charges pattern down for some time and any reversal of a pattern like that’s notable and the rationale issues went again up and didn’t simply keep the identical was principally due to what Jerome Powell mentioned throughout his press convention after the assembly. It looks as if most individuals in Wall Avenue establishments, bond buyers, whoever, they’re all relying on that December charge lower. Then Powell comes out in his press convention and says, not so quick the December charge lower is, I believe he mentioned something however sure was his actual quote, some doubt on one thing that the business felt was a foregone conclusion. And that type of modified sentiment and pushed bond yields again up and that’s why mortgage charges went again up. So that’s type of the lengthy story of what’s occurring right here.
It’s not that the Fed shouldn’t be going to chop charges, I truly assume they’re in all probability nonetheless going to chop charges a number of instances over the following 12 months, nevertheless it’s that they’ve type of launched a little bit little bit of uncertainty into what individuals have been feeling fairly clear about prior. Now the query after all is why did he try this? Why is he introducing uncertainty into the market proper now? You’d assume that he desires to be as sure and clear as doable. Effectively, the Fed’s job, as we discuss loads on the present, is two-sided. They’re chargeable for sustaining value stability, which is simply the flamboyant method of claiming controlling inflation, and so they’re additionally chargeable for maximizing employment. So actually preserving and attempting to keep up the labor market as finest as doable. However proper now we’re type of on this distinctive time the place each of these issues are unsure.
We don’t know if inflation’s below management, it’s gone up 4 months in a row or is it getting higher? We don’t know if the labor market is getting uncontrolled, and I believe what Jerome Powell is doing right here is simply attempting to hedge and say that they don’t actually know which is the larger drawback proper now, at the moment as of the final couple of months, they assume that the labor market breaking is the larger drawback. That’s why they’re chopping charges. They’re much less involved about inflation than they’re the labor market. That’s why he lower charges. However he’s saying in maintaining the door open for the concept the labor market is perhaps okay, inflation truly would possibly worsen, and in that case they’re not going to chop charges. And so that’s simply this little little bit of uncertainty that he’s launched into the market and is one thing that we’re going to all should control.
In order that’s what I wish to discuss extra on this episode as a result of we wish to know not simply the place the federal funds charge goes, we wish to know the place mortgage charges are going, and for that we are able to’t simply take a look at what Jerome Powell says. We have to perceive the place the bond market is perhaps going. Mortgage charges don’t comply with what the federal funds charge does. Federal funds controls what is named the quick finish of the curve. That is short-term lending prices. Lengthy-term lending prices like mortgages are broadly influenced by the identical issues that the Federal Reserve is considering inflation recession dangers. There’s much more different variables, however these are two of the principle ones that they’re and what the Fed does and what bond buyers do should not essentially all the time the identical factor, however I believe if we do a deep dive into what’s occurring with inflation within the labor market, we’ll get a clearer image of what the Fed is more likely to do and what the bond market is more likely to do, after which we are able to perceive the place mortgage charges and affordability are going. In order that’s what I wish to do with the remainder of this episode. We do received to take a fast break although. We’ll be proper again.
Welcome again to On the Market. I’m Dave Meyer right here speaking about what occurred with the Fed, however we’re transferring on from what occurred final week and what Jerome Powell mentioned, and we’re going to do our personal evaluation right here of what’s occurring with the labor market, what is occurring with inflation proper now, as a result of that’s going to inform us not simply what the Fed would possibly do, however hopefully we may all see that truthfully what the Fed does isn’t actually impacting residential actual property proper now. Mortgage charges are going up after they lower. I ought to point out it ought to assist industrial actual property. The federal funds charge influences short-term lending, far more than long-term lending, and since industrial lending is shorter, charge cuts could have a much bigger influence on industrial. So I ought to simply point out that, however why we’re type of digging into inflation within the labor market shouldn’t be as a result of we’re attempting to determine what the Fed goes to do.
We wish to perceive what the bond market’s going to do as a result of that can inform us the place mortgage charges are going, which goes to inform us loads about housing affordability, which goes to inform us in all probability what’s going to occur with the housing market within the subsequent couple of months. In order that’s the plan right here. We’re in a bizarre time with the financial system proper now. Now we have been for a few years now. This has simply been the one factor that’s constant over the previous couple of years is the financial system continues to ship combine and bizarre indicators. Proper now we’re seeing what I believe is a declining labor market. I’ve talked about that on the present loads and we’ve seen cussed inflation at finest and rising inflation at worst, and that is uncommon, this isn’t what usually occurs. You don’t in regular instances have a danger of inflation similtaneously the chance of a recession or worsening labor market.
Usually in I common commonplace outdated financial cycle, what occurs is you might have an growth, issues are rising and rising and that is the great instances, and ultimately they overheat a little bit bit and that’s whenever you get inflation as a result of there’s simply an excessive amount of demand for the availability out there simply throughout your entire financial system that creates inflation. Finally, the Fed will reply by rising rates of interest that can ultimately lead us right into a recession the place unemployment goes up. So you’ll be able to see the a part of the financial cycle the place there’s inflation and the a part of the financial cycle the place there’s job loss are usually on reverse sides, however given all kinds of advanced issues which can be occurring within the financial system, whether or not it’s AI or tariffs or the financial provide will increase we’ve had during the last couple of years, we’re seeing each on the similar time. And that is what we might name the chance of stagflation.
Stagflation is just about the worst financial scenario you will get. Some individuals would say deflation is even worse, however stagflation is fairly dangerous as a result of what you might have is rising price within the type of inflation and lowering spending energy as a result of persons are shedding their jobs, which is only a nightmare for the financial system. Now, I wish to be clear, we aren’t in a stagflationary setting proper now. Sure, the labor market has been getting worse. Unemployment charge has been going up, however we’re nonetheless traditionally talking, the labor market is doing nicely. We’re at a 4.2% unemployment charge. That is superb. Secondly, inflation has gone up 4 months in a row, nevertheless it’s nonetheless at 3.1%, 3% inflation shouldn’t be nice. It’s not what we wish and it’s heading within the mistaken route proper now, however we now have to maintain issues in perspective. 3.1% inflation shouldn’t be an emergency in itself.
It feels actually tough proper now as a result of we’ve had actually excessive inflation now 4 or 5 years in a row. So the compounding impact of all these issues is dangerous, don’t get me mistaken, however being in a scenario the place we now have a 4.1 4.2% unemployment charge and inflation at 3.1% shouldn’t be stagflation but. Why am I speaking about this? As a result of this stagflationary danger, these forces which can be usually not present on the similar time, the truth that they do exist on the similar time is why mortgage charges and the bond market aren’t transferring. Bond buyers are very involved about inflation. They don’t prefer it as a result of give it some thought, what’s a bond? You might be lending cash to the US authorities for a time frame, and the bonds we’re speaking about are 10, 20, 30 12 months time intervals and the yields on these, the curiosity that you just earn proper now are proper about 4%.
That’s a great way to protect wealth if the inflation charge is at 2% as a result of then you might be incomes a 2% actual yield, proper? You’re getting 4% inflation is consuming away 2%. So 4 minus two is 2% actual yield. Once I say actual, I imply inflation adjusted yield. However what occurs if inflation goes as much as 5%? Then your actual yield on bonds that you just purchase immediately is destructive. You’re incomes a 4% yield inflation’s at 5%. Which means you’re incomes destructive 1%. That’s not good. The entire level of shopping for a bond is that you just’re accepting a low return for stability and assurance that you just’re going to receives a commission. And so bond buyers tremendous involved about inflation despite the fact that it’s not uncontrolled, they don’t prefer it and so they don’t need this. Alternatively, they’re additionally nervous about recession, and the bond market is admittedly reactive to recession danger as a result of the rationale once more, individuals spend money on bonds is for security and stability.
And so what occurs whenever you enter financial situations when there’s loads of danger, individuals are inclined to take their cash out of different belongings, whether or not it’s the inventory market or cryptocurrency or actual property or their financial savings account, and so they put ’em in bonds and so they say, despite the fact that I’m solely going to earn a 2% actual return, that’s lower than the inventory market. Inventory market’s feeling sort of dangerous proper now, so I’m going to place my cash into bonds and simply be sure that I don’t lose cash for the following couple of years. I’ll be okay if I don’t take advantage of cash. And so these are these competing forces that we now have proper now. Because of this the bond market shouldn’t be transferring, and it’s why I’ve been saying type of all 12 months that I don’t assume mortgage charges are going to go down and why I believe via the top of 2025, they’re not more likely to go down both.
It’s as a result of we don’t have a transparent sight but on which considered one of these items goes to be the larger challenge. So hopefully, given that you just type of perceive why mortgage charges aren’t transferring that a lot, why I don’t assume they’re going to maneuver that a lot for the remainder of the 12 months except after all we get some large information in regards to the labor market altering or cussed inflation. Now, I believe that’s unlikely to occur as a result of we’re already type of to start with of November right here and issues are inclined to not change that a lot in the direction of the top of the 12 months, nevertheless it’s additionally extraordinarily unlikely to occur as a result of the federal government is shut down and we don’t even have the information about inflation and the labor market that we usually get. And so via the top of the 12 months, I believe it’s not possible that we see massive modifications, however we are able to do our personal analysis, we are able to look into non-public knowledge, we are able to look into state knowledge to a minimum of get a way.
It’s not so good as having every little thing that we usually have, however I’ve pulled collectively details about the labor market and about inflation to share with you in order that we are able to attempt to forecast what’s going to occur. We have to know what’s occurring. Let’s speak in regards to the labor market first. You’ve in all probability seen within the final week specifically, there’s been loads of excessive profile layoffs. This week UPS mentioned that it’s going to chop or did lower 48,000 workers. That’s an insane quantity, 48,000 workers. On high of that, Amazon mentioned that they have been going to chop as much as 30,000 jobs and already did 14,000 layoffs. We’ve additionally seen different massive corporations, meta intel all throughout the financial system. We’re seeing excessive profile layoffs, however does this imply that the labor market is definitely beginning to break? Once more, a little bit laborious to inform as a result of we’re not getting regular knowledge we get from the federal authorities, however we do get some non-public knowledge.
So loads of non-public corporations, payroll corporations will put collectively this knowledge and we nonetheless have state knowledge, which you’ll type of extrapolate out. It’s not good, however I do wish to share with you what’s occurring as a result of I do know persons are nervous about their jobs, they’re nervous in regards to the labor market, and so I’m simply attempting to share with you what we do know even regardless of the federal government shutdown. So right here’s what we received, a DP, which is a payroll firm. They all the time put out a month-to-month jobs report, and they also truly put out some knowledge lately that reveals truly an enchancment within the hiring setting during the last couple of weeks. All through October, they observe mainly a 4 week transferring common of modifications unemployment, and during the last couple of weeks they’ve had constructive 10,000, 20,000 during the last two readings, whereas in September it was destructive about the identical time.
So that’s comparatively constructive information. It’s not like bumper nice progress, however when it was destructive in September, that was a little bit extra regarding the truth that it’s turned constructive. That’s a constructive. We even have another estimates. Citibank put out a research and so they’re displaying that their estimate, once more, it’s an estimate as a result of we don’t have this federal authorities knowledge, is that the variety of Individuals submitting for unemployment did improve for the latest week in October, however simply from 220,000 to 232,000, you don’t wish to see that go up ever. However having it go from two 20 to 2 32, that’s like a standard fluctuation. These should not alarming ranges a lot, and I believe that is type of complicated, however I’ll simply clarify to you what I believe is happening right here. And really Jerome Powell mentioned this, not, I believe it was the earlier fed assembly.
He was saying, we’re within the no rent, no fireplace financial system, and whenever you dig into the information, that’s what you see loads of. We do have these excessive profile layoffs, however corporations are nonetheless hiring, nevertheless it’s not rising. It’s like a one in a single out sort of system proper now the place nobody’s investing into new workers or new packages, however as a result of loads of corporations are in actually good positions, company earnings are in any respect time highs. These corporations don’t must make loads of layoffs. You see in loads of these cases, Amazon, for instance, or UPS, they’re simply doing this as a result of they’re transferring in the direction of automation. I believe UPS is attempting to maneuver in the direction of extra gig staff as a substitute of full-time workers. So it’s not like these corporations are shedding their earnings. They, for no matter purpose, really feel like they’ll optimize their workforce or optimize their earnings or no matter these public corporations wish to do.
That’s what they’re doing, and it’s much less about dramatic emergency price chopping measures. That’s a minimum of what I’ve been seeing. Additionally, the Federal Reserve Financial institution of Chicago put out one other estimate too. They tried to place out an estimate of unemployment. They confirmed that it did improve a whopping 0.01% from September to October. So mainly unchanged. They mentioned that their estimates went from 4.34% to 4.35%. They’re scientific about these items. For regular individuals, which means unchanged. So I believe the massive factor is, despite the fact that these excessive profile layoffs proper now, the excellent news is that it’s not all dangerous. We’re not seeing some huge improve in unemployment from AI or from company earnings declining that the opposites occur. Company earnings are doing very well proper now. So that’s comparatively excellent news, proper? Nobody desires the labor market to interrupt, nevertheless it is among the causes the Fed is being cautious about charge cuts as a result of once more, their job to regulate unemployment, to regulate inflation, in the event that they really feel the labor market is doing nicely, they’re going to be much less aggressive about charge cuts.
I nonetheless assume they’ll lower charges, however they’ll in all probability do it slower. If the job market actually begins to tank, then they should lower charges even sooner. Now, I believe all of that is comparatively excellent news for proper now. After all, issues can change sooner or later, however we now have restricted knowledge and what we are able to see of that restricted knowledge, it doesn’t appear as dangerous because the headlines are making it out to be. And I’m inspired by that as a result of I admit it guys. I admit I’ve concern about AI and what it’d do within the labor market. I type of have combined emotions about this truly. So on one hand, I’ve concern about that. Alternatively, I additionally assume corporations are overcommitting to AI proper now. I take advantage of ai. I do know lots of people who do it might’t change most jobs but.
It might help people who find themselves doing jobs. However the concept proper now with the expertise as it’s that it’s going to wholesale change loads of completely different jobs, I believe is a little bit overblown. I believe over the following couple of years it’s undoubtedly going to try this. However my concern extra is that corporations are identical to if issues begin to go dangerous, they’re going to be like, oh, we’re simply going to fireplace, lay off a bunch of individuals and rent. It’s all going to be with out an precise plan about that, and that’s one thing that worries me truthfully as a result of I don’t need individuals to lose their jobs. But it surely’s additionally a tough factor to repair. If AI actually does begin to come and take jobs from Individuals, it’s not one thing that the Fed can repair. It’s not even actually one thing coverage can repair, proper?
As a result of it’s not like, oh, we’re going to go decrease charges 1%. All these corporations are like, ah, you realize what? Neglect ai. I’m going to go rent a bunch of individuals. That’s not going to occur, proper? We’re simply in the midst of a technological shift. It’s a disruptive time within the labor market. These items, they do stabilize. In all earlier cases the place individuals have been scared in regards to the phone or electrical energy or automation or the web or all of those various things. There’s a time of disruption. Then new jobs come out, and that’s what I anticipate principally will occur with ai. However there’s a time frame the place there may be this disruption, and I fear about that. I believe we is perhaps in the midst of that even when it hasn’t began but. In order that’s the labor market.
Let’s speak shortly about inflation too. We don’t have the entire knowledge, however they really did name individuals again into the Bureau of Labor Statistics to place out particularly the September CPI report as a result of this does have impacts on how social safety advantages and Medicare advantages and all these different advantages are calculated for subsequent 12 months. So that they actually wanted this one. So we do have the September CPI report, and what it confirmed was that inflation hit 3% final month. I’ve been attempting to say, I believe I’ve mentioned it for a 12 months or in order that I don’t assume we’re out of the woods by way of inflation progress and clearly not as a result of it’s gone up 4 months in a row. Once more, nothing tremendous alarming, nevertheless it had been happening for a few years in a row. Now it’s up 4 months in a row. That’s one thing notable, I believe for us as actual property investing neighborhood.
The factor that it’s best to know is that the main factor that’s serving to general inflation come down is rents. Even after loads of the availability shock got here via and the cash printing and all of that, that contributed to our inflation again in 20 21, 20 22, even after that stuff had stopped. The CPI report was actually excessive for some time due to lease. Now, once we take a look at rents, which they name house owners equal rents, that’s how they observe it, which makes up almost one third of the CPI. The best way they calculate that headline quantity is that they name ’em weighted baskets. So there’s these completely different classes, and lease is the most important class. It’s a 3rd of the entire thing is lease, and it truly, the truth that it’s been going up on the slowest charge is the precise technique to say it, has truly actually helped the general CPI.
It’s truly estimated that with out that, it will’ve been 3.1% as a substitute of three%. In order that’s truly actually good. However what you see in inflation is there’s two classes, proper? There’s items and providers, items, stuff that you just purchase, providers or belongings you pay different individuals to do. Items inflation is fairly variable. It might go up, however then it might return down. You see this in gasoline, it goes up, then it comes down, electrical energy goes up, it goes down, use automobiles, they go up and down. Service inflation, whenever you pay another person to do one thing for you is far stickier. It goes up. It hardly ever comes again down. The very last thing I wished to speak about with inflation is that inflation doesn’t occur the identical in every single place. I believe that is sort of actually an fascinating factor. Folks simply see this high line quantity, however truly in numerous cities, it’s completely different.
And I truly pulled this up. The highest 20 cities for the best inflation. Primary metropolis for inflation is Denver, Colorado proper now. Quantity two is San Diego. We even have quantity three in Chicago, however issues are literally far and wide geographically. Phoenix, Arizona is up there, Washington, dc, Anchorage, Alaska. However the purpose I’m bringing this up is as a result of inflation on a metropolis stage shouldn’t be going to influence mortgage charges for the bond market. That’s simply not likely the way it works. They’re going to take a look at that high line quantity. However for actual property buyers, I do assume it issues as a result of whenever you see a metropolis like Denver, which is seeing excessive inflation and a struggling housing market and rental market, I take a look at that. I’m like, rents are going to maintain happening whatever the provide drawback. However persons are maxed out.
You already are bumping up into affordability challenges, and cities like Denver persons are going to be paying extra for meals. They’re going to be paying extra for groceries or fuel or no matter it’s. It’s received to return from someplace. And in a market the place there’s an extra of provide, it’s in all probability going to return from lease. Individuals are going to decide on cheaper flats or they’re going to barter more durable. And so that is simply one thing I need individuals to be cognizant of. If you happen to’re in considered one of these markets with actually excessive inflation and also you’re already seeing some declines, that in all probability goes so as to add a little bit gas to that decline. In order that’s the inflation knowledge that we now have proper now. I believe general it’s okay. Truthfully, you don’t wish to see it going up, however the outlook stays actually unclear. On one hand, this previous week, president Trump went to China and met with Xi Jinping and so they have been firming it down, proper?
They’re already type of decreasing these loopy tariffs of 100%, however they’re nonetheless excessive on our greatest buying and selling associate, so it’s sort of laborious to determine that out. We now have new tariffs on Canada. We received 10% tariffs there, and the information additionally reveals that to date corporations are consuming loads of tariffs, so customers aren’t paying 100% of the influence. We’ll see if that shifts. Most of those massive banks like Goldman Sachs and Deloitte and all these corporations that look into this assume that it’s going to more and more get handed on to the buyer. And so I do assume we’ll in all probability nonetheless see the next inflationary setting, however hopefully it simply doesn’t get uncontrolled. To me, that’s what actually issues. It doesn’t preserve going up each single month, or if it goes up a little bit bit the following couple months, that’s okay, however we are able to’t see it get uncontrolled if we wish mortgage charges to return down.
In order that brings us to our final query is simply the place do charges go from right here? Effectively, if inflation stays elevated however not uncontrolled like it’s now and the labor market is weak however not collapsing like now, I do assume we get extra charge cuts. I believe we see two to 4 charge cuts within the subsequent 12 months that’s going to assist industrial actual property a superb deal. But it surely doesn’t imply mortgage charges are going to return down that a lot. I believe they are going to come down. I believe it would assist push them down. However except there’s a giant recession, I don’t assume we’re going to see large modifications to mortgage charges. I believe there’ll be, I’m going to only throw out 5.7, 5 to 6 and 1 / 4, six and a half within the subsequent 12 months or so. Hopefully we hit the decrease finish of that pattern.
That may be higher if we’re on the greater finish of that pattern. Six and 1 / 4, six and a half. If we keep the place we’re proper now, mortgage charges, I believe we’re in a troublesome 12 months for actual property subsequent 12 months, it’s going to be a gradual market with modestly declining costs. That doesn’t imply it’s a nasty time to purchase actual property. I simply assume it’s going to be a gradual sort of draggy market subsequent 12 months. Now, if the labor market breaks and we don’t have inflation, then charges are going to go down. That’s the scenario the place mortgage charges actually go down. If we see unemployment go up and inflation type of average or go down, we’ll see mortgage charges decline in all probability into the mid or even perhaps decrease fives, however there’s no proof that that’s occurring proper now. So I wouldn’t depend on that.
After which the alternative may occur. If the labor market stays nice, however inflation goes up, mortgage charges are going to return up. I do know everybody says that’s loopy, however even when the fed cuts charges in that setting, mortgage charges are going again up. However I believe the purpose of that is that we don’t know, and if you would like a superb financial system, issues aren’t going to alter that a lot. The one method mortgage charges are actually going to go down is that if unemployment goes again up. Not an excellent scenario, and so I actually simply hope that that is simply one other knowledge level in your thoughts that maybe it’s best to cease ready for charges to go down. So we’ve been speaking about all 12 months simply underwrite your offers with the way in which charges are immediately. I truly simply did a whole episode on the BiggerPockets podcast about this.
You possibly can test it out. It got here out on Friday, this episode in the marketplace. I actually simply went into the why, the information, the nerdy stuff, however if you wish to hear my ideas on spend money on the next rate of interest setting, I believe that’s the place we’re going to remain for some time. Take a look at that present. However once more, I simply assume hopefully what I’m attempting to elucidate to you and never simply let you know, charges are going up, charges are happening. Folks can scream that on social media. What I’m attempting to do on this episodes is provide help to perceive why issues are occurring, as a result of then you’ll be able to interpret this for your self. As a result of individuals in social media, all of them have these different motives. They’re attempting to promote you one thing. They’re attempting to persuade you of one thing. However in case you truly perceive this for your self, then you’ll be able to discern what info, which opinions it’s best to truly take and take into consideration, and hopefully this background context into what’s occurring within the labor market and with inflation might help you just do that. That’s what we received for you guys immediately in the marketplace. Thanks all a lot for being right here. I’m Dave Meyer and we’ll see you on Thursday for one more episode.