PEO Leadership 2022 Conference - Special thanks to Focus Asset Management for making this fireside chat possible! David Rosenberg provides advice to 2,600 clients, both retail and institutional, across 40 countries. He is the founder and president of Rosenberg Research, an economic and financial market consulting firm he established in January 2020. Prior to creating his own company, David was chief economist and strategist at Gluskin Sheff + Associates from 2009 to 2019. Prior to that, from 2000 to 2009, he was at Merrill Lynch, where for the first two years he was the chief Canadian economist and strategist based out of Toronto; for the last seven, he was the chief North American economist at Merrill Lynch in New York, where he was consistently ranked in the top three of Wall Street economists polled by the annual Institutional Investors survey.
PEO Leadership provides its business community the ability to leverage its collective knowledge, experience and network; to challenge and be challenged in a high-disclosure, objective and trusted environment through a combination of Peer Advisory Boards, One-on-One Coaching, and Thought Leadership Executive Networking Events - all for the purpose of enhancing the personal and professional lives of its members.
PEO Leadership 2022 Conference - Special thanks to Focus Asset Management for making this fireside chat possible! David Rosenberg provides advice to 2,600 clients, both retail and institutional, across 40 countries. He is the founder and president of Rosenberg Research, an economic and financial market consulting firm he established in January 2020. Prior to creating his own company, David was chief economist and strategist at Gluskin Sheff + Associates from 2009 to 2019. Prior to that, from 2000 to 2009, he was at Merrill Lynch, where for the first two years he was the chief Canadian economist and strategist based out of Toronto; for the last seven, he was the chief North American economist at Merrill Lynch in New York, where he was consistently ranked in the top three of Wall Street economists polled by the annual Institutional Investors survey.
PEO Leadership provides its business community the ability to leverage its collective knowledge, experience and network; to challenge and be challenged in a high-disclosure, objective and trusted environment through a combination of Peer Advisory Boards, One-on-One Coaching, and Thought Leadership Executive Networking Events - all for the purpose of enhancing the personal and professional lives of its members.
Leon Goren
Hi, I'm Leon Goren, president of PEO leadership, a peer to peer leadership advisory firm. We're an amazing community of CEOs, presidents and senior executives. Ask yourself, are you learning as fast as the world is changing? It's time for Ontario business leaders to band together for counsel and support. It's time for you to tap into the business wisdom of our peer groups and unlock new ways to grow. I want you to come out of this COVID crisis a better leader and your organization ready for what's next, take the first step at PEO-leadership.com. Special thanks to Focus Asset Management for helping us bring you today's peo leadership's way forward podcast.
James Stellick
It's a real honour to be speaking at the 10th annual conference, as I learned this morning during Leon's presentation. I'm James Stellick, with Focus Asset Management. And we are proud to be an educational partner of PEO. And we're proud and we're humbled that PEO members and their families choose us to help protect and grow their wealth and navigate this very uncertain environment that we're in. And what an uncertain environment we are in, as we'll hear a little bit later. But I think we can all kind of, you know, feel it intrinsically that 2022 has presented a level of uncertainty and a series of challenges, probably that we haven't seen in decades. So why don't we start out maybe with a little bit of a straw poll or some, you know, high frequency data, as David would would call it by a show of hands, so we know that inflation's at or near 40 year highs, by a show of hands who in the room is feeling the impacts of inflation on their business? I see a lot of hands and the lights are bright. But what do we call that? 80%? Maybe?
David Rosenberg
Well, you know, it's a, I'd say, more like 79.9246. But if you want to round up, that's your business.
James Stellick
With a 2% margin of error.
David Rosenberg
There you go.
James Stellick
So we'll continue our straw poll here. We know that interest rates have gone up rapidly in an effort to quell that inflation. We know there's a lot of debt in the economy and in the system, as we'll no doubt hear more about later. Who here is concerned, somewhat are very concerned that rising interest rates might pose a challenge to the economy. David, we got your hand there. Probably another 80% plus or minus?
David Rosenberg
Go figure inflation and interest rates. Interesting.
James Stellick
There you go. And finally, why don't we ask playing armchair economist as Leon admitted to doing a little bit earlier on, Who here thinks it's likely or very likely that we might see a recession in the next 12 months before our next PTO conference? What's out a little, maybe maybe 70 to 75%?
David Rosenberg
Fair enough.
James Stellick
So I'm not delusional, I'm not the only one who's feeling uncertain. And that gives me some comfort.
David Rosenberg
If that makes you feel better go for it.
James Stellick
I'll take it.
David Rosenberg
Misery loves company.
James Stellick
So our view at Focus is that when you're faced with an environment of uncertainty, as we are now and as some of us will be at the late night casino a little bit later on, that sounds like fun. I'll have to get a make an ATM stop before professor Liana, I'll remind myself to do that. But in an environment of uncertainty, we think it's important to take a probabilistic view and to understand and prepare for the range of outcomes that might come to pass. And to do that, you really need to incorporate a diversity of opinions. And you need to listen to forecasters that maybe aren't afraid to diverge from the herd and offer out an opinion that doesn't jive with with kind of what the mainstream consensus is, which is a long winded way of bringing us to why we're so excited to have the man here, seated to my right. He's had a long and illustrious career, as we heard on on Wall Street, and Bay Street as an economist and strategist. At focus. We are research clients of his firm Rosenberg research, and we enjoy and and hold his views in very high regard. And he is not one who's afraid to pull punches or go against the grain. And we know he's going to call him like he sees him and speak his mind today. David Rosenberg, great to Great to have you here. Well, it's great to reconnect this way, just like the old days of Gluskin. So I'm excited. The shared alma mater, why don't we just start by mentioning, we want to we've styled this fireside chat as interest rates, inflation and investing, which is good because it seems to be on a lot of people's minds in the room. But we want to tailor the conversation to the questions that you have or maybe the challenges that you're facing in your business. So after an opening salvo or two for for Mr. Rosenberg will have the dynamic team circulating the audience with microphones. So please raise your hand and ask a question of Dave that might be on your mind. And we'll look forward to having a great free flowing q&a session as well. So Dave, you began your career on a Monday in October of 1987 on Bay Street.
David Rosenberg
October 19 1987.
James Stellick
That that day would go on to be known as Black Monday. Through no fault of yours.
David Rosenberg
Some people blame me.
James Stellick
So that's known as Black Monday because it marked the largest one day decline in the stock market in history.
David Rosenberg
Down 23%
James Stellick
You still remember it well.
David Rosenberg
To the decimal place since I bought bank of Nova Scotia stock the Friday before you bought the Dales, my well that was my first day on Bay Street was got hired as the financial economist in the economics department of the Bank of Nova Scotia. I was working three years prior, right out of school to Canada Mortgage and Housing. So I was a housing economist, and a civil servant. But I just had this I don't know what it was, I want to come back to Toronto. I don't know what it was about Bay Street, that that attracted me. But they gave me a shot. And my first day in the job, my first day on a trading floor was that day was pandemonium. And I'll just tell you that. I mean, it stays with me today that you know if somebody had offered me around 8:30 In the morning as I'm walking on the bank of Nova Scotia trading floor over it at you know, being king offered me the border colonial ticket back to my cushy job in Ottawa. I would have taken it was a people were like, it was it was pandemonium. It was crazy. But we see it we look we've seen we haven't seen a 20% decline in one day. But my whole career as a street economist was really built into massive turbulence. But that explains, you see why I walk around with the star cloud wherever I go. There's the price. There's the perma bear. There's the Primavera say, Well, you start your career, October 19 1987, and you'll see how it feels.
James Stellick
Okay, so this is great. We're facilitating dialogue. And we're you know, we're creating understanding, which is fantastic.
David Rosenberg
I'm just reading the teleprompter.
James Stellick
So there we go. On the subject of maybe being a permabear, you gave me that intro there. But we are we're subscribers to Rosenberg research, and I start my morning with a coffee and breakfast with Dave which is your your daily missive every morning, and I have to say I take my coffee black. Lately, I'm tempted to include a side of Bailey's. You've been unequivocal and vocal in your view that a recession is coming. Tell us what you see in the economic landscape. And, and what causes you to arrive at that view?
David Rosenberg
Oh, look, I ideal in as I think we all should. And what I really like is, is I can speak to all the people in the room as also as a business owner, and not just some, you know, economist, an ivory tower. And we're always playing, I think, whether it's in your professional life, your personal life, we're always thinking about probabilities of events, and outcomes. When the Fed and the bank Canada started raising rates earlier this year, I was saying, Okay, we are in a new window, trying to time it, we're in something new, where we are in Central Bank tightening mode. And by the way, since I started in the business 1987, I've got a lot of these cycles, you know, under my belt. And I said when we start going through these periods where the central banks start to raise interest rates, historically 80% of the time, we go into a recession. Now, could it be a year later, two years later, I just had to tell my clients just know that it's out there. But we also have to assess how far they're gonna go. So I'm just saying that there is a 20% chance that we get by with what's called a soft landing, which is the economy slows, but doesn't contract economic contraction is like a national pay cut. That is different, the economy going into reverse is different than a slowdown 20% of the time in the past, the economy actually did manage a soft landing and quotes. And so I kept an open mind that there's a 20% chance but the base case scenario was that we're going to have a recession in the next couple of years. And then I have to pay attention to what the markets are telling me, right. And so I'm a strategist, I'm an economist, which means that there is always this symbiotic relationship between the markets, and the macro economy, and the macro economy and the markets and they feed off each other, and they lead each other. So when I started to see not just the stock market go down and not so much in Canada, because, you know, energy didn't go down that much for reasons that we know. But I started noticing globally and especially in the United States, that when the deepest cyclical stocks, the capital, spending stocks, the financials, the consumer cyclicals we're going into a bear market. I started saying, well, the stock market's giving me a message here. And alongside that the central banks it comes down to your other question. Of course, it's been overkill. Of course, it's been overkill. The central banks, especially TIFF, Maclin, and Jay Powell, I'm not being critical. I'm just saying this is what it is. They have continued to raise interest rates, let alone shrink their balance sheets, but they raise interest rates into an inverted yield curve.
Now I want to see a show of hands, who knows what I'm talking about when I say an inverted yield curve? Nobody knows. Okay, in a normal in a normal situation and the steady state normal situation in the middle part of the business cycle, say, what's normal is that long term interest rates, long term bond yields, say 30, you're going to Canada bond yields or Treasury yields historically, or above where short term interest rates are short term interest rates might be 2%, long term interest rates might be 4%. That's normal. That's the time value of money. And why you want to take a look at this relationship between short term interest rates and long term interest rates in the money market in the bond market, is because as business owners know, I've got the luxury of being an economist on Bay Street and Wall Street. So I've watched this stuff, but it's a great leading indicator for the economy. So when we go to a situation where short term interest rates go above the level of long term interest rates, which is what we have in our hands right now, that's a very unusual situation. And it's the bond markets way of saying uncle to the central banks, when short term interest rates go up of long term interest rates, which happens in aggressive monetary tightening cycles, which we are surely in this year. You have a 90% chance of recession. So you go from 80 to 90. So it's not just our the central banks, tightening liquidity, raising interest rates. And we usually, often quite inadvertently, a lot of the time that central banks don't intend to cause a recession. But we fall into one sometimes like under Paul Volcker, he deliberately tried to create a recession. And he did quite often, you know, it's just the nature of the beast. It's like basically this to everybody in the room, the best economist of all time when I said, Who's the who are the other two, the best economists of all time, was a physicist, youngest Nobel Laureate in science in history. He was Albert Einstein, who famously said that the power, of interest rates is the eighth wonder of the world. And it's really all about interest rates. And interest rates is what determines how you discount future cash flows, which is as business owners what we should be thinking about. And so what's happened is that the inverted yield curve, they raise short-term rates of long term rates, therefore, all of a sudden, the odds go from 80 to 90%. And then there's one particular metric that I look at. And often I say to people honestly, just put me out of business. The Conference Board's The Conference Board, puts out a leading economic indicator, it's a hodgepodge of 10 different things, capital goods, orders, building permits, it's got some financial indicators in there, it goes back to like 1958. And when it goes down seven months in a row, which it has, and it's down at over a 5% annual rate. What I'll tell you is that a recession follows within the next quarter wrote or two 100% of the time. So my evolution has been looking at whatever crystal ball I look at, central banks start to raise rates, okay, we gotta be on watch, because they usually slip up. Or maybe the central banks want to create a recession. They're so freaked out over inflation. They want to kill demand. Okay. You got Jay Powell, Jay Powell thinks he's the modern day, Paul Volcker. Well, Paul Volcker killed inflation, all right, by killing the economy from 1980 to 1982, it was three years of hell, it can't be done. So we have a new dynamic, which is central bank tightening the next Dynamic Yield Curve inversion. And then the next thing I'm noticing is that the official leading economic indicator is actually provided a 100%. So if we don't go into recession, it will be the first time that's happened based on the pattern of the leading indicator that's been around for the past seven decades. So I think a recession staring us in the face message for the 25% people that didn't put up their hands. You know, I think that it's, it's just part of the business cycle. I don't I don't, I'm trying to actually take away that dark cloud from October 19 87. You see, October 19 1987. We had a stock market collapse. Everybody thought there was going to be recession and the Bank of Nova Scotia actually cut half the research budget. Do you know I just started I just left Ottawa, you know, to go to this insanity called Bay Street, and and they thought it was going to be a depression. Does anybody anybody there anybody there at that point, they thought there's going to be a depression because of the collapse in the stock market, which was a liquidity event. It wasn't an economic event. And the central banks had been raising rates, but they did invert the yield curve, there was no risk. Recession came about three years later. Thank you to John crow. But the recession came roughly three years later, I was told. So they had a cut half the economics department, I just started there. You know, I mean, I was bringing underwear to work like new pairs just to get changed every single was it was really frightening. My boss said to me, when they let go half the department, he said, hide under your desk.
But nobody ever came to get me. I was there for three days. But I managed to, I managed to survive. But that was, but you see, that was that was a liquidity event. Okay. And what did the central banks do right away, was they flood the system with liquidity, and they cut interest rates. And in fact, they we steep in the yield curve, then, by the way, by 1989, the inverted yield curve, and then we had the recession in 1990. That's why anybody who's shaking their heads was he talking about the yield curve, and I promised there was gonna go over the technical. Everybody talks about the stock market being a great leading indicator, and it really is, but the bond market is also a very good leading indicator, you have to take a very eclectic approach and watch everything. Watching the macro variables, the leading indicators, not the coincident indicators. But the leading indicators are all flashing 2023 recession. And that's exactly what the markets have been telling you what to expect. We can talk about has the stock market bottom to the stock market, not bottom, we can talk about the markets, and I'm sure we will. But remember, the markets provide price signals on the economy. And if we're running our businesses, we have to really respect what the financial markets are telling us, including, by the way the commodity markets, but they're not quite as leading as the stock market. And the bond market is they're telling us we have a recession next year, which means we have to really all of us run our businesses much more cautiously in terms of how we manage our costs, manage our inventories, manage our staffing. Next year is going to be if you think that this past year was a roller coaster ride, you taught them what uncertainty, it wasn't so much uncertainty for the economy, all the coincident economic indicators are doing just fine. But I don't live that way. I try to I try to drive looking through the front window. And so the front window is different than what's happening right now. Right now, the coincident indicators are fine. Frankly, I don't really care. I care more about will these codes and indicators be doing 612 months from now. So if you think that we had a wild rollercoaster ride in the financial markets this year, they're telling you we're gonna have a hell of a ride for the economy, for the economy next year. So even as things bottomed out next year in the financial markets, and my clients will be buying stocks because they've cheapened up a lot. And there'll be pricing in a better 2024. As far as 2023 is concerned, it's going to be a recession. And what we really don't know is how, how deep it's going to be. And what's going to get us out of it. What it has to get us out of it ultimately is going back to a declining interest rate cycle. The central banks have to be convinced that inflation is going down, but they're so wound up about being wrong on inflation, which by the way, I don't think they were wrong on inflation, and we could talk about that. But they feel Powell TIFF, Mack LOM, Christine Lagarde, they all feel that somehow their credibility was attacked these past 18 months. So I think the big risk is that when it comes time, finally to take, you know, take the foot off the brakes, they're going to be really way too slow. So it might well be a deeper recession than people think.
James Stellick
So why don't we come back to that topic of inflation? Because I noticed you didn't have your hand up when 80% of the room did indicate that they were concerned about inflation. Is the inflation dragon. all that it's cracked up to be at the moment? Or is this, as you say overkill, by central bankers? And what would be we came from an environment of disinflation, where there was lament years ago that inflation was not high enough and was below the Feds 2% target. Where do you think the long term level of of interest rates settles to? After after all this?
David Rosenberg
What was your first question? So look, you the question that you asked the group was, is isn't is inflation having an impact? And of course, inflation is having an impact inflation is really a coincident to like indicator. The question is going to be more appropriately. Look, when I talked to people that are in the financial markets, the important question is, where's inflation going to be 12 months from now, not where it is today. Let's look at this situation. Of course, we had very significant inflation. Over an 18 month period, we had a series of shocks, a series of inflationary shocks, one after another, we had that we had the pandemic- we had the COVID. I started my business two months prior. And everybody thought like we didn't know, Who knew. Who knew. We thought it might be the black plague. Like who knew. Did you don't remember, I mean, I remember walking in the streets in my neighborhood, and it'd be a mother with a little girl. And they'd cross the street because I was some alien from outer space. Man, we got to stay away from that man. It was you remember that? I mean, these subscribers. Look what happened, farmers were calling their herds. Nobody ever thought we'd go to a restaurant again. We had massive food inflation, like like right away, all of a sudden, who is going to live in a high rise again, who will ever want to do that? So all of a sudden, there's an abrupt halt. To multifamily construction, we had all these series of shocks. You see, the thing is that you would think that well, because on the demand side, this is actually deflationary. And for a period of was remember, there's a period, by the way, in April of 2020, when oil prices technically went below zero, if you can believe that, the futures went below zero. But what happened was that it was a huge constriction on the supply of everything. And if you're going to forecast inflation, you need demand any supply. And what happened with COVID was the impact on supply overwhelmed the negative impact on demand.
Then we have the lock downs. And we have the lock downs, which was an added constriction on supply while we're paying people not to work. So the government didn't want to see demand go down, we'll pay these people not to work. But the economy has shut down. And that has a huge impact on supply. Well, any basic economics went on course will tell you looking at supply demand curves, we're gonna get some inflation, which we did. But then they overdid it on the fiscal stimulus, Big time, big time. And of course, because we had the variance, you know, we had delta that we had Omicron. And then we had the first shooting war in Europe in 80 years, and wars are inflationary. And then all of a sudden, you have an extra impetus into food, inflation, wheat, and the grains and oil and, of course, the energy crisis that we have in Europe that comes out of this. So we've just been hit in a short period of time in the overall annals of economic history. This is a short period of time, multiple inflationary shocks. And so the central banks were telling everybody transitory their problem was never defined transitory, transitory, is really meaningless. They should have said, this is actually how we define transitory 18 months is transitory to me. I mean, I'm an economic historian. 18 months is transitory. But you see, when you start being told by the intelligence, you know, all the people on TV and in the media, that, you know that you blown it on inflation, these central bankers started to feeling that they're, you know, that they're losing their credibility. I never felt they the markets never said they lost their credibility. What I'm saying is that we did have the inflation, a lot of the inflation was on the cost side. So of course, everybody's going to feel it. Because unless you can raise your prices faster than your costs have gone up, your margins are going to get squeezed. Now people talk about the labor market, you know, well, that's something else that happened with COVID, and long COVID, and the inability for some industries to find that workers. You know, that's a big problem. And you could see that on the labor market side, that's some cost push inflation. That's really mostly mostly in low skilled, low value, add restaurants, movie theaters, theme parks, in terms of, you know, the unskilled, and those people actually coming out of COVID actually seeing the biggest wage increases. And maybe from a society standpoint, that's not the worst thing in the world. But you see, we had a health crisis that was global, and we had a war. In the last time we had something like this sample size of one, but only one that we really have data on was what happened exactly a century ago. We had World War one followed by the Spanish flu. And when people talk about oh, inflation 7% 8% Look at this. I got news for you in that period, say from 1960 to 1920. Inflation was 15% per year, wasn't 18 months, it was double what it was. And guess what? Guess what happened? Once the supply side pressures subsided, which they naturally will, we reverted to the mean. And we went 10 years from 1920 to 1929. And of course, 1929. We had a huge deflationary event on October 29 of 1929. Now, I wasn't there for that one. That was a bigger decline, but we had 10 years of disinflation or deflation F Scott Fitzgerald writes The Great Gatsby in 1926, you look at that there's no mention of the great inflation. No mention the great inflation from what so I'm gonna say that and for years, we will not be talking about inflation anymore. And it all comes down to Hey on a fine transitory, of course, the central banks are overdoing it. I think this time next year, we'll be in a deflation, I think we're already seeing it in assets. We're seeing it in home prices and equities. And you're starting to see I mean, every single measure, every every measure of freight rates, I'm looking at commodities, now, commodities aren't plunging. And there's reasons actually to be very long term bullish on the commodity sector. Looking at the greening of the world, and the fact there's been no capital investment in the basic material industry. Maybe that's very good news for Canada. The point is that commodities are off their peaks, oil is not $125 anymore. Copper is down like 30%, wheat, corn, soybeans, all the stuff that was raging just six to nine months ago, have all come down, they're elevated. But you know, prices stayed elevated all the time, Paul Volcker was an office so 1979 to 1987, prices stayed elevated, but inflation is not about the price level, it's about the rate of change. The central banks are determined to kill inflation that is really in some sense was always beyond their control, the fiscal stimulus is in the rearview mirror. I'm looking at all these different freight rate measures, I said before commodity prices, I'm looking at different measures that assess global supply chain problems, who hasn't been affected by that. I mean, Canada is a small, open economy. We're very highly dependent on global supply chains. But you see, they are coming back. Of course, the one thing I didn't mention that was super inflationary was what I should have mentioned, this was I mean, God forbid, I mean, I mean, I mean, China, China gets five COVID cases, and then Beijing shuts down port cities of 20 million people. But you see, they're now starting to ease up. And one of the reasons why the Chinese stock market if you're watching these things, like I do every day, there are markets starting to come back from a very low level, because there's this anticipation that Beijing is going to start to relax their COVID rules as early as next year, second quarter. While I'm saying that would be a very good thing to help bring global inflation down. So these global cost pressures that have come from the war, that have come from COVID, and all the direct indirect consequences of COVID. They're increasingly in the rearview mirror. What is ahead of us is what the central banks have done to the demand side. Like I said, Before, you can't forecast inflation with one curve, you need both there, they've overkill that we're gonna see here next year. And we're gonna go a while to those guys ever. Just as the same people were saying, what a bunch of idiots they blew transitory will be the same people say this time next year, they they over killed. And I think there'll be cutting rates, again, under totally different circumstances that we have today. Totally different stock market. Totally different economy. Totally different inflation. So I would say that for the people that are concerned about inflation right now, our concerns are going to shift from inflation to the economy within the next 12 months, the concern will not be is inflation, your top concern. It'll be what is better, what is your order books looking like? Because remember that the central bank's interest rates are interesting, they operate with a lag. Because people respond with a lag, people don't respond, you know, the central bank doesn't raise rates on Friday, we all respond on Saturday, and interest rates, whether in the mortgage market or your credit cards or your auto loans or your furniture loans, they reset over time. And then people start to see the effects of these rising interest rates, they adjust their spending patterns. And as all these multiplier impacts on the economy, that is what is staring us in the face for for next year, are the lags from all what they've done. Okay, and then they'll adjust rates, interest rates are cyclical, our businesses are cyclical. Even the businesses that are the most non cyclical, even Walmart, you know, which came out with great earnings. Everything is cyclical, everything to varying degrees will move, ebb and flow with the cycle, including interest rates, some people and I say to people, by the way, yeah, the bank's gonna raise rates again, the Fed, they're barking and barking and barking and biting yet for the next two or three months. But I'm saying for those of you with a 12 month view, rates are going to come down next year and come down hard. People say what about the inflation? They can do that? Because the inflation? Yeah. Do you think inflation is going to stay static? What am life stay static? You think inflation is going to stay where it is today.
And when I'm tracing through everything that's happening, all the pressures on inflation, supply and demand, I think the big surprise next year, you see because the consensus is that inflation is going to be sticky. It's not going to come down that much. I'm taking the other side of that, but I think inflation is going to come down very significantly next year. The worst thing anybody can do. And I find this as always a trap is extrapolating your most recent experience in the future, when it comes to inflation, I'm just focusing on what I've always focused on taking my tools as an economic seer, and I'm trying to see, where are the pressures going? Where are the pressures going. And although inflation is elevated, we got the numbers today for Canada. Although if you strip out food and energy, you strip off, you know, people love that about economists, you know, Rosenberg, they say he was stripped out everything, the CPI would be zero. Yeah, I know that. I know that. But the underlying pressures on inflation, even in Canada, are starting to, they're starting to fade. And I think that'll be a very big story next year too.