Hello, and welcome to the Download. I'm your host, Dave Richardson, and this is a somewhat special edition of The Download because we're all used to having Canada's hardest working economist, Eric Lascelles, on the podcast, usually talking about current issues in the economy. And it's not that we're not going to be touching on that in this episode, but we have been talking for a while about some of the challenges that are emerging for China, both structural challenges that have developed over time and some of the current challenges coming out of COVID slightly different policy than the rest of the world followed. And Eric has been doing a lot of work on China for a number of years. Back in January, we promised that we would get together and do this podcast and talk about what's going on in China. Now, of course, over the last couple of weeks, some of those issues have bubbled up more to the surface and to broader awareness. We like to get ahead of things a earlier on the podcast. So, Eric, I will take complete responsibility on this because you have never stopped in your constant quest for knowledge to look at what's going on in China. But better late than never. Let's take a look at the things that you've been thinking about for some time and how they're rearing their ugly head right now. And then let's balance it against what's going on around the world. And I think at the end you're going to say not all is lost, right?

Right. Exactly. It's still a big country. It's still important, it's still moving pretty fast compared to most countries, if not to its own standards. So we can finish on a high note, Dave.

Eric has published a lot of these pieces. If you go back over the last five years, if you go to the RBC Global Asset Management website, you'll find some of it. Eric, I imagine some of the people who follow you on LinkedIn or on Twitter are going to see examples of some of the pieces that you've written over the years. But if we were to put it all in one bucket, what have been your broad concerns about China and the Chinese economy and where it is sitting here in the 2018 to 2023 period, and why do we need to be thinking about this as we move forward?

I think there are really two sets of issues— and by sets, I really mean time frames. As you mentioned earlier, we have some weakness right now. And that weakness is for a number of very specific reasons, and we'll get into that in a moment and examples of that weakness. But maybe I should start with the structural weakness. China used to grow at 10% a year. And then it grew 8% a year. And then going into the pandemic, it was growing at maybe 6% a year— it might have been on track for a hair below, but something like 6% a year—, and it's come out of that, and it grew 2.9% last year— granted, with some lockdowns; that's not quite a fair comparison—, but it grew a whole lot less quickly. And forecasters are calling for something like 5% this year. I'm going to let you in a little secret: we're in the middle of our quarterly updating, but we're going to pull our China forecast below 5%. And that's supposed to be a rebound year after a lockdown. Suddenly, China's normal rate of growth isn't 10%. It's not 8%. It's not 6%. Might not be 5%. In fact, on the long run, meaning maybe the next decade plus, China might be a 3 to 4% real GDP growth a year country. And again, the good news at the end is that still beats the pants off of every developed country and everything else. So, again, let's not cry too many tears, but it's a lot less. Why we think they grow less quickly going forward? Part of it, they're just getting richer, and richer countries don't get to go as fast. Every incremental dollar of productivity is harder to come by. And they've gone from a phase in which they could kind of copy and mimic and so on. They achieved a certain level of prosperity, which is how all poor countries become middle income countries. And now they need to push ahead and innovate on their own and it's a bit less easy to achieve that fast growth. The housing market, particularly in the last couple of decades, was a huge driver of Chinese economic growth and it's doing all sorts of wobbly things we'll get to in a moment. In the short run— but I think just fundamentally— a pretty big bubble got formed over the last several decades. In China, if you're a household and have money to save, you're pretty much putting that into the housing market. The stock market is tiny, the mutual fund industry is tiny, the bond market isn't all that big. None of these are very popular with retail investors. They put their money into real estate and so that really is inflated. Quite a real estate bubble, and it was a huge driver of economic growth. And Chinese policymakers are now struggling with what to do about that because bubbles aren't good, and they're trying to contain that. I'm sure you're aware of the various huge builders that are defaulting on bonds, or at least delinquent on bonds, and have market caps that are approaching nil in some cases. And so there are some real big problems there. Conversely, they don't want to lose a big driver of their economy. And so there's this balancing act they're trying to achieve. But the bottom line is, it's pretty unlikely that housing is going to be the huge driver of growth over the next few decades that it was over the last few decades. Some of that was a mistake and a lot of that was just unsustainable. And so, they're kind of losing that. This is a tougher one, this next reason, but it seems to us that China is tilting back towards favoring the state over the private sector to some extent. Now, the story itself changes on a quarter-to-quarter basis, and recently the news you would see would be China encouraging entrepreneurs and things like that. But I think fundamentally under President Xi, who's been in place now for ten years and doesn't have an end date on his presidency, it's been a pretty clear tilt away from the private sector and entrepreneurs and those sorts of things and towards the state. And of course, the state can be wonderful, but also, I think it's less likely they’re going to make decisions that maximize productivity growth and innovation and wealth and so on. And so that may limit growth a little bit as well. We know the demographic story is really tough for China. So China's working age population has been shrinking for a number of years. Its overall population just started shrinking in the last year. China just got passed by India, in terms of the world's most populous country. That's neither here nor there, to be honest, but nevertheless, another symbol of maybe challenging demographics. The country had that one child policy for a long time. It got rid of that. It was an incremental thing, and then it got rid of it altogether. Hasn't really made much of a difference. You look across East Asia in particular, and fertility rates are pretty darn low, really, everywhere. And so I don't think there's a scenario where China's fertility rate pops from one to two or three, and they've solved it miraculously. And even if they did, of course children are actually an economic burden for the first 20 years or so, and then you get a boost later. So there's no kind of near term benefit. But I'm dubious that there is a turn at all, to be honest. And so that's quite a challenging one. So it's a rapidly aging population. Some people like to say, will China get old before it gets rich? That's a classic line. It refers to the idea that China is unusually old and has unusually low fertility for a country at its income level. I don't totally buy that in the sense that worse demographics just mean, yeah, you're more constrained in your growth to some extent. But I don't think it's too late now and you can't get rich anymore. You're just going to get rich maybe more slowly than you would have. So I would reject that. But nevertheless, the demographics are quite challenging, and it just means slower economic growth and it means more fiscal burdens and so on.

Is it a Japan? Is there any parallel with Japan at all?

Pretty strong, I think. The fertility rate numbers are almost identical and so from that perspective, it is. And of course, there was a big housing bubble in Japan and it's harder to say. I don't know if you could say the Chinese one was quite as egregious as in worse in some ways, to be honest, in terms of huge failing builders, but I think less egregious in others, if you look at just the absolute. What was the line? The Emperor's Palace in Tokyo was worth more than all the real estate in California at one point, or some crazy claim like that. I don't think that was ever quite true for Japan, but it went really far. I don't think it's gone quite as far. But it's funny you make that parallel to Japan because as much as there are some warnings there, I would actually say optimists would probably point to Japan and Korea and Taiwan and say well, Asian countries have been pretty good at achieving not just a middle income level, but a high income level. Not a lot of countries have pulled that off. It has pretty much been the domain of Europe and North America and a few other places to be truly rich. And some Asian countries have pulled that off. China may still be capable of that, even if there are some challenges of the sort that Japan faces. So that one can slice both ways. But the bottom line, the demographics are pretty tough. And then lastly, geopolitics. US and China have some pretty big frictions here and that is limiting China in some obvious ways in the context of access to high tech computer chips and things like this, which are supposed to be the foundation of a whole lot of industries going forward and various tariffs and so on going up. But also, now you see a lot of companies pursuing what they're calling a China-plus-one strategy. They still have a whole lot of production in China and that's probably not changing in the near term— keep in mind the allure of China is partially good infrastructure and they're already there and they know how it works and so on, but also because China is just big and has a lot of demand by itself, and so they're still going to be doing things in China, bar a really sharp turn in the geopolitical environment. But a lot of companies are now experimenting and so China-plus-one means they're now adding production in some other country. For some countries it's Mexico. That's close to the US. And for a lot, it's India, or Vietnam or Indonesia, or a whole range of mostly South Asian and Southeast Asian countries. Plus, Mexico. It takes a little away from China. In the short run, there's not too much danger in the sense that, okay, they lose a little bit, but in the grand scheme, it's going to take a while to build out the infrastructure in India in a way that the electrical grid is reliable enough and the port is big enough and the workers are skilled enough and everything clicks. But you stick the first factory there, you figure those things out and it can move pretty fast after you get that sorted out. And so I think there will be a significant shift over time there and that's to China's disadvantage as well. And so again, you wrap it all up and you say, well, China is not the 6 and 8% grower. It might be a 3 and 4% grower. It's a lot less. We're used to China being the fastest big country in the world. There are always some little ones that grow fast one year or another. But it’s still the fastest big country. India is believably, plausibly set to outgrow China on a percentage growth basis over the next 5 to 10 years and beyond. So that's the structural one. I'll stop for a moment, but then you've got some shorter-term issues recently that I'm happy to talk to.

Sure. Now when you look at it, and you've been identifying these issues for a number of years, none of this is a surprise. Again, this is longer-term structural view. This has been there for a while, but they don't seem to be taking the actions necessary to fix those things. Or are you seeing evidence that they are conscious of these structural issues that they have and they're taking the right steps to eliminate them in some way over time? Obviously, the one child policy, in hindsight, doesn't look that good now from an economic perspective anyways. This is not something you're going to fix overnight, but in other ways, is policy and thinking going to be able to work their way out of this?

For some of the cyclical issues, I think yes. And I want to get to that in a moment. But for the big structural ones we've just talked about, I think they're more than aware of them. I think they are doing what maybe can be done, but there's just a limit. For instance, when you get richer, you grow less quickly. It's not quite a concrete fact, but that's usually how it works. There's not a lot you can do about that. It's just harder to innovate from the top than from the bottom. Housing is a tricky one in the sense that they know exactly what to do if they wanted to boost housing. You cut rates to the bone and you lower down payment requirements and all the classic things, lower stamp duties and so on. But that creates its own problem, because housing is an excess already, and so they're trying to fix an excess without hurting the economy. There's a limit to what they can do. You don't want housing to be the only driver of the economy. The demographic story, as you say, best case scenario, is a slow fix. But I don't think realistically there's a fix there based on our experience in other countries. Geopolitics? Maybe there are ways you could mend relations with the US quickly, but China is keen to assert itself and to develop its own set of friends. We saw recently the BRICS group meet, and they added three more countries, and they invited three more than that. And so they're going to see what they can do on that front. But it's creating frictions. It's just part of that grand deglobalization or multipolarity argument that the world is fracturing somewhat, and so it doesn't seem like they're keen to become subservient again in any way. And so that's probably not changing. And then the one they really could do is they could say, listen, let's embrace the private sector more again, and not have this tilt toward the state. But it seems to me at this point you're going to have to wait out for a new president. This could be not a long time, or it could well be decades. And so that's a tough one. And they are pivoting, and they will learn to some extent, but it just seems in general that there's a headwind there that doesn't need to exist, and I don't see that going away. So I think the structural ones stick around. And for full context, we always assumed China would slow somewhat, but in the last few years, some of these things really coming to a point have us thinking 3 to 4% growth. We would’ve previously said 4 to 5% or 5 to 5.5%, which is a big enough difference in the grand scheme. Certainly, it compounds at a very different rate, on the cyclical side. There's also a secondary thing. As you know, China locked down last year. They reopened with fireworks in early 2023, and it all looked pretty good there for a few months. And they've really fizzled recently. The economic data hasn't been great in recent months. I think there are things they can do and things that they will do on that front. Just to lay out the fizzling first: the housing market. They wanted it cooler a few years ago, they got it cooler, and then it revived a bit and it's cooling again. Country Garden and Evergrande and a whole bunch of builders that are really in pretty perilous straits right now and so not building. Home prices are falling. Home sales are falling right now and actually decelerating in their trajectory. Credit growth is slowing. It's about the slowest we've seen in decades. Retail sales growth is slowing as well. The key to know, as I mentioned earlier, is that Chinese household wealth is in housing. If home prices are falling, people don't feel like spending, or they're not able to. Or perversely, they choose to save more because they are targeting whatever desired level of wealth upon retirement, and they are not on track to get that. So the retail sales has been quite cautious, even though the restrictions are gone. Youth unemployment is rising. We now say this somewhat speculatively, as you may have heard that China has ceased to publish its youth unemployment rate. It conceded that the rate had gone up for yet another month. It's north of 20%. Full disclosure, it's normal for youth unemployment to be higher than regular unemployment, but in China, it's four times higher, which you don't see in many places other than Spain maybe, which has an issue like that too, but it's quite high. It's been rising even as the overall unemployment rate has stayed. You'd think they wouldn't have trouble absorbing people because there's so few children. You think it would be easy to find jobs for these people. Some people say it's because they're too educated versus what the economy needs. Apparently, a lot of them are trained in sectors like tech because that was booming. Now tech isn't booming. They train for a lot of private education in China. People go to classes on the side, tutoring and so on. People were training for that. The government said no one's allowed to make money in that sector anymore. No for-profit businesses. And to some extent, it makes sense because it was getting insane, and people were studying till midnight every night. You needed a reset there, perhaps. But nevertheless, the youth unemployment is bad, and we'll never hear about it again. To the extent they've discontinued the series. As of latest month, unfortunately, Chinese exports are down 9%. Some of that is, I should say, around 10%. Depends which currency you use, the dollar or the yuan. But the decline certainly in part reflects that the global economy is not great. That's what trade is about as well. But it also reflects some shifting of production away from China. Just less appetite for Chinese goods. Chinese imports are down as well. So all sorts of weakness there. And then local governments are struggling. Local governments just don't get enough money from the central government. They don't really have any tax tools to generate the revenue, but they're expected to do all the social spending. They've been accumulating a lot of debt. A lot of it's off balance sheet because they're not even allowed to borrow. These are very squirrely financial structures. And some credible estimates say they've accumulated $10 trillion or more of debt across, which is a lot of money. The US Treasury market, is it 30 trillion now? It's a lot of money in local government debt. And they are now struggling, and a large fraction are unable to make interest payments and so on. And so they're doing things to fix that. But nevertheless, this is just another source of trouble and it's a vector that connects to the housing market and limits the capacity to deliver fiscal stimulus. So all sorts of messy things in the short run and it’s entirely legitimate to say weakness. It's come as a bit of a surprise because they reopened. You would have thought they'd have this magical boom like every other country, but they didn't do the level of reopening stimulus that other countries did. And China really isn't about, hey, everybody, here take a big check and go spend some money. That's not really the way they do stimulus. It tends to be more along the lines of, well, we'll tweak this rule and tweak that rule, and it won't cost us any money, but hopefully it induces the behavior that we are seeking. And so they've leaned a bit more on that. Maybe I'll say this, Dave— and then I'll seed the floor, and everyone will breathe a sigh of relief—, they are doing stimulus now. I think it's a little more than the market thinks. Maybe that's the only thing that matters, but they probably should be doing more. But I think they're doing more than people think. And so they've done some rate cuts. It's not a lot. People say, well, why wouldn't you cut rates more? They're the one country in the world with too low inflation. I shouldn't say the one country; they're a rare country with too low inflation and too weak growth. And so that's easy. Those are aligned interests. You cut rates and it fixes everything all at once. Most countries aren't enjoying that combination. They've got too much inflation and maybe they're worried about too little growth. And those argue for the opposite solution. So you think China should just be cutting rates like crazy and fixing it, but they're not. And so I think a big part is because the Chinese currency has been declining quite significantly. If you cut rates and everybody else is raising rates, that's just a recipe for your currency falling even more. Partially, it's a function of national prestige, and partially, it's a function of if you want to be a big global trade player, you probably don't want a currency that's just jumping around like crazy. You'd like to have some measure of stability, particularly as you're trying to make yourself a reserve currency, maybe as a 50-year project. And so it doesn't look great, but bottom line is they haven't been able to cut rates as much. But the currency does help; I guess maybe that's the point to me. What does a weaker currency do? It adds to inflation, which they want— they have deflation right now. And simultaneously, in theory, it boosts their competitiveness and makes their exports cheaper. I think that will help to some extent. And then they've made some housing rule changes which haven't gotten a whole lot of press. This is what they like to do. They tell other people to do things. They tell banks to lower mortgage rates for existing borrowers. And so banks need the finances to do that. But nevertheless, that's an implicit rate cut, you could say, without weakening the currency because it's not something that international financiers can sink their teeth into. But they've also reduced the minimum down payment. I think the down payment ratio has been pulled down. So those are classic housing stabilization tools. I wouldn't want to understate that. They've lowered taxes for small businesses. They've done things like reducing the fee for buying and selling stocks in the stock market. In theory, that's a bit of a helping hand. Further to the tell, as opposed to do, they're encouraging restaurants to have longer hours, looking for people to spend more. They're telling provincial governments to subsidize big ticket purchases. Again, those are the same local governments that are not in a position to do much of anything. But in any event, they're doing that. They've basically told state owned banks and provinces that they can lend a trillion dollars to local governments. Unfortunately, these provinces need to have the trillion dollars or they need to find a trillion dollars of people to do that. But nevertheless, they've basically said you can help the local government. So I tally that up and they're pretty significant housing things, and it's lower taxes on businesses and there were some rate cuts and the people forget about the currency being a stimulative effect. I think they are going to manage to stabilize growth.

So Eric, the commitment’s there and the capacity is there to solve these issues. And like you say, they're on the right side of things. I've got interest rates that I can lower to stimulate growth. I've got a currency that's devalued that's going to help get things going. So ultimately, they're going to get through that, right?

Yeah, I think that's fair. And just as a broad, sweeping and therefore probably unwise statement, I would say China has probably had the best economic policymakers of the last generation or the last couple of decades. They were the country that clawed their way out of extreme poverty and that generated 8 to 10% annualized growth for decades. And so every phase requires a different tool and trick. It's not quite automatic they get to continue doing that, but they have historically been very good. They do have some guides in terms of the rest of developed Asia, in terms of pathways towards achieving outright prosperity. And so, I wouldn't want to bet against them too hard. I think it's just going to be a slower journey and it's proving a rougher ride this year in particular. Focusing on the silver linings, we do still see room for growth from China from a rural to urban migration perspective. I used to know the stat very easily, but it was something like the average urban worker is three times more productive than the average rural worker. It's not quite the same as saying, hey, move to the city and you're three times more productive. Some of it is education, but some of it is just that factory jobs are more productive than the way agriculture is conducted in a large part of China. There's still room for that. There are still hundreds of millions of people in the rural areas who will realistically move to cities and become more productive. And actually, the one policy measure I didn't mention earlier they've been talking about, though they talk about it every once in a while— it seemed more real this time—, is what's called Hukou reform. Basically, in China, you do have a passport, but you don't have national citizenship so much as you have local or regional citizenship. And so you're not actually allowed to move between regions. You can, but you just don't have access to local public education, local public health care. You may not be allowed to buy a property in the new region. You're quite restricted. From the perspective of rural migrants working in factories, that's why their children are left behind on the farm with the grandparents, because they're living in a dorm, they're working. And they really couldn't integrate into the community if they wanted to. And that's holding things back. For people who are in cities, maybe the jobs are in a different city. Maybe this sector is particularly strong in Shenzhen and you live in Beijing, and it's not simple to move towards those jobs. And so it's not an efficient way of allocating labor and other things. And so it seems like they're pretty serious in cities, I think 3 million or fewer, they're planning to get rid of that altogether. The restrictions that's pretty big in cities, 3 to 5 million, they're going to ease it significantly. It's a little blurrier. I shouldn't have said Shenzhen since it's one of the biggest cities and maybe has one of the smallest adjustments, but nevertheless, that could be significant as well. So there are things that can keep China going forward. I wouldn't want to understate the decades of fast growth they managed before. I wouldn't want to understate how big they are. China generates— and this is even with the diminished growth outlook for the foreseeable future— a quarter of global growth. To the extent the economy is a bit bigger next year than this year, a quarter of that bigger is in China. There was a period of time when it was a third, and so it's lost a little bit, but it's a quarter. Nobody else is more than about 10%. India is now 2%, by the way. US is 3%. So they're still important, they're still growing a lot on a dollar basis, even if the percentage growth isn't as impressive as it once was. It seems to me like they might be about to take over the world from an auto sector perspective. All these new brands coming out. There's certainly lots of potential there. I'm sure you know about the «One belt, one road» initiative, which has been a very clever repurposing. China is basically infrastructured out. They've got the trains and the highways and the buildings that they realistically need, or at least the most urgent need has been met. And so they've got all this capacity to produce cement and steel and things, but they don't really need it all themselves. And so very cleverly, they've been making friends with the rest of the developing world and saying, we'll build your ports and infrastructure and roads and things like that. And it's come with catches and there have been some problems and debt has been bigger than countries thought they would owe to China and so on. And so it hasn't been cost free at all. But nevertheless, they are building a network and connections and I guess repurposing their capacity in those directions. It's certainly still a place I'd want to be exposed to and I think a place that will be a central player in the world going forward and still growing pretty fast, but just no longer the hyper growth country of the past. So I guess with some more challenges that look a little bit like what some developed world countries deal with on a day-to-day basis.

Eric, thanks for that. If for nothing else, I clearly did not oversell your expertise and depth of knowledge of the Chinese economy and what's going on there. But I think one of the key points you made there— and I've talked about this for a number of years, and there's always the risk that this changes— but as you point out, the track record on decisions that China has made around their economy, if you put it up against almost anyone over the last 30 years, it's a pretty good track record. And it's possible, but not likely that that track record just all of a sudden turns south right away. Students who get A’s in elementary school tend to move on and get A's in high school and in university. There's the risk you fall back for whatever reason. But we've talked about China and what's going on there, the impact that China has around the world. Is there a risk that this implodes or creates a contagion around the world that creates much broader economic issues for the globe? Or again, is this stuff they can contain, and do we just move through a period of somewhat slower growth and then we emerge out with a lower level of growth than before, but still sufficient to keep the global economy humming happily along for years to come?

Yes, that's a great question. In the short run, I will say we do forecast a developed world recession, not a Chinese one. Developing countries don't usually fall quite that far. But we do forecast a developed world recession. The big reason for that is because interest rates have gone up so much. That's the standard reason, but the secondary headwind that's come along has been China sputtering. So I think it's excellent that you reframe this in the context of what does that mean for the world and for everyone else. There are implications. And China is somewhat of a drag right now relative to prior expectations. I know oil prices are higher than they were a few months ago, but nevertheless, at one point people were saying, triple digit oil. China's reviving, they're going to need 2 or 3 million more barrels a day, and this is going to create a whole new wave of inflation and so on. And that hasn't played out because they haven't revived as fully as people had hoped for. So it matters in that context. In terms of the other half of your question, if I can put words in your mouth, maybe frame towards some of the financial issues in China right now, and could that blow out in a way that really hurts the rest of the world? And so the local governments have all that debt, and that's a problem. Anytime I hear the word $10 trillion, I hard to feel perfectly good about it. But I will say China may run into debt problems in different corners of the economy every decade or so when they've been pretty competent about fixing it in the past, and the expectation is they will follow a similar playbook. And so some of it is the next level of government guarantees the loan or makes the loan. Some of it is just rolling debt by force instead of by the choice of the investor. Lowering the interest rate. It seems like they're going to do the standard stuff, which is, if you ask a bond investor, probably a technical default in the sense that, hold on, why is the interest rate half of what it was? And why am I being paid back in ten years instead of five? But nevertheless, they will be able to paper over it in a way that probably everybody emerges without too much catastrophe. And that's mostly money that's contained within China, too, to the extent that I don't think too many international investors have exposure to that. And then with Chinese builders more generally, these are pretty big builders. Frankly, from an investment perspective, the damage has already been done. The last I looked, some of the big builders were trading at $0.11 on the dollar in Hong Kong. Adjustment has already occurred without seemingly inducing too much trouble on global markets and the global economy. I think China seems not inclined to just outright bail out these companies. They could just spend $50 billion or something and fix it right away. They seem not inclined to do that. They'd like some lessons to be learned and punishment to be doled out to those who deserve punishment. But equally, I think they fully appreciate that they need to make sure these projects still get built. And so these are going to be zombie-like companies that just keep functioning and building things and probably not making a whole lot of money for the foreseeable future. So I guess the bottom line is no. I think that to the extent China's economy moves more slowly, that's a drag on the global economy to some extent, but it's manageable. On the financial side, I'm not expecting a huge amount of financial contagion outside of China. I'm not the China equity strategist by any means, but you look at some of the equity valuations and it gets you a little excited. We had a conversation, one of the investment meetings not long ago, one of the big tech companies, their P/E was 11 or something. I haven't heard of too many world beating tech companies with rates that low. I guess, as always, when fear is gravest about a country, sometimes opportunities exist therein.

That's why we love checking in with you, Eric. I've been reading your content and thought pieces on China for years, and again, you've certainly displayed that depth of understanding and knowledge and shared with our listeners some information that I think is concerning in some ways in the near term, but pointed out a path to getting through this that should calm people's nerves. And when you think about investing over the long haul, sometimes those places that seem downtrodden in the near term are just popping up opportunities for a long-term investor. So that's an important point you made to close. Eric, as always, thanks a lot. We'll catch up with you with your regular scheduled updates on the jobs, market and inflation and everything we've been obsessed with in North America. But thanks for doing this. This is a really important topic.

Oh, thanks so much. Nice to talk with everybody.