Panelists discuss the state of the global economy, the outlook for the year ahead, and the domestic and international policy changes that might affect markets.
SCHLESINGER: Well, thanks, Operator. And welcome and thank you, everyone, for joining us for this Council on Foreign Relations Corporate Program conference call. I’m Jake Schlesinger with the Wall Street Journal, based in Washington. And we are very pleased this morning to have joining us Credit Agricole’s Michael Carey and BlackRock’s Kate Moore with us to discuss what we expect for the economy in 2019 and beyond. The three of us are going to talk for about twenty minutes, and then we’re going to open up the line to questions. And I just want to remind everybody that this whole call is on the record.
So we’re going to start, Mike, I guess, with you, to give us a quick overview of the real economy. And then Kate will jump in and talk about the markets and how they may or may not relate to the underlying economic conditions. So, Mike, why don’t you go first?
CAREY: Thanks, Jacob.
Well, it seems to me that we’re in the process of a synchronized global slowdown. The U.S. in 2018 grew about 3.1 percent. And we expect it to slow to about 2.1 percent in 2019. And this is still above potential, but it’s a significant slowdown, and it’s based on this sort of waning deficit finance fiscal stimulus, and also less supportive financial market conditions. If we look around the world, China also slowing down because of slower credit growth and the trade conflict with the U.S. Europe is slowing under the weight, I think, of uncertainty. There are some specific issues there in terms of the auto sector in Germany, and strikes, and the Yellow Vest protests in France, et cetera. Also, the disruptive political events like Brexit.
So all of those things, I think, are weighing on this sort of leading us to a slowdown. But I’m not overly pessimistic because I do think that some of these risks are being addressed by policymakers. It seems like the Fed has taken on board the impact of the financial market tightening and said, you know, we can pause for a while in our rate hikes. And China seems to be—have introduced, you know, some of its policy stimulus to offset some of these other headwinds. So they might be able to get a more controlled and balanced deceleration to about a 6.4 percent growth this year. And overall global monetary policy still remains accommodative. Even if the ECB is finished with their QE process, liquidity is generally abundant.
So I think all of those things suggest to me that, yes, we’re going to see a slowdown, but it’s not going to be something to be overly concerned about at the moment.
SCHLESINGER: Great. Thank you.
And, Kate, why don’t you give us the market perspective on the next year.
MOORE: Sure. I mean, I think Mike made some great points about accommodative monetary policy and, you know, China’s fiscal stimulus. And at least the desire for policymakers to sort of—for, at least, a willingness on the part of policymakers to kind of step in and provide a little support. There’s a saying, you know, an old boss of mine used to have, which is that markets stop panicking when policymakers start panicking. And I think that’s very much what we’ve witnessed in 2019 so far, is a nice rally in the equity market when it feels like policy will be more supportive this year than it was last year.
I just want to point something out, though. We very much agree that we’re kind of in a synchronized global slowdown. But it’s not so much just about the economic growth. It’s also about earnings growth. And we are a late stage of the corporate earnings cycle. The hurdles from 2018 are much higher. We’re talking about much more, you know, difficult comps. And we’re starting to see a pretty negative series of downgrades to earnings expectations across all regions of the world. One measure I look at, earning revision ratios, are at the weakest levels since May of 2016—you know, before the global inflation trade and that kind of turn in macro data. And the only other time in the post-crisis period beside that, you know, late spring 2016, when revisions were so negative, or there were so many more downgrades relative to upgrades, was in 2011 and 2012. So we’re seeing kind of a collapse of earnings expectations in addition to this synchronized global growth slowdown.
SCHLESINGER: OK, great. So you both have said, you know, we’re going to slow down, maybe not panic mode yet, as you say, because the policymakers are panicking for us. But talk a little bit about the risks of recession and/or a bear market either this year or next? It may not be necessarily the main base-case scenario, but how likely or possible is it? And how might that forecast compare with what you would have said a year ago?
Mike, you want to jump on that?
CAREY: Well, on my part, yeah, I would say that the risks have clearly risen. I think there’s at least a 40 percent chance that in 2020 the U.S. goes into what we call a classical recession. In our forecast—
SCHLESINGER: And what would you have said six months ago on that? Would you—
CAREY: I would have had a slowdown, but it wouldn’t have fallen into that. Right now, what we show is a growth recession. Growth slows below the 1.9 percent estimate of potential long-term growth. And I think that things behind it are—you know, the trade frictions have really increased uncertainty for businesses. And this uncertainty, you know, can lead them to pull back on investment, and hiring, and such. The fiscal stimulus fades out by 2020. Fed policy, yeah, they’ve got this great soft landing planned into their projections, but historically we know that’s very difficult to achieve. And you’ve got the slower global growth which then has spillover effects to other economies, and U.S. financial market conditions, of course, have tightened. So all of those things, to me, when you put them together, raise the odds significantly that you’re going to have, you know, a below-trend performance, if not an outright recession in 2020.
MOORE: Yeah. We have very similar projections for the probability of a recession in 2020. But I think that the probability of a recession in 2019 is pretty low. And in 2018, particularly in the fourth quarter, the narrative that we were, like, on the edge of a recession, or that this growth slowdown was going to lead to a massive contraction felt wrong. And you saw that happen in markets. It kind of overshot in 2018 to the downside. Look, when we think about the probability of a slowdown which we know is very high this year, and recession is a probability, say, in 2020, we have to ask, like, how much of that is already playing out in risk asset markets? And frankly, a fair amount of that got reflected last year. And as I mentioned before in earnings revisions, is getting reflected a little bit in expectations for earnings growth.
The chances of a profit recession or a significant headwind to global profits I think is very high for many quarters of this year. The comps are more difficult. There’s not that same degree of, you know, sort of sugar high from the tax cuts and fiscal stimulus in the U.S. And I do believe that this political and geopolitical uncertainty is seriously weighing on activity and could increase the probability of—sort of there’s a left tail risk for both earnings slowdown and growth slowdown.
SCHLESINGER: And talk a little bit more directly about your outlook for markets this year and next.
MOORE: So, you know, BlackRock is retaining an overweight recommendation for equities. And I’ll tell you our conviction level around equities meaningfully outperforming bonds have come down from where we were at this time last year. And we do recognize that, frankly, it’s a much harder asset allocation decision that there’s a greater buffet of assets that could offer the same kind of single-digit returns than there were at the beginning of last year, where fixed incomes was, you know, a much less attractive asset class. We think you have to be really focused on quality, though, in portfolios. And that could mean, you know, holding quality companies or quality assets. But you don’t want to lose all of your opportunities to take risk. So there’s a tactical overlay to that, which is looking for just locations for where the market has de-rated aggressively. So a more intensive portfolio, yeah.
SCHLESINGER: So let’s step through some of the specific risks. And, you know, one that—particularly sitting here in Washington—is top of mind, obviously, is the government shutdown, and the ways in which that may be rippling through the economy in forms that we may not have anticipated. I think we were talking earlier that, you know, just a few minutes ago news alerts moved about flights being stopped in and out of LaGuardia because of a shortage of air traffic controllers.
Mike, why don’t you start by talking about sort of how we should look at the shutdown, and how that may affect the economy going forward.
CAREY. Well, near-term impact is estimated to be about a one-tenth a percent reduction in real GDP growth for each week that the government is shutdown. But that’s not, like, a linear projection, because as we go along further the impact becomes more important because it spreads to contractors to the government, other people who make their living, you know, servicing people who work in the government. So that has already led us to trim our first quarter GDP growth estimate by a half a percent. And if it continues to go on further, then we’ll just continue to cut it. So I’m a little concerned there.
We also, from my point of view as an economist, is that—and the Fed—in trying to assess the economic situation, we’re not getting all the data that we used to get to make an assessment of how things are playing out. So this is one more, I think, probably good reason for the Fed to be on pause for several meetings before they continue—before they decide whether or not they need to hike rates again. But the main impact is there. And also maybe it goes back to some of the other comments we made about, you know, a divided government—it’s not necessarily bad for business or bad for growth, but if you get to some sort of paralysis-type situation, that’s got to weight negatively on both household and business sentiment.
MOORE: Yeah, I think Mike made a great point about the non-linearity of the impact that this shutdown might have on activity, and investment, and ultimately on growth. I would note that even before the shutdown, there has been a deterioration in corporate sentiment. We had a number of CEOs, CFO surveys released in the fourth quarter, which showed a pretty sharp quarter over quarter decline in terms of expectations for growth and willingness to invest. You know, one that I was looking at earlier this morning, the Deloitte CFO survey, you know, the percentage of companies who think that now is a good time to invest—and this is fourth quarter, again, before the shutdown—had fallen to the lowest level of the last four years. So, you know, I expect that just as there’s maybe a non-linearity in terms of growth impact, there’s going to be a non-linearity in terms of corporate investment and activity as they kind of wait and see how protracted this is.
SCHLESINGER: Yeah. So another big risk that looms over the world economy, or a big question mark, is China, both in terms of, you know, China’s own growth path, but also the ongoing trade tensions that revolve around China. Talk a little bit about both of those questions—what the outlooks is for China’s economy, how that ripples through the rest of the world, and how much is the trade tension with the U.S. factoring into that. I don’t know if, Mike, you want to take the first crack at that?
CAREY: Well, in terms of China, obviously it’s going—it’s decelerating growth. And a lot of that is coming from two things. I think it was the sort of prior slowdown in credit growth, because they wanted to get that under control, but now these trade tensions are, I think, accentuating the stuff. So they’re trying to offset that with, you know, cutting required reserve ratios and other fiscal stimulus measures. So they think—and I think they will probably be successful in getting that—sort a balanced deceleration down to about 6.4 percent growth this year.
For the U.S., my concern basically is that we have this—we have the very aggressive posture taken by the current administration in terms of these trade negotiations. And, you know, the risk is that you end up with some sort of, you know, trade war. And the impacts of that can go in many different directions. One is that, you know, businesses—even if I have a strong order book, if I’m exporting, you know, some of my product, I may just decide not to expand policy until I get a better read on where this thing is going. And if indeed we ended up in a trade war, where everything from China had a 25 percent tariff on it, well, then that would raise prices for, you know, Mr. and Mrs. Smith when they’re shopping at Walmart.
So I think that could infect, you know, inflation expectations, which would put the Fed in a horrible position. So I just think that this policy is kind of risky. And the negative impacts are—for the U.S., and for China, and for everyone who trades with us—I think is significant. And it’s not just China, because, you know, mid-February we’ll have—more negotiations are going to be starting with the EU and Japan, particularly with regards to the auto sector.
SCHLESINGER: Right. All right, Kate, do you want to weigh in on that?
MOORE: Yeah. Let’s see. I think the concerns around trade and these trade tensions, particularly between the U.S. and China, did have a big impact on China’s sensitive assets—much more so than U.S. sensitive—U.S. trade-sensitive assets in 2018. Some of the worst-case scenario was kind of getting priced in. But I would note that, in addition to the two things that sort of Mike highlighted is having an impact on China—the trade tensions as well as, you know, just a regular growth slowdown—you know, important for markets was a series of regulatory and policy changes affecting the value-added industry throughout the course of 2018, that frankly altered their earnings trajectory and made them make investments in to sort of make trade costs better within terms of government relations or content screening, and all kinds of things that sort of hurt the capital markets at the same time.
So it felt like there was a confluence of negative events around China. If we—and I want to go back to the policy bit here—end up continuing to get a Fed that is very conscious of the slower growth data and continues to talk proactively to the market about both, you know, the trajectory of rates and the balance sheet, and we don’t get a significant amount of movement in the dollar, that’s going to be a really good environment for Chinese assets. But the growth in trade issues are going to overhang.
SCHLESINGER: OK. One last big area of risk I want raise before we turn things over to the folks on the line is Brexit—the slow-motion train wreck of Brexit. Talk a little bit, both, about, you know, what you see as a likely scenario for how that plays out, and, you know, what are the risks both to the global economy and to global markets if they continue to be unable to do anything, other than avoid a hard Brexit in late March?
CAREY: Well, on the economic side I would say that our expectation is basically that March deadline gets pushed back to June, at the earliest. They are not going to be able to come up with a deal. They do seem to not want to go the hard Brexit route, which I think make sense. If they did, you know, you’d see much weaker growth in the U.K., higher inflation, impacts on gilts and on sterling. But we think that they can avoid that. But the impact is more specific to the U.K. There’s less of an impact, as far as we see, on the European Union. Although, certainly, there are, you know, supply chain issues that would need to be addressed. But I think it’s going to be focused there, and less so on the EU, and even less so in the United States, in terms of just the straight economic impact.
MOORE: Yeah. It feels like a unifying theme of a number of the stuff—things we were just talking about in terms of the U.S. government shutdown, and the trade tensions with China, and now with Brexit, is the impact that this is going to have on both activity as well as spending and investment. And that’s where we’re seeing, like, a real slowdown in terms of the U.K. If you—if you have so much uncertainty about whether or not we’re going to even have a hard Brexit—we’re putting a low probability on that. I think a lot of people are at this point. But to Mike’s point, they may extend the deadline, but still without a framework. If we continue to kick the can down the road, we think investment, especially on the part of domestic businesses, will be very, very weak. This is going to weigh on, you know, a whole variety of different sectors.
Just one little side note, from an equity person, which is that the U.K. equity market is not just domestic. But we’re actually seeing even the internationally listed shares in the U.K.’s indices have a significant discount to their global peers because of that association.
SCHLESINGER: OK. So before we turn it over to the folks on the line, just one last quick question for both of you. Briefly, so we’ve been—spent the last twenty minutes in a rather gloomy outlook for risks and problems for the world economy ahead. Say something positive about what are some good factors that are still areas of strength, and perhaps some potential upside surprises.
CAREY: Well, again, on the economic side, I would say that when I’m looking at 2019 in the U.S., I’m looking at a very solid labor market. And we have more job openings in this country than we do unemployed people. And we see some signs of a pickup in wage growth, 3.2 percent for average hourly earnings in December. Lower energy prices are boosting real disposable personal income for households. And, you know, banks are in—bank balance sheets are, I think, relatively strong, continued credit flows to the economy. So all of those economic conditions, I think, are favorable.
I would agree with Kate, maybe there are some questions about the business investment outlook given these uncertainties that businesses are facing. That’s one of the issues that I’m a little more concerned about. But two-thirds of GDP is coming from household spending—or, more than that, 70 percent. So I think that’s the sort of the positive outlook there. And if we resolve some of these issues on the trade front, and the Fed is taking a much sort of softer approach in terms of rate hikes, then, you know, you could have some upside surprises. And I think that would come more from the business side. But I would be interested to hear what Kate has to say.
MOORE: Well, I think there are two positives here. One was, you know, we talked about from the very onset with the policy response, or at least policymaker attention to slower growth environment and some of the challenges. So I think that’s a positive. We don’t have to really worry about people who are making decisions not getting what’s going on on the ground. They seem to be paying attention. The second is sort of an echo of some of the points that Mike was making, that actually we have a very solid corporate base.
I mean, one thing people—one of the things sort of criticized companies for in this post-crisis period was how slow they were to invest, or how slow they were to hire, or how much they seemed to be focused on managing their margins. But that’s actually a significant positive in my view. And here we are, ten years into the cycle, with a corporate management structure that is very focused on being conservative, and managing to margins, and only hiring where they need to, and thinking about their costs. It doesn’t feel like there’s a lot of fat to cut. So even if there’s a slowdown, I would say we’re in a much healthier place than we were in previous declines of activity.
SCHLESINGER: OK, great.
So now we’re going to open the line for questions. And I just want to remind all participants this call is on the record. Operator, please give instructions for the question-asking process.
OPERATOR: Thank you very much. Ladies and gentlemen, at this time we would like to open the floor for questions.
(Gives queuing instructions.)
SCHLESINGER: Operator, if we don’t have any—do we have any questions in the queue? If not, we can continue and let some folks push the buttons.
OPERATOR: That’s fine. We do have one question in the queue.
SCHLESINGER: OK, go for it.
OPERATOR: John Veroneau from Covington & Burlington (sic; Burling).
Q: Yes. Could you speak to debt levels, public and private, and how concerned you might be about those levels?
MOORE: Sure, I can take a first stab at that, especially on the private side. You know, there’s been a lot of handwringing and discussion around, you know, greater issuance of debt, and how companies have been engineering their balance sheets. You know, it’s my view that they’ve been prudent, and have actually made smart decisions in an extremely low interest rate environment. We actually find that the debt profiles for most of the publicly listed companies are relatively attractive when you consider how much they’ve termed out the debt and how much they’ve locked in lower interest rates. So we don’t see a huge amount of sensitivity to changes in rates over the last year, or a massive wall of debt that needs to be refinanced in the very near term. So, yes, levels are higher, but it was also, in our view, a product of the environment we were living in, of exceptionally low cost to borrow money.
CAREY: I would just add, on the public side—in terms of public debt—clearly our fiscal situation in the United States, we’re on an unsustainable trajectory in terms of running these huge—we’re looking at trillion-dollar deficits going forward given the tax cuts and increased spending that we’ve seen over the past couple of years. So normally you would say, OK, then you’re eventually going to require higher rates, a higher risk premium to attract investors. At some point will foreigners, say, require a higher risk premium to own U.S. assets, given the mismanagement?
And yet, we don’t see any of that. I mean, that’s what the textbook would tell you, and crowding out of corporate investments, potentially dampening productivity. And I—we just don’t see that yet. U.S. interest rates still remain relatively low. I think one of the other risks to this is, though, if we get into a recession scenario—and it seems likely in the next couple of years that at some point that’s going to happen—it’s a limit to counter-cyclical fiscal policy in the next downturn, given the fact that we’ve run up our debt so much and our deficits are so high.
OPERATOR: Thank you very much. Our next question will come from Jared Bannon (sp), Ernst & Young.
Q: Hi, there. Thank you all for the enlightening discussion this morning.
So I have a sort of two-part question. I was wondering if you could speak to mergers and acquisitions in this uncertain environment that we’re seeing right now. Do you think that we’re going to see a growth in M&A over the next twelve to twenty-four months, because of the—so much political and regulatory uncertainty. And then, two, with China’s slowdown, well, we’ve seen a lot of investing from them into certain parts of Africa, development primarily based investment over the last several years. Do you think that the slowdown will impact any investment into that region, in those countries, and will negatively impact the GDP growth over the next, again, twelve to twenty-four months? Thank you.
MOORE: I’ll take a quick stab here at answering both questions, then hand it over to Mike.
When it comes to M&A, you know, I think a lot is up in the air. You know, devaluation of the kind we experienced through especially the second half of 2018 made acquisition of public assets, and even some private assets, look more attractive. But I think companies are under a lot of scrutiny. And both their boards as well as the investment bases are making sure that any purchases they make are really going to be done, you know, at smart levels, and are also going to be accretive. I think that level of scrutiny is greater given the duration of this cycle and, frankly, the uncertainty we face from both politics and geopolitics. And so, from that perspective, I would—I would not be surprised if we had a slowdown in M&A activity and also, on the other side, in kind of like IPO issuance, and, you know, companies waiting to come to market until they have a better sense for the future quarters.
My two cents on the China slowdown question you asked, as to whether or not that leads to a decline in investment outside of China, particularly you mentioned Africa, I would suggest that it doesn’t. That one distinguishing feature of Chinese policy is that it—you know, it’s really a long-term policy. And while China was opportunistic during parts of the crisis, in terms of acquiring assets and making investments in distressed areas of the world, that they really do play for the long game. And we’ve heard nothing to suggest that those overall plans have changed.
CAREY: Yeah. I really don’t have much to add. I would just echo what Kate has already said in terms of China playing a long game there. And I have not heard—although, I am not a China expert—I have not heard of any plans to curb those kind of expenditures, particularly that you just mentioned. I haven’t heard anything on that line.
OPERATOR: Thank you.
(Gives queuing instructions.)
Sir, at this time we have no further questions in the queue.
SCHLESINGER: OK, why don’t we—there are some, I think, other loose ends between us, that I was going to keep the conversation going a little bit longer. Mike, one was you had mentioned obviously outstanding debt. And I think one of the things you had said in a note that you’d published earlier was about—maybe one of the sleeper issues, in particular, was the debt ceiling, which combines I guess concerns about the public debt and also, you know, perhaps the next big problem with the polarization and the divided government here. Wonder if you could talk a little bit about, you know, when that comes to a head and how you see that playing out.
CAREY: Well, the debt ceiling gets re-imposed in March. And at that point, then the government—or, the Treasury will go to extraordinary measures. And that can probably continue financing the U.S. government through late summer, I suspect. And then after that, it becomes—they’re going to have to make a change. And so my concern, of course, is that, OK, we’ve all—people in the markets have seen the play before. They know how it ends. But now there may just be a bit more concern, as we get close to that date, given the polarization that we’ve seen in Washington, the difficulty to get anything done, as evinced by the government shutdown that we’ve been through over a month now.
So I don’t think that that’s going to lead—I don’t really think there’s any significant probability of a U.S. default, or something like that. But I do think as we get closer, markets are probably going to get a little more perturbed about that than they would have without this kind of polarization that we see in the current government.
SCHLESINGER: And, Kate, you had said something when we were talking earlier about, you know, how markets tend to view divided government. And we now are officially, for the first time in a couple years, in that period of divided government. But this one—sometimes it’s seen as positive, but this new era of divided government maybe is a little bit more worrisome and negative for markets in the economy.
MOORE: Yeah. I think of it as kind of, like, a rule of thumb that, you know, if you have a divided government companies felt a little bit more comfortable in some ways. There was more certainty. There was less likely to be any significant legislative or regulatory changes that—especially if the two sides had very different views on an issue. You could assume that business as usual and the framework that you were already living in would persist for some period into the future. And companies love, you know, a certainty, and they love visibility. I think the fact that we don’t have it right now is leading to these declines in overall corporate sentiment measures.
But this divided government feels different. And it’s really marked by acrimony, and very little discussion even about any of the issues. I actually think that this divided government is leading to an even greater decline in overall corporate sentiment. And I think as I’ve mentioned a couple times on the call already today, that’s something for us to watch very closely, because it could have a real negative impact on growth—greater than is, frankly, in our existing forecast for 2019 and 2020.
SCHLESINGER: OK. And then just one other political question from me—and just a reminder to folks on the line, if they do want to ask a question to hit star-one and we’ll go back to the audience after this segment here—but, you know, you talked about the possibility of a recession in 2020. But 2020 also is obviously the next big election cycle. It’s obviously way too soon to really look at how that’s playing out, and yet, I mean, what you are seeing in kind of the early dialogue for 2020, particularly from the Democrats, is what would have been—by historical standards—been a fairly extreme liberal approach on economic policy. I mean, you have Elizabeth Warren coming out this week. There are reports of her coming out and endorsing this wealth tax—a new wealth tax. Alexandria Ocasio-Cortez in the House talking about a 70 percent bracket for income taxes. Just talk a little bit about how you see that sort of mood and that debate taking shape, and how that also may affect the outlook going forward.
MOORE: Do you want to ask Mike or me? Does it matter?
SCHLESINGER: Either way. Go ahead. Why don’t you jump in?
MOORE: OK. So I think a lot of this posturing we’re getting, and sort of testing of positions and views ahead of 2020, you know, is also being very acknowledged and sort of discussed in the investment community. You know, changes around tax policy, once again, if that ends up being really on the table during the next election cycle, then we’ll see what we did, you know, going into the 2016 elections and immediately, frankly, before the tax cuts were put together, which was, you know, people holding back on making decisions and sort of a decline of activity in anticipation of a change. If we see a significant increase in the tax rate for the—kind of, like, the upper echelons of earners, the top quintile, if you will, who have a disproportionate impact in terms of overall consumption, then, you know, that’s going to be a little bit of a tough one against the backdrop of slowing growth and heightened geopolitical risk. So I think we should watch these debates and these sort of testing of positions very closely to the opposition of the current administration.
SCHLESINGER: Mike, do you have anything you want to say on that one?
CAREY: Well, I think the shift in—to the left in the Democratic Party is—as we’ve seen so far—is in response to the current government’s policies. I mean, certainly businesses were very happy, and high-income individuals were happy with tax cuts, and businesses with less regulations, and all these things. So that was quite positive. And so to Kate’s comment early about, you know, business sentiment easing a bit, I think it’s also easing from very high levels, OK? And so when we’re moving forward, you know, whether these particular proposals that we hear in the press from Senator Warren and others are flawed or not, I think it does seem to capture the sentiment that the Democrats are going to be pushing in that direction.
And so that—on the other hand, if we’re going into a recession period, then, you know, the incumbent has to deal with that, even though it may or may not be his fault. He—you know, they’re going to get blamed for it. So it’s going to be an interesting development. I guess I would differ a little bit from Kate, in that I don’t think if you raise taxes on high-income people it’s going to have a huge, disproportional impact on spending, just given the impact of how that plays out in terms of their marginal propensity to consume. But that being said, you know, businesses obviously are going to look at that and be less receptive. And so there are issues there that it may be negative overall for, say, investment performance going forward.
SCHLESINGER: OK. Operator, do we have any other questions on the line?
OPERATOR: Sir, at this time we have no questions in the queue.
SCHLESINGER: OK. Well, I think if there’s no other questions we can wrap this up. And I want to thank again Credit Agricole’s Mike Carey and BlackRock’s Kate Moore. And thank you to everybody for dialing in today. And I guess we can all disconnect. Thank you all very much.