Interest rates and Stock Prices: An Old Market Debate Replayed!

0:00 Hi, welcome back. As we get into September 2026 and look back at the year so far, it's been quite a year. There have been there's been a war that's broken out and the effect it's had in oil prices, concern about recessions, but interest rates have been constantly part of the news as well. And it looks like they're taking center stage once more for three reasons. One is long-term rates, 10 year and 30-year rates are approaching levels we haven't seen in two decades.

0:32 The US debt recently hit 40 trillion and that's triggered a whole you know set of hand ringing about how much the debt is and how it'll bring the US economy down and take down bond holders with it. The Federal Reserve has a new chair in Kevin Walsh and the market is struggling with what he will bring to the Fed and we have a Treasury Secretary in Scotty Besson who's been particularly active in talking about interest rates. So I understand that interest rates are now part of the conversation and almost every story about markets is an interest rate subtext to it. So in this session, I'd like to focus on US Treasury rates first and look at how they performed over 2026, why they're in the news, and extend the discussion a little bit to global government bond rates and see if this is part of a global phenomenon. I also want to use this session to talk about the relationship between interest rates and stocks, which is a lot more nuanced than people are willing to accept. Higher rates don't necessarily translate to lower stock prices even though the the effect is direct with bond prices. And we'll talk about why. So let's set the ball rolling. Governments borrow money.

1:49 Why do they borrow money? Because the amount they collect in taxes is not enough to cover their expenditure for most governments. And they borrow money in many forms. And one of the ways they borrow money is by issuing bonds. The rates on these government's bond reflect not just you know investors concerns about the government that is borrowing and its default risk but about the currency in question the currency used to borrow money and the inflation that currency and whether buying power will stay stable in that currency. So I'd like to start this government borrowing rate discussion by looking at US Treasury rates. Why US Treasury rates?

2:27 Because notwithstanding the growth of government bond markets around the world, the US Treasury remains the largest single government borrowing in the world. So let's look back at 2026 and track what's happened to US Treasury rates during 2026. I've looked at you know US treasuries across the maturity year threeear the two the three month to two year the 5year the 10 year the 20 year and the 30-year and if you look across 2026 you notice a drift upwards you know almost all of them the 2-year rate has a little bit of a divergence from the rest but clearly all the rates have drifted up and I in the graph I've also listed out the four federal open market committee meetings. Why? Because that's what people seem to assign importance to when they talk about interest rates. I'll talk about why I'm not as attached to Federal Open Market Committee meetings. But I've also put the date that Kevin Walsh became the Fed chair because again, that's brought back attention to the Fed. So, as you look across 2026, rates have drifted up. But another way to look at what 2026 brought is by looking at what the yield curve looked like on December 31st to 2025 and how it switched every quarter since with the most recent one August 31st of 2026.

3:49 When we started the year, the yield curve was mostly upward sloping. Why mostly? Because the 2-year rate was lower than the 3month rate. And in March, that still remained the case. The kink had become less. And by June that had disappeared and by August there's a more more conventional you know upward sloping yield curve. Notice that the slope between the 10 and the 20 rate has become steeper. There might be a story here but clearly interest rates have risen but not by immense amounts. This is in 2022 or those years where interest rates climb dramatically. rates have risen and they've risen enough to catch people's attention but not by so much that they overwhelm everything around them. Now to get these rates in context, the change in rates in 2026 in context, I thought it might be useful to go back and look at US Treasury rates going back to 1962.

4:48 Here again, I've highlighted three rates. The 3month rate, the 10-year rate, and the 30-year rate. And there's a story behind Elo each of them. But let's start with the with a general statement you can make about these rates. They tend to move together. When rates move up, they all move up. When rates move down, they all move down. The 3-month rate tends to be more volatile than the 10year or the 30-year rates. And with the 30-year rate, notice it starts in 1976.

5:18 Part of the reason for that is while 10-year US treasuries have been around for a 100red years, 30-year treasuries have come and gone. So, the history of the 30-year Treasury is more broken. Something that we need to keep in mind when attention turns to 30-year rate. Historically, the 30-year rate has been higher than the 10-year rate, and the 10-year rate has been higher than the 3-month table rate. But if you take a look at that graph and you step back and you look at 2026, you you notice that the 30 the 20 all three rates are higher than they used to be in the last 10 15 years since 2008.

5:55 But if you from a larger term perspective, we're now closer to normal than we were in the last 15 years. So as people talk about rates being abnormally high today, perhaps it depends on your framing. If you think about Treasury rates in the longer term going back to the 1960s, we're now closer to the norm and maybe the abnormal time period is not 2026, but the period from 2008 to 2021 when T-Bull rates were close to zero. 3-month rates were close to zero.

6:28 10ear rates dipped below 2% briefly below 1%. 30-year rates came down as well. So, are rates high? Yes, relative to what they used to be since 2008, but not relative to what they've been over a much longer time period. So, what drives rates across time? You know, the 10ear rate, and I'm going to focus on the 10ear rate rather than the 3-month table rate because the 3-month table rate has, you know, more going on on a day-to-day basis that cause volatility. If you step back and look at a 10-year risk-free rate in any currency, at least in principle, that rate should be composed of two numbers. An expected inflation number and a real interest rate. I'm not putting out some theory here. That's just a decomposition of an intrinsic interest rate into expected inflation real interest rate.

7:20 So if expected inflation is higher, your intrinsic interest rate should be higher. If real interest rates are higher, intrinsic interest rates should be higher. Now, you may say, what goes to real interest rates? Part of it is real growth. Higher real growth means there's more demand for for my for for borrowing, which in turn pushes up real interest rates. High real growth economies should have higher real interest rates. Expected inflation plus an expected real interest rate. The market of course has a mind of its own.

7:52 It's not governed by fundamentals. The market interest rate is set by demand and supply. So what we observe in the market for the 10-year US Treasury is the demand and supply setting rate. But in at least in terms of fundamentals, that 10-year T-bond rate should have an expected inflation and expected real rate in it. Now, one of the things I've I've tried to talk about over over time is what drives that intrinsic risk-free rate. Part of it is expected inflation. And I say, who knows what expected? We have a tough enough time nailing down inflation last year, saying, who can tell what expected inflation is? For the last 20 plus years, we've had a market estimate of expected inflation out there, which I thought, at least in US dollars, which I think is pretty useful. Remember, inflation is currency specific. It varies across currencies. And for the US dollar, that expected inflation number that you can get from markets comes from the US Treasury market by doing what? By comparing the 10-year Treasury rate, the US 10year T-bond rate to the 10-year US TIPS rate, which is an inflation protected rate. The difference between those two rates is an expected inflation number. Here I've graphed out since 2003, which is when the TIPS started trading, that expected inflation number.

9:15 And if you look across the last 23 years that I we have data for the expected inflation number has moved around. In fact it dropped you know it dropped slight you know but the drops and rises are not dramatic. It is true expected inflation went down in the last decade. It's true expected inflation went back up in 2022. And in 2026 if you look at expected inflation numbers they've nudged up. And the key word is nudged up. They haven't shot up. This is in 2022 in terms of a jump in inflation, but inflation expectations have edged up. Why? We can talk about lots of reasons. The immediate reason might be the the war in Iran and what it does to oil prices, but it hasn't pushed up expected inflation dramatically, at least in a market-based number. Now, actual inflation numbers are going to be much more volatile, and you probably noticed that even this year. But the bottom line is markets don't seem to be reacting the way some inflation experts are or at least fear mongers are in terms of what they see coming in inflation. Now remember there are two ways of getting the interest rate. One is to look at the market.

10:27 There is a market set rate. The other is to build up to that same rate by adding expected inflation expected real interest rates. for the you know probably the last 15 years I've kept updating a graph where I compare the T-bond rate which is a market set number to what I call an intrinsic T- bond rate where I take the actual inflation rate each year and the actual real GDP growth which I use as a proxy for the real interest rate. It's a noisy number because that number jumps around. But if you look across time, it does a remarkably good job of explaining movements of rates over time. If you ask me, why did the 10-year bond rate jump during the 1970s? The answer is very simple. Because inflation shot up. Why were rates low in the last decade between 20121?

11:19 Low inflation and low real growth. The Fed of course contributed at the margin, but at the margin. Why have interest rates gone up since 2022? Again, the answer is pretty straightforward. Inflation came back in spades in 2022. It stayed up since then, and that's kept the intrinsic risk-free rate. In fact, in 2022, the intrinsic risk-free rate that I computed was actually much higher than the market rate, reflecting the fact that I'm using single year actual inflation and real GDP growth, whereas the market is smoothing those numbers out. In fact, if you look in September of 2026 at a 4.75% T- bond rate, that's actually closer to the intrinsic risk-free rate than it used to be. We've kind of converged. So risk-f free rates have moved up partly because inflation has gelled around 2 and a half to 3%. And it's being built into that in that T1 rate. Now if you make this a story entirely about US treasuries, you'd be missing a larger story line. In this graph, I look at that larger story line. And here's what I do. I look at now I won't call them major currencies because it concerns other currency but these are six widely followed and traded currencies but know the US dollar is one you got the British pound the euro which I've captured with the German 10-year bond rate the Japanese yen Australian dollar and the Canadian dollar every single one of the currencies if you look at rates in 2021 think of that as the pre you know pre-inflation era where I'm looking at inflation the most recent period. You look at rates in every currency, they were at historic lows. In fact, the 10-year German Euro bond rate in 2021 was minus.16%.

13:12 It was actually negative. Over the last 5 years, and especially with 2022, you see the jump in rates in every single currency. And in 2026, every single government bond rate has gone up. It's not just the US that's seen the 10-year bond rate go up. It's been true across the board. I think the shock effect is largest in Japan simply because Japan has had low rates less than 1% going back almost 30 years. This is a new world new economic order for Japanese investors to see tenure rates where they are. We'll come back and talk about what this jump in 10ear rates has done to bond prices. But you can see how rates have shifted in the major currencies. Is this true across all currencies? Not not quite. Here I brought in four other currencies. And I'm sorry if I've left your country's currency out, but I couldn't fit more than that into this graph. I've looked at the Chinese yuan, the Indian rupee, the Brazilian ria, and the South African rat. Here the story over the last 5 years has been very different. Rates have actually decreased in three of the four currencies relative to where they used to be in 2021. The Brazilian RI has seen a jump but rates have decreased.

14:28 And 2026 has seen an increase in rates in three of the currencies but a decrease in China. There seems to be a disconnect that's happening between what I'll call developed market currencies, no insult intended, and emerging market currencies. Government bond rates across the world are converging. And in many ways, that convergence is destroying what's called the carry trade. What's a carry trade? It's this incredibly lazy investing strategy where you borrow money in a currency with low interest rates, the Japanese yen used to be a favorite, and invested in bonds in a currency with higher interest rates, the US dollar, and claim the difference and make yourself look like a genius.

15:14 It is a brain deadad investment strategy. I will shed no tears for the people who've lost money as the strategy has basically been driven out as rates converge. But you can see as government bond rates converge, that strategy becomes less and less attractive. Now, as government bond rates change, US Treasury rate, the German Euro bond rate, the effect doesn't stay just with government bonds. Of course, government bond prices are affected by government bond rates. But I'm going to look at the ripple effects here. First by looking at the market that's most directly impacted by government bond rates, the corporate bond rate, bond market and corporate borrowing in general. And then I'm going to look at equities where the effect gets to be more nuanced. And we'll see why. Let's start with corporate bond rates.

16:02 To get when a company goes out and borrows money, it has to start with a risk-free rate in that currency as a starting point. Now if your government is default-f free, the government bond rate becomes the risk-free rate. Let's say we view Germany as a default free government. The German Euro bond rate becomes the base and any company borrowing in euros will have to pay that rate plus a default spread. Until 2025 with US dollars, I took the US Treasury as my default fee and added a default spread on top of that to come up with a corporate borrowing rate in dollars. Why has it changed? Because in 2025, the US lost the last AAA rating that it had Moody's and it dropped to below AAA. So now there's some default risk in the US government. You could argue that the US government bond rate is not quite default-free. I don't want to focus on that in this session because I've had a couple of more sessions where I've looked at that more specifically. But corporate borrowing rates will be a government borrowing rate plus a default spread on top. So what I'm going to start with is what those default spreads have done. And I'm going to go back to the US Treasury rate as my base year and look at default spreads over the US Treasury rate for different ratings classes from AAA all the way down to high yield, triple C and and higher. And look at what hap what's happened to default spreads during the course of 2026.

17:32 As you look across the ratings classes in the lower ratings classes, default spreads have either stayed the same or actually decreased. So corporate default spreads have narrowed. But if you look at the the high yield bonds triple C and lower, default spreads are widened. There's a there's a dissonant effect here where default spreads have stayed have stayed the same a drop for higher rated bonds but for the for the lowest rated bonds you've seen them grown up there's been a risk capital you know effect repricing of these bonds remember if you're a company and you go out borrow and borrow money this default spread is on top of the US Treasury rate now if you look at what h what happened to US Treasury rates which went from 4.18% on January 1st, 2026 to 4.75%.

18:24 Every company now when it goes out and borrows money is going to start with that higher base that pushes up the corporate board. So for companies, the cost of debt in 2026 has increased. In fact, if you take the the the T-bond rate and you add the default spread, you'll get the rate at which you can borrow money. Now, for investors, the effect of this increase in rates has been a drop in bond prices. By how much?

18:54 Here's what I did. I took the 10-year Treasury, a 10-year bond in each of the ratings classes, looked at the coupon yield based on the rate at the start of the year. So, the 10-year rate at the start was 4.18%. And then looked at what would have happened to the 10-year bond, holding the maturity constant with the new rate. So, if you take the 10-year bond, the US Treasury 10-year Treasury, the rate went from 4.18 to 4.75%. You repric the bond because the coupon stays fixed and the rates have gone up a higher discount rate, the price of the bond drops, the 10-year Treasury has lost about 4.5%.

19:35 On price. So, you collect the coupon, you lose on price. If you owned a US 10-year Treasury bond at the start of the year, your return for the year is now slightly negative. In fact, it's slightly negative. If you have a 10ear, a double A, the coupon starts to have a bigger effect. So, if you have a single B-rated bond, the coupon effect is over. So, you're making a return, but it's not great. It's 5.27%. The high yield bonds, the price effect has been pretty dramatic at 11% drop in prices. The coupon starting the year was also pretty high 13%. So you earn a return of 2.36%. It is positive but it's low given the risk you were exposed to.

20:19 So already you can see why we care as investors as a bond investor as rates have gone up you see bond prices affected. It's part of a present value equation right? The value of an asset is the present value the expected cash flows on that asset. You take the expected cash and discount back at a discount rate. Your first class and present value tells you what happens as discount rates increase. If you hold cash flows constant, if your cash flows are fixed, they're contractually set and I change my discount rate. I increase my discount rate, the effect on present value will always be negative. That's why bond prices decrease as interest rates go up. You see, what about equities? The effect is muddied by the fact that your cash flow is an expected cash flow and that expected cash flow could itself change as interest rates change.

21:16 Think of what let's break down what the expected cash flow in equity comes from. Let's go all the way to the top line revenues. Let's say interest rates go up because inflation is much higher. If you have pricing power, you might be able to pass that inflation on to your customers, right? you might be able to insulate yourself against interest rates effect. So with revenues, the key determinant of how higher interest rates play out is pricing power and how much you can pass through.

21:45 With your operating income, you're looking at things like, you know, cost of goods sold and other operating expense. The question is how are interest rates playing out there? And if you're a company with very little in input cost, you might not feel the effect of inflation. The effect of margins might be minimal. But here again, depending on your cost of goods sold, how high they are, how much input costs are affected, you could see your gross margin, your operating margin, your net margin will all change as interest rates go up. And finally, as interest rates go up, your interest expenses go up on your debt, right? On new debt that you take on, but the interest income also goes up on the cash and marketable securities you have. Your net interest expense will be affected by how much debt you bring to the table.

22:31 Already you can see if you ask me what'll happen to my cash flows as interest rates increase. Not only do I have to look at revenues and earnings, I also have to look at reinvestment. Reinvestment is the projects you take. And here as interest rates go up. The question is why are they going up? If they're going up because of inflation, you might still continue to invest hoping to reap benefits through pricing power. But they're going up because real interest rates are going up. You might invest less. And that will give you a short-term positive effect on cash flows, but perhaps a net long-term effect on growth. I know this is incredibly messy, but an interest rates change. Your numerator doesn't stay the change with equities. Your cash flows can go up, down, or stay the same. Your growth rates can go up, down or stay the same. Already you can see the effect of changing interest rates on aggregate equity value will depend will depend first on why interest rates changed in the first place. They changed because real rates went up or because inflation went up and how were cash flows affected by the change in interest rates. Pricing power through revenues. your your margins are affected by how much you have as cost of goods sold and how much your unit costs are affected by inflation and your reinvestment effect.

23:52 So they affect your cash flows in your margins. Your discount rate will generally go up as interest rates go up. Why? Because you have a higher risk-free rate and there could be an added effect on risk premiums, default spreads for cost of debt and equity risk premiums. And there's a final complication. interest rates go up, your failure risk might increase. Especially if you're a company that's young and money losing or older and have have a lot of debt, everything goes into motion. That's why when people say as interest rates go up, equity value should go down. I paused because it really depends on the companies in your equity market and how they're dealing with interest rates and the underlying drivers for what made interest rates go up. Now individual companies you'll ask me what inflation and interest rates do to you depends on the company. For companies with high pricing power and low cost of goods sold where reinvestment is more short-term.

24:53 Rising inflation and interest rates can actually increase equity value. For companies with low pricing power, lots of inputs that are affected by inflation and long-term reinvestment, higher inflation and interest rates will reduce value. So across the market, you should expect higher interest rates to have different effects on value. So what I'd like to do is take a look at what US equities did in have done so far in 2026.

25:24 As US treasuries have gone up in 2026 and you saw that in that graph of treasuries across the maturity, US equities so far at least through the end of August have had a decent year. If you look at the S&P 500 and the NASDAQ, they've both risen. The S&P 500 by about 12%, the NASDAQ by about 13% over the course of the year. And that doesn't count the dividend return you'd have made on the S&P 500. So far, it's shaped out to be a pretty good year. Now if you dig underneath and say well what did interest rates do in 2026 and how did stock prices react. I took day by day in 2026 what treasury the 10-year Treasury did and I'm going to focus on the 10 year rather than the 30 year cuz it is I think more indicative of what's happening to treasuries and more businesses are exposed to the 10-year Treasury. There were 42 days in 2026 where the 10-year Treasury rate was up more than three basis points. That's 0.03%. You think that's small, but in the Treasury market that's a pretty big movement. There were 42 other days where they were up by between 0ero and three basis points.

26:37 There were 42 days, and this is amazingly symmetric. I'm not making up things, where rates were down between zero and three basis points. And 31 days where they were down more than three basis points. So 73 days where rates went down, 84 days where rates went up and 12 days when they did nothing. I looked at the S&P 500 return in the day. And what jumps out at you are the big movement days. The 42 days where rates were up more than three basis points, stocks had a bad day, minus a half a percent. That doesn't sound like much, but that's a big movement for a daily return. The 10 days where rates were down, stocks were up about half a percent. Do rates matter? Obviously on a day-to-day basis on the 42 days each that they were up or down between three or less than three basics were pos were not that different. The 12 days rates were unchanged. Stocks did actually pretty well. So you're saying how do I reconcile the fact that higher interest rates affected stocks on individual days but not across 2026? How did we end up with stocks overall up by 12 to 13%. If on the days where rates were much higher, stocks were down so much. Here's the answer.

27:59 Remember that ultimately the effect on stocks of higher interest rates depend on how those higher interest rates are playing out in revenues and earnings and cash flows. If you look at aggregate consensus, aggregate earnings expectations for the S&P 500, and I've tracked those expectations for 2026 and 2027 from January 1st, 2026 through September 1st. So, the way to read this graph is in January 1st, 2026, analysts were expecting earnings in 2026 for the S&P 500 companies to be about 314 and earnings in 2027 to be 359.

28:38 In se on September 1st, that expectation on earnings for 2026 earnings had gone from 33 314 to 349. For whatever reason, earnings expectations for 2026 have risen about 11%. If you look at 2027 earnings, they've jumped as well by about 8 9 10%. earnings expectations going up has kind of buffered the market against higher interest rates. I'm not suggesting that this should mean you should not worry about higher interest rates and I'll be watching the third quarter earnings because I know people have questions about these estimated earnings. We know how much of it is driven by marktomarket and AI investments. How much of it is cosmetic? how much is coming from high margins that could collapse. I have all the same questions. So, I'm not suggesting that this is the end of the story, but this will continue to bear watching and I think we're going to see this be the number that determines how we end up in 2026.

29:49 Now, I did take a look at cross company differences starting with US sectors. Is this a market being driven by one or two sectors? Well, the best performing sector in 2026 so far should come as no surprise. It's energy. Why? Because oil prices are up. So, energy stocks in the aggregate. So, I've computed two levels of sector performance. One is I've looked at the aggregate market cap of companies in a sector and energy the in the energy sector. The total market cap is up 40%.

30:20 I've also looked across companies in that sector and computed the percentage that went up and down. 66% of energy companies are up about 34% are down and the first quartile the median in the third quarter of companies in that sector. The median energy companies up 27%. It's lower than the 40% but not by much. Take a look across sectors. The second best performing sector in terms of the aggregate market cap is technology up 25.2%.

30:52 But there take a look at what the median return is at 7.75%. The median tech companies up less than 8%. But technology is you're saying how do I read that? It tells you that the returns are topheavy. That the largest market cap companies in the sector are performing better than the lower market cap companies. In fact, that's a way to read the difference. If you take real estate as a contrast, the entire sector is up 9.17%, the median company's up 8.55%. That's the least topheavy perhaps the sectors. If you look across the sectors also you see the worst performing sectors, communication services, consumer discretionary and consumer staples where more than 50% in some cases more than 60% of companies are down for the year. the median companies returns are negative. And if you throw in, you know, real estate and utilities into the mix, you're getting a full sense of which sectors are doing the heavy lifting for the market and which ones are not. So essentially, you can see the variation. If you want, you can bring in the fundamentals about pricing power and cost of goods sold and reinvestment into the story line to explain why you have differences across sectors. I did also if you remember the government bond rates are up across the world. Take a look at equity returns across regions and to make them comparable I made them all dollar returns and you look at the aggregate market cap returns. The best performing part of the world is Eastern Europe and Russia. But before you get too excited, it's really a tiny slice of global equities. Globally, equities are up about $17 trillion in 2026. It's 11.28% return. The US is about 13%. The equities up about $8 trillion.

32:46 And the worst performing parts of the world in aggregate market cap terms are China and India. Two growth markets, two of the largest emerging markets, Indian equities in dollar terms are down 4.6%. It's true that the movement of the currency against the US dollar explains part of it. But the median Indian stock in dollar terms is down about 10 10%. In median Chinese stock is down about 9%. Clearly there are regional variations in how 2026 are playing out.

33:21 And there you can bring in the other macro components. Economic growth, oil prices, they're all playing a role. So what's the bottom line? As we get closer to the next Federal Open Market Committee meeting date, which I think is know September 15, 16, somewhere around there, I'm sure the Fed watches will come out of the woodwork. And all of the talk will talk about what the Fed can or cannot do to interest rates. They would raise the Fed funds rate or lower it.

33:48 And what Kevin War should be doing, shouldn't be doing, is doing, will be doing. And if you add Scotty Besson to the mix and what he is bringing with the Treasury, I think there'll be a lot of talk of what the Fed and the US Treasury can do. I'm cynical about much of the talk because it will remain talk. In my view, the key driver of the Treasury rate will remain inflation. And since 2022, Treasury rates and inflated inflation have been stuck between 2 and a half and 3% and rates reflect that.

34:22 Unless there's a break in inflation, you're not going to see a break in rates. That break can hit in both directions. If oil prices stay high and eventually start showing up as sustained inflation, rates will go up with or without the Fed. If there's a break in inflation and oil prices come back down and inflation settles back below 2%, rates will come down with or without the Fed. So, let's watch the fundamentals and let's be less focused on the Fed.

34:53 There's another story line that I think is worth examining here. 2022 was a shock. It was a shock for investors and a shock for many businesses. Why? Cuz they'd become used to a world of low rates and low inflation. And when inflation came back and rates went up, it was a shock. It showed up in stock prices dropping 20% roughly that year in bond prices dropping 20% in companies feeling no feeling that shock as well in earnings and and and in in their operations.

35:29 You've got to give both companies, investors credit for adapting pretty quickly because in 2022, the question is, how long will it take for markets to adjust to this new world where rates are now four to 5% rather than 1 to 2%. They've dealt with it pretty well. Businesses have rolled with the punches. They've been able to deliver profits in the face of higher interest rates and high inflation. Investors have pushed up markets with higher inflation, higher interest rates embedded. So, that's been the good news. And perhaps the news here is maybe the outlier was the period between 2008 2022 and maybe the behavior during that period was the behavior we should be reversing and that companies and investors are moving back to a more conventional interest rate regime and more conventional business practice when it comes to dealing with interest rates.

36:22 But we'll see because 20 there are four months left in 2026 still and much can happen in those four months. And I think we should keep our eyes on all of the drivers of interest rates rather than the the entities that we think set interest rates. I hope you found the session useful and I thank you very much for listening.