U.S. economy 'relatively strong' in coming years, Bill Smead says
Our opinion is the economy is going to be relatively strong, that including for probably the next five years from the United States standpoint. Demographics are fantastic. There's 180 million people under 40. They're a little slow to get started with their life, but but there they are. And that takes you from discretionary spending into necessity spending and necessity spending is always a great multiplier effect. So we, we, we really think underlying strength. And then secondly. We think, we personally think that there's no way on God's green earth they're going to be able to get around all this monetized federal debt without inflation being a persistent problem that that we think they're dreaming about beating this thing because it it, you know, they take gasoline and rent and three or four things out of the inflation numbers to try to put lipstick on a pig and they can't take out shelter, They can't take out insurance costs, They can't take out a lot of the a lot of these loans for automobiles, etcetera. Absolutely. But having said that, I think you've almost answered my question. Yes, inflation is going to be more persistent. Yes, rates are going to stay higher than the market previously wanted. But actually, as you quite already said, we're going to be relatively strong regardless of that. So actually something that surprised me, and I think most of us out there is that you can raise rates by 500 basis points and it actually hasn't had a dramatic effect. Or, or is that just way too complacent? Well, we own the home builders. So just imagine if you sat down and we're looking for a nightmare scenario. How about taking the Fed funds rate from 1/4 percent to 5 1/4%? In less than a year, that would have normally just completely obliterated the industry, but instead they made a complete pivot in their business model. They no longer borrow money to buy raw land and they have pristine balance sheets. So therefore they use their free cash flow to subsidize the mortgages of the people that are taking out loans. And there's a flood of people coming and the existing homes people have a 3% mortgage. They're not going anywhere and they're dilapidated. So they need work. So we don't Home Depot for that. But anyway, so so it it's. The other part of the strong economy is the wealth effect of the stock market on what is the largest. 60 to 80 year old group in U.S. history, which is us baby boomers, people like me. So they're all flush, right? I, I live in Phoenix in a area where there's a lot of people my age and people are building these luxury homes and they're doing it at a stock market wealth or owning a business, one of the two. And, and that's unusual for that kind of activity. A lot of construction activity out of 60 to 80 year olds. It's like that, that doesn't normally happen.