2024 U.S. Election Insights

00:00:00 Chris Dillon

Hello, everyone, and thank you for joining us for today's
2024 U.S. election update. I'm Chris Dillon, a fixed income specialist here at T.
Rowe Price, and your moderator for today's discussion. To start off, we
acknowledge the daunting challenge of covering the investment implications of
this election in our 30-minute webinar today. My colleague Caleb Fritz even
made the analogy of doing such a call is like boxing with the ocean; such a
daunting task against that backdrop.

Fortunately, T. Rowe Price has been busy this election
season, creating content that covers the U.S. election from multiple
perspectives. Please visit troweprice.com, where you'll find a trove of
information on the U.S. election and what it could mean for the economy,
markets, and investments. For our discussion today, our goal is to set aside emotion
and partisan rhetoric tied to the election and focus on the election results we
have and to interpret what all this could mean for the economy, capital markets,
and personal investments.

With all of this said, let's introduce our panel; a great
panel that we have today. I'll begin with Blerina Uruçi, chief U.S. economist
at T. Rowe Price. Blerina is going to offer her perspective on the election
impact on the U.S. economy and its policy implications. Blerina, you've been
busy. Thanks so much for being here today.

00:01:31 Blerina Uruçi

Thanks for having me. It's a pleasure to be here.

00:01:35 Chris Dillon

Thank you, Blerina.

Caleb Fritz, who I just mentioned, who is also...I'm wearing
a purple tie… Caleb is wearing a purple tie—that's on purpose. Getting back to
political bias and just talking about markets here. Caleb is a portfolio
specialist in the U.S. Equity Division, supporting large-cap value strategies.
He'll be discussing equity markets, obviously, and election results; what that
means, what that could mean going forward into 2025. Caleb, I know you've been
busy as well. Thank you so much for joining.

00:02:01 Caleb Fritz

It’s great to be here, Chris. Thank you.

00:02:03 Chris Dillon

Thank you, Caleb.

Lindsay Theodore, thought leadership senior manager in our Individual
Investors Division. She'll offer her views on how the election results could
impact investors from a personal finance perspective. I know you've been busy.
Everybody's busy. Lindsay, thank you so much for being here today.

00:02:19 Lindsay Theodore

Thank you, Chris. It’s a pleasure.

00:02:21 Chris Dillon

We have a lot of ground to cover and not a lot of time to
cover it. Again, a daunting task. No political bias here, just markets and an
election that just happened with a pretty clean mandate.

Blerina, let's begin with you. Fiscal and monetary policy certainly
influences the direction of the U.S. economy, which can be influenced by the
White House, which we are, where we are experiencing a change, a material change.

Could you please explain your view of the economy and Fed
policy, where you were, and how has your view been impacted by the results that
just came in overnight? Blerina, would be great to get your perspective.

00:02:54 Blerina Uruçi

Of course, as I said, thanks for having me here. It's great
to have this discussion in real time: the day after elections. So, I would say,
as far as the outlook for the U.S. economy is concerned, where we started, the
initial conditions matter a lot. So, what do I mean by that? I think we,
fundamentally, we have a resilient economy. Look at what has been happening
with the labor market since the summer. We had a bit of softness in employment
growth and an uptick in the unemployment rate, but that has been reversed with
recent prints. Of course, October was affected by weather. But we have a historically
low unemployment rate. We have employment growth at about 150K to 170K per
month, which is higher than the prepandemic pace of adding jobs. The economy is
growing at about 3% annualized growth per quarter.

Again, if you look at economic models of where equilibrium
growth is, they'll tell you somewhere around 1.5% to 2%. So, we're growing
above potential. We have a resilient labor market and, on top of that, we have
a Fed that is easing monetary policy because it thinks we've made sufficient
progress toward bringing inflation toward 2%. So, it feels like, from a
business cycle perspective, where rates might have been overly restrictive
earlier in the year, we've now moved to a better place, especially if you take
into account that the market is pricing in rate cuts ahead of the Fed actually
implementing them.

So, we've had easier financial conditions supporting growth
and now with this election and Donald Trump, the future president. I think we
have an administration that probably brings more uncertainty about the economic
outlook and why do I highlight uncertainty? I think Trump is certainly a more
disruptive president than Kamala Harris would have been, viewed as a
continuation of a Biden administration. And the areas in which I think Trump
can be more disruptive and bring new policies into the picture are trade,
immigration, and foreign relations. And then I think it's important to try and
think how could they influence inflation and growth because that's what's going
to matter for future monetary policy. When we think about the effect on
inflation, tariffs would, on net, have a small positive effect, but I think a
lot of this would depend on how much is passed through to consumers and how
much the U.S. dollar appreciates in return, which we noticed during the last
round of tariffs.

Immigration, I think on net could also put outward pressure
on wages, and that could be inflationary. But again, here it depends on how
immigration reform is implemented, how quickly it comes into place and stops
the flow of net migrants and the effect that it has on labor supply.

Now on the growth side, the picture is more nuanced because
both tariffs and immigration can lower growth on net because of the effect on
inflation, it lowers real disposable income, but then some of the other pillars
of Trump policy have been lower taxes and deregulation, and those factors can
offset some of the downside to growth from tariffs.

So, as you can see, before we know the specifics of the
pillars of policy, there is still a high degree of uncertainty, but I think
change is coming from January and I think market pricing today is reflecting
that.

00:06:38 Chris Dillon

Rapid change with rates. I'm going to talk about that from
my fixed income seat.

Solid economy, tight labor markets potentially getting
tighter with immigration reform. This is good segue to come over to you, Caleb.
So, you bring a unique perspective. We talked about your role as a specialist
on the equity side, value investing, specific regard to large-cap value.

I think maybe it's a way to attack this, Caleb, but what
were the primary themes your team was focused on: pre-election, now we had an election,
and we have a mandate. Have those views changed because of the election? We
just heard from Blerina on the economy— rock solid; uncertainty for next year. It
would be good to get your take.

00:07:15 Caleb Fritz

Yeah. Thanks, Chris. I think the short answer is that not
much in terms of the long-term view has really changed, and maybe our long-term
views are actually enhanced by what is likely to come from the Trump
administration. So let me be clear about that. I want to just  acknowledge that we're having a strong move
in the equity market today, and a lot of times, what you see is, you know,
campaign rhetoric does not actually match policy. And the moves that we see
around an election tend to fade over time.

So, I think we have to kind of be cautious here in the near
term of overinterpreting the results, and the near term is probably going to be
pretty volatile. That's why it's important, in our view, to be long-term-oriented.
And when we think about the long term and the value space, the simple view is
that we believe the next 10 years are going to be very different from the past 10.
And if you think about these past 10 years in the equity market, they were
characterized by really low inflation, you know, low interest rates, low
commodity prices, tepid economic growth.

And when we look out into the future, we see that changing
in ways that probably are going to be impactful to market leadership. That
environment I described, that post-GFC environment, was very good for growth
investing. If you were a company that was able to grow faster than the economic
conditions suggested you should, you really got a lot of attention. So, growth
really earned that strong market over the last 10 years. But going forward, we
just see things changing.

And it kind of comes back to what Blerina was talking about.
There's just, in our view, more inflationary pressures in the global economy.
When we look around the world, we see companies reorienting their supply
chains. Some of that's because of the tariffs that were back in 2017. But some
of it has to do with COVID and the impacts that that had on supply chains. We
see countries developing policies to protect their own industry and kind of
favor their own production. So, globalization, you know, maybe is not going
away, obviously, but maybe it has peaked in this era. When we look at the U.S.,
we see structural imbalances in labor that would put upward pressure on wage
prices. We also see a fiscal policy that's very profligate. That's likely
leading to higher interest rates over time. So, a very different environment,
and that is even before you think about commodities.

We have a view on the value team that commodity prices are
likely to be higher over the next 10 years. Some of that is because of
underinvestment in key commodities, but a lot of that is because of
productivity and oil and gas that's really breaking down. So, we put it all
together. Central banks are going to have to contend, in our view, including
the Fed with bouts of inflation over the next 10 years, and that means interest
rates are probably going to be higher and you think about who benefits from
that. Well, there're some sectors that really benefit fundamentally from higher
interest rates, higher inflation. Those are often found in the value world:
financials, energy, materials, etc.

So, when we put all that together, we just think the
environment is going to be, you know, more competitive for value from here,
relative to growth. This certainly is not an endorsement to sell all your
growth, by no means; you want to have a balance of value and growth, but value
could be more competitive from here. And when we look at the outcome of this
election—and we'll talk about this in more detail—you know nothing about this
election kind of changes that long-term view, and, if anything, it actually
enhances that a bit.

So that's what I think on equity. Chris, I'd like to turn
this same question to you, as a fixed income expert. What about the selection
changes, the themes and fixed income marketplace, and how we implement that at
T. Rowe Price?

00:10:18 Chris Dillon

So, I guess a couple of things. Blerina touched on it.
Caleb, you touched on it a bit. But solid economy, along with really good
corporate management during the past decade or so, means the fundamentals of
the corporate space on the credit side are really good, and that is reflected
in markets. So, you know spreads, if you will, that's the extra yield that you
get from corporates versus equivalent maturity U.S. Treasuries, historically
tight levels, investment grade, as well as below investment-grade credit.

I think our task in fixed income has been how to stay
invested, but if the narrative were to change to not participate in downside,
given how tight that that spread scenario in the market is right now. I think
the second part of this would be rate volatility. Blerina, you've touched on it.
The Fed cut interest rates 50 basis points in September. In mid-September, the
10-year Treasury yield was about 3.65%. Walking into this studio today and
addressing you, that 10-year Treasury yield is 4.40%.

The Federal Reserve and their policy, they control the front
end of the yield curve, but it is really supply and demand out the curve. What
the global investors do or think about that, what do U.S. bank executives think
about U.S. Treasuries on their balance sheet, and how are they interpreting
that? So, rate volatility pretty high in this environment that is getting
figured out in the market right now and with things that Blerina was saying
about inflation. Caleb, you mentioned inflation. You know, some tension with
regard to a change in stance, not a continuation of where we've been.

Yeah, we've got questions for next year. I would say a
conservative approach here from duration is where the platform was coming into
the election being shorter duration than what you get from the conventional
benchmark. I think we're letting the dust settle here, but I think, Blerina,
I've heard you say in recent meetings that the Fed isn't really going to gauge
everything and have a handle on this and voice policy maybe until March of
2025. So, there's this wait-and-see period. Markets are, and if you're going to
say something—

00:12:15 Blerina Uruçi

Yeah, I mean, I'm happy to jump in and say as far as the Fed
is concerned, the way they operate is they want to opine and make forecasts
based on existing or preannounced policies. So, they'll take fiscal as it is
today. They won't make assumptions about what a new Trump administration might
implement.

So, in that sense, they will wait until January to see the
executive orders, to see legislative action. March could be the earliest when
they update their strategy. And so, in this way, I think they set themselves up
to be a bit behind the curve if we're going to have a reflationary period following
this election.

00:12:54 Chris Dillon

Thanks for tying in, Blerina, and I think, just to finish
the three points, Caleb, on your question that I wanted to bring up in terms of
fixed income investing in this environment, you know, the last thing would be
the concept of the neutral fed funds rate. What should the fed funds policy
rate be if everything is just right? What I mean by everything being just right
is, right now, the economy—Blerina, you said—it is growing about 2.5% to 3%.

It feels pretty good. Unemployment rate around 4%. What's
the Fed’s mandate? Full employment price stability. So, check both boxes for
the Fed. That feels about just right. Before the pandemic, the Fed told us that
just right, if you have things just right, and that's where we are right now,
then a neutral fed funds rate—or what they call r-star—should be about 2.5%.

Much has changed since late 2019. It's a less globalized
world, and it may be that a Trump administration, more of an isolationist
approach, may even be less globalized relative to our understanding. So, this
search for a neutral fed funds rate? Markets were thinking, and when that 10-year
Treasury load was 3.65%, that Fed funds was on its way to this neutral fed funds
of a pre-pandemic understanding.

That understanding is changing, so I think, Caleb, it's
tight credit spreads, it's rate volatility and then this search for r-star.
It’s interesting in that a two-year Treasury yield right now yielding around
4.2% is giving a precursor to where fed funds may land here at some point. And
then the yield curve builds from there. So, a lot of moving parts in fixed
income.

Lindsay, you're sitting here, and you have a lot of good
things to say. Let's get you into this conversation. So, elections are
emotional events. This election is certainly no exception from that, this
perspective. Your finger’s on the pulse of individual investors in your role. What
expectations do you have for investors right now, in the wake of yesterday's
election, and then, you know, also into 2025?

00:14:43 Lindsay Theodore

Sure.

Elections are emotional, aren't they? Yeah, I'd say, you
know, clients are just like Americans. They tend to believe that if their
candidate, if the candidate they support, doesn't win, that the outcome will be
devastating. But luckily—as Blerina was saying, as Caleb, you've said—for the
economy and markets, this is typically not the case. 

I think for the 48% of investors who might be watching this,
who are disappointed or feeling uneasy about the election results, they should
rest assured that the markets, by and large, are not partisan. Listen, so it's
easier said than done, but I would encourage investors to separate their
feelings from their finances, at least in the short term and until we have a
better sense of what this next Trump administration and Congress will actually
seek to accomplish in office, as you all were saying.

I'd also point out that, with regard to critical pieces of
legislation—like the Tax Cuts and Jobs Act, the Affordable Care Act, the
Inflation Reduction Act (IRA)—both parties do have an incentive to keep popular
aspects of those bills intact. For instance, many of the provisions in the Tax Cuts
and Jobs Act (the TCJA) are set to expire—or were—at the end of 2025. We don't
know exactly how the House is going to look, but it is likely the members who were
elected yesterday are going to be running for reelection in 2026. And the last
thing most House members want to do is run on raising taxes for most of their
constituents because they opted to do nothing. So, it is looking more likely
that that legislation could be extended.

And then the Inflation Reduction Act has had an impact, I
think, Caleb, you mentioned on energy, but it also had parts of it that were
aimed to lower drug costs for seniors. That included placing a $2,000 cap on
annual out-of-pocket costs for drugs, and that's set to take effect next year.
And it also, negotiations took place, lower prices on the first 10 sets of
drugs that are widely used. Those lower prices are set to go into effect in
2026. Now these lower prices could save seniors $1.5 billion in out-of-pocket
costs and could save Medicare 22% on Medicare Part D expenses. So, while a lot
of Republicans did run on repealing the IRA, they might think twice about
repealing those aspects of the bill.

So, these are just examples of parts of legislation that were
passed by previous Republican administrations and Democratic administrations
that, you know, there might be some merit to keeping them. Of course, any
extensions will need to be matched with budget cuts or else will be further
expanding the deficit, which I know we’ll touch on a little bit.

But best thing investors can do is try their best to
separate their kind of feelings or fears from their financial decisions, at
least in the near term.

00:17:25 Chris Dillon

Thanks, Lindsay. Lindsay, you touched on something. I gave
my three perspectives on fixed income, the second of which was rate volatility.
But you just nuanced right through it, and you said politicians don't like to
run on a platform of raising taxes. So, debt sustainability in the U.S. is part
of that rate and vol conversation. Wanted to add that I love that you brought
that.

00:17:44 Lindsay Theodore

Yeah.

00:17:45 Chris Dillon

Blerina and Caleb, let's come back to you. We now have a
very different administration. We've been talking about this, and we've hit on
aspects of the question that comes here, but there's a lot to unpack. So, the
different regime coming, the White House in January in terms of economic
agenda, administration now has support of the Senate, possibly even the House. We’ll
know those results soon.

This is a mandate, make no mistake about it, this was not as
close an election as everybody was predicting. How does this definitive mandate—and
I think we can call it a definitive mandate with or without the House—represent
an additional wild card for your areas of expertise? I think Blerina, the
economy, good; let's start there. And then for Caleb, on value investing.

00:18:24 Blerina Uruçi

So, I would say for this question, I'm going to be a two-handed
economist. So, assuming we have a sweep, a Republican sweep. So, on the one
hand, this can be concerning for investors because we have less checks and
balances.

Point in case, here would be the deficit. It's already wide.
What if we get measures that reduce revenues from taxes but don't do anything
to address spending, and so then we end up with wider deficits and with debt on
a trajectory that is not sustainable. Add to that the fact that we are all here
discussing how we're in a world of higher-for-longer rates. That means that debt
servicing costs will be elevated as well. So, it does raise concerns. So,
that's the one hand.

The other hand is that whenever you have this kind of
mandate and a sweep, then you can get more done. You can have your legislative
priorities pushed through Congress. So, I think this could be good as we look
at the extension of the business cycle and continuing the recovery because we
discussed already tariffs. Inflation could have some dampening effects on
growth, but if the Republicans prioritize tax cuts and providing deregulation
pushing through this kind of legislative action in the first 100 days, let's
say, I think that kind of sets some of the softness and drag to growth from
those other measures. So, I think thinking carefully about the implications of
a sweep is important and also figuring out what ways we can provide checks and
balances beyond the fact that we now have a sweep in Congress and the presidency.

00:20:14 Caleb Fritz

Yeah. And I think you know the equity market today is
pricing in some of that optimism about economic growth for sure. Of course, I
think I would focus on three different sectors in response to this question. If
you have a more of an unfettered agenda, you can get through some of these
things. I think industrials, energy, and financials are a place to pay some
attention.

In industrials, we're seeing this kind of happen today. I
think there's two things that matter very much for industrials: it's tariffs
and trade policy to the extent you get a broad tariff that you know, maybe
still is fairly low likelihood, but certainly pointed tariffs on particular
countries. If you have a global supply chain, if your industry with a global
supply chain, you can actually see that bifurcation happening in the market
today, those that have that are down a bit. Those that don't are in better
shape. So, the market is going to sort that out a little bit. The Inflation
Reduction Act, Lindsay, you mentioned that. I think that, you know, is impactful
to both industrials and to energy. But in industrials, a lot of companies there
have been involved in some of those big projects that are somewhat underway. So,
you know, to the extent that you know politicians don't want to disappoint
their constituents, maybe some of those things are overstated how much they're
going to cut those tax credits cause there're actually jobs created with them,
but something to pay attention to for industrials.

Energy is a space that, in the value world, we really liked
coming into this election. I think we like it as much or maybe even more today,
post the election. And it's not really so much about policy, although policy
will matter. What really matters for energy over time and commodities in
general is technology and productivity. And, so, we've been in an environment
for commodities for a long time where we've had technological changes unlock
capacity, and shale was really the big revolution that created more capacity
and natural gas and oil. That creates a, you know, more productive use of
capital. You can get more out of the ground for less capital. We see that
breaking down, and that's a big driver of long-term commodity cycles. And, so,
when that productivity breaks down, we think that's going to put upward
pressure on both natural gas and oil that's going to happen regardless of who's
in the White House. Policy can be important here, right? You will probably see
under the Trump administration, you know, easier permitting, maybe less
regulation. That's going to be in these stocks as well, but what's going to
drive them is tech and productivity.

And then the last, the last area, another area probably a
little bit of a, I would say maybe muscle memory from the first time Trump was
elected, is we have banks that are really rallying today. And some of this is I
think tied to optimism about the economy. You know, maybe having another leg of
growth to it. So that would impact the yield curve, if we have a steeper yield
curve, that's very good for banks. Some of that's probably why we're seeing
this reaction.

But the last one is probably about deregulation. So, there's
probably a deregulation theme across the economy and financials were kind of
always in the crosshairs. I would argue, a deregulation theme kind of already
happening in financials before this election, so it probably would have
continued under a Harris administration to some extent, but it's going to be a
lot, probably a lot easier under a Trump administration. So, the market’s
pricing that in. One word of caution though on banks is they're up. The KBW
Bank Index is up 40% year to date. So, you know it's one thing to kind of get
excited about what's going to happen here. We also have to think about what's
already been priced in. So, I think you know, we have to keep all these things
in mind.

But Chris, that's how I'd answer, you know, with more
unfettered kind of interaction between executive and legislative branches. I
think those areas.

00:23:31 Chris Dillon

Great perspective, Caleb, and I think your point is taken.
You didn't say it this way, but I'll say it this way. Markets anticipate: they
trade ahead. That powerful perspective on financials and you think about
financials and think about connecting dots relative to the things that we
talked about. If it's fed funds around 4, 4.25, and the yield curve builds from
there. It wasn't too long ago we had a regional bank crisis.

So you have valuations, so things are up, but off of a low
valuation. Interesting to hear your perspective, Caleb. Industrials. If it's onshoring,
nearshoring, friendshoring, a less globalized world, certainly a tailwind for
that part of the world. And I think of the energy space and not just on the
equity side but in below investment-grade credit, a historic troublemaker in
the high yield markets. Not anymore. All of that changed in the mid-2010s to
2020.  I would say our high yield team,
overweight energy in a big way. So pretty powerful perspective equity below
investment grade connected on that point.

Lindsay, let's come back to you, we mentioned debt
sustainability. So, debt to GDP in the U.S. Today, worse than it was coming out
of World War II. It's an indirect way of saying that taxes are certain to
represent a future issue, even though politicians don't want to run on that
platform. And I don't blame them.

With that said, is the individual investor, with your finger
on the pulse of this underlying investor, are they worried about taxes? Should
they be? Maybe not a fair question, but I'm going to throw it to you anyway.

00:24:47 Lindsay Theodore

Individual investors are always worried about taxes, but I
think they're less worried today than they were yesterday, partly because the
TCJA is likely to be extended, or at least many of the provisions. But you
know, lawmakers have always faced a difficult balancing act between managing
the deficit, you know, making sure corporations can grow their profits, and
then making life easier for everyday Americans.

In the last 25 years, Blerina can probably attest, many of
the decisions that were made, like regardless of party, right or wrong, were
made with very little regard for the deficit. And, eventually, the money needs
to come from somewhere. It could come from increased taxes or reduced benefits
through programs like Medicare or Social Security. Both of those solutions,
surprise, surprise, are very unpopular. It could come naturally through
population growth and just having more workers, you know, earning money,
spending money in our economy, paying taxes, but like many wealthy nations, our
birth rates are dropping. And immigration, it's become a hotly contested issue,
as you all know.

So, I think that any serious efforts to tackle the deficit
will require some really difficult compromises, and not everyone will be
thrilled with the impact on them, especially if it's maybe some higher taxes.
Anecdotally, though, when I ask clients, do you think tax rates will be higher
or lower in 20 years? Most say higher.

And yet like, just as every temporary tax cut tends to
become permanent, most investors, when they put money away in their 401(k) and max
it out if they're able to, they often choose to put it away in pretax dollars
versus Roth and especially in their peak earning years. And that's because,
today, they'd rather have more money in their pockets than pay a major tax bill
in April. So, the “kick the can down the road” mentality is certainly not
reserved for our friends in Washington. It's human nature. But I think that it
could become a reality that taxes might need to go up, probably not in the near
term, based on the election results. But at some point, so as that policy comes
together, we would encourage investors to talk to their financial professional
about their investment strategy and any impacts on their plan.

00:26:35 Chris Dillon

Not investment advice, but it is a powerful message embedded
in what you just said around Roth IRA, where you don't have the taxes down the
road or even like converting your 401(k) to Roth. Those are things that are on
the table. We don't know when, but it's certainly based on where we are.

00:27:05 Lindsay Theodore

Yeah. Right. Tax rate might have to go up, right?

00:27:06 Chris Dillon

Sometime, some great perspective.

With us coming up on time, we've got a couple more
questions. Get some final thoughts. But Blerina, Caleb, let's come back and
we've hit on some of these things. But away from Congress, it's about executive
authority. The president has executive authority to materially influence—Blerina,
you've talked about it: Tariffs, immigration policy, foreign policy. It's
President Trump, as the next president of the United States, how can these three
levers at his disposal?

Anything else that we haven't touched upon, with tariffs,
immigration, foreign policy that we haven't hit on that matters, Blerina?

00:27:41 Blerina Uruçi

So, I guess one thing that we should discuss is making a
distinction between what can be done for tariffs or immigration reform with
executive order and with legislative priorities. So, the way I'm thinking about
the first 100 days of a Trump administration is that you'll want to do
something on all those three areas: immigration, tariffs, and taxes. So, then I
think he's going to use executive power for tariffs, such as section 301 tariffs.
Most likely start to
focus on intermediate goods before shifting down the line to consumer goods
that impact inflation.

But I do think that if we wanted to remove most favored
nations trading partner status for China, we need legislative action for that.
If we wanted tariffs of 10% across the board for all our trading partners,
again, we need legislative action similar for executive orders for borders,
similar to what Biden did in the middle of the year. But if we wanted
comprehensive immigration reform, which I think we need, given a declining
population growth, aging population, and pressure on labor force, I think for
that we need legislative action.

So, I think Trump, however, will take executive actions on
these two areas in the first 100 days, then down the road, maybe there will be
bipartisan action, highly doubted on trade, but maybe on immigration, there
will be more common ground. And then when it comes to TCJA, the extension I
think that's going to be the priority for Congress in those 100 days.

00:29:24 Chris Dillon

So those first 100 days, we talked about the Fed wanting
things to crystallize, dust to settle, March of next year. Blerina, it's not
really a question, but I anticipate you're going to be busy early next season.
Q1 just sounds like it.

00:29:38 Blerina Uruçi

Possibly.

00:29:40 Chris Dillon

Anything that Blerina just revealed there, Caleb, that you
haven't touched on yet because I love the financials, the industrials, the
energy; great perspective on those primary sectors. But anything we've missed?

00:29:50 Caleb Fritz

When I said at the beginning of this conversation that, you
know, if anything, the election of Trump enhances our long-term views, this is
kind of what I was talking about.

I hear, you know, I hear tariffs. I hear, you know, maybe
different labor policies and/or, sorry, immigration policies. And I think
inflation. I think that's in adding inflationary pressure. So, if anything, it
does kind of lend some credence to our views in the long term. The devil will
always be in the details, and so we have to pay attention to that, but I think
at the end of day, Chris, it probably just enhances that idea that over the
next 10 years, value should be more competitive with growth and you want to
have that balance between the two.

00:30:25 Chris Dillon

So, it used to be, and this is going to be a pun at the end
of this discussion. The market used to have very bad breadth and appearing to
now have much better breadth.

You, on the value side, representing that very well. Multi-asset
at T. Rowe Price, they split the difference leaning a little bit to value
better market breadth. This election, I think, helps drive that outcome.

Lindsay, how about for you? Any final thoughts, as I'm going
to take those as final thoughts for Caleb and Blerina—and I can't thank you
both enough for being here, as well as you, Lindsay. Any final thoughts?

00:30:56 Lindsay Theodore

A few but I think that if there is a full Republican sweep
of Congress, perhaps they could take a look at some of the mandatory spending
programs, which make up two-thirds of our budget, and
that's Social Security and Medicare are included there. We do need reforms in
order to shore up the system and continue paying those checks within the next 10
years. We'll need to shore up the system. So, with this full mandate, maybe
they can take some action to shore up and make it on a more sustainable footing
going forward and reduce the deficit in the run, but, and again, that's my
hope, but who knows?

But for individual investors, again, if you came into this
election with a solid financial plan and diversified investment portfolio, it
is likely several years from now, you'll be in the same strong financial
position. So don't take any actions based on your feelings at this time. Wait
and see. You know, the devil’s in the details on policy, and then talk to your
financial professional about impacts and planning.

00:31:54 Chris Dillon

I'll say one final thing from the fixed income perspective,
this is a time for active management in fixed income. I talked about rate
volatility today. A 10-year Treasury yield that was 3.65% in mid-September is
now 4.40%. That is not an enjoyable total return ride for investors involved
with fixed income. There's going to be a great opportunity to invest in fixed
income as rates reset higher here. It was this time last year that a 10-year
Treasury yield was around 5.00%.

Things changed and we came down to that lower level with a three-handle
on it, but now we're back. It's rate volatility. This is a time for active
management in fixed income and that's where I think T. Rowe Price is a really
good positive advantage for us as we move into 2025.

Blerina Uruçi, chief economist T. Rowe Price. Very busy.
Thank you so much for being here today. Thanks.

00:32:40 Blerina Uruçi

Thanks for having me.

00:32:45 Chris Dillon

Caleb Fritz, value investing. Thank you for that great
perspective.

Lindsay Theodore, thank you.

Thanks everybody. This wraps up our discussion today in the
2024 U.S. election update. I think we're all happy. And this isn't any biased
conversation in terms of the outcome of the election, but this is a pretty
clean mandate. And we've had a chance to have a good discussion because of it.
We've packed a lot into our discussion today.

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