Matt Egan on the Latest Market Trends: Interest Rates, Inflation, and Meme Stocks

Matt Egan (00:00)

Of course, the question is whether or not we're actually going to get lower interest rates. And coming into this year, there were some estimates that there'd be up to six rate cuts.

Gene Marks (00:09)

I remember, I remember.

Matt Egan (00:10)

And now it's an open question whether or not there's going to be one interest rate cut. And that's all because inflation has been a lot more stubborn than people had anticipated and the Fed has had to sort of delay when they can start lowering interest rates. I was looking earlier today, and the market's pricing in about a 70% chance of at least one interest rate cut by September, which, by the way, is the last meeting before the election.

Announcer (00:42)

Welcome to Paychex THRIVE, a Business Podcast where you'll hear timely insights to help you navigate marketplace dynamics and propel your business forward. Here's your host, Gene Marks.

Gene Marks (00:57)

Hey, everybody, it's Gene Marks. And welcome back for another episode of the Paychex THRIVE podcast. Thank you so much for joining me. We have Matt Egan back with us here. Matt is business reporter for CNN. He spoke with us before a number of months ago. We're really happy to have him back. Matt, first of all, thank you so much for joining.

Matt Egan (01:15)

Yeah, Gene, thanks for doing it. I loved the conversation last time. So happy to have to do it again.

Gene Marks (01:20)

Yeah, got a lot of action. A lot of people are interested in what you have to say. I mean, you were right in the thick of what's going on in business and the economy. And it's, you know, it's of interest to so many people. And it's cool that you're covering this. Today as we're speaking, the Dow hit 40,000, which is, do you remember, like back in, listen, I don't even know, like, where you were in 2008 or 2009 when like, the world was exploding. And I remember the market fell to like 6,500 at that point, you know, and it's at 40,000 today. It's great. Do you remember that?

Matt Egan (01:54)

I do remember that. I was actually covering the stock market. I was a digital market reporter, so I remember it vividly. And it is important to just kind of think about how far the market has come because you're right. I mean, the Dow went below 7,000. There were real fears about the actual collapse of the financial system. I mean, as it was, so many people lost their jobs, so many companies went under. It took unprecedented rescues from the Federal Reserve, from Congress to bail out the big Wall Street banks and various other companies. So, the fact that the market has gone up 33,000 points from that March '09 low after the months after the collapse of Lehman Brothers is amazing. And I'd add a little bit more context to that just four years ago, March of 2020, that the markets were in free fall. And we actually saw at that point the Dow go below 19,000. So, the market has actually doubled, just the COVID lows from four years ago.

Gene Marks (03:03)

Why do you think that is? I mean, you cover it. What do you think is going on?

Matt Egan (03:07)

Well, the fact that markets doubled from the scariest health crisis in a century is one thing. I mean, some of those fears were legitimate. Some of it maybe had been overdone worries about a financial crisis of COVID financial crisis and a COVID depression. And thankfully that didn't happen. But there was a real recession and then the market rebounded. The economy rebounded out of the COVID recession. And then, of course, we had inflation. And inflation is what caused the markets to go through another panic-type situation two and a half years ago as the Fed started to lob these massive interest rate hikes, right? I mean, the biggest since the Volcker days of the eighties and all of that trying to put out this inflation fire. And I think the fact that the market is now at record highs shows that there is some renewed optimism that maybe the Fed can actually pull this off. Not only will they not have this recession that people fear, but maybe they can pull off a soft landing where the economy continues to grow, where unemployment doesn't spike. And the best part would be where inflation goes back to normal. Now, we're not there yet, but this market milestone that we're talking about today is a reflection of some confidence in the soft land.

Gene Marks (04:30)

Sure. We talk about 40,000, we're talking about the Dow. Correct. Which are like the 30 stocks that are supposedly, some people argue that the Dow is just antiquated. It's really not such a great measure of the stock market anymore. I mean, what are your thoughts on that?

Matt Egan (04:46)

Yeah, well, they're right. It's just 30 stocks. It's been called the dumbest of all of the stock market indexes. They're all large companies. It's also price-weighted. It's not market value-weighted, which doesn't totally make sense. And so when you talk to professional traders, market strategists, technicians, economists, they often don't even know where the Dow is trading because they're not looking at it. They're looking at S&P 500. That's a broader measure of the stock market. 500 companies, more diversified, smaller ones, middle-sized ones, large companies. The Nasdaq as well obviously gets a lot of attention. But hey, it's worth pointing out that the S&P and the Nasdaq, they're also at record highs. This is not some anomaly with the Dow. Not only that, but the 30 companies that are in the Dow, these are American brands. Like the most American brands, right? Apple, Amazon, JP Morgan, Disney, McDonald's, Chevron, you name it, big American corporations are in the Dow. And so the fact that the Dow is at 40,000 means that this is really a bet on America, right? It's a bet on the American economy. And that does mean something. Although I get why people prefer to look at the S&P 500. But listen, I mean, the average American, if you ask them, you say something to them about the Dow, that means the stock market to them. I mean, this is arguably the most well-recognized indicator of the market on the planet, right?

Gene Marks (06:20)

It has such a huge impact on the economy. And people, I don't think people appreciate the stock market itself. When you read the news that you and I report on, there's so much bad news that's out there. So, when you hear that the markets are going up, it's like the one good thing that cheers people up, because then they can look at their investment statements, their retirement accounts. It just has that. And the economy is so about psychology, isn't it? It's all about expectations. And when consumers feel richer, you feel like, well, now that the Dow is up, we can keep going out and spending. I mean, do you agree with that?

Matt Egan (06:59)

Absolutely. There is a psychological element to all of this. Inflation is psychological. But the market and market milestones, that's also psychological. There is a confidence factor there, right? It's a confidence factor for consumers because talking about 58% of us households that own stocks either directly or indirectly through their 401(k)s and retirement plans. So, you're not supposed to look at your 401(k), your retirement plan, every day, certainly not every hour, although I have some friends who do that. I wouldn't recommend it. But every once in a while, if you take a peek and you see that, oh, you have more money than you did last quarter or last year or two years ago, or you remember how little you had during the COVID lows, that's a good thing because it does inspire some confidence. And people could go out and maybe that makes them go and take that extra vacation or go out to eat or buy that car. Hopefully, they're doing it responsibly. But there is a confidence factor. But there's also a confidence factor for business owners, too. And CEO's. Because if they see that the Dow's at 40,000 or the S&P 500 is at a record high, that also is going to likely inspire a little bit more confidence on their parts. Maybe they're going to open that next restaurant or they're going to open that factory. They're going to hire those workers. They're going to spend that extra million dollars on a new technology system. And I would also point out that the opposite is true. When there's a market crash and sometimes that's overdone, that is something that's scary. And it does have an impact in terms of people maybe deciding not to spend money, maybe encouraging some of those bosses to lay off those workers. So, it cuts both ways. And you don't want to see the market, of course, go straight up. That wouldn't be a good thing. That hasn't happened right now, and I don't think that that's a major concern right now. So, you don't want to see it overdone. But a steady rise in the market to new highs, that's a good thing. And that's a better feeling, of course, than when you see markets go straight down.

Gene Marks (09:03)

I was talking to a money manager recently on this podcast. I told the story, but I have to tell it to you again. A thousand years ago, when I was, I was at KPMG for like nine years, and then I was a controller of a publicly held company, right? And we were a biotech company. This company's long gone, by the way, but anyway, it's a biotech company, publicly held. We had about 100 employees, and we were all about developing. We were developing pharmaceuticals. And we had one big drug that was in, you know, clinical trials at the time, right? So, we were waiting for the results of this trial, and we knew obviously, the results were positive. The stock would skyrocket if it was, it was negative, not so much. The results came back and it was a failure. So, the drug did not do well in the trials. So, the reason why I'm telling you this story is because I was the controller. There was a CFO, there was a CEO of the company. We had a list of our institutional investors in this company, the biggest big funds, Fidelity, Magellan, whoever it was. We divided up the list. And then the three of us, the next morning, like 10 minutes before the market opened, which was within the window that was allowed, we personally called these people at home in their beds and told them clinical trials came out. Yesterday, results were bad. Just thought you'd like to know. And of course, within a minute of the market opening, they dumped the stock. I mean, the whole goal, the whole point was we're looking after these investors, so hopefully, they'll be back for another round. So, they dumped their stock, and meanwhile, the average investor, me, you, me, people... By the time they woke up and saw what happened, the stock had already lost 50% of its value. You know, so I ask you that question again. Our audience are business owners. We have confidence in our own companies. We are wary of companies that are not managed by us or on the stock market. Do you have a sense that that kind of stuff still goes on? The old boy market, the Wall Street people, they all play squash together, they all do shots together on Friday night, that it's for the individual investor, it's really like a gamble when you invest in stocks. For some of the reasons I just gave. I was curious what your responses to that story and what your thoughts are.

Matt Egan (11:18)

Yeah, I think that there is a sense that, that clubby nature still exists, and I do think that that's a frustration that some average investors and business owners have. Um, it's, it's, it's a hard thing to quantify. Uh, obviously, insider trading is still a thing. We're still reporting on instances of people getting charged and arrested and convicted for insider trading. That, of course, is, is still a problem. And it's the kind of thing that would be hard to completely eliminate from an average investor standpoint. Uh, that's one of the advantages to playing in more vanilla investment products by just betting on mutual funds and ETFs, because you remove some of that single stock risk, not only of being left out of the inside knowledge that sometimes gets exchanged, but also the single stock risk that you were referring to with your biotech company, where sometimes the company that you're betting on may have a failure of either in research or a cyber event or a bad product launch, and then you end up getting hurt there. So that is one of the advantages, if you're not a professional, to taking a sort of broader view on things, because you lose out on some of those, you get to avoid some of those negatives. Of course, you also avoid some of the positives, right? Because if you have Tesla, let's say, well, Tesla's a bad example this year, but if you had Nvidia in your stock market portfolio from two years ago, you're doing amazing. If you had it as part of your broader ETF that owned tech stocks, you're doing well, but not as well as you would, of course, if you owned it individually.

Gene Marks (13:00)

Fair enough. How about the media, Matt? I've always been curious about this. I mean, we rely so much on your reporting, which is great. And there are other business people in the media that report on the markets. And again, if you don't want to share this, this is fine. But I'm just curious, are there any rules, whether it's a CNN or other place, you've been about investing for yourself if you're covering these companies or are you allowed to pretty much invest wherever you want, personally?

Matt Egan (13:28)

Yeah. No, CNN does have tough standards. We take it very seriously. There's lots of different rules about who can own stocks, particularly people who cover business. We have restrictions over what we can do, certainly not able to make risky bets and options or anything like that. So, it is something that we take seriously also because we're doing reporting that can sometimes move markets, which is why it's very important. Sometimes we're doing investigations where colleagues of ours are doing investigations that relate to or directly implicate public companies. So, we take all of that very seriously. And I think it gets to the broader point of trust in the media. I mean, we want to be able to be looked at as sort of the referees who can sort of explain things. And I mean, I look at myself as someone who just kind of calls balls and strikes. I don't, you know, I don't have any favorites in companies or political parties or anything like that. We're going to call it like we see it as far as what policies mean for companies and what the companies and their strategies mean for investors.

Gene Marks (14:42)

Okay, back to stocks. That's very, very helpful, by the way. Let's talk about interest rates. Obviously, when you read the stories, a lot of people pin the stock market increases to the fact that interest rates may come down. Tell us why Wall Street investors want interest rates to come down, why they think that's good for stocks.

Matt Egan (15:08)

Sure, sure. It's a great question. So lower interest rates mean less competition for stocks. Right? Because interest rates are high, it means treasuries are returning a decent amount of money and treasuries are looked at as the safest assets on the planet. So that's some real competition for risky stocks when you have treasuries at 4% or 5%. So, the whole, the way you value stocks, you have to take into account what treasuries are yielding. So that's part of the equation. It's also because when rates are lower. It means that it's cheaper to borrow, and so that makes it easier for companies to grow. It lowers the risk that companies are going to lose money and have their own financial troubles on their own balance sheet with the money that they owe. It also lowers the risk that banks are going to run into trouble because the people they lend their money to are going to go out of business or have problems of their own. Lower rates mean that it's easier for consumers. So, it means that consumers are going to be able to borrow more money, whether that's on a store credit card at Best Buy, to buy a new TV or to borrow money to buy a house. Right? And all of those have economic benefits. Lower rates also lower the chances that Americans run into financial trouble again, whether it's their own mortgages or. Of course, we talk a lot about credit card debt. And credit card debt rates are at record highs, so it's a very hard time for someone who is sitting on credit card debt and trying to pay it off. So those are some of the reasons why lower rates are generally looked at as good for the market and for the economy. Of course, the question is whether or not we're actually going to get lower interest rates. And coming into this year, there were some estimates that there'd be up to six rate cuts, I remember. And now it's an open question whether or not there's going to be one interest rate cut. And that's all because inflation has been a lot more stubborn than people had anticipated, and the Fed has had to sort of delay when they can start lowering interest rates. I was looking earlier today, and the market's pricing in about a 70% chance of at least one interest rate cut by September, which, by the way, is the last meeting before the election.

Gene Marks (17:26)

Right. Right. Which I'm not expecting to see, but we'll see if that happens. You know, when we talk about interest rates and we talk about costs for businesses, a lot of this is related to inflation. Right? So, you know, the Fed has pressure to cut interest rates, but they're keeping interest rates as high as they possibly can because they are trying to fight inflation. Right now I'm hearing two conflicting things when I speak to my clients, Matt, and when I speak to industry associations around the country. Number one is they're dealing with much, much higher costs than they were two to three years ago. I mean, people in construction, manufacturing, service industries, the cost of industrial chemicals, cement, nails, utilities significantly higher, anywhere from 15% to 50% higher. So, they're trying to grapple with that. That's one. On the other hand, they've all welcomed this reduction in annualized inflation. I mean, we're now down to, what, around a 3% level somewhere in that ballpark, which obviously is a lot less. I hear from businesses that tell me that some inflation is not a bad thing. The Fed has this target of 2% inflation, and you'd be surprised how many business owners say to me, like, 2% is actually a little low. I mean, if we were 3% to 4% every year, we can manage our businesses that way. I'm curious, you've covered this for so long, do you think some inflation is that bad a thing?

Matt Egan (18:57)

Well, I've covered it long enough to remember when the central bankers were worried there wasn't enough.

Gene Marks (19:01)

Yeah, yeah, right. Talking about stagflation and deflation. Right, right.

Matt Egan (19:05)

3.4% was the annual increase in consumer prices from the April CPI report, 3.4%. Now, if you look back, that is higher than really at any point between 2012 and 2020. There was never a time where there was 3.4, but this was actually celebrated on Wall Street and looked at as a positive sign because obviously, we don't live in a vacuum. And this is an improvement. It's an improvement from the month before for, and from the 9% inflation of two years ago.

Gene Marks (19:39)

Right.

Matt Egan (19:40)

Now, to your point about having some inflation not being a bad thing, I mean, that's true. I mean, it makes sense. I think that consumers and business owners, policymakers, they can all operate better when it's a more stable environment. So the fact that consumer prices are going up at more like a three, three and a half rate annually, and it's been kind of around there, that does represent relative stability to what we saw previously. So, I get that. The Fed, of course, they're targeting 2% inflation now. 2%, it's kind of an arbitrary number, but it's what they feel is high enough where they don't have to worry about falling prices and not so high that it starts to freak out consumers and business owners and sending expectations of inflation because it, again, it's psychological. We referenced that earlier. They don't want people to start freaking out about prices going up and up and up because that's a bad thing. But it is interesting that not long ago, people were worried about prices being too low or not going up fast enough. And that's because the one thing that the Fed really fears the most, more than inflation is deflation, because that's really hard to get out of. They don't really know how to do that. And so, they don't want inflation to ever get so low that they have to worry about deflation. Although obviously, as consumers, a lot of us, we kind of miss those prices, those pre-COVID prices, and we sort of wish that prices would literally go down because inflation, it's got this snowballing effect. Right? Even though the rate of inflation is slowed, the prices overall for the business owners and for consumers, they're so much higher than they were just a few years ago.

Gene Marks (21:23)

Yeah, they jumped so quickly that that was the shock to the system. And when people talk, I mean, they'll be like, gee, when I was buying eggs, they were so much cheaper just two years ago. That's what's on people's minds. But over time, you adjust to the price levels as to what they are, as long as they don't fluctuate significantly. And even if you build in a 3% to 3.5% inflation every year, that's a very manageable thing, both for businesses and consumers. I don't know, I just think sometimes we get the story wrong. The story isn't that inflation now is too high, it's just the huge jump so quickly is what just freaked everybody out, including the businesses. Same thing with the interest. So let me get your thoughts on that. I mean, when I was, again, I was in high school at the time when interest rates were like 18%, it was like in the early eighties or whatever, and I can't even imagine dealing with that. The prime rate right now is 8.5%. Most of my clients, when they go for loans, they're paying a couple points above that. So it's certainly significantly higher than it was compared to the 0% interest rates that were just a few years ago. But there is also a level of interest that is acceptable to most business owners that I talk to, and it's not that further south than an 8.5% prime, you know, I mean, a 5% or 6% prime is not, is manageable as long as it's just stable at that level. So, yeah. What are your thoughts?

Matt Egan (22:53)

The stability is certainly the key part of it. I think you're also getting at the fact that whether you're talking about inflation or interest rates, we're not that far off.

Gene Marks (23:03)

Right.

Matt Egan (23:03)

Kind of where we want to be. I mean, and it is moving in the right direction. When you talk about inflation now, interest rates remain high. I think that when you look at it from the perspective of someone who's trying to buy a home, I mean, that is really telling. Now, my parents bought in the early eighties when you...

Gene Marks (23:20)

I'm hoping they refinanced.

Matt Egan (23:27)

Probably a few times, but they were dealing with astronomical mortgage rates then, and they made it work because, like you said, they've able to refinance. But just the shock from mortgage rates. I mean, it's amazing. When you look at if someone bought three years ago, let's say a $500,000 home, rates were around 3%. Now they're around 7%. So, you're talking about on that same $500,000 home, an extra thousand dollars a month just on interest. And over the lifetime of the loan, that's over $300,000. Again, just in interest. Not to mention the fact that, of course, home prices have just gone up so much. But to your point about borrowing costs, as a business owner, I think that there's a lot of businesses that could live with a stable environment where rates are a little bit lower than right now. I think one of the problems though, Gene, and you know this, is that a lot of people have to refinance, so they're refinancing their debt. Some companies have loans maturing and they need to refinance that debt at such a higher rate than it was just a few years ago. And that is going to cause some problems as we go forward, especially, of course, in the commercial real estate market.

Gene Marks (24:37)

I feel that when it comes to real estate, there is this pent-up demand. I'm going on record as saying that I think there is a pent up and a potential boom in real estate, residential real estate in particular, that once interest rates do start coming down, so many people have been holding off from buying and selling their homes because of mortgage rates the way they are, that when they start heading down in a southward direction, I think we're going to be seeing a lot of activity in the residential real estate market, like a boom, and I think that will also level off prices as well, because it will level off demand and supply. But we will see. All right, we only have a few minutes left, I promise. Before we even started recording this, I had to get your thoughts. You wrote, I forget if it was a few weeks or a couple months ago, about the four-day work week. I'm not going to call you on any specifics of the piece because it's hard to remember everything that you're right, but I was kind of curious. Your thoughts background there is Bernie Sanders, and I think you wrote this around this time, he introduced legislation mandating employers to pay people for 40 hours. But they only have to work 32 hours. There are some companies that have been testing out, there are some European countries that have been testing out four-day workweek programs.  You cover business, you cover the economy. I certainly have my thoughts, particularly my thoughts on my clients. A curious thing. Do you think the four-day workweek is a thing? Do you see this happening?

Matt Egan (26:00)

I see it being talked about more and more and being looked at as a potential option down the line. We know that businesses are trying to figure out ways to fight burnout because their workers are burned out from COVID from their everyday life. And that's a problem because companies, they need to hold on to the talent they have. They need to attract more talent. And so, they're exploring a lot of different options. KPMG had a survey recently where they asked CEO's and about 30% of large us company CEO's say they are exploring new work schedule shifts, including a four day or four and a half day work week. Now, a lot of the experiments out there do have some positive results, including in Europe, like you mentioned, often they're 40 hour-work weeks, though, and it's just spread out over four days instead of five. Now, I also think it's, I mean, it's clear it's not going to work everywhere. There's some industries that really, it may not make sense, and there's other more corporate jobs, more office jobs where maybe they'll explore it. I think there's some generational issues. I think that younger folks might be a little bit more open to it than to people who've been doing the five-day workweek for 20, 30, 40 years. So, I don't know that it's something that's imminent. I talked to Paul Knopp. He's the U.S. CEO of KPMG, and he said he doesn't think this is something that's going to happen in the next few months, probably not even the next few years. But it is just interesting that businesses are even exploring this issue and that we're talking about it, because really, five years ago, I don't even know this was on the radar.

Gene Marks (27:51)

All right. Well, Matt, any other stories that you're working on, what do you think are some of the bigger stories that you think you'll be paying attention to over the next few months? Election aside, although I don't know if I can put that aside.

Matt Egan (28:03)

But, yeah, it is hard to put it aside. Well, one of the crazy things that we've been covering is this return of the meme stock, meaning where we've seen some of these companies that are struggling. Some of them are relatively small and their share prices are skyrocketing. We saw this in 2020 and 2021, around the time that a lot of people were home, stimulus checks were coming out, and we're seeing it again. GameStop and AMC, some other companies that are heavily shorted. That's been a fascinating trend, and it's also been one that is sort of related a little bit to the election, because Donald Trump's social media company, his company, Truth Social, it's owned by Trump Media, and he's the no different chairman and the leading shareholder. And that stock, that company's being valued in the billions and billions of dollars, around $10 billion, even though it generates almost no revenue, in the fourth quarter there was less than a million dollars in revenue. And it's losing money. And the true social remains relatively small. And yet the stock price has, it's been bumping around, but still it's valuing the company in the billions. And that's just been fascinating and something that really doesn't make sense. And so, we're going to continue to see how all of these companies that have been called meme stocks, how all of that plays out, because it's been, it's been a weird situation.

Gene Marks (29:38)

That all goes back to the story I told you earlier about sort of fixing the markets. I mean, it is, it really raised your question. If you can rally up stock prices based on subreddits, and you can have, like, Trump's Truth Social just on his, because if his fan base can rally up a stock price there, it really does give you pause to think about all the valuations of some of these companies that make up the Dow, that make up the S&P 500. We have 40,000 stock. We're at that level now. How much of it is real and how much of it is just manmade, created through rumors and stories, and it just gives us all a pause. You really just wonder if it's all how much of a house of cards all this stuff is.

Matt Egan (30:22)

Well, hopefully it's not. I think at the end of the day, a stock is worth what people are willing to pay for it, right. And right now, people are willing to pay a lot for Trump media and for GameStop and for AMC and some of these other companies, even though the fundamentals don't necessarily line up. I do think, though, that when you zoom out, right, I mean, there are going to always be pockets of companies that may look overvalued. There can be instances of irrational exuberance there can be instances of retail traders on Reddit pumping up a stock or insiders on Wall Street pumping up a stock. But I think when you zoom out and you look at the big picture, I mean, a lot of these companies, their balance sheets look a lot healthier than they did two, three, four years ago, let alone during the financial crisis. The companies are making money. We're talking about record corporate profits. And there is the real potential that the Fed will start to lower interest rates and there's hope that the worst for inflation is over and that inflation is going to start to really move down. And those are some of the reasons why we've seen the market, not just the Dow, but the S&P 500, the Nasdaq hit record highs. Hopefully, they're right, because I do think at the end of the day, that would be good for Main Street too, right? It'd be good for consumers, and it would be great for businesses if this economic expansion can just keep going.

Gene Marks (31:49)

Man, if there's anybody in the world who would be cynical about the markets, it would be you. I mean, you've been covering it for 100 years. You know, the fact that I'm not hearing that you're running for the caves or that you're frustrated or, you know, dubious, you know, gives me comfort. I think we'll give our listeners and our viewers comfort as well. Matt, thank you so much for joining. Great conversation. I want to wish you all the best at CNN and I'm a big fan and following your work.

Matt Egan (32:14)

Thank you, Gene. Thanks for having me on. Enjoy the conversation, as always.

Gene Marks (32:19)

Do you have a topic or a guest that you would like to hear on THRIVE, please let us know. Visit payx.me/thrivetopics and send us your ideas or matters of interest. Also, if your business is looking to simplify your HR, payroll, benefits, or insurance services, see how Paychex can help. Visit the resource hub at  paychex.com/worx. That's W-O-R-X. Paychex can help manage those complexities while you focus on all the ways you want your business to thrive. I'm your host, Gene Marks, and thanks for joining us. Till next time, take care.

Announcer (32:55)

This podcast is property of Paychex, Incorporated, 2024. All rights reserved.