The Dividend Cafe (The Bahnsen Group)

I understand it may seem odd to devote a Dividend Cafe to the particular subject of the Energy sector in a week of surreal market volatility and media obsession over the Fed. But in fairness, I write about the Fed almost every week, plus four days a week in The DC Today, and the entire subject of monetary theory underlies all that we do in capital allocation at The Bahnsen Group. Our nuanced views on the role the Fed currently has in financial markets are known, and to co-opt my planned Dividend Cafe subject yet again to cover the thrilling story of the Fed moving interest rates exactly how we knew they would, is not going to happen.

But the Fed was not the only story (non-story) this week. Markets are in a pattern of daily incoherence as traders, algorithms, novice investors, speculators, and other such inconveniences work through the challenges of a paradigm shift. What the futures say at night has nothing to do with what they will say in the morning which has nothing to do with what they will say at the open which is fully disconnected from intra-day activity which then leads to a totally unpredictable market close. Then, rinse and repeat.

So I’ve written about our low opinion of “shiny object” investing, and the avoidance of such has a lot to do with the way our January has (thus far!!??) gone. But the energy sector is up +18% this month as of press time in a YTD market that has a Nasdaq down -15% and S&P 500 down -10%. We need to look at that. Is Energy becoming a new “shiny object”? Is the sector a trade or a long-term opportunity? What aspects of energy investing appeal to us right now? Where do environmental, political, and macroeconomic concerns fit in? These subjects all deserve their own Dividend Cafe, and that day is today.

So jump on into the Dividend Cafe …

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Latest market updates and news from David L. Bahnsen of The Bahnsen Group

DividendCafe.com TheBahnsenGroup.com

Dow: +269 points (+0.81%) S&P: +1.28% Nasdaq: +1.76% 10-Year Treasury Yield: 3.54% (-7.6 basis points) Top-performing sector: Real Estate (+3.60%) Bottom-performing sector: Consumer Staples (+0.06%) WTI Crude Oil: $77.71/barrel (+3.45%)

ASK DAVID “The US government has stated that it will purchase crude oil to replenish the strategic reserve once the price hits $70. In effect, this seems to indicate that the government will purchase millions of barrels at $70.

Does this function as a price floor? And, if so, what impact does a government-created price floor have on markets?”

~ Keith

So just by way of clarification, they have indicated they want that to be the rough price level at which they will transact, but their rough and very ambiguous guidance on the subject would indicate the intent of more a floor than a ceiling and yet, if the price does not go (or stay) there, it may not be a price at which much transacts. The government cannot make the market cooperate. But to the extent the market expects that level to be a rough “floor,” I suppose one could assume in their economic calculation that some of the left tail risks of various price collapses are less likely. The problem is that they can change their mind, and any number of events could happen (upside or downside) that alter the economics here. What market actors ultimately know is that there is a forced buyer in the marketplace, and supply calculations, profit expectations, and a number of numerical considerations around production can be performed with that intervening fact lingering. It does suggest a certain backstop in matters which provide a bit of an asymmetrical risk/reward (in the producers’ favor).

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

September 11 Market Update and Inflation Insights

In this episode of Dividend Cafe, host Brian Szytel begins with a somber remembrance of the September 11 terrorist attacks, offering thoughts and prayers to those affected. He proceeds with market commentary, noting an initial drop and subsequent recovery, likely influenced by the recent debate between former President Trump and Vice President Kamala Harris. Szytel discusses key inflation data, highlighting that the Consumer Price Index (CPI) numbers are in line with Federal Reserve targets. He also touches on the implications for upcoming interest rate decisions and the balance sheet. Finally, Seitel provides a preview of forthcoming economic data, including initial jobless claims and the Producer Price Index (PPI).

00:00 Introduction and Remembrance of 9/11

00:33 Market Opening and Debate Impact

01:05 Market Performance and Analysis

01:51 Inflation Data and Federal Reserve Expectations

03:34 Upcoming Economic Indicators and Closing Remarks

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market dropped for the third day in a row, again led substantially by the sell-off in big tech (the Nasdaq is down 10% since last Wednesday’s late day high). The Dow is down ~1,600 points since mid-week last week, about half of the drop in the Nasdaq in percentage terms. Futures were pointing up ~200 points last night, but today the market opened down 400 points and chopped around throughout the day, taking two turns down in the final two hours of trading.

Expect a bit more markets and economic coverage in this week’s missives than normal because the Friday Dividend Cafe will be exclusively focused as the special election issue. We are entering a new phase of the COVID economic recovery that I believe will move slower than the first half has moved. A lot of the low-hanging fruit of job recovery and activity-resurgence has taken place, but normalized conditions are a ways off and will likely see a slowdown in pace of recovery from here.

COVID Health Information

• I am sure the Labor Day report of just 27,000 new cases yesterday was low around holiday reporting issues. The 7-day moving average is dropping ever so slowly. • The 7-day rolling average for daily mortalities is down 12% from the week prior and down 22% from a month ago. • The leaders of nine major pharma companies, all engaged in leading vaccine efforts, sent a public letter vowing to take no shortcuts en route to a COVID vaccine. • Incredible news (I will keep this updated as long as Dr. Bostom keeps maintaining the source report): 26,000 alleged COVID positive cases on college campuses now; zero hospitalizations

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Market Recap: Equities, Bonds, and Economic Indicators

In this episode, David, managing partner at the Bahnsen Group, provides a recap of the latest market activities. Broadcasting from Dallas, Texas, he shares insights on slight movements in the Dow, S&P, and NASDAQ indices, with real estate being the top performing sector. He also discusses minor changes in bond yields and notes that oil prices have remained steady. On the economic front, durable goods orders and housing starts showed underwhelming results. Upcoming is the PCE inflation report, which is significant as it is closely watched by the Fed.

00:00 Introduction and Market Overview 00:29 Equity and Bond Market Performance 01:07 Oil Prices and Economic News 01:45 Housing Market Update 02:19 Upcoming Inflation Report

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4bySeX3

A consistently positive trading day in markets from start to finish, with the Dow closing at the highs for the day up 348 points. Yields have also settled in the last few sessions, which, as Tuesday’s knee-jerk move higher, gets normalized. Both the Empire and Philadelphia manufacturing index numbers came in meaningfully above expectations, and jobless claims also beat, so a few good data points in economic fundamentals.

We did get a second quarter of contracting GDP for Q4 out for both the UK and Japan, indicating recessions in both countries. Japan has now lost its third-place spot on the global GDP stage to Germany, falling to fourth. I mentioned this a few quarters ago, but it will be very difficult for central banks to stick to higher interest rates in slower-growth areas of the world. Stagflation will be something to watch in some of these areas if unemployment rises faster than inflation falls, but either way, rate cuts are soon to follow.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's post: https://bahnsen.co/3SXObdT

Key Economic Points of the Day:

ADP reported 242,000 private sector jobs created in February. The correlation between the ADP and BLS numbers each month has not been very tight for a while now. Job openings came in at 10.82 million for February, 300k higher than expected. It had been 11.2 million last month. The trade deficit came in at $68.3 billion in February, a little less than expected. Total trade was up +7.6% versus last January ($18.1bn), indicating ongoing improvement in supply chain conditions versus a year ago.

ASK DAVID “I noticed Sen. Elizabeth Warren grilling Jerome Powell yesterday, and her main point (that the primary causes of inflation and the only tool the fed has to fight inflation are disconnected) sounded familiar. Would you have ever guessed that you would find common ground with a left-wing Senator from Massachusetts? She did have to get price gouging theory in there though …”

~ Jack B.

I’ve said this countless times – that though the progressive’s motives are to pin the blame for inflation on “capitalist greed” (the most preposterous theory imaginable), the right’s agenda here will leave them regretting it when economic opponents are the ones making the case that, no, people having jobs is NOT inflationary. Inflation is a highly toxic issue politically, no doubt, and parties not in power will make hay of it when they can just out of political reality. But the need of the hour is economic growth, and for the right to join the fray in alleging that growth and jobs are inflationary is absurd. For Elizabeth Warren to be the one making the case that the Fed is about to do more harm than good is heartbreaking to this movement conservative.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Exploring the Dynamics of the Dow

This episode delves into the intricacies of the Dow Jones Industrial Average (DJIA), commonly referred to as the Dow. The show offers insight into its components, historical significance, how it is calculated, and its role as an economic indicator. Listeners will learn about the major influences on the Dow's movements, its impact on market trends, and why it is closely watched by investors and analysts.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Economic Update and Market Insights: October 1st Summary

In this episode of Dividend Cafe, host Brian Szytel provides a market update from New York City on October 1st. He discusses the day's negative market performance influenced by Middle East tension between Iran and Israel, which led to increased oil prices and slight declines in stocks. Key economic data points include unchanged ISA manufacturing data for August and a rise in job openings as per the JOLTS report, indicating a balanced labor market. Szytel also addresses a viewer question on evaluating stock prices and dividends, emphasizing the importance of fundamental analysis over high yields. Overall, the episode delivers a blend of market analysis and economic news with a cautionary note on ongoing geopolitical tensions.

00:00 Welcome to Dividend Cafe

00:10 Market Overview and Middle East Tensions

00:42 Economic Calendar Updates

00:57 Labor Market Insights

01:57 Geopolitical Tensions and Market Impact

02:04 Ask TBG: Stock Analysis

02:41 Closing Remarks

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Dividends, Dollars, and Central Bankers by The Bahnsen Group

Today's Post - https://bahnsen.co/3ncX8V7

The subject of bank stability has really been a big conversation topic since the failure of Silicon Valley Bank and Signature Bank back in mid-March.  People have wondered who was to blame, what went wrong, what could have been different, and what else is still going to happen that we may not know about.

I have written in these pages already about Sunday afternoon dramas and the market instabilities that generally create such events.  Notice how I worded that, for it was intentional.  Sunday afternoon dramas do not create market instabilities; market instabilities create Sunday afternoon dramas.  And as we navigate through a change in the present financial cycle, a little perspective is warranted on what has been driving financial cycles.  In fact, if we do this well we may just understand not only how this fits into Sunday afternoon dramas and the broad reality of market disruption risk; we may also understand a lot more about the federal reserve, interest rates, and basic financial behavior.

So let's jump into the Dividend Cafe ...

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Replay of National Call Market Outlook with TBG CIO and Founder, David L. Bahnsen and Scott Gamm of Strategy Voice Associates.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Topics discussed:

1. Working only on the things you CAN control
2. P/E Ratios and Stocks going Down
3. A Diatribe of Dislocations

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3vEgA0Y

Ask David “What is your view about investing in the Indian economy since it appears to have the potential for considerable growth and is not hampered by the regulations of the CCP?” ~ Al

On one hand, India is the highest country allocation in our emerging markets strategy. On the other hand, that is not really “investing in the Indian economy” as much as it is investing in “companies that happen to be based in India.” The domestic market strength is a huge factor, but it is really more of a bottom-up than top-down decision. We are not looking for good countries but rather good companies.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Up to date information regarding Covid and Markets with a focus on the impact of the pending elections and Federal Reserve guidance.

With David L. Bahnsen and Scott Gamm.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/46j9PPy

Following another down day yesterday, we got a little reprieve in markets, with both stocks and bonds posting gains on the day. The biggest economic news on the day was the miss in ADP Payroll numbers, which starkly contrasted with yesterday's big upside surprise in the jobs openings report. More openings but fewer private payrolls could either mean there is a cyclicality or variability around the timing of correlation between the two or could have just been from the number of new job openings TBG just posted this month. Still, either way, the more significant number will be this Friday when nonfarm payroll numbers come out.

While yields came off following today's economic data during the trading day, it is notable to see 10-year yields hit 4.88% in overnight trading and 30-year treasuries reach 5%. As a result, US debt interest expense is now just over 14% of tax revenue, which has not been the case since the late 1990s and has historically been a threshold in which fiscal austerity begins to show. Fact notwithstanding, last night, we also saw the ousting of the Speaker of the House, Kevin McCarthy, by his party for the first time in history for getting a bill passed not to cut spending to avoid a government shutdown.

I strongly suspect deficits at 7% of GDP during full employment will keep volatility high in Washington as tough decisions must be made. While the Fed says higher rates are here for longer, I remain skeptical, given the tightening financial conditions we have already seen.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Market Closure, Payroll Data & Investment Insights - January 9th Edition

In this episode of Dividend Cafe, Brian Szytel discusses the market closure in observance of President Carter's funeral and offers condolences to those affected by California wildfires. Brian highlights the anticipation around non-farm payroll data, expected unemployment rates, and wage growth stats. He also introduces David's annual white paper summarizing the investment outlook and reflections on past predictions. Brian emphasizes the value of reading macro-related research but cautions against overly relying on it for portfolio strategies. The focus remains on bottom-up fundamentals for security selection and asset allocation. He concludes with a nod to the upcoming wildcard weekend in sports.

00:00 Introduction and Market Closure

00:51 Upcoming Economic Data

01:34 Dividend Cafe Annual White Paper

02:18 Macro Research Insights

03:02 Investment Strategy and Philosophy

04:29 Conclusion and Weekend Plans

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

Topics discussed: Markets re-opened Tuesday this week after the MLK holiday on Monday, and experienced some modest moves to the downside on the week as of Thursday's press time ... But in a shortened market week where the big political news (impeachment hearings) are completely ignored by markets, and where there is no notable macroeconomic news or Federal Reserve announcements to process, it gives us a great opportunity to catch up on other topics not given enough attention in the Dividend Cafe.

We'll talk shale this week, viral fears in China, why a high bond supply does the opposite to interest rates that most people expect, and we spend a lot of time in Politics & Money ...

So jump on into the Dividend Cafe. It's a good one.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Bookies vs. Pollsters and Your Portfolio - June 17, 2016 by The Bahnsen Group

Today's Dividend Cafe dives into some of the great economic principles one has to learn if they are to ever learn anything about economics and finds a comparison with the great investing principle of all time.  I hope I will connect the dots well for you.

DividendCafe.com TheBahnsenGroup.com

Topics discussed:

1. Who Is Leading Who?
2. What would Mr. Contrarian do?
3. Catching a good return by the tail

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3GAu2FF

I hope everyone had a wonderful Easter weekend and are feeling excited for the week ahead. Markets should be pretty weird this week, but now I just say that every week because I have such a high chance of being right when I use the word “weird.” Today didn’t do anything to embarrass me in this prediction (more below).

Dividend Cafe last week was my earnest effort to unpack the current state of oil markets and all their economic, geopolitical, and monetary implications

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The market was up 164 points today, though the % move up in the S&P and the Nasdaq was less. There was a little move up to start the day, then a flat range for most of the day, followed by a dip, and then a rally into the close. My own feeling is that investors are a little hesitant to be unexposed into a close out of fear that a stimulus deal may get announced while markets are closed … (it isn’t impossible, but I doubt that it is imminent).

The “hurricane” set to come through NYC turned out to be a rain shower, and something tells me this won’t be the last time a doom & gloom prediction for New York City turns out to be wrong this year.

Speaking of NYC, they have LESS THAN a 1% positivity rate right now with high levels of testing, and that positivity rate has been less than 2% for almost two months! Their new cases are almost not registering at all (57 yesterday, same as some small towns in the midwest). Hospitalizations were just 15 yesterday – again, 15 is a fraction of what towns 1/100th the size are experiencing. And mortalities have been zero many days recently, and not more than ten in a day for several weeks.

So I am pleased to see all of this in NYC, and hopeful that it leads to steps towards economic revitalization, not the opposite. Now, with NYC’s health status out of the way, let’s jump everywhere else we normally go.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4aN8tiB

An up day for markets across the board.

The drama on the SEC/bitcoin ETF deal moved today. Yesterday it was that they had approved a bitcoin ETF as expected, and bitcoin prices fell. But then they announced that, no, they had not approved it (yet), and the announcement was from a “hack.” Uh-huh. Then the chairman of the SEC took to Twitter to announce that people investing in crypto should “be cautious” due to “serious risks involved.” And today they approved the ETF exactly as had been reported yesterday.

I was on Varney this morning talking wealth tax, Wall Street’s view of government spending, and dividend thoughts.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The second violent rally day in a row took place today, with the market up nearly +6% to start off October, erasing all of the downturn of the last ten days of September (for now). More to say in our daily podcast, of course!

MARKET ACTION

Dow: +825 points (+2.80%) S&P: +3.06% Nasdaq: +3.34% 10-Year Treasury Yield: 3.63% (-2.2 basis points) Top-performing sector: Energy (+4.34%) Bottom-performing sector: Consumer Staples (+1.53%) WTI Crude Oil: $86.30/barrel (+3.17%) Key Economic Points of the Day:

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Topics discussed:

1. Markets in the first six months of 2019
2. Fear of Market Highs
3. Where we are in the trade war with China
4. Dividend Cafe Podcast will be merged with Advice & Insights Podcast going forward.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Analyzing Market Movements and Inflation Impact

In this episode of Dividend Cafe, Brian Szytel from West Palm Beach, Florida, discusses the market's performance on February 13th, highlighting a positive day for stocks and a significant drop in bond yields. The conversation focuses on recent inflation data, specifically the producer price index (PPI) and its effect on market behavior. Brian emphasizes the importance of observing longer-term fundamentals rather than reacting to short-term market fluctuations. He also shares his thoughts on gold as an investment, pointing out its unpredictability and lack of cash flow production. He concludes by encouraging a long-term view and inviting audience engagement with questions.

00:00 Introduction and Market Overview 00:45 Inflation and Interest Rates Analysis 02:07 Long-Term Investment Strategy 03:09 Gold Investment Insights 04:33 Conclusion and Final Thoughts

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3leNG2y

This is Trevor Cummings, and I am sitting in for David Bahnsen to bring you DC Today.

There is a common idiom in the English language, “Wait until the dust settles.” This adage encourages one to be patient until they have more clarity. Investors crave clarity, and when things become too foggy or dusty, investor anxieties skyrocket. These anxieties surface as market volatility, which you are currently enduring.

At this stage, everyone is still sifting through the rubble of SVB to separate substance from hysteria. I want to encourage you to read David Bahnsen’s special Silicon Valley Bank Dividend Cafe, which was published Monday. Our intent here at The Bahnsen Group is to keep you informed and guide you through the dust. David will even be writing a Dividend Cafe piece on Friday dedicated to the plethora of questions we’ve received this week – you won’t want to miss that.

With that said, let’s talk about what happened around the markets today…

TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The market ended the month of February with a level of pain in the markets not seen since December of 2018 (fourteen months ago). As of press time Friday morning we have experienced sell-offs every day this week, creating the worst week for markets since the financial crisis. The details are unpacked in the Dividend Cafe … The level of sell-off in the market is discussed but so are a variety of circumstances around it that very much warrant additional analysis. I made the decision this Friday morning to ditch literally pages of commentary and analysis I wrote over the last few days and just write afresh straight from the heart on all that is going on. Please click through and read.

This is not a Dividend Cafe to miss.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Futures last night really hugged around the flat line non-stop from 3pm pacific until 9pm or so when I stopped checking.  At 3am this morning they were still flat, and throughout the morning going into the market open they moved a tad lower.  The Dow got down as much as 200 points, gyrated around most of the day up and down, and then rallied the final hour of trading to close up 300 points.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Topics discussed:

1. Market Epicurean Series On 2008 Financial Crisis
2. Active vs Passive Investing
3. Cause of the next Recession
4. Which asset classes are up, which are down
5. Repatriation of Corporate profits

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com Advice and Insights Podcast - Passive vs Active Investing Special Market Epicurean Series On The Financial Crisis Of 2008

Today's Post - https://bahnsen.co/49ia3bk

A more productive day in markets today following yesterdays sell off with with the SP500 regaining the 5,000 level and bond yields giving back some of yesterdays back up in rates. As expected, internals yesterday were quite negative at -13 to 1 on the advance/decline ratio, but without credit spreads even budging, we move on. For what its worth, in a meeting with House members following the inflation release yesterday, Powell mentioned that the CPI data was consistent with what they had expected.

Moving back to actual fundamentals that matter more to me, with over two thirds of Q4 earnings season completed we are tracking a 9% growth rate for the SP500 on the year, with a few more percentage points to the upside by the time its all said and done. Hard to see issues in that, and margins are holding in nicely at 16.7% with another 10% of earnings growth expected for 2024. I do think the latter ends up getting revised lower, but it remains a positive backdrop nonetheless.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Topics discussed: As of press time mid-day on Thursday, the market was down about 250 points on the week, which is not noteworthy in that 250 points is nothing, especially divided by 28,000, and especially because it is three or four days of action. I only mention it because (a) Some of you are getting bored by the low volatility market of the last few weeks and this makes it sound like markets moved, and (b) Some of the chatter behind the couple points we moved are interesting.

But I am not going to pretend that there is much substance behind a 250 point move; markets can move 250 points on a sneeze! What I will do this week is provide some history, provide some economics, and provide some perspective – because frankly, I don’t think there are a lot of other places to get it right now! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3LS40QV

On August 1 of this year the Dow Jones Industrial Average closed at 35,630. As of press time this morning, just a tad over two months later, it is trading just below 33,000. This is a -7.5% drop in about nine weeks, which we will discuss more in today’s Dividend Cafe. If -7.5% in nine weeks doesn’t seem like that big of a deal, it’s because it isn’t. However, what I didn’t mention is that almost all of that drop has been in the last three weeks (-6% of the -7.5%). The Nasdaq has fared a tad worse with similar timing in the numbers – a peak at the end of July, a slow drip down since, with an accelerated downturn the last few week.

The right thing for me to do in this period is probably not write about it. By addressing it I enter the unavoidable territory of contradicting best behavioral practices around market downturns. And yet we exist to offer perspective, point-of-view, commentary, and conviction, and so to not address key market or economic activity would also be problematic.

The reality is that a -5% or -7% drop in markets (or more, for that matter) is a par for the course, standard, status quo, always-to-be-expected part of equity investing. I shouldn’t (and won’t today) write as if it is an urgency or source of panic in any investor’s life. The behavioral realities around market volatility should (and will be today) constantly reinforced. And at the same time, there are particulars in this stage of the cycle that I think are worth unpacking.

So today’s Dividend Cafe does it all today – it holds in tension the two things I most struggle with on these pages: the macro commentary of current events, and the behavioral wisdom of how not to react to such.

Let’s jump in to the Dividend Cafe …

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Markets Frightened , Election Tightened, Media not Enlightened by The Bahnsen Group

Today's Post - https://bahnsen.co/3ZCSvkX

So the market followed its robust January returns with a -4% drop in the Dow for February and a -2.5% drop in the S&P 500, and the bond market dropped -2.7% on the month (though almost every index we track across stock and bond markets was still positive on the year through February, just much less so than previously). A few comments on today’s action here

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post -https://bahnsen.co/3ricXf2

I am hopeful all had a wonderful Independence Day spent with family and friends in celebration of the 247th year of the greatest country to ever inhabit the Earth.  The biggest news on the day was the Fed minutes that were released, indicating the rationale behind their decision to pause and hold rates steady last meeting while leaving the door open to raising again in the near future.  While the decision was unanimous, the discussion revealed a debate by some on moving rates up 25 bps last week.  The next FOMC meeting is out on 7/25 and 7/26, and while we do get some employment data this week, I think it will be less relevant than the consumer price data we will get a week from today that will ultimately drive their next decision on rates.  It does appear the Fed is erring on the risk of recession over the risk of having to repeat the 1970s style stop and go on Fed policy.  All said, it was a low-volume trading day following the holiday and the first full trading day in the second half of the year that was modestly negative in stock and bond prices throughout.  All discussed and more in today's video podcast link below.

Brian Szytel

Source: https://www.usatoday.com/story/money/2023/07/05/ups-teamsters-negotiations-end-as-strike-looms/70382580007/

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's call focuses on the latest in financial markets and the reconciliation bill. DividendCafe.com TheBahnsenGroup.com

First of all, please note our bi-weekly national video call this coming Monday, June 1, at 11:00am pacific time. I plan to address some things Monday I have not yet addressed through this COVID period, and invite your presence on the call.

The market exploded 550 points higher today and is now up over 1,100 points in the last two days and ~2,500 points in less than two weeks. Without any direct news or events to explain the increase, broad-based optimism about the economic re-opening is certainly the most logical explanation. I would definitely read today’s Market Technicals for more color here.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4cXvPC2

https://www.cnbc.com/2024/09/03/nvidia-tumbles-leading-chip-stocks-lower.html

Market Recap: Tech Sell-off and Economic Data Analysis

In this edition of Dividend Cafe, David Bahnsen, Chief Investment Officer at the Bahnsen Group, provides an update on market performance for the Tuesday, September 3rd, following the Labor Day holiday. Bahnsen discusses the significant downturn in the major indexes with the S&P 500 down 2.1%, NASDAQ down 3.25%, and the Dow Jones down 1.5% due to a tech-driven sell-off led by semiconductor stocks like NVIDIA. He also covers the mixed economic data, including the fifth month of contraction in ISM manufacturing numbers and the upward revision of the Q2 real GDP. Additionally, Bahnsen touches on NVIDIA's financial metrics, the broader distribution trends in market sectors, and current geopolitical events. The episode concludes with a discussion on bond yields, midstream energy sector performance, and expected Federal Reserve rate hikes.

00:00 Introduction and Welcome

00:19 USC Game Recap

00:59 Market Summary and Tech Sell-Off

01:57 Economic Data and Market Highlights

04:27 NVIDIA Analysis

05:56 News Highlights

06:58 Economic and Market Updates

08:43 Energy Sector Insights

09:39 Conclusion and Upcoming Updates

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

This week, David Bahnsen recaps the week in markets and reviews the ket takeaways from our 2018 whitepaper.

Topics discussed:

1. The excesses of markets and human behavior
2. Sector outlooks for 2018
3. Why asset allocation matters

4. Links mentioned in this episode: https://www.hightoweradvisors.com/team/~/media/hightower/team/bahnsen/documents/tbg%202018%20whitepaper%20pdf_v1.ashx?mkt_tok=eyJpIjoiT0RrMlkyWm1aRFUxTVdOaSIsInQiOiJkbnhKcWUzbVFqaFpRXC82SW9nRitoZ2s4MzY4cHlWSmNqc2ppY3NKeHFtUlJJd284UitIbHNDU2N3eTg3NHBGcks5amdqU2FiVXZYbmdNekIySkZRakR6cVF1c2hvZmp2NjF0SSt0aTNpUXY0NTdoWXZabVRvODlXYjRXK2RqdUgifQ%3D%3D

A Global State of Affairs by The Bahnsen Group

We look at the state of the markets with the election a couple weeks away, what we mean by “post-COVID” market realities, and spend time reviewing some of the major takeaways of our recent meetings with New York City portfolio managers.

Links mentioned in this episode: DividendCafe.com TheDCToday.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4fktJ0n

Exploring Market Optimism Amid Economic Trends and Forecasts

In this edition of Dividend Cafe, host David Bahnsen discusses the current optimism in small and large businesses as captured by the NFIB small business index and other indicators. He delves into the impacts of the Trump 2.0 administration's deregulatory and tax policies on market sentiment. David also touches on Nvidia's market valuation, the significance of financial deregulation, IPO activity, and the relationship between CPI and PPI in the context of inflation. The episode concludes with market history insights and a preview of topics for the upcoming weeks.

00:00 Introduction to Dividend Cafe

00:49 Today's Focus: Optimism in the Market

03:19 Small Business Optimism and Trump Administration

04:30 Big Business Sentiments and Market Implications

11:12 Nvidia's Market Cap and Financial Deregulation

14:18 CPI, PPI, and Market History

15:29 Conclusion and Upcoming Plans

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

I began writing this from Dallas, Texas this morning, where yesterday USC suffered a heartbreaking loss in what was one of the most exciting Cotton Bowl games ever. I am back in Newport now, where tomorrow morning we reveal the new large office expansion to our team (same floor, same building). It has been a labor of love, I assure you. We have added new advisor offices (we have a new advisor starting in Newport Beach and another new one starting in Nashville next week), but mostly the Newport expansion houses new members of our Tax Department, Planning Department, Research, and Trading. It is really beautiful space.

Today’s DC Today is the normal Monday format of DC Today and, obviously, the kick-off to 2023! There is a 27-page white paper coming Friday in the Dividend Cafe providing the most comprehensive recap of 2022 and forecasts for 2023 we think you will find anywhere. I hope you find it to be a labor of love, too.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The S&P was flat today, the Nasdaq was up, and the Dow was down 100 points, so let’s call it a flat day overall. We will cover our normal categories and take a few detours as well as we launch another market week in the midst of this COVID pandemic …

As for health data, the 1.5% case growth over the weekend is what we have been waiting for – the smallest case growth in the U.S. since all of this began. And all analysis indicates we will see new cases and case growth % really decline from here. If the new cases had declined with a substantially lower weekend testing number that would be less noteworthy, but the testing stayed quite elevated all weekend. The positive ratio to total tests was just 7.8% yesterday, and our trend level for total tests is right around 300,000 per day now.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Long-time readers know that I have strong opinions about the Fed, about monetary policy, about its relevance to economic conditions, and of course about its implications for investment decision-making.

Today we have enough misinformation out there about the Fed that it may be a chance to actually use that word appropriately. And this misinformation comes in a period of elevated interest. The stakes are high.

This week in the Dividend Cafe we are going to see if we can’t make more sense of what the risks are and are not around current Fed actions. And in so doing it will allow us (force us?) to touch on a handful of peripheral subjects that matter. It’s an easy read, digestible, and actionable.

So jump on in to the Dividend Cafe …

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Market Update and Economic Insights - March 25

In this episode of Dividend Cafe, hosted by Brian Szytel from West Palm Beach, Florida, the focus is on the recent positive momentum of the S&P 500 and the economic factors influencing the market. Key topics include tariff implementations, consumer confidence reaching a four-year low, steady new home sales, and the relationship between currency and trade policies. The episode emphasizes the interconnectedness of economic factors and the importance of understanding diverse perspectives in financial decision-making. Sitel concludes with a brief Q&A and an overview of current market performance.

00:00 Introduction and Market Overview

00:49 Economic Indicators and Consumer Confidence

02:01 Real Estate Market Update

02:53 Trade Policy and Currency Discussion

05:03 Q&A and Market Wrap-Up

06:09 Conclusion and Closing Remarks

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

Today's Post - https://bahnsen.co/40TtKTI

The Dividend Cafe: Market Reactions to Tariffs and Taxes

In this episode of The Dividend Cafe, host David Bahnsen provides an update from Phoenix, Arizona, discussing a busy week involving team meetings and client engagements. Highlights include his recovery from illness, travel between New York and California, and expansion plans for the Phoenix office. David dives deep into market reactions to recent tariff announcements by the Trump administration and the lack of actual tariff implementations. He also explores the complexities of fair trade and its economic implications. Lastly, David discusses the progress and hurdles facing the House Budget Committee on a significant tax and spending bill, detailing the political intricacies and potential impacts on the economy. Tune in for insights on tariffs, taxes, and their market effects.

00:00 Introduction and Weekly Recap 01:24 Market Reactions to Tariff Announcements 04:20 Analyzing the Impact of Tariffs 07:30 Debunking Free Trade Myths 11:55 Updates on the Tax Bill 17:49 Conclusion and Upcoming Events

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

This week, David L. Bahnsen covers the years in markets and reveals his views on whether or not investors should expect more surprises in 2018.

Links mentioned in this episode: www.DividendCafe.com www.TheBahnsenGroup.com

I love the topic of this week’s Dividend Cafe. I believe one of the most powerful people in global finance gave me the chance to address a topic today that desperately needs to be addressed. And through this topic we have profound takeaways to inform our understanding of economics, and to apply such understanding to the emphases we put in our portfolios.

I will leave the introduction there, and hopefully with enough suspense to push you into the Dividend Cafe. This is important stuff.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Trevor Cummings here, and I am honored to be joining you for the third day in a row.  As mentioned yesterday, David Bahnsen will be back tomorrow with his weekly commentary – Dividend Cafe.  Additionally, I invite you to subscribe to my weekly writings at thoughtsonmoney.com. Now, off to the updates from this busy Thursday market day…

Dow: -91.01 (0.30%) S&P: -0.80% Nasdaq: -0.61% 10-Year Treasury Yield: 4.232% (+10.3 basis points) Top-performing sector: Communication Services (+0.36%) Bottom-performing sector: Utilities (- 2.51%) WTI Crude Oil: $85.71/barrel (+0.19%) Key Economic Points of the Day: • Liz Truss has resigned as U.K. Prime Minister ◦ This was the shortest tenure in British history ◦ Note, her Finance Minister was dismissed from his post after just 38 days • Jobless claims came in at 214,000 on an expectation of 230,000 ◦ The impacts of Hurricane Ian on the data looked to be much lighter this week ◦ The total number of people collecting unemployment benefits sits at 1.39 million, near a 50-year low ◦ In simple terms, the labor market remains tight • As to be expected, U.S. existing-home sales were down ◦ The figures came in at 4.7 million, nearly on the dot with expectations ◦ This is eight consecutive months of decline and, when compared to September 2021, a slide of 23.8% ◦ Reminder, mortgage interest rates are skyrocketing, the general population is on edge regarding inflation and recession, and this combination of anxiety and affordability is slowing down activity • The Philadelphia Fed manufacturing index published today ◦ This regional look is meant to give a sneak peek at what the national ISM data might look like next month ◦ the numbers came in at -8.7 on an expectation of -5 (note, any number below 0 represents declining business conditions)

TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4cOxt92

Understanding Single Stock ETFs and the Demand-Side Dynamics in Investing

In this week's episode of Dividend Cafe, David Bahnsen, recording from New York City, delves into the concept of single stock ETFs. Despite not recommending such financial products, the discussion highlights the importance of understanding them from a philosophical perspective about investing, human nature, and the intersection of supply and demand. David criticizes these products as tools for high-risk, intraday speculation but argues against banning them, focusing instead on the demand side as a solution to financial recklessness. The episode also covers the inversion of the yield curve, its implications for sectors like healthcare and consumer staples, and the negative multiplier effect of government debt on GDP growth.

00:00 Introduction and Personal Update

00:56 The New Financial Product: Single Stock ETFs

04:28 Philosophical Insights on Financial Products

09:42 Market Commentary: Yield Curve and Recession Predictions

12:15 The Negative Multiplier Effect and Government Debt

14:01 Conclusion and Final Thoughts

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/44MFjx8

So the CPI today came in today at 4.9% year-over-year, the lowest we have seen now since April of 2021. 5% had been expected so it is another month of slightly lower than expected year-over-year movement. And yet …

Shelter is showing an +8.1% year-over-year price inflation still now in April. Yep. +8.1%. So, at the 34% weighting you can surmise that 2.75% of the inflation is, well, poppycock. That puts the actual present CPI somewhere between 2% and 2.5% which last time I checked is the Fed’s target.

Used car prices are down -6.6% on the year (deflation). Gas utilities are down -2.1%. Medical care was only up +0.4% on the year. Food and transportation, though, are still showing higher annualized price increases.

It is interesting to hear people talk about a slowing job market as Job Openings (JOLTS) started the year at 11.2 million and are now at 9.6 million. I am not sure I have ever heard nearly 10 million unfilled job openings described as a “slowdown” before, but you do you boo. Now, the CEO of ZipRecruiter did come out and say, “demand for recruiting services is declining” – which may mean things are slowing down (and also may mean hiring is so easy right now less people feel the need to use recruiters, but I digress). I do think there is no question that companies are paring back new hires, but I also think some industries (see: tech) were way, way, way over-hired. Bottom line, I don’t see anything contradictory (or complicated, for that matter) about saying these two things at once – (1) The job market is good; (2) It may be headed towards “less good” than it has been.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Market Insights and Investment Strategies on Dividend Cafe

In this November 13th episode of Dividend Cafe, Brian Szytel from The Bahnsen Group provides a comprehensive update on the current market dynamics from their Newport Beach headquarters. He discusses the relatively flat market performance with slight gains in the Dow, S&P, and minimal change in NASDAQ, alongside a decrease in volatility and an uptick in the 10-year yield. The episode covers the alignment of CPI with expectations, easing inflation concerns, improved third-quarter earnings, and fiscal and monetary policy's impact on market conditions. Brian emphasizes the importance of revisiting asset allocation, advocating for selective investment strategies over momentum chasing, and incorporating bonds and alternative assets into the portfolio. Ultimately, he reassures listeners about the potential value in the current market and encourages them to stay engaged with thoughtful and diversified investment choices.

00:00 Introduction and Market Overview

00:27 Inflation and Market Reactions

01:31 Market Performance and Bond Yields

03:36 Investment Strategies and Recommendations

05:08 Conclusion and Viewer Engagement

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

As of press time Thursday it has been another strong week in markets, with the formal signing of the phase one-U.S/China trade deal, a strong start to earnings season, and the continued general feeling that this is a good market in a good economy. Of course, life is never that simple, and markets are really never that simple, so we have a lot more to say about everything.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Election Day Market Update: Positive Movements and Economic Insights

On Tuesday, November 5th, Brian Szytel provides a market update from West Palm Beach, Florida. Despite the busyness of election day, the markets showed positive movement, with the Dow rising 427 points, the S&P up 1.25%, and the Nasdaq up 1.4%. Bond yields also saw a slight drop. An anecdote features a sighting of Trump's motorcade. Economic highlights include a strong ISM services number for October, the highest in two years, and a notable increase in the trade deficit for September. The mix of higher growth and lower inflation figures contributed to the day's market optimism.

00:00 Introduction and Market Overview

00:40 Election Day Anecdote

01:14 Economic Data Highlights

01:51 Trade Deficit Insights

02:23 Conclusion and Sign Off

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

Topics discussed:

1. The right asset allocation means you're not always following the market moves
2. Japan's economy is a telling story
3. Chinese Tariff Rumor still don't move the market

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3JRB2yV

I read an interesting line from an analyst I read daily in my morning research this morning … “if the bulls are to reclaim control of this market, beta likely needs to reassert itself; hasn’t happened yet.” Of course, this sort of begs the question – bulls of what? Well, if one means “the market index,” then they have essentially said, “if those bullish for beta are to get what they want, beta needs to do well.” I think we call that a tautology. “If I am to eat ice cream I like, I will first have to eat ice cream that I like” is not a super profound observation. But I am not picking on this analyst or the comment – I am pointing out the premise hidden in the statement – that a “bull” means the “index” (beta just measures the portion of a return that is really index/market oriented). It highlighted for me how differently we think at TBG – that one can be agnostic about a broad market index (which is neither bullish nor bearish) yet still bullish on an investment strategy that is not remotely connected to beta … Indeed, to that end we work.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Market Update and Economic Insights - September 10th

In this episode of Dividend Cafe, Brian Szytel provides a market update for Tuesday, September 10th. He discusses the mixed performance of the Dow, S&P, and NASDAQ, along with a decrease in the 10-year Treasury yield. Key economic insights include the NFIB small business survey results, inflation concerns, upcoming CPI data, and banking regulation updates from the Fed. Additionally, there's an analysis on dividend yields relative to stock price appreciation and a brief mention of the Fed's quantitative tightening efforts. The episode concludes with a note on the evening's Harris-Trump debate.

00:00 Introduction and Market Overview

00:48 Economic Indicators and Surveys

01:55 Banking Sector Updates

02:46 Upcoming Economic Data

02:57 Dividend Yield Discussion

04:03 Federal Reserve and Quantitative Tightening

04:46 Conclusion and Sign-Off

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3JF6mRh

We are in a moment of “volatile Sundays” in the financial services industry. This is when market actors, policymakers, movers, and shakers have big news to announce on a Sunday in an effort to “beat markets opening”, or as Ben Bernanke once joked that his memoir would be called, “before Asia opens.”

I lived through it in spades in 2008 – Fannie and Freddie’s conservatorship, Lehman’s bankruptcy, Wachovia into the arms of Wells Fargo, Morgan Stanley’s deal with Mitsubishi, and the government’s extended backstop of Citi – all on different Sunday afternoon/evenings in either September, October, or November of 2008. I can tell you where I was, what I was doing, the exact date, the exact time, and all the things. Good times.

The last couple of Sundays have been a little adventurous, but for different reasons and with different catalysts. In a different environment, the news that UBS had done a “rescue acquisition” of Credit Suisse would have been the biggest news story of the entire year. I want to unpack it this week and share some thoughts on where it may be relevant for you, regular U.S. investors presumably with no direct exposure to either UBS or Credit Suisse, who normally just prefer to use your Sundays for church, family, rest, and sports.

Let’s jump into the Dividend Cafe!

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Market Recap and Economic Insights - November 21 Edition

In this episode of Dividend Cafe, Brian Szytel discusses the positive performance of the equity markets on November 21st, highlighting a 461-point rise in the Dow, a modest increase in the S&P, and a flat Nasdaq. He covers the economic side, including better-than-expected initial unemployment claims, a contraction in the Philly Fed manufacturing index, and strong existing home sales. Szytel also provides insights into future market expectations, emphasizing realistic expectations for index returns and a focus on dividend income given current valuations. The episode concludes with a preview of upcoming content for the holiday week.

00:00 Introduction and Market Overview

00:44 Economic Indicators and Labor Market Insights

01:17 Manufacturing and Housing Market Update

01:47 Market Expectations and Valuation Analysis

03:32 Conclusion and Upcoming Content

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

This week, Chief Investment Officer David L. Bahnsen discusses:

Topics discussed:

1. The re-pricing of stocks in tug-a-war
2. The tragedy of higher wages
3. When things get this screwy, they also get this good?

Links mentioned in this episode: www.DividendCafe.com

Today's Post - https://bahnsen.co/4301I8h

We have had a lot to say about housing here in the Dividend Cafe over the years, most recently here with a broad update of projections for supply, demand, and pricing, and more philosophically, last year’s bulletin here that aimed to provide a bigger picture perspective on how to think about it all. I was and am proud of both issues of the Dividend Cafe and the message embedded therein. Housing is a big part of the U.S. economy, where we live is a big part of our lives, and what it costs us is a big part of our monthly pocketbook.

Yet today’s Dividend Cafe is a little different. Not only am I not offering a forecast today as to whether or not median home prices will drop -9% from here or go up +5% or some other irrelevant nonsense, I also am not speaking to some macroeconomic ramifications of housing the way many pundits do (this many construction jobs will be added or lost, or this increase or decrease will take place in spending at the Home Depots and Lowes of our economy, blah blah blah). I do happen to think most of those discussion items are silly, misguided, and misunderstood, but that is not why I am ignoring them today. Besides them being bad questions, and impossible to answer, I also have a different focus that is more important to our lives and well-being.

Today I want to dig into the single biggest reality of housing that no one seems interested in talking about – and that is the cultural implications of how we have re-framed our view of residential real estate over the years. Some may prefer a discussion to the latest projections around the rocket science that is “home flipping,” but I believe our angle today is the lowest hanging fruit of how we ought to think about this subject. Let’s jump into the Dividend Cafe …

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3XR3bLi

Good afternoon, Brian Szytel here with you today, helping you navigate in a sea of red ink in today’s trading day. A volatile day with the VIX up big, with much of the narrative revolving around interest rates moving higher across the spectrum, along with mixed earnings and economic data and all of which I fully unpack in today’s video podcast

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3Ao6vbh

Market Insights & Election Uncertainty: Navigating the Week Ahead

In this episode of Monday's Dividend Cafe, David Bahnsen, Chief Investment Officer and Managing Partner at The Bahnsen Group, discusses market activity, public policy, the Federal Reserve, housing, and economic data ahead of the upcoming election. He highlights market volatility and the uncertainty surrounding closely contested elections, with battleground states showing tight polling results. He addresses current economic indicators such as job creation, bond yields, and the performance of different market sectors. Bahnsen also comments on China’s housing market, the expected Fed rate cut, and the contrasting perspectives in economic growth between the U.S. and Europe. The episode concludes with an invitation for listener questions and a note on potential election-related updates later in the week.

00:00 Introduction and Overview

00:38 Election Impact on Markets

02:06 Market Volatility and Polling Analysis

08:20 Jobs Report and Economic Indicators

09:35 Federal Reserve and Energy Sector Update

10:17 GDP Growth and International Exposure

11:09 Conclusion and Final Thoughts

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

Profits Earned, Lessons Learned, Sessions Burned by The Bahnsen Group

Post Election Perspective on Markets with David L. Bahnsen and Scott Gamm

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4fUvrpK

Monday Market Recap and Current Economic Updates

In this Monday edition of Dividend Cafe, David Bahnsen delivers a comprehensive summary of the market's current state, noting that the Dow closed the day down by 55 points while the S&P and NASDAQ saw slight gains. The segment highlights the top-performing energy sector and provides details on bond yields, including the noteworthy un-inversion of the yield curve for the first time in two years. David touches on the financial influence of the 'Magnificent Seven' companies on the S&P 500, and discusses disparities within the semiconductor sector. Additionally, various political updates are given, including the Pennsylvania State Supreme Court's ruling on illegal ballots and President Biden's decision regarding Ukraine's use of long-range missiles. The episode also covers Trump transition team appointments, particularly in economic and energy sectors. Industrial production stats, retail sales data, and Fed rate expectations are reviewed, along with a resilience in midstream energy assets despite fluctuating oil prices. David concludes by pointing to further reading and engagement through Dividend Cafe and anticipates additional updates throughout the week.

00:00 Introduction and Market Summary

00:48 Market Performance and Sector Highlights

01:23 Bond Yields and Yield Curve Inversion

02:10 MAG 7 and Semiconductor Sector Analysis

03:42 Electoral News and Ukraine Update

04:38 Trump Transition and Key Appointments

07:41 Economic Indicators and Fed Expectations

09:59 Energy Sector and Midstream Performance

12:18 Conclusion and Final Thoughts

Links mentioned in this episode: DividendCafe.com

TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4a8TMWG

As we get ready for a busy week of jobs data a few things stick out:

(1) The weekly jobless claims remain very low which seems to indicate a continued healthy employment market

(2) The “quits” rate (people voluntarily leaving their job) has been very high, and even as it has come down from early 2022 highs, it remains very elevated historically

(3) The number of job openings remains very high (though it fell to 8.7 million this month, still 1.5-2 million higher than pre-COVID average, but well off 2021 highs)

(4) The average work week has steadily declined on the margin (from 35 hours, which was above the 15-year average, to 34.25 hours, which is below the average).

(5) Several data points have softened in recent months, but not softened to what can be called “weak” conditions – just “less strong” than had been the case previously

A few other market tidbits and things that caught my eye today …

It is interesting to me that small cap value has outperformed growth since the turn in the middle of the year, but large cap growth has modestly outperformed large cap value. The two are normally correlated.

Some of the “big seven” names that have driven a lot of the market this year have not moved at all in six months (well, they have moved up and down, but I mean they currently sit flat from where they were this summer). The broader market has begun playing a little catch-up.

2024 earnings expectations are now up to $246/share in the S&P 500. We are likely going to end at $221 for 2023 so this would mean earnings growth of +11.3% in 2024, rather amazing if it happened. Of course, at that earnings level, the S&P is still trading at an 18.6x multiple (forward projected), and is trading currently at 20.7x.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

This week, [someone], [someone else] and [another person] cover [topic].....

Topics discussed:

1. Bitter Fight with Canada Barely Avoided
2. Will China Play Out Like Canada?
3. Bonds, Short Duration Bonds

Links mentioned in this episode:

TheBahnsenGroup.com

This is the replay of the Market Outlook National Video Call with David L. Bahnsen and Scott Gamm.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

A Win Streak for the Ages and Company Profits Galore – July 22, 2016 by The Bahnsen Group

Today's Post - https://bahnsen.co/43GLAdk

The markets went into big-time rally mode today and, of course, had already rallied a lot from mid-March levels. The CPI number was quite disinflationary yesterday, as Trevor walked you through in the DC Today, and we saw the disinflationary report in CPI yesterday and now further disinflation in PPI today (producer prices). Headline PPI was down -0.5% on the month when no change was estimated. The core PPI number year-over-year is now +3.4%, down more than 50% from its peak level a year ago. It had been +4.8% YOY just one month ago. But the Headline PPI is now up just +2.7% from a year ago, a massive drop and substantial wholesale disinflation that screams for …

A rate hike??? Dear Lord.

March 2022 headline PPI: +11.7%

March 2023 headline PPI: +2.7%

Okay. Don’t get me started. But did the market rally today because it is now even more obvious that the Fed should not be hiking anymore? Well, if so, the Fed Funds Futures aren’t showing it (still 66% implied odds of a quarter-point rate hike). Do markets rally because of what the Fed ought to do or only what the market believes it will do? The former is unlikely last time I checked. Yet markets today clearly said some form of “risk on,” and the reality is that the Fed either gets it or they don’t. The end is near. At least for this rate hike cycle. Credit is contracting. And both stocks and bonds seem to be seeing some form of easier path ahead.

Listen or watch today’s comments and check out the Ask David below for the pivotal question about the dollar everyone is asking.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3vIRb6n

A positive morning of trading in markets gave way to losses mid-day, only to gain it all back and then some as we headed towards the close, ending up 200 points. Interestingly, the correlation between rates and stocks today actually moved together with both rising, where the opposite has been the case much of this year. 10’s are moving further into four handle territory up to 4.14% as rates crept back up today with a stronger jobless claim number. We are at about a 54% chance on futures for a March rate cut at this point.

We are still early in earnings season, but it has been notable that while 92% of companies reported thus far have exceeded expectations, 58% of them have actually traded lower on the news. A combination of some exuberance over lower rates this year coming out of markets and just some general consolidation after the year-end run-up seems to be at play. I find this consolidation healthy, and with an advance decline ratio only back to -3:1, I doubt we have seen the last of it. More in the link below.

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

After the big move up the last two days, we closed the extraordinary month of April with a down-300 point day.

Weekly jobless claims came in at 3.8 million, bringing the aggregate new unemployment claims since the COVID crisis began to ~30 million.

Oil prices for the June contract were up ~$4 today (+25%), and are up ~$8 since Monday. April ends up being the biggest month up in the stock market since January 1987 (+11.1% for the Dow and +12.7% for the S&P).

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/43pRAau

Generally, a pretty market-friendly statement from the Fed, with some upgrading on the economy with GDP estimates moving up from 1.4% to 2.0%, they lowered their unemployment rate forecasts from 4.1% to 4% and raised the Core PCE forecasts by two-tenths to 2.6% for the year (and we are already at 2.8% now mind you).

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Topics discussed: Greetings from the financial capital of the world that is New York City where I have officially begun my annual "due diligence" week, and where another week in the markets deserves comprehensive analysis. We focus our efforts this week on what was done and not done in the "pre-written, phase one" trade deal, but we also delve into Brexit, the yield curve, Elizabeth Warren proposals, and even the lottery this week. But one thing I ask this week - persevere through all the weekly commentary to get to the "economic lesson" of the week. It is the subject most near and dear to my heart this week, and hopefully will be well worth the listen. So jump on into the Dividend Cafe!

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

DividendCafe.com TheBahnsenGroup.com

Market Action

Futures opened down nearly -200 points last night but got back nearly to the flat line by bedtime as Japan and Hong Kong markets were rallying. Then this morning, futures pointed to a +170-point open pre-market. The market opened +80 points and went steadily higher throughout the day. The Dow closed up +424 points (+1.31%), with the S&P 500 up +0.96% and the Nasdaq up +0.85%.

It would be malpractice not to start with this chart. One thing I have said over and over is that I believe equity volatility does not stabilize until the ascendant dollar reverses. Friday’s drop in the DXY was the worst day for the dollar since 2015 and the second worst day since the financial crisis (h/t Jim Bianco). Now, the dollar was still UP on the week – we are hardly in a trend of dollar reversal. Volatility is still the story, not a weakening dollar. For now.

We are up to 85% of companies reported for the quarter now (Q3 results), and revenue growth looks to be +11% year-over-year with earnings growth of +4.3%. And the earnings outlook for 2023 has only come down from $252/share for the S&P 500 to $233, meaning either this will end up being a very, very mild recession, or else there is more room to go for downward revisions of 2023 profits. The ten-year bond yield closed today at 4.22%, up six basis points on the day Top-performing sector for the day: Communication Services (+1.83%) and Energy (+1.73%) Bottom-performing sector for the day: Utilities (-1.94%) I am not sure that the ESG movement is proving to be much about ideology. It is apparently a lot more about performance, after all. As ESG-popular FAANG stocks have gotten hammered and ESG-hated energy stocks have thrived, new money into ESG products has evaporated.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I loved writing the Dividend Cafe for many years with a “jump around” approach, basically covering a wide array of topics that would enter my orbit of interest each week. I made a decision late last year to start writing “single topic” and to write the entire thing in “one sitting” – basically Friday mornings – so as to make it a more coherent and cohesive read. I do like it better that way, and the feedback I have gotten suggests you do too.

Today is a little old school, which happens every once in a while when no singular topic is inspiring me. There are a number of things I want to look at today, from the Value/Growth discussion to the impact of debt on the economy to so much more. I did write it all in “one sitting” (yes, Friday morning – I am a serious creature of habit), but it covers a handful of different topics that entered my world this morning from a plethora of inspirations.

So off we go into the Dividend Cafe, a read that will be well worth your while.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Santa Delivers the Most Market-Friendly Tax Cut In Over 30 Years - Dec. 22, 2017 by The Bahnsen Group

I have always had a sort of unfair pet peeve with people talking about time moving either too fast or too slow. I think what I hate is the thoughtlessness of it – the sort of expected cliche when someone says, “wow, this year has flown by.” For one thing, it can’t possibly feel that way for everybody, yet it seems like everybody says it. Plus, it often times is just patently false – what people say they feel is the opposite of how I feel, and therefore I assume they must be wrong. I know, I know, but I already said it was unfair.

The first half of 2021 did not “zoom by” and it also has not “dragged on” – for me. There are moments I can look back on and say “that feels like it was years ago” and there are other moments (perhaps more of these) that I do feel came and went quickly. At the end of the day, the holidays and the turn of the year were about six months ago. That much I know is true.

As I do every year, I wrote a lengthy white paper between Christmas and the New Year to recap last year and to lay out our themes and perspectives for this year ahead. I prefer to wait for the next six months to do a deeper dive there, but I will check in this week on some of those perspectives.

But primarily what I want to do in this week’s Dividend Cafe is give you a look at what has transpired so far this calendar year, and why. Accurately knowing what happened in financial markets is useful – and not to be taken for granted (remember, “what you know that just ain’t so” can be dangerous stuff). But I really want to explain today why things have played out how they have, and from there offer up a viewpoint on the future.

Jump on into the Dividend Cafe …

DividendCafe.com TheBahnsenGroup.com

with your host David L. Bahnsen, CIO and Managing Partner of The Bahnsen Group

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Another volatile day with the Dow closing flat after being down nearly -400 points. More to say here:

MARKET ACTION Dow: -7 points (-0.02%) – had been down over -300 points at the low and -400 pre-market S&P: -0.31% Nasdaq: -0.35% 10-Year Treasury Yield: 3.76% (+7 basis points) Top-performing sector: Technology (+0.21%) and Energy (+0.12%) Bottom-performing sector: Utilities (-1.79%) WTI Crude Oil: $81.94/barrel (-4.26%) Key Economic Points of the Day:

Weekly initial jobless claims came in at 222,000 – not a big move from the week before or variance from expectations Single-family starts in new housing construction dropped to 855,000, down -6% on the month and -35% from post-COVID highs

ASK DAVID “What do you think the impact would be on the stock and bond market if the Fed formally changed their inflation target from 2% to 3%? I assume it would be risk on for equities?”

~ Mike S.

Yes, it would be. But they won’t. And they don’t need to – they basically already did in 2020 with their adjustment to the 2% standard (that is, they no longer target 2%, but rather an “average” of 2%, meaning they can let things run hot in perpetuity to “blend” to 2% depending on how the math before or after works. In other words, they gave themselves “flexibility.”

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3uFMLMZ

Ask David

“If you are an investor in a passive index fund, exactly what happens to your equity when that fund/index removes a poor performer, and replaces it with a stock that has recently performed much better? While I suspect that your equity may stay the same upon replacement, it seems intuitively like an example of buying high while selling low. Is there any documented study of index fund performance over time due to the survival bias? Do you have any thoughts on the topic?” ~ Dom

I think I understand what you are saying but actually in this case the survival bias of the index methodology helps its performance over time, not hurts. What you are suggesting makes sense prima facie – that they are adding companies at high prices and removing others at low prices – but the fact of the matter is that the companies removed from the index is very rare, and almost always only happens after the company is broken. A significant amount of companies that have been removed from market indices over the years no longer exist at all, meaning that path from “a low price” to “zero” was never experienced by the index investor. Of course, there are cases when a company is removed from an index and subsequently rallies from a low valuation, but that is much less frequent than the opposite. And all of it is very rare and inconsequential …

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The Week the Fed Muscled its way back to the Front Page by The Bahnsen Group

Most of the attention in the markets this week was on the Fed’s announcements Wednesday – (a) That interest rates aren’t being changed any time soon, and (b) the quantitative easing program launched 20 months ago will start to be slowly eased back later this month with a goal of no additional bond purchases in roughly nine months).

But very little attention is ever paid to why these policies exist, and what their impact is to the various things we investors care about.

In the Dividend Cafe today, we will look at the state of monetary policy, the fiscal policy that has necessitated it (yes, those two things are married right now), and what investment lessons we can extract.

Earnings season is preparing to wrap and it was a solid one. Congress is continuing to bat around legislative things that have not gone the way most people anticipated (or even close). There was huge election news this week that speak to the current political landscape. And yet through it all, the major investment story of the week may be the one least discussed.

Come on in to the Dividend Cafe.

DividendCafe.com TheBahnsenGroup.com

Today's Blogpost - https://bahnsen.co/3mK2RRS

Today we are going to talk about something no one else seems to be talking about, and that may be one of the worst things imaginable for financial media ratings if it ever gets out. It is not controversial. It is, to me, somewhat obvious. But it is highly counter-cultural, and as I say, for many, it is highly problematic.

Jump on into the Dividend Cafe!

Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Topics discussed:

1. Tech Reckoning
2. Sector Positioning for 2022 (Tech, Energy)
3. Tax implications for 2022
4. Inflation in 2022
5. Dividend growth investing in 2022

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I hope you will find this to be a special Dividend Cafe. No, this week’s Dividend Cafe doesn’t dare to bring the vast military sophistication of people who tweet all day long to you, but maybe we do one better.

We don’t talk about Russia/Ukraine at all.

Actually there is some true connectivity between much of what I discuss today and how it interacts with current events, but at the core of the present market story is the challenge of growth. Military conflicts, elevated uncertainty, spikes in commodity prices, and other undesirables do not help the growth story. But they are peripheral pieces to the story, not the story itself.

And today in the Dividend Cafe we are going to talk about growth, and all we are doing to make sure we never get enough of exactly what we need.

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Topics discussed:

1. Sentiment vs. Fundamentals
2. When you pray that past is not prologue
3. Real Estate vs. Stocks in Recession
4. Getting QE right so we can get the next five years right

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Futures opened last night down -50 and were down -85 into the evening. This morning markets pointed to a down -265 open pre-market. Futures would improve in the next three hours before the opening. The market opened down just -80 points and then went positive before then steadily declining throughout the day. The Dow closed down -261 points (0.77%), with the S&P 500 down -1.30% and the Nasdaq down -1.96%.

January looks to be the greatest month for bond market auctions in history, with every single auction printing below-market yields. More demand than supply across the yield curve; each auction of new treasury debt means one thing – these buyers don’t believe these yields will last. Only 29% of companies have reported Q4 results so far, so it is really too early, still, but thus far, we are tracking for year-over-year revenue growth of +4.2% and year-over-year earnings contraction of -2.9%. Full-year earnings estimates started the year at $225 on the S&P 500 and are now sitting at $220. The ten-year bond yield closed today at 3.54%, up two basis points on the day. Top-performing sector for the day: Consumer Staples (+0.07%) Bottom-performing sector for the day: Energy (-2.29%) Earnings in energy currently make up over 12% of the S&P’s earnings, but Energy is currently only 5% of the S&P 500 by weighting. That 7% differential between earnings contribution and weighting is the highest it has ever been.

Links mentioned in this episode: [TheDCToday.com] https://bahnsen.co/3JqiqaH DividendCafe.com TheBahnsenGroup.com

Topics discussed: But first, I would direct you all to the annual white paper I do every year recapping the year behind us and offering our perspective on the year in front of us - Year Ahead/Year Behind. I believe you will find it to be an informative and useful tool in understanding the recent past and considering the immediate future. Share with any you would like.

Links mentioned in this episode: A Year Ahead/A Year Behind DividendCafe.com TheBahnsenGroup.com

The stock, bond, and housing markets are in pretty real distress right now as higher rates re-price risk assets, and general instability in monetary policy becomes the natural consequence of years of excess and irresponsibility.

And yet, everyone is already talking about it, making it a far less compelling candidate for this week’s Dividend Cafe. I have covered plenty on monetary policy this year and it will remain a primary macroeconomic focus in my shop for years to come. And as far as the general equity market distress playing out, I do think a general primer on bear markets next week will be useful (I have already begun writing it in my head).

But this week, I believe we are due for a topic that may be more dramatic than even stock market volatility, inflation, or Fed breakage. I think that through the lenses we normally think about various international affairs, particularly as it pertains to countries we consider enemies of the United States, we are missing some economic and market-sensitive ramifications that will be important to better understand.

So grab your globe but not your passport, and let’s devote this week’s Dividend Cafe to a few matters of international significance. I confess up front that it may not all cheer you up, but I can promise you this: It is not going to be the standard level of depth you are often exposed to.

Let’s dive deeper, and jump in, to the Dividend Cafe …

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market closed up 230 points today, zig-zagging around most of the day after opening up +350 points.

The driver was optimism around vaccine talk (and it is not just one source of optimism, as you will see in today’s Health Data). Earnings season is too young to be much of a driver but I selfishly like what I have seen so far. Let’s jump around the bend as always …

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Last Friday, December 11, marked year number 25 since December 11, 1995, when my father passed away. His name was Greg Bahnsen, he was 47 years old (the age I will be next year), and he was my hero and my best friend. I have to imagine many of you have experienced things (including losses) that do not feel like they were as long ago as they actually were. I know those cliches are tired, but it just simply does not feel like it has been 25 years since my dad died. Yet it has been, and I imagine when another 25 years go by, I will be saying and feeling the same thing.

Time becomes a weirder thing as we get older, I suppose (some of you will have more expertise in this than I do), and I am sure that time dynamics get even muddier when we are talking about a loss. Last weekend as I was isolated away working on a project, I spent abundant amounts of time reflecting on this and many other things. Regardless of what it feels like, 25 years has gone by since dad died, and my entire life being upended and forever changed. Over these last 25 years, not just in my own personal life, but across society, the news, the world, the culture, and yes, the economy and markets, there are a whole lot of things that have barely changed or haven’t changed at all. But, there also are certain things that reflect substantial change. Not just “evolutionary” change, but real paradigmatic change.

And the biggest of those changes is the subject of this week’s Dividend Cafe …

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Topics discussed: We are too early into earnings season to have much to say and the impeachment/political 'stuff' is enough to exhaust anyone. But 'global macroeconomics' - this is the stuff that gets us out of bed in the morning. And that's what we did this morning - we got out of bed and we talked global macro for you all. This is a not-to-be-missed Dividend Cafe podcast from our whole investment committee ...

Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com