The Dividend Cafe - TBG Investment Committee Outlook - Week of January 27, 2020

Episode Date: January 27, 2020

Topics discussed: The market dropped 450 points today as fears and uncertainties around the Chinese coronavirus make their way through the markets. In this special edition podcast with our whole investment committee we make the case for “don’t just do something, stand there” as the right investor response to the present news. We appeal to history, market realities, health epidemic precedents, and basic trade economics to make the case for avoiding panic, and letting an unresolved problem get resolved. Please give it a listen, and please reach out with any questions you may have. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, financial food for thought. And a lot to kind of unpack. We're going to try to go a little short today because all of us are in the midst of various portfolio activities and client conversations and things like that. But we're taking a moment to discuss it amongst ourselves and record it all for you. to it though the uh rundown for those of you listening who maybe weren't paying attention to some of this in the news last week was that there were isolated cases of the virus breaking out earlier in the week uh by the end of the week i believe as of friday that fatality number had gotten up to about 50 as i talk here today it's now at about 80 and the number reported cases somewhere around 5 000 um there are five five cases that have been reported in the United States, two of which they are not even sure it is coronavirus, and the other three of which they think they have reasonably controlled. So we're going to be talking about this as a Chinese market story and its impact on American financial markets. But as far as a health epidemic, it is not yet,

and we would certainly pray it will not become so, a U.S.-centric story. So we talked last week, and I think rightly so, about the precedent with SARS back in 2003. There had been the avian swine flu in 1999, and there had been the Ebola issue in 2013 2013 or 14 so we've had these various health epidemics over the last 20 years and right now this is playing out exactly the way all of them have which is some modest elevated volatility in the early stages and then of course the part that we don't yet know is the way all these other epidemics ended, which is that they ended. So I'm going to leave it open for discussion.

I have a number of comments. I was at the – I worked pretty hard this morning unpacking a lot of some research and so forth, and then I went to my morning workout in the middle of working at NBC called and asked for a quote on how it would impact trade, and I was really breathing very heavily, and I think they probably thought I had the coronavirus as I was giving them an answer about the trade impact.

But I do want to get into the issues related to trade, the U.S.-China situation. But right now, just macro, broad impact. I'll start on my left with Daya, and we'll go around the circle. What is your initial kind of instinct around this as a market event? My initial instinct around this is, and I'm heavily biased towards this being primarily fear-driven and mood of the market thing. And as far as, yeah, the market's sold off a bit. Treasuries have rallied.

But the fear is almost always overblown when you look at the actual fundamentals. And like David mentioned, we've had a lot of epidemics throughout the years. You have SARS. You have Ebola. You have swine flu. I'm looking at this chart here. Asian flu. Hong Kong flu.

And no doubt that they have some sort of effect on fundamentals in the short term, maybe travel or certain commercial activities. But they tend to be exactly that short-term in nature, and they're very hard to predict exactly how long they'll last. So trying to trade around these epidemics has proven to be extremely difficult and will most likely cause you some sort of self-inflicted harm. So that's the way I see it. Good feedback. I would agree with that. I think it's kind of, well, first off, it's hard to predict. And actually, first and foremost, our thoughts are with the families of those that are affected

by this thing. It's terrible. As far as how it moves markets, it's moving them today and it's fear-based. As far as the changing fundamentals in the world, I think it'd be highly unlikely that that could happen. And if there was some wood, I would knock on it, unless it really were to get much worse. So for now, we're kind of taking it day by day, and it's moving markets a little bit, 1.5% on the day.

So we'll kind of take it as it comes. Julian, add a comment, and then I'm going to have a follow-up. Go ahead. Yeah, I was going to say it's interesting to put this number into perspective when you look at just the U.S. You have 200,000 people a year who get diagnosed with influenza, and then 35,000 a year who die, and we don't talk about that. And so if you look at SARS in 2003,

there were about 800 people died, and mostly in China. And the impact on the economy, actually, even 10 years or 15 years later, it's hard to know exactly what's the impact. I mean, you have numbers going from 30 billion to 100 billion globally, and some estimates saying that China lost about 1% of GDP that year, and in Southeast Asia, it was about 0.5%. So I guess the impact on the U.S. economy

was really marginal what happened, or even the global economy. So maybe locally, clearly this could have an impact on the Chinese economy. But if it's comparable to SARS, it's probably not going to have much impact on the overall economy. It's really the fear factor that's impacting

the economy more than anything else. But fear of what? I mean, isn't that the point? It's uncertainty. The thing we're afraid of is that we're afraid of something. Yes. It isn't definable or measurable or known. If it were, like let's say we're afraid of 80 deaths becoming 50,000.

Well, we have that many deaths from influenza in the United States and then some now. It's just sort of, to me, this kind of undefinable uncertainty. I guess it's fear of the unknown. So, like, people stop traveling, stop going on holidays, stop, you know, going to restaurants. They just stay home. They quarantine. I mean, you have, like…

In China. In China, yeah. But I guess the difference with, like, SARS is that these days you have many more people you know uh traveling and you can see like the i think us is trying to uh to get a thousand people back from i think france has like 500 people there they're trying to get back so there's i guess much more interconnection with china these days that you had 15 years ago so that's i would bet that maybe the difference is going to be you're not going to have 80% of the death toll of the case in China. It's going to be probably more spread out.

But the numbers are still very low. Yeah, and like you said, as far as the uncertainty goes, it's different than, sure, maybe something like influenza where there's a lot more deaths related to it. But we understand influenza where this is new and your imagination can run away with you. Maybe it's only 80 deaths now, but who's to say it can't be 800,000 deaths? It's easy to see the fear kind of getting away with you where we don't really have that knowledge yet. Yeah, I think it's interesting too just to think about the size of the Chinese economy compared to what 15 years ago or 2003

and how the effect of something like this would have maybe more of an impact just because the chinese economy is growing at six percent gdp versus you know 12 as it was in 2003 type of thing plus look how many more high-speed trains are in china in that period of time too so what would previously have been more or less contained and just say wuhan province city what have you i mean people can get on train during the incubation period and be in bank beijing shanghai in the same period of time so i i just look at it as you know as every day the market's getting more volatile, a little dipping here and there.

It just becomes a more compelling buying story, in my opinion. We're looking at this thing. We don't have data. The uncertainty is largely stemming from what the real or perceived response is from the Chinese. We had some kind of PR. I don't know if you guys saw the photo of all the excavators building that 1,000-person hospital.

I mean, miraculous, really. But I think we're waiting to see whether or not they are transparent about what's actually happening over there. Miraculous, like how quickly they're building it. Yeah, I mean, they did a great job. They extended the lunar year. So it's good timing, I guess, in some respect. But, yeah, the photo or video I'm looking at is in Wuhan. They're having trouble dealing with the outbreak, right?

So they're building this thousand-person bed from the bare dirt. And there were these photo and videos that showed dozens and dozens of excavators. It kind of looked like they were just moving sand and dirt from one place to another, but evidently it's going to be done in six days. Right. It's amazing how quickly they can put those type of structures up. So if I have a theory that the greater magnitude of impact of a Chinese health epidemic to a global supply chain now versus 15 years ago is a positive to this problem, not a negative, would you guys say I'm crazy? What I mean by that is there are so many more people with skin in the game that are driven towards a solution, towards an immediate transparent resolution, towards collaboration.

You have South Korea, Thailand, of course, United States. We have significant Asian regional trading partners all on the ground there in China working together towards containment where I think that the known risks lead to pragmatic motive towards solution. There is a sense – let's all joke how many guys take to a school and light bulb. Who knows? Just ask the free market. It will figure it out and And it's really funny. That's a great joke. That's a great joke.

And it's one of these jokes that like a few economists in a hotel room, like you get done with a conference and you go out to the break room and the economists tell the joke and they all laugh. And there's just no girls around and there's no cool guys around. It's just economists laughing at the joke. However, the joke is somewhat true. That is it possible the way you should feel about this epidemic is that you do not know how it will get worked out. You just know that it will get worked out. Is that is that fideism, blind faith, or is it actually the unbelievably clear lesson of history? It's the unbelievably clear lesson of history.

Look, I'm not a pathologist. I don't understand these diseases in and out, but I do understand the data. And if you look at the data, people get together, they solve these problems, and they find a solution to these epidemics. Now, what David mentioned is the increased globalization of everything and everybody getting together and trying – and you have more of a collaborative effort in trying to solve these problems is definitely a plus. Obviously, if this disease – I absolutely don't think it's as serious as the media portrays it to be. But if like we're living in La La Land, let's say the movie Outbreak, we're thinking about the movie Outbreak, yes, it would be a bad thing. It would be better if there wasn't any sort of anybody who's connected and this happened in a single village and was able to be contained.

But we do live in a globalized economy, and people are able to work together to solve these problems. If you look at the historical record, it's absolutely clear. These things tend to be fixed by people who are intelligent, and they tend to be fixed pretty quickly. I agree. I think with more people involved and more people connected, while the speed of an outbreak could maybe travel a little faster around the world,

I think with more eyeballs and people looking at it, how to solve the problem, the faster and the more efficient it will get solved. Julian, before you bring it up, I'm going to ask you, because I don't really want to get into it, do you think that the Fed is now looking at this as a potential catalyst? We all knew he was going to go there anyway. I don't think the Fed is

really focused on that too much, but I guess indirectly this is. You can see the 10 years starting to move a little bit. The dollars is moving so 10 years back to 1.6. The curve has inverted slightly on the short end I think the last two weeks. If you back to 1.6, the curve has inverted slightly already, slightly on the short end, I think, the last two weeks. So if you look at the implied probabilities, the market is already saying, you know, maybe nothing, you know, I guess, based on the guidance of the Fed, you know, we believe nothing happens the first half of the year.

But the implied probabilities are not really moving. But that doesn't move, though. moving that doesn't move though that that that percentage the almost no possibility of february march cut and the higher possibility of a july august september cut that's been there since the holidays uh yeah so it's not i don't like the specifically the epidemic is not really i don't think is is doing anything to how the fed is thinking of this in the in the short term it hasn't even moved long-term rates really i. I mean, a couple basis points, right? Not much, yeah. Not much. But I guess what I'm saying is, like, if the odds are, you know, by December that, you know, the market expects a cut,

you rarely see the Fed not following what, you know, the implied priorities are. So we'll see. I mean, they can try to guide the market a different way by the time we get to that point. But at the moment, like, the market is saying we want one or two red cuts by the end of the year. I find it a little hard, too, to, you know, separate out the effect of this, you know, the coronavirus from some of the political stuff that's happening, too. I mean, because it's coincident with, you know, Bernie rising in the polls a little bit, this new Bolton book revelation, too.

So kind of unpacking the market or the macro effects has been a little bit hard for me personally. Just because of the confluences? It's all happening kind of at the same time right now, right there. Yeah, I mean, I think there's a couple things that come up with these types of events that I've really seen it so many times now. It feels really redundant, and that is a market that needs no excuse to sell off. And you had mentioned a moment ago, Brian, down 1.5%. The Dow was down 1.500. It's down 1% now. It's down 300. Now, by the time we're done recording, it could be back to 500. And the market could end flat on the day.

I mean, that's literally the kind of craziness you get in this intraday volatility that we've had so little of lately. But the market is up 3,000 points in the last three and a half months. Yeah. 3,000 points in the Dow since phase one trade deal was announced. The market could literally have gone down 400 points today because of an outfit someone wore at the Grammys. I mean, it's just that random and that ridiculous. Now, I do believe this is related to coronavirus sentiment, fear, volatility, that that's where

this happens to be. But if it wasn't this, it could very well have been something else. So then you look into the Fed and what they may or may not do. And there's all the different factors. I think you're right. The shape of the yield curve is going to dictate what they end up doing later into the year but but i guess um i i don't want to just give the message to our listeners our clients that is what so many others would be saying right now which is ignore the noise the media is full of it but that's kind of

my message like sometimes we're with consensus and I'm with consensus. This is just noise. There isn't anything else to be talking about. The impeachment did not generate enough market activity to stimulate anybody. The real big news story right now in the world is a tragedy, not a market impacting one, which is the death of the icon who is Kobe Bryant. They're not going to talk about that all day on financial media. So this is the story. But I'm not belittling this as a story.

I'm just saying, do you guys get an impression that there's almost kind of glee from the press that they have a chance to generate a little bit of fear and hype when they haven't had that opportunity for a bit, Brian? Yeah, no, I definitely think that, unfortunately. They're in the business to sell advertising, and you get more eyeballs watching the screen, and you get more ad revenue. And so they're sensationalistic and a motive to do that. But I totally agree.

I think we are consensus on this, which is that it's terrible, it's tragic. We're going to deal with it as it comes. It's not changing fundamentals, and to use Fed speak, it will likely be transitory. It's something that will come and go and we'll move on. Dan, what were you going to say? No, I mean, it's

almost sounds a little boring. I mean, I wish that we could say that, wow, this time is different and here is exactly why this time is different and so on and so forth. It'd probably make for a more interesting discussion. But all we can really look at is the historical record and go from there as far as our analysis goes. I think that this report, Lewis Govkow Research, that we circulated real early this morning.

He's one of my favorite economists and his father, Charles, is perhaps my very favorite economist living right now. His point about China having two speeds on this stuff is really interesting. Either total cover-up, sleep under the rug, see no evil, hear no evil, or this, like, substantial overreaction where right now, and I didn't realize this, they're attempting to quarantine 56 million people, which is the population of Italy. But, boy, is that ever different than the SARS thing in 2003. Just a completely different response. No, no, I don't know.

And as far as those are just a few different cities or the city of... I think it's the UN province. So when they say quarantine, that means nobody's being let out of the city? That's the weird thing. You're not allowed to leave, but then France, US, they're all trying to get their expats out of there. So it's like, okay, so what's the point of quarantining 53 million people if you let 1,000 French people out?

They're going to just not quarantine them in the country, though. So if the French or whoever else is pulling their people out, they're going to quarantine them for 15 days. Yeah, they'd be quarantined in the US. It's like traveling with a pack. For 15 days. so they would pull them out and get them to a hospital in france and quarantine or wherever yeah that's the that's the idea that's the idea might it might this also just thinking through the trade deal stuff you know we talked previously about the maybe unbelievable nature of the proposed agricultural purchases from from china and i

don't i don't at all mean to be culturally insensitive but if people are over there eating bats cats and rats don't you hold on is that true is that true this is i'm reading i want to make sure we're not offensive so i'm just going to read from the report what he's saying is that the current wound flu has been blamed variously on bat soup rat meat and even consumption of cobras and so i i don't know differently i i was unaware of what they believe causation to be but obviously that you is that where you're going with this maybe this would speak to the fact they need exactly that's exactly where i'm going for modernity because one of the two perhaps they're coming off of that that's that swine flu right where they had a shortage of pork in the country so what i'm saying is maybe people are choosing a substitute protein or something like that and

they went maybe a little too far in some situations. So I don't know. We don't know from the reports necessarily. I thought it was just like a specialized market in Wuhan where they – it's like – I mean a lot of these things – Is that where it originated? Delicacies? I don't know.

Maybe it's – I think to Robert's point, if anything, it's either a non-event or if anything, on the margin, it might incentivize greater importing of U.S. product and way of life. It could be a derivative, I guess. We can't talk about the superiority of Western civilization on this podcast. That's not what we're here for. This is just a cultural thing. It's a cultural thing. But it has a health ramification.

It does. And so it's a cultural thing. But it has a health ramification. It does. And so it's worthy of noting. The media coverage is the most, I think, interesting thing about these epidemics

because it goes back to human nature. It's like, why do they talk about this so much on the news? Because, you know, that's how they

catch our attention. Like, we like everything that's Why do bank robbers rob banks? Because that's where the money is? Yeah. So why does the media put this stuff out there?

Exactly. Because the people want to hear it. They like to hear about that, and they like to hear about bad news and scary stuff more than anything. And what's scarier than dying from some unknown disease? Yeah, but see, I make a distinction, Julian, between financial media and the regular press, the tabloids. social media and the regular press, the tabloids. Presenting this as sort of a story about disease and hospitals and quarantines and bat soup and stuff, I get why that is a shock value thing just like at People Magazine or the nightly news even.

But I'm saying specific to investor ramifications. It concedes a certain short-termism which is fatal to investor success and it doesn't even do that very well. They don't even get the short-termism, which is fatal to investor success, and it doesn't even do that very well. They don't even get the short-term ramifications right. So I would kind of argue that I think the reason people care about short-term is because the media is telling them to care in an investor context. They care about short-term because the media is telling them to care about short-term. It is entirely possible that we had an outbreak of health epidemic in another country with other ramifications that we would never even know about and markets would never have gone down. It would not impact tourism.

It would not impact direct commodity purchases and so forth. I think that it's the self-fulfilling prophecy here that is really, I think, very problematic and irresponsible. It creates opportunities for long-term investors as well. So we see that as a blessing. It does. And it also reinforces the moral validity of our profession. If your advisor is an anchor on a financial news network and you're reading all this and seeing all of it, you might think the right thing to do.

I'm not panicking. I'm not being crazy. I'm not being crazy. I'm being smart. They're saying that this could shut down tourism and take out a third of a continent and I've got to go sell everything in my 401K for a little while. And so the intermediary who is a good financial advisor is the one who has to sit there to say, I don't know exactly how it's going to end or when. I do know that's the dumbest thing you could possibly do.

So, I mean, Brian, you could think about other things even outside of SARS over the years, other non-health epidemic issues. But isn't that kind of always the case where short-term volatility, when played into, instead of becoming your friend, becomes your foe? It is. And, you know, it's not that it's ignored and that that's the answer every single time. There are things that happen in the world that change things, you know, it's not that it's ignored and that that's the answer every single time. There are things that happen in the world that change that change things, you know, that change fundamentals. But when you have something like, unfortunately, and it's tragic, you know, 80 deaths out of 1.4 billion people, it's unfortunate.

But is that changing the way the world turns? Is this the end of humanity as we know it? No. And so we'll find a solution to it one way or the other, and it will play out, and we'll move on. And it just doesn't move – it doesn't make sense to make drastic, reckless decisions in your portfolio because of something that is tragic and something that is scary like this. Yeah, which is basically something we can say all of the time, that there is not ever really an event that it makes sense to be reckless. Sure. And I guess I could take the other side of it, though, too. I don't see any of us saying let's go buy with both hands over a 300 or 400-point drop in the Dow either. So just like we have always resisted panic selling, I'm not really tempted to panic buying right now either.

I mean, so everything before today was 18.3 x and now it's 18.2 x yeah it hasn't moved much at all and like you like you said what are we two percent from the high although you know energy might be getting even cheaper it's cheap uh the oil prices i mean again people is oil prices are oil prices down because of this flu this epidemic i i don't believe it. No, I mean, there's a huge travel schedule in China right now. It just happens to be sort of their new year on January 30th. The lunar new year.

And like you were talking about how they can build a hospital, like they have 1,000 beds overnight. They also, and I just think it's fascinating, they extended the new year to February 2nd. Yeah, I read that. I mean, just with a decision like that. So to try to mitigate the people not traveling and all that kind of stuff. Well, it doesn't sound like any of us are particularly concerned about short-term trade disruptions.

I think Robert's point that maybe there might be some anecdotal support for the need for greater imports of U.S. product. We do see today it hitting some of the key companies in the technology sector. But of course, those companies have been up so much in the last couple months that it's really hard to say, oh, wow, people want less semiconductors or less, what's the word, smartphone products just as a result of this. So it's going to carry through where you would logically expect it to. But in terms of earnings season, we're in the meatiest week of the year, of the quarter for earnings season this week

and then again into next week. One month from now, Robert, what will have moved markets more, the way earnings play out or this health virus issue? Earnings. Julian. Yeah, earnings, totally.

I mean, it's actually interesting that in the next few days and next week, it's extremely busy with earnings. So it's going to help us refocus on that. I'm sure even the financial media are going to talk a bit less about this. This is interesting for a few days, and then people get bored, and so they're going to go back to what makes more sense, hopefully, and earnings. And we have a lot of companies reporting. I think we have half of our companies reporting this week.

So it's going to be very busy Wednesday to Friday. Yeah, I agree. Earnings or coronavirus? Definitely earnings and definitely fundamentals of those earnings. Is this going to hurt Corona beer that the virus is getting through? I thought about that, yeah. I don't think so. How did he pick the name other than viruses? I thought about that. Yeah. I don't think so. How did he pick the name?

Why Corona? I don't know. It's part of the family. Is there no trademark for Corona? The first ground zero or the thing? I'm not a pathologist. I don't want to. It's the way the virus has like some structure.

Okay. Corona. Oh, it looks like it. Okay. And SARS is similar. I think it's something like that. Similar Oh, it looks like it. Okay. And SARS is similar. I think it's similar families, I guess. Okay. Yeah, in about a month.

Look, I don't know what's going to move markets in a month. I know that earnings is what should move markets, and the longer that window gets, my vote goes towards earnings. But look, if this death toll goes from 80 to – if this is still a story, which I doubt it will be still a story a month from now. But if it is still a story, yeah, it could cause some volatility in markets. Self-fulfilling prophecy sort of thing? Right. Just like David was saying, the whole fear, whether or not it's actually funding fundamentals, the whole self-fulfilling prophecy fear, and maybe lead to more of a sell-offs and treasuries will continue to rally. So in a month, it's a very short-term window.

I think earnings should drive markets in a month. And I think your point, Julian, earlier was really good, too, which is the flu in the U.S. alone, one country, 35,000 deaths every year. 200,000 hospitalizations, 35,000 deaths. I did not know that. It puts it in comparison. So we should probably all stop traveling and stay home. No, it's dangerous to leave

right I mean it's like the conclusion right we should I mean it's down to if people change their habits then it will impact the economy if they don't

then it's not going to make a difference no one's changing their habits no so no one's changing their habits on this it's not going to happen this too shall pass

even when it happens yeah even if they change their habits it'll be a delay not just earthquakes tornadoes terrorism, the human spirit wants to live the flourishing life it wants to live. And if that means going to your favorite bat soup restaurant, I guess that's what we were going to do. But listen, this is not about U.S. tourism to China.

It's about activity within China domestically. So I think the lowest thing to fruit of problems would come from if there was a legitimate and sustainable supply disruption. Even if there's a supply chain disruption in tech. If it's not sustainable, it's not a market-moving event. It's just a hiccup. It's a pause. It's a delay.

These are things that are part of the system. And this is where, like, all the reading I've done of Taleb over the years on anti-fragility, systems get stronger when they get challenged and choked by kind of unexpected things like this they become more robust out of it and i think that you're it's very entirely possible we're going to look at this in a week or two and mourn for those who lost you know there is a real sickness and pestilence element here that's awful but but it may very well be we say, God, they've come a long way in what's essentially a third world country in 15 years versus where they were with SARS. And the global cooperation, having South Korean doctors come in and things like this, I mean, that's where I expect it's going to go. I just think that we're so conditioned to focus on the negatives, and there's some positive angles there.

In the midst of a market drop and uncertainty around the medical, I get why it's not ready to be considered over yet, but it will be. Also, one big difference, I was listening on coming in today on the radio, some of the biggest tech companies in China, maybe for manufacturing it might be a problem if you have a factory, but the tech companies in China, maybe it's for manufacturing might be a problem if you have a factory, but the tech companies,

they just, all their employees just work from home. So it's like they keep, you know, they keep operating. Maybe you couldn't do that 20 years ago,

but, you know, if we all had to work from home tomorrow, you can, the business still can keep going on. Well, it's a good point. It's not going to impact

your, you know, the economy. It probably has less of an impact than it did 15 years ago as far as people not traveling or not being able to go to work and things like that. Because you're right. With technology, you can now do it in other places.

Yeah, remotely. Well, let's see. Is there anything else we need to cover? Does anyone have any kind of closing comments? And then I'll sort of wrap us up. I think we've covered it. I think we have, too. Yeah.

Yeah. Sorry. I will say this. If I hear one company in the earnings results that we still have to go, say we've got to talk down forward guidance and blame it on this, then I will- I'd be shocked. Well, I won't be shocked. I can see it happening.

I think that Dale will be getting a task to liquidate that position. It's very likely. Very likely. But you see that time to time. Companies are notorious for blame casting around current events. Yeah. All right. They have currency, too.

Any sort of currency movement anywhere, it was all currency. It's only one directional. They never made their numbers because of currency headwinds. Right, exactly. They missed their numbers because of currency headwinds. It's a tricky old time here. This is what we are paid to do. We're trying to get it right. We're trying to give you the right

information, trying to give you the right emotional construct to be thinking about this. And then from the economic standing and from the investment allocation, you can rest assured that we would be responding where we need to respond and not responding where we don't. And right now we're in a sort of don't just do something but stand there kind of approach.

But the time may very well come where we get the opportunity to buy more. We just conducted a rebalance. We feel very confident that we have our client portfolios allocated the right way. There may very well be an opportunity to deploy some cash at lower prices and nibble in as we target risk asset allocation. It gets a bit cheaper, but we don't know where that will go exactly. Markets are still up on the month of January, so let's be very sanguine about how we're interpreting a 1% down day.

And they say the market was down last week, worst week in however many weeks. Well, the market had been on a tear. This is why you own bonds. This is why you own alternatives because the day-to-day and month-to-month volatility sometimes can be disruptive. These things are reasonably neutered for a properly allocated portfolio.

And then ultimately, we are focused on the greater good of earning season. And you're going to hear a lot more from us about that stuff in the weeks to come. I will not go down the path of talking about impeachment right now, but we may have more to say about that by the end of the week in the politics and money section of Dividend Cafe. And to the extent I'm going to say anything at all about the tragic loss of Kobe Bryant

and several of the people who are on the plane with him who are fellow Orange County residents here where the Bonson Group is located in Newport Beach. There is an incredible loss in our community, incredible loss in the Southland. But I honestly, without being melodramatic, think it's an incredible loss for the whole country. It's such a young and talented man with a family, a beautiful daughter. A lot of people not only lost a hero and a basketball legend yesterday, but a few people lost a father father and it's incomprehensible. So we give that proper mention to the events, frankly, more on my mind than anything else. With that said, thank you for listening to our Weekly Diving Cafe, the special

edition. Feel free to share it around as you see fit and reach out to us with any questions. And for clients, reach out to your private wealth advisor if there's anything else he can unpack, he or she can unpack for you in this time. Thank you very much. Thank you for listening to the Dividend Cafe, financial food for thought. The Boston Group is registered with Hightower Securities LLC, a member of FINRA and SIPC, and with Hightower Advisors LLC, a registered investment advisor with the SEC. Securities We'll be right back. Thank you. representations or warranties as to the accuracy or completeness of the data and other information or for statements or errors contained in or omissions from the obtained data and information reference herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice. This document was created for informational purposes only. The opinions expressed are solely those of the team and do not represent those of Hightower Advisors LLC or any of its affiliates.