The Dividend Cafe - The DC Today - Monday, February 5, 2024

Episode Date: February 5, 2024

Today's Post - https://bahnsen.co/3HOoQy5 I am very excited to announce a few things going on with the DC Today … First, we’ll start with the changes coming to the Monday edition of DC Today: None. I will continue writing and recording the Monday DC Today every week and will continue doing so in the “format” you see below (which follows the template from the old “COVID and Markets” days for you nostalgic types – be safe, be well, be free – and has been the Monday template throughout the history of DC Today). I enjoy doing this. I use a lot of weekend morning time pre-sun to do the writing. And Mondays before our weekly Investment Committee meeting commences don’t have the morning workload other days do. I will continue to make the time Monday afternoons to record the DC Today podcast and video, as well. So Monday stays as is and you’re stuck with me. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Welcome to the DC Today, your daily market synopsis of the Dividend Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. All right. Hello. Welcome to the Monday edition of DC Today. I am so excited to be with you. It's a beautiful day in New York City. It's an exciting week. And the reason is that every week is exciting when you love your job. And I love my job. And of course, that's also the subject of the very new book, which is coming out tomorrow, which is adding to my excitement called Full-Time Work and the Meaning of Life. So there's a lot going on as I prepare for the book to come out. And there's a lot going on in markets today.

And we use the DC Today to talk to you about markets day by day. And I wanted to first give you a quick update in some ways that we've kind of reshuffled the deck a bit in a way that I think is very, very positive. First of all, we'll start with some things not changing. I absolutely love writing the Monday DC Today. Because I get the weekend, there's all those extra categories in the kind of old school template that we like to use where every Monday we're going into the Fed, to housing, to public policy, to economic data. For those of you that have been with us for a while, it was from our old COVID and markets kind of daily writing. And we've kept that in our

Monday routine. And we're going to continue doing that. And I'm going to continue writing it and recording this podcast and video every Monday in that same format. And then, of course, on Friday, the Dividend Cafe comes out. There's a podcast. There's a video. There's the weekly written bulletin I've been writing every week for a long, long, long time. It really goes back to the days of Lehman's bankruptcy in September of 2008. And I'm going to continue doing that exactly how I have been. That is something I literally intend to do, God willing, until they have to carry me out. So those two things stay exactly how they are. Then Tuesday, Wednesday, Thursday, we're going to continue doing a daily DC Today kind of market

recap with whatever the particular economic data or market updates of the day are. And Brian Saitel is going to be bringing you that more consistently full time. But then each day, I'm going to write a sort of what's on David's mind section. And I'll write it fresh myself every day. And it could be a paragraph about the Fed, it could be two paragraphs about dividend growth or something that I've been inspired by, by my morning research and reading. And that's going to be kind of the routine, the recording of it Tuesday, Wednesday, Thursday. Brian is going to be bringing you and he does a phenomenal job. He is the co-CIO with me at the Bonson Group. We've been partners together for a very long time and I feel like this is a great division of labor to continue creating and bringing you the content you're

used to getting. We want to improve upon it, play to our own strengths and manage it within schedule feasibility. So that's going to be the plan. If you're really, really happy, feel free to let us know. If you're really, really unhappy, I'm very sorry. Okay, where do we want to start? Markets are down today. Futures were down like 80 and then 60. And then when I got up this morning, they were down somewhere around the same 50, 60, close to where they had been when I went to bed last night. Then by the market opening at 930, the market opened down 120 points, but almost immediately

was down over 430 points. So it accelerated to the downside for the first, let's call it hour, hour and a half of the day. And then it slowly but surely kind of picked back up. And at one point was only down about 180 or so. It did end up closing down 274. So still down 0.71% on the day. The S&P was down itself 32 basis points and the NASDAQ was down 20 basis points. This was kind of more like it in terms of this correlation with the bond market, the 10-year was up to a 13 basis points. So it

closed at 4.17%. And then you got stock selling off with bonds. Was it because of Chairman Powell on 60 Minutes last night? I have a hard time believing that just to the sense that he really didn't say anything on 60 Minutes last night that was different than what he said last week. Markets dropped when he talked and then it was up a bunch on Thursday, Friday. So I think that you just have enhanced volatility. This is a big theme of ours this year. Mostly irrational around the up and down repricing, re-expectations of the exact situations related to Fed easing. And so you've now gotten down to, it's funny, I'd written over the weekend

that I was shocked that the futures were still pricing in a 38% chance of a rate cut in March. It's down to 16% now. So markets have started to better price in this reality that unless there's something pretty significant in February, March to change things, the Fed is very likely not cutting in March. They're going to just sort of sit still again. And then in May, the odds have come down from 100% down to 62%. I actually do believe that they will end up cutting in the month of May, but I don't believe they will in March, and I don't believe it matters one way or the other. So then you just get enhanced volatility around all these things.

Technology was up most today, only half a point. Healthcare was just behind it, up a third of a point. Materials got hit pretty big. They were down two and a half points. One thing I wanted to share from a piece I read in Semaphore over the weekend, that the sovereign debt of Greece has just recently recovered its investment debt rating. And I find this fascinating. It was about 2010 when Greece was falling into the ocean. In 2011, it looked like they were going to be insolvent as a country. And they basically were downgraded five different times by a total of nine notches. I mean,

junkie junk debt trading at 20 something cents on the dollar. It was really the textbook definition economically of a failed nation state. But there were three different rescue packages that came that totaled about $350 billion. And each one came with various demands of austerity, reductions in pensions, reductions in spending. It created a profound structural change in Greece. But their economic activity has come back. It's a story worthy of the history books. One paragraph in the DC Today and the last 90 seconds in this podcast, Don't Do It Justice. I may write a lot more about it, but there's just been quite a journey there. And the fact that Greece's sovereign debt is back to investment grade rating is simply phenomenal. Okay, in terms of news stuff, I think most people

know now the U.S. struck quite a few targets Friday night into the weekend, mostly in Syria and Iraq in retaliation for the drone attacks from the prior weekend that killed three U.S. troops, wounded 25. So that whole geopolitical story continues. Then the other big story of the weekend that kind of became official this morning is the Senate bipartisan bill. President Biden said he will sign into law. There are Republicans and Democrats backing $118 billion bill that would provide some funding to Ukraine, would provide some funding for Israel, and then would provide for various issues at the border. And regardless

of what one thinks about the good and the bad of the bill, I don't really think it matters. I'm not sure they're going to get the 60 votes in the Senate. I'm pretty sure they won't. They're obviously going to need 60 to avoid a filibuster there. But even if they somehow get that, which would be very difficult, because I don't think they're going to get all 50 Democrats. Even if they did, I'm not sure who the 10 Republicans would be. But you're not going to get the House on board here. So I think it's dead on arrival, but maybe something changes. But that's where things stand.

It's at the Senate level now, and then it goes on to the House. OK, so the big, big news Friday, 353,000 000 jobs created uh 317 000 of which were in the private sector you had 126 000 revisions higher for jobs created in december and november so we're used to some downward revisions we got upward revisions um it was just a massive report now that one negative hours worked did decline from 34.3 to 34.1 the labor participation force is still at 62 and a half percent a number i consider way too low um but for the most part it was it was robust and uh greeted as such there's a chart i'd love you to look at in the DC Today in our housing section today. Just the painful amount of reduction in new housing starts, multifamily, single family,

it took place after financial crisis. And then 14 years later, where we stand still not even close to back to pre-crisis levels of new supply, and why I believe the issues with housing continue to be a supply problem. So I've already discussed the Fed. Oil was up about three quarters of a percent today. There's a beautiful quote in the DC Today on against doomsdayism that I took from my friend Jonah Goldberg, his writing over the weekend, wonderful encapsulation of the things that have gotten inarguably better over the last 50, 100, and 1,000 years. You have to read it. So I'm going to leave it there. There is a lot that will be going on this week. I'm very excited about these kind of adjustments in the schedule. I look forward

to continuing my writing and contributing. You're going to still be hearing me, DC Today, every Monday on the podcast and obviously the Dividend Cafe. And every single note that you send, questions at the Bonson Group, I get it. I reply. I enjoy that correspondence. And so we'll kind of see how all this works out. Thanks for listening. Thanks for watching. Thank you for reading the DC today. All of us at the Bonson Group are very proud to be full-time workers.

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