The Dividend Cafe - The DC Today - Monday, September 18, 2023

Episode Date: September 18, 2023

Today's Post - https://bahnsen.co/44YIrFd Nothing like the Monday DCT with a great deal of stuff for you today about housing, policy, the economy, markets, and more! 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. Well, hello and welcome to the Monday edition of DC Today. You know the Monday edition, the special, old-school, long-form. There's a lot in it today. I'm going to try to go through as much as I can. Old school, long form. There's a lot in it today. I'm going to try to go through as much as I can. A lot of market action today is not covered

because it was an extremely boring day in the markets. In fact, all three indices, Dow, S&P, and NASDAQ, ended up basically flat on the day. How flat were they? So flat that I didn't even bother to put the numbers in the DC today. I just put that they were flat because they were all literally within a couple basis points. The Dow had opened down a bit.

It went up a little and then just kind of leveled out right around where it opened on the day. And similar action with S&P and NASDAQ. Now, within that, the energy sector was up about 0.7 percent. Consumer discretionary was down about 1 percent. But again, as far as the whole indexes go, not a lot to say in the markets today. If you go to the D.C. today, by the way, in the kind of opening paragraphs, there is a regurgitation of the Dividend Cafe from Friday, just the links to the written Dividend Cafe, the video, the podcast. And then because I was on Varney and Fox Business this morning before the market opened and I was on CNBC after the market closed, we have links to

those appearances. There's actually even a little quote, a link to the Wall Street Journal had a big article yesterday on markets and I was quoted in the article. It's just one quote, but we've provided that link for your reading pleasure. So with a flat market behind us, a couple other little market nuggets and then we'll get into some news stories, public policy, the Fed, all the good things. 53% of tech companies, I mean, basically just right around half, and actually only 40% of semiconductor companies, less than half, are above their 200-day moving average.

So you have definitely seen a weakening in the breadth of the technology sector, which had really been carrying a lot of the S&P and obviously the NASDAQ most of the year. We'll see where that goes because the top side, the top positions in the indexes, the largest size, have actually hung in there. But the internal weakness up and down has definitely intensified. The bond market, not a lot to report today. The 10-year closed down 1.7 basis points in its yield, down to 4.30, so bonds were up a little today. And then oil prices were up 1%, closing at basically just shy of $91 a barrel. So a lot of strengthening in energy. The autoworkers strike is the big story that I

think is most market adjacent. The fact that Zelensky is here in the States, is meeting with President Biden at the White House this week. I'm here in New York right now, and I have never seen anything like the shutdown that goes on on the east side when the U.N. General Assembly is meeting. So you combine the United Nations meeting, which brought President Biden here to New York, combined with the fact that we had rain all day and especially this morning. I mean, it was just it's quite an experience seeing everyone come upon the east side of Manhattan. everyone come upon the east side of Manhattan. But Zelensky is here in the States. That then opens up more of these discussions with the House and the Senate. And we're going to talk about kind of what some of the divide is on the Republican side

right now. And then that other story is the United Auto Workers going on strike. First time in the union's history they were offered a 20% plus raise by the automakers that was turned down. And so there will be, I mean, you can't really call it a big market story when the market was flat today. And what economic implications are a little bit to be determined because so far, the strikes have been regionalized and limited, real localized. But I think it could become an even bigger political story, economic story, market story. So I will be watching it and writing on it as need be. On to that public policy side, I suspect a government shutdown is very likely at

the end of the month. Now, there was reports that there's a compromise has been arranged within the House GOP. The problem with that report is that there seems to be more than enough individuals from the Freedom Caucus and kind of the far right side of things saying that they don't support this compromise. And the math of it is such that unless we're supposed to believe that the Democrats are lining up behind it, that they don't have the votes for it. They can only afford, I think, to lose four votes, and there's been more than four that have said they're opposed to it. So there are reports that there's a compromise between these warring factions in the House GOP, but the math doesn't seem to be adding up to me. The plan within their compromise called for 8% budget cuts, for some funding going to the border, but there seems to be a few things missing to get others on board.

And, of course, even then it can go to the Senate and the White House. It has no chance of going anywhere there. So there you go. The Government Accountability Office released a report last week verifying, it had been reported earlier, but they verified through their analysis that one out of every seven dollars that was dispersed by federal unemployment during COVID was fraudulently stolen. And they believe that dollar amount to be as much as $135 billion. I just think that data point belongs in our treatment of public policy. Economically, industrial production was up 0.4% in August. Prior months

were also revised upward a little bit. Utilities output and mining were up nicely. Even manufacturing was up a little bit, although auto production was down 5%. U.S. median household real income fell for the third year in a row in 2022. It is now 4.7% below its 2019 level. And all that really is is a reference to median household income adjusted for inflation overnight China's retail sales came in four and a half percent year-over-year up for four and a half percent year-over-year the forecast was it would only be up three percent their industrial production was up four and a half percent and it was projected 3.9%. So slightly better than expected in industrial production and retail sales out of China.

The lay of the land in housing right now is basically this. You have mortgages sitting at a 7.5% average rate nationally. That's on a 30-year mortgage. Between the big increase in housing prices that took place from middle of 20 to middle of 2022 and the new higher mortgage rates the average monthly payment for a new home buyer at the median price has almost doubled in the last three years volume of purchase transactions taking place within single-family residence is very low. Mortgage applications for a new purchase are down well over 50 percent. Refinancings of current mortgages are

almost obsolete. Basically nobody is doing them. Inventory and supply of houses for sale, of new listings is extremely low. One interesting thing though, the highest priced tiers of homes have seen a slight uptick in inventory in the market recent months. And so with all of these things on the table, home prices just aren't moving. They're not going higher, obviously, based on affordability, but they're not dropping much either. Low supply, low affordability has sort of created a stalemate. One thing I'd say is new home sales have an advantage over existing home sales because home builders do have certain levers they can pull to try to sweeten the pot a little bit. But there's not much. I mean, overall, even the new NAHB survey

today, home builder optimism was bad. It was down five points. It had been at a 56 level in July and is down to 45 now. It was 50 last month. So you have very bad internals, current conditions, prospective buyers traffic, none of which are going great. But as we sit here, the odds of a Fed rate hike this Wednesday at the FOMC meeting are 0% in the futures market. There's basically a 99.9% chance that they sit tight. And then it's gotten up to about 70% chance that there'll be no hike in the November meeting as well. We'll see what happens in November. But for now, we're expecting the Fed to say things Wednesday. They do love to say things, but not cut or increase rates this week. So I'm going to leave it there. There's also an against doomsdayism quote that I think

you'll find very interesting at the dctoday.com. And someone had asked about whether or not someone could just buy a dividend stock anytime and get the dividend no matter what. And I explained the way that the payable date, the record date, and the ex-dividend date are announced, what those dates each represent in terms of how the timing of dividend payments and both buying and selling a dividend stock work if you're interested in such a thing so i'm going to leave it there i will be back with you every day this week from our studio here in new york for the dc today and in the meantime you're very welcome to reach out to us with questions anytime thank you for listening thank you for watching and thank you for reading the DC Today.

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