The Dividend Cafe - The DC Today - Thursday, December 14, 2023

Episode Date: December 14, 2023

Today's Post - https://bahnsen.co/4aigyM6 Well, and there you have it – coming out of a global pandemic where the world shut down and reopened and supply chain disruption and pent-up demand caused 9% inflation, the Fed raised rates 525bps in one year, inflation fell back down without rising unemployment, the economy still grew, and as of yesterday, the Dow closed at an all-time high. I really don’t think, in all humility, there was anyone out there (including yours truly) that would have predicted all that. Now, there is still more time to go before I think you can officially fly the soft landing flags, but we are getting close after yesterday’s Fed meeting and statements. Adding to that narrative, we had some encouraging retail sales and jobless claims data today that had markets higher again. Also, the good ole three handle 10yr is back! We closed below 4% today down another 11 bps at 3.91% on 10’s for the day. Does all this sound too good to be true? I assure you there are still plenty of things in the world to worry about, but my sense at this point, with a dearth of large economic data coming out before the year-end, is that we will head into the holidays feeling a little more merrier than we did last year. =) 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. Good evening. Welcome to DC Today. It is Thursday, the 14th of December, and it's good to be with you here, all of you today. And it's good to be with you here, all of you today. We had another update in markets, although we had a head fake around two o'clock where markets kind of went back to fair value. But we closed up about 79 points on the Dow, which was nice yesterday. Obviously, big news was was the Fed meeting and rates that stayed the same. But then conversation and a press conference and statement following that really pointed to a cut in interest rates just by the Fed. The Fed's own dot plots, it was 75 basis points and markets are priced in almost double that or so, 125 for next year.

So all that is good and fine. We had the good old three handle is back on the 10-year. So 10-year yields closed today at 391. They were down another 11 basis points. So this vicious bond rally continues, which is really great to see. And I just think it's interesting. I don't know that it's official that you can really just declare a soft landing. I don't really know that you can ever declare a soft landing. At some point, you know, we'll have to deal with something. But technically, as of right now, as of today, the Dow closed yesterday for the first time in two years at an all-time high. And then just by definition, since it was up again today,

79 points, it closed another all-time high as of today. And so you had, you know, I don't know if anybody would have guessed that, you know, coming through a global pandemic, which we'd never seen, the world shut down, the world reopening, supply chain issues, pent up demand, all these things caused this, a lot of fiscal stimulus, monetary stimulus, the whole thing caused all this inflation. And we were up at 9%. And so the Fed took interest rates from zero to up 525 basis points in one year without an increase in unemployment, with GDP still growing, with the Dow closing at an all-time high, and with basically a round trip on where interest

rates are going to go out of the Fed, which is they're telegraphing that they're going to start reducing rates sometime next year. So it's a lot of good news, frankly. I don't want to get over my skis as we get into ski season. But, you know, so there's no victory lap here. But as of right now, things look pretty good, I have to say, in markets and where the Fed is at. We don't have a lot of data coming out from now until the end of the year. A couple of little things here and there that we'll see. I know there's industrial production, I think, tomorrow, and the Empire State Manufacturing Index, just things like that, but not really necessarily market-moving things. So most likely, we'll head into the holidays this year feeling a bit better than we did last year. And I'll chalk that up as good. Now we just need some more snow.

So other than that, we had retail sales, a couple of good data pieces today. Retail sales were up much stronger than expected. We were at positive 0.3. We actually expected a contraction of negative 0.2. So this is the season, consumers out there shopping, and those retail sales definitely beat expectations. Jobless numbers were also a little better than expected. We got 202, and we were expecting somewhere in the 230s.

So again, unemployment still looks good. Retail sales, that's a good sign for the consumer and the economy. And these things are all kind of feeding into that sort of soft narrative more. But tomorrow, or I'm sorry, we had ECB out today that, uh, followed suit with the fed in one way, which is they kept rates the same and the guard, but the guard was much more hawkish than Powell was yesterday. The guard was saying that, um, you know, she wants to hold rates steady for longer. She doesn't want to let her guard down, um, and, uh, in the next year and see where things sort of play out. I personally would be shocked if the United States starts to reduce interest rates and the ECB doesn't follow next year. So I think it's fine to say that for right now out of the ECB. And technically the ECB downgraded both inflation

and also GDP for next year, which is a little counterintuitive. You're going to say you're going to keep rates the same, but then the economy is going to slow down and also inflation will go down. I don't know. Those two things seem contradictory to me. So take it for what it's worth, I suppose. I take it at face value and knowing that in reality next year that they'll probably reduce rates along with the U.S. But all in all, you know, kind of a short update today, kind of a quiet day, but again, positive.

Big story, I would say, is positive economic data, kind of more narrative for soft landing, and then interest rates that keep going lower on the 10-year and across the curve. So with that, I will turn you back to your evenings. Thank you for listening. As always, we've got 10 days left before Christmas. So if you haven't done any shopping like I have, then probably you should start. And I probably won't. But maybe this will get me to if I put it on camera.

Anyways, hope you have a good night and good talking with you. We'll talk to you soon. Thank you. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, with Hightower Advisors LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. Thank you. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary and does not constitute investment advice.

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