The Dividend Cafe - The DC Today - Thursday, February 15, 2024

Episode Date: February 15, 2024

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

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. Hello, welcome back to DC Today on Thursday, February 15th. Great to be back with you all again from Newport Beach, California, in the nice studio we have here. And also, nice day in markets. If I could have a chart every day that looked like today's chart, I will take that on basically any investment because it really just kept climbing higher the entire day. We closed at the highs. The Dow was

up 348 points, which is nice. S&P and the Nasdaq were below. Part of that move was large cap energy. Oil was up 2% today. So you had some energy stocks on the move higher, which is good to see. The 10-year yield closed at 424. So it's down two bips on the day. Not a lot of movement there. Although after Tuesday's inflation data and the run-up in rates, we've now given back quite a bit of that run-up. And the 10-year is about nine basis points higher than before that number, and the two years up, maybe 10 basis points. So really, that's not much at all, as best as I can tell you. Jobless numbers today were a little better than expected. We got 212 for January versus 220.

Again, labor market still looks really good in my terms. And I just don't buy into the fact that some have said that we need to have unemployment in order to see inflation coming down. Inflation is moving lower anyway, so we'll hopefully keep those jobs. And again, I'd say good news is just good news rather than reading into it more than that. Manufacturing data today out of Empire State and also Philadelphia, both better than expected, so some bright spot in manufacturing. Again, good news is good. And then on the economic side, retail sales was disappointed.

My caveat in what I wrote is just month to month, trying to understand what consumers are gonna spend their money on and how they're gonna do it, I just think is a moving target. I wouldn't read into it too much, especially just for one month. And we can see the other growth numbers and and other metrics. We're in decent shape. It is December and January, so there's the weather to blame, I suppose. There's also a shift into more

services versus some other things and experiences. So there's all those things. But all in all, I'll chalk up today, economically speaking, as a good day in markets. And I think markets, the Dow being up the way it was, was responsive to that. We got negative GDP numbers in both the UK and Japan for Q4. And both of those countries had negative numbers in Q3. So that's two quarters in a row. And so that's a recession. So they've got a recession there in both UK and Japan. Japan was the one that was more surprising because Q3 was a pretty significant down number of negative 3.3. So to follow through with a negative 4.4 is fairly meaningful.

They technically, not by a lot, but lost their third spot on the world GDP stage to Germany. So Japan is now the fourth largest economy. And when I was growing up, it was the second largest. So I suppose this term that we've thrown around called Japanification, there's probably no better place that personifies that economically than Japan. The market there, though, has not been bad. The stock market has actually been an outperformer the last 12 months. So go figure. Those two things are not always correlated. In fact, they usually aren't economic output directly to stock market performance in the same year.

All that to say, the other statement I had in there, there was literally I'd walked from the conference room and to record this and so left a meeting and just recorded the question that I had from that meeting there. But it was really around real estate. We get this question often, but do we help clients with complex, sometimes real estate portfolios or frankly, large inherited real estate assets? And they're trying to figure out how to pass it to the next generation, how to keep things tax efficient, exchange ideas, 1031s. Do we help with that? And of course, we really do. It's an area of speciality, frankly. We, of course, will use outside realtors when we need to have someone charge a commission and process

paperwork and things like that. I'm not downplaying the profession. I think there's a lot of value to it. My point was more just, I think when you start sometimes with roads leading back to a transaction in the beginning of a conversation versus going to your fiduciary and going through the ins and outs of the whole deal and all the options on the table, sometimes number one, transactions are not needed. And then number two, I just have found it removes a conflict to some of those important decisions. But yeah, we help with really complex and interesting things. A lot of our institutional partners have Delaware Statutory Trust arrangements,

so DSTs that we can use. We, 721 upreads, you know, and like I said, it doesn't always come to something happening, but we certainly have a lot of resources to help folks out if that's something that is needed. With that, I'm gonna let you go for the day. It's Thursday, it's been a heck of a week for me, a good one, but busy. And so I'm going to get back to it. I want to get you back to your day. Thank you for listening as it's always good to be with

you. Reach out with your questions as always. Tomorrow we'll have Dividend Cafe in the inbox as we always do. And then we'll hit the weekend. So with that, I'll let you go. Thanks for listening. 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. Advisory services are offered through Hightower Advisors LLC. This is not an offer to buy or sell securities. No investment process is free of risk. There is no guarantee that the investment process or investment opportunities referenced herein will be profitable.

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