The Dividend Cafe - The DC Today - Thursday, February 2, 2023

Episode Date: February 2, 2023

ASK DAVID “Could you give us some tips on what we can do to fight ESG?” ~ Mark S. It is the subject of much obsession at places like National Review’s Capital Matters, and I am engaged in many efforts to fight for the interests of shareholders when it comes to the activity of corporate managers taking their P’s and Q’s from the radical and incoherent agenda of various fads and virtue-signaling alphabet soup movements. I have primarily noted that ESG has really been more of a marketing tactic for Wall Street to raise money at higher fees than anything else. But there is no question that there are many other consequences and intentions behind the movement, and that the movement’s lack of clarity and specificity as to what “environmental, social, and governance” principles they advocate has rendered it a moving target. I commend Aswath Damodaran of NYU for his frequent wisdom on the issue, and I will soon be posting more about general shareholder activism and rights and what TBG is doing in this regard. Links mentioned in this episode: [TheDCToday.com] (https://bahnsen.co/3JyLk8w) 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 Thursday DC Today. If my voice sounds a little bit hoarse, it's because the Pacific Christian Tritons are the San Joaquin League champions as of last night, outright league champs. And perhaps I was there and perhaps my voice got a little use. But more importantly, it was a really interesting day of markets. The day after Fed Day, I actually saw a rally continuation. And I love something that has happened. And some

people aren't going to understand this. A bunch of stocks are getting hit really hard right now after market. And a bunch of stocks were up huge today during market. And it's all company specific. So you have the largest social media company in the world was up 23% today alone. And as I'm talking after hours, and by the way, this could rotate later because that happens from time to time in the immediate aftermath of the futures market. And aftermarket activities are not always as reliable. But I'm going to check the update as I'm speaking here. But you have a rather significant revenue decline. Apple is the largest company in the world. And I bring it up because it's in the media right now.

And you had idiosyncratic or bottom-up fundamental news that has not been well-received by the largest e-commerce retailer in the world and the largest search engine. So these are big tech companies all down. You got other big tech companies that are up. And my point is, that's not about the Fed. And that's what I mean why it's reasonably positive to see the market acting in that more idiosyncratic and bottom-up way. It is Darwinian. Some companies are responding well to unexpected good news. Other companies are responding poorly to unexpected good news. Other companies are responding poorly to unexpected bad news. And that's interesting for a day after the Fed. I want to continue checking numbers as we're speaking. But so far, everything I said is holding up. And we'll see what it does tomorrow. But some

of these companies that have reported today are getting hit, you know, three, four or five percent down. And yet the NASDAQ today was up substantially in the middle of the day. And that was largely off of some other companies that had positive news. So let me stick with what we're doing here. The Dow was actually down 39 points, but it had been down 275 at the low. And you know, the Dow has the Dow marches to the beat of its own drum. The S&P was up 1.5%. The NASDAQ was up 3.25%. So just a really big rally in risk assets, primarily communication services, the best performing sector of the day. And consumer discretionary is right behind it, of the day. And consumer discretionary is right behind it, number two. So kind of a risk on day for the lower quality sectors, if I can be so simplistic. The worst performing sector was

energy. Energy has been in a little bit of a lag for a few days. And I do notice several healthcare companies were down today as well. Oil itself was at 75.80 a barrel. So just down, you know, 0.8%. Um, the 10 year treasury was flat. Let me check it where the rest of the yield curve closed. I think it stayed constant there, but you did have the 10 year treasury closed at 3.4%, basically where it came in. And let's see here. Yeah, you were really close to flat, like less than a basis point of move across the term structure, other than the six month was down three and a half basis points and the one month down six and a half. So you got a little rally in the short end of the curve. But like I said, just tremendous things happening in the bond market and really not a big surprise in my

humble opinion. So what else do I want to go through today? The Fed level was sort of drowned out by both the Bank of England and the European Central Bank, both of which raised rates 50 basis points this morning. But then the Bank of England made a comment in their rate announcement about believing that the risks of a severe recession have come way off. And so they're really starting to talk up the software handling thing too. So we live in interesting times. Jobless claims are better than expected. Productivity was better than expected. It came in at 3% for the fourth quarter annualized. And the unit labor costs, which of course are affected by productivity,

by productivity, they were up 1.1%, but 1.5% had been expected. And rising productivity aided in that number. So lower unit labor costs comes from greater productivity. You follow me? They're inversely related. That's about it. I don't want to pour more on. I have such a meaty and exciting dividend cafe coming tomorrow. I haven't completed writing it as I'm talking right now, but I've written a lot of it. And I love writing dividend cafe every week, but I really have enjoyed writing this one. And I hope you'll enjoy it. It's an incredibly important macroeconomic reality. And it's not, it is a little contrarian. There are not, there's not a consensus viewpoint, but we're going to share it tomorrow about the macroeconomic reality of Japanification, deflation, old terms that I've been talking about forever that I'm updating some perspective on. In the meantime, thank you for listening to, watching and reading the DC today. Thank you. 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. The Bonser Group and Hightower shall not in any way be liable for claims and make no

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