The Dividend Cafe - The DC Today - Thursday, February 22, 2024

Episode Date: February 22, 2024

Today's Post - https://bahnsen.co/3OUiHEJ A big rally day today across the board, but particularly in technology stocks primarily fueled by AI euphoria. I honestly, can’t remember a time when the point move in the Nasdaq was almost on par with that of the Dow, up X and X respectively in what is more and more feeling like 1999. Japan however, is feeling more and more like 1989, closing at an all time high today surpassing its market peak of 12/12/1989, about a month after the fall of the Berlin wall when instead of trading stocks I was trading baseball cards. You read that right, it has taken the Nikkei 34 years to regain a new height following of the largest asset bubbles in the modern era. Do valuations matter? Yes, indeed they do. 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, February 22nd. Great to be with you all and on this nice kind of big rally day in the market, which is great to see now and again.

The Dow actually was up 456 points. And I don't remember a time when the NASDAQ point gain was basically the same as the Dow. The NASDAQ was up 460 points. So they almost were up the same, even though one of them's in the 38,000 range, and one of them is about a third, a little more than a half, or sorry, a little more than a third of that. So big day in markets, obviously, NASDAQ was at 3%. And the reason was driven by euphoria in artificial intelligence and generative AI. And so this space in the market is driving a lot of attention. And there was a big earnings out from NVIDIA, which is one of the lead chip makers in that space yesterday that I mentioned in DC

today. But the stock opened today and traded well all day, frankly. It beat, but it didn't beat by as much as some had hoped. So I was curious to see if the thing would actually close as good as it traded. And it certainly did on the day. And I think a lot of that enthusiasm and what I've called some euphoria in tech in general is just running through markets. And so it's just feeling more and more to me like 1999. This is what we dealt with back then. Obviously, it was a long time ago. it was a long time ago. I'm not saying that in NVIDIA or these great companies are going anywhere. There's a lot of what happened in the late 90s with the internet stocks. Think of pets.com or web van, these big, very successful from a stock perspective and valuation perspective companies end up going to zero. So that's not what I'm saying. I'm just saying that valuations are very, very stretched. They're very expensive. There's a lot of euphoria in that space and it's just driving markets. And at some point, these valuations are going to matter a whole lot. We didn't see that today. So again,

it feels like 99. And interestingly, and coincidentally, with a big rally day, you actually had another market close at an all-time high, which was Japan. The Nikkei closed at an all-time high, which wasn't just The Nikkei closed at an all-time high, which wasn't just a couple of months ago or a couple of weeks ago, was in 1989. So it feels like 99 in the US and it feels like 89 in Japan. So I was 12 trading baseball cards instead of stocks at that point. The Berlin Wall had just come down. So think about how long that is. So when I talk about overvalued markets and bubbles and things, just understand they're real.

You can look at the depression in the US and where markets traded out right before that and how long it took for markets to get back to where they were. And look at something like a Japan and understand what we've been through in the dot-com era, at least in my vintage and frankly, David's vintage, that we were sensitive to these things. They are important to keep an eye on. So all that to say, David had a nice section in Ask David there about inflation and food. It's a very common thing. All of us eat as people. So people are well aware that the Big Mac costs more and a gallon of milk costs more and those types of things. And I hear it a lot from clients, but technically over this entire period of time, including the pandemic anomaly, inflation in food has only averaged about 2.3%. So food for thought,

pun intended there. I just made that up. Let's see. We had initial jobless claims on the day come in better than expected, meaning lower. We thought it would be around 217. They came in at 201. Continuing claims were also better. So continued robustness in the employment market, and that's a good thing, not a bad thing. So we've got inflation moving lower. We've got earnings that have done quite well. And all these things are not necessarily bad, they're good. And so if interest rates are not going to come down in March or May, maybe it's June or July, then I don't know that that's a negative thing or not. The PMI data, it's just a flash read for the month of February, and we're not quite done with the month. So flash read on PMIs today came in a little bit better than expected.

Actually, the composite, meaning manufacturing and services, was right in line. Inside of that number, services underperformed, manufacturing hugely outperformed. But both of those components of it were in expansion territory, so above 50. And those are also good things. Existing home sales were up 3.1% on the month, but still down 1.7 on the year. So housing is still stuck. As I've said many times, we're in a frozen kind of need a thong out in our housing market, but it isn't happening yet. Mortgage rates are still too high. So all that fun stuff to say, obviously a great day in markets and I'll take it any day of the week. The technology sector

from top to bottom was up 4.35% as a sector. So quite a day, quite a day indeed. All that to say, I hope you have a wonderful evening. Tomorrow we'll have Dividend Cafe as we always do in your inbox. And there isn't a lot in the economic calendar tomorrow. It's pretty quiet. But then there's a lot going on next week. So we'll be back with you on DC Today next week and Dividend Cafe tomorrow. And I wish you all a lovely weekend. 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. Advisory services are offered through Hightower Advisors LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC.

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