The Dividend Cafe - The DC Today - Thursday, February 8, 2024

Episode Date: February 8, 2024

Today's Post - https://bahnsen.co/42FOvmj Stocks rose modestly again today as we flirted with a five handle milestone on the SP500 intra day but closed just two points below. We are up 13 of the last 14 weeks, which is technically the longest streak since 1986. Good thing there wasn’t volatility the following October (joking aside 87’ still closed higher on the year believe it or not). All said, earnings have been quite good, the Fed is on hold for now with the next move lower rather than higher, employment and GDP are quite good, and inflation is subsiding, so the path of least resistance has been higher. Elsewhere, with year over year decline in CPI out today the slowdown in China post pandemic has been one that few, if any, predicted. After decades of record economic growth aided by a rapidly expanding population and industrialization, growth has been slowing. There isn’t anything different about this playing out in China as it did in Europe and then the US mind you, it just happened faster because of technology and productivity being more advanced than in previous periods. Demographics in the country have also begun to shift. Today, 18% of the population is over the age of 60, and by the year 2032 over 32% will be, which will surpass that of the US. This isn’t to say there isn’t growth in China, it still grew GDP by 5.2% last year, but would you like to guess what the 30 year annual compounded return in the market has been there? -2.1% per year or about zero including dividends. 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 to DC Today. It's February the 8th, which is a Thursday, and Brian Seitel with you again. It's nice to be here as we get closer to the end of the week here. We had another nice day in markets today. The Dow closed up 48 points, kind of a flattish day, but we were just sort of flirting all day with this 5,000 level on the S&P. And so I had written a little intro about my memories of the S&P in different periods of time. And of course,

I wasn't able to include it because it didn't close above 5000. But we closed two points below 5000. But, you know, with with things basically more, you know, more biases to the upside with things basically fairly good. You have the Fed on hold. Earnings have been good. You know, GDP is in line and coming in, you know, just fine. Unemployment's holding in. Inflation's pulling back. And so path of least resistance is a little bit melting higher in stocks. You've had 10-year rates drift up a little bit too. They were up three basis points today, closed at 412 on 10s. And technically, we're up 13 out of 14 weeks in S&P right now. So that's the longest streak since 1986. And good thing there wasn't much volatility the following October. All joking aside, the market was up in 87 after that big sell off and on Black Monday. But all that to say, markets have been acting quite nicely. VIX, the volatility is still quite low, and we're kind of humming along here.

There was inflation data out of China today, CPI and PPI. CPI came out for the month of January at 0.3, so a small gain. But year over year, it's down 0.8, so deflation. That's definition there. PPI is down 2.5% year over year. So it's this continued slowdown in China in the world's second largest economy. They're dealing with deflation. They're dealing with population decline in numbers, not decline overall.

Most things are positive there in China every year as people have more money and are able to do more, more things, more education, all those things, better economy. But overall, the population has been declining. It was down 2 million people last year. And so you just have a headwind when population is growing like that. You also have an aging population in China, and some of that's playing into this deflationary theme that we're seeing in 24. The age of population over 60 is 18% now, but in the next 18 years, that'll pop up to 32%, which will put it above the US from an aging standpoint. And as we all know, your peak earning years tend to start to wane in your later years and the economic activity declines as you get older.

Of course, health care costs can go up. But generally speaking, when you have a population that's pulling back a little bit in size and also aging, you know, that's not necessarily a recipe for a big tailwind in growth. And what I put in there is the decades over the past 30 years in China have been just so amazing from a growth perspective. It's been one for the ages. And it's not unusual to have growth slow. That happened in the United States in our industrialization period. It happened in Europe. It just, in Europe was first, but it happened over a longer period of time. Technology was different then. and productivity was different, much different, lower meaning. And so now they've run up, and then the slowdown seems to be happening a little faster in the modern era. And that's

not necessarily a bad thing. It's frankly natural. But they're trying to shift gears and bring their economy into more of a consumption-based economy versus an export-led paradigm. And that is just having some, you know, taking time. And we're seeing that in the numbers now. It definitely is significant for global GDP over time because they were such a big contributor to it. But I'll leave it there for the day on that topic. The initial jobless claims were out today at 218 versus 220. It's basically right in line. Employment picture is still very sound. Still continued stress with this bank I've mentioned before, New York City Community Bank. More stress in the regional banking sector. This bank is down 60% year to date, unfortunately. It's basically following the playbook of what

happens to banks when there's a lack of confidence and you get this downward spiral. And it's sort of a self-fulfilling prophecy. There was a reshuffling in management at the top yesterday. There was a reiteration of $83 billion, a deposit base, and that's stable. If you remember what First Republic went through, it was almost the same comment basically a week before. So hopefully things turn around. It wouldn't surprise me if there's some action that comes out of it, and it'll be chalked up to commercial real estate stress. Although really what it comes down to is lack of confidence and frankly, potentially run on that bank. But we'll see as time goes on.

Tomorrow, we have a revision in CPI. It's a seasonal revision. So I don't know that it'll be hugely market moving, but it could move the needle here a little bit one way or the other. And we'll have Dividend Cafe in your inbox tomorrow, as we always do. or the other. And we'll have Dividend Cafe in your inbox tomorrow, as we always do. And for all of you out there that are football fans, I wish whatever team you're rooting for does well, and good luck in the Super Bowl. And with two young daughters that are obsessed with Taylor Swift, I guess I'm rooting for the Chiefs this year. So another AFC West rival for my Chargers. Anyways, that's what I got for you today.

It's Thursday. Have a wonderful weekend if I don't speak to you. And 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. Advisory services are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors LLC. This is not an offer to buy or sell securities.

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