The Dividend Cafe - The DC Today - Thursday, January 5, 2023

Episode Date: January 5, 2023

A solid day for the energy sector and some key blue chip companies but downside across most market sectors. Dow: -340 points (-1.02%) S&P: -1.16% Nasdaq: -1.47% 10-Year Treasury Yield: 3.72% (+1 basis point) Top-performing sector: Energy (+1.99%) Bottom-performing sector: Real Estate (-2.89%) WTI Crude Oil: $73.80/barrel (+1.32%) Key Economic Point of the Day: The ADP jobs number for the private sector came in at 235k for December, well above the 150k projected. Naturally, futures went down on the news. 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 and welcome to the Thursday DC Today. Markets closed today to the downside, although they were pretty much flat for the whole day. They just gapped down at the open once they kind of hit a low point near the beginning of market trading, stayed there throughout the day. There was a little up and down stuff along the way, but for the most part, pretty flat range once you priced in the downside of the opening, which left the Dow down 340 points, left the S&P, excuse me, down 1.16%, the NASDAQ down 1.5%. You have continued issues with some of the big cap and big tech names on the NASDAQ side.

The Dow was interesting because you actually had some real big names, blue chip names, some kind of big value type dividend growth names that were up on the day. And then energy was up about 2%. It was the only positive performing sector and energy had been down on the first couple of days of the new year. But energy was up 2% of the day. And then you had the worst performing sector being real estate down almost 3%. So the REITs are getting hit. You have all the different normal cast of reasons around that. The factor that pushed futures down this morning and then stuck with market downside throughout the day was the ADP jobs report, which came out. the day was the ADP jobs report, which came out 235,000 private sector jobs created in December, and there's about 150,000 expected. So God knows you can't have new jobs being created or let alone

more than expected. And so the market had to sell off out of the fear of what the Fed may have to do around those new jobs. So that's as much sarcasm as I can muster. But that's kind of, it's again, that same old dynamic that we saw throughout all of last year. So I don't have much to add to it because the BLS date is coming tomorrow. Let's see, did I give you all the numbers yet? The 10-year closed at 3.72%, basically flat today. And crude oil was up about 1%, 1.5%, back to $74 a barrel. And then I think as of the time I'm recording, they've now done nine votes in the House with no Speaker of the House secured, and they're getting ready to potentially do a 10th vote tonight. There was talk this morning when I was up quite early that there

had been some progress made, but nothing had surfaced there yet. And by progress, I mean within the Republican Party's internal disagreement towards getting some concessions made that would help get a vote necessary to confirm Kevin McCarthy as Speaker of the House. I cannot tell you what's going to happen, and nobody I'm talking to can tell you where this thing is going to go. So that lingers. And then the other piece today that I put into my notes very early this morning, there is now officially no global debt trading at a negative yield. You have slowly seen that dissipating away

over the last several years as bonds have sold off, which means yields going higher. And at one point, I believe the peak would have been around 2018, had nearly $17 trillion trading at a negative yield in terms of global sovereign debt. developed in emerging markets, even though we had gotten down to just a couple trillion in recent times, officially the chart that we look to where Bloomberg tracks out a lot of this stuff has no sovereign indebtedness trading negative yield. So that's a sign of such a significant movement. I mean, I don't think we can take our eye off the ball of how preposterous things were previously. But that pendulum having shifted the other way is both good to normalize some of these sovereign debt scenarios. And then it's also a negative where there are countries that have now tightened to a point that there's risk of recession and things like that. But that's kind of the state of affairs. So yeah, the BLS, the Bureau of Labor Statistics,

the real jobs report, that comes out tomorrow. There's a pretty decent history of the ADP and BLS data not aligning. Will the BLS data outperform ADP tomorrow? We'll see. Will it underperform expectations? We'll see. Will the market care? Is the Fed already going to do what it's going to do anyways, which is kind of my view? We shall see. I think all things being equal, the Fed would like to get some cover and have a bad jobs report and whatnot. But I think substantively they have a path they're going to go down regardless. So that's tomorrow, BLS, 5.30 a.m. Pacific. And then the other event tomorrow is the Dividend Cafe coming to you with both a lengthy video, the same audio of the video on podcast. But then the 27-page white paper will be available to you as a printable PDF with charts and all the things to edify your weekend about 2022 and 2023 in the economy and the market. Thanks for listening to the DC today and watching. And we take your questions.

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