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

Episode Date: March 2, 2023

Today's Post - https://bahnsen.co/3ZCSvkX So the market followed its robust January returns with a -4% drop in the Dow for February and a -2.5% drop in the S&P 500, and the bond market dropped -2.7% on the month (though almost every index we track across stock and bond markets was still positive on the year through February, just much less so than previously). A few comments on today’s action here 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. Well, hello and welcome to another DC Today, the Thursday edition. We're going to bring DC today to a close for the week and then come to you with a dividend cafe tomorrow, which I'm pretty excited about. The market did some weird stuff today. So first of all, let me just tell you, February closed with the Dow down 4%, the S&P down 2.5%. And the bond market was down 2.7 percent for the month. So basically, every index that we track more or less was down in February. And every index that we track is still up on the year, but much less so. So January was up more than February was down, whether you're talking about bonds, S&P, NASDAQ, Dow, emerging markets, all these different things, and yet gave up a significant part of the return in

the month of February, as you probably know. Now, today, the S&P was down a fair amount. NASDAQ was down a fair amount. The Dow was not, but it was at least when the market first opened, as I was sitting on set at Fox News this morning, Fox Business with Stuart Barney's show, 29 of the 30 stocks in the Dow were down, but the Dow was up because one stock, a company called Salesforce, had announced earnings and issues yesterday that caused it to be up so much that it was making the whole Dow go up. So it was kind of a weird deal. And then even in the S&P and NASDAQ, which have a very large weighting of Tesla, which was down a lot, it was sort of throwing it off. lot, which was down a lot, it was sort of throwing it off. So it's very rare you see a day like that where one particular company is distorting a whole index. But it's even more rare that it's happening twice with different companies and in different directions, one to the upside, one to

the downside. But then all that changed near, oh, I'm going to say about two hours or so before the close. The Fed governor in Atlanta, Rafael Bostic, said that he was firmly in favor of continuing at quarter point hikes when asked about the idea of a half point hike. So I just can't tell you how stupid this is, that the same rate that we are going to get to, whether it's with a half a point move or quarter point moves, is not changing and didn't get repriced on the terminal side of the bond market and within the yield curve. And yet the market would move just on the idea that, well, the pace may end up being just at the quarter point move, which the Fed funds futures market were already saying was the pace anyways. But again, to my point, that so much of market movement right now is not about what the Fed will do or not do. It is about people

trading around what they anticipate traders will trade around with the Fed. And that double redundancy is there on purpose. And I think it speaks to the need for some more prudence in the market. So again, during this tail end of earnings season, you see some idiosyncratic results. Some people didn't like Tesla not giving a lot of specificity on some production developments. And the issue with Salesforce was kind of a surprise on their cost cutting. There's different things individual companies can do, right? But then you see stuff like Silverlake, which is a kind of digital crypto clearing bank, and they are just getting hammered. And it hasn't anything to do with that company. I don't know anyone who owns it. We don't own it.

It's not a part of my point here, but it's a big news event. Why is it in the news? Because again, it speaks to this sort of systemic pressure in that whole space. So those narratives are kind of 2022-ish and they're sticking around in 23 around Fed front running and trading and concerns are responding either upside or downside to a comment a Fed governor makes, I think you know how I feel about it. So the 10-year Treasury was up seven basis points today. Bond market was down, and yet you had equities rally. The Dow up 342 points on the day. The S&P and NASDAQ each up three-quarters of a percent.

Utilities, which have been really struggling, were up 1.82%. I imagine that's their best performing day of the year, but I'm not sure of that. And then financials were the worst performing sector. A lot of the banks got hit today and they were down about half a percent. Oil was up a little bit, around $78 a barrel. Initial jobless claims came in at 190,000, which was a little bit below expectations. So still continued good news on the job front. And then mortgage rates jumped back above the 7%. You may recall it was about three weeks ago now that they were maybe four weeks ago. You know, it's three, it's about three weeks ago that I think they were sitting at their

low in the last, you know, eight months or so at 6.2%. They've come all the way back up to 7%. So that's the state of the economic data today. That's the state of the market. And we're going to talk about national debt tomorrow in the Dividend Cafe. Reach out to questions at thevonsongroup.com if you have any further questions. There is a link in the DC Today to my appearance on Varney this morning. I was on set for an hour, and so my team put together a compilation of just kind of my contributions throughout that hour. If you're so interested, that link is there.

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