The Dividend Cafe - The DC Today - Thursday, October 19, 2023

Episode Date: October 19, 2023

Today's Post - https://bahnsen.co/3Q1Ot2c This is Trevor Cummings playing backup quarterback for one more day. As mentioned, David will be back with you tomorrow with his weekly Dividend Cafe. Today is quite a busy one for David, as he will be attending both the Economic Club of New York for Jerome Powell’s speech and then closes out the evening at the National Review Gala. With that said, we’ve got a handful of data and news to keep us busy for the time being. We will tackle initial jobless claims, the Philadelphia Fed manufacturing survey, existing home sales, Powell’s speech, and Jordan’s persistence. That was a mouthful, now off we go… 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. Welcome to DC Today. I'm Trevor Cummings filling in again for Mr. David Bonson. It might look like I'm wearing a Halloween tie today, but I'm not. I'm wearing my Bulls and Bears tie. Markets were quite active today. I can't wait for David Bonson to be back because he's going

to have some good stories for you. He was at the Economic Club of New York today. Maybe not front row center, but a few rows back listening to Jerome Powell talk. And he talked about via text message that there was a protest and they had to escort him out and he was giving us kind of live updates so he'll have a lot of fun stories and great facts and a lot of findings that he's going to bring back for all of our listeners a busy man today started out there at the economic club of new york and we'll finish the night at the national review gala but like i said markets were pretty crazy today and there's a lot of data. So I will try to get everything organized and deliberate for you here on video or audio, your listening choice.

Today we had Drum Pal's speech was headlines. That was the most important thing happening today. Then you had jobless claims. You had the Philadelphia Fed manufacturing survey, existing home sales, and then an update on Congressman Jordan's game plan. So the Dow was down 252 points. It's become a theme that when Jerome Powell speaks that markets go down. So don't blame me for that performance today. But that means the Dow was down about three quarters of a percent. S&P was down 0.85 percent.

NASDAQ down 0.96 percent. The top performing sector and the only positive sector for today, energy was almost flat, but slightly down. So the only positive sector for the day was communication services up 0.33%. I'm sure a lot of that attribution to one large telecom company reporting and having positive numbers. Bottom performing sector was real estate, which was down 2.44%. The 10-year treasury is knocking on the door of 5%. Is that a significant number? Not so much, but we as human beings love whole numbers. So with the 10-year treasury at 4.98%, up 7.5 basis points, We are all curious if it's going to be 5%. Oil was in the 90s. So oil's at $90.48, up 2.45% today. And again, most important thing going on today

is what is Jerome Powell talking about? So he said today at the Economic Club of New York that inflation is still around and that he believes the posture of the Federal Reserve is appropriate. Now, does this mean that the markets think that they're going to continue to raise rates? I don't think so. What the market is more curious about is when are they going to start cutting rates? We've seen what high rates have done to the real estate market. And the question is when some of these businesses that have fixed interest rates are going to have to refinance them when they go variable, what impact that will have on a business cash flow. So again, all eyes on what the Federal

Reserve is going to do. And we've seen the calamity that's caused in the treasury markets as we've seen a huge rise in rates over the last 30 days or so. Beyond that, some of the data that the Federal Reserve is going to look at is jobless claims, right? They're trying to see the dual mandate. They want stable prices, and they want full employment. So employment is still quite strong. 198,000 jobless claims, and that is below expectation. That's a nine month low. And I'm doing this from memory, but I think if you take out the seasonally adjusted, it might be something like a 50 year low. So the employment market is still quite strong. Now you might have seen a flattening in job openings

and a little bit of a flattening in wage growth, but the general job market is still quite strong. When you look at the Philadelphia Fed Manufacturing Survey, again, that along with the Empire State Index is a good foreshadow to see what ISM is going to look like. So that data published today, it was improving, but it was still contractionary. Existing home sales. I mean, again, we're going to say this every day on DC Today, the real estate market is on pause. So existing home sales were the lowest since 2010 at 3.96 million. So you have a 30 year mortgage higher than you've seen in the last two decades. And you see inventory probably the lowest it's been in the 2000s. So low inventory, high interest rates means not a lot of transactions.

Congressman Jordan says he will continue to push for Speaker. So they had maybe a game plan about extending the interim till January, but it doesn't look like that's going to happen. So that saga will continue. If you go to the written, you're going to see an Ask David section about demographics. The way economic data works is you're always peeling back one layer at a time or pulling on the thread to see what drives what, right? Because it's dominoes. Everything has an impact on one another. But all of it kind of starts with demographics. So for a healthy economy, you want high replacement rates. You want people giving birth to children. You want a growing population. But it's two parts. You want a growing population of productive

people. So David breaks that down and says how difficult or impossible it would be to forecast something like that over 50 years, but talks about the economic impact of population. Again, all the attention was on Jerome Powell today. He spoke about that dual mandate. I would encourage you to read what David's written about inflation. There's a place you can zoom in a little bit and I think it's worth studying this idea of how rental prices are such a big part of inflation data, but it's such a lagging indicator in the way that they collect owner's equivalent rent. So again, David's written about that ad nauseum, so I'm sure that's helpful,

but we will continue to follow the data, provide the news, and break down our beliefs and how it aligns with our philosophy. So you will be excited to have David Bonson not only back Friday, which is tomorrow, for the Dividend Cafe, but back next week to deliver DC Today, where we'll have lots of factoids and tidbits and fun stories from this week's due diligence trip. Thank you for joining me for DC Today. This is Trevor Cummings signing off. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors LLC. This is not an offer to buy or sell securities. No investment process is free of risk.

There is no guarantee that the investment process or investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Thank you. and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice. This document was created for informational purposes only.

The opinions expressed are solely those of the Bonson Group and do not represent those of Hightower Advisors LLC or any of its affiliates. Thank you.