The Dividend Cafe - The DC Today - Thursday, September 14, 2023

Episode Date: September 14, 2023

Today's Post - https://bahnsen.co/3EGfov8 The European Central Bank (ECB) raised their rate to 4%, and bond yields FELL (go figure) – mostly because markets price in today what they believe about the future. Job hirings have slowed, but job firings have too. We live in interesting times. 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 the Thursday edition of DC Today. I just returned moments ago from being on Fox with Larry Kudlow after the market closed. And we'll have the clip of that in DC today. But rather than go back to the office to record, I'm recording in my apartment before heading out for a dinner tonight. And so that's the change of scenery. I always like you to know where I am. My life's an open book. What can I say? The market rallied today. Dow was up over 330 points, about 1%. S&P was up almost 1%. Same for the NASDAQ. They were up a little bit less, 81 basis points for the NASDAQ, 84 basis points for the S&P. But nevertheless, a big rally led by 1.75% move

higher in real estate and a 1.5%, nearly and a half percent increase in utilities. Both of those sectors having been, I think, quite oversold. And the worst performing sector, this is a very rare day, but the worst performing sector was up and that was healthcare was up a quarter of a percentage point. So those are real rally days and just like real sell-off days when every sector is down, real rallies when every sector is up, a lot of breadth. Economically, European Central Bank raised their funding rate to 4%, which some were wondering if they would do less than that. And then bond yields all fell. And I just can't emphasize enough the reality of markets discounting ahead what they believe about the future.

Why would bond yields fall when the funding rate went higher than expected? It would be the bond market, for right or for wrong, believing that this may be the end of it and that the next step would be lower. And so it gets priced ahead of time. The U.S. bond market did a similar thing with the Fed and ended up being wrong. That's very rare, but it can happen. And so that would explain the European bond move today. Job hirings have slowed the pace of them, but people wonder why the unemployment number still looks so good and why the initial jobless claims are still so low. It's because even if you have a slightly lower pace of hirings from a base of

low unemployment, and then you have a very low pace of firings, then you just simply don't see the numbers move a lot. But that's the case right now. Hirings have slowed, firings have slowed. And I think a lot of employers are kind of in a waiting pattern based on what they had dealt with before with the labor shortage. So our bond yield today, the 10-year, closed at 4.288%. It was up four basis points yesterday. You recall it had been down four or five basis points. And oil did close above $90, closed at 90.61, up nearly 2.5%. So obviously that oil move continues to move higher

you saw that in the producer price index by the way it was up um 0.7 percent in august but only up 1.6 percent year over year and energy wholesale prices were up 10 and a half percent where food wholesale prices in august had declined and intermediate processed goods year over year are down in deflation. So energy is kind of the story in prices, no question. Retail sales were up 0.6% in August. They're up 2.5% versus a year ago. So mostly price increases, not volume of goods moving that higher. The Ask David today, I answer the question as to what I mean when I talk about a country exporting their deflation.

I encourage you to go to the DC today dot com to see that answer. I'm going to leave it there. I do thank you for listening, watching and reading the DC today. And I look forward to coming at you tomorrow with the Dividend Cafe. Thank you. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary and does not constitute investment advice. The Bonser Group and Hightower shall not in any way be liable for claims 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

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