The Dividend Cafe - The DC Today - Thursday September 15, 2022

Episode Date: September 15, 2022

Special thanks to all who have reached out to say how much they like and appreciate the new format. Between the addition of a podcast, a video, a transcription of the podcast, and the continuation of a daily written synopsis, along with the legacy version on Monday and the real meat of Dividend Cafe on Friday, I think the vast majority of readers have been extremely positive in their feedback. Ironically, the one or two nasty emails we got (you should see the stuff my communications team receives sometimes) were not even from clients, soooooo …. I do recognize that sometimes people like routine and familiarity (I am one of them), but change is part of life, and these changes were done to add mediums that are most popular and sought after, and to harmonize the workload with the reality of someone who has worked 16-18 hours per day for 25 years. Beyond that, I’m pretty much done talking about it … Okay – off we go! MARKET ACTION Dow: -173 points (-0.56%) S&P: (-1.13%) Nasdaq: (-1.43%) 10-Year Treasury Yield: 3.45% (+3.7 basis points) Top-performing sector: Health Care (+0.55%) Bottom-performing sector: Energy (-2.54%) WTI Crude Oil: $85.30/barrel (-3.62%) Key Economic Point of the Day: Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Well, hello and welcome to the DC Today. The market has closed here today on Thursday, September 15th. I am getting ready to run out of my New York office and head to JFK, where I'll be flying back to California late tonight. And we'll be back in the Newport Beach office tomorrow, Friday, where you will be receiving a lovely dividend cafe. I'll be riding on the plane tonight devoted to the energy subject. So a lot of what I want to say about the energy sector, what's going on in the energy world for investors, as well as where the lay of the land is for energy geopolitically, economically and so forth. I'm going to be diving into that in Dividend Cafe that you'll receive tomorrow, Friday. As far as the market today, it ended up down. It was kind of down a bit at the open and then kind of rallied up and then did a lot of zigging and zagging throughout the day.

Got back up to a new high and then kind of in the last two hours of the day, gave some back. It did get down about 250 at one point and then closed down 173. So a little off of the lows. Dow down half of a percentage point. The S&P was down over 1%, largely led by big tech dropping quite a bit. And then NASDAQ along those lines was down over 1.4%. So since the Tuesday sell-off, you did not get a market recovery per se. And as I've been talking about, the way in which bond yields are acting is related to this. The 10-year was at 3.7 bps, 3.7 basis points to 3.45%. But both the one-year and two-year are sitting there just below 4%, 3.8, 3.9 range. 3.8%, 3.9% range. And so I expect that it will be very hard for stocks to find a footing until bonds have found a ceiling, bond yields that is. And we will see if and when that is forthcoming.

Top performing sector today was healthcare, which was up over half of a percent. Energy was down 2.5. You recall energy had had quite big days, relatively speaking, on the last couple of days. But crude oil was down 3.6 today. Crude closed at $85.30 a barrel. And so there's a good explanation in that. But like I said, we're going to talk more about energy tomorrow. There's a few economic points I want to hit. Retail sales overall were up 0.3% for the month. But core retail, and of course, I'm referring to the month of August, core retail sales, which really is going to exclude anything gasoline related, was basically unchanged on the month. And so there wasn't much volatility. There was maybe a slightly positive direction on retail sales, but nothing really to write home about either way. The railroad strike we've been talking about the last couple of days and potential supply

chain disruptions was indeed apparently averted kind of in the middle of the night because I was up about 3.45 Eastern time and the announcement was waiting for me when I woke up. I understand they came to an agreement around 2.30 in the morning. I do believe there's still a kind of formality vote in front. And so you don't know if anything could kind of come up, but it appears that they have a pretty solid handshake and that could avert what was some unknown degree of risk around a strike from a couple of large labor unions in the railroad industry. Industrial production was down 0.2% in the month of August and and it had reached a new high in July. But manufacturing was actually up a tad. The famously volatile part of industrial production, utilities output is what was down. And that tends to have a lot more correlation to more intrinsically volatile things like weather. Utilities output was really kind of what brought some of that

down. But either way, industrial production in aggregate was down a couple, 0.2%. Initial jobless claims came in for the week, only 213,000. So we were running at about 250,000 a week, six, seven weeks ago. And that four-week running average has dropped quite substantially. Again, another labor data point that seems to be running against the narrative at this time about recessionary conditions. When you get your DC Today in your inbox, I was on Varney on Fox Business this morning for the opening hour from 9 a.m. to 10 a.m. and covered a lot of kind of interesting topics or some fun exchanges about Tesla's return to office policy, about big tech, about valuations and growth. There's just a number of things that I think might be worthy of your attention if you happen to catch that video link. My production team did a wonderful job editing it down.

So instead of watching the whole hour, you can catch the seven minutes of highlights, if you will. I mentioned what's going to be going on with Dividend Cafe tomorrow. So you'll get that on the energy side. I don't think that there's a lot more to really cover today. By way of public policy, the railroad strike issue was probably the biggest news. There's not any pending legislation. I certainly don't intend to be giving a daily update of campaigns and polling and all these other things. But obviously, the midterms from a kind of week by week and eventually into November, that's going to be a substantial policy story for the remainder of the year. The Fed isn't allowed to talk right now. They're in a quiet period. Their meeting is next week. And

we know the expectations for a 75 basis point rate hike. I think that's well, well, well baked in. And of course, everyone will be waiting on pins and needles to see what they say about the future and their desire to see some form of tick down in the rate of growth of inflation. And so we'll keep doing what we're doing. Please reach out with any questions. The question that I answered today in the DC Today, the very thoughtful one about our approach to dividend reinvesting and how we go about doing that, reinvesting into the companies that paid the dividend or accumulating cash and doing something different. And I hope you'll check out that answer. So that's our comments on the daily market summary.

Thank you, as always, for listening to DC Today. And I'll look forward to a substantive Dividend Cafe for you on Energy Tomorrow. Thanks so much. 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 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

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