The Dividend Cafe - The DC Today - Tuesday, April 9, 2024

Episode Date: April 9, 2024

Today's Post - https://bahnsen.co/4aKgDaL We traded mostly lower the entire day today but then rallied back to fair value the last hour or so of trading. Tomorrow we have CPI out, and with a lack of other meaningful economic data today and right before earnings season heats up later this week, markets were mixed in anticipation. Bonds did rally across the curve giving back some of the back up in rates we have seen the past few sessions with the 10-year down 6bps. With earnings season set to start this Friday, a quick recap of where expectations lie: 3% revenue growth, 5% earnings growth on the quarter with a big up tick in Utility (believe it or not) earnings growth up 18%. For the year we are still looking at roughly $243 per share on the SP500 or about 10% growth from the previous year. Sectors where the bar on expectations is set fairly high at this point are in technology and communications, with Energy and Materials the opposite so it will be interesting to see where markets price the actual results in comparison. 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. It is Tuesday, April the 9th, and for all of you UConn fans out there, congratulations on your victory last night. Today, we had kind of a quiet day, really, in markets, in the economic calendar, and then also in trading. Although, for most of the day, the market was lower.

We were down, call it 200 points for most of the day. We sort of worked our way back up and then right about an hour before close worked our way all the way back to fair value. In fact, the Dow only closed down nine points and the S&P and the NASDAQ both actually finished positive on the day. So some late day recovery. And I think part of it was tomorrow we've got more data out. We've got a CPI number that'll be out tomorrow that the market's waiting. And then we've got earnings now that are kicking in for Q1. And so far, so good, although they've just started to come out. But I think the market sold off in some anticipation

and then just sort of recovered through the end of the day. Again, quiet day in the economic calendar, so not a lot of data out. But bonds rallied a bit across the curve. We had yields come down. Ten-year was down six basis points, closed at 436. So there you have it on the market recap. I put a section in there talking about just because earnings season is now upon us, what the expectations are. Revenue growth is seen at about 3%. And then earnings per share EPS is looked at as growing at 5%. So those are the estimates for the quarter. For the year, we're looking at about 243, 244 on the S&P as far as the earnings per share, which is a growth amount from previous year of about 10.5%. So earnings are expected to be good this year.

And my comments were, sometimes the bars get set at certain levels. Sometimes they get set high and they're hard to attain and sometimes too low and they're easier to beat and so on and so forth. And so things get priced around expectations, but then results can vary around that as well. And so if we're expecting 10.5% earnings growth for the year, I think the bar is pretty high. So my concern would just be that we would fail to deliver there. But we'll see here what Q1 gives us. On different sectors, technology, the bar is very high. Utilities, believe it or not, are expected to grow at 18%. So there's some standouts for the quarter in there. And then energy and materials are both looked at as basically having declining

earnings per share. And so those bars are very low. And I say all that because I believe it's counterintuitive, where my guess would be that the sectors that have low expectations would probably outperform a little than the others, which are going to be hard to attain. that comes out and was below expectations. It's actually the 27th month of having it be, excuse me, below the historical norm, or the average at least. I don't know if I'd read into that a ton. Like I've said many times, these surveys, whether it's consumer sentiment or small business survey, they're worthy to read, and you should take note of them.

But just keep in mind what it is. It's looking backwards. It's asking people how they feel, which is what they've just gone through, not necessarily what is likely to come in the future since that is kind of unknowable. But we get at least a glimpse and it was the same culprits, you know, inflation, you know, interest rates, labor. Those were some of the complaints, I guess, or the concerns I should say on the small business survey, but we're adding 300,000 jobs a month. And so, you know, if you look at the real numbers, things don't really look all that bad. We've got full employment, earnings are growing, all of those things. You've just got some small business angst and rightfully so there's an election, there's geopolitical angst, there's higher interest rates, all those things at play here. The question and answer section that I added for Ask Brian was a pretty simple one.

It was really just a different size of investor asking if he has enough money to own alternative investments, if that was suitable. And so the answer is yes. We have a very broad array, a very diverse makeup of our alternative investment portfolio. And so we're able to work with both qualified purchaser and also accredited. with both qualified purchaser and also accredited. So there's different asset levels, whether it's 1 million or 5 million in asset level to make sure that we're building out the right amount of, or the appropriate alternative investment portfolio based on goals. But in either solution, it's a very robust offering. And so absolutely, we can help people in that two to $3 million range, build out those portfolios.

That's what I have for you today. I'm leaving it a little short on the day because, frankly, it was a little quiet. And I think tomorrow we're going to have a lot more in the calendar. We've got, like I said, the CPI data. We're expecting 0.3% for both headline and core for the month. And then we're expecting headline to tick up from 3.2 to 3.4 year over year. And we're expecting core to tick down year over year from 3.8 to 3.7. Um, if I were a betting man, I I'd say we're going to disappoint tomorrow on, on those numbers, just based on what I've seen. But, uh, again, that's kind of a shot in the dark, frankly. It doesn't matter.

We'll see what the numbers are tomorrow and go from there. We also have some minutes out from the Fed of their last meeting, and there might be a few nuggets in there that we can glean on some rationale and logic that they're using. So with that, I'm going to let you go for the evening. I wish you all a lovely evening, and I shall speak to you soon. Reach out with questions. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with Hightower Advisors LLC, a registered investment advisor with the SEC.

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