The Dividend Cafe - The DC Today - Tuesday February 28, 2023

Episode Date: February 28, 2023

This is Trevor Cummings filling in for David Bahsen as he is traveling back to our New York office today. First and foremost, I want to encourage you to check out David’s Dividend Cafe published on Friday. David covered a myriad of topics in a potpourri fashion, and all of these tidbits are what bubble up from actual clients and readers’ questions. Having attended countless number of David’s speaking engagements, the concluding Q&A is always my favorite; the Dividend Cafe this week reminds me a lot of one of those Q&A sessions. Alright, without further ado, let’s jump right into what was happening in Markets today as we close out the month of February. 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. Hello, welcome to DC Today. I'm Trevor Cummings, filling in for David Bonson. He is on a flight to New York. He'll be in our office in Manhattan doing a lot of TV stuff and other media this week. And even as I say that, it's kind of fun to think about the expanding footprint of the Bonson Group. Last year, we opened offices in Bend, Oregon, in Nashville, Tennessee. We obviously have our office in Minnesota, New York, Newport Beach, and perhaps we'll be expanding in the future. You'll have to wait and hear about that.

Markets today ended in a sense of how they kind of were all month. So you saw the Dow Jones Industrial Average go down 0.71%. NASDAQ, or sorry, S&P 500 was down 0.3%. The NASDAQ was actually up on the day. It was up 0.3%. The NASDAQ was actually up on the day. It was up 0.3%. When you see that disparity, the interesting question is, where does the attribution come from? We usually will get the answer by just looking at what was the worst performing sector. So the worst performing sector today was utilities. Utilities were down 1.72%.

There's your answer. There's no utility companies in the NASDAQ, something very tech heavy. So you can see that big disconnect between S&P and the NASDAQ or the NASDAQ and the Dow Jones Industrial Average. The best performing sector for the day was materials. They were up about 0.45%. The 10-year treasury, it's interesting for me because the last few DCD days I filled in for, I kind of was saying, hey, it really loves this kind of 3.5% area that's been hovering around. Well, today it's at 3.92%. Unchanged for the day, but a huge spike in yields for the month of February. And when you look at how the stock market did in the month of February, a lot of it has to do with those spike in yields.

There's been a huge correlation. David's been talking huge correlation. David's been talking about it as where bond yields go, so do stock prices. Makes it very hard for allocators who are looking to diversify with stocks and bonds. So 3.92%, we haven't seen that since November of last year. When we look at the month as a whole, today was the last day of the month, because remember, there's only 28 days in February, at least for this year. The Dow was down roughly 4% for the month of February. S&P, I wrote it down here somewhere, was down about 2.6% and the NASDAQ was down about 1.1%. Now all three indices are still positive on the year,

but just like markets like to do, we started out with a bang in January. I think the S&P was up close to 6%. So I often am saying this idea of two steps forward, three steps forward and one step backwards. As somebody who advises clients and does kind of this game film review of how performance has been in their portfolios, it is very enjoyable to be able to see 12 months or 24 months as a whole because you see how chaotic markets can be on a month-to-month basis and really shakes out folks that shouldn't be investing if they don't have the right time horizon and such. A few economic data points for today.

The Case-Shiller Index, which is just looking at really at home prices. So there's two indices that are typically followed. It's kind of a 20-city indice. These are large cities that you would be familiar with. Think San Francisco, Seattle, of the such. I mentioned those two because they were actually the only two cities, San Francisco and Seattle, that recorded a negative growth for 2022. The last six months, you've seen a sliding of that index, but still, that Case-Shiller Index, whether you're looking at the 20 cities or you're looking at the more broad national average, it was positive for 2022. We saw a lot of the headwinds come towards the end

of the year. And all of our listeners know the obvious answer is looking at mortgage prices. It goes with a sequence of a spike inflation causes the Fed to raise interest rates, which causes mortgage rates to go up, which causes buyers to go recalculate their payment and say, huh, can I afford that much house at that interest rate? As David often says, people don't buy prices. People don't buy homes based on home prices. They buy them based on monthly payments. And that's where we're kind of at a standstill when we look at transactions in real estate and the such. I think a lot of folks are sitting on their hands seeing what does this look like 12 to 18 months from now. And we'll see.

The Consumer Confidence Index was published today. It was kind of a surprise to the downside. Last month, it was at about 106. Expectations, when you look at just average estimates, was supposed to be about 108.5. That would be a rise in consumer confidence. It actually went down to 102.9. went down to 102.9. And what I put in here too is on Friday, the Consumer Sentiment Index, the University of Michigan does that. It was actually positive. It was coming off of a historic low in June of 2022. And I believe it was something like six months of a rise.

So you have to take each piece of economic data with a grain of salt and see how do these things all intertwine and relate to one another. The question I covered on Ask Trevor today was I've gotten an influx of a lot of questions about, hey, I have a surplus of money, some cash, but I really need it to stay liquid. I need access to it. It's kind of in case of emergencies or things like that. It's just where my comfort level is. I like to have this much cash. How should I be managing my cash? Because I work with a large banking institution. This is most people's attitude. Just think about the largest banks in the country. And they're saying, hey, my savings account

is paying next to nothing. So one of the things I mentioned in the DC Today, the written, if you go to it, bankrate.com does a lot of statistics on interest rates, mortgage rates, and things like that. So it's a good source for data. Right now, they wrote an article last week based on their weekly survey. The average savings account across America was at about 0.23%. So you could understand why somebody with extra cash in their bank account, reading about experiencing inflation, seeing the rising interest rates in treasuries, and wondering, why is my savings account not following with all these rises in interest rates?

And that's where I encourage in the written that, hey, you should be a diligent saver and you should look at all the options on the table. I know for our clients here at the Bonson Group, we are intentional at looking at money market accounts and understanding what is the best cash management solution for an investor. Or, I use the term saver here because we're looking for, you know, liquid cash, just surplus emergency funds, things of that nature. And the thing I'll draw attention to, it's not exactly this number, but literally some of these money market accounts with the custodians that we commonly resource for clients, they're nearly 20x, 20 times that national

average. Not exactly, but it's within the zip code, within the realm of what that is. So again, if you have that question about cash management, my encouragement would be to connect with your advisor, to do a review of your balance sheet, and look at, is this the right figure for my emergency savings? Do I need more or less? And from a cash management standpoint, how do I maximize my interest rate to be prudent with the fact that all the prices around me are increasing? And that's all I have for you today. For all my Laker fans out there, because I always want to mention basketball, NBA basketball, because there's not many fans out there, but I'm sure everyone's putting their prayers out for LeBron

James as he's hurt his ankle and wondering, can he make it back before playoffs start and make one final push for Laker fans to see if they can make it into the playoffs? So without me talking further about NBA basketball and boring you, I will close this out for today. And David will be back tomorrow with the DC Today. 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.

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