The Dividend Cafe - The DC Today - Tuesday, July 25, 2023

Episode Date: July 25, 2023

Today's Post - https://bahnsen.co/3rRaJTS The Dow was up for the 12th market day in a row, the longest streak since February of 2017 … (the ancient history of 6.5 years ago, back when I was much younger). Hong Kong and China stocks rallied hard (+4%) as Chinese leadership pledged more “support” for their property sector. What could go wrong? Some “worry” China will “succeed” in fighting their disinflation this way, and that it will leave a global economy too hot and make things harder for central banks. Some people, though, are idiots. WTI Crude oil broke through its 200-day moving average and is now a whisker from $80. I will be paying more attention to the threat of labor union strikes in the coming days and weeks. One strike here and one strike there (particularly in something as niche as Hollywood writers) doesn’t grab me from a purely macroeconomic sense. But four new strikes and a couple big ones (like, you know, the UAW), and I do wonder what kind of impact it may have on select companies and sectors. 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. Well, hello and welcome to the Tuesday edition of DC Today live from New York City. You know, I have been coming to the city very heavily. I mean, my wife and I have kind of lived here bi-coastally, back and forth from California for six and a half years. And I have been coming heavily for, you know, 23 years. And I still find it just utterly bizarre that a place could have, I mean, like raging thunderstorms while it is 85 degrees outside. It is needless to say, not a situation that I am used to from Orange County, California. So the weather in New York today may not have been delightful, but the Dow was up for the 12th day in a row, which is the longest streak since February of 2017.

So what is that? That's actually when we first got an apartment in New York City. So yeah, six and a half years. Longest streak. There you go. That may very well be broken tomorrow when the Fed comes out. We shall see. A few other news tidbits I want to kind of go through and then we'll get

into today. Hong Kong and China had rallied hard overnight. Stocks were up over 4% in their respective markets. Chinese leadership pledged more support for their property sector. That sounds like a really good idea. Some are worried that China will succeed in fighting their disinflation this way. I read several analyst reports to that macro effect this morning, and that it will leave a global economy too hot with China doing well, and that that could be a problem for other central banks. And I lack the words to respond to that belief. I really hope China does not go down the path of Japanification for sake of global economy, the exporting of deflation, and utilizing fiscal and monetary stimulus to juice your economy doesn't end in the way people would hope it would mid and long term is the testimony of history for those paying attention. WTI crude oil broke through its 200-day moving average. It's

now just a whisker away from $80 a barrel. I will be paying more attention in the days, weeks ahead to these labor union strikes. It's one thing, a strike here or there, particularly something as niche as the Hollywood writers, people can have different opinions on the merits of each case or whatnot, but macroeconomically something like a one-off or more, like I say, niche is probably not super impactful. But I think now you're talking about what is it, four more significant strikes, one of which a couple are pretty big in theory, if they were to surface the United Auto Workers for one, that may very well be something with a more select impact across

sectors and particular sectors and obviously companies. So I'm going to be commenting on that in the days ahead. But the Dow was up just 27 points, only eight basis points on a percentage basis, but nevertheless still positive. The S&P was up 28 basis points and NASDAQ was up 60 basis points. The 10-year bond yield was up three basis points to 3.89%. Top performing sector day was materials at 1.76% to the upside, with real estate down 0.74% to the downside. So pretty decent dispersion between the higher end of performers and the lower end of performers today. Like I said, oil closing at 79.33, up three quarters of a percentage point. On the economic front, house prices. Okay, so the Case-Shiller, you get this national median data, which is like national weather average, not very helpful. Nevertheless, down year over year,

a little less than 1%, whatever. But I do think in the weeds, it's interesting that Seattle as a metropolitan area was down over 11%. San Francisco is down over 11%. Even Vegas, Phoenix were down 7%. They had been very hot, particularly Phoenix. But then New York was up year over year. Miami continued to be up year over year. So just a lot of disparity in the data and for a variety of supply, demand, and other reasons. What else do we want to say? The Fed tomorrow, I'll leave you here. The FOMC is going

to raise rates a quarter point tomorrow. I got to think J-PAL is going to talk pretty hawkish in the comments and press conference, leave open the door to future rate hikes. And the market may have to reprice the odds of that happening. But I don't really think that matters because to me, the Fed will be making a big mistake to raise rates tomorrow and they're going to do it. And the Fed will be making a big mistake to raise rates tomorrow, and they're going to do it. And the Fed will be making a really big mistake to raise rates again in two months. It's the end of September. But the reason why any market response tomorrow is kind of irrelevant is the Fed can say whatever they want tomorrow. They can swear they're going to raise, and they can swear they're not going to raise. But two whole months of more jobs report numbers, CPI numbers, political issues as you get ready to go into the real prep for the election season.

I just don't believe that we're going to know tomorrow what the Fed's really going to do in two months. I already know what they should do, which is really what they should not do. But that's irrelevant here. It's been irrelevant. And I think that you're not going to get an idea tomorrow what's really going to happen in September. Because he can lean hawkish. He can talk hawkish. I can have to listen to people say he's a vulgar again and other stuff.

And then you could get a really weak CPI print. And you could get disinflation in oil. Or you could get a jobs number that is soft. And the whole entire narrative could change. Credit spreads could widen. The S&P could drop. So much can happen in two months that no one knows. And so I just don't think what happens tomorrow matters at all. I'd expect a little noise, though. But I expect that just because that's what we've been getting for about 18 months. These stupid Fed pressers create noise. So let other people have fun with that. And we will we will do what we do. Okay, that's it. Thanks for listening.

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