The Dividend Cafe - The DC Today - Tuesday, March 19, 2024

Episode Date: March 19, 2024

Today's Post - https://bahnsen.co/3ViQThg Markets built on gains quite nicely throughout the day today, with the Dow up 320 points, on an uncharacteristically consistent trading day heading into tomorrow’s FOMC decision and statement. The back up in rates we have seen the past two weeks eased a little today as well, with 10s down three basis points, which also supported our generally positive day. We are still in the range I mentioned on the 10-year, just at the higher end of it with 4.35%, the high watermark on the year so far. 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. It's Tuesday, March 19th. Great to be with you here on this generally pretty positive trading day, actually, which on this generally pretty positive trading day, actually, which is a little uncharacteristic because tomorrow we'll conclude the two-day Federal Reserve meeting and they'll set their policy and then talk about forward guidance. And I think what the market will be expecting tomorrow

is that obviously it's a 100% chance on Fed futures that they're going to keep rates the same. So that part is to be expected. But it'll depend on what they talk about, what the tone of J-PAL is in the press conference. And then if the dot plots, if what they're expecting before the end of the year on rates changes from three reductions of 25 basis points to maybe two. from three reductions of 25 basis points to maybe two. And again, both the PPI data, the CPI data, and the PCE data we got for last month was above what was expected. Again, it's not overly bothersome to me. I still think they're getting to where they need to go. It just isn't happening

in a straight line. And I think that they're well aware of that. But that's the big news for tomorrow. But other than that, the day just sort of to melt higher. And so just when I started typing that we were going to have a mixed bag in markets, we ended up having a fairly positive day across the board. S&P, NASDAQ, Dow were all up. And the bond market was also up. Bond prices rallied.

And so you got a 10-year yield that dropped about three basis points, Dow were all up. And the bond market was also up. Bond prices rallied. And so you got a 10-year yield that dropped about three basis points, closed at 429. Still in that same range I've spoken about, which is about 410 to 435. So we'll see tomorrow. There's definitely news enough with the Fed where rates could pop higher, depending on what they say. So we'll stay tuned there. Other big news on the day was the BOJ, the Bank of Japan, raised interest rates for the first time in 17 years. So the last time that they did this was when George W. Bush was president, and the Bourne Ultimatum was in movie theaters along with another Western that I particularly like called 310 to Yuma that nobody saw, but is a good movie

if you want to catch it. Anyways, my point is that was a long time ago. They've been stuck in this sort of deflationary spiral now for decades and decades since really the late 80s. And this is historical, I guess, because they're going from negative rates into positive territory, a full, you know, zero to 0.1% is their central bank policy rate. And I said, basically, you know, it's when it's a bold thing to do. But when you get close to a three times GDP and government debt, I suppose it's time for some monetary responsibility, I suppose. government debt, I suppose it's time for some monetary responsibility, I suppose. Housing starts for the day were up 10.6%, which was much stronger than expected. We had a weaker number in January, though, based on just weather. And so read into that what it is. It's positive that

we're getting good data on housing. Resi was up 11.6 and multifamily was up 8.3. Permits, which we look at as more forward looking indicator, were up about 2%, a little less as well. So again, broad based and a foreshadowing to what I'll ultimately add in an Ask Brian section in the next DC Today or maybe the one following on housing is how this country is just underbuilt. We're undersupplied in housing. We're forming more households every year than we're replacing with new builds. And so eventually that results in a shortage of housing. That's what we're dealing with. Again, the Fed is tomorrow. There was an Ask Brian section today about taxable municipal bonds. It's not a very big

market, this taxable muni space. If people remember in 2009, there was something called Build America Bonds. This was coming out of the GFC and federal government trying to subsidize the states to issue some debt by covering a third of the interest expense, if you remember that. But those were taxable munis. I remember they were in the 6% and almost 7% coupon range. I think they traded above par. But all that to say, the question was, can you put this stuff in an IRA? You can. I mean, it's just like any other taxable bond. We don't do it, but

that doesn't necessarily mean it doesn't make sense financially. But my comment was because the inventory is so small in the world. In other words, if you go to Schwab or Fidelity or something and try to go find taxable munis, you can find them, but there'll be odd lots and there'll be here and there. And it's just, there's not a lot of inventory. And so people will buy an ETF of them. And I just, you know, I just don't think buying an ETF of fixed income is a great idea. So I'm not a fan. So that was my comment to this person. It was a good question. And there's nothing wrong with taxable munis inside an IRA. Tax-free munis in an IRA would be a bad thing, right? Tax-free interest in a tax shelter wouldn't make sense. But hopefully you got some education there. And again, I'll be with you tomorrow,

which will be Wednesday. And in the meantime, I wish you all a lovely evening, and I will talk to you soon. Thank you. 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 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.

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