The Dividend Cafe - The DC Today - Tuesday, March 21, 2023

Episode Date: March 21, 2023

Today's Post - https://bahnsen.co/3JvZllP I imagine it is quite likely that the bond market has seen its highs in bond yields for quite some time to come (across the whole yield curve). The 10-year sits at 3.5%, down from 4.21%, and I will be surprised if it gets back up to that level. Likewise, the short end sits at 4.5%, down from over 5%, and I don’t see it getting back there, either. If I am wrong, I am wrong, but I don’t think I am here. China has bought $88 billion in oil, natural gas, and coal from Russia since the war began last year, up over $30 billion from the year prior and causing Russia to beat out Saudi Arabia as China’s leading supplier. The government is evaluating how they can increase FDIC deposit insurance levels above $250,000 without getting Congressional approval. 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. It was another rally day in markets. You had the Dow up 1%, the S&P up 1.3%, the NASDAQ up 1.5%. That's over 316 points for the Dow. And of course, it was up big yesterday as well. So some degree of calming in markets around the presumption that some of the bank instabilities are calming

and that where there may be ongoing vulnerabilities, there will be more government backstop or support. That's the best read I'd have to offer on it. Along with the market's assumption that the Fed is most certainly getting ready to lay down, tomorrow will be the day we'll hear from the Federal Open Market Committee. They've been meeting all day today. And the question is whether or not they will raise

rates a quarter point and announce or signify some intent to pause from here, which is what I expect, or perhaps that they may not even raise rates at all. That futures market action had gotten all the way down to 50-50 between no hike tomorrow and a quarter point hike tomorrow. But as of today, the last time I looked at it a short while ago, it was back above 80% odds in the futures market of the Fed hiking a quarter point tomorrow and a less than 20% chance that there'd be no hike. So we shall see both how the market responds to what the Fed does tomorrow, but also what the Fed actually does, what he says, how he says it. And you can be sure I'll be here tomorrow to give you

that full report. When we talk about the market's action today, it was energy leading the way up we talk about the market's action today, it was energy leading the way up over two and a half percent. It was, excuse me, up over three and a half percent. It was financials near the high as well, up two and a half. The sector was down the most was utilities, which was actually down about two percent. So you had a wide dispersion of results in this rally, but a lot of the stuff that had been hurting the most last week leading the way this week, financials and energy. The other thing I just want to say before I let you go in a short edition today is that the bond market, I believe, is entirely possibly already put in its high on the yields. put in its high on the yields. The lows of bond pricing have been put in from the one year all the way up to the 10 year in terms of the yield curve. The 10 year was up about 10 base points today. It had gotten down to about three and a half and closed at three six. But if you recall,

its high point was about 4.2, 4.25 percent. I don't think we're going to see that level again anytime soon. The one year had been above 5%. It's now down to 4.5%. Again, I don't think we're going back to 5% on the one year. If I'm wrong, I'm wrong, but I don't believe so, in which case that would mean that you've seen highs in yields and at whatever pace it happens, would expect to see yields come lower from here and bond prices experience that kind of price appreciation. Oil's back up near 70, not quite at 70, but it had gotten down in the mid 60s, come back up to the $70 range. So I think besides some ongoing discussion about where exactly the FDIC is going to go, what policymakers want to see happen on the explicit nature of FDIC limits for depositors versus what they leave

implicit. I think that's a big topic right now that's still TBD. And then China buying $88 billion of oil, gas and coal from Russia since the war started over the last one year period. They had been doing $40 to $50 billion. It's all the way up to $88 billion. They bought more from Russia over the last year than they did from Saudi Arabia. And that's a story I want to mention just so that it doesn't get out of our sight, out of our mind, that the changing parts in these kind of global partnerships and where Russia and China fit in to the geopolitical landscape is a big deal. What it means for the dollar, what it means for Middle Eastern oil,

what it means for the whole dynamic with Russia-Ukraine, I think is significant. And I'm watching it closely and reading as much as I can for the tentacles to the story that may be relevant to us as investors. So that's basically all I have for today. Read the written DC today. I'm trying, experimenting with a couple new ideas in the format, make it a little less rigid, a little less templated, and a little more freestyle. And if you want to send us feedback, I'm very happy to read it.

And we'll be back at you tomorrow, Wednesday, for Fed Day. And like I always say, up or down, Fed Day is the best day. Thanks for listening to, watching, and reading the DCR Day. 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. Thank you. opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information

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