The Dividend Cafe - The DC Today - Tuesday, March 26, 2024

Episode Date: March 26, 2024

Today's Post - https://bahnsen.co/3TTReFO Markets traded positively for most of the day, although ended up closing slightly down by 31 points. This is the 10th time since 1950 that the SP500 has been up for 5 months in a row, so it certainly has happened enough before, but interesting that when I looked at those time periods 12 months following, they were also all in positive territory as well. All that said, earnings and fundamentals are going to have to pull their weight for that to happen an 11th time from these valuations (see David’s comments below). Historically speaking, it’s also rare to see markets top when there is such broad participation in new 52-week highs. Typically, that internal breadth starts to show cracks before the overall market reaches its cycle peak and turns lower, and that is not what we are seeing today. Energy, by the way, has reaccelerated, with now 80% of the sector at 3-month highs, as that market rotation and broadening of sector returns continues. 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 and welcome to DC Today, this Tuesday, March the 26th. It's great to be with you. We had mostly a fairly sideways day in markets. The market was positive for most of the day. We ended up closing slightly negative. We were down about 30 points, a little more

on the Dow. Interest rates were down two basis points on 10s to 423. So a fairly quiet day in markets. And I have some comments in there on some historical data. And then I think David does as well in his section. So let me tie those two pieces together. So this is the 10th time since 1950 that we've had five months in a row of positive markets. And what I did is just looked at history when that did happen. Again, I mean, 10 times is quite a few, really, even though it's over 70 years. Were markets positive or negative a year later than that? And this does not mean that it'll be the case this time, but in every case, they were positive. And so there's something to be said about some momentum, and that's what we're seeing now. That said, there's a real valuation issue that we're talking about. And David alludes to

this very nicely in his piece, which is if you assume an 11% growth rate for this year, and then what is estimated now for next year at 13%, you're still trading at 21.4 times now and 19 times for next year's. And that's including or assuming that markets will stay the same, meaning they won't go any higher. So look, historically, the numbers aren't necessarily against us as far as market returns, considering where we are. But just keep in mind, the valuations are pretty stretched here at this point. There is some other parts of the market that I think are fairly encouraging. You are seeing, and I talked about this on either CNBC or Bloomberg, I forgot, but there is broadening happening in the market. It's moving from just tech into some

other sectors, and energy is one of those sectors. And right now, there is now 80% of the energy sector trading above its three-month high. And so that's generally seen as fairly positive. And again, energy was so tough for so long, 15 and 16 and then so forth with overinvestment. And those numbers are still being worked through. But generally speaking, it's good to see some broadening out in overall markets. We had durable goods orders out today that were better than expected. They were up 1.4%, which is quite a bit better, really, than the 1% expected. But just keep in mind for January, there was kind of an anomaly in there with a large seasonal factor with Boeing airline contract orders. And so those numbers are a little skewed there, but generally still a positive number. We had Case-Shiller home price index for the day up, I'm sorry, for the month of 0.1% for January and is now up 6.6% year over year. So continued strength in housing, and I've written about it a few different times. There's really not much transactions occurring right now. And so prices

are staying where they are until there's more transactions. I suspect that'll come at some point. We had consumer sentiment numbers out today that were a little weaker. There's a little election coming out this year, I think, that causes people to answer the survey results a little more negatively. There are just some other things happening in the world. Again, the two comments that I make is, number one, just keep in mind, this is a household survey. So they're calling people and asking them questions about how they feel about things. So it's basically a lagging indicator because it's how you just felt about something that just went on and not necessarily indicative of exactly what the future will hold. But then nonetheless, those are the two or three sort of data points on the day from an economic standpoint. sort of data points on the day from an economic standpoint. I answered a question that I get often about what our account minimum size is, which is that we try not to set one.

You know, there's and this is in the Ask Brian section. You know, I mean, pragmatically, is there a dollar amount where it wouldn't make sense to work with us? Of course. But my point is just, you know, we have 50, 100100 million clients that aren't good fits that we turn down sometimes. And that has to happen because of a lot of different reasons. And it's just not a good fit. And we have one, $2 million clients that are a great fit. And we can add a ton of value to. And there's 63 people on our team that can help with these people and improve their lives. So there isn't a hard minimum. I really want TBG to be looked at as that quarterback position though. What I want to get away from for, I think, where the question was coming from is how much do we need to put in

the dividend portfolio? And I just wouldn't look at us as just an investment manager at all. It's much more holistic than that. So as far as dollar amount, it matters a little less. All that to say, tomorrow there is a Fed speaker talking, Waller. Other than that, it's a fairly quiet day in the economic calendar. I'll still be with you and there'll be plenty to go through in DC today, day in the economic calendar. I'll still be with you and there'll be plenty to go through in D.C. today, but not a lot actually scheduled. So for that, for now, I'm going to let you go for the day. I appreciate you listening. I look forward to being back with you tomorrow. Thanks so much. 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

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