The Dividend Cafe - The DC Today - Wednesday, August 30, 2023

Episode Date: August 30, 2023

Today's Post - https://bahnsen.co/3sAjvX7 Futures looked like we were going to give a little back from the move higher the past three days until about 830AM EST when we got a slew of softer than expected economic data, and since bad news is the new good for markets, moved us back into positive territory on the day. Q2 GDP was revised a little lower, ADP Payroll came in weaker than expected, and the part that is actually good news (meaning not a number showing our economy quite as fast as we thought and less people are finding jobs), Core PCE came in lower than expected for Q2. After yesterdays softer job openings and then today, fed fund futures are slowly tilting back towards peak rates but we are still at 55% pause and 45% hike for Nov/Dec. A good amount of numbers below for you, and a better amount of walking through it all in the video podcast link. 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. It is now Wednesday, August the 30th. and after a couple of nice up days here as we finish out the last week of summer looked like at least in the morning that we were going to give maybe a little bit of that back not a lot and then we got sort of a slew of different technically weaker than expected economic data and markets tended to kind of perk up right before the open. And then we opened up, we were up about 150 points, um, you know, right after maybe an hour after the open and just sort of drifted sideways a little bit lower. We actually held on to gains for most of the day. Um, and we ended up closing up on the day, uh, marginally for, uh, for, for today, which is, which is Wednesday. We're up about 37 points on the day. So biggest news on the day, again, we had some yields come down a little bit. Two-year yields are now at 487. Again, they were at 510 a few days ago. So that's a development. And some of

the reason is for, again, some of the data that's come out has been a little weaker. It's actually sort of porridge is just right. It's not really falling off a cliff. It's just slowing down a little bit. And so if there's those in that soft landing camp, that's what we're seeing as of right now, I guess this week, there's a number tomorrow, I think that'll paint another part to that picture. And then another on Friday, really. But payroll, ADP payroll out today, uh, came out at one 77. It was 200 expected. So jobs number was a little less than expected. Just keep in mind that for July, it was revised.

That was for August for July. It was revised up from three 24,000 for the month to 371,000. So, you know, last month was showing a more robust labor market. This is a little less. Technically, if we're going to stay around the sort of 150-ish level or thereabouts on payroll for months, it's about where we were before the pandemic. So that's kind of more in line. So I do feel like this stuff is starting to come back in line.

I don't feel like it needs to necessarily, and that's a driver of what is causing inflation to go lower. But I think that it is something the Fed looks at. And I think that all of these things matter. GDP was actually revised a little lower today as well. It was estimated at 2.4. Markets were expecting the revision to be unchanged, and it came in at 2.1, which is a little lower. Although it was still better than what we had originally expected or feared, I guess, for the quarter. So markets took that part in stride. But you had a little bit weaker on jobs, a little bit weaker on growth.

Again, it's giving more fuel to the soft landing camp or the peak Fed rate narrative camp. But you also had PCE, at least core PCE for the quarter, not for the month, for the quarter, come in at 3.7 versus a 3.8 expected today. So a little bit lower jobs numbers, a little bit lower GDP revision, and a little bit lower inflation all speaks to interest rates calming down a little bit. Chances for a Fed hike in September are still the done deal, basically. And then November and December is now more like 55, 45. So the market is starting to believe that we can get a little slowdown in inflation and some of the metrics the Fed looks at. But it isn't totally convinced yet.

There's a PCE number out tomorrow for the month of July that probably will be looked at quite heavily and can move this a little bit, this narrative. And then there's a payroll number, the non-farm payrolls, the actual payroll number is going to be out on Friday. And I think there's $235,000 expected on payroll. And then for tomorrow, we're expecting for the month of July, a 0.2% increase in PCE, which if you annualize that is right in that sort of 2% range the Fed is looking for. Both of those things can change this narrative on markets hanging in there for the rest of the month, because it's still a negative month, although it's less negative than it was a week ago. So we'll take it. Pending home sales today were better than expected. They were up 0.9%. There was actually a decline of 0.5%

expected. So more continued resiliency in housing. The average payment, if you look at the national home price right now, and then the national mortgage average, the 30-year mortgage average, technically the average payment is now at an all-time high in dollar terms, at least. So it's the highest ever, which makes intuitive sense, just given where rates are and giving that over time prices tend to go up again with inflation, that that would make sense to that equation would continuously go higher over time in some sense. But again, I think we wrote about this before, but the average person that has a mortgage is not paying the sevens. They're paying, you know, still three and a half percent.

So the prices just haven't really reflected all of that much. But all that to say, there's a little announcement or big announcement, sorry, big press release out on some new hires that we had, which we're really proud of. that we had, which we're really proud of. We had a promotion internally for Joe Klein, who is now the COO of the Bonson Group, who brings a ton of organizational skill and ability to be intentional and drive some of the growth internally between our departments and help us achieve a higher level, a higher standard of what we can offer for clients. And we're really proud and grateful for him and excited about that. We have Eric Dreyer that's joining us as the director of our planning group. As Joe moves up, Eric is stepping into that directorship of planning. He's got eight plus years of experience. He'll be in our Minnesota office. And then we had James Andrews out in our California office in Newport

Beach, joined from a Goldman Sachs affiliate and in our private wealth advisor group. So it's three amazing people and just wanted to give a special little shout out on DC Today for them. The press release is in the link there and it's much better spoken than the way that I'm able to articulate it. So please read that. With that, we'll kind of get into it. David will be back with you tomorrow on DC Today. He was on a little trip for a few days that I think was changed because of some weather. But he'll be back with you on DC Today.

And then we'll have the Dividend Cafe in your inbox on Friday. So as always, it's been really fun being with you this week. Hope to do it again really soon. And if I don't speak to you, have a great Labor Day weekend. Thank you. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC,

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