The Dividend Cafe - The DC Today - Wednesday, December 20, 2023

Episode Date: December 20, 2023

Today's Post - https://bahnsen.co/47gk0nS A quiet day of trading as markets head towards the Christmas holiday on Monday and things slow down. The US is one of many countries where inflation readings and projections are being reduced. The UK had a much lower-than-expected November inflation reading yesterday at 3.9% y/y versus a 4.3% expected and down from 4.6% the month prior. Not surprisingly, Gilt yields moved dramatically lower, and futures were priced in 150 bps of BOE rate cuts next year. PPI data in Germany today was also below expectations. While the ECB noted it would maintain rates where they were last week, I expect that narrative to change next year if we continue to see numbers like this, especially once the US starts cutting. Global central bank policy, as does trade and currencies, tends to be tethered—this and more in today's video podcast. 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 the 20th of December here on Wednesday, and I had a look at my calendar there, getting into the holiday season. Focuses are starting to shift a little bit as we get closer to the Christmas holiday, which is on Monday, and into the new year, and things just slow down.

And you saw that in markets today. It was a slow, quiet day in trading. Rates were down a few basis points. Markets were basically flat for most of the day. But all that said, there's some data overnight out of Europe that I thought was worth noting. Yeah, inflation in the UK came in much lower than expected. It was 3.9%. We were expecting more like 4.3%, which is down from 4.6% the month prior.

The PPI in Germany was lower than expected, too. And I say some of these things across the pond because central banks are tethered to one another with inflation lower in the U.S. and likely rate cuts in 2024, while the ECB telegraphed at least last week that they were going to hold rates the same. And like I said last week, I don't think that's realistic if the U.S. cuts significantly next year. Of course, with today's numbers, rates came down a ton in the UK. The gilts were trading at 354. They were down like 12 basis points on the day. So you're seeing the same phenomenon there as you are here. And I frankly think it's a positive. And I believe that central banks will tend to move in concert just like they did on the way up. Not quite lockstep across the world, but pretty close to that. And there's a lot of reasons. Currencies are affected by central bank policy. Higher rates

tend to have stronger currencies. And that affects trade, things like trade and the economy. And so these things are all kind of tethered hand in hand a little bit. So I guess more good news on the inflation front from that perspective, that it's not just in the U.S. And it's not shocking that it's not just in the U.S. coming down. It's because of the primary cause of it being the supply chain disruption from the pandemic. That wasn't just in the U.S. It was a global pandemic shutdown across the world. And so as things shut down, prices went up when everything reopened and there was more dollars chasing the same amount of goods or less goods, I should say. That's what we're getting. So generally positive there. You had existing home sales for the month of November were basically in line, although the headline was that they were better than expected. But they were up 0.8% for the month, which technically was better than expected, but they were up 0.8% for the month, which technically was better than

expected. But just keep in mind, those are still down. Existing home sales are still down 7.3% from last year, year over year. So getting a little bit better. It was actually the fifth month in a row we had declines in existing home sales. And so this is the first monthly increase in almost half the year. So positive, I guess. Median prices were up 4% across the country year over year. Again, there's just no transactions going on or very few. And so I don't know if that's a real accurate price discovery there or not, really. I think it's a bit convoluted. Consumer confidence for the month of December. This comes out today as the 20th. So it was out today. I don't usually go into this a ton just because it's how people are feeling and how confident

they are based on a survey. And so if you get the Fed saying that they're going to lower rates and the markets are doing better, the employment picture hung in there and it's the holidays. I mean, there's probably a ton of things I could cite where people would answer something in a positive fashion. I don't really know that that predicts much about the future because it doesn't. You know, people tend to be reactive, not proactive to how they're going to feel. They feel how they just what they just went through. But take it for what it is. That's the data that we have for today.

Again, pretty quiet day overall. Something interesting and particularly unprecedented in the state of Colorado, the Supreme Court ruled to remove Donald Trump from any potential presidential ballot in the state. That hasn't been done before. And so this is immediately appealed at the federal level. And of course, as you know, the Supreme Court nationally is heavily appointed by Trump. So, you know, whether that gets overturned or not, I'd say the odds are probably in the favor of it, but I'm no lawyer here. So we'll have to see how that goes. But it could be meaningful for the election next year. You know,

one state, probably not, especially a state that likely was blue anyway. But we'll see. That's kind of an interesting thing. And again, in my life, and frankly, ever, that's not something that I've seen before. Tomorrow, we've got Q3 GDP revision coming out, the first revision of several. It was 5.2% originally, it's expected to kind of fall to 5.1%. So basically in line, but that can move markets potentially, if you got a upward revision in GDP, I think that would be good. And if it was dramatically lower, then I think that would obviously be bad. But somewhere around the number that I really don't think markets are going to care much at all. And again, we're going into Christmas here. So things are quiet. Traders are on vacation at this point. And just sort of that

merry time of year. Tomorrow we'll have DCT for you. David will be back with you on DC today, tomorrow. And then we'll have the last Dividend Cafe of the year on Friday. And then we'll head into the holidays. And so that's what I have for you today. I appreciate you listening and reading, as I always do. Send your questions. I really do appreciate them. And if I don't speak with you, have a lovely holiday, have a lovely Christmas, a new year, time with your family. And we'll talk to you soon. Thank you very much. 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 investment opportunities referenced herein

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