The Dividend Cafe - The DC Today - Wednesday, February 1, 2023

Episode Date: February 1, 2023

ASK DAVID “When you talk about a stock on television, but then later end up selling as your viewpoint changes, do you publish or broadcast your new view somewhere?” ~ Tom As for the more practical aspect of your question, no, we really couldn’t possibly be responsible for “running a portfolio on TV” if you know what I mean. Updating what we have added and subtracted and bought and sold and when and why would require a really different forum to take on that responsibility. We are never making Buy or Sell recommendations on TV, but rather just speaking at a point in time as to what we are doing and why. People use that information in a number of different ways, but I would never recommend one use it as a holistic portfolio strategy (partially for the very reasons you cite). Our clients, obviously, see the whole enchilada week by week etc. (our WPHR is sent to clients every Wednesday, and yes, regulatory requirements render that a client-only communique). I hope this helps. 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 Fed Day. And you could kind of say that Fed Day was a rally day today and may not feel like it. The Dow was up, I think, six or seven points, but I'm going to explain what kind of happened here. So I don't need to look at the data right now. I'm just going to walk you through qualitatively what happened. As I mentioned yesterday, there's always a lot of positioning and short-term outgoes and things going into the Fed announcement that can be long, it can be short, it can be hedged, it can be unhedged, it can be both. And then you have unwinding or rewinding and all these things afterwards. So let's take out that noise. We are really working on a lot of Fed meetings in a row now where the immediate aftermath is worthless. So today, and you'll see the chart in the DCToday.com,

today and you'll see the chart in the dctoday.com but the Dow had been down pretty good let's call it 250 300 throughout the day and then it dropped another a couple hundred and so you got a Dow down over 500 points and then it rallied up about 240 points so that's within I'm going to say, 60 minutes, 75 soaking wet, that it moved 740 points intraday, closed dead flat on the day. But dead flat was only down from a high 240. It was up 500 from a low. The Nasdaq had been down 0.72% at its low, closed up on the day 2%. The S&P didn't go down as much, but it was up just a tad over 1%. So risk on the top performing sector was technology. You definitely got more high PE type movement. And then that bond rally, and I see here in the D.C. today that I'm

missing the word energy in bottom performing sector, but it was the only down sector. And we'll get that cleaned up before I go to press here. But energy was down 1.89. So energy was a bit of a lag today. Everything else was up and a lot of volatility on the Fed announcement. Well, what did the Fed announce? The Fed announced that interest rates were going to be down, excuse me, up a quarter point. There was a 100 percent chance coming into the meeting today. That's what they're going to announce. Paul definitely reasserted exactly what I said he would say, that no, the risk is greater to the risk of letting inflation reaccelerate. They want to be careful there. But yes, they'll stay higher unless they change their mind. And it was really not as hawkish as I thought it would be. I would not say it was dovish. But I think it was very clear that they were unwilling to let to contradict the market.

And by market, I mean financial markets, stocks and bonds. The 10 year collapse, the yield, the bond rallied huge. The 10 year was down 11 basis points. You now have a 10 year treasury at 3.4 percent. Treasury at 3.4%. So if one believes that we have 7% or 8% inflation or 7% or 8% inflation coming back and you got a 3.4% yield on the 10-year, I don't know what to tell you. The yields in all aspects of the term structure of the bond market have moved down all year. The weakness in the economy is not going away. ISM manufacturing was down for the third month in a row. 16 out of 18 sectors showed contraction. It was at 47.4. Remember, anything under 50 is contraction, anything over 50 is

expansion. And you had new orders that were down. You had production down. You had supplier deliveries up, but nevertheless, it was down to the lowest level it's been since 2009, unless you are counting the COVID months, which I'm taking out. The ADP private sector jobs were up 108,000. It was expected to be up 180,000. So we'll see if that's a precursor to a disappointing jobs number on Friday as well. When I say disappointing, it's because I want people to have jobs. And some people might say, oh, a disappointing jobs number would be a good thing, and I'll be disappointed if it isn't disappointing. And that's because those people are idiots. So that's the way we're going to close

out the D.C. today. There is a question asked David today about how I handle talking about stocks on television. I'd encourage you to check that out. But yeah, a lot of volatility on the Fed. I'm very glad we didn't try to rebalance in the midst of a Fed day. And we are looking at doing some more portfolio rebalancing next week instead to get out of that immediate aftermath situation. So the markets do have a precedent of not cooperating the next day. There's more time to kind of settle here. We'll see what happens with certain earnings.

But right now, risk appears to be on until it isn't. And in the meantime, the bond market is certainly loving what's happening. Disinflation, decelerating growth, and no one really believing that the Fed is going to not have to do something there. And that's the nature of the beast. It's been the nature of most of my adult life managing money. And I can expand on that another time. Thanks for listening to, watching, and reading the DC Today. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC,

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