The Dividend Cafe - The DC Today - Wednesday, February 21, 2024

Episode Date: February 21, 2024

Today's Post - https://bahnsen.co/3T6zpmI We began the day positive at least for the few hours and lost momentum mid day. The Fed minutes released today showed broad agreement in the need for more confidence for inflation moving to a sustained 2% target before decreasing rates. While this wasn’t new information and followed what Powell already revealed in statement and his press conference following the meeting, the minutes showed more Fed constituents citing inflation risks with as their primary concern then overly restrictive rate policy, and that is what saw rates move a little higher this afternoon and stocks lower. 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, welcome to DC Today, this lovely Wednesday. Today is February the 21st, and we actually closed up on the market today, which was nice. We opened a little positive or lower for most of the day until about an hour before the close and then ended up closing at the highs. We closed up 48 points on the Dow, which is great. Big news, I guess, for the day,

I guess there were a few things. The Fed minutes were released from their January meeting, most of which was a reiteration of what Powell commented in his statement following the meeting itself and then his press conference afterwards. So the need or the want for more confidence is what they keep saying with inflation being at 2% sustainably before they can lower interest rates was pretty much across the board. There was definitely more constituents inside of the minutes that were worried about inflation over restrictive policy causing a slowdown. So you can read into that two ways. I actually look at that as, I suppose, glasses half full because them being not concerned or less concerned about

the strength of the economy, given all the strength that there is in the economy, is not a bad thing. That's a good thing. And I get that they don't want to have to stop and go like the 70s. I don't get why people compare this era to that era, because they're completely, totally not even close to the same at all, the causes of inflation, and the economy and all those sorts of things. But at the end of the day, if that's what they're concerned about, that's fine. And what we said is basically, whether it is May or June, when they start lowering interest rates, or whether it's three times or four times or five, those things matter and they sort of don't. The end of the day, what matters is that the economy is hanging in, earnings are coming out pretty good, quite good, actually. And inflation is moving substantially lower. We have disinflation right now. And whether that's

in a straight line, like I said, is, you know, won't happen. But those are all the good things. And the fact that we've hit peak rates in this business cycle. So this rate tightening cycle has ended, whether they lower a three or four, I don't think really matters personally. So markets will move up and down a little bit on it, but I wouldn't read into that overly in it. So Fed minutes out today were probably the largest thing. Rates moved up a little bit based on that. They were up five basis points on the 10 year. We closed at 433. So top performing sector on the day was energy. It was up almost 2%. A couple of company, individual company news, really, there was a purchase from Capital One to Discover, which is the largest payment processing purchase that we've seen in 20 years.

Since the last time was when B of A bought MBNA. I just mentioned it because the deal announced was a 26 premium to current share price, and it's really only trading up 10. So I don't know that the market believes that it'll get through any antitrust hurdles. But meaningful news, nonetheless. I guess to keep it on company news, NVIDIA had earnings out. It's highly anticipated and watched, and the news reports on it. So I'm mentioning it here. Obviously, we don't own it directly, but they came in better than expected

as far as what they guided, what the guidance was, but not as good as the highest level of expectation. So we'll see how the stock opens tomorrow. Again, it's up some $600 billion in market cap since the last earnings report. So it's priced to perfection here. So let's see how it trades from here going forward. Again, I don't know that for us, it is a huge deal either way. But that aside, I think for the day, it was fairly benign. The volatility index was up a little bit, but not a lot. So we're just sort of getting through, again, more Fed banter. Tomorrow, we have more data out that I'll go through, more real data, which is things like jobless claims. There's existing home sales. There is a PMI report out, things like that.

So there'll be more economic data to go through tomorrow. And I look forward to being with you then. For that, this will be sort of a short recording, but I always appreciate you listening very much. And if you have any questions, please reach out. Thank you very 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 advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors LLC. This is not an offer to buy or sell securities. No investment process is free of risk.

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