The Dividend Cafe - The DC Today - Wednesday, March 13, 2024

Episode Date: March 13, 2024

Today's Post - https://bahnsen.co/3wTpet0 The Dow eked out a small gain, with both the SP500 and Nasdaq closing modestly lower. Yields drifted a little higher today 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 Wednesday, March the 13th. And it's great to be with you here on a somewhat quiet day, really, in markets. We had a nice up day yesterday. Really, it was a technology rally yesterday, and we gave a little bit of that back, at least on a relative sector basis. Technology was down about a percent or so on the day. The NASDAQ itself was down about 0.54%, about half of a percent. For the day, the Dow still eked out a gain of about 37 points. It's a little bit mixed on the day, which is normal. There wasn't a ton of economic news today. I wrote about that yesterday. Today was sort of a quiet calendar in the economic front,

but there's plenty to go through tomorrow. And there's still plenty today, really, just not economic numbers, which some of you may like and some of you may not. The WTI was up to almost 3% today, a little less, 2.8% on a Ukrainian strike on a Russian refinery. Rosneft, that caused some turmoil in energy markets a little bit. And then you had a drawdown from the government on inventories in the US of about. of about a million and a half barrels. So WTI was up. Both of those things take supply offline or indicative of supply being utilized. And so oil prices rallied a little bit on the day. There has been a lot of talk really about the amount of cash that's on the sidelines. And there's been a lot of media about it. And

there's about 18 plus trillion dollars sitting in cash. A lot of that came because of higher interest rates, people looking for cash as an actual asset class that gives you a positive real rate of return, which is nice for a change after many years of it otherwise. But it's just interesting to me when I sort of peeled back the onion a little bit more. Yeah, cash has gone. So if you looked at pre-pandemic 2019, we were at about $13 trillion in cash in the country. Now we're at about $18 trillion. So that's a 35% increase over a course of a short period of time. So totally get why it's in the media. But if you look at total household net worth, for example, so if you divided what $13 was by

household net worth in 2019, and then you divide what it is now, which is $18 trillion in cash by total household net worth. Household net worth has gone up about the same, not quite 35%, but it's up about 32%. So that's good news. People are worth more in the country. The country's wealthier. That's not a bad thing. But just the percentage of it being in cash is the same. It's basically 10%. So I don't think that there's some other secret to discover with some large amount of cash that's going to come out of money markets and into stocks or something like that. Sure, that can happen. But just remember that the percentage of cash is about the same. And over that period of time, there was a little bit, when you look

at charts, when you look at trend lines of, for example, net household net worth, so adjusted for inflation, there is a pop there right around 2021, 2022 from transfer payments from governments, basically, and then markets really rebounding after the pandemic, both real estate, but also stocks too. And so that you had that sort of run up and that led it to some of that inflation that has now come back to trend line. So what I wrote was it's been quite a ride. But if you look at those numbers going up about 30% to 35%, consumer spending also went up about the same. And then inflation adjusted. We're back on the trend of where we were before it all started.

Not necessarily an economic point for the day, but Trump did clinch the Republican nomination. but Trump did clinch the Republican nomination. So we've got another rematch or a rematch, sorry, between Biden and Trump for the election in November. And it's not new. We've had seven other rematches in presidential history before, but the last one was 68 years ago in 1956 with Eisenhower and basically the other guy that probably nobody's heard of, who is Stevenson, or most people haven't. So it's been a long time. So this is obviously going to get a whole lot of media attention, particularly because the majority of both parties, Republicans and Democrats, would have preferred a different candidate, at least judged by polling. So yeah, I think this one will be one for the memory banks here as we go through the rest of the year. And then I'm sure media will cover it. Saturday Night Live will probably have

stuff on it as they do, which is always fun. The question today that I got earlier was about having a low interest rate on a mortgage on your primary residence because it's so low. So long as the bank would let you extend an additional amount of borrowing at the same low rate, I'm not aware of that being something that is out there a whole lot. But the question was, if it were, wouldn't it be better to take that at a low interest rate of, say, two and a quarter and just park it in cash at 5% and earn the interest rate arbitrage on the two? I think that those things are fine. I don't think that it's needed on a primary residence if there isn't some sort of financial stress or some reason for it. So I'm not keen on it at all. I think that people should live in their houses and enjoy them and not use them as ATM machines from time to time, even when. And often as a human nature, money that is taken out that is seeming an excess of liquidity may get used for other things at some point. And so

I just don't want to see people extend on their primary residence without a real financial reasons to do it. With that tomorrow, we've got retail sales, we've got initial jobless claims, and then more importantly, we have the PPI data. So some more inflation read that we can take a look at with you tomorrow. So with that, I will let you go for the evening. It's good, as always, to be with you. Reach out with questions. I do enjoy them. Thank you. 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 with Hightower Advisors LLC, a registered investment advisor with the SEC.

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