The Dividend Cafe - The DC Today - Wednesday, March 15, 2023

Episode Date: March 15, 2023

Today's Post - https://bahnsen.co/3leNG2y This is Trevor Cummings, and I am sitting in for David Bahnsen to bring you DC Today. There is a common idiom in the English language, “Wait until the dust settles.” This adage encourages one to be patient until they have more clarity. Investors crave clarity, and when things become too foggy or dusty, investor anxieties skyrocket. These anxieties surface as market volatility, which you are currently enduring. At this stage, everyone is still sifting through the rubble of SVB to separate substance from hysteria. I want to encourage you to read David Bahnsen’s special Silicon Valley Bank Dividend Cafe, which was published Monday. Our intent here at The Bahnsen Group is to keep you informed and guide you through the dust. David will even be writing a Dividend Cafe piece on Friday dedicated to the plethora of questions we’ve received this week – you won’t want to miss that. With that said, let’s talk about what happened around the markets today… 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. I am Trevor Cummings, filling in for David Bonson, and I will start my story there. And I will start my story there. I got an email from David Bonson at 4 a.m. this morning. And I want to tell you this story because I want to tell you the character of David Bonson and how much he cares about our clients. He was saying, I might need to do DC Today, Trevor. He had this planned vacation, and we try really hard at the Bonson Group to offer David Lyft and to really honor his time when he's away for the business because it's very rare. So the reason I'm telling you this story is because this man is up at 3 or 4 a.m. every day reading through research paper, digesting what's going on in

markets. One, because he loves what he does, but at the end of the day, it is for the clients. One, because he loves what he does, but at the end of the day, it is for the clients. So for me, it just spoke, I don't even know how to articulate it. It was just one of those moments in my career that I'm like, I'm so thankful to be working here at the Bonson Group. So with a lot of arm twisting, I encouraged him to let me do DC today. Now, why would that be happening? Well, futures markets were showing the market opening down something like 600 points. And what David's real desire is to make sure that you all know that we are working tirelessly behind the scenes to understand that everything is going on.

What I wrote about in DC Today as far as the intro was this idiom that we use in the English language that basically says you got to wait till the dust settles. There is some rubble at Silicon Valley Bank and all analysts are parsing through that rubble to understand what is substance, if anything is actually like a systematic threat, and what is hysteria? The tough thing when you're talking about banks, what does hysteria mean? I'm not talking about people just acting crazy. I'm saying people have full freedom to go online and move money from one bank to another. I was reading a Bloomberg report today that said over the last few days, something like $18 billion of deposits were put into Bank of America. To make that relative to you, last year, Bank of America had negative $8 billion of deposits.

So what does hysteria look like right now? It means smaller regional banks are losing depositors, which puts pressure on them. Those are folks that employ people in our country, and they're moving to what they would posture as banks that are too big to fail. So I wrote an article last week for Thoughts on Money where I talked about the four largest banks had something like 50 or 60% of the deposits in our country, Wells Fargo, Chase, Bank of America, and Citi. When the dust settles, that'll look different. And there's been a lot of movement. So whether it's Signature Bank or Silicon Valley Bank, or what the headline today was Credit Suisse, right? What liquidity issues and what's happening there, kind of looking at

all the rumors are, you know, are Swiss authorities talking about putting a full backstop on the bank or whatnot. So that really ruled the headlines. Now, if you want me to put a positive spin on it, David Bonson was texting me at 4 a.m. when we were down 600 points on the Dow, and we ended the day through ups and downs, right? Down 280 points on the Dow. It was down about 0.87%. The S&P 500 was down 0.7%. And the NASDAQ was actually positive. The leading sector was, I should probably look at my notes here, the leading sector was communication services, which was up 1.5%. And the energy sector, one of its worst days, I think, in over the last 12 months or so, energy sector was down 5.42%.

Oil prices were at $68.17 a barrel. That was down 4.46%. Where I would draw the greatest attention, if you're a curious investor, is look at bond prices. The 10-year treasury was down 17 basis points today. The 10-year treasury was down 17 basis points today. You go look at the short end of where two-year treasuries were a week ago and where they are today. This is the type of bond volatility we've never seen in my entire career. And we might not have seen this in the last 50 years.

So what that's telling you is markets right now are trying to recalibrate to the news that's going on. Again, I'll bring us back to that idiom. You as an investor, somebody who has a financial plan, I'm going to encourage you to wait till the death settles until you make big decisions. Investors love clarity. They crave clarity. And you are just not going to get a lot of clarity right now with those situations because each day you're going to know something that you didn't know yesterday. Now, all of this will overshadow any of the economic data that was published today, but I'll give it to you. It's in the written. You'll see that retail sales fell a third time in the last four months. One of the things they focus on there is they look at restaurants.

They kind of look at that as potentially a leading indicator to see how the consumer is spending. There was a fall in restaurant spending prior month. The hard part there is weather has been pretty tough. And sometimes, I'll speak for myself, when it's pouring outside in Southern California, I'm probably more likely to eat at home than go out to a restaurant. The producer price index came in a little bit lighter than expected, which is a positive, right? It means inflation is slowing. David's written ad nauseum about this. The most interesting thing, if you want to have some coffee talk conversation, egg prices, right? Those were

the big thing everyone was talking about. Egg prices dropped 41%, which definitely helped to soften the producer price index. The National Association of Home Builders, they do a confidence survey every month, a third month in a row, that it was positive. It was above expectations. The actual measurement was, I think, 44. So that's a positive that there is some confidence for builders building new homes. Keep in mind that it's well off where it was a year ago. I've said this many times when I sat in for David here. A lot of folks are sitting on their hands as they try to figure out where do mortgage rates go? Where is demand. And remember, if you're a builder or you're submitting permits, you have to look where the puck's going. So again,

we'll watch that stuff closely. But in reality, most of the focus in markets right now is starting with Silicon Valley Bank and now some of the news with Credit Suisse. My encouragement to you, David wrote an amazing piece on Monday that you should read. It talks all about what actually happened with Silicon Valley Bank. On Friday, David has stored up a bunch of Ask David questions. So on Friday, I'm sure a question that you're thinking about or a question that you maybe have asked is going to be addressed there. Unless he decides to pivot. But that is the plan for Friday.

Brian Zytel will bring you DC Today tomorrow. And then quite a bit of economic data. Like I said, it might be trumped by what we're looking at in the banking sector. But you have jobless claims tomorrow, housing starts, building permits, and then the Philadelphia Fed manufacturing data. So that is all I have for you today. I will

leave you with this last encouragement. We are here for you. So if you have questions, if you have concerns, if you just want to jump on the phone, reach out to your advisor at the Bonson Group. You're welcome to email me or David Bonson. We are available. We want to be a resource and be as helpful as we can. With that said, hopefully wherever you are in the country, I hope that sometime today or this week, the sun will be shining. You'll enjoy some time

with your family and friends. And Brian Zetel will be back tomorrow to bring you the DC Today. 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.

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