The Dividend Cafe - The DC Today - Wednesday, March 8, 2023

Episode Date: March 8, 2023

Today's post: https://bahnsen.co/3SXObdT Key Economic Points of the Day: ADP reported 242,000 private sector jobs created in February. The correlation between the ADP and BLS numbers each month has not been very tight for a while now. Job openings came in at 10.82 million for February, 300k higher than expected. It had been 11.2 million last month. The trade deficit came in at $68.3 billion in February, a little less than expected. Total trade was up +7.6% versus last January ($18.1bn), indicating ongoing improvement in supply chain conditions versus a year ago. ASK DAVID “I noticed Sen. Elizabeth Warren grilling Jerome Powell yesterday, and her main point (that the primary causes of inflation and the only tool the fed has to fight inflation are disconnected) sounded familiar. Would you have ever guessed that you would find common ground with a left-wing Senator from Massachusetts? She did have to get price gouging theory in there though …” ~ Jack B. I’ve said this countless times – that though the progressive’s motives are to pin the blame for inflation on “capitalist greed” (the most preposterous theory imaginable), the right’s agenda here will leave them regretting it when economic opponents are the ones making the case that, no, people having jobs is NOT inflationary. Inflation is a highly toxic issue politically, no doubt, and parties not in power will make hay of it when they can just out of political reality. But the need of the hour is economic growth, and for the right to join the fray in alleging that growth and jobs are inflationary is absurd. For Elizabeth Warren to be the one making the case that the Fed is about to do more harm than good is heartbreaking to this movement conservative. 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 the Wednesday edition of DC Today, recording once again from beautiful Manhattan here in New York. from beautiful Manhattan here in New York. And I guess kind of a boring day in the markets on a closing basis, but there's some not boring things happening in the news cycle I want to talk through. First of all, we'll just kind of cover the market, then cover a news story I think is pertinent to investors,

and then go through a couple economic data points. Okay, first of all, the Dow ended up down about 50 on the day. It had been down about 250. At one point, I think it was up 40. You had nearly a 300 point spread from the high level of the day to the low level, but the market closed well off of its low. The S&P was actually up a tiny bit on the day and the NASDAQ was also up a tiny bit on the day, a little bit more than the S&P. The treasury market didn't move much. The 10-year was up about one basis point in the yield, still just right below the 4% mark there on the 10-year yield. The worst performing sector today was energy. It was down about 1%, but the

top performing sector today was real estate, which was up 1.3%. It had been the biggest drag yesterday, so there was a bit of a retracement to recovery today in real estate. Oil was down a little over 1%, still hanging out there right around $76, $77 a barrel. So again, not a lot of newsworthy things into the actual market. You had the Powell testimony in the Senate yesterday, spoke to the House today, and as expected, there was nothing to really add on to. You would think anything particularly profound he would have said in the Senate test yesterday. And indeed he did. Today was mostly a kind of repeat. Silvergate is a very large bank. It is regulated by FDIC, but it is known as a crypto related bank because it would lend

two depositors off of crypto based assets. So it was not a crypto exchange in the way a lot of these other high profile names you've heard about your Gemnize and your FTXs and your Celsius and these other names that have been in the news a lot, the bulk of which are in bankruptcy or investigation or different things like that. But today, Silvergate announced that they're shutting down and liquidating. They were also similarly caught up in the whole kind of run on the crypto space that evolved out of Q4 of last year. The reason I bring it up is that crypto, or excuse me, Bitcoin,

was right near $25,000 a coin just two weeks ago now, 16 days to be precise, and it closed today a little below $21,000. And so again, the systemic space, the systemic environment surrounding adjacent area of the exchanges, the banks, those that are involved in the kind of ecosystem of this world have a profound impact on the overall price level and sentiment. And that's been evidenced again. And the reason I bring it up to, first of all, any clients listening that are not through anything we do at Bonson Group connected to these names or the notion of being invested into cryptocurrency. these names or the notion of being invested into cryptocurrency. But I bring it up as again, a reflection of the state of risk assets when one goes into some of the more

speculative domains that we happen to not believe in, that you become very captive to circumstances totally outside of your control, totally independent of what you would think was the investment thesis you invested in. And we're seeing that play out right now in crypto yet again. On the economic data front, ADP reported 242,000 jobs created in February in the private sector. The ADP report has not been very correlated with the BLS, the Bureau of Labor Statistics, which is sort of the more official governmental jobs report that we get every month. And so unsurprisingly, there isn't much of a market response to this.

But anecdotally, it does appear that there was another strong jobs month. And I have no reason to think that there wouldn't be such again in the BLS on Friday. We shall see. The jolts date of the job openings came in for February as well, 10.8 million. That was about 300,000 higher than expected, but a little lower than the 11.2 million we saw last month. But either way, you still see a stubbornly high data point out

of job openings. I had dinner last night here in the city with a macro analyst that I'm quite close with and very fond of. And he was speaking to a theory he's working on that a lot of the job openings data might have to do with people who have post-COVID been capitalizing on what he calls side hustles, various aspects of cash flow generative activity that might not be showing up in that data. So it's interesting to me, Prima Facie, but he's working on some more empirical support before I think any more actionably about it. Finally, the trade deficit came in at $68.3 billion in February. That was, I guess, just a little bit lower than was expected. But the main thing, because I don't really care a whole lot about the delta between imports and exports each month,

I care about the total trade, the combination of imports and exports that speaks to overall economic activity. And it was up 7.6 percent in January of this year versus January of last year. It's about 18.1 billion dollars, which as a percentage of denominator is 7.6 percent increase year over year. That does speak to a very ongoing, healthy, increase year over year. That does speak to a very ongoing, healthy, substantial improvement in supply chain conditions versus where they were a year ago. So that was my takeaway from the trade deficit data. I'm going to leave it there. There's a few nuggets in there on economic data. I like to keep it short and sweet. Not anything more interesting to report on the market itself. Thursday is a new day.

I'll be on Varney tomorrow morning at 9 a.m. Eastern on Fox Business. And we'll have a full report for you tomorrow night at the end of the day. As always, thanks for listening to, watching, and reading the DC Today. Thank you. that the investment process or investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary and does not constitute investment advice. The Bonser Group and Hightower shall not in any way be liable for claims and make no expressed or implied representations or warranties as to the

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