The Dividend Cafe - The DC Today - Wednesday, May 31, 2023

Episode Date: May 31, 2023

Today's Post - The debt ceiling bill has gotten through the House Rules Committee and it appears nearly certain that the House will have the votes tonight for passage. What happened here proved to be even less dramatic than I predicted, and I was predicting that the media posture here was recklessly and shamefully melodramatic. I promise you this, though – no one will learn anything, and everyone will take the bait again next time, too. Media reports that some hardliners on the right were going to look to oust Speaker McCarthy over this bill were, well, totally untrue. One of the big themes in the market right now is the relative weakness of defensive sectors like Consumer Staples, Health Care, and Utilities. And for a contrarian like me, it makes me like them even more. The momentum is in one very narrow space right now. That boat has a capsize risk in front of it as 2023 progresses. In the meantime, 4% of the large cap universe is at a relative high right now, while 25% is at a relative low. Weird wacky stuff. 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 the Wednesday DC Today, the very final day of the month of May. May. And we had a little excitement in markets today, kind of dropped closer to 300 points at one point, but then came back to kind of where it had opened on the day. And the Dow ended up only down 0.4%, the S&P 0.6%, NASDAQ 0.6% all down. Point-wise, the Dow was down 134 points. And it was mostly in financials. You had pretty good rallies in some of the other sectors. It was kind of a mixed bag. The main issue, just to get it done once and for all, is the House is now going to go vote tonight and the debt ceiling deal is done. They did have a little fun today getting through the rules committee, and you had about 20 Republicans hold that up,

which was nowhere near enough to stop it, but some Democrat votes were needed because of the slim majority the Republicans have, and that moved it forward. There's been some talk in the press about it. Some of these Freedom Caucus guys so mad about this bill that they're going to boot out Kevin McCarthy. And I'm talking to several people on the Hill that say it's a joke and there's no real murmurings there, but you know, people, you may have heard the press likes the drama, but no, this thing looks done and it looks like to be

getting done with less drama than I thought there would be. And I thought there would be exponentially less drama than the press has played into. So you got even less than I got. And I was the, than I forecasted. And I was the opposite of a drama queen on this thing. So quite, quite interesting how it played out. What do I want to talk about with that? I don't think you care much about the procedural side of how we played out. What do I want to talk about with that? I don't think you care much about the procedural side of how we got there, but all of that to say the basics, if you missed Tuesday's

DC Today, which was yesterday, May 30, that had more of the details of it. I'm going to leave it there for now, so I'm not redundant day by day. The economic news today was in the jolts, the job opening data, that there were 10.1 million unfilled open jobs in the month of April, and that was up from 9.75 million the month before. So a big part of the increase of unfilled job openings is in construction. If you're trying to get higher unemployment, meaning less jobs available and more people looking for jobs, which I think would be the objective of either a horrible human being or a central banker, the fact of the matter is that it's a pretty tough thing that may happen when there continues to be more job openings coming than people who are unemployed

and looking for work. So there you go. As far as stock market stuff goes, right now in the Russell 1000, that's a thousand companies, much bigger than the S&P 500, but all large cap. There are 4% of companies that are relative high, and there are 25% at a relative low. That's how weak the breadth is in the market. I'm kind of finding a new data point every day to share with you to make the point that while the headline market index looks okay for NASDAQ and S&P, the underlying reality of the market and the companies within the market has not been good. The Dow was actually down a little in the year. And you're really just talking about a very small amount of companies of a massive

capitalization doing all the work. And that's that with that. Oil prices, due to kind of weakening demand or unimpressive demand levels that were coming out of the data from China. Crude is now down to close to $68 a barrel. And that is entirely a demand story with China. And we'll see how that shakes out. And then finally, the Fed Funds futures today flipped. There was a 40% chance yesterday of them pausing at the next meeting and a 60% chance of another rate hike. It flipped today to a 69% chance of a pause. So therefore a 31% chance of a hike. So the momentum moved kind of, you know, reversed towards no rate hike at the next meeting as one of the new, one of the Fed governors who's expected to be named

vice chair came out and said he wanted a pause at the next meeting. And so their messaging, their signaling, you know, seems rather clear at this point. I expect the futures will be pricing in more of such probability in the days ahead. That's about all. I know I went through that quickly, but it was just another day in the market. And tomorrow we'll start off the month of June and we'll come back to you again with another DC Today. Thanks for listening. Thanks for watching. Thanks for reading the DC Today. Thank you. 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

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