The Dividend Cafe - The Dividend Cafe Thursday - August 1, 2024

Episode Date: August 1, 2024

Market Volatility and Economic Data Insights – August 1st Update In this episode of Dividend Cafe, Brian Szytel from the Newport Beach office discusses the substantial market movements on August 1st. Following a significant rally, there was a notable sell-off with the Dow down 494 points, S&P falling by 1.3%, and NASDAQ declining by 2.3%. The 10-year yield dropped below 4%, and the VIX rose to 19, indicating increased market volatility. Seitel highlights recent economic data, including weaker-than-expected ISM manufacturing data and high jobless claims, portraying a cooling employment market. He also previews upcoming non-farm payrolls and emphasized the importance of understanding daily market fluctuations in the context of broader economic trends. 00:00 Introduction and Market Overview 00:24 Market Reversal and Bond Yields 01:13 Economic Data and Market Reaction 02:01 Employment Data and Fed's Mandate 02:49 Conclusion and Upcoming Events Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Welcome to Dividend Cafe this Thursday, August the 1st. Brian Seitel with you here from Newport Beach office. And what one day giveth, another taketh away. So after yesterday's big rally, we had a big decent sell-off at least today. Dow was down 494 points. S&P was down about 1.3%. NASDAQ sold off the most, down 2.3%. So basically a reverse, partial reversal of yesterday. The yields continue to plummet with bonds rallying. 10-year yield broke 4%. We're at 398. We're actually below 398 earlier in the year,

but still, we haven't seen a three-handle here in some time, six months or five months or so. The volatility index, the VIX, was up to 19. That's about the highs that we saw last April. If you remember earlier in the year, I'm sorry, this April, if you remember earlier in the year, we had interest rates pricing really a whole lot of cuts in the beginning of the year, I'm sorry, this April, if you remember earlier in the year, we had interest rates price in really a whole lot of cuts in the beginning of the year and markets rallied on that. And then as rates went, 10-year went from about 385 to 485 from February to April. We had markets sell off quite a bit then. And this is about the similar amount of volatility is what's priced in on the VIX. So basically, you've got the script flipped back to what is more normal.

Frankly, it's bad news is bad news. We had some weaker economic data. And so you had bonds rally and stocks sell off. That's a normal dichotomy. What we've seen lately is more lower rates just being the sort of punch bowl at the market party and lifting everything and that reversed today. So fundamentals will outweigh yesterday's Fed talk, real fundamentals from the day, current fundamentals. And what we got was some manufacturing data on ISM for the month that

was in contractionary territory and lower than what was expected. And then we had initial jobless claims come in at 249 versus 235 expected. And also, which is the highest number we've had in about a year, continuing claims were about the highest that we've had in about two years. So employment is cooling, and that's showing in the numbers. It is what the Fed referred to yesterday in more of a balanced risk paradigm that they're trying to outweigh in their two mandates, which is full employment, which is cooling, and inflation, which is too hot and coming lower. So there you have it for the day. I would look at today for what it is. Okay. So it's one day with some negative economic data. You had markets sell off after yesterday's rally. Markets are still doing just fine. They're still high and there's more positive in the economy happening

right now than just a couple of these data points. If we're going to have a soft landing, meaning a landing that isn't a recession, but a soft landing, you can't get there without some negative data points along the way. And I think we really haven't had a couple together on the same day. There's a lot of days where I write and there's something negative coupled with something positive. And so that sort of offsets. And today you didn't have that. So tomorrow we've got non-farm payrolls out and to give you a preview of what's expected, unemployment is now at 4.1 and it's expected to stay there. And we're expecting something like 180, 190,000 new jobs. So we'll see what that will be get tomorrow. And we'll also have, of course, the long form dividend cafe for you on your Friday.

And as always reach out with your questions. And if I don't speak to you for some reason, please have a nice weekend. 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 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. There is no guarantee 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.

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