The Dividend Cafe - The Dividend Cafe Thursday - June 6, 2024

Episode Date: June 6, 2024

Market Summary and Economic Insights In this episode of Dividend Cafe, the day saw minor movements in the trading markets with the Dow closing up 78 points, while the S&P and Nasdaq remained nearly unchanged. The 10-year yield also remained stable. Significant economic updates included the European Central Bank and Bank of Canada cutting interest rates. Initial jobless claims were slightly higher than expected but still reflect healthy employment numbers. Productivity and trade deficit data showed slight improvements. Additionally, TSA travel levels for 2024 indicated strong economic activity. The discussion also touched on the preference for goal-oriented benchmarks over traditional market benchmarks. Listeners were reminded about the upcoming non-farm payroll data and the long-form Dividend Cafe newsletter set to release the following day. 00:00 Introduction and Market Overview 00:23 European Central Bank and Interest Rates 01:03 US Economic Indicators 01:41 Travel Trends and Economic Activity 02:30 Benchmarking Dividend Portfolios 03:17 Upcoming Non-Farm Payrolls Report 03:21 Conclusion and Sign-Off 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. It's Thursday, the 6th. In a pretty modest and quiet day of trading, the Dow ended up closing up 78 points, but both the S&P and the Nasdaq were just slightly lower, almost unchanged really on the day. The 10-year yield was also unchanged. We closed at 428. So not a lot of movement after yesterday's move higher in both stocks and bonds. We did get the European Central Bank cutting interest rates, which would probably be the second largest developed economy to do that. Bank of Canada cut rates yesterday by a quarter point. So the ECB cut today by a quarter point. A hawkish statement that went along with it though as well. So markets rallied a little in the morning and then

faded a little bit. The 10-year, by the way, in Europe is lower than their central bank policy rate. That tells you where interest rates are probably going to go. The central bank policy rate is at 3.75%. German two-year boons are trading in the twos. So writing's on the wall for where rates are likely to go in a very slow-growing economy like the European Union or the Eurozone, sorry. a little weaker than expected. We got 229 versus 220, but still very healthy numbers really with employment. Those numbers are not bad at all. Productivity actually beat a little bit on the day. We got 0.2 versus 0% expected. And then trade was a little bit better. It was $74 billion deficit versus $75 billion for the month. So not sure I'd call that a big win there. So there you have it. There's your recap on what went on on the day, flattish day, not a lot of action on the trading side of things. I did have a little chart I included in there I thought was just interesting because we're

in the summer months now and people are out traveling around the country and around the world with their kids out of school and all that. But TSA levels for 2024 are at all time highs. So if you look at like the last five and a half years, you can see the big sell off. You can see 2019, which was normal, call that baseline. 2020, big sell off with COVID. 2021 was recovery. And then you had 22 and 23. 2023 was the exact same as pre-pandemic. So we were exactly back to where we started. But now in 24, six months into the year, at least, we're tracking above all of those other years. So these are a lot of people moving around the country. And it's a sign of positive economic activity. It's

hard to travel if you don't have a job and can't afford to buy a plane ticket to go somewhere. So generally, that's a positive comment. There was a question that we had yesterday, or sorry, the day before that I answered about which benchmark to use against our dividend portfolio. And so my comment was essentially, we tend to not use benchmarks because there really isn't one that's super applicable, number one. Number two, I haven't found them to be a very productive tool for clients and prospective clients to really concentrate on, just a relative barometer. What I prefer is the benchmark are people's actual goals and what they're trying to accomplish. And are we exceeding those goals or at least meeting them? And that's the way I would measure success more than if the

Russell 1000 value is up 10 and we're up 11 or something like that. So for what it's worth, that's the way we tend to look at benchmarking. Tomorrow, we've got non-farm payrolls out. So we'll get hopefully a print of around 180 to 190 new jobs. And so we'll take a look there with you on Friday. Obviously, the long form topical format dividend cafe will be in your inboxes tomorrow. And with that, I shall let you go. And if I don't speak to you, have a lovely weekend and I'll talk to you soon. Thank you. The Bonson Group is a group

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