The Dividend Cafe - The Dividend Cafe Thursday - May 23, 2024

Episode Date: May 23, 2024

In this episode of Dividend Cafe, the discussion revolves around a significant downturn in the market with the Dow closing over 600 points lower. However, some sectors, especially those related to AI technology, showed positive performance due to favorable earnings results. The episode delves into recent economic indicators, highlighting PMI data showing the economy's accelerated growth in May, with manufacturing and services sectors posting gains. Despite positive economic indicators, concerns remain regarding potential Federal Reserve actions on interest rates. The episode also covers lower-than-expected initial jobless claims and a decline in new home sales, attributed to higher interest rates. A Q&A session discussed dealing with large deficits and government debt, advocating for supply-side economic policies to stimulate growth without excessively raising taxes or increasing regulation. The Bonson Group provided these insights, emphasizing that their advice does not constitute a solicitation for securities and should not replace professional tax or legal consultation. 00:00 Welcome to Dividend Cafe! 00:19 Market Overview: A Down Day in the Markets 00:53 Economic Indicators: PMI Data and Jobless Claims 01:57 Housing Market Insights: New Home Sales Data 02:42 Fiscal Policy Discussion: Deficits, Taxes, and Economic Growth 03:49 Closing Remarks and Contact Information 03:59 Legal and Advisory Disclosures 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. Hello and welcome to Dividend Cafe. It is Thursday, May the 23rd, and what was a fairly down day in markets across the board. The Dow closed over 600 points lower on the day. There was some bright spots, I guess, from a performance standpoint inside of some of the technology names, particularly related to AI with some of the earnings results today. But other than that, it was a down day. And the reason that markets were down was really

a feeling of good news being bad news, unfortunately, with what it could mean for the Federal Reserve. And I speak about this a little bit in the writing, but we got good news today. Listen, we got PMI data, at least a flash number. This is sort of a inter-month number for PMIs on both services and manufacturing. The composite index was up the most in two years. So that's a good thing. It means the economy re-accelerated in the month of May. Those things are positive. Inside of those numbers, services were up the highest in over a year, and manufacturing in those were up for the fourth consecutive month, and overall output has now been positive for 16 months in a row. Those are all good things. So I'm going to say that I will stick with the narrative of good

news for the economy being good news, and I think it's far too reliant on what people think that the Fed may or may not do with raising interest rates lower by 25 basis points in July or September or October or something like this. We also had initial jobless claims that were better than expected. We were at 215 versus 220 expected. And so again, fewer people filing from unemployment. And again, these numbers are the same numbers we had 50, 60 years ago. So these are positive things in the economy. We did have some new home sales data we had existing yesterday. Today, we had new home sales that disappointed a bit. They were down 4.7% for the month of April. And higher interest rates do make a divot in the appetite for new

homes. And it was different across the country as housing is, but the Northeast saw the biggest decline down 21%. Actually, the Midwest was up 10%. But overall, new home sales were down. We got a 634 number versus 675 expected. New prices on those were down slightly too at 433,000 versus 439 the month before. So a little softness there in housing. And like I've said many times, housing just remains a bit stuck here with where we are at this juncture with interest rates. I really liked David's Q&A session in there for an Ask TPG about how do we rectify the fact that we have these big deficits and we're creating a lot of government debt to support them? And the answer was about, there's two things you can do, basically cut spending or raise revenues to the government to not have to run a deficit. And the comment was

more about when you start to tax something more over time, and this is a Laffer calculation, Laffer curve, you ultimately end up getting a little less of it as there's a bell curve to what you get from a basically smaller private market as you overtax it to try to create more revenue. So that's not necessarily the solution. And so really, it comes down to trying to grow the economy and keep tax rates attractive in order to have capital markets, private markets be able to do that to provide more growth in the economy. And then, of course, regulation, less regulation in order to facilitate those things is this important part of it, too. It's basically a supply side economics Q&A session, and I really liked it a lot. So if you didn't get a chance, please do read what David wrote in there. But for the day,

I'm going to let you go for this evening here, get you up into your Friday for tomorrow. Please reach out with questions. As always, we're here to answer them. Thank you so much. Bye-bye. 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. 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. Thank you. representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced.

Such data and information are subject to change without notice. This document was created for informational purposes only. The opinions expressed are solely those of the Bonson Group and do not represent those of Hightower Advisors LLC or any of its affiliates. Hightower Advisors do not provide tax or legal advice. Thank you.