The Dividend Cafe - The Dividend Cafe Thursday - October 3, 2024

Episode Date: October 3, 2024

Market Updates and Dividend Strategies: October 3rd In this episode of Dividend Cafe, Brian Szytel provides a market update from New York City, noting a decrease in the Dow and S&P and a slight increase in the 10-year yield. Key economic indicators include above-expectation initial jobless claims and a positive Services PMI. Dividend reinvestment strategies are discussed, highlighting customization based on client needs. The episode also examines the relative performance of the US dollar amid geopolitical tensions and global monetary policies, emphasizing its role as a safe haven in times of unrest. 00:00 Introduction and Market Overview 00:31 Economic Indicators and Jobless Claims 01:23 Dividends and Portfolio Management 02:29 Currency and Dollar Dynamics 04:20 Conclusion and Final Thoughts 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 is Thursday, October the 3rd. Brian Saitel with you in New York City in our office here in Midtown Manhattan. City in our office here in Midtown Manhattan. In what was a bit of a down day, although fairly quiet, we had the Dow down 238 points, which is about 57 basis points. The S&P was down about 0.3%, and the 10-year was up about six basis points to 384. So a little higher rates on the day, little lower stocks, fairly manageable overall. We had a couple of pieces of news in the economic calendar that moved things a slight bit, mostly for the better, frankly. But we had initial jobless claims that came out at 225

versus a 218. That's actually a little bit higher than expected. But these numbers have really been oscillating right around that 220 level week to week. And so we're more or less in that range there of what we've seen. And then we had a September ISM services PMI come out today that was a good amount above expectations. We got 54.9 versus a 51.4. Again, this is the services side, as we saw earlier in the week on a number below 50 for manufacturing, meaning contractionary, of course, above 50 in the services side is expansionary. And that was a positive piece of information on the day. There was a question in there about dividends and our holdings, are they automatically reinvested? And if so, is it done so at the weighting of the position? And how do we manage that? And of course, it's client by client specific. So if we have people that need income or are living off of

the income to supplement retirement or something like this, of course, all the dividends get paid to cash and they can be distributed to clients. And then they're living off of cash flows without selling shares. And that's all by design with not just our dividend portfolio, but fixed income with our alternatives, private credit, so on and so forth, real estate, that we're able to generate that cash flow. And then for people that are not needing the cash flow for current expenditures, it can just be reinvested into the positions. And so it is by weighting, because if there's a 4% weighting that owns, that pays a dividend, that dividend will get reinvested back into the name. And it'll be done so based on the size of

the position. Of course, the yield on each position is different. And so in dollar terms, it won't correlate exactly to the weighting from that perspective overall, but you get the idea. So it's very customizable on that front. We also had, I had some data in there about the dollar. It is a topic that comes up and it matters. We've been looking at a weaker dollar, or there's been a lot of rhetoric about a weaker dollar giving interest rates that are starting to come down. Usually that is as negative for currency and in things like this, some earnings reports that have been a little lower, at least on guidance going forward. And then just some overall labor market numbers that have weakened a little bit.

There's been talk about a weakening currency. But some of the other things we get are more related to the reserve status of the dollar versus other currencies and so on and so forth. And I wanted to just touch on the fact that this is not an absolute game. It does not operate in a vacuum. So it isn't about deficit spending and the absolute level of debt in the country, or even as a percentage of GDP as it is relative to other economies in the world and those metrics elsewhere, because they all operate together. They're all relative to one another. So in other words, you can't have a weakening dollar against other economies that are also weaker and stimulating more and providing more monetary stimulus and things like this to the Federal Reserve. And that's, of course, what we've seen here the past week. We've had a rally in the

dollar. It's the largest rally we've seen since April of this year. It's up about a percent and a half on the week. And part of that is because it's still a safe haven. And we had geopolitical unrest between Iran and Israel. And you get a flight to safety, it sends the price of the dollar up versus other currencies. And then you also had a government in Japan basically signal they're more reluctant to keep increasing rates at this point, and to let their monetary policy play out as it is. And then of course, weaker growth numbers out of Europe and more aggressive stimulus and central bank policy there to ease rates on that side versus what you saw in the Federal Reserve. So all that to say, a relative game on currency is not absolute. With that, I will let you go

for the evening here. And please reach out with your questions. If I don't speak to you, have a lovely weekend. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and 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. The investment opportunities referenced herein may not be suitable for all investors.

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