The Dividend Cafe - The Dividend Cafe Thursday - September 26, 2024

Episode Date: September 26, 2024

Market Recap and China's Economic Stimulus In this episode of Dividend Cafe, Brian Szytel reports from West Palm Beach, Florida on a generally positive market day. He discusses recent stimuli enacted by the People's Bank of China to spur economic growth, including lowering mortgage and deposit rates. China faces deflation with PPI at -1.8% and significant real estate declines. Despite market weaknesses, global GDP remains relatively stable at 3%. U.S. jobless claims slightly beat expectations, third-quarter GDP remains unchanged at 3%, and durable goods orders exceeded expectations. Chinese stock performance and its impact on U.S. markets are also examined. 00:00 Introduction and Market Overview 00:24 China's Economic Stimulus and Its Impact 00:43 Detailed Analysis of China's Economic Indicators 01:46 Global Market Reactions and Future Outlook 02:22 US Economic Data and Market Performance 02:57 Closing Remarks 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. It is Thursday, September the 26th, and Brian Seitel with you here again in our West Palm Beach, Florida office. Palm Beach, Florida office. And a generally positive day in markets overall. We had some weakness yesterday, but we had some recovery today and NASDAQ closed at a gain for the fourth day in a row. We had written about this, or I did last week. I know David wrote about it Tuesday, but there was stimulus enacted in China, pretty much across the board from the PBOC. And so I unpacked that a little bit today in the Dividend Cafe. I wanted to go over with readers some of the reasons as to why they're doing these things, lowering mortgage rates and lowering deposit rates and these types of things to spur the economy. You've had CPI in China coming year over year at 0.6% in August. You

had PPI deflating, which is negative 1.8 percent year over year in August. Economic growth has slowed. Freight rates are down from Shanghai to New York by 20 percent, which is pretty stunning, really. Real estate year over year is down 23 percent, and that's kind of the gorilla in the room. This is the big deflating real estate market that was invested in from the government to build infrastructure and to build these cities and railways and bridges and all these apartment buildings and office towers and all these things. And they've had a transition into more of a consumer-led economy. And this is why you've seen some of these weak numbers. But the silver lining to a lot of these things

are that this is essentially known. A lot of this is priced in. The markets in China are lower by 30% just from 2021. They were lower by half, frankly, before this recent recovery. This stuff is already priced in. It's priced into global commodity markets. It's priced into global currencies. And so at this point, the signs of life, I guess, in the stock market following stimulus just give you a pause to think about what will end up being fundamental and what will be lasting in the economy to actually drive a turnaround story in the world's second largest economy. And it matters, right? Because it's the world's second largest economy. So there you go. That all said, GDP in China is supposed to be roughly four and a half to 5% for 2024. And we have global GDP still at 3%.

So it's not all bad. Okay, this stuff has been priced in and the world is still turning. But we'll see how this translates into fundamentals. To get back into today's action, we had initial jobless claims at 218. We were expecting around 220. So a slight beat on initial jobless claims. We had a revision, a third quarter GDP that came out unchanged at 3%. Both of those would be considered good. And then we had durable goods orders ahead of expectations. They were actually flat on the month, but we were expecting a 3% decline. So all three of those data points for the day were generally positive. And I think that's what flowed through to markets in the US, along with a robust day on Chinese stocks as well. So there you go. There you have

it. Tomorrow, we'll have PCE data to go through with you. We'll have the long form dividend cafe on Friday in your inbox, as always. And I encourage you all to reach out with your questions. And if I don't speak to you, please enjoy your weekend. And we'll talk to you soon. Thank you. 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.

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