The Dividend Cafe - The Dividend Cafe Tuesday - August 20, 2024

Episode Date: August 20, 2024

Market Insights Amidst a Quiet Day: Economic Data and Upcoming Events In today's episode of Dividend Cafe, host Brian Szytel reviews the quiet market day, noting the slight downturn after an 8-day positive streak for both the S&P 500 and NASDAQ. He discusses the 10-year yield drop and increased volatility indicated by the VIX. Seitel also highlights upcoming key economic events, including jobless claims and the FOMC minutes, as well as Federal Reserve Chair Jerome Powell's anticipated speech at Jackson Hole. The episode provides a general overview of the current economy, touching on unemployment, GDP estimates, corporate earnings growth, and a positive 35-page economic report from Apollo, while advising on the importance of economic data in market movements and portfolio design. 00:00 Introduction and Market Overview 00:57 Economic Indicators and Employment 01:19 Corporate Earnings and Economic Activity 02:14 Market Valuation and Investment Strategy 03:08 Upcoming Economic Events 03:19 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 the Dividend Cafe. It is Tuesday, August the 20th. Brian Seitel with you here today in an otherwise fairly quiet day in markets overall. We gave a little bit back here, but we also had eight days in a row with both the S&P and the NASDAQ positive. So there you have it. The 10-year yield was down four or five basis points. We closed at 382. And that's sort of normal correlation between stocks and bonds. And stocks and bonds continues with bond yields a little lower as stocks sell off

here a little bit. But with that, there's a quiet day in the economic calendar today. We did pick up a little bit on the VIX, so volatility was a little higher. Tomorrow, we've got jobless claims. We've got the FOMC minutes out. And then Friday, we'll have Powell speaking at Jackson Hole and giving his press conference, which is really the largest piece of economic news on the week. So what I did is just went through the economy generally, given the quiet day that it was. So we have unemployment now at 4.3. That's up from three and a half. So, you know, up 80 basis points, which is meaningful. But just keep in mind, 4.3% is still considered full employment in this country. So employment continues to be strong, albeit a little cooler. We've got GDP estimates in the 2 to 2.4% range. So still, you know, positive and not recessionary. Earnings growth, which has just come out, closed at around 12% higher, 12.4%, with revenue growth at 5%. So positive things on corporate profits and corporate earnings. barometer of overall economic activity, there was a 35-page chart book from Apollo going through everything from things like New York City Broadway show tickets to air travel, traffic, national

income tax receipts, things like credit card spending or the consumer spending like they were, and then just low bankruptcy rates and low charge-offs on debt. There's 30 pages of this stuff, and almost every single metric is showing you that the economy is pretty strong overall. It doesn't mean it's perfect and it doesn't mean that there's not cracks in the dam or anything, but I think it's positive. With saying all that, we're trading at 23 times on the S&P. My point here is just that the market has already priced most of that in, and so more stocks are already expensive. And things that get priced to perfection often can lead to being disappointed if the news comes out a little less than perfection. So just keep that in mind. And my comments here are that

economic data is vital, it's important, but really it's not going to drive market movement. Sometimes it's the opposite, sometimes it's non-correlated. So take economic data for what it is, and it also won't design a portfolio for you. It's not going to give you what you're looking for as far as where the rubber meets the road, how to set up the allocation to achieve X, Y, or Z based on A, B, or C outcomes in the economy. So keep that in mind to stay active, keep asset allocation on the forefront, and then engage with us, engage with the advisor. You'll be happy that you did. Tomorrow, we've got jobless claims. We have minutes out on the FOMC. And then Friday, again, Jay Powell will talk and give his press conference on where he sees rates. With that, I shall let you go. Please reach out with your questions as always. If I don't speak to you, have a great evening. The Bonson Group is a group of

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