The Dividend Cafe - The Dividend Cafe Tuesday - November 26, 2024

Episode Date: November 26, 2024

Market Recovery, Fed Minutes, and Holiday Preparations - Dividend Cafe Update In this episode of Dividend Cafe, airing on Tuesday, November 26th, Brian Szytel discusses the day's market activity, including a morning sell-off that transformed into a positive momentum by the end of the trading session. Key topics include the Federal Reserve's minutes and expectations on rate cuts, significant drops in October's new home sales, and consumer confidence statistics. Additional discussions cover potential new tariffs announced by the Trump administration and developments in biotech concerning GLP-1 treatments. As the year-end approaches, Brian also addresses actions like required minimum distributions and tax loss harvesting, while wishing viewers a happy Thanksgiving. 00:00 Introduction and Market Overview 00:45 Federal Reserve Insights 01:51 Housing Market Update 02:18 Consumer Confidence and Inflation 02:37 Tariffs and Trade Policies 03:12 Pharmaceutical News and Investments 04:06 Year-End Financial Planning 04:34 Conclusion and Thanksgiving Wishes 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 Tuesday, November the 26th, in a fairly quiet trading week with the Thanksgiving holiday just the day after tomorrow coming up. And I first off want to wish everyone a lovely and happy Thanksgiving with your families here if I don't speak to you. But in the meantime, we actually had a market sell-off this morning turn into a recovery and positive momentum almost consistently the entire trading day closing at highs of the session or thereabouts. So we had positive action in stocks. Modestly, we had a small sell-off in bonds with a 10-year up about three basis points on the day. We closed at 430 on the 10-year in markets. And a couple of different pieces of news out on the

economic front. There was a lot of discussion around the Fed minutes that were released from the last meeting. They talked about the expectations of rate cuts and the timing of them being data dependent. That's nothing really new. But they also talked about the reverse repo rate and some other factors in those minutes that were a little bit new. And markets took most of that in stride. These minutes get released after the fact. So a lot of this data was already released in the press conference that Powell gave following the meeting itself. But Fed futures still show a 40 percent chance of no rate cut in December. I suspect likely they'll still do one. But there's a lot of things that can come up and change those things. And so we'll give that a little bit of time. But for now, the the bias is certainly towards another 25 basis point rate cut in a couple of weeks here. Have other things happening, too, from now and through the end of the year and then into

first quarter that'll drive much of where the Fed's going to take interest rates, things like labor numbers that come out. Of course, Trump policies with the new administration can affect different outcomes and markets in things as well. We had October new home sales significantly missed consensus. We were down 17%, 17.3 exactly month over month. So that's a pretty big miss there. Interest rates, lack of transactions, all those things are the same with housing remaining just basically stuck here until interest rates come lower. The Case-Shiller

20-city home price Index did notch up a little bit, though, for the month of September. It was up 0.2%, which was just below expectations. Consumer confidence, basically fully in line. Again, we look at that more of as a lagging indicator and don't pay a lot of attention to it, but for whatever it's worth, they were in line with expectations, and the inflation expectations 12 months out were actually lower, significantly lower than they were the month prior. So I guess that's some good news there. The Trump administration had some data out on additional tariffs, 10% more on what is existing for China,

and then potentially up to a 25% tariff on our neighbors to the north and south in Mexico and Canada, citing things like drug importation, particularly fentanyl, and immigration looseness and things around why those tariffs would exist. I think some of those things, as we've mentioned many times, have a lot to do with negotiating tactics and may or may not actually come to fruition. have a lot to do with negotiating tactics and may or may not actually come to fruition. There was also some news out of the White House regarding GLP-1s. These are the very, very popular weight loss, really diabetic treatment drugs that are popular around the country and different pharmaceutical companies, that they could be covered from an obesity standpoint under Medicare and Medicaid. That's different than what it is now,

which is just for diabetes. Some of those names moved higher. Coincidentally, we did a little bit of adding to a position that we own in the biotech space, but not related to the White House news, much more related to its own GLP-1 treatment that we thought had just fine results. The market thought otherwise. The stock was down double digits in the morning, closed about half of that by the end of the day. So we added to that earlier in the session. So some coincidence there on some news from the White House, and then also just some idiosyncratic single company news that had us do that. Obviously, we're entering the end of the year here. And so from our perspective, we're processing things like required minimum distributions from retirement accounts.

We're also harvesting some tax losses. It's obviously been a very good year in the market. There aren't a lot of things that frankly are even down to harvest, but whatever there is, we're trying to take advantage of that for clients as best as we can. And those are just some items that we happen to be working on in a very busy time of year, this lovely holiday season that is upon us. Speaking of which, I will let you go for the evening so that you can all get back to your families and hopefully you're headed off to see them or have them visiting you for Thanksgiving. Please reach out with your questions as always and make it a great evening.

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