The Dividend Cafe - The Dividend Cafe Wednesday - December 4, 2024

Episode Date: December 4, 2024

Market Rally and Housing Insights - December 4th Update In this episode of Dividend Cafe, Brian Szytel provides a comprehensive overview of the market's performance on December 4th from West Palm Beach, Florida. He highlights the 11th positive market day out of the last 12, with the Dow Jones up 308 points, S&P 500 up 0.6%, and NASDAQ up 1.3%. Economic data discussed include the ADP private payroll number, ISM services index, and dovish comments from Federal Reserve governors impacting interest rates. Additionally, Brian offers an in-depth analysis of the current housing market, highlighting high mortgage rates, low supply, and the effects of demographic factors. He concludes by noting the impactful trends and encouraging listeners to reach out with questions. 00:00 Introduction and Market Overview 00:31 Economic Indicators and Market Reactions 01:55 Interest Rates and Housing Market Insights 03:08 Housing Market Trends and Demographics 04:40 Conclusion and Sign Off 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 Wednesday, December the 4th. Brian Seitel with you here in West Palm Beach, Florida. On an across the board up market, this is actually the 11th positive day out of 12. So we've got a nice little streak here. The Dow closed up 308 points. That was on the S&P, by the way, the S&P 500, 11 out of 12. The Dow was up 308 points today, the S&P up 0.6%, and the NASDAQ was up 1.3%. So a big rally in technology on the day. Energy was the weaker sector for the day. On the economic side, we did get the ADP private payroll number out today. It was a little lower than expected, but still pretty good. We got a 146,000 private payroll job creation for the

month. I mean, we were expecting 158. So not too far off. There was some weakness inside of the number in manufacturing, and that's what was the largest detractor in the figure. The more heavily anticipated number will be the non-farm payroll report, however, that will come out on Friday. This is always the precursor the week of, but generally in line, I would call that. So we'll see what we get on Friday. There was an ISM services number out for the month of November today that was just below expectations at 52.1. Remember, anything over 50 is expansionary. So I take that also as a positive.

So a couple of fairly decent economic numbers on the day. The 10 years down today, at least four basis points, we closed at 418. So we've got a little higher conviction in the futures market on 25 basis points coming out in December as another rate cut. And so some of these interest rates have moved slightly lower. I think that was another positive today in markets. I had some data in there just on the housing markets to kind of shift gears away from publicly traded capital markets and just talk about housing, most of us own houses. So it's a big asset for most of us. We're still in this sort of stuck environment. We have higher mortgage rates along with higher home prices. And as most know, when you move into a bigger house

or into a more expensive house, the property tax base gets reset on top of potentially a higher mortgage rate. And so a much, much higher payment. And so people are just reluctant to do it. And so there you have it. There was a big migration wave, particularly out of states like California and New York during 2020 and 2021 into some states like the state I'm sitting in, the Sunshine State of Florida. And that ended and that was during when interest rates were at zero. And so now rates are in the mortgage land on the sixes. And so we've just got really low supply, a lot of very low transactions in the real estate market. I do suspect that when rates start to move a little lower, transactions should pick up a little bit.

We're starting to see that already, but just a small amount. And maybe there's some price discovery at lower prices from whatever one's holding it on paper or what Zillow says. But that is yet to be seen. There is some larger demographic things to think about, though. The total housing inventory per capita in the country is just 1.1. This is an all-time low, and it shows a very limited amount of supply. The total supply of housing is low. We've underbuilt housing for a couple of generations now. Housing prices are at all-time highs, and household equity is at an all-time high at $35 trillion. Pretty incredible. Almost half of all mortgages have a rate of 4% or below, and 95% of all mortgages, whether they're 4% or below, are at a 30% or fixed rate.

So one, they weren't affected by the Fed raising interest rates, because that's the largest debt that most people have. Their interest rate was fixed. And then now that it's fixed at a low rate, they can't change it to a higher rate and then move. So there you have it. Monthly mortgage payment for a new mortgage, to put this in perspective nationally, has doubled from pre-pandemic. So from 2019, we were around $1,500 for the average mortgage payment. We're now at about $2,900. So all those things to say, I get that prices are high and that makes kind of counterintuitive sense with where interest rates have gone. But when you think about some of the broader, more secular themes like that, that's why prices

have kind of hung in there. And this is just the polar opposite environment than what you saw in the 2006, 2007 era. A lot of equity and not a lot of transactions and very limited supply. So there you have it with a little housing update. And hopefully that was helpful. I'll be back with you tomorrow here from Palm Beach. That'll be Thursday to go over what's out in the news. With that, I shall leave you. Reach out with questions. Have a good night. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, 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. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary and does not constitute investment advice. The Bonser Group and Hightower shall not in any way be liable for claims and make no expressed or implied 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. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based

on the client's individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for any related questions.