The Dividend Cafe - The Dividend Cafe Wednesday - July 31, 2024

Episode Date: July 31, 2024

FOMC Meeting Updates and Market Rally on July 31st In this episode of Dividend Cafe, Brian Szytel from Newport Beach discusses the positive market response on July 31st, highlighting gains across various sectors following the FOMC meeting. Although the Federal Reserve kept interest rates unchanged at 5.25-5.5%, their balanced view on the risks to the economy, including a weakening employment market and declining inflation, boosted market confidence. Additionally, the episode covers the impact of the lower-than-expected ADP private payroll numbers and employer cost index on the market rally. The discussion also touches on putting money to work in the current market, upcoming initial jobless claims, and manufacturing data, as well as the anticipated employment report. 00:00 Introduction and Market Overview 00:20 FOMC Meeting Insights 01:14 Market Reactions and Rally 01:36 Economic Data and Fed Narrative 01:59 Investment Strategy and Upcoming Data 02:30 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, the last day of July, July 31st. Brian Seitel with you here from our Newport Beach office. And what was a nice day really in markets across the board. The morning opened up so the markets were up on the day to start, and then they built on those gains around the FOMC meeting ending today. And while they left rates unchanged at five and a quarter to five and a half, they definitely had some change in language with a much more balanced

picture around the risks to the economy between a weakening employment market and a declining inflation paradigm that they've been working on. So more confidence that they've gotten inflation to where it needs to go, or at least in that path. They didn't go so far as to say, and by the way, in September, we'll definitely raise rates because, of course, that would be silly. There's too much data from now until then to come out. But that's what was read in markets. And there's about a 93% chance in Fed funds futures that September will be the starting point of the next phase in this cycle. They've been tightening for, they started almost two years ago. And so it's taken a while to get employment to come into balance and to get inflation to move to where it needs to be. And so it's taken a while to get employment to come into balance and to get

inflation to move to where it needs to be. And now that we're just about there, markets were up nicely on the day. We had a big rally today across the board in risk assets, recovery too in the NASDAQ that it had been weak here for some time. So across the board, things were up nicely. The 10-year was down seven basis points on the day. So bonds were up too. So all in all, markets like the dovish comments. And there you have it. There was an ADP number out today that I think supported some of this as well. It was a private payroll number that was weaker than expected at 122 versus 150,000 expected. And then inside of that, the employer cost index was also a little bit lower than expected. So if you think about what the employer cost index was also a little bit lower than

expected. So if you think about what the Fed's narrative was, those two things were exactly in line with what they said, and I think supported some of the rally on the day. There was a question in there about putting money to work in this market. Short answer is yes, we put money to work every day. We don't buy part of the market that's overly priced. And so we feel comfortable getting funds working for people sooner than later, especially as long as their goals are somewhat realistic and over any longer period of time, it makes more sense. And no, we don't try to time the market on a day-to-day basis. Tomorrow, we'll actually have initial jobless claims and some manufacturing data. But I think that the bigger news will be the employment report that we're going to get on

Friday. So with that, enjoy the last day of July and this rally day and the green on your screen. And I shall be back with you tomorrow in Dividend Cafe. Thank you very much. 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. Thank you. 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.

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