The Dividend Cafe - The Dividend Cafe Wednesday - May 8, 2024

Episode Date: May 8, 2024

A daily summary of key market data and economic nuggets.  Reach out with questions anytime! 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 Wednesday, May the 8th. And thank you for being with me today. Another sort of quiet day, really, in trading. The Dow actually ended up closing up 172 points. It was marginally higher, basically flat for most of the day and got a little late day rally. The S&P closed completely unchanged and the NASDAQ ended up down actually a little bit. Again, there's really not a lot of economic news this whole week, frankly. There's really not a lot of economic news this whole week, frankly. And I think markets are just in a lull waiting for what will be CPI that will come out next week that will certainly move things.

There was a couple of things, though. There's a Fed survey called SLU's. It's an opinion. It's basically a bank manager survey regarding lending standards. Are they tightening? Are they loosening? What are they seeing and why? And they were slightly tighter for the month, but not anything meaningful. Just citing things like economic uncertainty and things like that. It was not a whole lot of market moving news. There was wholesale inventory numbers out today that were down 0.4% for the month of March, which gives us a negative 2.3% year over year. And counterintuitive sometimes, but wholesale inventories are a function of economic health.

So it's the opposite. So you get increasing inventories, meaning consumer demand is lower and decreasing with consumer demand being higher. So it can be seen technically as a positive thing for strengthening the economy. It's also something notable for something like inflation because you have inventories being depleted because demand is high above what was stocked. On the what's on Brian's mind today, I just shared something that I think sometimes gets overlooked. We're issuing a whole lot of treasury debt, obviously. We're funding a large deficit for the country, call it almost $2 trillion. Maybe it'll come in a little lower than that for the year. But to be able to just spin off $125 roughly billion in treasury notes in one week with above average bid to cover ratios

across the gamut of maturities is something that really shouldn't be taken for granted. Just because we can, in other words, doesn't necessarily mean that we should take advantage of it. But it is funding the deficit currently. And, you know, strong dollar policy is a good thing for the country long term. There's no question about it. It's the reason why the U.S. is the reserve currency. One of the reasons, stable and strong currency. and strong currency. But obviously, in the short term, it can hurt some competitiveness with our products being sold overseas and our services costing more in relative terms in foreign currency.

So those are the sort of give and take with it. A couple of questions that I answered in there as well about how we manage bond portfolios, a combination between individual bonds and usually some of our outside mutual fund partners for some of those asset classes that you just can't buy through an inventory search. You really do need an institutional manager finding inventory in the high yield market, in the structured credit market, floating rate, things like this. And so we use a combination of the two. And often the combination is a more dynamic approach than just one or the other. So there's benefits for both. There was an energy question in there that might be a little over some people's heads, but essentially there's

a lot of oil in Canada, obviously, that gets produced and distributed down south to the U.S. to be refined. And without a major pipeline to the West Coast, there was a limited number of bidders on some of that oil. And so some of those refiners had higher margins because they could basically keep prices low, being the only game in town. And now with the TMX pipeline, some of that stuff opens up on the West Coast, which also, by the way, includes China being able to bid on some of that oil. So you should see most likely some firmer prices on the upstream side, and it could hurt some margins potentially on the downstream. But with that, I'm going to let you go. Again, kind of a quiet day in the markets. The VIX is now I'm going to let you go again, kind of a quiet day in the markets.

The VIX is now in a 12 handle. So we're at 12.97 on the VIX. So again, I think awaiting some real economic news more next week. But we'll see what we get tomorrow. And I'll be with you again on the Dividend Cafe. Thanks so much for listening. 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

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