The Dividend Cafe - The Dividend Cafe Wednesday - September 25, 2024

Episode Date: September 25, 2024

Market Recap and Insights on Private Credit - September 25th In this episode of Dividend Cafe, Brian Szytel provides a comprehensive market recap for September 25th, including fluctuating market figures with the Dow decreasing by 293 points and the S&P down by 0.2%. He discusses the steepening yield curve and a stronger dollar. Further insights include housing market data with new home sales down 4.7%, building permits, and mortgage rates dropping to a two-year low. Brian also addresses questions about private credit and its risks compared to the bond market. Tune in for more economic data updates expected tomorrow, including initial jobless claims, durable goods, GDP revision, and pending home sales. 00:00 Introduction and Market Overview 00:57 Market Recap and Economic Data 01:04 Private Credit Market Insights 01:50 Housing Market Update 02:53 Upcoming Economic Data 03:18 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 is Wednesday, September the 25th, and Brian Saitel with you here in our West Palm Beach, Florida office. You're on a stormy, rainy day and actually a bit of a down day in markets, although somewhat mixed. The Dow closed down 293 points. The S&P was down about 0.2%, a little less. So the Dow was down a little bit more. We had some all-time high readings and frankly, we were a little due for at least some equity consolidation, I would call it. The NASDAQ actually closed basically flat. It was up 0.04%

on the day. And we got some higher yields. The 10-year was up five basis points. We closed at 379. And then that yield curve just continues to steepen here a bit. And the 210 spread is now at 22 basis points. So we've got some positive sloping yield curve. And that's generally considered a good thing as far as future economic expectations. The dollar was stronger by about a half a percent today. So there's your market recap on the day. There wasn't a lot of economic data out, but there was some housing numbers that I'll walk through. As we get into that, there was an Ask TPG in there about private credit and are the credit ratings similar to the bond market where you'll have A versus BBB,

BBB, things like that. And yeah, there's ratings and there's risks and there's duration and there's liquidity issues and all those same things in that private credit market, but it's private rather than public. And so it definitely is a different animal than the bond market. So there's just sort of a range of these different credits and different yields, but there isn't a free lunch and the outsized yields you're getting in the private credit market comes with some risks, some liquidity risk. And then the way that we've dealt with it is to definitely stay with the larger managers and to stay more diversified and to stay in that first lien senior secured capital structure in private credit because of those other risks and things. But so other than that question, on the economic

data for the day, we had housing numbers, new home sales were down 4.7% on the month, although that was still a little bit better than expected. Technically, we were at 716,000. The estimate was set for 700,000. So negative, but still a little bit better than expected. New building permits were about in line, a little bit weaker than expected. And then you had mortgage rates that were down to 6.13% on the week, which is the lowest in two years. So mortgage rates are declining with just overall interest rates and the Fed funds rate and those things as the 10-year yield, they tend to be more tethered to that sort of belly of the curve. 10-year yield has come down. Applications were up 11% on mortgages for the week. So I know we're talking about a frozen housing market. It definitely still is that way. It's

still stuck over time with lower rates, maybe that unfreezes and we get some more price discovery that we've talked about a few different times, including today. Tomorrow, we've got a whole lot more economic data coming out. I'm looking forward to going through all of it with you. We have initial jobless claims. We have durable goods and GDP revision. We're not expecting much of a revision on GDP. It's estimated at still 3%. So we'll see what we get tomorrow. Initial jobless claims, we're looking at around 220 as an estimate. There's some other Federal Reserve speakers out, and then we have pending home sales for tomorrow. So there's a good amount of stuff to go through with you.

But with that, I'm going to let you go for the evening here on Wednesday night, and I will be back with you tomorrow on Thursday. So with that, have a good evening. Thank you. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and 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.

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