The Dividend Cafe - Wednesday - January 22, 2025

Episode Date: January 22, 2025

In this Dividend Cafe commentary, recorded on January 22nd from Newport Beach, Brian Szytel discusses the recent market movements, highlighting an intraday breach of the S&P 500 closing high and closing disparities led by the technology sector. He also addresses recent economic data, including a weaker leading economic indicator. Seitel responds to a question about the bond market's recovery post-2022's downturn, advising against expecting a significant rebound but emphasizing the value of high-grade fixed income yields and portfolio diversification. The episode concludes with an invitation for further questions and consultations. 00:00 Introduction to Dividend Cafe 00:23 Market Performance Overview 01:36 Economic Indicators and Market Sentiment 02:16 Bond Market Analysis and Insights 04:00 Conclusion and Final Thoughts 04:24 Disclaimer and Legal Information 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, January the 22nd, and Brian Seitel with you here in our Newport Beach, California, TPG headquarters. Beach, California, TPG headquarters. A positive day overall in markets and we actually intraday went above the closing high, we breached 6,100 but just barely on the day and then we ended up closing just below about four points below an all time high on the S&P. So we're just within a whisker of it. Breath today, meaning internal strength was actually weaker. We've seen that now for six straight sessions where breath has actually been quite strong,

which is a momentum indicator, weakened a little bit today. But it was a disparity in returns, largely driven in the technology sector and the talk around an AI investment of $500 billion called Stargate between different corporations like SoftBank and Oracle and some others. So some exuberance on AI that moved the NASDAQ a little bit more than everything else. So on the day you had the Dow that was up about a third of a percent, which is 130 points. You had the S&P up about two thirds of a percent and then the NASDAQ was up about 1.3 percent. So disparity in returns there.

On the 10-year you had yields up four basis points, so we closed at 461. Again, some better growth prospects has started to pull rates a little bit higher here the last session or so. On the day from an economic standpoint, it was actually another quiet day. Frankly, this week, obviously markets were closed Monday, but it's been a quieter week on the economic calendar. There'll be some more data out the next two days, as I mentioned before, but there was a leading economic indicator number that was a little weaker than expected. It was negative 0.1 and that's down from November's positive 0.4. So this is a forward looking indicator that market participants can look at. It does oscillate and so we pay attention to it, but it isn't something that

drives a whole lot of necessarily a whole lot of decision making for us at least in there. But that's all we have to really chew on for the day. So there you have it. But there was an Ask TBG question that I had received in there about the recovery in the bond market, as you know, 2022 was the doozy of the bond market. It was a 13% negative year on fixed income, which was the worst year ever. 1980 saw a negative 8% return. Other than that, it really hasn't been a year. And of course, we know that the reason is that interest rates were at zero and they went to five percent

Or just over and that's unprecedented. So you so rising yields and any sort of duration means negative return So the question is what do we do for the recovery and why haven't we seen it and should we give up or still? Have a position in fixed income things like that. All I would say is I wouldn't worry about some big recovery I don't think you're gonna get something like that You'd have to have a lot of things play out mostly negative for the, for the economy. And that's not what I'm looking at right now. So I wouldn't worry about that. But what I would say is capturing, you know, anywhere from four and a half to 6% yield in high grade fixed income is a,

is a, is a good, good return. Number one, you know, it's double inflation, call it, you know, so the real rate of return just on the coupon is positive. Any idea i do think that with global indebtedness you'll have gravitational pull that will bring back. Interest rates a little lower and with that you should have more of a tailwind. In bond prices but i wouldn't be buying it for a trade that would be buying it for some. You know twenty percent return or something like that on the year those things may come and and go, but you know just the absolute yield perspective, the diversity for a portfolio, you know all of those other benefits, safety principle, those are the reasons why you want to buy it and if your expectation is as such then I think you'll be happy with it. That's my comment on fixed income.

So for that I'm going to let you go for this evening. As you know, as I mentioned, we're in a week of some team meetings here for the next couple of days Still available and love to hear from everyone and doing a lot of client meetings here in Newport Beach But please reach out with additional questions and with that we'll have the long-form dividend cafe for you on Friday and Be around in the meantime, and I wish you well. Have a good evening. Thank you. 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.

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