The Dividend Cafe - Wednesday - January 8, 2025

Episode Date: January 8, 2025

Market Recap and Fed Insights - January 8th In this episode of Dividend Cafe, Brian Szytel provides a comprehensive market recap for January 8th. The Dow closed above fair value with a gain of 106 points, while the S&P edged slightly higher and the NASDAQ remained flat. The U.S. dollar strengthened amidst currency weakness in the UK. Fed Governor Waller discussed potential rate cuts in 2025, noting core PCE inflation was below 2% over the past year. The FOMC minutes from December indicated elevated inflation and a cautious approach to rate cuts. On the economic front, ADP private payrolls fell short of expectations, but the labor market remains strong with initial jobless claims lower than anticipated. Additionally, Waller remarked that Trump tariffs would likely have minimal impact on inflation. The episode concludes with a brief Q&A on Trump's comments about Canada, Greenland, and Panama, and a look ahead to the non-farm payroll report on Friday. 00:00 Introduction and Market Recap 00:27 Currency and Fed Policy Updates 02:03 Economic Data Insights 02:40 Q&A Session Highlights 03:14 Closing Remarks and Upcoming Events 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 8th. Brian Seitel with you here to go over our market recap. We actually closed above fair value on the Dow. We were up 106 points, which is a quarter of a percent. We were just above fair value on the S&P, nine points, and then just below, barely, on the NASDAQ, essentially flat. So quite a choppy day overall, choppy session. Dollar was up about half of a percent. There has been some sterling weakness in the UK on some fiscal woes they're dealing with there and some currency weakness there. And so dollar tends to be that safe haven.

There was Fed Governor Waller talking more dovishly about rate policy, supportive of more rate cuts in 2025 than what the market has priced in. He noted that core PCE was below 2% for the entirety of the last 12 months. If you remove housing from it, I tend to agree with him. Right now, the market has only priced in about 50, actually less than that, 38 basis points of additional rate cuts for 2025. I would take the over on that, but we'll see what other economic data we get. The March easing that, but we'll see what other economic data we get. The March easing Fed funds rate right now, the futures are predicting still less than 50% chance of a March cut. So it isn't until the summertime, midsummer, where you start to see a higher conviction on a lower Fed funds target rate. At least that's what markets are perceiving right now. Waller did mention that he did not

think Trump tariffs would have a big impact on inflation. So for whatever that's worth. Also in Fedland, the FOMC minutes for December were out today as well. Noted things like inflation still being elevated and they were going to take a cautious approach on rate cuts. Again, that's a delayed report. So that's a month old at least. But those minutes were released today. Strong consumer and reduced labor risk were some of the other positives inside of the report.

But that's why Fed futures are priced in a lower amount of rate cuts because of this stuff. On the economic front, we had ADP private payrolls that missed expectations. We did get 122,000 gains, job gains, which is still pretty good. We were expecting a 135 number, so it's just below consensus really. So labor market's still looking pretty good and further shown inside of the initial jobless claims today that were below expectations at only 201. We were expecting about 215. So the labor market is continuing to be strong. That's what the FOMC minutes from December noted, and that's what the numbers for today essentially affirmed. So overall, there you have it in markets. There was a Q&A session in there about some of the Trump comments related to Canada and Greenland and

Panama and the Gulf of Mexico. I think David did a pretty good job answering it, which is just to say there's probably some plan behind it, but probably less than what is being perceived as anything literal. So it's securing military interests, trade, transport, things like this. Whether actually some of those things come to fruition or not is probably not the base case, but they were said, and so they've been a question of popularity. In the meantime, we do have nonfarm payroll on Friday, so there's going to be more economic data to go through as the week progresses here. And we hit our stride into 2025. Markets are closed tomorrow for the passing of ex-President Carter. So it should be a pretty

quiet day to report. Nonetheless, I'll be with you. And with that, I wish you 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. 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

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