The Dividend Cafe

Today's Post - https://bahnsen.co/3QqYcRa So the market came into today just 300 points above its intra-day low of Friday the 6th at the beginning of this month, having rallied about a thousand points off of that in the six days that followed, but then selling off three days in a row to end last week. Bill Ackman announced this morning that he had covered his short on U.S. Treasuries (another way of saying this is that he ended his bet on rates going higher). Bonds also rallied on the news as the 10-year yield dropped 17 basis points (from +8 to -9). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/46P3YBs Greetings from New York City, where I will be leaving very early Friday morning to head back to California for a week and where I have been in meetings all week with our major money manager partners across every asset class in which we live. I had thought about doing today’s Dividend Cafe as a sort of recap of the week, but I am going to need the plane flight home to better organize 25 pages of notes and more decks than I know what to do with. I am in content overload mode at the moment, which is one of my favorite modes to be in (often times I am in Chinese food overload mode, so “too many charts” about the economy is far healthier than “too much fried rice”). I plan to really clean up my notes and takeaways and allow more organized thoughts to create a deliverable around this week’s findings. Brian Szytel and Kenny Molina are phenomenal Investment Committee partners, and we were all richly blessed by the conversations we enjoyed this week on interest rates, economic projections, housing, credit markets, relative value opportunities, and more. So, for those who want to tag along a bit on the week, stay tuned – more to come. But that does leave me with a Dividend Cafe to write and not a whole lot of margin in which to write it. Luckily for me (and maybe for you??), a robust set of questions has come in that I have been sandbagging, and it seems like a good time to use Dividend Cafe to answer all of your latest and greatest questions. I am quite confident these questions that have come in will reflect things on the minds of many of you, so get ready for some good takes on such subjects as fears about interruption to dividend growth, minimum wage laws, velocity and inflation, dollar strength, China, and more on the Israel/Middle East situation (discussed in last week’s Dividend Cafe). Get ready to jump into the Dividend Cafe … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3Q1Ot2c This is Trevor Cummings playing backup quarterback for one more day. As mentioned, David will be back with you tomorrow with his weekly Dividend Cafe. Today is quite a busy one for David, as he will be attending both the Economic Club of New York for Jerome Powell’s speech and then closes out the evening at the National Review Gala. With that said, we’ve got a handful of data and news to keep us busy for the time being. We will tackle initial jobless claims, the Philadelphia Fed manufacturing survey, existing home sales, Powell’s speech, and Jordan’s persistence. That was a mouthful, now off we go… Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/48YpBB6 This is Trevor Cummings filling in for David Bahnsen. David is in the midst of day three of his annual TBG Money Manager Due Diligence trip. As mentioned, he will be back with you for the weekly Dividend Cafe on Friday. Markets were a bit more active today than yesterday. We also had a rebound in housing starts, another L for Jordan’s ballot push, and Biden seeking a monumental aid package for Israel. And off we go… Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/46UIS4q Today David Bahnsen is on day two of the annual TBG Money Manager Due Diligence trip in New York. This is an exciting time of the year as our investment committee dives deep into all the portfolio particulars and then surfaces with a plethora of content to share with our clients as well as some actionable portfolio items. I believe this is year 18 of this trip and something that I know (1) David greatly enjoys and (2) has a meaningful impact on how we manage capital for our clients. Thank you, David, and we look forward to welcoming you back for the Dividend Cafe on Friday. With that said, I, Trevor Cummings, will take the reigns today and walk you through the latest market happenings. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3ZSi3fd I am writing this week’s Dividend Cafe from my apartment in New York City, very early on Friday morning, hours before I will leave for an all-day symposium I have attended every year since 2009 (besides the COVID-cancelled years, of course). I mention this only because my philosophy of dealing with markets in the aftermath of exogenous shocks and particularly geopolitical events was heavily influenced by the historical realities taught to me at this very symposium over the years. I do not learn anything new in attending any more; I just immensely benefit from the reinforcement. But this week we have had an event so tragic, so reprehensible, so infuriating, and yet also one that requires me to reinforce myself (perhaps redundantly) the principles and best practices prudent investors must hold dear. But I also brought up New York City, because it had a terrorist event of its own back shortly after I entered the business, one which also profoundly impacted me. I have talked a lot in the past about the history of it and lessons learned. The 9/11 moment is, all at once, one of the seminal moments in my younger adult life, the very first shocking moment in my investment career, and an event obviously connected directly to New York City. (You know, come to think of it, I was right here in March of 2020 as well when the COVID matter was becoming an American reality, and wrote about all of that, then, too. There is just a deep association for memorable market moments in my life and career with New York City). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post -https://bahnsen.co/3FkhgKh The headline and Core CPI figures today were largely in line with expectations as the market opened. However, we witnessed a reversal of early morning gains throughout the session, resulting in both stocks and bonds closing lower. Interestingly, Fed futures remained relatively unchanged after the release of these numbers, hovering at approximately two-thirds, suggesting that the Fed is unlikely to make any significant changes in the foreseeable future. Today marks the one-year anniversary of the market lows experienced last year. What’s intriguing, though, are the disparities within the markets that contributed to the S&P 500’s impressive 22% gain over the past year, following a significant downturn in the previous year. Currently, less than half of the market is trading above its 200-day moving averages, indicating that the market’s performance has been far from universally strong. Financials, in particular, have experienced a nearly 20% decline during this recovery, and it’s worth noting that this has been the weakest small-cap return following a market bottom in history. However, there is good news amidst this divergence. The contrast between interest rate-sensitive sectors, such as small caps and financials, and the lack of broad market participation presents numerous opportunities for value investors like ourselves to look forward to. Active management will be crucial in navigating this complex landscape. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3LYNG0J Treasury yields dropped again, and stocks rose again today. The minutes from the Fed meeting last month came out today and said nothing new or unsurprising at all. ExxonMobil agreed to buy Pioneer Resources for $59.5 billion in an all-stock deal that represents the largest oil and gas deal in over two decades. I am not sure that an Israeli ground invasion of Gaza is imminent. Even though I am convinced, Israel will (and should) do whatever it can to eradicate and punish this atrocity, a ground invasion appears to involve so much complexity and challenge that much of the work I have read in the last 24 hours suggests it may require more planning, nuance, and particulars than was initially expected. The IRS says Microsoft owes it $29 billion? They should’ve used TBG Tax! The House Speaker race is going to be very interesting, with a majority of Republicans voting to send up Steve Scalise for a vote, but not potentially enough to get him over the needed line in a whole House vote. More here: Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3S0qSBs Markets today moved higher as bond yields came lower. One can argue that bond yields are dropping in response to comments from Fed governors yesterday (see below) but the more prominent factor is likely a slight flight-to-risk out of the war situation in Gaza. What it has done, though, is exacerbate the stock-bond correlation whereby they were both dropping in September and now are both rallying. Earnings season launched with Pepsi announcing their results before the market opened. Markets liked it. President Biden joined with European leaders in a joint statement taking an unambiguous stance against Hamas and for Israel. He gave a speech this afternoon that conceded there are American fatalities and hostages. Congress and even the White House are not really the challenge here – a rare thing to be able to say in this day and age. The challenge for the President will be, to borrow from my favorite political commentator, Mark Halperin, “the squad, and then Harvard students.” But there also will be a real challenge for the administration to maintain their posture with Iran (it will likely be impossible), and what can be done about American hostages taken by Hamas is not going to be easy either. Add to that the complexity of getting aid for Ukraine and Israel in the next 2-3 weeks, and this is going to be a challenging time at the White House. The death toll appears to be over 1,500 now. The reports all seem to indicate that one of the reasons Israeli intelligence picked up nothing on what Hamas was doing was that there was simply no electronic communication about it at all – none. The Republican mess over the next Speaker of the House is as blurry, evenly divided, and unclear as it was a week ago. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3tpEJXU All attention this weekend immediately moved Saturday morning to the unspeakable attacks on Israel by Hamas, the declaration of war to protect themselves by Israel, and speculation as to what the ramification would be. I assure you ample commentary is provided on those subjects in this edition of The DC Today, An important thing to note today: the stock market was open, but bond markets (and banks) were not. There is obviously action in the bond futures world (indicating yields down and prices up), but with no cash market bond action it is simply a distorted and weird day. It only happens twice every year (Columbus Day being one of them), but it basically never happens following a weekend of such global turmoil. As an earnest believer in price discovery, I feel somewhat limited in terms of thoughts and deeds when all useful information is not actually available. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com