The Dividend Cafe

I am not sure I have complained enough about the absurdity of having a day when the stock market is open and the bond market is not. Columbus Day is this odd anomaly where they honored the great explorer in financial markets in the most convoluted way possible – by taking away banking transactions and bond activity but by having stock exchanges open (for those who have not read my prior writings on such a thing, it is highly distortive to markets, as many financial actors function in both spaces at once, so lose use of the left hand while they continue to use their right hand). That said, today was such an absurd day. I did write a Dividend Cafe Friday with more information about the bear market in which we find ourselves, and the historical lessons that may be useful as we proceed through this. The video is here with the same comments on podcast here. I was on CNBC this morning giving my feedback to comments the media was running with from Jamie Dimon (the CEO of JP Morgan). My first comment was spot on. My second comment was spot on. And my third comment was about to hit the ball out of the park, when all of a sudden …. (you’ll have to see). Off we go … Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

I wouldn’t say that I like this, but I would say that I understand it. But last week’s Dividend Cafe was, in just a few days, the most widely read Dividend Cafe I have ever written. I hope that is because clients and readers flocked to the philosophical takeaways of a deeper reflection on bear markets like the one we are in now. But I know that the ratings of financial TV networks skyrocket higher in bad times and that it has a lot more to do with the reality of human nature than anything else. Fear gets clicks and views. I don’t do fearmongering. My Dividend Cafe last week was actually the opposite of fearmongering. I sought to present the highly rational case for a real glory in the aftermath of bear markets for investors who behave well. Nevertheless, I can understand that the general interest in the topic is largely related to the fear and emotion that goes with the uncertainty of the moment. This week I am keeping the topic alive, partially because the current bear market did not end in the last five days but also because there is more to be said about the history of all this and the future. And I believe you will find both illuminating in the uncertainty of the moment. So let’s jump into the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

A little market move down today – nothing to write home about. But more information on big picture you will want to listen to right here … MARKET ACTION Dow: -347 points (-1.15%) S&P: -1.02% Nasdaq: -0.68% 10-Year Treasury Yield: 3.83% (+7 basis points) Top-performing sector: Energy (+1.82%) – fourth day in a row Bottom-performing sector: Utilities (-3.30%) – second day in a row; rare and nasty WTI Crude Oil: $88.90/barrel (+1.26%) Key Economic Point of the Day: Initial jobless claims came in at 219k, higher than the 203k expected (though continuing claims came in a tad less than expected) Mortgage rates at 16-year high … (6.75%) ASK DAVID “Given the tight labor market and recognizing the number of people that left the workforce over the past 2+ years, is it reasonable to expect a decrease in unemployment numbers any time soon? If it’s not reasonable to expect a decrease in unemployment numbers, do you think the Fed should use this criteria as a benchmark for monetary policy?” ~ Ed D. Unfortunately, I do believe unemployment will go higher, and I do believe it will be relevant to Fed policy. Technically their dual mandate includes full employment, so if they pursue a monetary policy that increases joblessness I believe they will reverse course. I don’t think it is the benchmark they say it is, but I do think right now it gives them cover in non-effective monetary tightening (if anyone still believes the Fed Funds rate is causing inflation I have a bridge to sell them, assuming I can get the parts and labor). Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

MARKET ACTION Dow: -42 points (-0.14%) S&P: -0.20% Nasdaq: -0.25% 10-Year Treasury Yield: 3.75% (+13 basis points) Top-performing sector: Energy (+2.06%) – third day in a row top sector Bottom-performing sector: Utilities (-2.25%) WTI Crude Oil: $87.97/barrel (+1.69%) Key Economic Point of the Day: ISM Non-Manufacturing (Services) came in at 56.7, still well into expansion and above the expectation but less than month’s levels. Services are expanding while Goods are slowing. Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

The second violent rally day in a row took place today, with the market up nearly +6% to start off October, erasing all of the downturn of the last ten days of September (for now). More to say in our daily podcast, of course! MARKET ACTION Dow: +825 points (+2.80%) S&P: +3.06% Nasdaq: +3.34% 10-Year Treasury Yield: 3.63% (-2.2 basis points) Top-performing sector: Energy (+4.34%) Bottom-performing sector: Consumer Staples (+1.53%) WTI Crude Oil: $86.30/barrel (+3.17%) Key Economic Points of the Day: Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

A big rally day after a bloodbath week in markets. Lots to say on markets and more markets today. The thing most on everyone’s mind right now is surely the raging bear market (in both stocks and bonds). I addressed it thoroughly in Friday’s Dividend Cafe and really encourage you to read it here. The weekly video is here, and the same comments from the video are in podcast form here. The underlying theme is that our pathos very understandably sees times like these as negatives, while our logos must be reminded of how wonderful times like these prove to be. I was on Varney Friday, was on Kudlow’s radio show (WABC) Saturday, and on Charles Payne today talking markets. Off we go … Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

Today’s Dividend Cafe is sort of the reason the Dividend Cafe started. I didn’t call it Dividend Cafe back then, I didn’t have a website for it, I didn’t post it on social media, it wasn’t re-published on a multitude of financial websites, there was no podcast, there was no video, and it didn’t have nearly 20,000 subscribers. In fact, there couldn’t be any “subscribers” because there was no organized list – just me sending an email from Microsoft Outlook manually to clients I thought would like to hear what I had to say. And the catalyst? A bear market. The week I began doing this “weekly commentary” we were not in an “ordinary” bear market. In a ten day span Fannie and Freddie had been taken over by the government, Lehman Brothers had declared bankruptcy, AIG had gone down, Merrill Lynch ran into the arms of Bank of America, and my own firm at the time, Morgan Stanley, was in its own existential (but soon to solved) crisis. Mortgage bonds were collapsing, housing prices were utterly collapsing, and yes, the stock market was in freefall. Today I write to talk about bear markets. Not societal collapse. Not the mother of all credit implosions. Not a deep and unbearable recession (the “great” recession). But bear markets. The kind where stocks drop and investors do one of two things. We are going to talk about those two things, and I hope when you are done reading you will not merely feel better about this bear market, but even just a little bit excited (as counter-intuitive to human nature as that may be). So let’s jump on in to the Dividend Cafe, as it does what it was always created to do – present the unvarnished truth in matters of macroeconomics and investor behavior, and do so towards the greater end of the very purpose for which we at The Bahnsen Group work. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

We reversed much, although not all, of yesterday’s broad-based rally in today’s market sell-off – what one day giveth another taketh away. I unpack it all in a deep capital markets dive for you in today’s video and podcast links below that you’ll not want to miss. Dow: -458 points (-1.54%) S&P: -2.11% Nasdaq: -2.84% 10-Year Treasury Yield: 3.77% (down 6 basis points) Top-performing sector: Energy (- .13%) Bottom-performing sector: Utilities (-4.07%) WTI Crude Oil: $81.47/barrel (- .83%) Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

A rally day on Wall Street and a thorough explanation in today’s DC Today podcast! MARKET ACTION Dow: +549 points (+1.88%) S&P: +1.97% Nasdaq: +2.05% 10-Year Treasury Yield: 3.73% (-23 basis points) Top-performing sector: Energy (+4.40%) Bottom-performing sector: Technology (+0.92%) – worst sector still up by almost 1%, and this was heavily weighed down by Apple being negative WTI Crude Oil: $81.88/barrel (+4.31%) Key Economic Point of the Day: National Rent Report showing national residential rents down -0.2% month-over-month, first monthly median decline in over two years Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Markets took a decent lead at the open but couldn’t hold it, and there is some more to say about the bond market in today’s daily podcast! TheDCToday.com TheBahnsenGroup.com