The Dividend Cafe

The market dropped 400 points today despite opening up over 200 points. The 600-point intra-day reversal was led by the Nasdaq’s almost 400-point intra-day reversal, bringing the recent peak-to-trough drop now to ~9.6%, so not quite 10% correction territory on a closing basis. There was not a particular catalyst to the sell-off. The weekly jobless claims number came an hour before the market opened and the tick down did not begin until ninety minutes after the market opened. The fact that the Democrats blocked the Republican stimulus bill from coming forward for discussion was obviously not a surprise. The selling pressure in big tech just hasn’t settled yet, and that is where we are. Weekly jobless claims stayed around 850,000 on the week, and continuing claims stayed around 13.4 million … Okay – around the horn we go! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market dropped for the third day in a row, again led substantially by the sell-off in big tech (the Nasdaq is down 10% since last Wednesday’s late day high). The Dow is down ~1,600 points since mid-week last week, about half of the drop in the Nasdaq in percentage terms. Futures were pointing up ~200 points last night, but today the market opened down 400 points and chopped around throughout the day, taking two turns down in the final two hours of trading. Expect a bit more markets and economic coverage in this week’s missives than normal because the Friday Dividend Cafe will be exclusively focused as the special election issue. We are entering a new phase of the COVID economic recovery that I believe will move slower than the first half has moved. A lot of the low-hanging fruit of job recovery and activity-resurgence has taken place, but normalized conditions are a ways off and will likely see a slowdown in pace of recovery from here. COVID Health Information • I am sure the Labor Day report of just 27,000 new cases yesterday was low around holiday reporting issues. The 7-day moving average is dropping ever so slowly. • The 7-day rolling average for daily mortalities is down 12% from the week prior and down 22% from a month ago. • The leaders of nine major pharma companies, all engaged in leading vaccine efforts, sent a public letter vowing to take no shortcuts en route to a COVID vaccine. • Incredible news (I will keep this updated as long as Dr. Bostom keeps maintaining the source report): 26,000 alleged COVID positive cases on college campuses now; zero hospitalizations Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

In this week’s Dividend Cafe we will address all of this and more: • Market week in review – is this the tech correction we have been anticipating??? • A vast and thrilling ride through the world of zero% interest rates, and what this new monetary regime means for the economy, the future, and oh yeah, all investors! • A tale of two economies • Something to really worry about • The danger of stock splits • The Pro and Con case for the bank sector • Economic Report Card for the Week (special attention to today’s jobs report) • Politics & Money – update on the election betting odds, scenarios for election night, and general volatility expectations • Chart of the Week – a little history of Nasdaq corrections … A perfect way to launch your Labor Day weekend … Let’s jump in, to the Dividend Cafe! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

COVID Health Information • Confirmed cases in the U.S. are running about flat this week to last week, which leads some to say, “oh good, cases are not further increasing,” and it leads others to say, “see, the rate of decline has flat-lined.” It would seem to me that neither posture is the most astute given all we have learned, particularly in the context of applying COVID to our economic and market and societal realities. But as long as the focus is wrongly put on cases versus the other metrics we have learned are more systemically significant, that debate will likely continue. • If one were inclined to earnestly follow the case growth numbers, though, and I certainly provide them here (despite my insistence that they are of little use I still play along), it would be noteworthy that while case growth has flattened, testing is actually up 6%, with the positivity rate is down to the 5-handle we were waiting for. In other words, adjusted for testing, cases are continuing to decline. • If there is one “prediction” I can offer here (and if there is anything NO ONE should be doing around COVID based on the last four or five months, it is making predictions), it is that we will see cases on college campuses in the coming weeks – cases that will create little or no hospitalizations – result in the next round of headlines and hand-wringing (and everyone can decide for themselves if such will be justified or not). P.S. – 546 positives art University of Kansas – zero hospitalizations; Ohio State University 882 positives, zero hospitalizations. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The extraordinary drop in new cases has slowed down, as expected. New cases seem to have flat-lined even as hospitalizations and mortalities continue declining, pointing to the increasingly less symptomatic and lethal nature of COVID cases currently being tested. Color me confused by analysts and experts who are confused by the low mortality metrics coming out of European countries in their late summer increase of new cases. I would think everyone would have expected the low mortality rates Europe is seeing based on the experience of the U.S. this summer (better treatment, healthier infections, less severe virus, etc.). The CFA Institute published a provocative article last week from Laurence Siegel (Director of Research at the CFA Institute Research Foundation) and Stephen Sexauer (CIO at the San Diego Employees Retirement Pension) looking at the dangers of COVID that are not specific to COVID (Bastiat’s law of the unseen versus the seen). This chart in particular grabbed me. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

In this week’s Dividend Cafe we will: • Review the week that was in markets • Really spend the time we need looking at what the Fed has done, will do, and will never, ever do • Provide five key investment implications to the monetary regime we now live in • Do a “Euro”pean history lesson for you, and look at what that means for investors now • Provide an explanation of how business investment works, what the hold-up has been, and why it matters • Politics and Money – a look at this week’s Republican convention • Chart of the Week Let’s jump in, to the Dividend Cafe! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market rose 160 points today, perhaps from a mix of reasons (Fed talk, hurricane control, and COVID testing news – see below). The S&P was up just a tad, and the Nasdaq was actually down on the day. I do feel like today’s missive is a meaty one, so I hope you will enjoy reading it as much as I enjoyed writing it. I confess, this “every other day” missive schedule has been much more manageable for yours truly! Okay, let’s go around the horn … COVID Health Information • Confirmed new cases are now down over 37% from the July peak of a month ago, and are down over 12% on daily average basis from last week. The case decline is rapid, and while I am of the opinion it must be hospitalizations and case severity that drives public policy, not merely the existence of cases, the actual decline in cases adds ammo to the arguments for greater freedom of movement and activity (an economic plus). • The only states not seeing rapid decline in hospitalizations are Alaska, Hawaii, Montana, and West Virginia – more or less the overall national trend and data reality where there is a real COVID presence is in overwhelmingly declining COVID hospitalizations. • And even apart from the dropping hospitalizations, and dropping cases, the hospitalizations-per-confirmed cases has dropped substantially from the spring levels, unambiguously supporting the notion that the recent infections affected a less vulnerable and more healthy group, and lending support to the idea many epidemiologists have proposed that the virus is losing potency. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market dropped 60 points today but the S&P and Nasdaq were both up. It was a pretty mixed day across sectors and market categories. I am going to write more about it in Friday’s Dividend Cafe but the news today that Secretary Mnuchin and Trade Representative Robert Lighthizer spoke with Chinese Vice Premier Liu He yesterday, and that all commitments of the phase one trade accord were reaffirmed, is substantial (at least for now in containing potential tail risk). One of the advantages in this new schedule to my missives is that it gives me the chance to better broaden the scope (not ignoring the other categories besides COVID health data). Today we cover all the bases, and they are worth your read. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Up to date information regarding Covid and Markets with a focus on the impact of the pending elections and Federal Reserve guidance. With David L. Bahnsen and Scott Gamm. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

This week we look at … • The week that was in the market (and get ready for the final week of August ahead) • Really, truly unpack why dividend growth investing is so important, and why the dividend itself is such a small part of that, and yet such a big part of it • The deflationary nature of debt, and how all that works … A special feature! • Valuations in the stock market, here, and in third world countries • China. Enough said. • The state of the economy (as we do every week) • Politics and Money (as we also do every week, even when it hurts) • … and so much more With our thinking caps on, let’s jump in to the Dividend Cafe! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com