The Dividend Cafe

The market rallied another 460+ points today, and the S&P closed back where it started the year (so not quite back to its all-time high, but back to its New Years Eve level). The Dow has a little more work to do still. The entire thing is surreal. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I find it inconceivable that we will not have up and down volatility at some point in the near future. But I am not surprised by this market's resilience. The forward-looking capabilities of the market are powerful, even though they are more often subject to excess. On the downside and the upside - no perfect equilibrium can ever be found. This is why market timing is the errand of a fool. I hope and pray our society will find a forward-looking optimism, as well. That what is wrong in our country can be fixed by that which is right in our country. Believe it or not, even apart from all I care about on these pages regarding the markets and investment capital, it is to those greater ends that I work. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The weekly jobless claims came in at 1.87 million, and continuing claims totaled 21.5 million. We will get the official unemployment number for the month of May from the Bureau of Labor Statistics tomorrow morning. The numbers today were about as bad as expected if not a bit worse, whereas yesterday’s number was exponentially better than expected. More on all of that in tomorrow’s Dividend Cafe! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market exploded 527 points higher today, now well past 26,000 on the Dow, and in the high range of our general short term target. REIT’s, financials, and energy names led the way today. And while the question of, “how can markets be going higher when ___” are completely understandable and reasonable, the answer(s) remain no different regardless of how you fill in that blank. First, markets need no reason to do what they do in either direction, ever. Second, they are forward-looking and have incredible knack for shaking off what they know will be out of the news in days if not hours. Third, the Fed. Fourth, the economic re-opening is going very well. And finally, fifth, the Fed. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Early on in the COVID affair my general feeling was that the most ignored yet needed data point was the recovery rate, as first three people I knew tested positive and quickly recovered, then eight, then twenty, then ~thirty, etc. The key timing issue was that a significant portion of the people I knew early on that tested positive were already recovered by the time they got their test results, as back then getting the test, and getting the results, had a nearly ten day lag from the time one initially had symptoms bad enough to warrant getting tested. Here we are nearly three months later and I am sure we have less of a percentage who already recovered by the time they get test results (because of improved testing), but I still strongly suspect “recoveries” are rampant (we intuitively know this, and empirically know it), yet the data has either no way to capture it, or a big lag in capturing it. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

This is the Replay of the National Video Call hosted by David L. Bahnsen- Markets are continuing to shock investors and a wide array of interpretations of health data and economic data are circulating. We will delve into all of this and more. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I am constantly challenging myself to get my applications of “first things” right in the investment world, but my principles themselves are not constantly changing. I say that with pride. The challenge that exists for the investment professional who has done the work of developing operative principles is to constantly evaluate their application of said principles, to alter, change, adjust, or modify as needed. And here is the other piece to that: To thoughtfully consider what it would mean to their client’s capital if they were wrong. Investing client funds as if one can not be wrong in investment application/execution/implementation is the height of arrogance. The humility to constantly check one’s work and one’s strategic thinking is a money-saving character trait. Sometimes it gets forced upon you in my business. So this week’s Dividend Cafe focuses on many first principles in investing, and many beliefs we have about executing on our principles. But it also hopefully reflects the humility that is needed in risk management. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market pointed to a modest up opening this morning in the overnight futures, and it did just that. And the market stayed up ~100-200 points throughout the day, until the final hour of trading where it went from +150 to -150. The media has reported it as a combination of news that POTUS was signing an executive order trying to reign in social media companies as well as news that the White House would hold a press conference Friday to discuss some aspect of the China relationship. I believe it was entirely the latter and not at all the former (the social media flexing was known to be coming all day, and surely the market does not see it as having a lot of teeth). The uncertainty around the China announcement was surely worth a couple hundred points … The weekly jobless claims came in at 2.1 million, down from the 2.5 million level of last week, and way down from the 6.9 million high level in late March, but still extremely high, and extremely sad. The number had been just 212,000 per week on average in January and February before the economic shutdown. Continuing claims, though, tallying the unemployment benefits of state programs, fell last week for the first time since the COVID moment began. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

First of all, please note our bi-weekly national video call this coming Monday, June 1, at 11:00am pacific time. I plan to address some things Monday I have not yet addressed through this COVID period, and invite your presence on the call. The market exploded 550 points higher today and is now up over 1,100 points in the last two days and ~2,500 points in less than two weeks. Without any direct news or events to explain the increase, broad-based optimism about the economic re-opening is certainly the most logical explanation. I would definitely read today’s Market Technicals for more color here. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market was up 530 points today behind extraordinary optimism in economic re-opening and directional good news on a vaccine development (more on both below – a lot on the health side). Futures had pointed to a ~300 point move higher throughout Memorial Day,and the Nikkei in Japan surged over 500 points last night (now back above 21,000). Futures in the U.S. were +500 when I woke up this morning, and the Dow was at one point +700 on the day. We closed just a pinch below the 25,000 level on the Dow Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com