The Dividend Cafe

Today's Post - https://bahnsen.co/3JLnpSl It has been an interesting week in the market, but as you will see in the first paragraph below it may seem like nothing happened whatsoever. That is more common than people think. Today we visit the state of the U.S. dollar, the “safe haven” of bitcoin, the politics of oil, the nature of contrarian investing, and more. Just a lot of easy-bite tidbits to edify you this beautiful spring weekend. And before I remind you that a new and improved Dividend Cafe is coming any day, jump on in, to this Dividend Cafe! Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3w8tK6R Somewhat of a repeat of yesterdays market action with a positive morning failing to hold momentum and falling off into the close in more consolidation in markets around rates. We did eek out a small gain on the Dow, but the SP500 closed slightly lower for the fifth session in a row. The 2-YR Treasury is back to YTD highs at just under 5% and 10-YR was up 5 bps today to 4.63%. For what was on the docket today in the economic calendar, mostly good news. Jobless claims, existing home sales and manufacturing data all modestly ahead of expectations, but it just wasn’t enough to keep the momentum on the day. There isn’t a lot of economic news for the remainder of this week, and most eyes will be on the PCE figures out next Friday. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3TX5X1I What started off as a positive trading morning, slid negative as the day progressed. Powell’s comments yesterday were debated as to whether he took his ‘Pivot’ from October back. Not to worry, because first, I don’t think he did take it back and two rate cuts are still priced in to Fed futures, and second, as I mentioned yesterday there is enough in the economy that is good at this time to withstand a delayed move lower in rates by a few months. The Fed’s beige book out today supported that general positive undertone in the economy which helped us off the lows of the day a few hours before closing as well. Seeing as we all made our tax payments this week, yesterday we saw the US Government take in the most it ever has in tax collections from corporations and non withheld amounts at $155B. The previous high water mark was back in 2022 following a big year prior and reopening after the pandemic when the same April figure was $121B. The Congressional Budget Office (CBO) is expecting total tax receipts for the full year 2024 to come in right near that record level in 2022 at roughly $4.93T. This is good news for the budget deficit and the growth rate of Treasury bill issuance which is set to decline for the first time in two years, although still won’t put us any where near an actual budget surplus when we are talking about chipping away at a $2T deficit. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3Q5001u A mixed day of trading between positive and negative all morning and right into the market close with the Dow slightly higher and both the S&P 500 and Nasdaq just below fair value. Rates continue their move higher, with the 10-year up 4 bps and now at the 4.66% level. So aside from what so far has been a tougher start to the second quarter, a few things to keep in mind: Rates and Fed futures have reset higher based just as much on stronger-than-expected good things in the economy, such as earnings growth, GDP, and employment, as they have on inflation expectations. We are still only 4% from all-time highs in the S&P 500 when the historical intra-year drawdown is more like 14% on average. So, yes, markets are down a little here, and volatility is up with higher rates, but keep in mind this is pretty run-of-the-mill market consolidation at most at this point. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3Q2J5g8 Against Doomsdayism Where this Iran-Israel atrocity goes from here, what should and should not have been done, what and should not be done, what it will mean for markets and oil prices – all these things notwithstanding, the winner of the weekend appears to be anti-missile defense systems, first pursued by the Reagan administration in the 1980’s. The ability for this technology across multiple mediums to bat nearly a thousand in putting down missiles and drones coming in hot to do unspeakable damage is, well, vindicating. The specifics of the various technologies and strategies are fascinating, but for now, we celebrate those whose vision was to shoot down missiles and missiles, from ground and from air. Such military investment saves lives, and deserves our celebration. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3JfyXwQ I cannot tell you how much fun it is for me to spend three hours on a Friday morning reading research. Reading when it is dark outside is the single activity that brings me the most joy, and I love the inspiration it fostered for today's Dividend Cafe Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3JfyXwQ A modestly positive day in markets overall today on some better-than-expected PPI numbers following yesterday’s selloff on CPI. So what one-day taketh, another giveth back (well, not quite). The Producer Price Index numbers showed a gain of just .2% for the month on headline when .3% was expected, and the Core PPI only gained .1% for the month. The takeaway is PPI is just not confirming a reacceleration in inflation on the wholesale side, which is a positive. We unpacked yesterday’s CPI numbers pretty well, I thought, but I am sharing this chart from our friends at Strategas with you below to show you where rate expectations have now moved since. My point here is that while they have moved meaningfully higher, I do believe this to be a good thing, contrary to what some may say. The economy, employment, and the markets have all digested these higher rate expectations and it’s simply far healthier for markets to focus and trade on the actual fundamentals of the economy and earnings versus solely on the hopes of looser monetary policy. Shown below, we came into the year expecting Fed funds at 3.5% by Christmas and have now priced in just two rate cuts and ending this year closer to 4.75%. The bar of Fed expectations has been reset to a level high enough that it is now more supportive for markets than the opposite at this point. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3PWoA4P A down day in both stocks and bonds today following a disappointment on CPI numbers by one tenth on both Headline and Core, that sent the Dow down XXX points and the 10-year bond yield up .18XXbps. We expected .3% on both and got .4% instead to cause todays action, so on one hand a risk off day as higher rates were priced in on yields, and on the other, the difference of a tenth is far from dramatic in and of itself. I do believe the Federal Reserve is an independent institution adhering to its employment and price stability mandates. I also believe they are aware of the Fiscal paradigm as well however (not driven by, but aware). Do I think a $2T budget deficit when we are at full employment with interest expense now accounting for 17% of tax revenue when our average termed government debt interest rate is only at 3.3% is on their radar in terms of Quantitative Tightening, yes I do. They can’t go until inflation gives them the OK sign (or gets close enough), but they are ready to reduce rates later this year as they’ve telegraphed, and from the Fed minutes released just today my point on reducing QT will come in to play sooner than later. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4aKgDaL We traded mostly lower the entire day today but then rallied back to fair value the last hour or so of trading. Tomorrow we have CPI out, and with a lack of other meaningful economic data today and right before earnings season heats up later this week, markets were mixed in anticipation. Bonds did rally across the curve giving back some of the back up in rates we have seen the past few sessions with the 10-year down 6bps. With earnings season set to start this Friday, a quick recap of where expectations lie: 3% revenue growth, 5% earnings growth on the quarter with a big up tick in Utility (believe it or not) earnings growth up 18%. For the year we are still looking at roughly $243 per share on the SP500 or about 10% growth from the previous year. Sectors where the bar on expectations is set fairly high at this point are in technology and communications, with Energy and Materials the opposite so it will be interesting to see where markets price the actual results in comparison. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4aMHEug Economic Front The primary news of the weekend was the 303k new jobs created in March, up by 89k over expectations. A full 232k of that came from the private sector. The two prior months were revised upwards by 22k. The household survey was up huge, as well. The unemployment rate fell to 3.8%. Construction was solid (39k new j obs), and leisure and hospitality led the way, with private education and health care strong as well. The annual gain in wages is +4.1%, and the average hours worked went up to 34.4 (had been 34.3). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - The stock market dropped this week and it has given me a chance to write a Dividend Cafe about one of my favorite topics – the crucial importance of predicting the future, reading the tea leaves, and all that good stuff. I have strong opinions about people’s talent in such projections and the relevance of such to one’s long-term financial success. So today we are going to just have at it and talk about this week’s market volatility and what it means to you. Some of you are going to be really, really disappointed (if I did my job right). Jump on in, to the Dividend Cafe. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - Our morning rally in stocks turned decisively negative midday. There was geo-political tension with Iran threatening action after Israel’s strike on Syria and then some mixed messaging from different Fed presidents today that seemed to both contribute to today’s decline. That said, there really wasn’t a whole lot to warrant such a large 750-point swing from top to bottom on the day, so some strange market action with volatility picking up. While the overall labor force participation rate has come up recently, it’s still on the lower end of the historical norm at about 62.5%. It’s interesting to see the bifurcation of what’s driving it. The participation rate amongst the largest cohort of working 25-54 year olds is actually the highest it has ever been in this country at 83.5%, while the 54+ is basically at the lowest level it has ever been at about 38.5%. Read into that what you will, but the charts seem to shift just following the pandemic with a greater gap between the two cohorts. Younger folks with fewer assets had less wealth effects from rising prices, while the opposite was more prevalent in the older is my take. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3U2mBhF A modestly positive trading day today in markets with both stocks a little higher and the VIX lower following a few down days. ADP payroll numbers for March came in quite strong at 184k, although the actual employment report this Friday will get more attention. Powell had comments out today that reiterated their patient approach on lowering rates which is really just more of the same with Fed futures unchanged. Sort of a quiet day really all around. As the office REIT space recovers, earnings revisions for next year have brought the average estimate from -1.8% to now 12.2% for 2025. Healthcare REIT’s have also seen a huge revision from -17.2% to now 6.9% for next year EPS estimates. In fact of all 10 industries in the SP500 with upward revisions for next year, 6 of them are in the REIT space overall. Now, I imagine if interest rates don’t move lower as much as expected the shine may wear off for these analysts, but interesting nonetheless. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3JnoIqp Although off the lows for the day, stocks closed down for a second day to start off the new quarter. 10-Year yields have now moved back towards the high end of their four-month range at 4.35%, which is about the level where we have seen markets start to pay more attention which is what today was about. Fed futures are still at 50/50 for a June cut and roughly 70% for July, and what’s being repriced into markets is rates that may stay a little higher this year. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4cDHCqg There is a lot of good stuff in the podcast today and, as always, we welcome your questions and curiosities. Dividend Cafe looked at a number of things around the Fed, market valuation, inflation, and more on Friday. We have some very exciting things in the works about our plans for daily and weekly content delivery, with even more additions and refinements coming. Meetings are underway and nothing will be ready to announce imminently but we are excited to bring what we are doing to another level. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4cDi2Sq The first quarter of 2024 is in the history books (both because it is done, so therefore now history – and because it was a big quarter with a lot of surprises for market pundits). As you go into your Easter Weekend and enjoy the market holiday that is Good Friday, take a trip around the horn as we look at history, market valuations, passive investing, credit, money supply, financial conditions, and more. Jump on in to the Dividend Cafe … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3TT4Scl Another generally positive day in markets with today marking the 99th consecutive trading day that the SP500 closed above its 50 day moving average. This has happened many times in history believe it or not, and certainly isn’t even half way to 1995’s run of 257 (back when I was graduating high school), but its impressive none the less. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3TTReFO Markets traded positively for most of the day, although ended up closing slightly down by 31 points. This is the 10th time since 1950 that the SP500 has been up for 5 months in a row, so it certainly has happened enough before, but interesting that when I looked at those time periods 12 months following, they were also all in positive territory as well. All that said, earnings and fundamentals are going to have to pull their weight for that to happen an 11th time from these valuations (see David’s comments below). Historically speaking, it’s also rare to see markets top when there is such broad participation in new 52-week highs. Typically, that internal breadth starts to show cracks before the overall market reaches its cycle peak and turns lower, and that is not what we are seeing today. Energy, by the way, has reaccelerated, with now 80% of the sector at 3-month highs, as that market rotation and broadening of sector returns continues. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/49cizrs Greetings from Dallas, Texas where I am the next two days before then getting to Houston on Wednesday and then to the TBG offices in Austin and doing three events there for a couple of days before returning to NYC on Friday. Today’s DCT is housing-heavy with plenty else in the mix to make it worth your time. Dividend Cafe looked further into the time-tested wisdom of dividend growth investing, the historical factors that involved over the past few decades, and the lay of the land in the years ahead. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4924jl3 Predictions are fun. They are not, though, at the heart of the investment business. They can be very important in the methodology and process of some speculators, and they can even be marginally additive for some investors. But “predictions” are not quite the same as “calculations,” and they are categorically different from “belief systems.” At the core of all good investors lies a philosophy. I find it an unimprovable joy in life to study the investing philosophies of great investors. I never, ever, ever find one who relies on “feel” or “just has that Midas touch.” That very thinking is for simpletons and know-nothings. Great investors execute well off of a cogent philosophy. Bad investors either fail to execute or have an improperly formed philosophy (or, worst of all, options; they have no discernable philosophy at all). The Bahnsen Group embraces being defined by our investment philosophy, and we embrace being known by the role dividend growth plays within that philosophy. Dividend growth is not new. In fact, what is [relatively] new is NOT viewing the receipt of cash flow from the risk investments you make as a key objective in your investing and a significant part of your anticipated return. In today’s Dividend Cafe, we address the history of investor distraction from dividend monetization and the reorientation that we believe is about to shift the focus back to where it belongs. We are not talking a “new normal” but rather a “return to normal normal.” So jump on in to a very normal Dividend Cafe … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com