Dow: +269 points (+0.81%) S&P: +1.28% Nasdaq: +1.76% 10-Year Treasury Yield: 3.54% (-7.6 basis points) Top-performing sector: Real Estate (+3.60%) Bottom-performing sector: Consumer Staples (+0.06%) WTI Crude Oil: $77.71/barrel (+3.45%) ASK DAVID “The US government has stated that it will purchase crude oil to replenish the strategic reserve once the price hits $70. In effect, this seems to indicate that the government will purchase millions of barrels at $70. Does this function as a price floor? And, if so, what impact does a government-created price floor have on markets?” ~ Keith So just by way of clarification, they have indicated they want that to be the rough price level at which they will transact, but their rough and very ambiguous guidance on the subject would indicate the intent of more a floor than a ceiling and yet, if the price does not go (or stay) there, it may not be a price at which much transacts. The government cannot make the market cooperate. But to the extent the market expects that level to be a rough “floor,” I suppose one could assume in their economic calculation that some of the left tail risks of various price collapses are less likely. The problem is that they can change their mind, and any number of events could happen (upside or downside) that alter the economics here. What market actors ultimately know is that there is a forced buyer in the marketplace, and supply calculations, profit expectations, and a number of numerical considerations around production can be performed with that intervening fact lingering. It does suggest a certain backstop in matters which provide a bit of an asymmetrical risk/reward (in the producers’ favor). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

A little early morning volatility but then a small rally on the day in markets. Read below, listen, watch – the choice is yours! MARKET ACTION Dow: +186 points (+0.56%) S&P: 0.70% Nasdaq: 1.01% 10-Year Treasury Yield: 3.62% (+10 basis points) Top-performing sector: Communication Svcs (+1.29%) and Consumer Discretionary (+1.26%) Bottom-performing sector: Consumer Staples (-0.16%) WTI Crude Oil: $74.66/barrel (flat) Key Economic Points of the Day: Used Car Prices dropped -15% year-over-year in 2022 (from where they ended 2021), the largest single-year drop on record. This came, of course, off of large increases in 2021. The Fannie Mae Home Purchase Sentiment Index was up in December versus November but basically right at the all-time low set in October. 21% of people surveyed said they believed it to be a good time to buy. The NFIB Small Business Optimism Index dropped to 89.8 from 91.9 in December, the lowest since June of last year. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Futures opened last night up +40 points and were up over +80 points by bedtime. This morning futures pointed to a +100-point open pre-market. The market opened up +150 points and got up over +300 points before falling just over -100 points. A 450-point delta between the high and low levels today … The Dow closed down -113 points (-0.34%) with the S&P 500 down -0.08%, and the Nasdaq up +0.63% as Tesla and the chip sector rallied substantially. The massive rally Friday saw 7-to-1 advancers to decliners, fairly solid breadth. The top 20% of companies paying out cash dividends as their primary cash outlet were down -2.7% last year compared to the top 20% of companies doing the highest stock buybacks (which were down -13.3%). This is comparing apples-to-apples – top performers compared to top performers by their primary cash outlet vehicle. The ten-year bond yield closed today at 3.53%, down 4 basis points on the day. Top-performing sector for the day: Technology (+1.09%) Bottom-performing sector for the day: Health Care (-1.66%) Revenue growth is expected this year in each sector of the S&P besides Utilities and Materials (and a very slight top-line revenue decline is expected in Technology). The more significant factor will be margins and where overall profit levels come in, though if earnings are revised downwards as time goes on, I suspect it will have more to do with lesser-than-expected revenues than it will have lesser-than-expected margins. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Dividend Cafe Link - https://bahnsen.co/3Z98Le5 I’ve lost count of how many years now we’ve done this, but it is a lot, and it is one of my favorite projects every year. I thoroughly enjoy the research that goes into it, the writing that creates it, and the accountability that comes out of it. I will refrain from the temptation to start waxing and waning now and just say that I hope you find this year’s Year Behind, Year Ahead white paper profitable. It’s going to be a wild year. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

A solid day for the energy sector and some key blue chip companies but downside across most market sectors. Dow: -340 points (-1.02%) S&P: -1.16% Nasdaq: -1.47% 10-Year Treasury Yield: 3.72% (+1 basis point) Top-performing sector: Energy (+1.99%) Bottom-performing sector: Real Estate (-2.89%) WTI Crude Oil: $73.80/barrel (+1.32%) Key Economic Point of the Day: The ADP jobs number for the private sector came in at 235k for December, well above the 150k projected. Naturally, futures went down on the news. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The new wing of the TBG offices in Newport is now open. We are excited for you to come see it. I believe it is now 28 out of our 50 people that are based in Newport, soon to be 30 out of 52 (we are hiring two new Tax Services people this month). The new space gives us extra space we needed for our Solutions Department from last year’s growth, more space for additional future growth, new offices for key partner-advisors, additional space for our growing Tax Services Department, and additional client conference room meeting space. Come visit any time! Today’s market action was up and down but mostly up … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

I began writing this from Dallas, Texas this morning, where yesterday USC suffered a heartbreaking loss in what was one of the most exciting Cotton Bowl games ever. I am back in Newport now, where tomorrow morning we reveal the new large office expansion to our team (same floor, same building). It has been a labor of love, I assure you. We have added new advisor offices (we have a new advisor starting in Newport Beach and another new one starting in Nashville next week), but mostly the Newport expansion houses new members of our Tax Department, Planning Department, Research, and Trading. It is really beautiful space. Today’s DC Today is the normal Monday format of DC Today and, obviously, the kick-off to 2023! There is a 27-page white paper coming Friday in the Dividend Cafe providing the most comprehensive recap of 2022 and forecasts for 2023 we think you will find anywhere. I hope you find it to be a labor of love, too. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

https://bahnsen.co/3uYu6c0 Virtually everything going on in markets right now (or so it would seem) has to do with what central banks are doing (or are projected to do). It certainly is not true in reality – the things happening today that will ultimately determine investment outcomes in years to come will have far less to do with the cost of capital and far more to do with human action – but in the day-to-day volatility of market price levels, I have no choice but to pretend. Well, “pretend” is not actually the right word – it is more an acknowledgment that the world we are living in gives a lot – and I mean a lot – of attention to the Fed in one’s outlook on financial asset pricing and economic health. The current obsession with the Fed (as in the immediate 2022 and soon-to-be 2023 period) revolves around inflation. We have had a cult-like obsession with the Fed for over 25 years, so it is not inflation that created the Fed’s place in our hearts and our wallets. But right now, inflation is the cause du jour – the rationalization for 24/7 coverage of the Fed, and certainly the Fed’s stated rationale of heavy activity in financial markets. Much of this is with good reason. Much of it is so misguided that I don’t really believe I am hearing what I hear some days from people I know [used to?] know better. But all the talk about the Fed right now is tied up with all the talk about inflation, and therefore a re-visit on the inflation subject is in order. Jump on into the Dividend Cafe, and may our investigation of the state of the nation when it comes to inflation bring some revelation about the Fed’s imagination in matters of monetary administration as we pursue our goal of wealth creation. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

So the Dow gave back Monday’s gain today and a tad more, but with today’s -764 point day in the Dow, the market finds itself a couple of hundred points off where it was just last Friday. And the bond market rally continued again today as yields fell again. All of this is carefully dissected in today’s podcast and video … Dow: down -764 points (-2.25%) S&P: down -2.49% Nasdaq: down -3.23% 10-Year Treasury Yield: 3.45% (-5 basis points) Top-performing sector: Energy (-0.53%) Bottom-performing sector: Technology (-3.78%) and Communication Services (-3.84%) WTI Crude Oil: $76.20/barrel (-1.38%) Key Economic Points of the Day: Retail Sales fell -0.6% in November, and even ex-autos were down -0.2%. Much of this was related to the strong number of October, off of which this drop is based. Nominal GDP expectations for Q4 will come down if consumer activity is less than expected. Industrial Production fell -0.2% vs. expectations of a +0.1% increase. Initial jobless claims were down 20k to 211k. Continuing claims are at their highest level since February (at 1.67 million). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Welcome to Fed day Wednesday on DC Today. Following positive sessions on both Monday and Tuesday leading up to today’s Fed announcement, we gave 142 points back on the Dow but remain up on the week in both stocks and bonds. I fully unpack today’s Fed announcement, the market reactions and implications and several takeaways in my Fed-heavy video podcast that you will not want to miss. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The CPI report came in well below expectations, and futures were up as much as +830 points pre-market (on top of yesterday’s +520 point rally). The rally basically peaked at the open and then fizzled from there, going negative mid-day, before closing up just a hundred points or so. Dow: +104 points (+0.30%) S&P: +0.73% Nasdaq: +1.01% 10-Year Treasury Yield: 3.50% (- 11 basis points) Top-performing sector: Real Estate (+2.04%); Energy (+1.77%) Bottom-performing sector: Consumer Staples (-0.17%) – only negative sector WTI Crude Oil: $75.25/barrel (-0.19%) Key Economic Point of the Day: ASK DAVID “You (and just about everyone else) focus on the three major stock indices when reporting on the daily market. The Dow, the S&P 500, and the NASDAQ often move together, but when they don’t what does it mean? How did these get to be the Big Three, and what do each tell us about the market?” I actually think the difference between the three indices is quite noteworthy, and even if they often directionally move together, the magnitude of moves is quite different. The Dow is down roughly -7% on the year, while the S&P is down roughly -18% and the Nasdaq roughly -30%. This is really a by-product of the Dow being more diversified than the Nasdaq (i.e., broad American sector diversification in the Dow vs. heavy technology penetration in the Nasdaq). Then the S&P is market-cap weighted (that is, the S&P is well-diversified, but because its constituents are weighted to their size, it becomes very, very tethered to a few mega-cap tech companies. The Dow was constructed to be the bellwether representation of the American economy reflected in the stock market that it is. It wasn’t like there were competitive index options in the late 19th century and early 20th century when it was constructed. It has stood the test of time, to say the least. TheDCToday.com DividendCafe.com TheBahnsenGroup.com

It’s a crazy time in the ‘bizarro’ world when we have questions that we do about 2023’s economic health, the earnings environment, and financial markets liquidity, and yet one of the biggest stories in financial media for the week centers around a couple of obscure income real estate portfolios. Indeed, one could argue it is truly a ‘bizarro’ world when what appears to be one of the largest frauds and wealth evaporations in history (FTX) provides a pretty glowing media tour while some of the most successful wealth creation and capital markets success in history is given the third degree by the same people. But today’s Dividend Cafe is not about Blackstone or Starwood or FTX or CNBC, or any other particular asset manager, crypto scam, or media outlet. Rather it is about a broad issue in financial markets that is not understood, needs to be understood, and has no chance of being understood given the fact that the people doing the educating do not understand. So let’s jump into the Dividend Cafe. Mark this moment. The lesson will not prove to be over-valued. Blog post here: https://bahnsen.co/3iNX8IJ Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Dow: Up +184 points (+0.55%) S&P: +0.75% Nasdaq: +1.13% 10-Year Treasury Yield: 3.48% (+7.9 basis points) Top-performing sector: Technology (+1.59%) Bottom-performing sector: Communication Services (-0.50%) WTI Crude Oil: $71.81/barrel (-0.28%) Key Economic Point of the Day: Initial jobless claims came in at 230k – right at expectations. Continuing claims have inched higher as well, all at once indicating some softening (high since February), but very little to write home about (not a big movement up). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

A DEAD FLAT day in the Dow – up/down +0.00% (you do not see that often), and a whole lot I discuss in the DC Today. MARKET ACTION Dow: Up 1 point (LOL) (+0.001%) S&P: -0.19% Nasdaq: -0.51% 10-Year Treasury Yield: 3.42% (-9.3 basis points) Top-performing sector: Health Care (+0.85%) Bottom-performing sector: Communication Services (-0.93%) WTI Crude Oil: $72.43/barrel (-2.48%) Key Economic Point of the Day: Used vehicle prices hit their lowest level in over a year as outright deflation continues to permeate that marketplace (-15.6% decline since January) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Lots to cover here in the DC Today … Listen to the podcast or watch the video, and check out the info below! MARKET ACTION Dow: -351 points (-1.03%) S&P: -1.44% Nasdaq: -2.00% 10-Year Treasury Yield: 3.53% (-6.6 basis points) – ferocious bond rally of last month continues Top-performing sector: Utilities (+0.66%) Bottom-performing sector: Energy (-2.65%) WTI Crude Oil: $74.34/barrel (-3.35%) Key Economic Point of the Day: Business Roundtable CEO Outlook Survey was at its lowest number since Q3 2020, but is way, way above the breakeven level of expectation (that is, still anticipating substantial economic expansion, albeit with a grimmer relative outlook than last year) The trade deficit came in at $78.2 billion in October, less than the $80 billion expected. But total trade was up on the month and is up +13.7% versus a year ago. The container ship debacle has largely subsided and yet there are still some issues marginally constricting trade (China COVID policy, Russia sanctions, etc.) Key Economic Point of the Day: Business Roundtable CEO Outlook Survey was at its lowest number since Q3 2020, but is way, way above the breakeven level of expectation (that is, still anticipating substantial economic expansion, albeit with a grimmer relative outlook than last year) The trade deficit came in at $78.2 billion in October, less than the $80 billion expected. But total trade was up on the month and is up +13.7% versus a year ago. The container ship debacle has largely subsided and yet there are still some issues marginally constricting trade (China COVID policy, Russia sanctions, etc.) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Futures opened last night down -40 points and stayed around there into the evening. This morning they pointed to a down -100 open pre-market and worsened a bit from there. The market opened down -175 points and worsened throughout the day, though it came a hundred points off the low late in the trading day The Dow closed down -483 points (-1.4%), with the S&P 500 down -1.79% and Nasdaq down -1.93% Markets on Friday gave us the full gamut of today’s idiocy, as futures quickly dropped over -400 points upon the God-awful news that more jobs were created than expected last month and that lower-income people were making a little more than they had the year before. Then, hours later, markets finished to the upside after a day of volatile trading. Right now, consensus expectations are for $232/share of earnings for the S&P 500 next year, about 7-8% lower than what their peak expectations were but +5% higher than the $221 level of this calendar year. The best thing I can say is that if we had a recession in 2023, and earnings were up +5% on the year, that would be a rarity. The ten-year bond yield closed today at 3.58%, up eight basis points on the day. Top-performing sector for the day: Utilities (-0.60%) Bottom-performing sector for the day: Consumer Discretionary (-2.95%) Most cyclical sectors were down the most today; the most defensive sectors were down the least (but all were down) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The markets rallied dramatically on Wednesday when the chairman of the Federal Reserve, Jerome Powell, gave a speech at the Brookings Institute essentially confirming the likelihood of a Fed “slowing” its plans for interest rate hikes. Other speeches this year have seen markets fall a thousand points. The direction of market impact is less important to my point than the impact itself: we have markets that are highly susceptible to speeches given by one person. And when I refer to “markets” I do not merely mean the stock market but also the (much larger) bond market, the (similarly-sized) housing market, and the (gigantic) market for currencies. Of course, the nature of market movement is not so much about a speech, per se, but rather policy expectations that are derived from a given speech. And the response in financial markets to the policy decisions of the Federal Reserve is hardly where it all stops; Fed decisions impact all aspects of the economy. No person lives a life free of impact from the decisions of the Federal Reserve. Today I want to unpack this a bit more, at least as much as a commentary of this size will let me. I doubt all of this information and perspective will be new to consistent readers of the Dividend Cafe, but I do believe you will find it relevant to your investing life, and more importantly, relevant to how you think about the economic affairs in which we live. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

December has launched and I have some things to tell you … MARKET ACTION Dow: Down -195 points (-0.56%) S&P: -0.09% Nasdaq: +0.13% 10-Year Treasury Yield: 3.50% (- 19 basis points); down 72bps from the 4.22% high of just five weeks ago! Top-performing sector: Communication Services (+0.29%) & Health Care (+0.24%) Bottom-performing sector: Financials (-0.71%) WTI Crude Oil: $81.28/barrel (+0.91%) Key Economic Point of the Day: The Fed’s favorite inflation measurement (PCE) came in up just +0.2% on the month, less than the +0.3% expected, and known to be tainted by the misleading contribution of housing’s lag effect (which I have written about extensively). The September gain had been +0.5%, so the stock and bond market responded favorably to the disinflationary trend. Initial jobless claims came in at 225,000, actually lower than expected Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

A monstrous rally ensued today when Jerome Powell verified Fed plans to slow down on rate hikes. Do I think this makes sense? Well, I will tell you what I think about all of it in today’s podcast and video! MARKET ACTION Dow: +737 points (+2.18%) S&P: +3.09% Nasdaq: +4.41% The S&P 500 ended the month of November up +5.37% and the Dow ended up +5.7%. Combined with October Q2 has been monstrous, so far anyways. 10-Year Treasury Yield: 3.61% (-14 basis points) Top-performing sector: Technology (+5.03%) Bottom-performing sector: Energy (+0.56%) – one of those days where the WORST sector was up this much WTI Crude Oil: $80.45/barrel (+2.88%) Key Economic Point of the Day: Q3 GDP growth was revised upward to +2.9% annualized (from +2.6% before) Job Openings fell in October to 10.3 million, down 353,000 from the month prior and 760,000 less than a year ago Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

An interesting but not especially noteworthy day in markets today, and we have all the commentary you need right here MARKET ACTION Dow: +3 points (+0.01%) S&P: -0.16% Nasdaq: -0.59% 10-Year Treasury Yield: 3.75% (+5 basis points) Top-performing sector: Real Estate (+1.71%); Energy +1.28% Bottom-performing sector: Technology (-0.98%) WTI Crude Oil: $78.64/barrel (+1.81%) Key Economic Point of the Day: The Case Shiller Housing Index dropped for the third month in a row, now down -13% since August. ASK DAVID “How fair is it to compare the relationship between FTX and Alameda Research to the relationship between the U.S. government and the Federal Reserve? Alameda was using client money to buy up FTX’s token (FTT) in order to bolster the price of the FTT. How much different is that from the Fed using taxpayer money to buy US treasuries?” ~ Marty There are a few pretty substantive differences worth noting. First, the Fed doesn’t actually use taxpayer money to buy treasuries, though it is taxpayer money that is being paid back to the Fed (that is what a Treasury bond is). But the main difference is that the Treasuries on the Fed’s balance sheet are backed by the full faith and credit of the U.S. government, and no principal or interest payment has been missed in nearly 250 years. Alameda was backed by FTT, which is worth less than a beanie baby. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Market Action Futures opened last night down -50 points or so and were down -160 points into the evening. This morning they were pointing to a down -200 point open pre-market. It is safe to say embedded in market action today is come “catch up” after last week where Wednesday is always a “low participation” day, Thursday saw markets closed for the holiday, and Friday is a token open day where markets close three hours early. The market opened down -50 points and just steadily worsened throughout the day. The Dow closed down -497 points (-1.45%) with the S&P 500 down -1.54% and the Nasdaq down -1.58%. The market’s challenges today were clearly related to concerns about the supply chain and some contagion effect around the disruptions in China (see Top News Stories below) The ten-year bond yield closed today at 3.67%, down two basis points on the day Top-performing sector for the day: Consumer Staples (-0.31%) Bottom-performing sector for the day: Real Estate (-2.80%) There is a lot to be said on the crypto/FTX implosion of the last couple weeks, and I believe even more will be said in the weeks ahead. BlockFi, another large crypto exchange, has now filed for bankruptcy as well Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today we are one day closer to cutting into that turkey, enjoying some homemade gravy, and spending some quality time with those nearest and dearest to us. A great time of the year to be grateful, and I, Trevor Cummings, am personally grateful to be filling in for David Bahnsen today. I wish you all a wonderful Thanksgiving, and I encourage you to take a moment to watch or listen to what’s happening in markets today (links below). And off we go… Full Blog post here: https://bahnsen.co/3V7jsLO Topics discussed: Dow: +397 (+1.18%) S&P: +1.36% Nasdaq: +1.36% 10-Year Treasury Yield: 3.76% (-6 basis points) Top-performing sector: Energy (+3.18%) Bottom-performing sector: Real Estate (+0.46%) WTI Crude Oil: $81.20/barrel (+1.15%) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

I actually hate the title this week, because the word “stupid” really is pretty mean. I try not to be mean because I think it is wrong to be mean (I can elaborate if needed). However, in this case, when James Carville famously said, “it’s the economy, stupid,” in the context of what voters cared about in the 1992 election, he basically created a new adage for how we say that a particular thing is really the thing. And that is the topic of this week’s Dividend Cafe – the thing in dividend growth investing, and clarifying some important terminology and concepts around the thing. And as you shall see today, the thing is growth of income. Let’s jump into the Dividend Cafe! DividendCafe.com TheBahnsenGroup.com

Another volatile day with the Dow closing flat after being down nearly -400 points. More to say here: MARKET ACTION Dow: -7 points (-0.02%) – had been down over -300 points at the low and -400 pre-market S&P: -0.31% Nasdaq: -0.35% 10-Year Treasury Yield: 3.76% (+7 basis points) Top-performing sector: Technology (+0.21%) and Energy (+0.12%) Bottom-performing sector: Utilities (-1.79%) WTI Crude Oil: $81.94/barrel (-4.26%) Key Economic Points of the Day: Weekly initial jobless claims came in at 222,000 – not a big move from the week before or variance from expectations Single-family starts in new housing construction dropped to 855,000, down -6% on the month and -35% from post-COVID highs ASK DAVID “What do you think the impact would be on the stock and bond market if the Fed formally changed their inflation target from 2% to 3%? I assume it would be risk on for equities?” ~ Mike S. Yes, it would be. But they won’t. And they don’t need to – they basically already did in 2020 with their adjustment to the 2% standard (that is, they no longer target 2%, but rather an “average” of 2%, meaning they can let things run hot in perpetuity to “blend” to 2% depending on how the math before or after works. In other words, they gave themselves “flexibility.” Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

It was a very choppy (up-down) day in markets, to say the least. The chart itself is testimony to how much the market could not make its mind up today. A few nuggets to chew on here … MARKET ACTION Dow: -39 points (-0.12%) S&P: -0.83% Nasdaq: -1.54% 10-Year Treasury Yield: 3.69% (-11 basis points) Top-performing sector: Utilities (+0.87%) – only other sector up was Consumer Staples Bottom-performing sector: Energy (-2.15%) WTI Crude Oil: $85.32/barrel (-0.32%) Key Economic Points of the Day: Core retail sales were up +6.5% year-over-year in October and up 0.7% on the month (double what was expected). Industrial Production declined -0.1% in October, with mining and utilities output leading the way lower Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

MARKET ACTION Dow: Up +56 points (+0.17%) S&P: +0.87% Nasdaq: 1.45% 10-Year Treasury Yield: 3.76% (- 10 basis points) Top-performing sector: Communication Services (+1.78%) Bottom-performing sector: Materials (-0.11%) WTI Crude Oil: $86.86/barrel (+1.15%) Key Economic Point of the Day: The Producer Price Index only rose +0.2% in October, half of the +0.4% monthly increase that had been anticipated. And much of that lower figure came from a decline of -0.1% in services, the first decline in wholesale services costs in two years ASK DAVID** “Is purchasing gold and/or silver a good investment?” ~ Cindy W. My view has been for quite some time that it is a non-productive investment. What I mean by then is that it does not generate any cash flow and does not have any internal earnings stream, so the value becomes a matter of speculation or supply/demand around use. But gold is not really owned much for industrial use, and even its cosmetic use is somewhat limited, so those who own gold or silver for investment purposes must defend the notion of gold being a sort of inflation hedge or currency proxy. And maybe it will be that someday, but that day is not the last 42 years, where gold is down by -50% relative to inflation – a stunning and shocking fact to all who hear it. I will also point out that the most common thing I have been told over the years is that gold gives us a hedge or substitute against crazy unstable monetary policy. Well, trillions of printed QE dollars since 2012 later, gold is lower than it was a decade ago. This should have been the golden age for gold; instead, it has many wondering what exactly the thesis is. At the end of the day, gold can go up a lot, and it can go down a lot, but it rarely does what people seem to want it to do when they want it to do it. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today’s DC Today is monstrous and requires you to listen to the whole thing. Election aftermath. Fed expectations. Inflation changes. Huge rally days. So much updating. TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Greetings from Nashville, Tennessee, where I will be necessarily giving you a shorter Dividend Cafe today, but one you may find quite interesting nonetheless. I am sure some of you would prefer we just stay out here in Nashville. But alas, we live in crazy times. And speaking of crazy, I want to talk today through a few charts, quickly, that cover the subject of energy investing and technology investing. The angle is a bit different than many choose to take. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

MARKET ACTION Dow: +334 points (+1.02%) S&P: +0.56% Nasdaq: +0.49% 10-Year Treasury Yield: 4.13% (-8.4 basis points) Top-performing sector: Materials (+1.68%) Bottom-performing sector: Consumer Discretionary (-0.30%) – only negative sector WTI Crude Oil: $88.55/barrel (-3.53%) Key Economic Point of the Day: The October NFIB Small Business Optimism Index fell from 92.1 to 91.3 Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Market Action Futures opened down nearly -200 points last night but got back nearly to the flat line by bedtime as Japan and Hong Kong markets were rallying. Then this morning, futures pointed to a +170-point open pre-market. The market opened +80 points and went steadily higher throughout the day. The Dow closed up +424 points (+1.31%), with the S&P 500 up +0.96% and the Nasdaq up +0.85%. It would be malpractice not to start with this chart. One thing I have said over and over is that I believe equity volatility does not stabilize until the ascendant dollar reverses. Friday’s drop in the DXY was the worst day for the dollar since 2015 and the second worst day since the financial crisis (h/t Jim Bianco). Now, the dollar was still UP on the week – we are hardly in a trend of dollar reversal. Volatility is still the story, not a weakening dollar. For now. We are up to 85% of companies reported for the quarter now (Q3 results), and revenue growth looks to be +11% year-over-year with earnings growth of +4.3%. And the earnings outlook for 2023 has only come down from $252/share for the S&P 500 to $233, meaning either this will end up being a very, very mild recession, or else there is more room to go for downward revisions of 2023 profits. The ten-year bond yield closed today at 4.22%, up six basis points on the day Top-performing sector for the day: Communication Services (+1.83%) and Energy (+1.73%) Bottom-performing sector for the day: Utilities (-1.94%) I am not sure that the ESG movement is proving to be much about ideology. It is apparently a lot more about performance, after all. As ESG-popular FAANG stocks have gotten hammered and ESG-hated energy stocks have thrived, new money into ESG products has evaporated. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I appreciated the very kind words I received about last week’s lengthy Dividend Café, and hope the message coming out of that annual week of meetings was clear and useful for readers. I struggled with where to take Dividend Café this week as last week’s covered so many topics, the Fed’s announcement this week was no real surprise at all, and I desire to write less about the Fed in the Dividend Café. On that last part, it isn’t going to happen – and that’s not merely because of my not-so-secret obsession with monetary economics. I may believe (and I assure you, I do) that the Fed policy framework of this era has given a way higher role to the Fed in modern economics than is appropriate, but believing it shouldn’t be is different than believing it isn’t such. So yes, the Fed is going to be a heavy theme in Dividend Café for years to come (whether I like it or not). But if there is one thing I am obsessed about more than monetary economics, it is dividend-growth investing. And I think you will find some observations about dividend equity investing to be very relevant to the paradigm in which we find ourselves. So today is not quite Fed-free, but it is rich in dividends, the very rewards I want for investing clients. Let’s jump into the Dividend Café … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

MARKET ACTION Dow: -146 points (-0.46%) S&P: -1.06% Nasdaq: -1.73% 10-Year Treasury Yield: 4.15% (+9 basis points) Top-performing sector: Energy (+2.04 xxx%) Bottom-performing sector: Technology (-3.00%) and Communication Services -2.83% WTI Crude Oil: $87.95/barrel (-2.29%) Key Economic Point of the Day: 1.485 million continuing claims (up 47k, most since March) ISM Services came in at 54.4 – still expansionary but a point lower than expected, and with New Orders dropping 4 points ASK DAVID “I enjoy listening to your podcasts – thank you for the insights! I am sitting on cash – about 75% of my investable assets. What would be a good philosophy of when to get back into the market and how? I am a believer in dividend based investing.” ~ Adrian One first has to start with the basic principles – not getting invested in a dividend equity portfolio with cash is a riskier than getting invested in one. The reason not to invest immediately is either (a) A belief about market timing that is not grounded in reality, or (b) A desire to not invest all at once at an inopportune time (that being revealed to you in hindsight, not in advance). I reject reason A and am sympathetic to reason B, as long as one does the needed self-assessment to see that reason B is psychological and emotional, not financial or rational. So then if the desire to mitigate timing risk is psychologically helpful, I advise deploying no less than 50% at once, and then the rest either over a period of time periodically (say, 1/10th of the remainder each month for ten months), or tactically (each “bad” down day in markets deploying more). I have no statistical or empirical argument for one over the other as it pertains to how to deploy the second 50%, but feel strongly about getting 50% of uninvested cash at once. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I would have to go back and look at the exact shape but I believe the market action today was quite identical to the last time the Fed announced a known rate hike, where the market bad been down, rallied huge to the upside on the news, sold off substantially, rallied all the way back, then sold off into the close with no new news. It’s all just so, so dumb. But I have more to say than that here … MARKET ACTION Dow: -505 points (-1.55%) S&P: -2.50% Nasdaq: -3.36% 10-Year Treasury Yield: 4.09% (+4 basis points) Top-performing sector: Utilities (-1.02%) Bottom-performing sector: Consumer Discretionary (-3.79%) WTI Crude Oil: $89.35/barrel (+1.11%) Key Economic Point of the Day: ADP private sector number came in at +239k for October vs. 198k expected. BLS jobs report is Friday Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

MARKET ACTION Dow: -80 points (-0.24%) S&P: -0.41% Nasdaq: -0.89% 10-Year Treasury Yield: 4.04% (-3 basis points) Top-performing sector: Energy (+0.99%) Bottom-performing sector: Communication Services (-1.81%) WTI Crude Oil: $88.57/barrel (+2.36%) Key Economic Points of the Day: ISM Manufacturing fell to 50.2, just barely in expansion mode, and the weakest figure since May 2020. New Orders and Backlogs reflected contraction, and only 8 of 18 sectors saw growth on the month. But … Job Openings went HIGHER in September, coming in at 10.7 million (almost a million higher than the 9.8 million expected) Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Futures opened basically dead flat last night and stayed there into the evening. Bright and early this morning futures pointed to a down -100 point open pre-market and it worsened from there. The market opened down -100 points or so and didn’t move much above or below that throughout the day. The Dow closed down -128 points (-0.39%) with the S&P 500 down -0.75% and the Nasdaq down -1.03%. The Dow hit 28,661 at one point October 13, it closed as low as 29,203 on October 10, and yet today sits at 32,732, up +14% from mid-month lows. We are a bit over half way through earnings season (263/500 companies reporting) and sales growth is +10.3% year-over-year (a bit ahead of expectations and earnings growth is +4.2% (a bit behind expectations). Excluding the energy sector, though, earnings growth in the S&P 500 is negative year-over-year. Right now consensus expectations are for $235 of earnings from the S&P 500 in calendar year 2023. The number was $250 in the summer, so it has come down, but really not very much. Operating margins have declined from about 17% plus change to 16% plus change. For the third time this year we have a spike of breadth where the % of companies advancing over a 10-day period is in the 99th percentile (it also happened in January and July). In those other two occasions the momentum was not sustained. As good as things have been the last few weeks, only 40% of companies are above their 200-day moving average. And in some sectors the breadth of companies seeing price improvement is really, really low. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I have mentioned all week how excited I am for this week’s Dividend Cafe, and now here we are. I have explained why our annual week of money manager meetings is so important before, and have written weekly recaps before as well. But this is different. This week not only comes in the midst of a bear market (as the 2008 and 2011 trips did, as well) but was also the best-scheduled meeting we have ever had, meaning, the caliber and topical significance of many of the managers and economists we were in front of was top-shelf. Combine that with a dinner with one of the true legendary CEO’s in America, and it was an absolutely tremendous week. It also comes at a very important time. I do not mean that because stocks are in a bear market, or interest rates are rising. I mean it because of the circumstances behind both of these things, years in the making, with years of profound investment ramifications ahead. I believe a lot of perspective was gained on this year’s trip that needs to be applied to a decade of thoughtful guidance, not merely covering a month or a quarter. I hope you will find the information shared as interesting, actionable, useful, and provocative as I do. And, of course, reach out with any questions at any time. This is the stuff we live for, and I am confident this Dividend Cafe is one you will be glad you read. So with that, let’s all jump in, to this “money manager week recap” edition of the Dividend Cafe! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I returned from my meetings in Palm Beach at the end of the day yesterday and hit the ground running (both figuratively and literally) very early this morning. I love doing the DC Today. Special thanks to Brian and Trevor for filling in, and off we go with an action-packed recap of today … Market Action Dow: Up +194 points (+0.61%) – but off of a +550 point high S&P: -0.61% Nasdaq: -1.63% 10-Year Treasury Yield: 3.92% (-9 basis points) Top-performing sector: Industrials (+1.14%) Bottom-performing sector: Communication Services (-4.12%) WTI Crude Oil: $88.58/barrel (+0.72%) Key Economic Points of the Day: Real GDP grew in Q3 at +2.6% annualized rate as net exports grew in light of energy exports being up and Chinese imports being down. Personal Consumption and Business Investment were up, but only a tad. New Orders for Durable Goods were up +0.4%, below the 0.6% expectation Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today was a mixed bag, where we continue to see varying results from the Dow and the Nasdaq. Some market pundits have dubbed this as value vs. growth or categorized these baskets of equities as a difference in “duration.” Regardless of how you describe it, we saw some downward pressure resulting from less-than-favorable earnings reports on a handful of large tech companies, and some continued positive momentum from the sectors leading the market on the year (Energy, Healthcare, Consumer Staples, etc.). Market Action Dow: +2.37 (0.01%) S&P: -0.74% Nasdaq: -2.04% 10-Year Treasury Yield: 4.01% (-9 basis points) Top-performing sector: Energy (+1.36%) Bottom-performing sector: Communication Services (-4.75%) WTI Crude Oil: $88.12/barrel (+3.26%) Key Economic Points of the Day: The trade deficit widened in September by 5.7% (from $87.3 billion to $92.2 billion) There is a lot you could potentially dissect here, but the simplest explanation is that a strong dollar means buyers (exports) can buy less of our goods, and US purchasers (imports) can buy more goods, which expands the deficit – falling exports, rising imports. New home sales fell month over month (from 677,000 to 603,000), but we were still slightly above the average estimates of 593,000 For perspective here, new home sales peaked in August 2020 at 1.04 million Although the number of homes sold declined, the average sale price did rise from $436,800 to $470,600 (slightly below the record high of $479,800) Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

We notched a third day of gains in markets today, up now 11% on the S&P from the intra-day lows a few weeks ago in a broad-based rally in both stocks and bonds, and I have plenty to go around the horn in my video and podcast links below. I have also sprinkled in a few takeaways from over 20 portfolio manager meetings last week in New York to add to your listening pleasure. Take a listen, and reach out to me, Brian Szytel, with questions. Market Action Dow: +337 points, +1.07% S&P: +1.63% Nasdaq: +2.25% 10-Year Treasury Yield: 4.10% (+ 13 basis points) Top-performing sector: Real Estate +3.94% Bottom-performing sector: Energy -.05% WTI Crude Oil: $84.92 barrel +.40% Key Economic Points of the Day: Consumer sentiment came in lower than expected at 102 versus expectations of 105. The Richmond Fed index came in weaker than expected today at -10. The US Dollar was lower on the day by about 1%, along with interest rates across the yield curve that both aided today’s equity rally. Terminal Fed Funds Rate shown ending north of CPI in all of the last rate tightening cycles is shown below. Today we are at 3.3% versus 8.2%, and while those rates will likely converge, we just aren’t there yet folks… Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I think we have a meaty one today, so here we go with this Monday edition of DC Today … Off we go … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Greetings from New York City, where I am two hedge fund meetings away today from being done with a week of extraordinary meetings, insights, and collaboration with our portfolio management partners.  Some key takeaways are being summarized for next week, and a deliverable will be made available.  More importantly, c  It has been everything I hoped it would be this week, and more. It is a shorter than normal Dividend Cafe this week because of the meeting load (and post-meeting download time).  But I think what I do today you will find useful and valuable, as I use a Q&A format to answer a few key questions about the current investing state of affairs. Let's jump into the Dividend Cafe ... Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Trevor Cummings here, and I am honored to be joining you for the third day in a row.  As mentioned yesterday, David Bahnsen will be back tomorrow with his weekly commentary – Dividend Cafe.  Additionally, I invite you to subscribe to my weekly writings at thoughtsonmoney.com. Now, off to the updates from this busy Thursday market day… Dow: -91.01 (0.30%) S&P: -0.80% Nasdaq: -0.61% 10-Year Treasury Yield: 4.232% (+10.3 basis points) Top-performing sector: Communication Services (+0.36%) Bottom-performing sector: Utilities (- 2.51%) WTI Crude Oil: $85.71/barrel (+0.19%) Key Economic Points of the Day: • Liz Truss has resigned as U.K. Prime Minister ◦ This was the shortest tenure in British history ◦ Note, her Finance Minister was dismissed from his post after just 38 days • Jobless claims came in at 214,000 on an expectation of 230,000 ◦ The impacts of Hurricane Ian on the data looked to be much lighter this week ◦ The total number of people collecting unemployment benefits sits at 1.39 million, near a 50-year low ◦ In simple terms, the labor market remains tight • As to be expected, U.S. existing-home sales were down ◦ The figures came in at 4.7 million, nearly on the dot with expectations ◦ This is eight consecutive months of decline and, when compared to September 2021, a slide of 23.8% ◦ Reminder, mortgage interest rates are skyrocketing, the general population is on edge regarding inflation and recession, and this combination of anxiety and affordability is slowing down activity • The Philadelphia Fed manufacturing index published today ◦ This regional look is meant to give a sneak peek at what the national ISM data might look like next month ◦ the numbers came in at -8.7 on an expectation of -5 (note, any number below 0 represents declining business conditions) TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Welcome to DC Today where I, Trevor Cummings, will be your guest host again on this fine Wednesday. Please join me for the video or podcast (links below), as there is quite a bit to cover and discuss today. David Bahnsen will be back on Friday with his normally scheduled program – Dividend Cafe Dow: -98.54 (-0.32%) S&P: -0.66% Nasdaq: -0.85% 10-Year Treasury Yield: 4.131% (+13.3 basis points) Top-performing sector: Energy (+2.94%) Bottom-performing sector: Real Estate (-2.56%) WTI Crude Oil: $85.63/barrel (+3.39%) Key Economic Point of the Day: Today we saw the published data for new housing starts and building permits Housing starts came in at 1.4mm on an expectation of 1.47mm Down 8.1% seasonally adjusted and down 7.7% year-over-year in September Looking at the attribution, we see new homes fell 4.7% and new apartment construction fell 13.1% Building permits came in at 1.56mm on an expectation of 1.5mm Rising 1.4% in the month of September Permits for new homes fell 3.1%, with apartment construction rising 8.2% Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

This is Trevor Cummings joining you as your guest host on DC Today.  You can find my weekly commentary at www.thoughtsonmoney.com.  Also, please join me for the DC Today video and podcast – see below. Market Action Dow: +341.67 (1.13%) S&P: 1.16%% Nasdaq: 0.9% 10-Year Treasury Yield: 3.994% (+2 basis points) Top-performing sector: Industrials (+2.36%) Bottom-performing sector: Communication Services (+0.54%) WTI Crude Oil: $83.22/barrel (-2.6%) Key Economic Point of the Day: • Industrial production in September rose 0.4% which was a surprise to the upside – estimates were 0.1%.  Additionally, August was revised slightly to the upside, as well; a revision from -0.2% to -0.1%. • The National Association of Home Builders’ (NAHB) monthly confidence fell 8 points to 38 in October, making 10 consecutive months of decline.  Note, the index was at 80 last October and this 10-month decline tops the record of consecutive declining months set in ’06/’08. Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

Greetings from the world’s greatest city where we kicked off money manager meeting week with significant discussions with the CIO, the taxable fixed income team, and the levered loan group at Voya, and this afternoon met with the real estate team, private equity group, and head real estate folks at Blackstone.  It won’t be this many meetings every day this week (it better not be), but it was a great way to start off the week.  My summary of the whole week will be prepared at the end of the week for public consumption. Futures opened last night up +100 points and stayed positive throughout the night even as Japanese markets struggled.  By bedtime, we were about +150 in overnight futures and at the crack of dawn this morning (now on eastern time zone), futures were pointing to a +300-point open. The market opened up +500 points and got as high as +675 points, and stayed very level throughout the day. The Dow closed up +550 points (+1.86%) with the S&P 500 up +2.65% and the Nasdaq up a massive +3.43%. UK bonds rallied violently this morning as yields collapsed, no doubt the key correlative event to the U.S. stock market rally overnight.  The 30-year and 20-year dropped by a stunning 40 basis points, and each point on the yield curve from three years up to ten years was down by almost the same.  Anyone who bought British bonds last week made about two years’ worth of return in about 24 hours. The ten-year bond yield closed today at 4.01%, up less than a basis point on the day I am not sure what to think about the measurement of bond returns in 1721 when churning butter was the most profound technological advancement of the decade, but I do know this: 2022 is going in the history books for global sovereign bond returns Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I hear often from investors who are focused on the “fun” parts of risk-asset investing that they “don’t care” about the bond market. Truth be told, it doesn’t do a lot to excite me, either. Most professional bond managers I know seem to be borderline Communists (just kidding), and the bond market itself lacks the human action that I believe is embedded in things like operating enterprises. But the bond market cares about us whether or not we care about it, and that is the subject of today’s Dividend Cafe. It is a message I like a lot, and I believe if you jump into today’s Dividend Cafe, you will come out more enlightened about economic growth, stock market pricing, interest rates, and the decisions we face as investors. So let’s do just that. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Okay, so one of the largest intra-day market moves on record (from down -550 to up +950 – a 1,500 bottom-to-top move today). So there is market action AND inflation/economic action to unpack, and you have come to the right place: MARKET ACTION Dow: Up +828 points (+2.83%) – was down -550 points at the low S&P: +2.60% Nasdaq: 2.23% 10-Year Treasury Yield: 3.95% (+5 basis points) Top-performing sector: Financials (+4.14%) – I am not going to take the time to look it up, but I will safely guess that this is the best day in years for Financials; in fact, I bet HALF of this would be the best day of 2022 for financials … NOTE: Energy was right behind it at +4.08% Bottom-performing sector: Consumer Discretionary (+0.98%) WTI Crude Oil: $89.25/barrel (+2.27%) Key Economic Point of the Day: CPI (headline) increased +0.4% for the month where +0.3% had been expected. Headline inflation is up +8.2% on the year vs. a peak of +8.9% several months back. Core CPI (ex food and energy) was up +0.6% in September. Energy prices fell -2.1% but food prices increased +0.8%. It is all about food inflation in the aggregate data. Services is the source of increased inflation. Rents were up +0.8% on the month and primary residence impact is up +7.2% year-over-year. This is simply not true in the present tense but the lag effect is the driver here as we shall all see in a couple months’ time. The Fed has NO influence on this, but Health insurance prices were up a staggering 2.1% on the month and are up +28% on the year Airfare is up 43% on the year (base effect from limited travel a year ago) Goods prices were FLAT – slowest year-over-year increase since May 2021 (+6.6%) Used car prices down -1.1% on the month Clothing down -0.3% Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market zigged and zagged all day and was down -100 and up +200 before closing down a tad in the final minutes of trading. Lots to say about the Bank of England in today’s podcast … MARKET ACTION Dow: -28 points (-0.10%) S&P: -0.33% Nasdaq: 0.09% 10-Year Treasury Yield: 3.89% (- 4 basis points) Top-performing sector: Energy (+0.75%) Bottom-performing sector: Utilities (-3.42%) – the collapse in this sector in the last month is absolutely unprecedented WTI Crude Oil: $87.09/barrel (-2.53%) Key Economic Point of the Day: Core PPI (ex-food and energy) came in exactly in line at +0.3%. August’s PPI was revised downwards. September’s PPI headline read (w/ food and energy) was +0.4%. The year-over-year headline PPI is +8.5% vs. +8.7% last month. Processed goods prices fell for the third month in a row. Prices for transportation and storage fell -0.2%. Goods down, services up. Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com