Today's Post - https://bahnsen.co/46Z4Xj5 This is the longest winning streak (number of up days) for the S&P 500 in two years. One of the least encouraging things? The delta between cap-weighted and equal-weighted results … Top-heavy doesn’t end well. But nevertheless, markets are enjoying a very strong rally over the last week and a half. Oil was hit hard today (down over -4%). Some traders think things will settle in the Middle East. It appears S&P earnings growth year-over-year for this earnings season is going to top +5.7%, with revenue growth of +1.2%. Margin expansion has been something to behold and has a lot to do with market resilience in this challenging rate period. Office behemoth WeWork, officially declared bankruptcy. Shiny objects are painful to watch implode. The ramifications to commercial office space will be notable, but it does appear creditor restructuring has been reasonably pre-negotiated and is not likely to result in huge vacancies hitting the market. For all the weakness in manufacturing and insistence that construction is hurting and (especially) China’s weakness, why is iron ore doing so well and copper basically hanging in there? Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3SuN9Yy Nothing like the Monday edition of DC Today. I’ll get right into it. Dividend Cafe dealt with the subject of long term interest rates and what it all means for the economy and investors. I think it was a useful way to think about what the long term is supposed to measure, and what current Fed actions mean for that process. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3tWWLRz It has been a volatile month in markets, to say the least. October represented the third consecutive negative month in all three market indices, coming off of a modest downturn in August and September, as well. October did it in more roller-coaster fashion, starting off the month with a 600-point drop in the first few days of the month, only to see that reverse to a +1,000 point increase from October 6’s low to October 11’s high (that’s a pretty quick comeback), only to then drop -1,500 points (no typo) from mid-month to late-month, only to then yet again rally, being up over +1,100 points from the low of last Friday to the time I am typing this just one week later. But the intra-month volatility and the odd twists and turns of the market throughout the year all speak to a bigger underlying dynamic in markets that I have obsessively covered in these very pages all year – the role of monetary policy, financial conditions, and bond yields in driving investor outcomes in this very short term moment. That entire landscape was the heavy focus of our annual week spent with various money managers, hedge funds, and research partners this year (I covered Fed chair, Jerome Powell, last week). The evolution of our annual “due diligence” week has led to a lot more meetings with managers in private markets, as well (equity and credit). Across private and public markets, we got a chance to see what is most on the minds of asset managers at this stage of 2023, and you will be shocked to know it is not a lot different than the same things on the minds of all investors. And those things are the subject of this week’s Dividend Cafe – the underlying conditions right now creating multiple round trips of a thousand points in the market in just one month. Jump on into the Dividend Cafe … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - Big rally day, with markets posting a very nice fourth day of gains, closing up 564 points and putting us now up almost 5% on the week. While I would love to say it’s off to the races, under the hood, the relative underperformance of the higher beta components of the market just feels less convincing. Another bond market rally day as well, with 10’s coming down another nine bps to now 4.67%, along with continued yield curve volatility. Following a slightly lighter-than-expected Treasury issuance report that was more front-end loaded on the curve and QT, which has removed the largest buyer of the front end, we’ve gone from 18bps inverted yesterday morning to now 30bps. For those citing the historical track record of an inverted curve un-inverting just before a recession starts (looking at you ‘bond king’), the last two days have us in the opposite direction. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3tYWGgn So the market closed the month of October down -1.35% in the Dow, down -2.2% in the S&P, and -3.4% in the Nasdaq. Let’s just say those numbers got a lot better the last two days, though. And then today was noteworthy as well … Fed Day is the best day, and today the Fed kept rates where they were, as expected. The market was up +100 when Powell began talking, it went up to +200, then gave that back, then went up +250, and closed just a tad below that level. More importantly, bonds rallied viciously – with each maturity from two to ten years on the treasury curve seeing yields drop over 10 basis points. His only comments about quantitative tightening were that they were not, at this time, considering slowing down or ceasing their “run-off” of the balance sheet. The word “run-off” is key because they are not actively selling bonds – they are letting about $80 billion of bonds mature per month and not reinvesting the proceeds. This is a form of tightening, but less aggressive than some have suggested. Bottom line – Powell was pretty clear that they know financial conditions are, themselves, doing their work for them, and while he skirted around QT it is hard to see how anyone could hear what he said today and conclude any additional rate hikes are coming. As mentioned yesterday the rally on Monday saw 2.5 advancers for every 1 decliner, and yesterday it repeated at 2.3 to 1. A year ago when the market bottomed and a nine-month rally began the breadth of the rally was consistently above 5-to-1 and sometimes well above 10-to-1. Market participation is still too thin to feel good about things. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3QErw6L With half of the companies having reported quarterly results, we now see +4.3% earnings growth year-over-year and +1.4% revenue growth. Of course, half is only half. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/49hz1aU Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - I closed out our annual “money manager due diligence week” last week with a luncheon put on by the Economic Club of New York with Federal Reserve chair, Jerome Powell. He surprised me by saying some things that I was not expecting, and he also said a lot that I could have predicted verbatim (okay, I did predict verbatim) before the speech. But despite all my earnest desire that the main action in markets let alone the economy not be at the whim of a few unelected academics, the Fed is the major story of markets right now. Their propensity to stay way too loose for way too long followed by a period of being way too tight for way too long is the cyclical and rotational story of our economic and market-oriented experience for 25 years. We met with nearly twenty money managers last week (across a wide variety of asset classes in both private and public markets). We did not meet with a single one who did not bring up the Fed, the state of monetary policy, the potential direction of monetary policy, and its impact on how they think (and in some cases act). So let’s jump into the Dividend Cafe where today is all about the Fed, the rubber chicken, and the radicals who stormed the stage before the speech began. Well, actually, we spend very little time talking about the rubber chicken or the people who stormed the stage and delayed the event for fifteen minutes while security and law enforcement did their thing. Those things really happened and were quite upsetting (especially the chicken). But the Dividend Cafe today is all about the actual words of Jerome Powell and what it all means. Off we go. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/45RiZ4B Yesterday’s little market move was pretty weak sauce (not even 2-to-1 advancers to decliners and not even 1% in any index). Yields soared back today, putting downward pressure on the S&P and Nasdaq in a 2022 kind of day. Yesterday, I recorded DC Today in the studio in our Newport Beach offices, had already submitted the final written edition, and then walked down the hallway to my office to eight pop-ups and notifications and alerts that Tom Emmer had removed himself for contention for the House speakership. Five minutes earlier, I had talked about how he was the most recent candidate, but I still didn’t see a path for him to get the votes. Twenty-four hours later, Congressman Mike Johnson of Louisiana is the new Speaker of the House. In one day, our Q3 earnings season theme of divergent results amongst companies was on high profile display as the largest software company and an up-and-comer in cloud applications (Microsoft) posted positive results, while the largest search and advertising revenue firm in the world (Google) posted negative cloud revenue. The S&P earnings yield is still higher than a 10-year treasury yield (total earnings dividend by share price). Of course, that differential is less than it has been in the last twenty years, but it is actually much more historically in line with where it was in the 1980s and 90s. The highest earnings yield in the market? Energy. China increased its tolerance for a deficit to the highest in thirty years last night (above the 3% limit of deficit-to-GDP) and stated that deflationary risk will not be tolerated. President Xi actually made a trip to their central bank (he has never done that). The fiscal side of Japanification seems to be coming. The monetary side is the question mark. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3tLGlvi Markets today rallied a bit (though they closed off their highs) as Treasury yields calmed down and leveled out. Earnings season is not even 20% complete yet, so all projections are quite premature, but thus far, revenue growth is coming in +0.9% year-over-year with earnings growth of +1.2%. There will be more meaty data to chew on in the next week and the week after that, of course. Republicans nominated Tom Emmer as their new potential Speaker of the House, but it is highly doubtful they have the votes in a full vote of the House to get him approved. A fair question – are many people buying Treasuries now not as a non-recession call (yields higher because there is no recession), but rather as a recession call (one will come and right now we get 5%, so buy now and then during a recession Treasuries rally and yields fall). In other words, is it a trade? And if it is one, is it a good one? Time will tell. Was 5% the top in the 10-year? It is obviously way too early to say. It fell pretty quickly below it yesterday and today closed at 4.81%. But the bond market volatility in 2023 doesn’t allow us to read anything whatsoever into 19 basis points or 30 hours. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3QqYcRa So the market came into today just 300 points above its intra-day low of Friday the 6th at the beginning of this month, having rallied about a thousand points off of that in the six days that followed, but then selling off three days in a row to end last week. Bill Ackman announced this morning that he had covered his short on U.S. Treasuries (another way of saying this is that he ended his bet on rates going higher). Bonds also rallied on the news as the 10-year yield dropped 17 basis points (from +8 to -9). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/46P3YBs Greetings from New York City, where I will be leaving very early Friday morning to head back to California for a week and where I have been in meetings all week with our major money manager partners across every asset class in which we live. I had thought about doing today’s Dividend Cafe as a sort of recap of the week, but I am going to need the plane flight home to better organize 25 pages of notes and more decks than I know what to do with. I am in content overload mode at the moment, which is one of my favorite modes to be in (often times I am in Chinese food overload mode, so “too many charts” about the economy is far healthier than “too much fried rice”). I plan to really clean up my notes and takeaways and allow more organized thoughts to create a deliverable around this week’s findings. Brian Szytel and Kenny Molina are phenomenal Investment Committee partners, and we were all richly blessed by the conversations we enjoyed this week on interest rates, economic projections, housing, credit markets, relative value opportunities, and more. So, for those who want to tag along a bit on the week, stay tuned – more to come. But that does leave me with a Dividend Cafe to write and not a whole lot of margin in which to write it. Luckily for me (and maybe for you??), a robust set of questions has come in that I have been sandbagging, and it seems like a good time to use Dividend Cafe to answer all of your latest and greatest questions. I am quite confident these questions that have come in will reflect things on the minds of many of you, so get ready for some good takes on such subjects as fears about interruption to dividend growth, minimum wage laws, velocity and inflation, dollar strength, China, and more on the Israel/Middle East situation (discussed in last week’s Dividend Cafe). Get ready to jump into the Dividend Cafe … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3Q1Ot2c This is Trevor Cummings playing backup quarterback for one more day. As mentioned, David will be back with you tomorrow with his weekly Dividend Cafe. Today is quite a busy one for David, as he will be attending both the Economic Club of New York for Jerome Powell’s speech and then closes out the evening at the National Review Gala. With that said, we’ve got a handful of data and news to keep us busy for the time being. We will tackle initial jobless claims, the Philadelphia Fed manufacturing survey, existing home sales, Powell’s speech, and Jordan’s persistence. That was a mouthful, now off we go… Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/48YpBB6 This is Trevor Cummings filling in for David Bahnsen. David is in the midst of day three of his annual TBG Money Manager Due Diligence trip. As mentioned, he will be back with you for the weekly Dividend Cafe on Friday. Markets were a bit more active today than yesterday. We also had a rebound in housing starts, another L for Jordan’s ballot push, and Biden seeking a monumental aid package for Israel. And off we go… Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/46UIS4q Today David Bahnsen is on day two of the annual TBG Money Manager Due Diligence trip in New York. This is an exciting time of the year as our investment committee dives deep into all the portfolio particulars and then surfaces with a plethora of content to share with our clients as well as some actionable portfolio items. I believe this is year 18 of this trip and something that I know (1) David greatly enjoys and (2) has a meaningful impact on how we manage capital for our clients. Thank you, David, and we look forward to welcoming you back for the Dividend Cafe on Friday. With that said, I, Trevor Cummings, will take the reigns today and walk you through the latest market happenings. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3ZSi3fd I am writing this week’s Dividend Cafe from my apartment in New York City, very early on Friday morning, hours before I will leave for an all-day symposium I have attended every year since 2009 (besides the COVID-cancelled years, of course). I mention this only because my philosophy of dealing with markets in the aftermath of exogenous shocks and particularly geopolitical events was heavily influenced by the historical realities taught to me at this very symposium over the years. I do not learn anything new in attending any more; I just immensely benefit from the reinforcement. But this week we have had an event so tragic, so reprehensible, so infuriating, and yet also one that requires me to reinforce myself (perhaps redundantly) the principles and best practices prudent investors must hold dear. But I also brought up New York City, because it had a terrorist event of its own back shortly after I entered the business, one which also profoundly impacted me. I have talked a lot in the past about the history of it and lessons learned. The 9/11 moment is, all at once, one of the seminal moments in my younger adult life, the very first shocking moment in my investment career, and an event obviously connected directly to New York City. (You know, come to think of it, I was right here in March of 2020 as well when the COVID matter was becoming an American reality, and wrote about all of that, then, too. There is just a deep association for memorable market moments in my life and career with New York City). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post -https://bahnsen.co/3FkhgKh The headline and Core CPI figures today were largely in line with expectations as the market opened. However, we witnessed a reversal of early morning gains throughout the session, resulting in both stocks and bonds closing lower. Interestingly, Fed futures remained relatively unchanged after the release of these numbers, hovering at approximately two-thirds, suggesting that the Fed is unlikely to make any significant changes in the foreseeable future. Today marks the one-year anniversary of the market lows experienced last year. What’s intriguing, though, are the disparities within the markets that contributed to the S&P 500’s impressive 22% gain over the past year, following a significant downturn in the previous year. Currently, less than half of the market is trading above its 200-day moving averages, indicating that the market’s performance has been far from universally strong. Financials, in particular, have experienced a nearly 20% decline during this recovery, and it’s worth noting that this has been the weakest small-cap return following a market bottom in history. However, there is good news amidst this divergence. The contrast between interest rate-sensitive sectors, such as small caps and financials, and the lack of broad market participation presents numerous opportunities for value investors like ourselves to look forward to. Active management will be crucial in navigating this complex landscape. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3LYNG0J Treasury yields dropped again, and stocks rose again today. The minutes from the Fed meeting last month came out today and said nothing new or unsurprising at all. ExxonMobil agreed to buy Pioneer Resources for $59.5 billion in an all-stock deal that represents the largest oil and gas deal in over two decades. I am not sure that an Israeli ground invasion of Gaza is imminent. Even though I am convinced, Israel will (and should) do whatever it can to eradicate and punish this atrocity, a ground invasion appears to involve so much complexity and challenge that much of the work I have read in the last 24 hours suggests it may require more planning, nuance, and particulars than was initially expected. The IRS says Microsoft owes it $29 billion? They should’ve used TBG Tax! The House Speaker race is going to be very interesting, with a majority of Republicans voting to send up Steve Scalise for a vote, but not potentially enough to get him over the needed line in a whole House vote. More here: Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3S0qSBs Markets today moved higher as bond yields came lower. One can argue that bond yields are dropping in response to comments from Fed governors yesterday (see below) but the more prominent factor is likely a slight flight-to-risk out of the war situation in Gaza. What it has done, though, is exacerbate the stock-bond correlation whereby they were both dropping in September and now are both rallying. Earnings season launched with Pepsi announcing their results before the market opened. Markets liked it. President Biden joined with European leaders in a joint statement taking an unambiguous stance against Hamas and for Israel. He gave a speech this afternoon that conceded there are American fatalities and hostages. Congress and even the White House are not really the challenge here – a rare thing to be able to say in this day and age. The challenge for the President will be, to borrow from my favorite political commentator, Mark Halperin, “the squad, and then Harvard students.” But there also will be a real challenge for the administration to maintain their posture with Iran (it will likely be impossible), and what can be done about American hostages taken by Hamas is not going to be easy either. Add to that the complexity of getting aid for Ukraine and Israel in the next 2-3 weeks, and this is going to be a challenging time at the White House. The death toll appears to be over 1,500 now. The reports all seem to indicate that one of the reasons Israeli intelligence picked up nothing on what Hamas was doing was that there was simply no electronic communication about it at all – none. The Republican mess over the next Speaker of the House is as blurry, evenly divided, and unclear as it was a week ago. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3tpEJXU All attention this weekend immediately moved Saturday morning to the unspeakable attacks on Israel by Hamas, the declaration of war to protect themselves by Israel, and speculation as to what the ramification would be. I assure you ample commentary is provided on those subjects in this edition of The DC Today, An important thing to note today: the stock market was open, but bond markets (and banks) were not. There is obviously action in the bond futures world (indicating yields down and prices up), but with no cash market bond action it is simply a distorted and weird day. It only happens twice every year (Columbus Day being one of them), but it basically never happens following a weekend of such global turmoil. As an earnest believer in price discovery, I feel somewhat limited in terms of thoughts and deeds when all useful information is not actually available. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3LS40QV On August 1 of this year the Dow Jones Industrial Average closed at 35,630. As of press time this morning, just a tad over two months later, it is trading just below 33,000. This is a -7.5% drop in about nine weeks, which we will discuss more in today’s Dividend Cafe. If -7.5% in nine weeks doesn’t seem like that big of a deal, it’s because it isn’t. However, what I didn’t mention is that almost all of that drop has been in the last three weeks (-6% of the -7.5%). The Nasdaq has fared a tad worse with similar timing in the numbers – a peak at the end of July, a slow drip down since, with an accelerated downturn the last few week. The right thing for me to do in this period is probably not write about it. By addressing it I enter the unavoidable territory of contradicting best behavioral practices around market downturns. And yet we exist to offer perspective, point-of-view, commentary, and conviction, and so to not address key market or economic activity would also be problematic. The reality is that a -5% or -7% drop in markets (or more, for that matter) is a par for the course, standard, status quo, always-to-be-expected part of equity investing. I shouldn’t (and won’t today) write as if it is an urgency or source of panic in any investor’s life. The behavioral realities around market volatility should (and will be today) constantly reinforced. And at the same time, there are particulars in this stage of the cycle that I think are worth unpacking. So today’s Dividend Cafe does it all today – it holds in tension the two things I most struggle with on these pages: the macro commentary of current events, and the behavioral wisdom of how not to react to such. Let’s jump in to the Dividend Cafe … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3F8Luji More or less, there is one market movement right now, even if it has three parts. Bond yields and the dollar are in the same direction; stocks are in the opposite direction. Those three in those respective relationships are all part of one story, not three different stories. In a nutshell, I remain convinced that the story has become one of quantitative tightening. The Fed is a seller (sort of) of Treasuries, not a buyer (meaning they are not rolling over matured bonds). Global central banks are buying less to support their own currencies. And that leaves individuals and economic buyers who buy at good yields but not lower yields. On Capitol Hill, the race for the new speaker is setting up to be a real circus. I know, you are shocked. Gasoline is down over -20% in the last three weeks! Mary Daly of the San Francisco Fed said in a speech today that, wait for it, holding rates where they are is also restrictive monetary policy! Hmmmm, you don’t say. Other than that, it was an uneventful day, and the intra-day swing was only -225 points (the chart visually looks more violent) – all in a flat day. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/46j9PPy Following another down day yesterday, we got a little reprieve in markets, with both stocks and bonds posting gains on the day. The biggest economic news on the day was the miss in ADP Payroll numbers, which starkly contrasted with yesterday's big upside surprise in the jobs openings report. More openings but fewer private payrolls could either mean there is a cyclicality or variability around the timing of correlation between the two or could have just been from the number of new job openings TBG just posted this month. Still, either way, the more significant number will be this Friday when nonfarm payroll numbers come out. While yields came off following today's economic data during the trading day, it is notable to see 10-year yields hit 4.88% in overnight trading and 30-year treasuries reach 5%. As a result, US debt interest expense is now just over 14% of tax revenue, which has not been the case since the late 1990s and has historically been a threshold in which fiscal austerity begins to show. Fact notwithstanding, last night, we also saw the ousting of the Speaker of the House, Kevin McCarthy, by his party for the first time in history for getting a bill passed not to cut spending to avoid a government shutdown. I strongly suspect deficits at 7% of GDP during full employment will keep volatility high in Washington as tough decisions must be made. While the Fed says higher rates are here for longer, I remain skeptical, given the tightening financial conditions we have already seen. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3RJ28h3 Markets were hit hard again today, and I do imagine we are getting closer to some short-term capitulation, but you never know. The way the regional banks have been acting lately is noteworthy. This bond rally has not let up and is basically 100% of the current market story. Why have oil prices gone up so much even as gas prices have not really gone up (and have, in fact, come down)? Refinery margins have collapsed, period. There is more than one input to retail gas prices at the pump. Cleveland Fed President, Loretta Mester, is the latest Fed head to say she believes another rate hike is needed. But she also said part of that would depend on … “the UAW strike” ?????? Yep. She is not a voting member of the FOMC, by the way. You’ve heard all the talk about record levels of credit card debt. It is currently 3.7% of nominal GDP. It was 3.9% of nominal GDP in late 2019. It was 4.2% in 2010 after the financial crisis. Sorry, but the numerator is not the only number in a fraction. Market rates are tightening without the Fed. The idea that the Fed would pour gasoline on top of this is surreal to me. But so is modern central banking. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3F3CrAp Ask David “A couple weeks ago in your ‘What to Look for in an Advisor‘ Dividend Cafe, you pointed out that most advisors outsource portfolio management and asset allocation, and you expressed your disagreement with that trend. I agree with you, but I was wondering if you could unpack the specific reasons for why you disagree with outsourcing the investment process and why there is merit in direct portfolio management by advisors.” ~ Nathan I really don’t feel strongly that most advisors should be managing capital directly, and in fact, for a significant amount of advisors I have met, considering their work ethic and intellectual capacity, I am glad they don’t. But I do feel that TBG should because we consider it our calling, part of our authentic skill set, and a huge part of our value proposition. What I believe is more universal, though, is that all advisors should have some baseline competence in capital markets, even if they do not practice security selection or portfolio management directly. And that they should be accountable for who they outsource to and not use third-party partners as mitigation of their own decision-making. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4598Q3a I hope (and assume) that long-time and regular readers of Dividend Café know that I am a sucker for history.  I think this is true of all history, going back thousands of years, covering many eras, geographies, nations, people, and events, but it is especially true of American history.  20th-century American history is not very old, but wow, is there ever a lot of material there. What happened in 1906 or 1915 or 1933 that matters to us today is “history” now – but when it was happening, it was “future history.”  It was also well before I was born.  There are, though, events in my lifetime, even my adult lifetime, that represent future history, much like the events of the early 20th century I allude to above.  Knowing that I lived through these more recent events, that I have my own particular context to add, that they were both personal and all at once cultural – it all makes my interest in “modern events” of my adult lifetime that will be “future-historical” intense and profound.  If I write too often or too obsessively about such things, forgive me, but it isn’t going to stop.  I believe living through history being made is almost as fun as studying the history that was long ago made.  And all of it I count one of the great blessings of this life. It deeply impacted my life and allows me to obnoxiously wax and wane nostalgically, but it also deeply impacts your portfolio, even today.  For much of the last 25 years you might argue this event had the most significant market impact, period.  I am not being hyperbolic. And that event is the subject of this week’s Dividend Café.  Let’s jump into a little modern history and a 25th anniversary you will benefit from understanding. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/468UHnU This morning, we had a slew of economic data that moved markets modestly to the upside in stocks and bonds in a fairly positive trading day throughout the session. Q2 GDP revision was largely unchanged, jobless claims were better than expected, and Core PCE revision was also unchanged. Yields moved lower across the curve following the releases, which put some wind in the sails for most risk assets today. The inverted yield curve is slowly but surely becoming less so as longer rates rise, and is now half of what it was a month ago at 47 bps on 2/10’s from over 100 bps. With short rates anchored closer to Fed Funds, why are longer rates moving higher? A combination of the Fed’s QT, Japan’s exit of Yield Curve control, US budget deficits and less Treasury demand from China on falling exports. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3rtSIve The market opened up a bit and got up nearly -150 points before dropping nearly -300 points (an intra-day swing of over -400 points) before rallying back a few hundred points and closing down just -68 points. Who knows what the next two trading days hold but right now the only asset class on my screen up on the month is the DOLLAR. Bonds, Gold, Europe, Emerging, TIPS, Small Cap, Tech. Utilities – you name it, all down. The dollar, up nicely (DXY). At this time we expect the government shutdown will kick in on October 1 (this Sunday). Jamie Dimon, CEO of JP Morgan, said yesterday that if rates were to get to 7% you would see a deflationary asset unwind and a lot of asset bubbles burst. The media ran with the comment as if he were predicting that rates would go to 7%, which of course, he was not. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/45cmDG2 Markets were hit again today (five out of six days to the downside) as the Biden administration announced a major antitrust lawsuit against Amazon, and general market jitters continued (despite a flat day in bond yields). Why is the U.S. dollar up so much when things are supposed to be so bad in the U.S.? A good place to start might be the fact that yields are high and growth has been decent (and compared to other places, quite decent). Currency is a relative game, always and forever. More dollar bears have lost their faces and reputations, failing to understand that basic point more than anything else. To be totally honest (and believe it or not, I am serious right now), I cannot remember if “net neutrality” rules were supposed to ruin the internet and the world as we know it or if “rescinding net neutrality rules” was supposed to ruin the internet and the world as we know it. What I do know, or at least I think I know, is that we used to have them (I think), and then they were rescinded in the Trump administration (I think), and it doesn’t seem like a lot of horrible things happened in having them or not having them. And then this morning, I see that with the Biden Administration now having a majority of votes at the Federal Communications Commission (FCC), the intent is underway to bring back net neutrality rules, which is either a good thing or a bad thing. I would have more to say if I could keep it all straight. Another Fed governor is talking about a further rate hike, and futures respond by INCREASING the odds of NO further hike. Follow the fed funds futures, not the rush to a microphone. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/48qpYnM Status of the shutdown – Speaker McCarthy is trying to split enough of the far “right” (I hate that term applied here) to avoid a shutdown. He’s currently attempting to package several appropriations bills together and send them to the House for a vote. The votes appear to be questionable as to whether or not they will be there, and this does not avoid a shutdown. These bills, IF passed in the House, have no chance of passing in the Senate. There appear to be enough votes in the House against any form of continuing resolution whatsoever that keeping the government open past this weekend is highly unlikely. How it could play out: Option 1: The House passes a bill this week, the Senate amends it (to put it mildly), the House then rejects that, the government shuts down, a deal happens to end that, and Speaker McCarthy ends up removed from his post; OR, Option 2: No bill is passed out of the House, the Senate passes a bill, a deal is cut between House moderates and Democrats, and a shutdown is averted (with McCarthy likely removed shortly thereafter) I think Speaker McCarthy has moves to help avert a shutdown or, more likely, end one after it has started (see above). In both cases, I think he greatly improves his chance of being removed as Speaker. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3EPBStR Actually, the inspiration for this week’s Dividend Cafe is not “why markets were down this week or this month” – but rather something more substantial and thematic. There are some “whys” that are more important than “whats” right now and big picture, I felt certain macroeconomic themes we are watching were worth a whole Dividend Cafe. That verbiage makes it sound kind of boring, but really, I am just under-selling the excitement of what lies ahead for those who jump into this Dividend Cafe … You will not want to miss the drama and fun. Off we go Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/48s8IyG The violence was most felt in the bond market as yields rallied dramatically at the long end of the curve. As yields did not move much (or at all) in the short end of the curve, you saw a fair amount of inversion eroded. It is all a rate story now – as stocks are following bonds, not vice versa. QT is tightening, and high rates are tightening (with the bond market doing more of it for them). Something has to break eventually. The Bank of England also left its interest rate alone, pausing after 14 consecutive increases. The House GOP was four votes short of having the votes needed to advance their compromise funding bill. Some tweaks are in motion to allow for a new vote next week. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/44YX2Am The Fed basically was explicit in tying their “we need to stay restrictive” posture to the resilient economy (which, unfortunately to them, has been “expanding at a solid pace”). The market was up +200 points before the announcement and press conference, it dropped -100, rallied back +100, then dropped -150 (so still up over +50 points) before closing down -77 points (but with the Nasdaq down -1.53%). Bond yields at first barely moved but then the short end moved up five basis points and the long end flattish. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3LvZG9P Oil hit a ten-month high this morning. Bonds continue selling off as yields continue rallying. Japanese ownership of Treasuries increased by $7 billion on the month, while Chinese holdings decreased by $13 billion. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/44YIrFd Nothing like the Monday DCT with a great deal of stuff for you today about housing, policy, the economy, markets, and more! Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3r79obX Thursday afternoon I received an inquiry through the “questions” portal whereby a reader asked “how one is supposed to go about selecting a financial advisor” – attaching to the question the appropriate sub-questions around trust, qualifications, needs, and services. I know I have addressed this topic over the years but I think it has been at least five years if not longer, and it is a topic that you may be shocked to hear I have many opinions on. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3EGfov8 The European Central Bank (ECB) raised their rate to 4%, and bond yields FELL (go figure) – mostly because markets price in today what they believe about the future. Job hirings have slowed, but job firings have too. We live in interesting times. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/44MsGRn Today was a heavily anticipated news day for markets, with August CPI coming largely in line with expectations at .6% on headline inflation for the month and 3.7% year-over-year. As we had expected, higher energy prices moved that headline number, with gasoline specifically up 10.5%, which accounted for almost half of the total move higher in CPI. The Fed pays more attention to core CPI (ex food and energy), which was up .3% on the month and stands now at 4.3% y/y. All said, we got about what we had expected today: decreasing shelter costs offset a rise in energy prices to some degree, and Fed futures didn’t budge much. Yields were up a few basis points across most of the curve, and stocks held in. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3PExy76 Mexico has the strongest currency in the world this year. Its stock market is on fire (near the best in the world this year), It has overtaken China as the biggest supplier of goods to the United States (did you know that?). Direct investment from foreign countries into Mexico is up +40% in 2023 alone. Do you see why I refer to “near-shoring” as much as “on-shoring“? The diminishment of supply chain dependency on China in the United States is happening. But it may prove to be much more of a Mexico story than a Rust Belt story. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4680dH4 The first thing I will say before delving into this September 11 edition of DC Today as I sit here in New York City is that I honor those who were killed that day, and I will never, ever forget the atrocity that it was. I have written about this day in a very special Dividend Cafe before (I encourage you to re-read it), but regardless, whether it has been 22 years or when it is one day, 52 years, I will never, ever forget. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3PxghfG Today, I would like to use the last five years to make some broader points about the realities of investing. Evergreen realities are, well, permanent. Yet we find within the last five years some serious bold-faced reiteration of these realities to which I refer (and as you will soon see, there actually is a particular single reality most on my radar this week). So, in this week’s Dividend Cafe, we will look at the last five years and extract from this little short-term window some big-picture lessons that are sure to matter for more than just the last five years. Consider it part “History” (albeit recent history) and part “Investing 101” … Jump on into the Dividend Cafe! Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/466evrH Markets acted a little more 2022-ish today, with defensives all up and Technology way down. Reports of a Chinese iPhone ban from government departments took a toll, and the U.S. dollar may be headed to its eighth consecutive weekly increase (longest streak since 2005 if it holds). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3LcqThy Oil is the story of markets yet again, with Brent now passing $90 and WTI Crude passing $87. The idea that oil was between $65 and $75 for months and we did nothing to help re-fill the Strategic Petroleum Reserve is just surreal to me. These prices at now 10-month highs are sure to exacerbate the delta between core and headline inflation in the months ahead. Just 37% of companies in the S&P 500 were above their 50-day moving average this morning as internal momentum continues to dissipate. China and Japan are not happy about the dollar’s recent rise and are pledging decisive action to arrest their own currency’s drop relative to the U.S. dollar. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3r2cE8d This is the kind of DC Today I love love love writing – where I really get to absorb a lot of material and bring pen to paper (or finger to keys) in all categories. I always loved this format the most, and being able to do this long-form version once a week is a true joy for me. Doing it every single day as I did for quite some time (though today’s is fuller than even the old format normally was) just became way too much, and I do hope the new program (long-form once a week, shorter form with daily podcast/video three times a week, Dividend Cafe on Friday) is working for everyone. I certainly solicit feedback about that. But in the meantime, enjoy this first post-Labor Day “fall and football are here” version of the DC Today. Note the deep dive into Public Policy and Housing (with all categories covered). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/487nJFU So you may have seen in yesterday’s DC Today that my plans for an out-of-country few days with my wife this week, unplugged from work and electronics, was foiled yet again, this time by Hurricane Franklin. We have a running list over the last nearly 25 years of that which has prevented such an “unplugging,” and truth-be-told, we just are what we are. It seems to be a bigger focus to others that we “relax” and “take it easy” than it is to us. We accept this is a full-time job. But yes, it was not the week we had thought was coming. This week’s Dividend Cafe is the Dividend Cafe I thought was coming, though. A long list of really thoughtful questions is worked through covering such topics as the Fed, private credit, growth investing, the U.S. dollar, Saudi Arabia, the 2024 election, municipal bonds, and so much more. It is a lot of fun and sure to offer something for everyone. So jump on in to the Dividend Cafe. There may be a hurricane in Bermuda, but there is clarity, perspective and answers, in this place where we belong. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/47WCxH3 I arrived back in California late last evening with Hurricane Franklin having cancelled our previously mentioned trip out of the country. Joleen and I replaced it with a couple days away at our place in the Hamptons, not exactly unplugged, but not exactly fully working. Maybe the notion of a true work-free unplugged trip will happen some day, but I have to say, so far, a pretty comical list of sincere attempts to see it happen have been tried and failed. I am very grateful to Brian Szytel for the last three days of DC Todays and I am back in the California office today and happy to be back with you. We are up to an 89% chance in the futures market of a rate hike at the next Fed meeting in late September, and a 54% chance of no hike at the meeting after that in November. The five-year inflation breakeven priced in the TIPS market is 2.16%. Atlanta Fed President, Raphael Bostic, cautioned against the Fed over-tightening and said current Fed policy was “appropriately restrictive.” Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3sAjvX7 Futures looked like we were going to give a little back from the move higher the past three days until about 830AM EST when we got a slew of softer than expected economic data, and since bad news is the new good for markets, moved us back into positive territory on the day. Q2 GDP was revised a little lower, ADP Payroll came in weaker than expected, and the part that is actually good news (meaning not a number showing our economy quite as fast as we thought and less people are finding jobs), Core PCE came in lower than expected for Q2. After yesterdays softer job openings and then today, fed fund futures are slowly tilting back towards peak rates but we are still at 55% pause and 45% hike for Nov/Dec. A good amount of numbers below for you, and a better amount of walking through it all in the video podcast link. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/3L3fHUy The third up day in a row in markets today in a broad-based rally that closed at the high. The S&P 500 is still down 2% for the month, but with three trading days left in the last week of summer, we’ll see if we get a little more back before Labor Day weekend. Yields were lower across the entire curve today, with treasuries rallying following a much lower-than-expected July JOLTS new jobs report. Following yesterday’s underwhelming market response to stimulus, China is considering having its major banks decrease mortgage rates on about 38 trillion yuan ($5T) worth of existing loans which moved markets there up 2% on the day. Whether those efforts will prove effective will have to be seen, but I do think it’s putting a bid in global energy prices, which were up again today. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com