In Theory but not in Practice
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 10 May 2024
⏱️ 18 minutes
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Summary
Today's Post - https://bahnsen.co/4afqiVW
As I finish up this writing Friday morning the Dow is tracking for its eight consecutive day in positive territory (I have little doubt that my mere typing of that sentence likely jinxed it). The market reversal from April into May can be credited to a combination of:
Renewed acknowledgment that regardless of when the Fed begins cutting rates they have made it reasonably clear they are done hiking rates, and
Marginally improved financial markets liquidity in the present tense and with a vision to the future around the tapering of quantitative tightening, and
A good fundamental backdrop for corporate profits with another earnings season in the books reflective of enduring margins, reasonable forward guidance, and revenue growth in line with expectations
It is a bad time to be a market timer. But I don’t think anyone can even time when it is a good time to be a market timer, so maybe I am just repeating myself over and over. Anyways, we know what time it is at The Bahnsen Group …
… and it is time to jump into the Dividend Cafe.
Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:13.0 | Well, hello and welcome to this week's Dividend Cafe. I'm glad to be back here in the studio in our New York office and prepared to go through a few different things with you today. |
| 0:24.8 | It is actually, as I'm sitting here recording, it appears we're on track for our eighth day in a row of positive movement in the Dow. |
| 0:35.7 | Now, you know, we still have a few hours to go Friday, so I'm quite confident |
| 0:39.1 | that I have jinxed it by even saying that, but there is at the very least been already seven |
| 0:44.4 | days in a row. And so many are asking, what has caused this kind of reversal of sentiment as if, |
| 0:51.5 | you know, two weeks of market action versus what had been maybe three |
| 0:55.9 | weeks of market action before that qualifies as a reversal. I just loathe this interest in the |
| 1:03.8 | short-termism of the moment, but nevertheless, I think it's fine for the idle curiosity of the fact that there was, |
| 1:12.2 | you know, |
| 1:12.5 | a roughly 4 to 5% downward pressure on markets in the weeks of April. |
| 1:17.0 | And there's been a roughly 3 to 4% upward pressure on markets here since we came into May. |
| 1:22.9 | And I will tell you that I think there's three things at play. |
| 1:26.7 | One, I mean, the timing is just almost too coincident at the Fed's meeting whereby they did not raise rates or cut rates as expected, but nevertheless kind of maintain the posture that rate hikes are off the table that they that they see the |
| 1:47.6 | present level that you know we're getting pretty close to having been at this fed funds rate this |
| 1:52.8 | July which is only a couple months away now it will have been a whole year that this represents |
| 1:58.9 | the peak of the cycle for for monetary. But I would add that there's |
| 2:04.5 | also been, and someone had asked about this a week ago, and I'm answering it a little more fully now, |
| 2:10.1 | marginally improved liquidity in financial markets as a result of the fed's expressed vision to taper their quantitative |
| 2:19.4 | tightening. And I think that that enhancement of liquidity in the marketplace, |
| 2:24.3 | either as a present tense condition or something that gets priced in out of forward guidance, |
| 2:30.6 | has been a factor in a stronger market sentiment, stronger market optimism. |
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