Interest Rates and the Next Ten Years
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 3 November 2023
⏱️ 17 minutes
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Summary
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
Transcript
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| 0:00.0 | Welcome to the Dividing Cafe weekly market commentary focused on dividends in your portfolio |
| 0:06.5 | and dividends in your understanding of economic life. |
| 0:12.5 | Hello and welcome to another week in the Dividendon Cafe. |
| 0:16.3 | What a week it has been, very different tale from last week. |
| 0:20.5 | I'm sitting here in New York City |
| 0:21.8 | recording middle of the day on Friday. So the market's not closed, but we're up quite a bit Friday. |
| 0:26.9 | And we've been up every day this week. In fact, up now at this point, 11 or 1,200 points from where |
| 0:32.3 | we were just a week ago. So you've had a really significant rally. And it doesn't really make a lot of |
| 0:36.9 | sense to say, |
| 0:42.1 | well, it's because of the weaker unemployment number we had this morning when most of the rally took place before this morning. And it doesn't really make sense to say, oh, it's because |
| 0:45.9 | Chairman Powell didn't sound all that hawkish on Wednesday because a lot of the rally had |
| 0:51.0 | taken place before then as well. Basically, with a variety of circumstances |
| 0:57.0 | throughout the week, the jobs number, the Fed's press conference, the different news events |
| 1:01.9 | and earnings realities that came to fruition throughout the week, the bottom line is the bond yields |
| 1:07.2 | dropped. And this is kind of the theme I want to have today in the Dividing Cafe |
| 1:12.5 | is to explain something about the long bond and tie it in to the meetings we recently have |
| 1:17.6 | with a lot of our money manager partners here in New York City a couple weeks ago. |
| 1:22.3 | If you look back to the market in September, you basically have now had a market turning down about |
| 1:30.3 | a thousand points as bond yields went up about 30 or 40 basis points. Then a market very |
| 1:35.6 | quickly going up about a thousand points as bond yields went down 30 or 40 basis points. Then over |
| 1:42.0 | about a two-week period, a market going down 12 or 1,300 points as bond yields |
| 1:47.7 | went all the way back up to 5%. And then now a market that is up 11, 1,200 points as bond yields have |
... |
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