The DC Today -Thursday April 20, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 20 April 2023
⏱️ 12 minutes
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Summary
Today's Post - https://bahnsen.co/3mP5Ad0
The talk is warming up for the debt ceiling debate to become a major market story for a time. As I was writing months ago, there is no leverage for the Republican House if they don’t first pass their own debt ceiling bill (essentially, a bill they actually pass with 218 or more votes that does raise the debt ceiling but gives House Republicans what they want by way of spending cuts). It is what John Boehner first did in 2011 that then forced the Obama administration to have to take a stance against it, and then ultimately pushed that stand-off to the point of the “sequester” where hundreds of billions of dollars came out of the deficit. In this case, I (a) Do not know if Speaker McCarthy will get his 218 votes, (b) Do know that the Biden administration will oppose whatever that is, and (c) Do not know what the twists and turns will be when they find themselves at their version of a “Boehner-Obama” stand-off. I only know this: Without “A” – there is no “B” or “C.” So we shall see if the House GOP can pass a bill and then take it from there. A debt ceiling lift that comes with the spending cuts they want does force the White House into a tougher political play (they can’t see the Republicans are forcing the government to default if the House has actually passed a bill to not do so). But these things have a way of moving and shaking quite a bit before we get to the end, and I can promise you media coverage of it all is going to be … unhelpful.
Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com
Transcript
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| 0:00.0 | Welcome to the DC Today, your daily market synopsis of the Dividing Cafe, brought to you every Monday through Thursday to bring you up-to-date information and perspective on financial markets. |
| 0:14.9 | Hello and welcome to DC Today. My name is Brian Saitel. Today is Thursday, April 20th. And down day in markets, |
| 0:24.6 | futures were down last night a little bit too, but not anything real significant. |
| 0:28.6 | But we opened down about 150 points on the day. We kind of traded back up, not quite to fair value, but close close to it and then sold off before the close |
| 0:37.9 | then down something like 109 points on the day the rates today interest rates were down a little |
| 0:46.5 | bit across the curve the curve actually steeped a tiny bit but the 10 year closed down six |
| 0:52.1 | bases points on the day something like 3.54%. |
| 0:55.1 | So a little rally in bonds, a little sell-off in stocks. |
| 1:01.9 | We talked about this a little bit, but the kind of collapse of equity volume has been pretty significant. |
| 1:08.5 | About a month ago in March, we had a VIX at something like 35. |
| 1:13.6 | And actually, I take it back. That was going back to October. |
| 1:17.6 | October, I would say VIX was close to 35, something like that. |
| 1:21.6 | We kind of came down about 10 points. We were 25, about a month ago. |
| 1:25.6 | And then today, while it was up, volatility was up today |
| 1:28.9 | because of sort of a down market, |
| 1:32.2 | we're down to 17, 16, 17, something like that. |
| 1:35.3 | So you're just sort of seeing this kind of erosion |
| 1:37.5 | in volatility. |
| 1:38.7 | And I'll talk about this a little more, |
| 1:40.0 | but I think the reason is just the feeling of certainty |
| 1:43.7 | around a terminal fed funds rate, call it five, five and a quarter, something close to where we are now. |
| 1:50.0 | And so I think equities are feeling a little bit better in that regard. |
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