The DC Today - Thursday, August 10, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 10 August 2023
⏱️ 10 minutes
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Summary
Today's Post - https://bahnsen.co/454dv7h
A tad to my surprise CPI came in even lower than expected (+3.2% vs. consensus estimates of +3.3%). The core rate was +4.7% as anticipated. On the month, prices ex-food, ex-energy and ex-the B.S. shelter figure were down -0.1%. Within that +3.2% the shelter component was up +7.8%, as the model shows OER (owner’s equivalent rent) up +7.7% on the year and Rentals of primary residence up +8%. Uh huh.
Core goods prices are up +0.8% on the year. +0.8%. The annualized total CPI from the last three months even with the bad shelter data is +1.9%.
Shelter is overstating headline inflation by 30% and core inflation by 40% (and I actually think it is mor than that). Month-to-month data is moved by base effects of the year prior and energy prices. As for energy prices, it looks like much of the oil and gas surge was late July and not as captured in this month’s data as I would have expected.
Two years ago this exact week the S&P was at 4,450 or so. Fast forward to today, the S&P is at 4,450 or so. But the 10-year yield was 1.32% and is now 4.02%. Would anyone guess that a near tripling of the bond yield would leave the market flat? Now, the Nasdaq is down -8.3% over the last two years, but still, you get the idea. Sometimes facts make no sense unless you have the gift of hindsight. Be careful about applying an investment conclusion to your forward-looking premises. As I always say, it will be hard enough for your premises to come true. It will be even harder for the conclusions that come from your premises to prove accurate.
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. |
| 0:14.7 | Well, hello and welcome to the Thursday edition of DC Today. I actually am recording from my apartment. |
| 0:22.2 | I, New York City was just hit with quite a thunderstorm. |
| 0:28.0 | And so rather than go back to the office after I'd been down at Fox Studios recording |
| 0:32.6 | on set with Larry Cutlow after the market closed, rather than go recording recording our studio at the office, I came straight to the apartment, |
| 0:39.9 | reasonably soaking wet. |
| 0:42.2 | And that is just a byproduct of the dedication I have to you to come here to record this. |
| 0:48.3 | So let's get into it. |
| 0:49.5 | It was CPI Day. |
| 0:51.2 | And there's a few things I want to be able to go through. |
| 0:54.7 | All right. |
| 0:55.3 | Let me pull something closer here. |
| 0:58.2 | Okay. |
| 0:58.9 | The market was up 450 points today at one point, the Dow, and it closed up only 50. |
| 1:05.7 | So it gave up most of the lead. |
| 1:08.3 | On the day you ended up with the Dow up 15 basis points, 50 points, like I said, |
| 1:14.7 | the S&P just up, you know, only a few basis points, practically flat, NASDAQ up, a small amount |
| 1:22.1 | as well. All three had been up quite a bit. All three gave up their leads. And what had happened |
| 1:27.2 | was the bond market |
| 1:28.1 | was all pretty much up, not a lot, but yields mostly across the curve had dropped one to two |
| 1:35.2 | basis points in the aftermath of CPI. And so as bonds were going higher, equities were rounding quite a bit. |
| 1:42.1 | And then at some point in the middle of the day, the bond yield started turning straight up. |
... |
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