The DC Today - Thursday, December 7, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 7 December 2023
⏱️ 8 minutes
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Summary
Today's Post - https://bahnsen.co/4abzegh
The market opened up a handful of points this morning and slowly built on gains for most of the day. After a big move lower across the curve in yields this week we took a bit of a breather today with a flat 10YR up two basis points at 4.14%. Stay tuned for a three handle on 10’s.
We are starting to see this market rally broaden out with the equal weight version of the SP500 breaking away from the market cap weighted index. This is showing the average stock starting to participate more in this rally outside of technology names, which I find constructive. Both large cap and regional banks by the way are back to where they were pre SVB failure earlier in the year. Part as a normalization of stress in the financials and part for a 2024 line up that could favor the banks if we get better net interest margins as the yield curve potentially normalizes with the short end moving down. This is something we have seen before; late cycle rally in financials as the Fed pauses and ultimately cuts the following year (95’/96′ comes to mind).
Monthly financial obligations for consumers like auto payments and home payments, as a percentage of household cash, are on the rise and now at 16%. Interesting however that even with such a rise in rates these are still actually below pre-pandemic levels which was closer to 18%. Higher rates just haven’t bit as hard as years past with such a prolonged low rate refinancing period the years preceding it.
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. |
| 0:14.1 | Hello, welcome to D.C. today. It's good to be with you here this Thursday in our Newport Beach studio. |
| 0:20.6 | And honestly, kind of a quiet day to be with you here this Thursday in our Newport Beach studio. And honestly, quite a kind of a quiet day to be with you in markets today. |
| 0:25.6 | The Dow ended up closing up 62 points. |
| 0:27.6 | It opened about the same, maybe 40 points, and just sort of melted a little higher throughout the day. |
| 0:32.6 | And then we kind of closed off the highs into the close. |
| 0:36.6 | Also quiet day in Vaughnland as well. We had a 10-year yield at 414. |
| 0:41.3 | It was up a couple basis points. That's up to a massive rally in bond prices the last couple of |
| 0:47.4 | weeks. So we just sort of took a little breather there, and that's okay here on Thursday. |
| 0:52.8 | We, at 414, where we've come, I mean, 5% on 10s down to 414, |
| 0:59.1 | I do think we'll see a three-handle yield here sometime soon. So stay tuned for that. It's hard to say |
| 1:04.8 | exactly when, but that seems to be the direction. Oil, you know, has also pulled back. We closed below |
| 1:10.4 | 70 today, just high 69 in change on the price of oil, you know, per barrel. So a little lackluster there as well. Somewhat notable in markets. We've seen, you know, this year, I mean, obviously 2022 is a sort of really down year and particularly in technology on the NASDAQ and a lot |
| 1:28.7 | of the technology names. |
| 1:29.9 | And then in 23, big recovery for those names. |
| 1:32.9 | But the rest of the market was a little late to the party until November. |
| 1:37.0 | And so in November, you really saw a broadening out of some of that rally into some of the other |
| 1:42.4 | sectors in the market. |
| 1:43.3 | And the average stock is now outperforming some of those, some of those tech names. |
| 1:48.4 | And I actually think it's constructive. |
| 1:50.7 | It's what you want to see. |
| 1:51.8 | And it's a more normal kind of market environment as we head into 2024. |
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