The DC Today - Thursday, February 16, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 16 February 2023
⏱️ 7 minutes
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Summary
ASK DAVID “Do you buy this stuff from Larry Lindsey and other economists like him that are worried that financial conditions are good enough that the Fed needs to assume their tightening is ‘not tight enough’? The reasoning seems to be that the Fed should take a message from financial conditions that they need to be tighter. Should the Fed be responding to financial conditions?”
~ L.K.
I disagree with Larry Lindsey emphatically on this. It’s inherently contradictory – if the Fed were to try to let financial conditions drive monetary policy, then financial conditions would price (or try to price) how and what the Fed would be reacting to, giving the Fed a constantly moving target. The Fed influences yields and multiples and spreads; to then be influenced by yields, multiples, and spreads is perpetually circular and incoherent.
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. |
| 0:14.2 | Well, hello and welcome to the D.C. today. It is Thursday, and we are in our last DC today of the week. |
| 0:21.0 | We'll have a dividend cafe for you tomorrow on the U.S. energy sector, |
| 0:26.1 | and our thoughts on investing in that space right now |
| 0:28.9 | and a whole lot of ramifications around energy, geopolitics, the economy, and so forth. |
| 0:36.7 | As for today, kind of of bizarre day in the markets. |
| 0:40.0 | I'm going to do this quickly. |
| 0:42.4 | The Dow ended up down 431 points, but it was down at the beginning of the day, you |
| 0:50.4 | know, 300 and something points like that, rallied all the way back, came to where it was down |
| 0:56.6 | less than 100. |
| 0:58.0 | Then in the final, let's see here, let's call it an hour, final hour of the day fell again. |
| 1:05.9 | So you had kind of a drop, then a rally, then a drop. |
| 1:08.8 | The Dow down 1.2%, the S&P, 1.4%, the NASDAQ, 1.8%. The tenure was only up |
| 1:16.6 | five basis points in the yield. The best performing sector today was consumer staples, and it was down |
| 1:24.6 | 0.79%. So you had one of those days where the breadth of the drop was |
| 1:30.5 | significant enough that all 11 sectors in the S&P were down. Consumer Staples was the best or |
| 1:39.8 | down the least. Utilities after that, real estate after that, health care after that. So there's your four most defensive sectors and they were the best performing yet still negative sectors in the market. |
| 1:50.0 | The worst was consumer discretionary, which was down over 2%, about 2.2%. |
| 1:57.0 | So that was the state of affairs in the stock market and bond market today. |
| 2:01.6 | Oil was pretty flatish down a little bit, not much. |
| 2:04.6 | So what was going on in the market today? |
| 2:06.6 | Well, the producer price index rose more than expected in January. |
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