The DC Today - Thursday, July 13, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 13 July 2023
⏱️ 9 minutes
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Summary
Today's Post - https://bahnsen.co/3Ddn2fV
Earnings season is officially underway (companies like Delta and Pepsi released today, and a slew of big banks release tomorrow).
The annual inflation rate came in yesterday at the lowest level in more than two years.
The dollar is at its lowest level (against a global basket of different currencies since April of last year.
Senator Warren is officially now yelling for Chairman Powell and the Fed to stop hiking interest rates (I have been waiting for a populist backlash; I just didn’t know if it would be from the right or the left first; now we know).
China exports fell -12.4% last month (year-over-year), with 11 months in a row of declining exports to the U.S. Hmmmmm …
Jobless claims came in at 237,000, heading south from the averages north of 250k we had been seeing!
Producer Prices are up +0.1% year-over-year. +0.1%. Zero percent inflation in wholesale prices. Now, let’s be real honest about something here. This is mostly a story of what we call “trading base effects.” Last year at this time, the YOY PPI was +11%, so that number was so silly that a year later, being up +0% is less profound than it may seem. But of course, the same was true before (only on the other side of the math), where a high YOY number was a by-product of the prior year’s price collapse. And we are supposed to do calculations off of these distortions?
But there is genuine price deflation in the producer prices (year-over-year) of processed and unprocessed core goods. Commodity prices are down. Supply chains have normalized. Wholesale prices have moderated entirely and are very likely heading lower based on manufacturing data. TIP spreads are showing implied inflation expectations of 1.95% for the next two years. Over five years, 2.19%.
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. |
| 0:15.5 | Well, hello and welcome to the Thursday edition of DC Today, another up day in markets and another day of some travel adventure for me. |
| 0:25.3 | I'm actually in my hotel room in Washington, D.C. I'm going to be leaving here in a moment to go give a speech tonight. |
| 0:31.9 | And yet I wanted to give you the breakdown of today's action. |
| 0:36.1 | And then tomorrow I'm flying to Memphis, Tennessee, where I'm |
| 0:40.0 | speaking, and then I get to go back to New York. So a lot of travel back and forth stuff for me right |
| 0:46.1 | now. And yet, in the meantime, markets continue to do what they do, which is never sleep. And the |
| 0:52.6 | markets have been on quite a bit of a tear. And today's action was again, |
| 0:58.4 | largely related to the white of the eyes of inflation, the producer price index. Yesterday, |
| 1:08.0 | Brian talked to you about what came out in the Consumer Price Index on Wednesday. |
| 1:13.1 | The producer price index came out today, and the year over a year headline inflation rate for wholesale prices was 0.1%. |
| 1:22.6 | Basically flat, no inflation. |
| 1:25.6 | Core goods at a wholesale level, both processed and unprocessed core goods, |
| 1:31.4 | have deflation over the last year, negative price movement. The market response today was primarily |
| 1:42.7 | felt in the bond market. You had yields dropped substantially, |
| 1:48.2 | big rally in the bond market. The tenure, which you recall had gotten above 4% on the employment |
| 1:54.8 | report last week from ADP is now back to 3.76%. So a really meaningful rally in bonds over the last several days. |
| 2:07.1 | I'm going to go through a couple of different news bits, |
| 2:09.2 | and then I'll give you the kind of market recap from today. |
| 2:12.8 | Earning season is officially started. |
| 2:14.6 | That should take over one of the bigger movement of markets in the |
| 2:19.1 | next three weeks. You had Delta Airlines and PepsiCo both released today, but now most of the |
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