The DC Today - Thursday, July 6, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 6 July 2023
⏱️ 11 minutes
🧾️ Download transcript
Summary
Today's Post - https://bahnsen.co/3NJs88A
One of my least favorite things I see analysts do on Wall Street is take various historical incidents and attempt to extract likely future market behavior from it. “7 out of the last 9 times a team from California won the World Series, the market was up over the next 120 days” (or something like that – I made that one up to make a point; actually, that example there would be significantly more logical than some of the nonsense I routinely see).
This morning I read a report that said “nine of the last nine times the real Fed Funds rate was rising, the S&P 500 was up.” Okay, fair enough. Not super helpful predictively, though, since one only knows what the period of time the real Fed Funds rate is rising in hindsight (from a start to an end), and periods within it can be quite negative (see: 2022). But then this report went on to say: “in the 12 months following a period of a rising fed funds rate the market was up double digits four of the nine times and down in the remaining five.”
Crystal clear. Now who won the World Series last year?
The ADP jobs number came out showing explosive June private sector job creation (+497k, double expectations). Leisure and Hospitality was nearly half of that, so it does seem a bit lumpy. Of course, we also know weekly initial jobless claims have been rising, so there is a bit of a mixed bag in the labor data with the skew still being to the positive side. We shall see what the BLS report generates for June tomorrow. Bond yields went up and stock futures went down after the ADP report.
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. |
| 0:14.6 | Hello and welcome to the Thursday edition of the DC Today. It feels like I've been away from DC today for a while just because |
| 0:23.4 | Brian doing it yesterday and the 4th of July stuff before that. And now here we are. I'm in the New York |
| 0:32.4 | studio. We have a really special dividend cafe tomorrow going through all the questions we've been behind |
| 0:38.2 | on different questions you guys have sent in. |
| 0:40.9 | It's not too late tonight. |
| 0:42.8 | I'll still finish more of that up tomorrow morning. |
| 0:45.5 | So if there's stuff you want to address in this week's dividend cafe, feel free to send us |
| 0:49.4 | questions to questions at the bonson group.com. |
| 0:52.9 | In the meantime, the market today was down 366 points on the Dow. |
| 0:58.5 | It's basically about 1%. S&P was down on a percentage basis, close to the same. |
| 1:04.0 | I think the S&P was 82 basis point or 80 basis points. |
| 1:08.7 | The NASDAQ was 82. |
| 1:10.4 | So right around the same level. |
| 1:12.1 | The Dow had been down over 500 and closed down 366. So off of its lows on the day. |
| 1:18.4 | So you say, okay, well, what made the markets drop a little bit? Bonds are down as well. The 10-year yield |
| 1:23.0 | was up, 8.8 basis points. So you saw the yield curve, yields all move higher, bringing bond prices down. |
| 1:30.8 | What could have caused it? And the answer is that we got the horrible news of 497,000 jobs created in |
| 1:42.3 | the private sector via the ADP payroll report that came out |
| 1:46.9 | bright and early this morning. And then you're not, you're really not going to believe |
| 1:50.5 | this one, the ISM services number jumped back up to 53.9. It had been at 50.6 last month, barely an expansion territory. 50 is the break-even |
| 2:05.1 | level. A number below 50 shows contraction, a number above 50 shows expansion. Not only stayed into |
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