The DC Today - Thursday, October 12, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 12 October 2023
⏱️ 9 minutes
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Summary
Today's Post -https://bahnsen.co/3FkhgKh
The headline and Core CPI figures today were largely in line with expectations as the market opened. However, we witnessed a reversal of early morning gains throughout the session, resulting in both stocks and bonds closing lower. Interestingly, Fed futures remained relatively unchanged after the release of these numbers, hovering at approximately two-thirds, suggesting that the Fed is unlikely to make any significant changes in the foreseeable future.
Today marks the one-year anniversary of the market lows experienced last year. What’s intriguing, though, are the disparities within the markets that contributed to the S&P 500’s impressive 22% gain over the past year, following a significant downturn in the previous year. Currently, less than half of the market is trading above its 200-day moving averages, indicating that the market’s performance has been far from universally strong.
Financials, in particular, have experienced a nearly 20% decline during this recovery, and it’s worth noting that this has been the weakest small-cap return following a market bottom in history. However, there is good news amidst this divergence. The contrast between interest rate-sensitive sectors, such as small caps and financials, and the lack of broad market participation presents numerous opportunities for value investors like ourselves to look forward to. Active management will be crucial in navigating this complex landscape.
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. |
| 0:13.7 | Hello, and welcome to D.C. today. Brian Saitel here with you and coming to you from our studio here in New York City in our office |
| 0:23.2 | on 44th in Lexington and had a down day in markets, although, you know, before markets opened, |
| 0:31.2 | we were up a little bit on futures, about 140 points. There was a CPI number released around |
| 0:37.0 | 830 Eastern that was basically in line, really, |
| 0:41.3 | with expectations. We had a headline number that was at 0.4, and 0.3 was expected, basically the same, |
| 0:50.8 | in a 3.7% year over year on headline CPI. |
| 0:55.0 | Core, which strips out things like volatile food and energy out of that, was 0.3% for the month, |
| 1:03.0 | and then 4.1% on the year. So maybe a tenth higher than expected, but basically in line. |
| 1:10.0 | There was a 30-year treasury auction today that went a little worse than expected, meaning |
| 1:14.6 | that the rate was higher for it to close. |
| 1:17.4 | And so interest rates kind of moved higher on the day, and I really think that was, |
| 1:21.2 | what drove stocks lower at least. |
| 1:23.5 | Bonds were lower, so yields were up. |
| 1:25.6 | The tenure was up 10 basis points on the day, closed at |
| 1:29.4 | just over 470 on the 10 year. So we've got a little move at interest rates. Like I said, |
| 1:34.4 | CPI inflation reading was basically in line. And I think it's notable really that inside of that |
| 1:41.6 | number, you know, we still, and we've talked about this, but we still have an |
| 1:44.7 | owner's equivalent rent figure in there that is a monthly average. So it's a pretty lagging number |
| 1:49.9 | on inflation of housing. And it's at a 7.1% rate inside of that number, which is a third of the |
| 1:58.2 | calculation. So if you think about a third times 7.1, |
| 2:01.5 | it's like a 2.5% figure added into the, you know, 4.1% year over year number. So if you |
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