The DC Today - Tuesday, August 15, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 15 August 2023
⏱️ 11 minutes
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Summary
Today's Post - https://bahnsen.co/44d1yL0
One of the things I used to get most frustrated by in the 2000-2007 period of artificially low interest rates, or 2010-2016, or 2020-2022, is how people assumed a central bank reducing rates was a good thing, when the only reason the Fed was doing it was because they believed things were bad. In other words, yes, a rate cut or low rates may (in many cases but not all) boost asset prices, but if the rate cut is coming because of fears of economic weakness (or actual economic weakness) there is ample reason to believe the celebration should be delayed. Now, I believe the Fed has rates way too tight right now and I further believe it is for all the wrong reasons. Yet if the Fed were cutting, not because they realize they over-did it, but rather because we were seeing screaming, severe recessionary conditions, does anyone believe that would be a positive thing?
The People’s Bank of China unexpectedly cut rates last night because things there are terrible. The Shanghai Composite Index was down -0.49% and the CSI 300 was down -0.31%. U.S. futures dropped -250 points and as I type the market is down -300 points (the final closing numbers are below). The reason risk assets responded negatively to what people intuitively (and naively) think is a good thing (i.e. unexpected rate cuts)? Because the rate cuts are due to things being, ummmm, bad. China’s situation now is case in point. This was the PBOC’s second rate cut this summer. Consumer spending, industrial production, and business investment were all less than expected. And everything happening there is teeing up this Friday’s Dividend Cafe on what I see as pending Chinafication – not the economic softening itself, but the response to the softening and what that creates.
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. |
| 0:14.7 | Well, hello and welcome to the Tuesday edition of the DC Today. Once again, I'm recording from San Diego where I've been at different |
| 0:23.0 | meetings and I am purposely recording again before the market close. All the data and so |
| 0:29.3 | forth will be updated in the DC today at the final close, but because I will be in a lunch |
| 0:35.0 | meeting with a money manager for the hour before the market |
| 0:39.3 | closes and after and won't be able to record after that. |
| 0:43.3 | I wanted to do this myself as opposed to having someone else do it with updated information |
| 0:49.8 | because there's something I wanted to talk to you about. |
| 0:53.0 | And so, you know, it doesn't happen very often. |
| 0:55.4 | I think yesterday I said it's only happened twice before. But, you know, sometimes the recording with the final updated numbers is really not that big of a deal. |
| 1:05.3 | Now, truth be told, it's never a big deal because I don't even know anyone else who does this at all. |
| 1:10.1 | And I don't even really know every day does this at all. And I don't even |
| 1:10.8 | really know every day why we do it. But I hope you get some information out of it. I hope you find |
| 1:16.1 | it valuable. I know that a lot of you who started listening to or reading or watching the DC |
| 1:21.2 | today back during the COVID days that the COVID markets missive, if you remember that term, |
| 1:27.4 | was a part of what we were |
| 1:29.4 | wanting to regularly communicate on. I don't care what the market closes that every day, |
| 1:35.2 | and none of you really do either, even if you think you do. But nevertheless, just for consistency |
| 1:40.7 | and updated data and information, it's kind of nice to have that rhythm of the daily numbers of where the Dow and S&P were |
| 1:48.2 | and the sectors and the bond yields and oil and all those kind of things. |
| 1:52.2 | But the qualitative message for today is more important to me than the quantitative |
| 1:56.9 | closings. |
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