The DC Today - Tuesday, March 7, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 7 March 2023
⏱️ 11 minutes
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Summary
Today's Post - https://bahnsen.co/3mrIiJz
Key Economic Point of the Day:
Futures market completely flip-flopped – went to a 70% chance of a half-point hike at the next meeting, with a 30% chance of a quarter-point hike (had been 30% and 70% just yesterday)
ASK DAVID “What do your most recent observations in the city tell you about the state of the New York City office market?”
~ Anthony
The fact of the matter is, anyone walking around the 40’s or 50’s (streets) on Tuesday through Thursday can tell offices are not merely 50% occupied in midtown – it is closer to 85% on those days. Where the vacancies lie are in bad and antiquated “old” products. The better quality class B and certainly class A office product is full 3-4 days a week, and tenants are renewing leases. A 10% vacancy rate that has gone to 20% inclusive of ALL NYC office products is really not that bad considering everything that has transpired. If you asked any office landlord 30 months ago if they would be content with the scenario they face now by February 2023, they would have killed for it. The leverage landlords are carrying is case by case, too, but if you all are asking whether or not foot traffic is back, New York City is utterly packed. There are moving parts, no doubt, and a new and class-A product is in the best position. But once again, the death of office, the death of going to work, and yes, the death of New York City, as painfully misdiagnosed.
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. |
| 0:15.0 | Well, hello, and welcome to the DC today on a beautiful Tuesday in New York City. It was a big down day in markets, |
| 0:25.1 | and I want to be able to explain why and talk through a few things. I'll kind of just get right |
| 0:29.7 | into it. First, just so you know, the Dow was down 575 points. The S&P was down 1.5%. percent. The NASDAQ was down one and a quarter. |
| 0:39.8 | And so most of this kind of took place early in the market day as Chairman Powell, Jerome Powell, |
| 0:47.2 | the chairman of the Federal Reserve, was testified to the Senate Finance Committee. |
| 0:52.2 | So I would love to share a kind of contrarian theory that in tandem with some of these |
| 0:58.8 | pressures on the market from Chairman Powell, there were other things at play as well. |
| 1:04.4 | And I think to what I woke up to this morning, and I want to read you word for word, |
| 1:12.4 | the foreign minister in China saying, and I want to read you word for word, the foreign minister in China, saying, and I'm quoting, the U.S. claims that it seeks to outcompete China, but does not |
| 1:20.4 | seek conflict. Yet in reality, it's so-called competition aims to contain and suppress China in all respects and get the two countries |
| 1:31.1 | locked in a zero-sum game. And so there was that, that's an escalation and rhetoric between |
| 1:38.4 | China and the U.S. And a part of me would be happier to attribute some of the downside today to concerns about |
| 1:47.7 | escalating tensions between U.S. and China if the anecdotal evidence that came throughout |
| 1:53.0 | the day was not so overwhelmingly rate sensitive. And so the fact that the Fed funds futures |
| 2:00.6 | totally inverse today. Yesterday, there was a 70% chance of a quarter point rate hike in the futures market and a 30% chance of a half point. And today it flipped to a 30% chance of a quarter point rate hike and a 70% chance of a half point rate hike. |
| 2:20.9 | Now, for what it's worth, I think the futures market is wrong on this one. |
| 2:25.3 | And that's rarely true. |
| 2:27.3 | Now, 7030 is very different than 9010. |
| 2:31.7 | If all of a sudden, the futures market gets to a 90% chance of a half point |
| 2:37.7 | rate hike at the meeting coming up on March the 22nd, then yes, I think it's very rare that the |
| 2:45.2 | futures would go that high and be wrong. But there was nothing the Chairman Powell said today that indicates to me a half a point rate high coming. |
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