The DC Today - Wednesday, January 17, 2024
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 17 January 2024
⏱️ 11 minutes
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Summary
Today's Post - https://bahnsen.co/47HzpgS
Markets have stayed in what is pretty much a buyer’s strike this month, as no violent sell-off has been forthcoming, but down days have piled up in advance of the heart of earnings season and with several Fed governors trying to modestly re-frame expectations. Odds of a March rate hike have come down a bit but still remain the most likely view in futures markets. This noise was, if you recall, a highly predictable and overrated theme as discussed in our Year Ahead piece for 2024.
China’s economy grew +5.2% annualized in Q4 vs. +5.3% expected. The jobless rate sits around +5.1%. Most importantly, they indicated their third consecutive quarter of consumer price deflation (longest streak in 25 years). Did I mention this, too, was a huge theme in our Year Ahead piece for 2024?
I was intrigued to see this morning that about 60% of BB and B+ rated high yield bonds are now trading above par value (it was around 20% just six months ago). That is an extraordinary rally in credit that is clearly a by-product of improved financial conditions (i.e. expectations for greater liquidity and easier access to and cost of capital).
Retail sales for December exceeded expectations (shocked!) as core sales jumped +0.8% month-over-month. Online sales closed the year up +7% from the year prior, and across food/beverage/clothing there was meaningful increase on the month and year, even above what had been forecast.
I expect the biggest public policy issue over the next thirty days to be a Ukraine deal tied to U.S. border security and likely tied to Israel support funds as well. The challenges to getting this done are immense.
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. |
| 0:13.8 | Hello and welcome to the Wednesday edition of DC Today. I have a few economic data points to go through with you today, a couple market |
| 0:23.0 | updates, and I'll get you on your way. It's a reasonably boring day in markets, meaning that |
| 0:29.7 | the Dow was down a quarter of percent, the S&P was down half a percent, NASDAQ was down a little |
| 0:35.2 | more than half a percent. So everything was down, but not a ton. |
| 0:39.2 | Bond market was down as the 10 year was up four basis points. So slowly but surely, it's gotten back |
| 0:44.5 | up to 4.1 percent. Obviously, the yield is way lower than the 5 percent it was at one point in October, |
| 0:52.5 | but it also is higher than the 3.85 it was just a few weeks ago. |
| 0:57.3 | So that's really behind the kind of market environment right now. |
| 1:02.1 | You really don't have any massive sell-off days. |
| 1:04.6 | You just don't have many updates. |
| 1:06.2 | Like the market is just sort of down a little bit every day right now. |
| 1:09.5 | And we'll see if this earning season that we're going into will reverse any of that. |
| 1:15.5 | It is a bit of a buyer strike and I think a theme behind in my year ahead paper that we put out last |
| 1:23.2 | week was that the Fed would end up being a very overrated component to how people were viewing |
| 1:31.1 | the markets. |
| 1:32.1 | You know, the futures were at about an 80-something percent chance of the first cut in March, |
| 1:37.5 | and now it's down to 65 percent chance. |
| 1:40.0 | So you still have a greater than half likelihood of a rate cut in March. |
| 1:44.8 | I personally think it could very well end up going to May. |
| 1:47.6 | I don't think it matters at all. |
| 1:49.5 | But certainly things are, uh, it matters to short term noise and, and so forth. |
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