The DC Today - Wednesday, January 18, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 18 January 2023
⏱️ 15 minutes
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Summary
Dow: -614 points (-1.81%) S&P: -1.56% Nasdaq: -1.24% 10-Year Treasury Yield: 3.37% (-16 basis points) Top-performing sector: Communication Services (-0.93%) Bottom-performing sector: Consumer Staples (-2.65%) WTI Crude Oil: $79.25/barrel (-1.16%) Key Economic Points of the Day:
The Producer Price Index (PPI) saw outright (and rather significant) DEFLATION in December, with prices dropping on the month -0.5%, well more than the -0.1% expected. November’s number was adjusted downwards by -0.2% as well. The 7.4% year-over-year number came down to 6.2%. The CORE number is down to 5.5%. Wholesale gas prices dropping -13.4% helped the cause, as did the food index’s -1.2% decline. Energy/gas prices have helped downward pressure in recent months, and that could/likely will reverse in months ahead even as other inflationary data see more downward pressure. I expect the core vs. headline reads to potentially diverge significantly in the months ahead. Industrial Production fell -0.7% in December and was actually down -1% when you factor in downward revisions from past months. Manufacturing led the way down. This was the largest monthly decline in more than a year. On an annualized basis, Industrial Production is down -5.2% in the last three months. Microsoft joined the fray of huge tech companies performing massive layoffs as they announced plans to lay off 10,000 employees (5% of their workforce) Retail sales fell -1.1% in December, mostly in line with the level of disinflation of gasoline prices we saw last month.
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 D.C. today where today is Wednesday, January 18th, where Pacifica Christian is number three in all of Orange County and where the market today got hammered. |
| 0:31.3 | It's an interesting point in the market that I want to spend most of our time talking about today because you have had these, |
| 0:38.9 | you know, 500, 600 point down days over the last year that almost exclusively, I would have to |
| 0:47.1 | go back and check if there's anything I'm missing, but almost exclusively were related to some |
| 0:51.6 | form of the inflation Fed narrative. |
| 0:54.9 | And that is to say you could have had the market down a lot when CPI came in higher than |
| 0:59.8 | expected one day or when the Fed talked tougher one day or when the Fed tightened more than |
| 1:05.0 | expected or telegraphed more tightening than expected. |
| 1:08.3 | You know, these various things that kind of took place largely throughout the spring of 22 |
| 1:14.0 | through the end of the year or through, let's call it the fall. |
| 1:18.6 | I think that the markets issue today, to a lesser degree yesterday, is now in the other side of the narrative. And you, |
| 1:30.3 | and you might be thinking with some rationale, what's the difference? Who cares why, you know, |
| 1:35.8 | a market down a bunch and it feels the same? Keep in mind the market had been up a bunch and |
| 1:41.2 | it's still up on the year so far in these first couple of weeks that we've been |
| 1:45.8 | open. But a lot of these gains that were getting pretty heavy have come back in the last couple |
| 1:50.7 | days and yet it's not related. The bond market's rallying like crazy. Bond yields are dropping |
| 1:58.0 | and that's up and down the term structure. So the yield curve is moving |
| 2:05.2 | lower. And at the same time, there's this ambiguity in the stock market. So what does that |
| 2:12.2 | mean? Because it clearly doesn't mean people are trying to price in more Fed tightening when, first of all, |
| 2:19.2 | the Fed is about to take a looser posture, not a tighter posture, but also the bond market |
| 2:24.8 | saying the exact opposite. |
... |
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