The DC Today - Wednesday, May 24, 2023

The Dividend Cafe

The Dividend Cafe - The Bahnsen Group

Monetary Policy, Investing, Wealth Management, Business, Retirement Planning, Macro Economics, Dividend Growth Investing, Estate Planning

4.9 • 572 Ratings

🗓️ 24 May 2023

⏱️ 9 minutes

🔗️ Recording | iTunes | RSS

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Summary

Today's Post - https://bahnsen.co/3Mxdgto

While everyone tosses and turns about the debt ceiling debate in Washington, I want to remind everyone what is the real scenario playing out in the economy. The Fed’s tightening may or may not “succeed” in their mission to destroy those inflation-creating jobs (their words, not mine), but it certainly will succeed (and has already) in tightening credit. Essentially a trillion dollars leaving the banking system is a lot less monetary base for lending. Funding costs for banks are much higher. And overall bank lending is collapsing. These things are all known.

Now, one can argue much of it is priced in. And one can certainly debate if it leads to a deep recession, or a shallow one, or a soft landing, or my own hypothesis, a more “narrow, targeted” recession, but it is the issue in front of us. What ends up being the impact across the broad economy and to corporate profits of the inevitable decline in credit as a result of this financial tightening? And then, of course, how does the Fed handle their inevitable back-peddling of the mess they create? It’s all so weird to watch play out.

The impact of tightening credit – the variables around that will be real in six months. Almost nothing anyone else is talking about right now will be. Food for thought.

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.
0:14.5	Well, hello, and welcome to the Wednesday edition of D.C. today, still representing here in Nashville, Tennessee, extremely busy day,
0:22.4	lots of wonderful things happening. And markets dropping a bit today, again, on just, you know,
0:29.6	volatility and debt ceiling discussion and different things like that. The actual chart of the
0:35.1	market, oh, it did open down and then it kind zigg and zagged a little bit throughout the day.
0:40.7	It made a little bit of a rally about 100 points up with 45 minutes to go in the trading day.
0:48.9	And then it gave that back near the end.
0:51.4	So the Dow closed down 255 points, which was 0.77%. The S&P was down about the same
0:58.9	percentage-wise, NASDAQ down a tiny bit less. Keep in mind, two, bonds have sold off a little. The
1:04.9	yields have come up. Today, the tenure was up 4.8 basis points. So you ended up with a 10-year treasury yield at 374.
1:14.4	And it had been at 350 a couple weeks ago.
1:17.5	So you've had a little sell-off there in treasury bonds.
1:20.5	Energy was up again today.
1:21.8	And energy was the only sector up again today.
1:24.0	So that's becoming a bit of the contrary sector in the midst of this market
1:28.3	stuff. Energy was up a little over half a percent. And then real estate had got hammered.
1:33.4	It was down 2.2%. Oil was up near $74 a barrel now, up 1.43%. The main comments I want to make,
1:43.9	and I don't want to keep us long on this, but again,
1:47.6	most focus on this, the Fed, excuse me, the debt default discussions, debt ceiling discussions,
1:55.3	whatnot. I've been pretty clear how I feel about all of it. And there's a couple of links in the DC today
2:00.6	today about, you know, from some of my
2:04.7	commentary to Barron's and Fortune and some other media outlets.
	...

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