The DC Today - Wednesday, November 29, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 29 November 2023
⏱️ 7 minutes
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Summary
Today's Post - https://bahnsen.co/3N5Ec4C
A mixed but ultimately flat day of trading in stocks following another decent move up in bonds as the 10 Yr came down another 8bps to 4.26%. Hard to believe we were north of 5% just last month. I was actually expecting yields on 10’s to pick back up after a better than expected upward revision to Q3 GDP mid morning, but this bond market is dead set on lower rates in 2024. All eyes will be on the inflation read tomorrow with PCE to see if that changes the narrative.
If the seven largest US technology companies were its own sector it would make up 18.2% of the market cap of the MSCI World Index and account for only 10% of the earnings. In comparison, the entire Financials sector in the MSCI World index equates to three precent less at 15.1% by market cap, but makes up over twice the earnings at 21.9%. Valuations may be a poor timing tool short term, but they do matter longer term and the multiple expansion in tech we have just seen can be easily disappointed if lower rates don’t keep pace next year.
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. |
| 0:13.9 | Hello and welcome to D.C. today. It's Brian Saitel with you here today is Wednesday Wednesday the 29th of November. |
| 0:21.7 | And I hope you all are doing well. |
| 0:23.1 | Pretty quiet day in markets. |
| 0:24.5 | The Dow was only up about 13 points. |
| 0:26.6 | We opened up this morning maybe 90 points, something like that, |
| 0:30.4 | gave it back mid-morning, rallied up about 150 or so, |
| 0:34.2 | and then just sort of lost momentum into the close. |
| 0:37.8 | It was interesting that bond market rallied pretty much throughout the entire day and really |
| 0:42.2 | was sort of unchanged. |
| 0:44.6 | The tenure was up eight basis points, closed at 426. |
| 0:48.5 | And what we've been seeing recently is just as bonds, bond yields come down, stocks have |
| 0:53.9 | been rallying. And I think a little of that has just kind of priced in at this point. It's baked in. So, but rates continue to move lower and meaningfully so. And I think part of it was Fed President Waller yesterday was talking about potentially a rate cut in the first quarter. He didn't quite say it like that, but he alluded to, you know, if inflation is down, of course, we would lower, you know, |
| 1:14.6 | rates where they would need to go. And it's not necessarily indicative of a slowdown or recession. |
| 1:19.9 | It's, you know, our job is full employment and steady prices. And so if that's what we've got, |
| 1:25.2 | we'll lower interest rates, which makes sense to me. I mean, ultimately, they're restrictive right now. And if we get the numbers that we |
| 1:32.3 | want, then it would make sense to go more neutral. And so what neutral is, is the question mark, |
| 1:37.7 | it's most likely somewhere a little north of where inflation would be. So if inflation is two and a half |
| 1:43.0 | or three, then maybe Fed funds would end up |
| 1:45.6 | gravitating towards that range, which I think it ultimately will. It's about timing at this point. |
| 1:52.1 | But there was a revision of Q3 GDP. Maybe it was later morning. And it was significantly better. |
| 2:00.9 | They revised it up from 4.9 to 5.3 annualized on real GDP quarter over quarter, |
... |
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