The DC Today - Wednesday, October 25, 2023
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 25 October 2023
⏱️ 7 minutes
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Summary
Today's Post - https://bahnsen.co/45RiZ4B
Yesterday’s little market move was pretty weak sauce (not even 2-to-1 advancers to decliners and not even 1% in any index). Yields soared back today, putting downward pressure on the S&P and Nasdaq in a 2022 kind of day.
Yesterday, I recorded DC Today in the studio in our Newport Beach offices, had already submitted the final written edition, and then walked down the hallway to my office to eight pop-ups and notifications and alerts that Tom Emmer had removed himself for contention for the House speakership. Five minutes earlier, I had talked about how he was the most recent candidate, but I still didn’t see a path for him to get the votes. Twenty-four hours later, Congressman Mike Johnson of Louisiana is the new Speaker of the House.
In one day, our Q3 earnings season theme of divergent results amongst companies was on high profile display as the largest software company and an up-and-comer in cloud applications (Microsoft) posted positive results, while the largest search and advertising revenue firm in the world (Google) posted negative cloud revenue.
The S&P earnings yield is still higher than a 10-year treasury yield (total earnings dividend by share price). Of course, that differential is less than it has been in the last twenty years, but it is actually much more historically in line with where it was in the 1980s and 90s. The highest earnings yield in the market? Energy.
China increased its tolerance for a deficit to the highest in thirty years last night (above the 3% limit of deficit-to-GDP) and stated that deflationary risk will not be tolerated. President Xi actually made a trip to their central bank (he has never done that). The fiscal side of Japanification seems to be coming. The monetary side is the question mark.
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. |
| 0:14.8 | Well, hello and welcome to the Wednesday edition of the DC today. It's actually going to be the last DC today of the week because we |
| 0:21.4 | will be in our team retreat tomorrow Thursday. If you feel like I've been announcing that a little too |
| 0:26.9 | much and overstating it, it's because I know how profoundly disappointed some of you are. And I'm |
| 0:33.1 | trying to ease the pain and prep the hole that will exist in some of your hearts on Thursday |
| 0:38.8 | when DC today doesn't come. But today was a very party like it's 2022 kind of day. The Dow was only |
| 0:48.2 | down 30 basis points, but the NASDAQ was down 250 basis points, a kind of pummeling in that tech space. |
| 0:58.1 | And the communication services sector was down no typo, almost 6% on the day. |
| 1:05.1 | Now, that's a cap-weighted sector. |
| 1:07.7 | And Google is one of the largest companies in the world. |
| 1:12.2 | They got crushed today. And that was really most of that attribution. But nevertheless, I have a link to what |
| 1:18.4 | happened with Google and so forth in the DC today. But you did have utilities up about half a |
| 1:26.2 | percentage point and consumer staples were the only other |
| 1:28.8 | sector that were up on the day. So a pretty classic defensive's did well and then the really |
| 1:34.6 | junkier, techier things got hit. But all of it was not really just about that one story regarding |
| 1:41.4 | Google. I mean, bond yields just soared higher today. |
| 1:44.8 | And the tenure was up 11 basis points back to 4.95%. |
| 1:50.0 | And so when bond yields are going up like that, the stocks are going down. |
| 1:55.0 | It's that simple. |
| 1:57.0 | And oil prices, by the way, came back up to above $85 today. They were up almost 2%, not quite. |
| 2:05.3 | The news side of things did see. So yesterday I record, I say, I don't really think this, |
| 2:11.7 | Emmer has the votes. I walk down the hallway. I'm in the studio in our Newport Beach office, and my office is from one |
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