The Dividend Cafe

ASK DAVID “Would you mind giving me your Cribb note version of your expectations on the USD’s devaluation now that Saudi Arabia (and probably others) are willing to trade oil for other currencies than the US dollar? If you expect a significant currency related (not just inflation related) devaluation, do you have an idea of how we can offset that?” ~ D.M. The main thing to say is that: Saudi has not yet done it, it will take a while to happen, it may happen at very small levels, and we do not expect a significant devaluation from this alone. We do believe it is a shot across the bow geopolitically, but not in fundamental forex (yet). The major thing for investors to understand is not that the collapse of the dollar is imminent (I wish I had one dollar for every time someone has suggested that or fretted over it in front of me over the last 25 years, for I would surely have a great deal of very spendable and exchangeable and useable dollars). Rather, it is that China is desperately seeking international legitimacy for their Yuan. The rest of this subject is mostly noise. Links mentioned in this episode: [TheDCToday.com] https://bahnsen.co/3JMMeP1 DividendCafe.com TheBahnsenGroup.com

Futures opened last night down -50 and were down -85 into the evening. This morning markets pointed to a down -265 open pre-market. Futures would improve in the next three hours before the opening. The market opened down just -80 points and then went positive before then steadily declining throughout the day. The Dow closed down -261 points (0.77%), with the S&P 500 down -1.30% and the Nasdaq down -1.96%. January looks to be the greatest month for bond market auctions in history, with every single auction printing below-market yields. More demand than supply across the yield curve; each auction of new treasury debt means one thing – these buyers don’t believe these yields will last. Only 29% of companies have reported Q4 results so far, so it is really too early, still, but thus far, we are tracking for year-over-year revenue growth of +4.2% and year-over-year earnings contraction of -2.9%. Full-year earnings estimates started the year at $225 on the S&P 500 and are now sitting at $220. The ten-year bond yield closed today at 3.54%, up two basis points on the day. Top-performing sector for the day: Consumer Staples (+0.07%) Bottom-performing sector for the day: Energy (-2.29%) Earnings in energy currently make up over 12% of the S&P’s earnings, but Energy is currently only 5% of the S&P 500 by weighting. That 7% differential between earnings contribution and weighting is the highest it has ever been. Links mentioned in this episode: [TheDCToday.com] https://bahnsen.co/3JqiqaH DividendCafe.com TheBahnsenGroup.com

The month of January has launched 2023 in a very different direction than 2022 thus far. I do not mean because markets are up thus far whereas they were down in 2022 (though technically both of those things are true). But beyond the mere directional change in markets (which could reverse at the drop of a hat), the themes and factors influencing markets – in other words, the stuff that matters – has changed. Moving way down the totem pole has been what the Fed is doing or is expected to do, and moving way up in priority (to the very top) is what will happen in the economy as a result of what the Fed has already done. I am going to elaborate on what that means in today’s Dividend Cafe, and more importantly, make the case for and against a 2023 recession. And I hope that after reading my case you will decide I have made the perfect call … Let’s jump in to the Dividend Cafe. Links mentioned in this episode: TheDCToday.com [DividendCafe.com] https://bahnsen.co/3WIokXu TheBahnsenGroup.com

Dow: +204.45 (+0.61%) S&P: +1.10% Nasdaq: +1.76% 10-Year Treasury Yield: 3.497% (+3 basis points) Top-performing sector: Energy (+3.32%) Bottom-performing sector: Consumer Staples (-0.28%) WTI Crude Oil: $81.04/barrel (+0.89%) Key Economic Point of the Day: Weekly jobless claims again reflected the strength of the labor markets with initial claims coming in at 186,000 versus a median forecast of 205,000 A reminder, all of this coming on the heels of daily reports of layoffs from some of the top employers in the country The 2022 4th quarter GDP number came in at 2.9%, slightly above the median forecast of 2.8%, and buoyed by continued solid consumer spending Durable goods orders came in at 5.6% compared to a 2.4% forecast, but a quick look behind the curtain shows that much of this was lifted by a 116% spike in aircraft orders ex-transportation new orders actually declined U.S. new home sales edged out the forecasted number, reporting 616,000 on a median forecast of 615,000, and marking a three-month trend of rising new home sales Note, the year-over-year figure here is still down nearly 27%, completely driven by higher borrowing. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Dow: +10 points (+0.03%) S&P: -0.02% Nasdaq: -0.18% 10-Year Treasury Yield: 3.45% (-1.8 basis points) Top-performing sector: Financials (+0.74%) Bottom-performing sector: Utilities (-1.36%) WTI Crude Oil: $80.49/barrel (+0.45%) ASK DAVID “This statement in Brian’s response to yesterday’s question caught my eye: “…because inflation is ultimately driven by demand.” I find this interesting because I believe I have heard you say, quite emphatically, that inflation is first and foremost a supply side phenomenon. So is this simply a theoretical disagreement among peers or am I misinterpreting something? ” ~ Mike Inflation, by definition, is one or the other or both. “Too much money chasing too few goods (or services)” – it is an algebraic expression that can have one or both inputs contributing (MV=PT) I believe this recent moment’s inflation (2021-22) was clearly supply-side-driven. The context of Brian’s full paragraph with that one line in it makes clear his view’s alignment with mine. Links mentioned in this episode: [TheDCToday.com] https://bahnsen.co/3Haj3Cb DividendCafe.com TheBahnsenGroup.com

Futures opened last night about even give or take 20 points, and stayed that way until early morning when we began moving lower and then notably so pointing to a down -150 point open. We opened down about -170 points but were down north of -250 after the first 20 minutes of trading. Around 1145 EST we had slightly better than expected PMI data released and fully recovered the morning losses trading sideways with a small upwards bias the remainder of the trading day. We closed positive on the Dow but slightly negative on both the SP500 and Nasdaq. Dow: +104.41 (+.31%) S&P: -.07% Nasdaq: -.27% 10-Year Treasury Yield: 3.46%, down -5.6bps on the day Top-performing sector: Industrials up +.65% Bottom-performing sector: Communication Services -.69% WTI Crude Oil: $80.16/barrel, down -1.79% Key Economic Point of the Day: A flash read today on US Composite PMI data showed a slight improvement over December, although still handily in contraction territory and the slowest since last October at 46.6 from 45 the month prior. Manufacturing PMI was little changed at 46.8 up from 46.2 with Services PMI at 46.6 from 44.7. Could the data in the chart below pick back up above 50 into positive territory before we end up registering an official recession this year, of course, but that economic margin is about as thin as it gets right now. For what its worth, this PMI data point is what led to markets recovering after the mornings initial sell off and was a ‘less bad’ read following December – not so bad that we fear recession is immanent, but cool enough to back the ‘Fed will pause soon’ narrative. Interestingly enough, the flash PMI read today from the Eurozone actually showed it barely bump back into expansion territory from 49.3 last month to 50.2, although not sure I would call that robust. Links mentioned in this episode: [TheDCToday.com] https://bahnsen.co/3RbWe5R DividendCafe.com TheBahnsenGroup.com

Futures opened last night pretty close to flat (down -20 points) and stayed right there into the evening. This morning futures pointed to a dead flat open pre-market when I first woke up. The market opened flat but moved up from there and stayed up with a few zigs and zags along the way (see chart below) The Dow closed up +254 points (+0.76%), with the S&P 500 up +1.19% and the Nasdaq up +2% The worst performers of 2022 are so far the best performers into 2023, partially as tax loss selling leads to re-buying post-wash sale rules. The “dividend payers” outperformed the “non-payers” in the S&P 500 by 23% last year. Dividends paid in the S&P 500 last year were $563 billion, the highest amount in history. Dividends were 26% of the return of the market in the 2010s and the 1990s but 100% of the return in the 2000s (when the market had a negative price return). Prior to that, dividends had averaged between 40% and 70% of the market return every decade for fifty years. The current dividend payout ratio of the S&P 500 is 33%; it has averaged 48% for nearly a hundred years but has not gotten back to that average since the financial crisis. Selectivity is crucial. The ten-year bond yield closed today at 3.52%, up 3.7 basis points on the day. Top-performing sector for the day: Technology (+2.28%) Bottom-performing sector for the day: Energy (-0.20%) TIP spreads show implied inflation for ten years at 2.1% now, down from over 3% less than a year ago. Shorter term inflation expectations (5-year) evidenced in the TIPS market (treasury inflation-protected securities) has gone from 3.6% at the high to 2.1% now. Whether 10-year or 5-year, the bond market has seen a collapse in inflation expectations in recent months. Links mentioned in this episode: [TheDCToday.com] https://bahnsen.co/3QZ6Y7w DividendCafe.com TheBahnsenGroup.com

FOR ACCESS to CHARTs described in this episode, click here - https://bahnsen.co/3DnVULR I wrote a piece for the Dividend Cafe in May last year about the subject of housing and having re-read it this morning, I wouldn’t change a word. But those more evergreen principles don’t take away the appetite many have for the current state of affairs. Economic conversation right now largely centers around recession questions, and discussions about financial markets are understandably focused on the stock market. Yet right in the Venn diagram of both the economy and the market is the state of housing, and almost every person I know lives somewhere. So this topic is perhaps more relevant in a practical sense than many of the others that garner our attention. I sometimes avoid this topic because that relevance is so misunderstood and misapplied (i.e. “if I could just know what would happen to house prices in the next few months, I would know if I should buy or rent” – or worse – “if I just knew what would happen to house prices in the next few months I could resume my foolproof home-flipping plans”). But as you shall see in today’s Dividend Cafe, our interest in the topic of housing is for a different application altogether. Let’s jump into housing yet again, in the Dividend Cafe … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

I, Trevor Cummings, am honored to be filling in for David Bahnsen today. I hope you will join me for the video and/or podcast, as I provide you with the daily happenings around markets. Please don’t miss out on the “Ask David” section below, as we’ve fielded this same or similar question quite a few times recently. Without further ado, off we go… Dow: -252.26(-0.76%) S&P: -0.76% Nasdaq: -0.96% 10-Year Treasury Yield: 3.395% (+2 basis points) Top-performing sector: Energy (+1.11%) Bottom-performing sector: Industrials (-2.08%) WTI Crude Oil: $80.47/barrel (+1.25%) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

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

Futures opened last night pretty flat (down a pinch) and dropped to down -50 points or into the evening as the Cowboys were having their way with Tom Brady. This morning futures pointed to a down -50 point open pre-market and that went a bit lower after results from Goldman Sachs. The market opened down close to -200 points and fell further in the next two hours before leveling around that low throughout the day. The reason for the Dow’s much worse result than the other two is that really the Dow’s drop was led by just two financial names. The Dow closed down -392 points (-1.14%), with the S&P down -0.20% and the Nasdaq +0.14%. The year is off to an interesting start – with just nine days of trading behind us (due to two Monday holidays so far), a lot of “shinies” are up on the year, and yet market breadth has been very strong with the highest percentage of stocks in a 10-day advance since 2020. As good as some of the shinies have done, the equal-weight (average stock) is still doing better than the index itself (cap-weight). The ten-year bond yield closed today at 3.55%, up four basis points on the day A pivotally important fact – yes, bond yields are all down, BUT they are down proportionately (essentially, the 2-year has dropped 30bps AND the 10-year and has dropped 30bps, meaning the yield curve inversion has NOT improved) Top-performing sector for the day: Technology (+0.44%) Bottom-performing sector for the day: Materials (-1.07%) I want to make sure I consistently reiterate my theme with data around the history of growth-value rotations (primarily, that they are secular decade-type rotations, not quarterly or annual ones) Links mentioned in this episode: [TheDCToday.com]https://bahnsen.co/3IUuwbA DividendCafe.com TheBahnsenGroup.com

Last weekend I watched a new documentary series on Netflix called Madoff: The Monster of Wall Street. Some of you know I am a bit of a geek for all things Wall Street history, and I seriously doubt you would believe me if you knew how many documentaries, fictionalized movies and TV shows, not to mention real books, I have taken in over the years covering various elements of Wall Street history. Many of them have a protagonist (at least from my perspective), and many cover the escapades of either the evil or the incompetent. This latest Madoff series manages to do both – cover the evil and the incompetent. But the entire Bernie Madoff saga also reinforces one of the most important and actionable realities of investing, universally applicable and relevant to all. And it really has very little to do with the red flags to avoid when it comes to international Ponzi schemes. Don’t get me wrong – I remain earnestly opposed to Ponzi schemes. =) But there is another lesson in the Madoff saga that transcends even that, and it applies to the core of human nature. And that is the subject of today’s Dividend Cafe … Links mentioned in this episode: [Episode Blog Post] (https://bahnsen.co/3QCrOcE) TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Dow: +269 points (+0.81%) S&P: +1.28% Nasdaq: +1.76% 10-Year Treasury Yield: 3.54% (-7.6 basis points) Top-performing sector: Real Estate (+3.60%) Bottom-performing sector: Consumer Staples (+0.06%) WTI Crude Oil: $77.71/barrel (+3.45%) ASK DAVID “The US government has stated that it will purchase crude oil to replenish the strategic reserve once the price hits $70. In effect, this seems to indicate that the government will purchase millions of barrels at $70. Does this function as a price floor? And, if so, what impact does a government-created price floor have on markets?” ~ Keith So just by way of clarification, they have indicated they want that to be the rough price level at which they will transact, but their rough and very ambiguous guidance on the subject would indicate the intent of more a floor than a ceiling and yet, if the price does not go (or stay) there, it may not be a price at which much transacts. The government cannot make the market cooperate. But to the extent the market expects that level to be a rough “floor,” I suppose one could assume in their economic calculation that some of the left tail risks of various price collapses are less likely. The problem is that they can change their mind, and any number of events could happen (upside or downside) that alter the economics here. What market actors ultimately know is that there is a forced buyer in the marketplace, and supply calculations, profit expectations, and a number of numerical considerations around production can be performed with that intervening fact lingering. It does suggest a certain backstop in matters which provide a bit of an asymmetrical risk/reward (in the producers’ favor). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Dow: +269 points (+0.81%) S&P: +1.28% Nasdaq: +1.76% 10-Year Treasury Yield: 3.54% (-7.6 basis points) Top-performing sector: Real Estate (+3.60%) Bottom-performing sector: Consumer Staples (+0.06%) WTI Crude Oil: $77.71/barrel (+3.45%) ASK DAVID “The US government has stated that it will purchase crude oil to replenish the strategic reserve once the price hits $70. In effect, this seems to indicate that the government will purchase millions of barrels at $70. Does this function as a price floor? And, if so, what impact does a government-created price floor have on markets?” ~ Keith So just by way of clarification, they have indicated they want that to be the rough price level at which they will transact, but their rough and very ambiguous guidance on the subject would indicate the intent of more a floor than a ceiling and yet, if the price does not go (or stay) there, it may not be a price at which much transacts. The government cannot make the market cooperate. But to the extent the market expects that level to be a rough “floor,” I suppose one could assume in their economic calculation that some of the left tail risks of various price collapses are less likely. The problem is that they can change their mind, and any number of events could happen (upside or downside) that alter the economics here. What market actors ultimately know is that there is a forced buyer in the marketplace, and supply calculations, profit expectations, and a number of numerical considerations around production can be performed with that intervening fact lingering. It does suggest a certain backstop in matters which provide a bit of an asymmetrical risk/reward (in the producers’ favor). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

A little early morning volatility but then a small rally on the day in markets. Read below, listen, watch – the choice is yours! MARKET ACTION Dow: +186 points (+0.56%) S&P: 0.70% Nasdaq: 1.01% 10-Year Treasury Yield: 3.62% (+10 basis points) Top-performing sector: Communication Svcs (+1.29%) and Consumer Discretionary (+1.26%) Bottom-performing sector: Consumer Staples (-0.16%) WTI Crude Oil: $74.66/barrel (flat) Key Economic Points of the Day: Used Car Prices dropped -15% year-over-year in 2022 (from where they ended 2021), the largest single-year drop on record. This came, of course, off of large increases in 2021. The Fannie Mae Home Purchase Sentiment Index was up in December versus November but basically right at the all-time low set in October. 21% of people surveyed said they believed it to be a good time to buy. The NFIB Small Business Optimism Index dropped to 89.8 from 91.9 in December, the lowest since June of last year. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Futures opened last night up +40 points and were up over +80 points by bedtime. This morning futures pointed to a +100-point open pre-market. The market opened up +150 points and got up over +300 points before falling just over -100 points. A 450-point delta between the high and low levels today … The Dow closed down -113 points (-0.34%) with the S&P 500 down -0.08%, and the Nasdaq up +0.63% as Tesla and the chip sector rallied substantially. The massive rally Friday saw 7-to-1 advancers to decliners, fairly solid breadth. The top 20% of companies paying out cash dividends as their primary cash outlet were down -2.7% last year compared to the top 20% of companies doing the highest stock buybacks (which were down -13.3%). This is comparing apples-to-apples – top performers compared to top performers by their primary cash outlet vehicle. The ten-year bond yield closed today at 3.53%, down 4 basis points on the day. Top-performing sector for the day: Technology (+1.09%) Bottom-performing sector for the day: Health Care (-1.66%) Revenue growth is expected this year in each sector of the S&P besides Utilities and Materials (and a very slight top-line revenue decline is expected in Technology). The more significant factor will be margins and where overall profit levels come in, though if earnings are revised downwards as time goes on, I suspect it will have more to do with lesser-than-expected revenues than it will have lesser-than-expected margins. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today's Dividend Cafe Link - https://bahnsen.co/3Z98Le5 I’ve lost count of how many years now we’ve done this, but it is a lot, and it is one of my favorite projects every year. I thoroughly enjoy the research that goes into it, the writing that creates it, and the accountability that comes out of it. I will refrain from the temptation to start waxing and waning now and just say that I hope you find this year’s Year Behind, Year Ahead white paper profitable. It’s going to be a wild year. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

A solid day for the energy sector and some key blue chip companies but downside across most market sectors. Dow: -340 points (-1.02%) S&P: -1.16% Nasdaq: -1.47% 10-Year Treasury Yield: 3.72% (+1 basis point) Top-performing sector: Energy (+1.99%) Bottom-performing sector: Real Estate (-2.89%) WTI Crude Oil: $73.80/barrel (+1.32%) Key Economic Point of the Day: The ADP jobs number for the private sector came in at 235k for December, well above the 150k projected. Naturally, futures went down on the news. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The new wing of the TBG offices in Newport is now open. We are excited for you to come see it. I believe it is now 28 out of our 50 people that are based in Newport, soon to be 30 out of 52 (we are hiring two new Tax Services people this month). The new space gives us extra space we needed for our Solutions Department from last year’s growth, more space for additional future growth, new offices for key partner-advisors, additional space for our growing Tax Services Department, and additional client conference room meeting space. Come visit any time! Today’s market action was up and down but mostly up … Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

I began writing this from Dallas, Texas this morning, where yesterday USC suffered a heartbreaking loss in what was one of the most exciting Cotton Bowl games ever. I am back in Newport now, where tomorrow morning we reveal the new large office expansion to our team (same floor, same building). It has been a labor of love, I assure you. We have added new advisor offices (we have a new advisor starting in Newport Beach and another new one starting in Nashville next week), but mostly the Newport expansion houses new members of our Tax Department, Planning Department, Research, and Trading. It is really beautiful space. Today’s DC Today is the normal Monday format of DC Today and, obviously, the kick-off to 2023! There is a 27-page white paper coming Friday in the Dividend Cafe providing the most comprehensive recap of 2022 and forecasts for 2023 we think you will find anywhere. I hope you find it to be a labor of love, too. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

https://bahnsen.co/3uYu6c0 Virtually everything going on in markets right now (or so it would seem) has to do with what central banks are doing (or are projected to do). It certainly is not true in reality – the things happening today that will ultimately determine investment outcomes in years to come will have far less to do with the cost of capital and far more to do with human action – but in the day-to-day volatility of market price levels, I have no choice but to pretend. Well, “pretend” is not actually the right word – it is more an acknowledgment that the world we are living in gives a lot – and I mean a lot – of attention to the Fed in one’s outlook on financial asset pricing and economic health. The current obsession with the Fed (as in the immediate 2022 and soon-to-be 2023 period) revolves around inflation. We have had a cult-like obsession with the Fed for over 25 years, so it is not inflation that created the Fed’s place in our hearts and our wallets. But right now, inflation is the cause du jour – the rationalization for 24/7 coverage of the Fed, and certainly the Fed’s stated rationale of heavy activity in financial markets. Much of this is with good reason. Much of it is so misguided that I don’t really believe I am hearing what I hear some days from people I know [used to?] know better. But all the talk about the Fed right now is tied up with all the talk about inflation, and therefore a re-visit on the inflation subject is in order. Jump on into the Dividend Cafe, and may our investigation of the state of the nation when it comes to inflation bring some revelation about the Fed’s imagination in matters of monetary administration as we pursue our goal of wealth creation. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

So the Dow gave back Monday’s gain today and a tad more, but with today’s -764 point day in the Dow, the market finds itself a couple of hundred points off where it was just last Friday. And the bond market rally continued again today as yields fell again. All of this is carefully dissected in today’s podcast and video … Dow: down -764 points (-2.25%) S&P: down -2.49% Nasdaq: down -3.23% 10-Year Treasury Yield: 3.45% (-5 basis points) Top-performing sector: Energy (-0.53%) Bottom-performing sector: Technology (-3.78%) and Communication Services (-3.84%) WTI Crude Oil: $76.20/barrel (-1.38%) Key Economic Points of the Day: Retail Sales fell -0.6% in November, and even ex-autos were down -0.2%. Much of this was related to the strong number of October, off of which this drop is based. Nominal GDP expectations for Q4 will come down if consumer activity is less than expected. Industrial Production fell -0.2% vs. expectations of a +0.1% increase. Initial jobless claims were down 20k to 211k. Continuing claims are at their highest level since February (at 1.67 million). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Welcome to Fed day Wednesday on DC Today. Following positive sessions on both Monday and Tuesday leading up to today’s Fed announcement, we gave 142 points back on the Dow but remain up on the week in both stocks and bonds. I fully unpack today’s Fed announcement, the market reactions and implications and several takeaways in my Fed-heavy video podcast that you will not want to miss. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The CPI report came in well below expectations, and futures were up as much as +830 points pre-market (on top of yesterday’s +520 point rally). The rally basically peaked at the open and then fizzled from there, going negative mid-day, before closing up just a hundred points or so. Dow: +104 points (+0.30%) S&P: +0.73% Nasdaq: +1.01% 10-Year Treasury Yield: 3.50% (- 11 basis points) Top-performing sector: Real Estate (+2.04%); Energy (+1.77%) Bottom-performing sector: Consumer Staples (-0.17%) – only negative sector WTI Crude Oil: $75.25/barrel (-0.19%) Key Economic Point of the Day: ASK DAVID “You (and just about everyone else) focus on the three major stock indices when reporting on the daily market. The Dow, the S&P 500, and the NASDAQ often move together, but when they don’t what does it mean? How did these get to be the Big Three, and what do each tell us about the market?” I actually think the difference between the three indices is quite noteworthy, and even if they often directionally move together, the magnitude of moves is quite different. The Dow is down roughly -7% on the year, while the S&P is down roughly -18% and the Nasdaq roughly -30%. This is really a by-product of the Dow being more diversified than the Nasdaq (i.e., broad American sector diversification in the Dow vs. heavy technology penetration in the Nasdaq). Then the S&P is market-cap weighted (that is, the S&P is well-diversified, but because its constituents are weighted to their size, it becomes very, very tethered to a few mega-cap tech companies. The Dow was constructed to be the bellwether representation of the American economy reflected in the stock market that it is. It wasn’t like there were competitive index options in the late 19th century and early 20th century when it was constructed. It has stood the test of time, to say the least. TheDCToday.com DividendCafe.com TheBahnsenGroup.com

It’s a crazy time in the ‘bizarro’ world when we have questions that we do about 2023’s economic health, the earnings environment, and financial markets liquidity, and yet one of the biggest stories in financial media for the week centers around a couple of obscure income real estate portfolios. Indeed, one could argue it is truly a ‘bizarro’ world when what appears to be one of the largest frauds and wealth evaporations in history (FTX) provides a pretty glowing media tour while some of the most successful wealth creation and capital markets success in history is given the third degree by the same people. But today’s Dividend Cafe is not about Blackstone or Starwood or FTX or CNBC, or any other particular asset manager, crypto scam, or media outlet. Rather it is about a broad issue in financial markets that is not understood, needs to be understood, and has no chance of being understood given the fact that the people doing the educating do not understand. So let’s jump into the Dividend Cafe. Mark this moment. The lesson will not prove to be over-valued. Blog post here: https://bahnsen.co/3iNX8IJ Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Dow: Up +184 points (+0.55%) S&P: +0.75% Nasdaq: +1.13% 10-Year Treasury Yield: 3.48% (+7.9 basis points) Top-performing sector: Technology (+1.59%) Bottom-performing sector: Communication Services (-0.50%) WTI Crude Oil: $71.81/barrel (-0.28%) Key Economic Point of the Day: Initial jobless claims came in at 230k – right at expectations. Continuing claims have inched higher as well, all at once indicating some softening (high since February), but very little to write home about (not a big movement up). Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

A DEAD FLAT day in the Dow – up/down +0.00% (you do not see that often), and a whole lot I discuss in the DC Today. MARKET ACTION Dow: Up 1 point (LOL) (+0.001%) S&P: -0.19% Nasdaq: -0.51% 10-Year Treasury Yield: 3.42% (-9.3 basis points) Top-performing sector: Health Care (+0.85%) Bottom-performing sector: Communication Services (-0.93%) WTI Crude Oil: $72.43/barrel (-2.48%) Key Economic Point of the Day: Used vehicle prices hit their lowest level in over a year as outright deflation continues to permeate that marketplace (-15.6% decline since January) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Lots to cover here in the DC Today … Listen to the podcast or watch the video, and check out the info below! MARKET ACTION Dow: -351 points (-1.03%) S&P: -1.44% Nasdaq: -2.00% 10-Year Treasury Yield: 3.53% (-6.6 basis points) – ferocious bond rally of last month continues Top-performing sector: Utilities (+0.66%) Bottom-performing sector: Energy (-2.65%) WTI Crude Oil: $74.34/barrel (-3.35%) Key Economic Point of the Day: Business Roundtable CEO Outlook Survey was at its lowest number since Q3 2020, but is way, way above the breakeven level of expectation (that is, still anticipating substantial economic expansion, albeit with a grimmer relative outlook than last year) The trade deficit came in at $78.2 billion in October, less than the $80 billion expected. But total trade was up on the month and is up +13.7% versus a year ago. The container ship debacle has largely subsided and yet there are still some issues marginally constricting trade (China COVID policy, Russia sanctions, etc.) Key Economic Point of the Day: Business Roundtable CEO Outlook Survey was at its lowest number since Q3 2020, but is way, way above the breakeven level of expectation (that is, still anticipating substantial economic expansion, albeit with a grimmer relative outlook than last year) The trade deficit came in at $78.2 billion in October, less than the $80 billion expected. But total trade was up on the month and is up +13.7% versus a year ago. The container ship debacle has largely subsided and yet there are still some issues marginally constricting trade (China COVID policy, Russia sanctions, etc.) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Futures opened last night down -40 points and stayed around there into the evening. This morning they pointed to a down -100 open pre-market and worsened a bit from there. The market opened down -175 points and worsened throughout the day, though it came a hundred points off the low late in the trading day The Dow closed down -483 points (-1.4%), with the S&P 500 down -1.79% and Nasdaq down -1.93% Markets on Friday gave us the full gamut of today’s idiocy, as futures quickly dropped over -400 points upon the God-awful news that more jobs were created than expected last month and that lower-income people were making a little more than they had the year before. Then, hours later, markets finished to the upside after a day of volatile trading. Right now, consensus expectations are for $232/share of earnings for the S&P 500 next year, about 7-8% lower than what their peak expectations were but +5% higher than the $221 level of this calendar year. The best thing I can say is that if we had a recession in 2023, and earnings were up +5% on the year, that would be a rarity. The ten-year bond yield closed today at 3.58%, up eight basis points on the day. Top-performing sector for the day: Utilities (-0.60%) Bottom-performing sector for the day: Consumer Discretionary (-2.95%) Most cyclical sectors were down the most today; the most defensive sectors were down the least (but all were down) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The markets rallied dramatically on Wednesday when the chairman of the Federal Reserve, Jerome Powell, gave a speech at the Brookings Institute essentially confirming the likelihood of a Fed “slowing” its plans for interest rate hikes. Other speeches this year have seen markets fall a thousand points. The direction of market impact is less important to my point than the impact itself: we have markets that are highly susceptible to speeches given by one person. And when I refer to “markets” I do not merely mean the stock market but also the (much larger) bond market, the (similarly-sized) housing market, and the (gigantic) market for currencies. Of course, the nature of market movement is not so much about a speech, per se, but rather policy expectations that are derived from a given speech. And the response in financial markets to the policy decisions of the Federal Reserve is hardly where it all stops; Fed decisions impact all aspects of the economy. No person lives a life free of impact from the decisions of the Federal Reserve. Today I want to unpack this a bit more, at least as much as a commentary of this size will let me. I doubt all of this information and perspective will be new to consistent readers of the Dividend Cafe, but I do believe you will find it relevant to your investing life, and more importantly, relevant to how you think about the economic affairs in which we live. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

December has launched and I have some things to tell you … MARKET ACTION Dow: Down -195 points (-0.56%) S&P: -0.09% Nasdaq: +0.13% 10-Year Treasury Yield: 3.50% (- 19 basis points); down 72bps from the 4.22% high of just five weeks ago! Top-performing sector: Communication Services (+0.29%) & Health Care (+0.24%) Bottom-performing sector: Financials (-0.71%) WTI Crude Oil: $81.28/barrel (+0.91%) Key Economic Point of the Day: The Fed’s favorite inflation measurement (PCE) came in up just +0.2% on the month, less than the +0.3% expected, and known to be tainted by the misleading contribution of housing’s lag effect (which I have written about extensively). The September gain had been +0.5%, so the stock and bond market responded favorably to the disinflationary trend. Initial jobless claims came in at 225,000, actually lower than expected Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

A monstrous rally ensued today when Jerome Powell verified Fed plans to slow down on rate hikes. Do I think this makes sense? Well, I will tell you what I think about all of it in today’s podcast and video! MARKET ACTION Dow: +737 points (+2.18%) S&P: +3.09% Nasdaq: +4.41% The S&P 500 ended the month of November up +5.37% and the Dow ended up +5.7%. Combined with October Q2 has been monstrous, so far anyways. 10-Year Treasury Yield: 3.61% (-14 basis points) Top-performing sector: Technology (+5.03%) Bottom-performing sector: Energy (+0.56%) – one of those days where the WORST sector was up this much WTI Crude Oil: $80.45/barrel (+2.88%) Key Economic Point of the Day: Q3 GDP growth was revised upward to +2.9% annualized (from +2.6% before) Job Openings fell in October to 10.3 million, down 353,000 from the month prior and 760,000 less than a year ago Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

An interesting but not especially noteworthy day in markets today, and we have all the commentary you need right here MARKET ACTION Dow: +3 points (+0.01%) S&P: -0.16% Nasdaq: -0.59% 10-Year Treasury Yield: 3.75% (+5 basis points) Top-performing sector: Real Estate (+1.71%); Energy +1.28% Bottom-performing sector: Technology (-0.98%) WTI Crude Oil: $78.64/barrel (+1.81%) Key Economic Point of the Day: The Case Shiller Housing Index dropped for the third month in a row, now down -13% since August. ASK DAVID “How fair is it to compare the relationship between FTX and Alameda Research to the relationship between the U.S. government and the Federal Reserve? Alameda was using client money to buy up FTX’s token (FTT) in order to bolster the price of the FTT. How much different is that from the Fed using taxpayer money to buy US treasuries?” ~ Marty There are a few pretty substantive differences worth noting. First, the Fed doesn’t actually use taxpayer money to buy treasuries, though it is taxpayer money that is being paid back to the Fed (that is what a Treasury bond is). But the main difference is that the Treasuries on the Fed’s balance sheet are backed by the full faith and credit of the U.S. government, and no principal or interest payment has been missed in nearly 250 years. Alameda was backed by FTT, which is worth less than a beanie baby. Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Market Action Futures opened last night down -50 points or so and were down -160 points into the evening. This morning they were pointing to a down -200 point open pre-market. It is safe to say embedded in market action today is come “catch up” after last week where Wednesday is always a “low participation” day, Thursday saw markets closed for the holiday, and Friday is a token open day where markets close three hours early. The market opened down -50 points and just steadily worsened throughout the day. The Dow closed down -497 points (-1.45%) with the S&P 500 down -1.54% and the Nasdaq down -1.58%. The market’s challenges today were clearly related to concerns about the supply chain and some contagion effect around the disruptions in China (see Top News Stories below) The ten-year bond yield closed today at 3.67%, down two basis points on the day Top-performing sector for the day: Consumer Staples (-0.31%) Bottom-performing sector for the day: Real Estate (-2.80%) There is a lot to be said on the crypto/FTX implosion of the last couple weeks, and I believe even more will be said in the weeks ahead. BlockFi, another large crypto exchange, has now filed for bankruptcy as well Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Today we are one day closer to cutting into that turkey, enjoying some homemade gravy, and spending some quality time with those nearest and dearest to us. A great time of the year to be grateful, and I, Trevor Cummings, am personally grateful to be filling in for David Bahnsen today. I wish you all a wonderful Thanksgiving, and I encourage you to take a moment to watch or listen to what’s happening in markets today (links below). And off we go… Full Blog post here: https://bahnsen.co/3V7jsLO Topics discussed: Dow: +397 (+1.18%) S&P: +1.36% Nasdaq: +1.36% 10-Year Treasury Yield: 3.76% (-6 basis points) Top-performing sector: Energy (+3.18%) Bottom-performing sector: Real Estate (+0.46%) WTI Crude Oil: $81.20/barrel (+1.15%) Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

I actually hate the title this week, because the word “stupid” really is pretty mean. I try not to be mean because I think it is wrong to be mean (I can elaborate if needed). However, in this case, when James Carville famously said, “it’s the economy, stupid,” in the context of what voters cared about in the 1992 election, he basically created a new adage for how we say that a particular thing is really the thing. And that is the topic of this week’s Dividend Cafe – the thing in dividend growth investing, and clarifying some important terminology and concepts around the thing. And as you shall see today, the thing is growth of income. Let’s jump into the Dividend Cafe! DividendCafe.com TheBahnsenGroup.com

Another volatile day with the Dow closing flat after being down nearly -400 points. More to say here: MARKET ACTION Dow: -7 points (-0.02%) – had been down over -300 points at the low and -400 pre-market S&P: -0.31% Nasdaq: -0.35% 10-Year Treasury Yield: 3.76% (+7 basis points) Top-performing sector: Technology (+0.21%) and Energy (+0.12%) Bottom-performing sector: Utilities (-1.79%) WTI Crude Oil: $81.94/barrel (-4.26%) Key Economic Points of the Day: Weekly initial jobless claims came in at 222,000 – not a big move from the week before or variance from expectations Single-family starts in new housing construction dropped to 855,000, down -6% on the month and -35% from post-COVID highs ASK DAVID “What do you think the impact would be on the stock and bond market if the Fed formally changed their inflation target from 2% to 3%? I assume it would be risk on for equities?” ~ Mike S. Yes, it would be. But they won’t. And they don’t need to – they basically already did in 2020 with their adjustment to the 2% standard (that is, they no longer target 2%, but rather an “average” of 2%, meaning they can let things run hot in perpetuity to “blend” to 2% depending on how the math before or after works. In other words, they gave themselves “flexibility.” Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

It was a very choppy (up-down) day in markets, to say the least. The chart itself is testimony to how much the market could not make its mind up today. A few nuggets to chew on here … MARKET ACTION Dow: -39 points (-0.12%) S&P: -0.83% Nasdaq: -1.54% 10-Year Treasury Yield: 3.69% (-11 basis points) Top-performing sector: Utilities (+0.87%) – only other sector up was Consumer Staples Bottom-performing sector: Energy (-2.15%) WTI Crude Oil: $85.32/barrel (-0.32%) Key Economic Points of the Day: Core retail sales were up +6.5% year-over-year in October and up 0.7% on the month (double what was expected). Industrial Production declined -0.1% in October, with mining and utilities output leading the way lower Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

MARKET ACTION Dow: Up +56 points (+0.17%) S&P: +0.87% Nasdaq: 1.45% 10-Year Treasury Yield: 3.76% (- 10 basis points) Top-performing sector: Communication Services (+1.78%) Bottom-performing sector: Materials (-0.11%) WTI Crude Oil: $86.86/barrel (+1.15%) Key Economic Point of the Day: The Producer Price Index only rose +0.2% in October, half of the +0.4% monthly increase that had been anticipated. And much of that lower figure came from a decline of -0.1% in services, the first decline in wholesale services costs in two years ASK DAVID** “Is purchasing gold and/or silver a good investment?” ~ Cindy W. My view has been for quite some time that it is a non-productive investment. What I mean by then is that it does not generate any cash flow and does not have any internal earnings stream, so the value becomes a matter of speculation or supply/demand around use. But gold is not really owned much for industrial use, and even its cosmetic use is somewhat limited, so those who own gold or silver for investment purposes must defend the notion of gold being a sort of inflation hedge or currency proxy. And maybe it will be that someday, but that day is not the last 42 years, where gold is down by -50% relative to inflation – a stunning and shocking fact to all who hear it. I will also point out that the most common thing I have been told over the years is that gold gives us a hedge or substitute against crazy unstable monetary policy. Well, trillions of printed QE dollars since 2012 later, gold is lower than it was a decade ago. This should have been the golden age for gold; instead, it has many wondering what exactly the thesis is. At the end of the day, gold can go up a lot, and it can go down a lot, but it rarely does what people seem to want it to do when they want it to do it. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today’s DC Today is monstrous and requires you to listen to the whole thing. Election aftermath. Fed expectations. Inflation changes. Huge rally days. So much updating. TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Greetings from Nashville, Tennessee, where I will be necessarily giving you a shorter Dividend Cafe today, but one you may find quite interesting nonetheless. I am sure some of you would prefer we just stay out here in Nashville. But alas, we live in crazy times. And speaking of crazy, I want to talk today through a few charts, quickly, that cover the subject of energy investing and technology investing. The angle is a bit different than many choose to take. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

MARKET ACTION Dow: +334 points (+1.02%) S&P: +0.56% Nasdaq: +0.49% 10-Year Treasury Yield: 4.13% (-8.4 basis points) Top-performing sector: Materials (+1.68%) Bottom-performing sector: Consumer Discretionary (-0.30%) – only negative sector WTI Crude Oil: $88.55/barrel (-3.53%) Key Economic Point of the Day: The October NFIB Small Business Optimism Index fell from 92.1 to 91.3 Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Market Action Futures opened down nearly -200 points last night but got back nearly to the flat line by bedtime as Japan and Hong Kong markets were rallying. Then this morning, futures pointed to a +170-point open pre-market. The market opened +80 points and went steadily higher throughout the day. The Dow closed up +424 points (+1.31%), with the S&P 500 up +0.96% and the Nasdaq up +0.85%. It would be malpractice not to start with this chart. One thing I have said over and over is that I believe equity volatility does not stabilize until the ascendant dollar reverses. Friday’s drop in the DXY was the worst day for the dollar since 2015 and the second worst day since the financial crisis (h/t Jim Bianco). Now, the dollar was still UP on the week – we are hardly in a trend of dollar reversal. Volatility is still the story, not a weakening dollar. For now. We are up to 85% of companies reported for the quarter now (Q3 results), and revenue growth looks to be +11% year-over-year with earnings growth of +4.3%. And the earnings outlook for 2023 has only come down from $252/share for the S&P 500 to $233, meaning either this will end up being a very, very mild recession, or else there is more room to go for downward revisions of 2023 profits. The ten-year bond yield closed today at 4.22%, up six basis points on the day Top-performing sector for the day: Communication Services (+1.83%) and Energy (+1.73%) Bottom-performing sector for the day: Utilities (-1.94%) I am not sure that the ESG movement is proving to be much about ideology. It is apparently a lot more about performance, after all. As ESG-popular FAANG stocks have gotten hammered and ESG-hated energy stocks have thrived, new money into ESG products has evaporated. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I appreciated the very kind words I received about last week’s lengthy Dividend Café, and hope the message coming out of that annual week of meetings was clear and useful for readers. I struggled with where to take Dividend Café this week as last week’s covered so many topics, the Fed’s announcement this week was no real surprise at all, and I desire to write less about the Fed in the Dividend Café. On that last part, it isn’t going to happen – and that’s not merely because of my not-so-secret obsession with monetary economics. I may believe (and I assure you, I do) that the Fed policy framework of this era has given a way higher role to the Fed in modern economics than is appropriate, but believing it shouldn’t be is different than believing it isn’t such. So yes, the Fed is going to be a heavy theme in Dividend Café for years to come (whether I like it or not). But if there is one thing I am obsessed about more than monetary economics, it is dividend-growth investing. And I think you will find some observations about dividend equity investing to be very relevant to the paradigm in which we find ourselves. So today is not quite Fed-free, but it is rich in dividends, the very rewards I want for investing clients. Let’s jump into the Dividend Café … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

MARKET ACTION Dow: -146 points (-0.46%) S&P: -1.06% Nasdaq: -1.73% 10-Year Treasury Yield: 4.15% (+9 basis points) Top-performing sector: Energy (+2.04 xxx%) Bottom-performing sector: Technology (-3.00%) and Communication Services -2.83% WTI Crude Oil: $87.95/barrel (-2.29%) Key Economic Point of the Day: 1.485 million continuing claims (up 47k, most since March) ISM Services came in at 54.4 – still expansionary but a point lower than expected, and with New Orders dropping 4 points ASK DAVID “I enjoy listening to your podcasts – thank you for the insights! I am sitting on cash – about 75% of my investable assets. What would be a good philosophy of when to get back into the market and how? I am a believer in dividend based investing.” ~ Adrian One first has to start with the basic principles – not getting invested in a dividend equity portfolio with cash is a riskier than getting invested in one. The reason not to invest immediately is either (a) A belief about market timing that is not grounded in reality, or (b) A desire to not invest all at once at an inopportune time (that being revealed to you in hindsight, not in advance). I reject reason A and am sympathetic to reason B, as long as one does the needed self-assessment to see that reason B is psychological and emotional, not financial or rational. So then if the desire to mitigate timing risk is psychologically helpful, I advise deploying no less than 50% at once, and then the rest either over a period of time periodically (say, 1/10th of the remainder each month for ten months), or tactically (each “bad” down day in markets deploying more). I have no statistical or empirical argument for one over the other as it pertains to how to deploy the second 50%, but feel strongly about getting 50% of uninvested cash at once. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I would have to go back and look at the exact shape but I believe the market action today was quite identical to the last time the Fed announced a known rate hike, where the market bad been down, rallied huge to the upside on the news, sold off substantially, rallied all the way back, then sold off into the close with no new news. It’s all just so, so dumb. But I have more to say than that here … MARKET ACTION Dow: -505 points (-1.55%) S&P: -2.50% Nasdaq: -3.36% 10-Year Treasury Yield: 4.09% (+4 basis points) Top-performing sector: Utilities (-1.02%) Bottom-performing sector: Consumer Discretionary (-3.79%) WTI Crude Oil: $89.35/barrel (+1.11%) Key Economic Point of the Day: ADP private sector number came in at +239k for October vs. 198k expected. BLS jobs report is Friday Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

MARKET ACTION Dow: -80 points (-0.24%) S&P: -0.41% Nasdaq: -0.89% 10-Year Treasury Yield: 4.04% (-3 basis points) Top-performing sector: Energy (+0.99%) Bottom-performing sector: Communication Services (-1.81%) WTI Crude Oil: $88.57/barrel (+2.36%) Key Economic Points of the Day: ISM Manufacturing fell to 50.2, just barely in expansion mode, and the weakest figure since May 2020. New Orders and Backlogs reflected contraction, and only 8 of 18 sectors saw growth on the month. But … Job Openings went HIGHER in September, coming in at 10.7 million (almost a million higher than the 9.8 million expected) Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Futures opened basically dead flat last night and stayed there into the evening. Bright and early this morning futures pointed to a down -100 point open pre-market and it worsened from there. The market opened down -100 points or so and didn’t move much above or below that throughout the day. The Dow closed down -128 points (-0.39%) with the S&P 500 down -0.75% and the Nasdaq down -1.03%. The Dow hit 28,661 at one point October 13, it closed as low as 29,203 on October 10, and yet today sits at 32,732, up +14% from mid-month lows. We are a bit over half way through earnings season (263/500 companies reporting) and sales growth is +10.3% year-over-year (a bit ahead of expectations and earnings growth is +4.2% (a bit behind expectations). Excluding the energy sector, though, earnings growth in the S&P 500 is negative year-over-year. Right now consensus expectations are for $235 of earnings from the S&P 500 in calendar year 2023. The number was $250 in the summer, so it has come down, but really not very much. Operating margins have declined from about 17% plus change to 16% plus change. For the third time this year we have a spike of breadth where the % of companies advancing over a 10-day period is in the 99th percentile (it also happened in January and July). In those other two occasions the momentum was not sustained. As good as things have been the last few weeks, only 40% of companies are above their 200-day moving average. And in some sectors the breadth of companies seeing price improvement is really, really low. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I have mentioned all week how excited I am for this week’s Dividend Cafe, and now here we are. I have explained why our annual week of money manager meetings is so important before, and have written weekly recaps before as well. But this is different. This week not only comes in the midst of a bear market (as the 2008 and 2011 trips did, as well) but was also the best-scheduled meeting we have ever had, meaning, the caliber and topical significance of many of the managers and economists we were in front of was top-shelf. Combine that with a dinner with one of the true legendary CEO’s in America, and it was an absolutely tremendous week. It also comes at a very important time. I do not mean that because stocks are in a bear market, or interest rates are rising. I mean it because of the circumstances behind both of these things, years in the making, with years of profound investment ramifications ahead. I believe a lot of perspective was gained on this year’s trip that needs to be applied to a decade of thoughtful guidance, not merely covering a month or a quarter. I hope you will find the information shared as interesting, actionable, useful, and provocative as I do. And, of course, reach out with any questions at any time. This is the stuff we live for, and I am confident this Dividend Cafe is one you will be glad you read. So with that, let’s all jump in, to this “money manager week recap” edition of the Dividend Cafe! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I returned from my meetings in Palm Beach at the end of the day yesterday and hit the ground running (both figuratively and literally) very early this morning. I love doing the DC Today. Special thanks to Brian and Trevor for filling in, and off we go with an action-packed recap of today … Market Action Dow: Up +194 points (+0.61%) – but off of a +550 point high S&P: -0.61% Nasdaq: -1.63% 10-Year Treasury Yield: 3.92% (-9 basis points) Top-performing sector: Industrials (+1.14%) Bottom-performing sector: Communication Services (-4.12%) WTI Crude Oil: $88.58/barrel (+0.72%) Key Economic Points of the Day: Real GDP grew in Q3 at +2.6% annualized rate as net exports grew in light of energy exports being up and Chinese imports being down. Personal Consumption and Business Investment were up, but only a tad. New Orders for Durable Goods were up +0.4%, below the 0.6% expectation Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com