The Dividend Cafe

Today was a mixed bag, where we continue to see varying results from the Dow and the Nasdaq. Some market pundits have dubbed this as value vs. growth or categorized these baskets of equities as a difference in “duration.” Regardless of how you describe it, we saw some downward pressure resulting from less-than-favorable earnings reports on a handful of large tech companies, and some continued positive momentum from the sectors leading the market on the year (Energy, Healthcare, Consumer Staples, etc.). Market Action Dow: +2.37 (0.01%) S&P: -0.74% Nasdaq: -2.04% 10-Year Treasury Yield: 4.01% (-9 basis points) Top-performing sector: Energy (+1.36%) Bottom-performing sector: Communication Services (-4.75%) WTI Crude Oil: $88.12/barrel (+3.26%) Key Economic Points of the Day: The trade deficit widened in September by 5.7% (from $87.3 billion to $92.2 billion) There is a lot you could potentially dissect here, but the simplest explanation is that a strong dollar means buyers (exports) can buy less of our goods, and US purchasers (imports) can buy more goods, which expands the deficit – falling exports, rising imports. New home sales fell month over month (from 677,000 to 603,000), but we were still slightly above the average estimates of 593,000 For perspective here, new home sales peaked in August 2020 at 1.04 million Although the number of homes sold declined, the average sale price did rise from $436,800 to $470,600 (slightly below the record high of $479,800) Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

We notched a third day of gains in markets today, up now 11% on the S&P from the intra-day lows a few weeks ago in a broad-based rally in both stocks and bonds, and I have plenty to go around the horn in my video and podcast links below. I have also sprinkled in a few takeaways from over 20 portfolio manager meetings last week in New York to add to your listening pleasure. Take a listen, and reach out to me, Brian Szytel, with questions. Market Action Dow: +337 points, +1.07% S&P: +1.63% Nasdaq: +2.25% 10-Year Treasury Yield: 4.10% (+ 13 basis points) Top-performing sector: Real Estate +3.94% Bottom-performing sector: Energy -.05% WTI Crude Oil: $84.92 barrel +.40% Key Economic Points of the Day: Consumer sentiment came in lower than expected at 102 versus expectations of 105. The Richmond Fed index came in weaker than expected today at -10. The US Dollar was lower on the day by about 1%, along with interest rates across the yield curve that both aided today’s equity rally. Terminal Fed Funds Rate shown ending north of CPI in all of the last rate tightening cycles is shown below. Today we are at 3.3% versus 8.2%, and while those rates will likely converge, we just aren’t there yet folks… Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I think we have a meaty one today, so here we go with this Monday edition of DC Today … Off we go … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Greetings from New York City, where I am two hedge fund meetings away today from being done with a week of extraordinary meetings, insights, and collaboration with our portfolio management partners. Some key takeaways are being summarized for next week, and a deliverable will be made available. More importantly, c It has been everything I hoped it would be this week, and more. It is a shorter than normal Dividend Cafe this week because of the meeting load (and post-meeting download time). But I think what I do today you will find useful and valuable, as I use a Q&A format to answer a few key questions about the current investing state of affairs. Let's jump into the Dividend Cafe ... Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Trevor Cummings here, and I am honored to be joining you for the third day in a row. As mentioned yesterday, David Bahnsen will be back tomorrow with his weekly commentary – Dividend Cafe. Additionally, I invite you to subscribe to my weekly writings at thoughtsonmoney.com. Now, off to the updates from this busy Thursday market day… Dow: -91.01 (0.30%) S&P: -0.80% Nasdaq: -0.61% 10-Year Treasury Yield: 4.232% (+10.3 basis points) Top-performing sector: Communication Services (+0.36%) Bottom-performing sector: Utilities (- 2.51%) WTI Crude Oil: $85.71/barrel (+0.19%) Key Economic Points of the Day: • Liz Truss has resigned as U.K. Prime Minister ◦ This was the shortest tenure in British history ◦ Note, her Finance Minister was dismissed from his post after just 38 days • Jobless claims came in at 214,000 on an expectation of 230,000 ◦ The impacts of Hurricane Ian on the data looked to be much lighter this week ◦ The total number of people collecting unemployment benefits sits at 1.39 million, near a 50-year low ◦ In simple terms, the labor market remains tight • As to be expected, U.S. existing-home sales were down ◦ The figures came in at 4.7 million, nearly on the dot with expectations ◦ This is eight consecutive months of decline and, when compared to September 2021, a slide of 23.8% ◦ Reminder, mortgage interest rates are skyrocketing, the general population is on edge regarding inflation and recession, and this combination of anxiety and affordability is slowing down activity • The Philadelphia Fed manufacturing index published today ◦ This regional look is meant to give a sneak peek at what the national ISM data might look like next month ◦ the numbers came in at -8.7 on an expectation of -5 (note, any number below 0 represents declining business conditions) TheDCToday.com DividendCafe.com TheBahnsenGroup.com

Welcome to DC Today where I, Trevor Cummings, will be your guest host again on this fine Wednesday. Please join me for the video or podcast (links below), as there is quite a bit to cover and discuss today. David Bahnsen will be back on Friday with his normally scheduled program – Dividend Cafe Dow: -98.54 (-0.32%) S&P: -0.66% Nasdaq: -0.85% 10-Year Treasury Yield: 4.131% (+13.3 basis points) Top-performing sector: Energy (+2.94%) Bottom-performing sector: Real Estate (-2.56%) WTI Crude Oil: $85.63/barrel (+3.39%) Key Economic Point of the Day: Today we saw the published data for new housing starts and building permits Housing starts came in at 1.4mm on an expectation of 1.47mm Down 8.1% seasonally adjusted and down 7.7% year-over-year in September Looking at the attribution, we see new homes fell 4.7% and new apartment construction fell 13.1% Building permits came in at 1.56mm on an expectation of 1.5mm Rising 1.4% in the month of September Permits for new homes fell 3.1%, with apartment construction rising 8.2% Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

This is Trevor Cummings joining you as your guest host on DC Today. You can find my weekly commentary at www.thoughtsonmoney.com. Also, please join me for the DC Today video and podcast – see below. Market Action Dow: +341.67 (1.13%) S&P: 1.16%% Nasdaq: 0.9% 10-Year Treasury Yield: 3.994% (+2 basis points) Top-performing sector: Industrials (+2.36%) Bottom-performing sector: Communication Services (+0.54%) WTI Crude Oil: $83.22/barrel (-2.6%) Key Economic Point of the Day: • Industrial production in September rose 0.4% which was a surprise to the upside – estimates were 0.1%. Additionally, August was revised slightly to the upside, as well; a revision from -0.2% to -0.1%. • The National Association of Home Builders’ (NAHB) monthly confidence fell 8 points to 38 in October, making 10 consecutive months of decline. Note, the index was at 80 last October and this 10-month decline tops the record of consecutive declining months set in ’06/’08. Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

Greetings from the world’s greatest city where we kicked off money manager meeting week with significant discussions with the CIO, the taxable fixed income team, and the levered loan group at Voya, and this afternoon met with the real estate team, private equity group, and head real estate folks at Blackstone. It won’t be this many meetings every day this week (it better not be), but it was a great way to start off the week. My summary of the whole week will be prepared at the end of the week for public consumption. Futures opened last night up +100 points and stayed positive throughout the night even as Japanese markets struggled. By bedtime, we were about +150 in overnight futures and at the crack of dawn this morning (now on eastern time zone), futures were pointing to a +300-point open. The market opened up +500 points and got as high as +675 points, and stayed very level throughout the day. The Dow closed up +550 points (+1.86%) with the S&P 500 up +2.65% and the Nasdaq up a massive +3.43%. UK bonds rallied violently this morning as yields collapsed, no doubt the key correlative event to the U.S. stock market rally overnight. The 30-year and 20-year dropped by a stunning 40 basis points, and each point on the yield curve from three years up to ten years was down by almost the same. Anyone who bought British bonds last week made about two years’ worth of return in about 24 hours. The ten-year bond yield closed today at 4.01%, up less than a basis point on the day I am not sure what to think about the measurement of bond returns in 1721 when churning butter was the most profound technological advancement of the decade, but I do know this: 2022 is going in the history books for global sovereign bond returns Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I hear often from investors who are focused on the “fun” parts of risk-asset investing that they “don’t care” about the bond market. Truth be told, it doesn’t do a lot to excite me, either. Most professional bond managers I know seem to be borderline Communists (just kidding), and the bond market itself lacks the human action that I believe is embedded in things like operating enterprises. But the bond market cares about us whether or not we care about it, and that is the subject of today’s Dividend Cafe. It is a message I like a lot, and I believe if you jump into today’s Dividend Cafe, you will come out more enlightened about economic growth, stock market pricing, interest rates, and the decisions we face as investors. So let’s do just that. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Okay, so one of the largest intra-day market moves on record (from down -550 to up +950 – a 1,500 bottom-to-top move today). So there is market action AND inflation/economic action to unpack, and you have come to the right place: MARKET ACTION Dow: Up +828 points (+2.83%) – was down -550 points at the low S&P: +2.60% Nasdaq: 2.23% 10-Year Treasury Yield: 3.95% (+5 basis points) Top-performing sector: Financials (+4.14%) – I am not going to take the time to look it up, but I will safely guess that this is the best day in years for Financials; in fact, I bet HALF of this would be the best day of 2022 for financials … NOTE: Energy was right behind it at +4.08% Bottom-performing sector: Consumer Discretionary (+0.98%) WTI Crude Oil: $89.25/barrel (+2.27%) Key Economic Point of the Day: CPI (headline) increased +0.4% for the month where +0.3% had been expected. Headline inflation is up +8.2% on the year vs. a peak of +8.9% several months back. Core CPI (ex food and energy) was up +0.6% in September. Energy prices fell -2.1% but food prices increased +0.8%. It is all about food inflation in the aggregate data. Services is the source of increased inflation. Rents were up +0.8% on the month and primary residence impact is up +7.2% year-over-year. This is simply not true in the present tense but the lag effect is the driver here as we shall all see in a couple months’ time. The Fed has NO influence on this, but Health insurance prices were up a staggering 2.1% on the month and are up +28% on the year Airfare is up 43% on the year (base effect from limited travel a year ago) Goods prices were FLAT – slowest year-over-year increase since May 2021 (+6.6%) Used car prices down -1.1% on the month Clothing down -0.3% Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market zigged and zagged all day and was down -100 and up +200 before closing down a tad in the final minutes of trading. Lots to say about the Bank of England in today’s podcast … MARKET ACTION Dow: -28 points (-0.10%) S&P: -0.33% Nasdaq: 0.09% 10-Year Treasury Yield: 3.89% (- 4 basis points) Top-performing sector: Energy (+0.75%) Bottom-performing sector: Utilities (-3.42%) – the collapse in this sector in the last month is absolutely unprecedented WTI Crude Oil: $87.09/barrel (-2.53%) Key Economic Point of the Day: Core PPI (ex-food and energy) came in exactly in line at +0.3%. August’s PPI was revised downwards. September’s PPI headline read (w/ food and energy) was +0.4%. The year-over-year headline PPI is +8.5% vs. +8.7% last month. Processed goods prices fell for the third month in a row. Prices for transportation and storage fell -0.2%. Goods down, services up. Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

An odd day (old school) as the Dow started down a bit, rallied way higher (up +400 points at one point), fell into negative territory, then closed up +36 as old-guard defensive sectors did very well (Real Estate, Consumer Staples, Health Care) and the cool stuff got hit. More to say on everything here. MARKET ACTION Dow: +36 points (+0.12%) S&P: -0.65% Nasdaq: -1.10% 10-Year Treasury Yield: 3.937% (+5 basis points) Top-performing sector: Real Estate (+1.02%) and Consumer Staples (+0.93%) Bottom-performing sector: Communication Services (-1.63%) and Technology (-1.52%) WTI Crude Oil: $88.68/barrel (-2.73%) Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I am not sure I have complained enough about the absurdity of having a day when the stock market is open and the bond market is not. Columbus Day is this odd anomaly where they honored the great explorer in financial markets in the most convoluted way possible – by taking away banking transactions and bond activity but by having stock exchanges open (for those who have not read my prior writings on such a thing, it is highly distortive to markets, as many financial actors function in both spaces at once, so lose use of the left hand while they continue to use their right hand). That said, today was such an absurd day. I did write a Dividend Cafe Friday with more information about the bear market in which we find ourselves, and the historical lessons that may be useful as we proceed through this. The video is here with the same comments on podcast here. I was on CNBC this morning giving my feedback to comments the media was running with from Jamie Dimon (the CEO of JP Morgan). My first comment was spot on. My second comment was spot on. And my third comment was about to hit the ball out of the park, when all of a sudden …. (you’ll have to see). Off we go … Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

I wouldn’t say that I like this, but I would say that I understand it. But last week’s Dividend Cafe was, in just a few days, the most widely read Dividend Cafe I have ever written. I hope that is because clients and readers flocked to the philosophical takeaways of a deeper reflection on bear markets like the one we are in now. But I know that the ratings of financial TV networks skyrocket higher in bad times and that it has a lot more to do with the reality of human nature than anything else. Fear gets clicks and views. I don’t do fearmongering. My Dividend Cafe last week was actually the opposite of fearmongering. I sought to present the highly rational case for a real glory in the aftermath of bear markets for investors who behave well. Nevertheless, I can understand that the general interest in the topic is largely related to the fear and emotion that goes with the uncertainty of the moment. This week I am keeping the topic alive, partially because the current bear market did not end in the last five days but also because there is more to be said about the history of all this and the future. And I believe you will find both illuminating in the uncertainty of the moment. So let’s jump into the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

A little market move down today – nothing to write home about. But more information on big picture you will want to listen to right here … MARKET ACTION Dow: -347 points (-1.15%) S&P: -1.02% Nasdaq: -0.68% 10-Year Treasury Yield: 3.83% (+7 basis points) Top-performing sector: Energy (+1.82%) – fourth day in a row Bottom-performing sector: Utilities (-3.30%) – second day in a row; rare and nasty WTI Crude Oil: $88.90/barrel (+1.26%) Key Economic Point of the Day: Initial jobless claims came in at 219k, higher than the 203k expected (though continuing claims came in a tad less than expected) Mortgage rates at 16-year high … (6.75%) ASK DAVID “Given the tight labor market and recognizing the number of people that left the workforce over the past 2+ years, is it reasonable to expect a decrease in unemployment numbers any time soon? If it’s not reasonable to expect a decrease in unemployment numbers, do you think the Fed should use this criteria as a benchmark for monetary policy?” ~ Ed D. Unfortunately, I do believe unemployment will go higher, and I do believe it will be relevant to Fed policy. Technically their dual mandate includes full employment, so if they pursue a monetary policy that increases joblessness I believe they will reverse course. I don’t think it is the benchmark they say it is, but I do think right now it gives them cover in non-effective monetary tightening (if anyone still believes the Fed Funds rate is causing inflation I have a bridge to sell them, assuming I can get the parts and labor). Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

MARKET ACTION Dow: -42 points (-0.14%) S&P: -0.20% Nasdaq: -0.25% 10-Year Treasury Yield: 3.75% (+13 basis points) Top-performing sector: Energy (+2.06%) – third day in a row top sector Bottom-performing sector: Utilities (-2.25%) WTI Crude Oil: $87.97/barrel (+1.69%) Key Economic Point of the Day: ISM Non-Manufacturing (Services) came in at 56.7, still well into expansion and above the expectation but less than month’s levels. Services are expanding while Goods are slowing. Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

The second violent rally day in a row took place today, with the market up nearly +6% to start off October, erasing all of the downturn of the last ten days of September (for now). More to say in our daily podcast, of course! MARKET ACTION Dow: +825 points (+2.80%) S&P: +3.06% Nasdaq: +3.34% 10-Year Treasury Yield: 3.63% (-2.2 basis points) Top-performing sector: Energy (+4.34%) Bottom-performing sector: Consumer Staples (+1.53%) WTI Crude Oil: $86.30/barrel (+3.17%) Key Economic Points of the Day: Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

A big rally day after a bloodbath week in markets. Lots to say on markets and more markets today. The thing most on everyone’s mind right now is surely the raging bear market (in both stocks and bonds). I addressed it thoroughly in Friday’s Dividend Cafe and really encourage you to read it here. The weekly video is here, and the same comments from the video are in podcast form here. The underlying theme is that our pathos very understandably sees times like these as negatives, while our logos must be reminded of how wonderful times like these prove to be. I was on Varney Friday, was on Kudlow’s radio show (WABC) Saturday, and on Charles Payne today talking markets. Off we go … Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

Today’s Dividend Cafe is sort of the reason the Dividend Cafe started. I didn’t call it Dividend Cafe back then, I didn’t have a website for it, I didn’t post it on social media, it wasn’t re-published on a multitude of financial websites, there was no podcast, there was no video, and it didn’t have nearly 20,000 subscribers. In fact, there couldn’t be any “subscribers” because there was no organized list – just me sending an email from Microsoft Outlook manually to clients I thought would like to hear what I had to say. And the catalyst? A bear market. The week I began doing this “weekly commentary” we were not in an “ordinary” bear market. In a ten day span Fannie and Freddie had been taken over by the government, Lehman Brothers had declared bankruptcy, AIG had gone down, Merrill Lynch ran into the arms of Bank of America, and my own firm at the time, Morgan Stanley, was in its own existential (but soon to solved) crisis. Mortgage bonds were collapsing, housing prices were utterly collapsing, and yes, the stock market was in freefall. Today I write to talk about bear markets. Not societal collapse. Not the mother of all credit implosions. Not a deep and unbearable recession (the “great” recession). But bear markets. The kind where stocks drop and investors do one of two things. We are going to talk about those two things, and I hope when you are done reading you will not merely feel better about this bear market, but even just a little bit excited (as counter-intuitive to human nature as that may be). So let’s jump on in to the Dividend Cafe, as it does what it was always created to do – present the unvarnished truth in matters of macroeconomics and investor behavior, and do so towards the greater end of the very purpose for which we at The Bahnsen Group work. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

We reversed much, although not all, of yesterday’s broad-based rally in today’s market sell-off – what one day giveth another taketh away. I unpack it all in a deep capital markets dive for you in today’s video and podcast links below that you’ll not want to miss. Dow: -458 points (-1.54%) S&P: -2.11% Nasdaq: -2.84% 10-Year Treasury Yield: 3.77% (down 6 basis points) Top-performing sector: Energy (- .13%) Bottom-performing sector: Utilities (-4.07%) WTI Crude Oil: $81.47/barrel (- .83%) Links mentioned in this episode: TheDCToday.com TheBahnsenGroup.com

A rally day on Wall Street and a thorough explanation in today’s DC Today podcast! MARKET ACTION Dow: +549 points (+1.88%) S&P: +1.97% Nasdaq: +2.05% 10-Year Treasury Yield: 3.73% (-23 basis points) Top-performing sector: Energy (+4.40%) Bottom-performing sector: Technology (+0.92%) – worst sector still up by almost 1%, and this was heavily weighed down by Apple being negative WTI Crude Oil: $81.88/barrel (+4.31%) Key Economic Point of the Day: National Rent Report showing national residential rents down -0.2% month-over-month, first monthly median decline in over two years Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Markets took a decent lead at the open but couldn’t hold it, and there is some more to say about the bond market in today’s daily podcast! TheDCToday.com TheBahnsenGroup.com

This is a long DC Today with a lot more market talk than you are used to, largely because the “legacy” version is only one day a week and I am purposely trying to pack a lot in. The last week has been brutal for markets and I have a lot to say today to quantify it, and a lot coming Friday in Dividend Cafe to qualify it. I was the market guest on Maria’s Wall Street over the weekend, discussing all sorts of aspects of the market and investing environment. Dividend Cafe on Friday dug deeper into foreign policy and geopolitical threats and their potential ramifications to markets. The video is here and same comments on podcast here. Off we go … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The stock, bond, and housing markets are in pretty real distress right now as higher rates re-price risk assets, and general instability in monetary policy becomes the natural consequence of years of excess and irresponsibility. And yet, everyone is already talking about it, making it a far less compelling candidate for this week’s Dividend Cafe. I have covered plenty on monetary policy this year and it will remain a primary macroeconomic focus in my shop for years to come. And as far as the general equity market distress playing out, I do think a general primer on bear markets next week will be useful (I have already begun writing it in my head). But this week, I believe we are due for a topic that may be more dramatic than even stock market volatility, inflation, or Fed breakage. I think that through the lenses we normally think about various international affairs, particularly as it pertains to countries we consider enemies of the United States, we are missing some economic and market-sensitive ramifications that will be important to better understand. So grab your globe but not your passport, and let’s devote this week’s Dividend Cafe to a few matters of international significance. I confess up front that it may not all cheer you up, but I can promise you this: It is not going to be the standard level of depth you are often exposed to. Let’s dive deeper, and jump in, to the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market really doesn’t want to close strong these days, going from +100 to -100 in the last ten minutes of trading today. MARKET ACTION Dow: -107 points (-0.35%) S&P: -0.84% Nasdaq: -1.37% 10-Year Treasury Yield: 3.71% (+20 basis points!) Top-performing sector: Health Care (+0.51%) Bottom-performing sector: Consumer Discretionary (-2.16%); now down -27% on the year, just 1% away from the down -28% of Technology but not nearly as bad as -36% Communication Services WTI Crude Oil: $83.45/barrel (+0.60%) Key Economic Points of the Day: The Bank of Japan left their policy rate unchanged (as expected) Initial jobless claims came in again at just 213,000, and last week, it was revised down to 208,000. The four-week average is now the lowest since early June. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I’d love to say “Fed comments caused the market to drop today” but it would be untrue. Within seconds of the Fed release the market went from +200 to -200, but then the market went back to +250, and that was all AFTER the Fed announcement, the release, and the Powell press conference. THEN, after all that, the market unraveled into the final thirty minutes of trading. Dow: -522 points (-1.70%) S&P: (-1.71%) Nasdaq: (-1.79%) 10-Year Treasury Yield: 3.53% (-4 basis points) Top-performing sector: Consumer Staples (-0.34%) Bottom-performing sector: Consumer Discretionary (-2.37%) WTI Crude Oil: $83.04/barrel (+0.12%) Key Economic Point of the Day: Existing home sales dropped -0.4% in August and are down -19.9% from a year ago Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

A volatile day to the downside in markets today as traders await comments from the Fed tomorrow and as bond yields bring down risk asset valuation. Dow: -313 points (-1.01%) S&P: -1.13% Nasdaq: -0.95% 10-Year Treasury Yield: 3.56% (+7 basis points) Top-performing sector: Technology (-0.51%) Bottom-performing sector: Real Estate (-2.57%) WTI Crude Oil: $84.16/barrel (-1.38%) Key Economic Point of the Day: Housing starts came in at 1.575 million annualized for the month of August, a whopping 125k above expectations. Nearly all of the excess vs. expectations were in multi-family, with single-family coming in the second lowest since mid-2020. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

It is not accidental that I write so much about the Energy sector. First and most applicable, we are big energy investors at The Bahnsen Group, carrying an allocation in our Core Dividend portfolio that is triple the weight that the S&P 500 has. What is happening in energy markets has profound relevance for the economy at large, for all people in their everyday lives, and across all national borders. Few things are more globally relevant than access to energy. But if I am being totally honest, even apart from the large financial exposure we have to the energy space, I love this subject because energy fascinates me. It should fascinate anyone who spends just sixty seconds thinking about the fact that natural resources around for thousands of years with almost no known utility have created a more significant increase in the quality of life for more people than anything under the sun. “Transformed energy” sits at the heart of all economic activity, as my friend Louis Gave is fond of saying. You cannot destroy energy, which is both a law of the universe most of us learned in elementary school and, these days, apparently a vital message for investors. In the physical universe, it merely means energy is constantly changing – usually for the purpose of doing work – but in the investing world, I believe it means something different but perhaps not entirely disconnected. So let’s do a little autumn analysis of the energy sector, where we are, where we may be going, and see what may edify us in the discussion. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Special thanks to all who have reached out to say how much they like and appreciate the new format. Between the addition of a podcast, a video, a transcription of the podcast, and the continuation of a daily written synopsis, along with the legacy version on Monday and the real meat of Dividend Cafe on Friday, I think the vast majority of readers have been extremely positive in their feedback. Ironically, the one or two nasty emails we got (you should see the stuff my communications team receives sometimes) were not even from clients, soooooo …. I do recognize that sometimes people like routine and familiarity (I am one of them), but change is part of life, and these changes were done to add mediums that are most popular and sought after, and to harmonize the workload with the reality of someone who has worked 16-18 hours per day for 25 years. Beyond that, I’m pretty much done talking about it … Okay – off we go! MARKET ACTION Dow: -173 points (-0.56%) S&P: (-1.13%) Nasdaq: (-1.43%) 10-Year Treasury Yield: 3.45% (+3.7 basis points) Top-performing sector: Health Care (+0.55%) Bottom-performing sector: Energy (-2.54%) WTI Crude Oil: $85.30/barrel (-3.62%) Key Economic Point of the Day: Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The day after the market sell-off you had a small move higher in each equity index but I unpack it all and then some here … MARKET ACTION Dow: +30 points (+0.10%) S&P: +0.34% Nasdaq: +0.74% 10-Year Treasury Yield: 3.41% (- 1 basis point) Top-performing sector: Energy (+2.85%) Bottom-performing sector: Real Estate (-1.39%) WTI Crude Oil: $88.68/barrel (+1.57%) Key Economic Point of the Day: Even as the Consumer Price Index came in a bit higher than expected yesterday, the Producer Price Index dropped -0.1% in August (consensus was for no change) ASK DAVID “When you refer to the futures market predicting a 88% chance of a 75bp rate hike or whatever the percentage and outcome may be, how is that determined?” ~ Don D. The CME (Chicago Mercantile Exchange) makes a market in fed funds rate futures. Real people using real money to buy real futures contracts on what the real rate may be at real future intervals. This futures market is the gold standard of measuring market expectations around the fed funds rate. ON DECK I will be on set co-hosting for an hour tomorrow with Stuart Varney (9am-10am ET) on Fox Business. CHECK OUT I was on set with Maria Bartiromo on Fox Business early this morning talking energy, inflation, markets, growth, and more. A worthwhile interview! Links mentioned in this episode: TheDCToday.com DividendCafe.com TheBahnsenGroup.com

The Consumer Price Index (Headline CPI) came in +8.3% over where it was a year ago. Core CPI (which excludes food and energy) came in at +6.3% versus a year ago. Food prices and the lagging effect of shelter cost put upward pressure on prices while energy prices and used cars put downward pressure on prices. TheDCToday.com DividendCafe.com TheBahnsenGroup.com

It’s pretty anti-climactic that I announce the new DC Today plans on Thursday and then we get to Monday and … it’s the same DC Today you are used to … But that is the idea – no difference in the written program for DC Today on Monday, but with the addition of this daily podcast (and video) … TheDCToday.com DividendCafe.com TheBahnsenGroup.com

I first want to thank everyone for the extremely positive feedback last week on the somewhat unique Dividend Cafe juxtaposing USC football and markets. It was fun to write and, at least for some of you, appears to have been fun to read. But for those who prefer the serious stuff, we are back to normal this week, and I think it is time I cover a topic that comes up a lot anecdotally, but I don’t think has ever received headline treatment in the Dividend Cafe. And yet, it is one of the single most important topics in the field of economics and finance … I refer to currencies, the U.S. dollar in particular, but really the overall global dynamics of currency and what it all means to investors. Currency ramifications impact all investors all the time, yet we rarely contemplate why or how. Today I want to play around a bit with some aspects of this critical topic in the present reality. Jump on into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Why in the world would I waste the precious soundwaves of Dividend Cafe to recap day-by-day market action when this hallowed ground is supposed to be reserved for what actually matters in markets (and life)? Because we are entering football season, of course, and how this all connects is about to be readily apparent to you. DividendCafe.com TheBahnsenGroup.com

Long-time readers of Dividend Cafe know that the real intent of this weekly commentary is to delve into the macroeconomic – the big picture – the high-level stuff that impacts investor decisions and behavior. Today in honor of the obsession over Jerome Powell’s speech at Jackson Hole (being delivered shortly after I hit “submit” on this commentary), I want to talk not an iota about the Fed, monetary policy, or really any aspect of macroeconomics. Rather, I want to actually dive into a question that is hyper-practical – more micro than macro – and that is when to sell a stock. I was in the process of answering a question about this topic for the Ask David section of The DC Today when I realized it really warranted the full Dividend Cafe treatment. So here we are – a Fed-free Dividend Cafe dedicated to the ever-practical issue of sell discipline. We’ll discuss Jackson Hole in Monday’s DC Today (only because I have to), but for today let’s talk about how dividend growth equity investors like ourselves think about the right time to sell a stock. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

We have a fun Dividend Cafe for you this week, with by far the most important things on my mind in the summer of 2022 getting all of the attention. This is a short, easy read, and easily digestible for anyone looking to make heads or tails of the current market conditions. I will spare you further introduction and jump right into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I kind of like this week's Dividend Cafe. We are going to do a very quick look into how the Fed fuels Japanification, but more specifically, how low-interest rates hurt growth. It is one thing (and a more severe one at that) that monetary policymakers generally view artificially low rates as a really good thing to fuel economic growth, but at this stage in my life and career, there is little I can do about that. It is another thing altogether that so many investors think is a great thing. Today I want to do a quick lesson on why it is not just wrong but a dangerous fallacy, that is, wait for it, undermining economic growth. Speaking of growth, many want to know when the Emerging Markets will deliver it. I think you will benefit from that lesson today as well. Unfortunately, the EM gain is likely to be Europe's pain, so get ready for a case of hot-cold. And finally, I want to add to last week's talk about "gross domestic product" in how we think about economic growth. You may find it illuminating. Jump on into the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

One of the hardest things about being an economic commentator in this day and age is that economic commentary requires nuance, and this day and age requires narratives. There is to be a single narrative about X, and any variation around, above, beneath, or of the exact X narrative is heretical or at least unappreciated. It is a tough way for society to function, but it is an especially tough way to do economic analysis. I do not merely refer to the inevitable complexity involved in topics like these that are, well, complex. You are smart readers, and I do my very best (sometimes better than others) to make complex topics a bit more comprehensible in my writing and speaking. Readers and listeners can judge how effective I am there, but I do try. No, this is not about complexity, but nuance, which basically can be quite simple at times; it is just that it doesn't fit into the script of a narrative. It isn't binary. The nuances of proper economic analysis aren't always fit for a forced narrative. Such is the moment we are in, and today I want to answer your questions about the state of the economy. If I do my job right, everyone will be mad at me when all is said and done (I should fail at landing in either of the primary narratives of the day). Such is the plight of an economic truth-teller in 2022 ... Jump on into the Dividend Cafe! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I really did mean to write this entire piece last week but simply ran out of time and space. I will give you a recap today of last week’s takeaways but then make sure this week’s wraps a bow around our updated point of view on inflation. This is not merely a philosophical exercise. There is an abundance of empirical support provided for my position, and I think you will find a lot of the information about the present state of affairs surprising. You may draw a different conclusion on the matter than I do, but my conclusions on what this means for the decade ahead have profound implications for citizens and investors alike. Again, this can’t be armchair stuff for a real asset allocator; this is what we call fiduciary responsibility. So grab a cup of coffee and get comfortable. This is one of those truly Dividend Cafe editions. Jump on in… Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

It has been a year and a half since I first took up the inflation/deflation debate as a matter of contemporary debate (a part 1 and a part 2). As much as I wished then (and now) that the great economic fight we would have for the next thirty years was inflation, I believed then (and now) that the great economic fight we will have for the next thirty years is better referred to as deflation (a term that itself will require more precise explanation. Some more in-depth updates on the subject have also been produced with a deep desire to really explain and contextualize the state of affairs. Nevertheless, the responsibility of clarity in messaging is with the writer, not the reader, and while there is only so much I can do to make sure those reading it understand it, I have a pretty strong desire to keep doing more. Let me just leave the introduction there and dive into this topic. I suppose I do hope some clarification comes out of this, but truth be told, I am more passionate about just reiterating the great economic message of our time. My agenda is not academic, and it is not political. I am responsible for actual client capital, which is to say, the instrumentation by which actual human goals and needs are met. I take it very, very seriously. And this subject sits at the center of what I believe is a generational economic challenge. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I send this week’s Dividend Cafe at the end of a 24-hour trip to Las Vegas, where I spoke at a conference yesterday. 2,600 people have come to the 110-degree city of sin for the purpose of hearing various economic and political musings, and one such forum of musings was a panel with myself, Steve Forbes, George Gilder, and Mark Skousen discussing, of all things, my book! It was a surreal experience to be next to Gilder, whose Wealth and Poverty was a transformative book in my intellectual development as a pretty darn young guy (you would actually think less of me if you knew how young I was when I read it). Anyways, by the time you read this, I will be on a plane back to New York City Friday afternoon, where I will be working all of next week before returning to Newport Beach next weekend. We are living in a time where there have been more bad ideas than money to invest in (or at least bad prices at which to buy those ideas). Soon we will see more money than people acting on bad ideas. But right now, a little parsing out of what the laws of contrarian investing mean is in order, and I think you will find it fascinating. Jump on into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The fundamental tension in the economy today, and less directly so, in markets themselves, is really simple: Is a recession coming that slows down price inflation? That question is simple to identify as the economic tension point of the moment, but it is not simple to answer. One reason for this complexity is that some of the premises brought to the question are not to be taken for granted. And this is the subject of today’s Dividend Cafe – what do we know about current economic conditions, potential economic developments, and eventual economic results? What do some think they know that could be wrong? And what is an investor to do through all of this? I have some thoughts to share that can hopefully bring clarity to much of this, and some of those thoughts are merely clarifying, while others may be non-consensus views. Either way, convictions run deep at The Bahnsen Group, as does humility. That is another “tension” that we hold gladly. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Happy Independence Day weekend to you and yours. Or for those without much historical interest, Happy Fourth of July. Today’s Dividend Cafe is not going to dive into the state of the market, though I can promise you that Tuesday’s DC Today will have plenty to say about the first half of 2022 and our expectations for the second half. But for today, I want to look at this Independence Day holiday that we celebrate in our country, and analyze what the Fourth of July has to do with markets and economics. I make no bones out of the fact that I love my country, and much have that has to do with understanding what this country is – an idea, and an exceptional idea, at that. How the exceptional idea of America ties into markets, economics, and investing, is where we are going in today’s Dividend Cafe. Jump on in – there will be time enough for BBQ and sun this weekend. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I’ll be very honest with you – I prefer single-topic Dividend Café issues. I wrote a multi-topic weekly commentary for many years before moving to a “mostly” single-topic orientation, and I have never loved writing Dividend Café more. I feel that the weekly information quality and value is higher with a singular focus each week, and I think the “variety” style works better in our daily market bulletin that is Dividend Café’s cousin, The DC Today. But today’s Dividend Cafe is a bit different. There are a few “big” issues that people are bringing up daily, and I want to do a little multi-question fireside chat with you. So jump on in to the Dividend Cafe … I promise you’ll find something of interest, and maybe even intellectually transformative! Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Volatility continues and certain market sectors are reeling, along with investors. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Once again we find ourselves in the midst of a tumultuous week in the markets, and yet with bigger fish to fry in the Dividend Cafe? What could be bigger than a 1,400 point drop in the market on the week, and a 3,000 point drop in the last two weeks (note: I am hitting “send” on this before the market opens on Friday, and pre-market action Friday does appear to be to the upside right now, but you know how that goes)? Well, for one thing, I think most of the commentary I have to offer on the specific things taking place this week in markets was well-covered in each edition of The DC Today this week. If day-to-day market distress is distressing you, I hope you will turn to The DC Today as a resource. Reading it cannot make the market go up any more than my act of writing it can, but hopefully, it can provide clarity around where this volatility fits into expectations for investors who have real financial goals in their lives. So the bigger fish to fry I refer to are not about the specific Fed meeting of this week, or this most recent interest rate hike, or even my broader theme about the carnage in “shiny object” investing … It has to do with discussions around a potential deeper level of concern in financial markets, and what they may look like. I hope after reading this week’s Dividend Cafe you will feel a bit smarter, a bit more informed, and a bit more at peace. Let’s jump into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I purposely wrote this week’s Dividend Cafe before the CPI number posted this morning at 8:30 am ET. Lots of traders were getting in front of this late Thursday, and a market that had rallied up +2,000 points in the last two weeks was down -1,000 points in the last five days and is now down a lot as markets open Friday. We are in a period of short-term traders trying to front-run the Fed, but more particularly, trying to front-run those who they think are trying to front-run the Fed. What I mean is not as complicated as it sounds: The basic belief is that if inflation data looks worse, for longer, the Fed becomes more Volcker-like in their hawkish tightening, and that hurts risk assets; therefore, if we see a whisker of “more inflationary than expected” some will start selling, and we should sell before they sell. Well, good luck with all that. Today I am going to look at what could make this market get worse, not in a “traders are going to do this” kind of way, but in a real systemic, significant, macro kind of way. It will turn into a two-parter, no doubt. But let’s look behind the headlines of the day, the CPI print of the moment, and the Fed actions of next week. Let’s dive into the Dividend Cafe … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I am doing three things in the Dividend Cafe today that I pretty much never do. For one thing, I am blatantly ripping someone off (you’ll see; it’s not as bad as it sounds). Secondly, I am getting pretty biographical (though I guess I do that every once in a while; last week being the most recent example). And then finally, I am really focusing on one pretty specific and even granular investment topic. Now that, I do every now and then – but not like this. You’ll see. So jump on into the Dividend Cafe to see me rip off someone else’s work, talk about a very personal and biographical aspect of my life, and apply it all to a really specific investment lesson and principle – one that should not be missed. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I really do not know how today’s Dividend Cafe is going to be received. I obviously believe in every word of what I have typed or I wouldn’t have typed them, yet I have found two things to be the case in my efforts at thought leadership in matters of markets and economics: (1) People sometimes do not like it when I veer off of a stock market focus, and (2) People do not like hearing what they do not want to hear The first one is more problematic when it comes to things like the bond market or public policy or monetary policy or alternative investing – the excitement of the stock market sometimes has to take a backseat to other matters that are absolutely integrally connected to it! But the second one is what I am worried about today. In over 20 years of professionally stewarding client assets, I have never seen investors be as emotional about any “asset class” as they are about housing. And if all that meant was “people are nostalgic and protective about where they live” – that would be one thing. But that is not what I mean. Opinions about the residential real estate market are, shall we say, sometimes laced with emotion, sometimes perhaps delusion, and often with various presuppositions that are hard for me to make sense of at times. Housing is back front and center in financial discussions, and all I want to do today in the Dividend Cafe is make sense of it, and give you some wisdom and insights that I believe will be useful in a holistic commentary of the day. So to that end, I work. We’ll still be friends if anything I say bothers you. Let’s jump into the Dividend Cafe for a special Housing edition … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

I have done something really fun with today’s Dividend Cafe – at least fun for me. I have taken the most common questions I receive these days from clients, in emails, in meetings, in interviews, etc., and compiled a set of answers that walk through the big issues of today. I think you will find it valuable. I doubt I cover everything on your mind here, so by all means fire away with new questions ([email protected]). You may just see it covered in The DC Today, and you will certainly hear from me personally. In the meantime, let’s jump into the Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com