The Dividend Cafe

The market rallied +370 points today, making back the points it was down yesterday, leaving the Dow through Wednesday with the nearly +1,000 point gain from Monday. Oil is approaching $34 after a +5% move today. It was a healthy day for risk assets across the board. And speaking of health, there is some truly good news to report on that front as well … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market was down 100 points or so in pre-market at 3:15am today, and stayed close to flat or modestly down until the open. It bounced a round a bit, then found the flat line and stayed there most of the day, before then seeing a substantial sell-off in the last 45 minutes of trading (see chart below). A report circulated just before the market sell-off that yesterday’s positive report on early phase vaccine trials may have been incomplete in some of its data. If that was indeed the reason for the sell-off, then these markets are a lot more susceptible to pops and drops around [silly?] vaccine headlines than I would have thought. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Chief Investment Officer David L. Bahnsen answers questions from investors on markets and the ongoing COVID-19 pandemic Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

What I want to do, starting in this week’s Dividend Cafe, but really in the weeks and months to come, is to examine the truly significant macroeconomic forces that are relevant to investors, and to explore investment solutions that match the moment. I do not believe advisors and investors can consider solutions intelligently if they have not considered what they are trying to solve intelligently. So to that end, we work. Join us, in this week’s Dividend Cafe. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The market closed up almost 400 points today after an intra-day session that was surely one of the weirdest I have seen in a couple weeks. Futures were down 100-200 all morning pre-market, and went down further after the initial jobless claims number came in at 2.98 million (the number had been expected to be closer to 2.7 million). The market went down as much as 450 points before rallying back and really zigging and zagging (with no apparent news) throughout the day, closing at the highs into a rally. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Futures were down last night, then up this morning, then went flat just as the market opened this morning. By the time the market open was catching steam downward pressure was on stocks, and that downward pressure accelerated a few hours after the open, and then stayed down but level the rest of the day. Stocks actually closed 180 points off their low of the day, but still down 500 points on the day. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

In the height of market violence throughout March and April it was routine that the overnight futures would do one thing, the opening the next morning something totally different, and the action throughout the day something different still. Sometimes even then there was no clarity as to how things would end up as 400+ point moves down or up even in the final hour of trading were extremely common (either as reversals or pile-ons). Lately the futures I have seen before bed time, the futures I wake up to around 3:00am, and the market opening levels have all been pretty in line with one another. There have been late day trading reversals (as I highlighted most days last week), but the futures and the opening levels have been pretty consistent. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

The S&P was flat today, the Nasdaq was up, and the Dow was down 100 points, so let’s call it a flat day overall. We will cover our normal categories and take a few detours as well as we launch another market week in the midst of this COVID pandemic … As for health data, the 1.5% case growth over the weekend is what we have been waiting for – the smallest case growth in the U.S. since all of this began. And all analysis indicates we will see new cases and case growth % really decline from here. If the new cases had declined with a substantially lower weekend testing number that would be less noteworthy, but the testing stayed quite elevated all weekend. The positive ratio to total tests was just 7.8% yesterday, and our trend level for total tests is right around 300,000 per day now. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

This week’s Dividend Cafe will do all it generally sets out to do.  We will look at the overall economy, and I even close with something I don’t often do: A summary of our short term, medium term, and long term outlooks.  There is quite a deep dive into the jobs data, the economic picture, the state of the U.S. energy industry, some post-COVID economic realities, and much, much more.  But there also is a sober assessment of something else – the human toll of non-productivity – the impact to joy and fulfillment when people are cut off from productive activity.  It is the heart of our tragic moment. Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Happy “Flash Crash” anniversary, to those who remember that fateful day (ten years ago today). I remember it like it was yesterday, ending a meeting with clients early (who were sitting in my office facing me at the time, as I faced the television over their shoulders that was informing me of the collapsing market). I began trading in client accounts heavily after the prematurely-ended meeting, and for the first time in my life saw ETF’s broken, bid-ask spreads broken, and wild mistakes in trading execution. It was simply crazy, and only in the weeks (and to some degree, years) ahead did we really understand what had happened, how, and why. Today we don’t have a Flash Crash, and have not exactly had one since May 6, 2010. But we do have incredible risk around liquid ETF’s made up of illiquid assets. I need to attention this issue more diligently in the post-COVID months ahead. I am trying to “tighten up” the daily missive, and better organize/structure it each day around: • Health Data • Market Technicals • Public Policy • Oil & Energy • Housing • Fed News I am hoping this predictable, consistent sequence will both reflect the general priorities readers have in some way, and make for a more succinct and digestible read. And of course, I do welcome your feedback and suggestions … Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com