The Dividend Cafe

In this week's Dividend Cafe we will look at:

The real lesson of 2020 so far, evidenced in Q1 being the 9th worst quarter in history, and Q2 being the 9th best quarter in history, and what behavioral lessons some investors may want to pick up from this.

What the jobs report yesterday did to encourage us, and what is still lacking - and will be for quite some time

Why Fed liquidity provisions may or may not matter to the real economy (i.e. jobs), but certainly matter to investors

The under-appreciated tensions coming to the surface with China after Bejing's passage of this Hong Kong security measure.

What history says about an investor's timeline and corresponding expectation

How foreign investors apparently feel about American markets right now

And all the economic data for the week to form that perfectly mixed picture of ambiguity.  Retail. 

And in Politics & Money ... the betting odds are blowing out for Joe Biden; what does that mean for investors, and what might the next three months of the stock market tell us about what to expect in November

Finally, in the Chart of the Week, some calendar history to take us home

Let's jump in to the Dividend Cafe!

Links mentioned in this episode:

The market closed the shortened holiday week up over 800 points for the week, with the market up almost 100 points today. Futures were really flat last night, and at 4:30am Eastern this morning were up over 200 points. The jobs report came at 8:30am ET and futures added on another 200 points. Markets were up 400 points at one point and moved up and down throughout the day before selling off substantially in the final 30-45 minutes of trading (not a surprise at all going into the long holiday weekend).

Regarding that jobs report, the big bullish news was that 4.8 million jobs were added back in June, about 1.6 million more than the 3.2 million consensus expectation. I want to reiterate – the fact that the “experts” continue to get economic projected data so wrong is not so much that they are incompetent as that this is all very, very hard – and not based on solid historical precedents. That said, I would recommend the pundits moderate their predictions with greater humility, but again, this is uncharted territory.

2.1 million jobs in leisure and hospitality were brought back. This makes it all the more important that policymakers not capitulate to the panic mob and allow a safe and sensible re-opening to continue. More importantly, it does show a continued trend that job losses were initially classified as temporary, are indeed proving to be temporary. Now, permanent job losses were up 500,000, and that is a cause for concern. The percentage of the unemployment we have classified as “temporary” as gone from 78% to 59%, yet that is largely because a good portion of those temporarily unemployed people have been hired back.

Links mentioned in this episode:

This is the audio replay of National Call Market Outlook from TBG CIO - David L. Bahnsen. With Host Scott Gamm of Strategy Voice and Associates.

Discussed is the impact of increased COVID cases in certain states on markets, and will attempt to evaluate the latest economic and investment developments, and what we are anticipating as we officially enter the second half of the year.

Links mentioned in this episode:

• Some clarification on COVID and the current media coverage

• How the result of “financialization” is to ignore capital investment, and how starving the economy of capital spending deprives it of future productivity

• The stress of the stress tests!

• The lost decade of gold is a powerful antidote to the strange argument that central bank abuses are bullish for gold. If the last decade wasn’t the golden era of central bank libertinism, I don’t know what was. And yet gold is just now trying to get back within striking distance of where it was ten years ago??

• A refresher on our friend, Illiquidity, and why behavioral finance drives the return premium in private market assets – a section that should get its own dedicated Dividend Cafe!

• How good/bad is the economic “recovery” going?

• And the secret sauce on how politics works in conjunction with markets … what we expect out of the next few months as various political scenarios play themselves out

• The Chart of the Week looks at the three stages of the COVID era …

Links mentioned in this episode:

Futures last night really hugged around the flat line non-stop from 3pm pacific until 9pm or so when I stopped checking.  At 3am this morning they were still flat, and throughout the morning going into the market open they moved a tad lower.  The Dow got down as much as 200 points, gyrated around most of the day up and down, and then rallied the final hour of trading to close up 300 points.

Links mentioned in this episode: