0:00
Welcome to the dividend cafe, weekly market commentary focused on dividends in your portfolio
0:07
and dividends in your understanding of economic life.
0:12
Good evening, welcome to dividend cafe.
0:15
I'm Brian Cytel, your host for this evening.
0:18
Speaking to you here from our Newport Beach California office here at the Bonson Group,
0:22
on a day that was positive overall in markets, but marginally so, we actually ended up closing
0:28
just off of the lows for the day.
0:30
So markets gave back earlier gains, but we ended up positive on the DAB by 46 points.
0:36
S&P was up a quarter of a percent.
0:38
NASDAQ was up almost a half of a percent.
0:41
So there's your stocks.
0:43
On Bons, we lost two basis points on 10 years, so we closed it 420.
0:48
10-year yields have been trading right around this range of 415 to 430 at the highest.
0:54
As far as the economic data on the day, there was not a lot of information.
0:58
We got a pending home sales for the month of February that was significantly better than expected.
1:04
So there is a chance that some slightly lower mortgage rates are causing some
1:09
unthawing of housing.
1:11
That's in just the pent up demand and the fact that it's been stuck here for
1:15
called five years with rates having moved up 500 basis points from their 0% lows.
1:21
So some of that activity I think is definitely a good thing.
1:23
It's a big part of the economy, but that's all there was in the economic calendar.
1:27
Tomorrow, we're going to have two things out, which are more important,
1:31
which is the PPI number and then the conclusion of the Fed's two-day meeting.
1:36
And it's widely expected they're going to leave rates unchanged at 350 to 375.
1:42
But it'll be interesting to note where some of the dot plot changes may occur.
1:46
Now that there's this new geopolitical event for them to put into their calculus.
1:52
As far as some of the comments that David wrote about today,
1:54
really, there's three major concerns for the market right now.
1:57
There's the war with Iran.
1:59
There is fear of a private credit and there is a change in the appetite for AI capital expenditure.
2:06
So if we break all of those things down, if you talk about the war in Iran,
2:11
then our take here is that while it won't be ending tomorrow,
2:15
it also won't be some sort of forever war.
2:17
I don't think the market has a rationally priced that in.
2:21
It's not likely for many reasons.
2:23
I don't know that the market is necessarily priced in the fact that it is a war to begin with.
2:27
It's almost a campaign at this point.
2:30
Those things can change and that's certainly not making light of any of the human element
2:33
of what's going on here at all.
2:35
So I'm just telling you where markets are pricing things in on the war side.
2:39
So most likely to end at some point, not be a forever war.
2:42
And as far as the timing, TBD, all of those things markets are anticipating in the price
2:47
and I think fairly adequately, which is to say that markets haven't really moved that much lower.
2:52
The Dow is down maybe six, seven percent or so from the highs.
2:56
It's negative on the year by about two and a quarter percent.
2:59
That's not a huge move.
3:01
Okay, next topic, private credit.
3:03
So I think that the idea of just a wave of massive defaults is, frankly, just silly.
3:09
I understand the media headlines and the popularity of New York times
3:13
and Wall Street Journal writing articles about potential defaults,
3:17
but just understand it's a percentage of the entirety of the market.
3:21
You're talking about sub five percent on non accrual.
3:23
So that is not enough for me to be concerned.
3:27
The fact that there's retail ownership in the space and probably irrationally,
3:31
meaning that there is too much retail ownership in a space that is supposed to be
3:35
for accredited investors only.
3:37
But there is more selling going on in that selling is causing gated redemption.
3:40
That's to protect the value of the loans that are inside the portfolio, nothing else.
3:45
So that said, is there some contagion effect that when you have people hitting the cell button
3:49
can cause some price deterioration, sure.
3:52
But do I think it's even mid single digits at this point?
3:56
No, could you get a few single points out of it potentially?
3:58
But we'll see how that unfolds for now.
4:00
It isn't something that is keeping me up at night at all.
4:04
So this is going to definitely be multi-pronged in the answer.
4:07
So are the hyperscalers going to continue to be able to spend as they have been?
4:11
No, are they going to spend zero?
4:13
No, they're going to continue to spend, but just a slowing delta.
4:18
The reality is with valuations trading where they are, is that priced in,
4:23
is that declining growth rate and capex priced into models.
4:27
And then the other part is just the ROI associated with all the capex.
4:32
When does that start to actually pencil for the investment that has been made?
4:35
So that's an ongoing question markets have for the AI space.
4:38
So there's your three topics.
4:40
Question in there is about, what do the mean for an advisor to be a fiduciary?
4:44
The difference is brokers are recommending investments that are suitable.
4:47
Not necessarily in the best interest, but they are suitable.
4:50
And because they get paid from the investment company in the brokerage house
4:53
versus the clients that they're recommending these investments for, that makes sense.
4:58
They've got a duty of care, but it's just for suitability.
5:01
The fiduciary is legally obligated to put clients citrus first.
5:05
And of course, the only way that the fiduciary can get paid is by a debit
5:08
from the client account.
5:09
So the client is paying directly for the advice.
5:12
The advisor is unable to earn any money or any income or any compensation
5:17
or have any conflict from a brokerage firm, from a custodian, from an investment house
5:21
or from anything else, makes it pretty clean and straightforward.
5:24
Like you would pay an attorney to provide you legal advice.
5:27
You would pay a fiduciary financial advisor to provide you financial advice.
5:31
There you have it for today.
5:33
I'll be back with you again tomorrow.
5:35
And like I said, there'll be more to chew through in the economic calendar.
5:38
With that, I wish you a lovely evening.
5:41
The Bonson Group is a group of investment professionals registered
5:43
with high-tower securities LLC, member Finra and SIPC, and with high-tower advisers LLC.
5:48
A registered investment advisor with the SEC.
5:52
Securities are offered through high-tower securities LLC.
5:54
Advisory services are offered through high-tower advisers LLC.
5:57
This is not an offer to buy a sell securities.
5:59
No investment process is free risk.
6:01
There's no guarantee that the investment process or investment opportunities
6:04
reference to Syrian will be profitable.
6:06
Past performance is not indicative of current or future performance and is not a guarantee.
6:10
The investment opportunities reference to Syrian may not be suitable for all investors.
6:15
All data and information reference to Syrian are from sources believed to be reliable.
6:19
Any opinions, news, research, analyses, prices, or other information contained in this
6:23
research is provided as general market commentary and does not constitute investment advice.
6:28
The Bonson Group and high-tower shall not in any way be reliable for claims and make
6:31
no expressed or implied representations or warranties as to the accuracy or completeness
6:35
of the data and other information.
6:38
More for statements or errors contained in or emissions from the obtained data and information
6:42
reference to Syrian.
6:44
The data and information are provided as to the date reference.
6:46
Such data and information are subject to change without notice.
6:49
This document was created for informational purposes only that opinions expressed are
6:53
solely those of the Bonson Group and do not represent those of high-tower advisers LLC
6:57
or any of its affiliates.
6:59
High-tower advisers do not provide tax or legal advice.
7:01
This material was not intended or written to be used or presented to any entity as tax
7:05
advice or tax information.
7:07
This was very based on the client's individual circumstances and could change at any time
7:12
Clients are urged to consult their tax or legal advisor for any related questions.