MONDAY – December 30, 2024

Dear Valued Clients and Friends –

With the holiday week last week and New Years week this week, you may find today’s Monday Dividend Cafe a little shorter than normal. But in addition to the two holiday weeks currently playing out, I am also on assignment right now on location at my desert house in Rancho Mirage, CA, where I am fond of writing the annual Year Behind, Year Ahead white paper. This annual tradition will hit the Dividend Cafe next Friday (January 10), complete with a printable PDF. I have to keep today’s Dividend Cafe short or, knowing myself as I do, I will end up starting to tease out some of my current research and conclusions that belong in the white paper in this Div Cafe – and we can’t have that!

So check out last Friday’s Dividend Cafe on market volatility and new market concerns with Trump 2.0, with the written version here, the video here, and the podcast here. Enjoy this final Monday Dividend Cafe of 2024, and I will see you in the Dividend Cafe this Friday, all in advance of next week’s special edition!

I was on CNBC Squawk Box this morning talking one-on-one with Joe Kernen about the market, about Trump 2.0, and about the future. It was fun to be back on Squawk Box after a very long hiatus (long story!!).

Off we go …

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Market Action

The market opened down over -500 points today and shortly thereafter was down over -700 points. It rallied back throughout the day, paring losses by 500 points before dropping 200 more at the very end of the day.
The Dow closed down -418 points (-0.97%), with the S&P 500 down -1.07% and the Nasdaq down -1.19%.

*CNBC, DJIA, Dec. 30, 2024

The fact that the market dropped over -700 points on no news at the open this morning and then came back nearly +500 points later in the day indicates a basic reality about these last couple days of the year … Stocks are up a lot this year and bonds are mostly down (not all); those non-taxable entities that do quarterly or annual rebalancing are mathematically sellers of stocks and buyers of bonds right now (various pension plans, endowments, foundations, 401k plans, and so forth). In other words, it’s noise today, gone tomorrow.
The ten-year bond yield closed today at 4.54%, down eight basis points on the day
Top-performing sector for the day: Energy (-0.08%)
Bottom-performing sector for the day: Consumer Discretionary (-1.59%)

Public Policy

President-elect Trump offered his full-throated “total endorsement” of Rep. Mike Johnson to continue as Speaker of the House this morning
President-elect Trump announced that Sriram Krishnan would serve as the President’s Artificial Intelligence advisor. Krishnan, a former partner at the elite VC firm Andreessen Horowitz, has advocated for removing the caps on green cards for high-skilled workers. This glaringly sensible policy generated a backlash from some in “MAGA” and prompted a vigorous defense of America securing top tech and engineering talent from overseas from people like Elon Musk, etc.
And finally, President-elect Trump asked the Supreme Court to delay the federal law forcing a sale or shutdown of TikTok.

Economic Front

China’s industrial profits dropped -7.3% in November, the fourth straight month of decline. Factories, Utilities, and Mines are all in decline in China as they steer through their deflationary unwind.
An average price hotel room in New York City hit its all-time record high last month. I’m old enough to remember when people said no one would ever go back to New York City. I hope those people are booking dinner reservations a month out.

Housing & Mortgage

Hedge funder Bill Ackman, tweeted today that he expected Trump 2.0 to fully privatize Fannie and Freddie in his new term, pulling them out of the conservatorship that the Treasury Department put them in in September of 2008.
The U.S. Department of Housing & Urban Development issued its annual report on Friday, and the findings included an +18% increase in homelessness last year (771,000 people nationwide).

Federal Reserve

We are looking at an 89% chance of no rate change next month right now (in the fed funds futures market). We have about a 58% chance or so of TWO cuts next year and an 18% chance of three. So there you go. But the fed funds rate is projected to end somewhere between 3.5% and 4% at this time next year (it is 4.25% now).

Oil and Energy

WTI Crude closed at $71.15, up +0.78% on the day.
Midstream was up about +1% last week during the Christmas holiday week, with MLPs and Canadians leading the way. It was a light volume week across all sectors of the market and even lighter in terms of news.
The Wall Street Journal had an excellent story over the weekend about the changing landscape of oil production, the re-focus on capital discipline, and the changing of the guard in terms of private drillers (from 50% to 25%) in the Permian and what that means for E&P. Their conclusion? The one we have been postulating for months: More efficiency and discipline in the space may mean less drilling but better results for investors.

Ask TBG

“If the equity market offers lower yields than historic returns have included, where should a real estate investor look for diversification?”
~ Andrew J.

Dividend growth equities

On Deck

No WPHR for clients this week, but it will pick back up on Wednesday, January 8
No Daily Recap this week, but there will be a Dividend Cafe on Friday and the launch of the new year on Monday the 6th.
The Friday, January 10, Dividend Cafe will be the aforementioned Year Behind, Year Ahead white paper.

A couple of business titans passed in recent days: Richard Parsons, former CEO of AOL-Time Warner, brought in to try and salvage what was the most value-destructive merger in world history, and Charles Dolan, the founder of HBO and Cablevision and a legend in the media and broadcast industry. Both were dynamic and interesting men who I never knew but have read a great deal about over the years. RIP.

With that, I will say Happy New Year to you and yours, and I will see you in the Dividend Cafe this coming Friday, January 3. The Year Behind, Year Ahead white paper writing marches on …

With regards,

David L. Bahnsen
Chief Investment Officer, Managing Partner
dbahnsen@thebahnsengroup.com

The Bahnsen Group
www.thebahnsengroup.com

The Dividend Cafe features research from S&P, Baird, Barclays, Goldman Sachs, and the IRN research platform of FactSet.

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December 30, 2024

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About the Author

David L. Bahnsen

FOUNDER, MANAGING PARTNER, AND CHIEF INVESTMENT OFFICER

He is a frequent guest on CNBC, Bloomberg, Fox News, and Fox Business, and is a regular contributor to National Review. David is a founding Trustee for Pacifica Christian High School of Orange County and serves on the Board of Directors for the Acton Institute.

He is the author of several best-selling books including Crisis of Responsibility: Our Cultural Addiction to Blame and How You Can Cure It (2018), The Case for Dividend Growth: Investing in a Post-Crisis World (2019), and There’s No Free Lunch: 250 Economic Truths (2021). His newest book, Full-Time: Work and the Meaning of Life, was released in February 2024.

The Bahnsen Group is registered with Hightower Advisors, LLC, an SEC registered investment adviser. Registration as an investment adviser does not imply a certain level of skill or training. Securities are offered through Hightower Securities, LLC, member FINRA and SIPC. Advisory services are offered through Hightower Advisors, LLC.

This is not an offer to buy or sell securities. No investment process is free of risk, and there is no guarantee that the investment process or the investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced herein may not be suitable for all investors.

All data and information reference herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary, it does not constitute investment advice. The team and HighTower shall not in any way be liable for claims, and make no expressed or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced herein. The data and information are provided as of the date referenced. Such data and information are subject to change without notice.

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Hightower Advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client’s individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for related questions.

This document was created for informational purposes only; the opinions expressed are solely those of the team and do not represent those of HighTower Advisors, LLC, or any of its affiliates.