DC Today is a daily missive from the Dividend Cafe of The Bahnsen Group. While the Dividend Cafe’s weekly market commentary is meant to be long-form, macroeconomic, and principle-driven, the DC Today’s purpose is to provide a daily synopsis of markets, politics, and current events. It will be short, sweet, and hopefully, informative. Our goal is to bring you the latest and most relevant market information and insights, written only by us. Please feel free to share The DC Today with your friends and family. And of course, we always welcome your feedback as to how we can make it more relevant and practical for you!


Dear Valued Clients and Friends –

It was a wild day in markets as bond yields moved higher and the reflation trade re-asserted itself.  All the details are covered below, including the equally wild developments in the beltway as House and Senate Democrat leadership tirelessly work to bridge the divide between progressives and moderates.

Fasten your seatbelt, not just for this reading, but for the rest of the week!

Market Action

  • Futures opened last night pretty flat, came down a bit throughout the evening, and were just a tad higher by my bedtime.  Very early this morning futures were pointing down over -100 points, with the Nasdaq down over -200 points (-1.3%).
  • The market opened down just -80 or -90 points but worsened for the first hour of trading.  Throughout the day the Dow dropped further but had a couple bounces in the second half of the day, as well, even as the Nasdaq stayed down all day.  Index selling and algos late-day kept the broad market down even as Energy traded up on the day.
  • The Dow closed down -569 points (-1.63%), with the S&P 500 down -2.04% and the Nasdaq down -2.83% (the worst day for the Nasdaq since March).

*FactSet, DJIA, Sept. 28, 2021

  • It is too early to say if we are saying a Q1 repeat or not where the energy and financials name rip as the tech and high P/E names sell-off.  Yes, that has been happening but whether or not it is sustained will take more time to play out.  From a valuation standpoint, this mean reversion is incredibly logical and expected.
  • The most encouraging thing I am seeing in markets right now is the sell-off in bonds.  Yields moving higher like this (the 10-year was at 1.26% just two weeks ago and is at 1.53% now) is some indication that markets see modest economic activity continuing.  Yields this low obviously don’t indicate inflationary pressures yet getting 25bps off a deflationary debacle of a level reflects some expectation of positive economic growth.
  • I probably owe it to some of you to either explain or remind – it is not a verbiage mistake to refer to “bonds selling off” and “yields going higher” simultaneously – the two are, in fact, one and the same.  I know most of you know this, but I also know for some it is counter-intuitive for others.  When yields move higher, it makes the value of pre-existing bonds go lower, and vice versa.   
  • The ten-year bond yield closed today at 1.54%, up six more basis points on the day
  • 90% of stocks in the Energy sector are at 20-day highs (short term momentum)
  • Top-performing sector for the day: Energy (+0.46%) – only positive sector on the day
  • Bottom-performing sectors for the day: Technology (-2.98%) and Communications (-2.79%)
  • Comparisons to 2020 are really unhelpful at this point when we consider the completely chaotic state of affairs during COVID lockdowns.  But comparing to pre-COVID 2019 is more useful, and helps contextualize the current state of affairs.  Top-line revenues are tracking to be up +16% in 2021 vs. 2019, with bottom-line earnings up +35%.

Top News Stories

  • As expected, the Senate filibustered the bill to raise the debt ceiling with Senate Republicans asking for a clean resolution to avoid a government shutdown.

Public Policy

  • Sen. Bernie Sanders tweeted today that he hopes House progressives will not vote for the infrastructure bill (that he has already voted for as Senator) unless and until the reconciliation bill is passed.

  • Reports indicate that Senator Schumer did not know Speaker Pelosi was going to separate the infrastructure bill from the reconciliation bill and hold a vote Thursday regardless.  And while she has publicly announced this, any number of things could cause her to change her mind.  At this time, it certainly appears the progressives and Speaker Pelosi are headed for a showdown, but I know better than to assume Speaker Pelosi does not have a further move planned or at least prepared.
  • Some House progressives claim there are more progressives willing to oppose the infrastructure bill than there were before the negotiations for an agreement began.
  • Let’s assume the progressives really will not let an infrastructure bill pass without a “reconciliation framework” (the latest “walk-back” in the requirement of a passed reconciliation bill) – what are the options?
    1. The infrastructure bill passes without progressive support (I now think this is impossible mathematically)
    2. The moderates, fresh off of having their infrastructure bill tanked decide to really play nice with progressives on the reconciliation bill, anyways.  If this is what happens, I would duck before a flying pig hits you in the head.
    3. The moderates, fresh off of having their infrastructure bill tanked, decide that there is no reason to force a reconciliation bill out any time soon and the whole thing is punted until Q1.
    4. None of the above?
  • The big question that reasonable people can disagree on: Does this dynamic here make it harder to get a deal done, as some consider the spending proposals as tethered to a dwindling popularity, OR does this dynamic make it more likely to get a deal done, as many feel this dynamic worsens without one?  I suspect it is the former, but freely admit there is a reasonable argument for the latter, too.

*Strategas Research, Policy Outlook, Sept. 28, 2021, p. 4

  • The word from my sources is that the Democrats are planning a full reinstatement of the SALT deduction by the House Rules Committee right before the vote (needed for moderate votes), as a necessary condition to getting certain House votes lined up.  This would be a one or two-year reinstatement, and may also serve as a disincentive to vote for the bill for some, even as it is a sweetener for others.


  • One thing I love about those in the media that obsess over cases when it comes to discussing coronavirus is how incredibly silent they get when cases begin collapsing.

*COVID-19 Resource Center, JAMA Network, Sept. 27, 2021

Housing & Mortgage

  • The S&P CoreLogic Home Price Index saw prices in July 2021 up +20% vs. prices in July 2020.  Another way of saying that is that homebuyers in the markets this index tracks paid 20% more this year to buy the same house vs. last year.  Phoenix and San Diego were top-appreciating markets in the index, with Chicago and Minneapolis the laggards (though still up double digits).
  • New purchase rate-lock mortgage volume is still substantially above 2019 levels, even as the comparables to 2020 have slowed a great deal.
  • Rents went up +2.1% in August (vs. July) according to the National Rent Report.

Federal Reserve

  • As if they were reading my forecasts, Chairman Powell said today to the Senate Banking Committee that, while the economy is doing great, the COVID delta setback has forced them to re-look at things …
  • Now Dallas Fed governor, Robert Kaplan, has decided to step down as well in the aftermath of the 2020 trading scandal.  The new Boston governor (once found and approved) will be a voting member of FOMC in 2022 and the new Dallas governor will be in 2023.
  • How does the Fed think about deflationary risks?  Consider this quote from Fed governor, Charlie Evans:

“I am more uneasy about us not generating enough inflation in 2023 and 2024 than the possibility that we will be living with too much.”

  • I also thought this take on the dangers of quantitative easing was interesting …

“[QE will] damage market functions, monetize fiscal deficits, harm central banks’ reputation, blur the boundary of monetary policy and create moral hazard.”

The originator of this take?  Yi Gang, governor of the People’s Bank of China.

Oil and Energy

  • WTI Crude closed at $74.80, down just $0.65 cents (-0.86%).  But WTI Crude was up a dollar to $76.50 this morning (+1.3%) on top of yesterday’s rally, and Brent was up over $80 this morning.
  • Natural gas futures are ripping as inadequate supply and production capacity leave both global and domestic needs at a deficit.  We have not seen these levels in nearly a decade, and the LNG arbitrage opportunity right now is salivating, for those who care about such things.

On deck

  • Clients will receive their Weekly Portfolio Holdings Report tomorrow bright and early.
  • Senator Schumer will soon decide if he wants to raise the debt ceiling through reconciliation or shut the government down (probably in two more weeks) and see how the political chips fall.  I imagine we’ll know in the next couple of days.

Reach out as always – any time.

With regards,

David L. Bahnsen
Chief Investment Officer, Managing Partner

The Bahnsen Group

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

The Bahnsen Group is registered with HighTower Securities, LLC, member FINRA and SIPC, and with HighTower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through HighTower Securities, LLC; advisory services are offered through HighTower Advisors, LLC.

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About the Author


Founder, Managing Partner,
and Chief Investment Officer

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

He is the author of the books, Crisis of Responsibility: Our Cultural Addiction to Blame and How You Can Cure It (Post Hill Press), The Case for Dividend Growth: Investing in a Post-Crisis World (Post Hill Press) and his latest, Elizabeth Warren: How Her Presidency Would Destroy the Middle Class and the American Dream (2020).

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