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 –

While everyone tosses and turns about the debt ceiling debate in Washington, I want to remind everyone what the real scenario playing out in the economy.  The Fed’s tightening may or may not “succeed” in its mission to destroy those inflation-creating jobs (their words, not mine), but it certainly will succeed (and has already) in tightening credit.  Essentially a trillion dollars leaving the banking system is a lot less monetary base for lending.  Funding costs for banks are much higher.  And overall, bank lending is collapsing.  These things are all known.

Now, one can argue much of it is priced in.  And one can certainly debate if it leads to a deep recession, a shallow one, or a soft landing, or, my own hypothesis, a more “narrow, targeted” recession, but it is the issue in front of us.  What ends up being the impact across the broad economy and to corporate profits of the inevitable decline in credit as a result of this financial tightening?  And then, of course, how does the Fed handle their inevitable back-peddling of the mess they create?  It’s all so weird to watch play out.

The impact of tightening credit – the variables around that will be real in six months.  Almost nothing anyone else is talking about right now will be.  Food for thought.

Market Action

*CNBC, DJIA, May 24, 2023

Dow: -255 points (-0.77%)
S&P: -0.73%
Nasdaq: -0.61%
10-Year Treasury Yield: 3.74% (+4.8 basis points)
Top-performing sector: Energy (+0.52%)
Bottom-performing sector: Real Estate (-2.21%)
WTI Crude Oil: $73.95/barrel (+1.43%)

Ask David

“Why does the regional banking crisis seem to be primarily affecting western banks? Do western regional banks generally have different business models than their national brethren?”
~ Steve B.
I actually really do not think that is true.  On one hand, Silicon Valley Bank was clearly west coast based, and their depositor base was heavily titled towards, well, Silicon Valley (tech, venture capital, etc.).  But on the other hand, Signature Bank was New York-based and more troubled by the vulnerability of crypto depositors.  Then you have First Republic, which definitely had a big presence in the Bay Area of California, but also had a similar sized branch network and deposit base in the northeast and had a loan book diversified all over the country.

The trouble exists where depositors are vulnerable, and loan terms are too generous relative to a rising rate environment.  That can happen anywhere, but the fact that this was more coastal affluent areas (west and east coast) has more to do with where the money centers are in our country than some particular reality of western banks.

Check Out

Send questions any time, and have a great night!

With regards,

David L. Bahnsen
Chief Investment Officer, Managing Partner

The Bahnsen Group

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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).