DeepSummary
The episode begins with an overview of the market performance, including the Dow Jones being up 146 points, and the market rallying after initially giving back 200 points. David discusses Google and Facebook's decision to pay small dividends, indicating a cultural shift in Silicon Valley. He also touches on the expected decline in earnings growth for the 'magnificent seven' tech companies by the end of the year.
David addresses questions about how gold has performed during geopolitical events, stating that the correlation is not strong either way. He mentions the uptick in fund flows into equities but doubts their reliability as an indicator. On the policy front, David refutes a Wall Street Journal report suggesting the Trump administration might attempt to limit the Federal Reserve's independence if re-elected.
The episode covers the 1.6% annualized GDP growth in Q1, lower than expected, with net exports being the biggest drag. Manufacturing and new orders are picking up, indicating more manufacturing activity ahead. David also discusses the Fed's impending meeting and expected rate decision, as well as the treatment of Social Security and pension payments in asset allocation.
Key Episodes Takeaways
- Google and Facebook's decision to pay small dividends signals a cultural shift in Silicon Valley towards dividend payments.
- Major tech companies like the 'magnificent seven' are expected to experience a slowdown in earnings growth by the end of the year due to the base effect.
- Gold's performance during geopolitical events does not show a strong correlation in either direction.
- David refutes reports suggesting the Trump administration might attempt to limit the Federal Reserve's independence if re-elected.
- Q1 GDP growth came in at 1.6% annualized, lower than expected, with net exports being the biggest drag.
- Manufacturing and new orders are picking up, indicating more manufacturing activity ahead.
- The Federal Reserve is expected to keep rates unchanged at their upcoming meeting.
- Social Security and pension payments are not typically considered part of a fixed income allocation in asset allocation strategies.
Top Episodes Quotes
- “And the reason I bring it up, even though we do not have skin in this game, is the fact that these were unmentionable ideas in Silicon Valley for so long and yet now joining the rule, the kind of world, if you will, of dividend paying companies, I think it suggests that there's some interesting things at play.“ by David L. Bahnsen
- “It's such a modest amount of money, it's not worth overthinking. And yet I would point out that the cultural permission structure for Silicon Valley to begin dividend payments seems to be slowly changing.“ by David L. Bahnsen
- “The downside of a big spurt in earnings growth, when you have companies that grow quite significantly in a given calendar year, is what's called base effect, is that then the next year it's very hard to kind of grow off of that level. And in fact, you could end up with a declining rate of earnings.“ by David L. Bahnsen
- “The big economic news Friday. The GDP growth came in annualized at 1.6% for q one two and a half percent had been expected. 3.4% is what real GDP growth was in q four. So you had a number that was, you know, quite a bit lower than where we were last quarter and quite a bit below what expectations were then.“ by David L. Bahnsen
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Episode Information
The Dividend Cafe
The Bahnsen Group
4/29/24
Today's Post - https://bahnsen.co/4dd0xsl
Economic Front The big economic news last week was the 1.6% annualized real GDP growth for Q1 when +2.5% had been expected. The 3.4% of Q4 (again, all these numbers are annualized, which is just how they get discussed) was not going to repeat itself, but 1.6% vs. 2.5% projected and 2.7% in the Atlanta Fed’s GDPNow model was a big step down. The positive side is that manufacturing appears to be picking up, New Orders are on the rise, and low inventories now mean more manufacturing later.
Net exports were the biggest drag (-0.9%), and, as is almost always the case, consumption was the largest contributor (+1.7%). Capex contributed just +0.4%.
The Personal Consumption Expenditures (PCE) was up +2.7% year-over-year last month, matching expectations. Personal Income rose +0.5% in March, in line with expectations.
54% of people worked at firms with less than 500 employees in 1980. That number is just over 46% now. The fertility rate in the U.S. dropped to 1.62 last year, the lowest on record. Our fertility rate has been below the 2.1 replacement level for 17 years now.
Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com