The Dividend Cafe - Monday - August 11, 2025

Episode Date: August 11, 2025

Today's Post - https://bahnsen.co/4lkaas5 Monday Market Rundown & Economic Insights - Dividend Cafe with David Bahnsen In this Monday edition of the Dividend Cafe, David Bahnsen from The Bahnsen Group provides a comprehensive market update and economic analysis. Key topics include Nvidia's significant market impact, President Trump's upcoming meeting with Vladimir Putin, and developments in the semiconductor tariffs with China. The episode also covers the overall performance of major market indices, notable policy changes, and the state of the housing market and Federal Reserve actions. Additionally, Boson addresses recent market dynamics, including the tariff delays on China and potential privatization of Fannie Mae and Freddie Mac. A discussion on Steven Miran's nomination to the Federal Reserve and the likelihood of upcoming interest rate cuts rounds out the update. Boson concludes by sharing insights into his favorite economists in response to viewer questions. 00:00 Introduction and Overview 01:18 Market Rundown and Economic Analysis 01:40 Nvidia and Semiconductor News 02:52 Market Performance and Indices 06:16 Policy Announcements and Tariffs 07:55 Housing Sector and Federal Reserve 10:57 Conclusion and Favorite Economists Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividing Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Well, hello and welcome to the Monday edition of the Dividendon Cafe here in our Newport Beach studio. For those who don't know, my name is David Bonson. I'm the managing partner and chief investment officer of the Bonson Group. Every Monday, we like to bring you a little market rundown and an update of the lay of the land in public policy, economic news, housing, the Fed, oil and energy markets, and all those good things. That's what we do in the Monday Diven Cafe. Friday, I write a long form macro commentary on some topic

du jour in this last Friday. We talked a bit about basically the state of the economy, not where it's headed, not forecasting our various predictions for where the economy will be in six months or 12 months, but rather just trying to get to some form of analysis about the state of affairs present tense. It's a divin cafe worth checking out. I think that there is some good information there to form a more nuanced view that doesn't become catastrophic and doesn't become polyanish and has some semblance of reality and objectivity associated with it. Reality and objectivity, apparently being the enemies of political analysis today. And hopefully we're doing better economic analysis in the Dividy Cafe than that.

As far as markets today, I guess I'd say it was a reasonably boring day. I definitely think it's good to just do a quick kind of round the horn without any major dramatic news announcements. Before I go to the summary of today's market action, I guess some people might consider this dramatic, what I'm about to say. I find it bizarre. I don't know if I'd use the word dramatic, but I find it. shocking, but the announcement was made that

NVIDIA has cut a direct deal whereby they will pay 15% I believe AMD is part of this deal as well on the chips that they're going to export to China straight to the federal government. So they get a little workaround and we're going to now export more semis to China and then NVIDIA pays a little fee to do that.

So that's newsworthy. as is the fact that President Trump is scheduled to meet with Vladimir Putin in Alaska this coming Friday. There's still ambiguity about where it will be in Alaska. I don't know why that matters. And whether or not Zelensky from Ukraine will be or will not be a part of this or a post-meeting meeting or something. So we'll see what happens with all that this week, including whether or not the Trump-Pooten meeting even happens. If you go to the dividend cafe.com, there are links to the dividend cafe. from Friday I mentioned, as well as links to my podcast where I was the guest with former Speaker

of the House, Newt Gingrich, again, talking about the economy and so forth. As far as today's market action, we opened up in the Dow 75 points. Futures had been open overnight, over 100 points. It didn't hold very long by about an hour, hour and a half after opening, started to drop into negative, and we just petered around for the rest of the day, closing down 200,000. points in the Dow, which is about 45 basis points. The S&P was down a quarter point. The NASDAQ was down 30 basis points. So nothing dramatic, but down day slightly less than half a point in each of the three major market indices. I mentioned a video before. It is now 8% that is not a typo, 8% of the S&P 500. One company out of 500 is now 8% of the index. That is the highest weighting

of any one company in the S&P ever in history. And V-Div is trading at 58 times earnings. So that's the highest PE that the largest company in the S&P has ever, ever, ever had. For historical record, I went back and looked. In 1994, General Electric was the largest company in the S&P 500. And GE stayed one of the largest companies in America up until the early 2000s. but it was the largest company in the S&P at 1994. I was 20 years old at the time, and it was rating at eight times earnings.

And when I say largest, it was about 3% of the index. Now you have Nvidia at 58 times earnings. It is 8% of the index. So there's a lot of apples to oranges in those comparisons. I would not assume I'm saying anything more than I'm saying about it other than just historical reference. One thing I want to bring up is that there has been a little bit of press, and I haven't seen it in any serious analysis, just financial media, and I make that distinction on purpose. But there have been people saying, look, I don't think this market's too expensive.

The net debt divided by equity market cap is at record lows. And I don't understand who is sharing that data point as a positive thing or as something that is automatically pointing to a benefit. There are two numbers there, the net debt and the equity market cap. And if the equity market cap or at an astronomically high level, you would expect the ratio to be at an all-time low. The ratio is not at a low because the net debt is some low, innocuous, pain-free level. The net debt is what it is, but it's divided by a very high equity market cap. In other words, that's a data point I would think people that are concerned about valuation to be sharing, not something indicative of anti-fragility in market valuation. So it's a silly.

thing to say. There are two numbers in a denominator. The 10-year bond yield closed today at 4.28% and that was flat on the day. So the bond market has stabilized a bit since that bad jobs report two weeks ago, or I guess let's call it a week and a half ago. It's stabilized, but it is still way, way, way lower than where it had been up at the four and a half range, but not yet down at the long end of the curve trying to break below 4% either. Top performing sector is consumer staples. That's It's not been a thing we've said a lot this year. It was up 17 basis points, and then the worst was energy, which was down 79. In terms of policy announcements, companies that are importing semiconductor or semiconductor parts

are going to pay 100% tariff unless they are doing some U.S.-based manufacturing, which virtually all of the big ones are. So Apple is getting excluded. Time and Semiconductor is getting excluded. Texas Instruments getting excluded. They all have some U.S. manufacturing and therefore are exempted. But, you know, there are some small businesses that don't that are getting hit by that. In terms of the other piece I wanted to share, oh, the Intel CEO, actually I think when I typed it in Divida Cafe this morning, he was headed to the White House.

I think he's in a meeting of President Trump as I'm sitting here. recording. And I mentioned this not to, there's a link about it in Divida Cafe. I don't much care about what's going on with Intel per se, but it is newsworthy that the President of United States last week put out a social media post saying the CEO of one of America's public traded companies should be let go because of his past connections with China. And that's normally not been public sector interference in a private sector that many would have condoned, but we'll see comes of it here. Shortly before the market closed today, the market did not respond at all because the market most certainly knew it was coming, but the president did announce there is another delay

on tariffs with China, putting that into another 90-day holding pattern as they continue to work through some things. The biggest thing I want to share today to wrap us up is going to be in the housing sector and then in the Federal Reserve. The plans for some form of privatization of Fannie and Freddie are going forward, it appears, that the White House is looking to sell off in an IPO some of the government's equity. They would not be getting rid of all of an IPO. That would be too big of a bite. But to start that process of privatization, we don't know if it's going to be one IPO where they merge Fannie and Freddie into one company or if they were talking about two different companies. We don't know exactly what they're going to do about the government's preferred

stake, but we have to believe that they're waiving the ridiculous, preposterous notion of that preferred hold in front of it of a couple hundred billion dollars, that something is being done there because otherwise they'd have no chance of being able to sell the common equity. We're watching it closely. It's a story near and dear to my heart, but I, like I said, the devil's in the details. Mortgage applications for both new home purchases and refinances are very, very low. Housing starts and new permits are very, very low. That puts downward pressure on the notion of there being new supply. I'm not sure if a lower Fed funds rate addresses these things directly or not. Will they help pull down the longer end of the curve to which mortgage

rates are largely tethered? We will have to see on the Fed side. And speaking of short-term interest rates, so Steve and Moran, who was the Council of Economic Advisors Chair, I guess technically still is. I don't think he will officially resign until the Senate's confirmed him at the Fed. But President Trump has nominated Stephen to replace Adriana Cuggler, who's a voting member, FOMC, who resigned a week and a half ago. That term, though, ends at the end of January. So, first of all, I think that the president has a chance to get this done in time, the Senate confirmation in time, for the September FMC meeting, that Stephen would be sitting as a voting member in time for that next meeting.

And it doesn't look like it's necessary. Not only do you have Chris Waller pounding the table for Fed rate cuts and climbing the charts in terms of betting market expectations for who the new Fed chair will be, but Fed Governor Michelle Bowman, who also dissented at the last FMC meeting, has come out and said we need three rate cuts by the end of the year. And there have been multiple other governors now that have gone public talking about the need for rate cuts. And some of those cases, these are not people that are just really trying to throw something at the wall to get the attention of the president. There is enough consensus at this point. It's very clear to me they're going to be cutting here in September. Oil prices were up 20 bips on the day. It closed at $64. Oil prices last week were all down, even though the S&P was up nicely on the week. The midstream energy sector's annual conference does kick off in Las Vegas this week, and that's always a great time to get updated on new projects and just general business forecast. But that's really about it. One of the questions that came through for Ask TBG was inquiring of who some of my favorite

economists are. I talked about Dr. Lacey Hunt being one of my favorite living economist, and I quoted him in the Dividing Cafe on Friday. But I provided a list in today's Dividing Cafe in answer to this Ask TBG question of some of my other favorite living economists, some of my favorite economists who are no longer with us but were alive in my lifetime, and then some that have been gone for quite a long time that nevertheless were big influences on me. So if that's of interest to you, it's there at the dividendcafe.com.

With that said, thank you for listening. Thank you for watching. Thank you for reading the dividend cafe. The Bonson Group is a group of investment professionals 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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