The Dividend Cafe - Monday - November 10, 2025

Episode Date: November 10, 2025

Today's Post - https://sqdc.st/s/TtvWulc Monday Market Insights: Government Shutdown, Market Rally, and Policy Updates In this Monday edition of the Dividend Cafe, the discussion centers around the potential end of the government shutdown, with eight Democrats crossing the aisle to vote with Republicans. The NASDAQ experienced a significant rally, recovering losses from the previous week's downturn. Various market sectors' performances are analyzed, including the notable decline in consumer staples and defensive sectors. Key public policy updates include the Senate's vote to end the shutdown, a proposed 50-year mortgage backed by the government, and potential equity stakes by Fannie and Freddie in tech companies. President Trump's suggestion of a $2,000 stimulus check and significant job cuts in October are also covered. The episode concludes with insights from the Bahnsen Group's offsite and upcoming speaking engagements. 00:00 Introduction and Government Shutdown Update 01:15 Market Rally and Sector Performance 03:03 Earnings and Market Disparities 05:36 Senate Vote and Public Policy 08:54 Supreme Court and Tariffs 10:28 Housing and Mortgage Updates 11:55 Economic Indicators and Fed Outlook 16:03 Conclusion and Upcoming Events 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. Hello and welcome to the Monday edition of the Dividend Cafe. Potentially, the post-shutdown Monday is upon us. Now, as a matter of technicality, the government remains shut down as I'm sitting here recording Monday afternoon and probably will be for another day or two. The president's targeting Wednesday to wrap all this up. But what we know at this time is that the votes have been there and recorded to overcome filibuster. And at this point, the rest is more or less procedural technicality. There are a couple little hiccups of things that have to get done at the Senate, then to the House, then to the president.

But basically, the major hurdle that's been keeping the government from reopening is the 60-vote threshold. And that has been overcome as eight Democrats crossed the aisle to come and agree with the Republicans to reopen government. Previously, the Democrats were blocking such from happening. There was one Republican Senator Rand Paul of the great state of Kentucky who did not vote with this resolution, but the Democrats got eight, which brought it to 60, and here we are. Now, I'm going to address all this further in our public policy section, but I wanted to lead with that because it certainly was the big story of the day, although a pretty meaningful rally in markets was quite a story as well, but we're going to put some of that in context after what took place last week. It was the worst week last week for the NASDAQ and the AI space since the April Liberation Day collapse, but then now today the NASDAQ was up 2.5% and 1,000. one day with technology being the leading sector, they're up over 2.5%. So quite a comeback in the stuff that was most beaten up last week. The S&P itself was up 1.5% today. And then the Dow was

up 382 points itself, a little over 80 basis points on the day. So let's get into some of the fun here. We're going to cover all the major categories, but there's quite a bit in public policy and housing today. So the market rallied today, as I mentioned. The Dow actually opened up 250 points, gave all of it back in the first half hour, and then in the final four hours of trading, rallied and actually ended up closing very near the highs of the day.

So you had a big recovery rally, and more or less, I think the things that are worth focusing on right now have to do with the various disparities in market, the really bizarre level at which a few names are driving such a significant amount. There's a chart in Dividendon Cafe today at Dividendoncafe.com showing the narrowing breadth where on an equal-weighted basis divided by the total S&P, you're getting one of the lowest ratios we've seen on record.

We're 75% of the way through earnings season, so there's still a little ways to go. but when you're this much past halfway through, you do have a good indication of where earnings are. And the fundamentals are great in the sense that earnings are up 19% year-over-year. That is the 11th straight quarter of sequential earnings growth. It is the highest trailing 12-month year-over-year growth for earnings since late 2021.

And that growth was largely out of the base effect of the year before where the COVID impact had been. up earnings. But this breadth issue is so significant because a mean reversion very likely takes the form of a rotation that rewards out of favor sectors to help normalize and recreate equilibrium in markets, but it also punishes those things at top. But again, timing such things is not easy to do. The bottom performing sector for the day was consumer staples. It was down 34 basis points. Other defensive sectors were down a tiny bit as well, utilities and reits. But as I mentioned, technology and communication services, both up over

two and a half percent on the day. The bond market was down a little bit as the 10-year yield was up two and a half basis points, closing the 10-year closing at 4.12%. So October was really all about market beta, momentum, both up a great deal in October. And then the first week in November, beta and momentum, but especially beta, they are not the same thing, hit very hard. Now, that reversed the reversal a little bit today, obviously. So good luck keeping up with these up and down movements. One thing I would say from a technical standpoint, it's interesting, is the sector, most interestingly showing signs of life right now is health care. You all of a sudden have the highest percentage of stocks in the health care sector above their own 200-day moving average that

you've had in over a year. The sector has been reasonably resilient through what has been some really unfortunate policy, regulatory abuses, in some cases, utterly insane declarations, and yet the internals for the sector have been steadily improving. And, of course, because of some of the issues and challenges the sector's taken on this year, the valuations actually look quite attractive. So the top news story for the day is certainly the Senate's vote. Now, one of the things the compromise bill is done is allow for a Democrat bill to go for a vote in December, again, to the Senate to extend Obamacare Affordable Care Act subsidies. The bill, the compromise bill also reverses all the permanent layoffs that were administered by the administration during the

shutdown. So obviously they weren't so permanent after all. It provides full pay for all federal employees impacted during the shutdown. And it will fund the SNAP program for the next 10 months. So again, procedurally, it's not a done deal, but it is essentially and technically a done deal. it's just a matter of whether or not it takes two days or three days to get a lot of this on the other side. From a political standpoint, I have to just invite what ends up happening in these situations where I have people say, you're drinking water for this side or you're being too hard to the other side or whatever, when in reality, I've always believed it would be impossible for both of the accusations I take on to be true at once. All I can do is

subjectively call it as I see it, and people are very welcome to disagree. But I think an objective and unbiased commentary is that I don't think Senator Chuck Schumer is actually against the Democrats that have crossed the line to do this. I think they have exactly eight. None of them are up for re-election, and I think that this way they got to orchestrate giving in, getting government reopened, avoiding. some of the turmoil that was to come, and then having some plausible deniability that they caved to the administration. It's a face-saving maneuver. No, they didn't get anything out of

the 40-plus-day shutdown. There were certainly elements of this that were accruing to the political weight against the administration as well. That's normal that whoever you don't like is usually who you're going to blame, and that was taking place in line with people's own priors. But I would say that this exit is sensible, and I don't really think the Trump administration is going to pose extending the Obamacare subsidies next month. Now, that doesn't mean that they'll get the votes in the House. I actually would be very surprised that they do get them in the House, but there will probably be something that they get out of this in the form of some additional health care spending.

And I don't think the Trump administration was ever going to fight that. They just did not want it attached to a continuing resolution funding government. So when all said and done, we're really back to where we were 40-plus days ago. And I don't think anyone can say like, oh, we got something we wanted out of this. And that's why I find shutdowns to be such a really embarrassing political tactic. Now, again, if people say, well, that's partisan of you to say it, I want to know which party I'm supposedly saying it against. Because I've been critical of any party that has the ability. to keep government open that shuts it down.

Here we go. Okay, very important. As I've talked last week about the Supreme Court hearing, the AEPA claim, the emergency economic powers claim from the administration is to rationale for tariffs. And the odds did go substantially higher, and I felt encouraged personally, particularly behind the questioning from Justice Gorsuch, that they're going to have a hard time getting five votes saying that the president has the right to just declare an economic emergency of something that has never been perceived as an economic emergency in history,

and then therefore we get to kind of bypass Article 1 of the United States Constitution. I do not believe at this time Supreme Court is going to go forward, but I could be wrong. The odds are not 100% of that, but they're in the 60 to 70% range now, which is much higher than the 50-ish they were before. But it's very important to understand that the administration will move to other pretextual rationales to maintain the tariffs. The IEPA rationale is so ambiguous and open-ended that that's the most vulnerable and I think it's the most problematic. And so if they do, in fact, strike that down, it's still, I think, a net positive for markets and the economy, but that's not the same thing

as saying, all these tariffs are going to go away. Some will go away. Some will be diminished. Some will stay and move to a different rationale, but it is still somewhat handcuffing. It's a little bit more of some parameters than if this IEPA rationale goes away, then otherwise would be the case. That's why I think it's important. As far as other policy issues, I don't really know what to say about this one. Bill Pulte, the director of the federal housing finance agency, stating this weekend that they're looking at ways for Fannie and Freddie. to take equity stakes in certain U.S. technology companies. So the emergency conservatorship of Fannie and Freddie

onto the balance sheet of the United States taxpayers, 79.5% of the equity and the Treasury Department having to function as the conservator, these are two mortgage finance companies that are run by the U.S. government that would be looking to take equity in some tech companies in a Republican administration. Maybe Bill spoke out of turn.

Maybe they're serious at looking at it, but not serious about doing it. Maybe the whole thing blows up. But, yeah, I guess this belongs in our public policy section under the what in the world, am I watching here? The other thing that took place this weekend was President Trump on going to social media to say that they want to send $2,000 to every American household. And then Secretary Besson saying on one of the Sunday morning news shows, no, the 2000 could be like a future. part of a tax cut on the president's agenda, not like a direct stimulus check. So there's a little lack of clarity as to what they mean, and where exactly the rationale for sending the checks would be coming from, I don't know. On the economic front, October saw the most job cuts

for any October in over 20 years, 153,000 job cuts per a private market survey from Challenger Gray and Christmas. We, of course, still do not have governmental data on these fronts. And there was a a hubbub around the University of Michigan's monthly consumer confidence index coming with a reading of 50.3 down from 53.6 the month before and 50.3 barely above the all-time low we saw a 50 in June of 2022. Current conditions were down a great deal. Expectations were down a tad. I think most people who listen to Dividendon Cafe know that I put no credence in consumer confidence surveys at all. I really don't find consumer confidence, period, very indicative of much. I have observed time and time and time again.

Consumers say they are not confident in spending right before they unconfidently go to the mall and max out their credit card. So all that to say, for whatever you think it's worth, whether it's backward looking or forward-looking or none of the above, consumer confidence came in quite low for the month of October. Now, the more significant housing and mortgage update is not the federal housing finance agency talking about buying stock in AI companies, it is that President Trump said and Bill Pulte of the FHFA confirmed that they are working on ways to develop a government-backed

50-year mortgage. Does that mean the government allowing it from a regulatory standpoint? Does it mean them mandating it at a Fannie Freddie? Does it mean them subsidizing it? It's a little unclear. But nevertheless, the introduction of a 50-year mortgage option is supposed to mean lower monthly payment for first-time homebuyers because you're stretching your payment out over 50 years instead of 30 years. I do not oppose it in terms of the freedom of a lender who wants to lend over a 50-year maturity and the freedom of a borrower wants to borrow over 50 years.

If two free economic actors without government subsidy want to do something, I don't really care. However, the notion of this is going to be good for affordability is bizarre. It will most certainly get priced in. It does not help with the really important element of affordability, which is down payment. It does not provide the additional now payment that is needed. And yes, it brings a monthly payment lower if you extend the payments in extra 20 years, but it massively, massively increases the cost of ownership.

People are saying, well, no, it helps you get in for a little while and then you can refinance later. But even along the way, the interest rate's obviously going to be higher for 50 year than a short-term vehicle. So I just don't think it understands that a lower monthly payment gets priced into the sticker price of the home. And so we'll see if this really goes anywhere, but it did get a lot of coverage over the weekend. Other housing news, the NAR report shows that the median age, the median age for a first-time home buyer right now in the United States is 40 years old. The median age for people buying their first home was 29 in 1981. And by the way, inflation was a lot higher in 1981 than it is now in terms of the rate of year-over-year growth of inflation

we've been going through out of the 1970s. On the Fed front, we're looking at about a 64% chance of another rate cut next month. Crude today was up about two-thirds of a percentage point, closed above $60. Last week, one of the bright spots in the market was midstream energy. It was up over 2% on the week when the S&P was down nearly 2% and oil was down 2.5%. So midstream sector was rallied last week without any backdrop of commodity prices going higher.

In the Ask TBG today that sits on the homepage at dividendcafe.com, someone asked what the impact economic growth would be if a lot of the spending that takes place because of structural deficits went away, and I think it's a very important answer. I'm going to leave it there. We've covered a lot of things here this week, a lot going on the news, a lot in public policy and housing. The Bonson Group is back from its all company offsite that we did over the four days in Dallas last week to Wednesday through Saturday. What an unbelievable time for our team. I'm here in Newport today and tomorrow, speaking an event in Vegas Wednesday, back to Newport Thursday, back to New York Thursday night, in New York, Friday, into the weekend, into Boston, early part of

next week, back to New York from there, then back to California for Thanksgiving week. It's a lot of back and forth for me in the next two weeks, but we'll not miss the Dividend Cafe, will not miss the very extensive things we have going on in markets at this very time. Thank you for listening. Thank you for watching. Thank you for reading the Dividendon Cafe. The Bonson Group is a group of investment professionals registered with High Tower Securities LLC, member FINRA and SIPC, 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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