The Dividend Cafe - Monday - November 17, 2025

Episode Date: November 17, 2025

Today's Post - https://bahnsen.co/3JTHQ36 Monday Market Recap and Economic Insights In this episode of Dividend Cafe, host Brian Szytel steps in for David, who is attending meetings in Boston. Brian provides a detailed market recap for Monday, November 17th. The DOW fell 557 points, while the Nasdaq and S&P both dropped about 0.8 to 0.9%. He discusses market shifts towards defensive stocks, notable dips in sectors like cryptocurrencies and quantum computing, and the overall volatility levels. He also touches on tariffs' impacts, proposed easing of capital requirements for banks, and better-than-expected Empire State Manufacturing Index numbers. Brian emphasizes the focus on bottom-up fundamentals in investment strategies amidst unpredictable macroeconomic conditions and notes upcoming economic data releases. 00:00 Introduction and Market Recap 00:52 Sector Performance and Market Trends 02:31 Impact of Tariffs and Economic Policies 03:37 Federal Reserve and Economic Indicators 05:11 AI Narrative and Investment Strategy 07:07 Upcoming Economic Data and Conclusion 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. Good evening and welcome back to Dividend Cafe. This is Monday, November the 17th. Brian Saitel with you here today, and rather than David, he's on a train traveling from Manhattan to Boston and back for some meetings. So I'm going to step in here and give you your market recap. We had lower markets across the board. We actually closed just just off of the lows. We were down 557 points on the Dow. Nasdaq and S&P were both down about 0.8 to 0.9% on the day. So broad sell-off in stocks, and you're continuing to see this rotation into more of the defensives. The NASDAQ was actually down a little less than the Dow today, but that was really just because of one very large internet search engine company

that was up significantly on some buying for the day. Ten-year was off about a basis point, So we closed it 413 on the 10 year. We've just seen the sell-off here over the past several months from what we've called shiny objects. This is things like rare earth minerals that kind of rallied up with the government investment inside of some of those companies, cryptocurrencies, some of the certainly some of the AI trade and some of these other parts of the market where they've just gone up so much. They're just crazy. Some of the quantum computing names that are trading at 500 times sales, not earnings, but sales. So all that stuff's off about 50%. Crypto's off about 30.

So that's a pretty decent pullback here. And it's hard for me to say whether that will go lower, whether this is the bottom and a buying opportunity, blah, blah, blah, blah. Nobody really knows that. But our point is because the valuation is either an infinity sign, which is what it is with crypto, meaning it's uncalculable,

or it's just incredibly expensive like quantum computing. It's not something that we feel very comfortable investing, certainly other people's hard-earned money in. But even with that, what I would call bloodbath here in those sectors, it's not like the technicals are really all that broken. You still have 50% of the S&P trading above its 200-day moving average right now. The VIX, which is volatility, has come up. It's back up to where it was just maybe two months ago, but it's in 23 level. So this is not screaming of a super panic type of situation. And then the other little component we look at as this city panic euphoria index is nowhere near anywhere like a panic or sell-off type of mode yet

would seem to me to be early in the early innings rather than late innings on how some of that stuff might trade. So again, some of the values, some of the defensives are definitely where we feel more comfortable. There was some talk today with the Treasury Secretary Bessent about tariffs in relating to negative outcomes from them, which is there's some things that the U.S. doesn't really make. Let's call it coffee or bananas. We import that stuff, and those are good things to have at the breakfast table specifically. But it was the first time where we're starting to actually understand that tariffs are having a negative effect on things that we just don't produce at home. And so they're looking at reducing some of these things.

I think that steps in the positive direction, and where ultimately this tariff talk will all end up settling out, which is marginally higher in certain countries and attempting to bring back supply chains and things like this. There's been new capital plans the Fed has submitted to ease some of the capital requirements for many of the large banks in the banking system. This gives them a higher percentage collateral for their treasury holdings. Basically, it just allows them to lend a little bit more. It would be stimulative. We're in big favor of it. I think it makes a lot of sense. And that should happen here coming out soon.

Other news on the economic side, if you had an Empire State Manufacturing Index that was quite a big. a bit better than expected. This was the high that we've seen in about a year now. So good to see some manufacturing start to get revived here a little bit in that number as well. But all that to say, what we're still working with here is just a dearth of data coming out of the government here. So we don't have BLS employment numbers yet. We're going to get the September numbers on Thursday. This is almost Thanksgiving. So this is a bit delayed, you could call it. But we're starting to get this stuff out, but there's a potential for there to be a lag and for the markets to need to reprice where they should be trading based on some of the data

that has yet to come out that'll be from the past. Either way, we know the trend in employment has been softening, and then we also know the government was shut down for 43 days. And so that's not good for employment either, technically. And I would suspect some more softness there. Right now, there's only a 41% chance for a December rate cut. in markets. You've got a couple of Fed governors that are obviously for it. We'll call it Waller. We can call Bowman or Mirren. But the others are undecided, including Powell, and it'll be difficult. And as Powell, and I said this last week, but as Powell mentioned in his press conference, you know, when you're driving in the fog, you tend to slow down. And so that's what

they're trying to do. They're trying to slow down committing to a December rate cut. But either way, I think that a 41% chance would be on the low end of what ultimately may come to for there. There was a good question in there today on the Ask TBG section. This was about the AI narrative changing the macroeconomic environment and how that's defining the risk level or the performance of different asset classes. And it'll either be a productivity story where AI works out and we get this huge productivity boom or it won't be and it'll be a dud and you'll end up reverting back to what our other real issue is, which is this enormous deficit that we have. So which one is it? And is TBG managing assets, essentially based on some of those macroeconomic

realities that may or may not come to pass? Okay, so here's the deal. We manage everything bottom up, right? So we're looking at what the numbers are telling us inside of businesses, given a certain type of sector and structure that they're operating in. We're looking at a percentage of free cash flow that's going to cover a dividend payment for us to shareholders. From that, you work your way up and you realize which sector it's in and what's going on with the company. Obviously, there's a lot of work that we do on the managerial side of how these businesses are run. And so there's a lot of fundamental analysis, but it does start on the bottom and it goes up. Some of those themes, whether AI will work out, whether this may happen in the future,

or Russia-Ukraine war is going to end or not end, or all of these different things, they're really unknowable and unpredictable. And so we tend to not make broad changes in asset allocations. and accounts based solely on a top-down view. That said, we certainly have one. We are certainly well read, as you can tell, by all the content that we send your way. So we have a viewpoint. That's not what I'm saying. But what I am saying is that it doesn't drive the lion's share of the decisions inside of the portfolio. We're aware of it. There's a theme there. We have an outlook there. But it's not that we're placing money solely based on that. It's more on the bottom-up fundamentals and those

analysis. So that's the way I'm going to answer that for you. Like I said, we should get a employment number out on Thursday. We actually do get the FOMC minutes out on Wednesday, and then we'll have PMIs out later in the week. So that's what I have on deck. And that's what I'm going to let you go for it today. So I appreciate you listening. Wasn't a whole lot of earth-shattering news on the day, but again, we did a full around the horn for you to go through every little bit of it, and I appreciate listening and appreciate the questions, and I wish you a very good night. We'll talk to you soon. Thank you again. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with

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