The Dividend Cafe - Monday - November 24, 2025

Episode Date: November 24, 2025

Today's Post - https://bahnsen.co/4oXqLUW Monday Dividend Cafe: Market Rally and Upcoming Thanksgiving Special In this episode of 'Monday Dividend Cafe,' we cover the market's uptick amid a holiday-shortened week, highlighting a strong performance in sectors like communication services driven by Google, and less favorable outcomes for consumer staples. The bond market also continued its rally despite risks in equities. The discussion includes updates on economic policies, including anticipated Fed rate cuts, a potential Ukraine-Russia settlement, and the state of healthcare stocks. Additionally, there's chatter around the Supreme Court's ruling on tariffs and President Trump's hints about its potential outcome. David briefly touches on energy sector dynamics and concludes with a personal moment recounting a memorable Dallas Cowboys victory. 00:00 Introduction and Housekeeping 00:42 Market Recap: A Positive Day 01:55 Sector Performance Highlights 02:25 Risk Assets and Valuation Concerns 06:18 High Yield and Technicals 06:49 Top News Stories: Russia-Ukraine Deal 07:28 Public Policy Updates 09:03 Economic Indicators and Fed Talk 10:57 Energy Sector Overview 11:16 Conclusion and Thanksgiving Preview Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividend 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 Dividend Cafe, where we are ready to go around the horn, per usual, here on this shortened Thanksgiving week, a little housekeeping quickly. We will not have a daily recap tomorrow or Wednesday due to the holiday week, but on Wednesday, we will come out with the normal dividend cafe, but instead of it being Friday, because of the holiday weekend,

we're going to put it out Wednesday, which we've done most years on Thanksgiving week. And the dividend cafe will be a sort of Thanksgiving edition, not a big market or economic commentary. So that'll come out Wednesday. And then we'll be back to a normal week next week as we go into the month of December. In terms of today,

what I want to quickly do is just recap, cap today in the market and then go into a few of the policy and economic and Fed and all those things that we normally do. The market opened up 130 points today in the Dow and stayed steadily higher throughout the day. There were a couple of dips here and there, but it closed up over 200 points, almost half a percentage point in the Dow, one and a half percentage points in the S&P, and over two and a half percentage points in the NASDAQ, as you had a pretty good comeback rally from what had been a pretty difficult week last week. I think that there are a few things about today worth sharing. A, that the bond market actually continued its rally despite a risk on move in equities is

interesting, if not surprising. The 10-year bond yield was down about three basis points, closed today, had just barely above 4%. And, of course, the 10-year yield had come lower last week as well. The odds of a Fed cut in December have moved up substantially. I'm going to get to that in a moment, and so hang tight and we'll get to some Fed talk. As far as other things about the market today, communication services, there's a link at Divida Cafe, but Google was the huge reason why, and it was the number one performing sector today, up 3.9% on the day with about half of that gain incrementally coming from Google. The worst performing sector of the day was consumer staples, which, again, the defensives sold off having rallied so much last week.

Consumer staples were down 1.3%. I would point out that with the recent sell-off in certain risk assets, and keep in mind, you have less credible risk assets like Bitcoin that were down 30%, you have some of the private equity asset managers down 15%. You have the AI KAPX type names down 12%. But even then the S&P 500 is only down from its high going into today 5.5%. Not a ton. But high yield credit spreads have widened. They reached about 306 basis points this morning. And I think they were as tight as 255.

I don't think they got to 250 since the summer. They've been running just barely about 2.5%. That's very tight. and at 3% wide, again, we're coming up the spread between high-yield credit and comparable treasury, which would be a risk-free rate. You're not talking about a ton, but three is wider than two and a half. So you've seen a directional change in risk in that sense, but still nothing very substantial. One thing I'd point out is about the NVIDIA deal, which we spent so much time talking about last week. It had basically gone up five percent,

on Thursday in the aftermath of its release of results. It then gave all that back and then some. We talked about that last week. But you're talking about 15% drop from its peak to its troth. And the most important thing that people who have been trying to express caution or concern here like myself need to say is that with this particular company, none of it has been related to declining fundamentals. It has all been because of the excessive valuation. So we're not dealing with, oh, fundamentals are great. So the stock's fine, where you get like a disconnect between value and price. And therefore, that's kind of like a classic value situation. But nor do you have a price deterioration coming from fundamental deterioration. You do have here

something that's very difficult for bulls to become convinced otherwise on, which is just present valuation issues. Now, the rate of growth declining, the current valuation, a declining rate of growth in the future, is that warranted? Is the valuation warranted with some of these conditions? All those things are legitimate questions. What the hypers are going to end up doing is a legitimate question. But what I would propose is that the far more important issue is whether or not the risk embedded in those unknowns, justifies the price action. And that one I find hard to answer affirmatively.

Now, 15% of name like Nvidia, and then you look at things that I consider to be legit shiny objects that are not fundamental stories. My critique of Nvidia evaluation is different than critiquing the revenue and profit growth that has clearly been monumental. But you look at a company like Microstrategy, which is essentially,

let's buy Bitcoin by issuing new stock and then the Bitcoin when we hold it is worth more than the underlying price. So then we use that to issue more stock to buy more Bitcoin to issue more stock to buy more Bitcoin, rinse and repeat. And again, if you're thinking that that sounds like a certain type of, shall we say, scheme out there, you're thinking rationally. But that stock is now down 67%. And it had gotten added to the S&P 500. So those are things that I think you can can categorically classify much differently than some of the other AI CapEx or Mag 7 excess valuation names from stories like this that I have a very hard time even talking about with a straight face. Okay. High yield we did. Friday's rally, 10 to 1 advanced to decline. Very, very substantial move in

some of those technicals, speaking of which like a sector like health care that have been way out of favor, 98.2%. If you look at the S&P 1500, which covers small, mid, large cap, 98.2% of healthcare companies up in that advanced decline. So certain internal breadth things interesting that are different than what we had seen before. So moving around the horn now, in terms of top news stories, there's no question. This deal being proposed for Russia, Ukraine, to come to a settlement that doesn't look like Europe is anywhere near on board. And I will be utterly shocked if Ukraine comes around to any part of this. It's getting a lot of the attention. It's probably the biggest legit non-market news story. And we're told that there's a few more

days for Ukraine to reply. And then we're told that there may be adjustments to the plan. And so there's a lot of on again off against stuff going on here. But that will maybe be a story that will have more of a conclusion to it by the end of the week. On the public policy side, the odds of the Supreme Court ruling that the president's rationale for tariffs are legal have dropped all the way to 25%. It had been above 50, it dropped to 30, came back up to 40, it's not sitting at 25. And based on President Trump on Twitter or true social or whatever over the weekend, it sure seems to me that the White House is getting word that the Supreme Court is not very likely to rule in their favor. I'm not going to do anything until it happens,

but I've been very clear on the record as to why I think it should just be a 9-0 vote that the Supreme Court rules that these are not rationalized or justified under the IEPA rationale as an economic emergency, but the White House does seem to be aggressively planning contingency arrangements. So, as I've said many times, I don't think that's going to matter much. The word I'm getting from multiple sources that are actually on both sides of the aisle is that a shutdown is likely to be averted when this new current resolution that's been extended comes due and that these Obamacare subsidies that are set to expire, the White

House is likely to extend them, but with certain terms and conditions. But one of the terms and conditions is that it'll be limited to people who only make seven times the poverty rate or less. That's what I am being told is being floated and it's been run in a number of not only press accounts, but institutional research sources that I take very seriously. So we'll see if indeed that's where things go, but it's been my consensus view all along. On the economic front, there's a chart in dividend cafe.com. I encourage you to look at showing the percentage of GDP being spent on technology CAPEX and how we're now back to that internet.com phase as a percentage from the late 1990s. We do know, as I already covered in dividend cafe on Friday, where our whole dividend cafe

Friday was devoted to a catch-up on the state of the economy, that there were 119,000 jobs created in the month of September, and that we're getting this data quite late now. The unemployment rate ticked higher to 4.4%. You had downward revisions from the summer jobs data of another net negative 33,000 jobs. October, existing home sales up 1.2%. They're up 1.7% from a year ago, so more or less pretty flat. transaction level in the state of home prices. Big news from the Fed was that the New York Fed President John Williams came out Friday to say he does believe we need a rate cut. And the odds now

of a rate cut in December spiked all the way up to 71%. They had gotten down below 40% as I covered just one week ago. And as my friend Peter Bookfar pointed out, both Friday or Saturday and again today, it's just very unlikely that John Williams went out and said that. without the blessing of J-PAL. The apparent indicator is that they are floating out there, even though we know there's a few no votes, that they do plan to cut rates in December. Now, again, we haven't got back to 90% probability,

but going from 40 to above 70% on a Fed president's comment is substantial. And you say, well, other Fed presidents have said something different. That's true, but they're not the New York Fed. And the New York Fed, which is a permanent FMC voting member, has a significant higher clout and gravitized. and some of the other Fed presidents do. Oil was up over one and a half percent today, but still below $60. Last week, you saw oil down over 3 percent, the stock market down 2 percent,

MLP's down just 0.3 percent, midstream, a little over one. So again, energy sector, kind of different results in different spaces, but overall relatively better. So I'm going to leave it there. I do hope that a lot of you got to watch the Dallas Cowboys come from behind. Miracle Victory yesterday, which was by far one of the most inspiring sports moments of 2025. And with that said, I hope you enjoy your Monday evening. I'll look forward to being with you Wednesday in the Dividendon Cafe for a Thanksgiving edition.

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