The Dividend Cafe - Monday - November 3, 2025

Starting point is 00:00:00 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 Dividend Cafe. I'm your host, David Bonson. My first thing I will say is to check out the Friday Dividendin Cafe. Dividendon Cafe.com. The podcast is there. The video is there. The written commentary is there where I do a pretty deep dive into private market.

Starting point is 00:00:30 private credit, private equity, the risks, the things that are not risks, and the systemic issues that many are concerned about, Friday Dividend Cafe worth checking out. Today's market was kind of a funky thing. We opened flat. The market went down 400 points within the first hour. It made 200 of those back pretty quickly. And then it really did kind of stay level-ish from there for the rest of the rest of the of the day, but the market did close down for the Dow 226 points, which is about half of a

Starting point is 00:01:09 percentage point. It had been worse earlier in the day. The S&P was up a little over flat, up 17 basis points in the day. NASDAQ was up about half a point. A lot of that coming from two particular companies. There is a chart in two days, Monday edition, dividend cafe.com that I very much want to direct you to regarding the state of market cap, entire sectors of the United States economy, and this really big company called NVIDIA. And I just think that chart, which I'm going to make you go to dividend cafe.com to look at is fascinating. Speaking of valuations of big AI CAPX, big cap growth companies, I do obviously have opinions

Starting point is 00:01:55 about the state of valuations in the space. I have no opinions whatsoever about timing of such. And in fact, in a moment, I'm going to share a historical nugget that some would errantly use to assume I might have a short-term two-month call that things are all going to be rosy. I, of course, have no such call because I never do about anything in two months. But when we talk about AI CAPX and the high, high, high valuations and that whole story going out, there was a dividend cafe about this, about three weeks ago. I just want to make clear that we are not looking at S&P 500 that is going down apart from that AI CapEx theme. In 1999, you had almost everything but this sort of internet backbone going down. And then in March of 2000, the internet backbone story broke and all,

Starting point is 00:02:50 you know, what broke loose in the NASDAQ. Right now, I would not call the breadth of the market great, but the even-weighted S&P 500 did hit an all-time high last week. It isn't like you have the regular market-cap-weighted making an all-time high because of a few big-cap tech companies and everything else going down. Everything is going up, or enough things are going up, that even the equal-weighted is still moving. It's just that the valuation stretches are most pronounced in that AI KAPX theme. 56% of the holdings in the S&P 500 right now are above their own 200-day moving average.

Starting point is 00:03:31 That's not great, but that's not terrible. That's not indicative of collapsing breadth. It's just, you know, so-so, and it is what it is. The historical nugget I wanted to share is that the first 10 months of 2025 rank as the 20th best first 10 months out of all the first 10 months of the last 80 years. So 20th place in the top 25 list out of 80, not bad, not huge, you know, is what it is. But if one was trying to get a short-term prediction based on history, which I most certainly do not recommend,

Starting point is 00:04:14 out of the top 25 first 10 months in the last 80 years, 24 of those 25, the market ended up being positive in November, December, in the two-month period. So, first of all, that's 96%, not 100%. Second of all, even if we're 100%, there's nothing that would say it couldn't go to a lower percentage. The first time for everything, past doesn't predict future. I can say all the stuff and all of it's correct. But my point being that generally, When you're at a positive situation like this, the first 10 months of the year, markets do tend to close with the last couple of months being positive as well. Do that whatever you want.

Starting point is 00:04:55 I'm just sharing it for historical context. Ten-year bond deal closed today flat, 4.1%. Top performing sector was consumer discretionary. Bottom performing sector was materials. Big news of the day, and there is a link in dividendcafe.com to the news story about this. but the Consumer Staples giant Kimberly Clark announced overnight a $48.7 billion acquisition of Kenview, which has been under distress lately since the White House outrageously, nonsensically, made announcements about Tylenol and autism for pregnant women. The fact of the matter is that Kimberly Clark, with all of their lawyers and bankers,

Starting point is 00:05:41 scientist and whatnot looked at it all and is now taking on that litigation risk that had been weighing down Kenview at what was a 46% premium to the closing price Friday. I bring it up because it's a big news event. It's the largest consumer staples merger of the year. And it's the third largest merger period. Only the big Norfolk Union Railroad deal and the electronic arts acquisition rank higher in terms of size. And it is worth, I just want to say, because I don't know if some of the people reached out to me were doing it because they listened to the podcast and video or if they were readers. And so in case, you know, I put this in the written version, but I want it said audibly too, I got a ton of feedback from various doctors and scientists,

Starting point is 00:06:33 adding more of support for the idea that there was absolutely no linkage between Tylenol and autism whatsoever. And a lot of people sent me very nice notes, commending me for my stance publicly on the issue. And I wanted to thank them because a lot of them are not clients, a lot of them are. But it was appreciated encouragement. And actually, I learned a lot from the information that was given. So thank you, thank you, thank you. Public policy, so much to say about the U.S. China deal. But I'm going to have to wait until Friday because I'm doing a whole dividend cafe on it this Friday. And I promise it's going to be an exhaustive coverage of the U.S. China situation. Supreme Court hears arguments this Wednesday on the constitutionality of President Trump's

Starting point is 00:07:16 tariffs behind an economic emergency rationale bypassing Congress despite their power for tax. They won't rule on Wednesday, but the hearing arguments Wednesday, and a lot of times you can read from what the tone and the questions of the judges where they stand. And other policy things stand to go to, I think a lot of the governor race in New Jersey and Virginia is tomorrow night at the mayor race in New York. And so there's a few little off-cycle off-year election things will pay attention to. Another bad month for manufacturing. Eighth month in a row of contraction for the sector, 12 out of 18 sectors were negative. The Fed news, we already covered last week, but certainly last week, the big news in markets

Starting point is 00:08:01 was that Chairman Powell said, oh, you know what, we haven't actually made up our mind. We're going to cut rates in December. and that added a lot of volatility to markets, although futures still sit in the mid-60s as far as the odds that they will end up cutting again in December, but that number had been up to the 90s. Oil flat today was pretty flat last week as well. OPEC plus agreeing that they're going to increase production

Starting point is 00:08:27 just a little bit more for December, but then they're going to pause for three months. So again, you're getting a pickup in supply and not commissary pickup in demand, and so there may be sitting on their hands for a little bit here. The Ask TBG section today at Dividycafe.com someone wanted to understand why the Fed doesn't just set the rate at a certain level, but their target rate has a little 25 basis point bandwidth.

Starting point is 00:08:52 And I explain that there at Dividendoncafe.com. Real quickly, there's not going to be a podcast in our daily blurb tomorrow, Tuesday, Wednesday, or Thursday. There will be a daily blurb email with the what's on, my mind and I ask TBG when I'm answering one of your questions, Tuesday and Wednesday, but there will be nothing at all Thursday, no email, no podcasts. Tomorrow I head out to Dallas and I can get all the written stuff I normally do done Tuesday and Wednesday. There isn't in the scheduling of everything going to be room for podcast recording for either Brian or myself,

Starting point is 00:09:26 Tuesday, Wednesday, Thursday. Our entire team is headed to Dallas, Texas for our annual offsite of meetings and all this fun type of stuff, Wednesday, Thursday, Friday. So that's why Thursday, there'll be nothing. Tuesday, Wednesday, it's truncated. Your normal client, weekly portfolio holdings will go Wednesday, and my full Dividendon Cafe with podcast video and all that will be there Friday, but I just didn't want anyone to be surprised. With that, obviously, I'm going quickly today because I'm running late for a call, but that

Starting point is 00:09:56 covers today's Monday Dividendon Cafe. So much fun. Thank you for reading. Thank you for watching. listening to 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. This is not an offer to buy

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The Dividend Cafe - Monday - November 3, 2025

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