The Dividend Cafe - Monday - October 13, 2025

Episode Date: October 13, 2025

Today's Post - https://bahnsen.co/4q8nNy3 In this week's Dividend Cafe, David Bahnsen dives into the latest market movements on a somewhat irregular Columbus Day with both stock market rallies and bank closures. Key highlights include the release of Israeli hostages held since October 2023, President Trump's upcoming meeting with China's President Xi, and the nuances of U.S.-China trade relations. David also breaks down the latest market performances, discuss the bond market, and preview the upcoming earnings season. Additionally, David touchs on the consistency and preferences in delivering Dividend Cafe content across different mediums. Get ready for a detailed wrap-up of today's economic events and market reactions. 00:00 Introduction to Dividend Cafe 00:51 Market Summary and Key Events 01:00 Global Political Developments 01:33 US-China Trade Relations 05:37 Market Performance Recap 07:30 Federal Reserve and Economic Indicators 08:55 Personal Preferences and Media Formats 10:47 Upcoming Events and Closing Remarks 12:05 Legal Disclaimers and Notices 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 Dividendon Cafe. By Monday, I am referring to Columbus Day, where today the stock market was open, the bond market was not, and banks were not. And yet you did have a big rally day. He didn't make back all of what was down on Friday from the big sell-off Friday, but you did have a rather substantial rally in what is a often confused or distorted day because of some markets being open and some markets not in the way it affects total asset allocators and hedging and other trading activity. But I think we got a pretty robust day out of today.

And I'm going to go through the summary of today and the summary of what's happening in the world because there is a lot happening in the world. Before I get to markets, I'm going to start with what I consider the biggest news of the day. The freeing of the remaining Israeli hostages from the atrocity of October 7, 2023. It is over two years that 20 hostages that are still living have been held in brutal captivity and they were freed today. This is a tremendous cause of celebration. In other news that is pertinent to markets and what took place, place on Friday and then over the weekend impacting markets today. President Trump has said that

contrary to other reports, his meeting with President Xi of China is still on to take place in two and a half weeks at the end of October going into early November. And one of the reasons that he would have announced 100% tariffs on these other categories of Chinese imports is that he made him effective for after that meeting is supposed to be effectively buying everybody a couple of weeks to cool the temperature and figure out where things are going, particularly some of the negotiators involved in all of this. I think the significant thing I want to say about over the weekend, I mean, look, some of it was quite shocking, him sending out a tweet saying, it will all be fine, and I want to

help China, not hurt China. It was an extremely de-escalatory social media post for the president, not something that we are often used to seeing from him. But the markets responded accordingly. Now, I would argue that even what took place Friday, really the surprise is not that it happened. It's that it hasn't happened more. We don't have a full arrangement yet between the U.S. and China. there's an awful lot of things playing out on the negotiating stage. There are a lot more than one or two topics that are up for grabs right now. And that there would be setbacks or jabs or use of leverage to improve one side or the other's bargaining power is not really very surprising to me at all. And that it hasn't happened more in terms of little market volatility enhancing moments

is a surprise. Now, look, you could say, well, he's threatening 100% terrorists. We don't know exactly that's going to play out. Maybe this thing will re-fire up. And I think it very well could. But fundamentally, I think what China knows is the same thing that markets know, which is that this president is not interested in shooting the hostages, as we say, and that all the walkbacks he's done since early April give China that information. Now, Then you have to say, well, does that mean China has this kind of naked leverage here that they can do whatever they want with? And in a sense, they do have leverage, but it's not sweeping. It's limited to the area in which they're trying to use it.

When they say they want export controls on rare earth minerals, they're not talking about banning the exports of rare earth minerals. They're talking about licenses. And this is almost identical to what the U.S. has done with some of its critical exports that they have a high degree of leverage over China. with. So both sides are jockeying for similar positioning, and we're going to have to see how that all plays out, but I think that the Occam's razor of how to play out is that I think that they will end up coming to an arrangement, but China's not going to forfeit their best leverage, and the U.S. won't forfeit it's. But the market did respond to the president kind of predicting and then sort of acting along the lines of de-escalation. There is a chart at dividend,

cafe.com today that I'm quite fond of showing what the tariff rates that have been announced are and how those have moved up and down since the beginning of the year, but then where the collections ought to be on the amount of imports we're actually doing relative to what those tariff rates are. And there's a really wide delta between collected revenues versus what they ought to be based on the math of those rates times the actualized. level of imports. The reason for the big delta is exceptions, the exemptions, waivers, and carve-outs, and I think that it speaks to the very discretionary nature, the current tariff regime in which we find ourselves. So the Dow, after being down almost 900 points on Friday, it opened up 400

today, and it did go a little higher throughout the day, but it was choppy, a little up and down action, but it closed up, 588 points. That's one. 1.3%. The S&P 500 was up 1.56%. The NASDAQ was up 2.21%. So in all three cases, they were up quite a bit today, but not up today as much as they were down on Friday. Friday's sell-off, by the way, was the worst day in market since the Liberation Day sell-off. We've had a few little doozies along the way, but Friday was the worst. But of course, It doesn't do much to break the incredible euphoria we've still been in with markets. 37% of stocks on Friday hit a 20-day low.

So that's not a super-high percentage number, and we're only in time about 20-day low. When you look above 50-day, 200-day tight-moving averages, you have a pretty robust market still. Top performing sector today, unsurprisingly, was technology up 2.47%. Bond market closed, nothing to report there. Worst performing sector today was consumer staples, down just 36 basis points. Only other negative sector was its defensive cousin healthcare, which was down just nine basis points, basically flat. China reported an 8.3% year-over-year increase in exports, but their exports to the United States were down by 27%. So the reason for the big increase in exports is that they have that much increased the exports they're doing with Europe, Asia,

particularly Africa, by the way. The average 30-year mortgage rate is sitting at 6.3%, which is basically where it was right before and right after the Fed announced their rate cut in September. You've had very little movement in mortgage rates since. The Secretary of the United States Treasury, Scott Besson, is handling this search for a new Federal Reserve chairman to replace J. Powell and his term as chairman ends in a few months.

and he had announced that the five candidates right now are Michelle Bowman and Christopher Waller, who are current Fed governors, Kevin Hassett, who is the current director of the National Economic Council, Rick Reeder, who is the current executive at BlackRock and has been a fixed income strategies there forever, and he's been a bit of a surprise on some of this list. And then Kevin Warsh, who is a former Fed governor and Morgan Stanley economist. We are sitting at 99% chance of one rate cut this month and a 94% chance of another rate cut in December. WTI crude oil up 1.3% today, closing just shy of $60, but down below 60, and if it were to dip down to $55, I think you'd see a lot of upstream producers taking it on the chin. And last week, speaking of taking on the chin, the whole energy infrastructure was down.

Upstream, midstream, midstream, and midstream was down 4% on the week. Finally, in my Ask TBG, I've had several people asking over the years why I always say, both in the Monday Dividing Cafe when I'm recapping the Friday Div Cafe or in the weekly portfolio holdings report, we send to clients on Wednesday, that my favorite of the three mediums we publish at Dividend Cafe in between the written word, the articles and commentary I write at dividendcafe.com, the videos that are posted to our YouTube channel and the podcast that go to podcast players and streaming services all over the place, that my favorite is the written. And the reason is, first of all, let's clarify that it is slightly different content.

I'm not just reading verbatim, the written one, in the video and podcast. The video and podcast each have the same audio content, but there's going to be just different cadence, different delivery, different thoroughness, different sequence. I usually am recording the Friday Dividing Cafe with notes in front of me from the written, but I'm never just reading the written. There's quite a bit of alteration, adjustment, flexibility.

We would like to have charts in the video at Dividendant Cafe whenever possible. There are charts, though, in the written version all the time that make up a difference. really the main issue for me is just me sharing with you my personal preference. I like to read more than I like to watch video. And there is a lot about Divida Cafe that it's Genesis, its foundation, its DNA is in the written word. Now, we're very grateful because there's a lot of you that listen to it on the video or listen to the podcast. And we want to continue doing that and not ourselves get in the way of people being able to get this content across multiple

mediums. But is the written word my subjective preference? It is. So I share that. All right. Lots of travel coming up for me bouncing around from New York to Newport, back to New York to Nashville, to Orlando, back to New York, back to California. That's all in the next nine days. But the big thing happening this week for markets will be earning season, hitting a stride to actually some major financial companies start releasing tomorrow morning before market. Friday's dividend Cafe will look at the expected impacted jobs from artificial intelligence is the topic I think a lot of you have questions about. So we'll look forward to a big divinity cafe on Friday. Busy week ahead. Earning season is something to be excited about and we'll see what continues

to happen here in the China trade, rare earth, AI stuff. It's a crazy world. That's all I got. Congratulations to my USC Trojans on an absolute thumping of Michigan. And I guess I should say, I'm really surprised that I didn't get to hear from all the Michigan folks last year who last year were so hospitable in their emails after Michigan won in the final seconds of the game. Great win for my Trojans up in the Los Angeles Memorial Coliseum. Fight on and have a wonderful Monday evening. Reach out always. Any questions, any comments. We're here for you. Thanks for listening. Thanks for watching. Thank you for reading the Dividing Cafe. The Bonson Group is a group of investment professionals registered with High Tower Securities, L.O. member FINRA and SIPC with Hightower Advisors LLC, a registered investment advisor with the SEC.

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