The Dividend Cafe - Monday - October 27, 2025

Episode Date: October 27, 2025

Today's Post - https://bahnsen.co/49mduQP Dividend Cafe: Market Recap and Economic Insights - Monday Edition In the Monday edition of Dividend Cafe, host David Bahnsen provides a thorough market recap from their Newport Beach studio. He highlights key market movements, with the DOW closing up 337 points, the S&P rising by 1.25%, and the NASDAQ up 1.75%. Boson also discusses the potential China trade deal and its impacts on the market, as well as the recent CPI report showing inflation metrics. Additionally, he touches on public policy developments concerning tariffs with Canada and Mexico and explores the implications of growing U.S. stock market capitalization. The episode wraps up with insights into housing market trends, mortgage rates, and Federal Reserve actions expected later in the week. 00:00 Welcome to Dividend Cafe Monday Edition 00:51 Market Recap: A Positive Day on Wall Street 02:20 Economic Insights: CPI Report Analysis 04:20 Public Policy and Trade Updates 04:57 US Stock Market Growth 06:25 Housing and Mortgage Market Trends 08:27 Federal Reserve and Oil Market Update 08:55 Against Doomsday: Positive Economic Indicators 09:54 Upcoming Events and Final Thoughts 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 Dividing Cafe Monday edition. I am your host, David Bonson. I am in our Newport Beach studio, and I am excited to go through the daily recap that we like to do each and every Monday. Before I do, I want to make sure that those of you who didn't receive the first of the Friday, Diven Cafe, or haven't had a chance to either read, watch, or listen since.

We'll note that we do a pretty deep dive into the world of index funds, the impact of indexing on overall markets, what we think are unique elements in the world of indexing, what are same-all, same-all, and how we're thinking about the whole step. It's a major discussion, a major topic in the world of investing, and I heartily hope that you will. see the Friday Dividend Cafe. For those, just looking for a quick market recap, let's get the easy part out of the way first. The markets opened up over 200 points today on the Dow, and it kind of zigged and zagged a little bit throughout the day. It stayed positive all day, and then closed near the highs of the day, up 337 points, which was about 71 basis points in

percentage terms. The S&P up 1.5% and the NASDAQ up over 1 and 3.4%. So another big rally day, and the whispers behind the rally today were from the president himself, who you may have heard tends to whisper rather loudly, that he believes a China trade deal will be worked out before he even meets the president G. So there's a great deal of confidence in some of the issues they've been fighting about this month that led to enhanced volatility in the first half of the month around rare earth minerals and other technological export permissions and so forth are going to be resolved. And so the markets like that idea. And it led to the top performing sector today being communication services was up over 2%.

Consumer Staples was the bottom performing down a quarter point as those defensives always lag in days like this. And so that was sort of the story in the market today. The 10-year bond yield closed at 3.98%, which was basically kind of flat on the day. Let me jump from that, by the way, real quick into some of the economic front issues, because the main thing I wanted to get to on the economic front was the CPI report from Friday. And essentially, it's kind of late and skewed and delayed because the government shut down. They ended up coming out with it.

And it showed headline CPI at 0.3% on the month, but it was, actually projected to be 0.4% of the month, but on a year-over-year basis, it's still 3%. Now, you take out food and energy, what they call core CPI, and it was only up 0.2% versus 0.3 headline, but the year-over-year was still the same at 3%. The interesting piece to me is that the CPI number is kind of hanging in there around the three level that the rent numbers that we long believed were going to be slowing and decelerating because they were overstated versus market level measurements. The rent growth and the owner's equivalent rent have indeed slowed. And yet the overall CPI numbers are hanging in there.

I believe a lot of that is clearly coming in certain categories that are showing higher prices from tariffs on the good side. So the number, you can read it either way if you want. I think most people are doing so around whatever their political desire tells them to. But both things are kind of true. The overall CPI number is kind of leveled. It hasn't leveled at a low place. It's leveled at a higher place. It's higher than it was the last few months of 2024. But it isn't going simply higher because other things that were long thought to be pulling it down are, in fact, pulling it down, but they're not really pulling it down. They're pulling it level because other things are pulling it up. And I'm positive what I just said makes sense. So if it sounds like it

didn't, and you have to listen to it again. And we'll go from there. Okay. On a public policy front, speaking of tariffs, president announced he's really mad at Canada. They ran a commercial that he did not like. And now we're going back to a really high tariffs of Canada and we're not talking to them. And then he did announce that he's extending the deadline with Mexico. as their talks are going well and he wants to give more time to complete a deal of Mexico. So south of the border, things supposedly looking better in the trade talks, north of the border, things looking worse, markets between Friday's action and today's action clearly shrugging it off. Speaking of market action, now this is crazy.

$65 trillion market capitalization of the U.S. stock market. That is $25 trillion higher than it was at the end of 2022. So we're getting close to three years now, and the market size of U.S. public-traded stocks is up $25 trillion. That growth in market cap in less than three years, in 33 months to be precise, just the increase of market cap in this very short period. period of time for U.S. stocks is higher than the total market cap, not the growth, the entire size of Japan, Europe, and the United Kingdom combined. That growth is higher than all of China's equity market value. And that, by the way, is with almost no positive return, a basically flat return in three years from the small and mid-cap sectors of the U.S. stock

market. That's how significant to move higher in this big cap growth has been. There's a chart I want you to look at divincafe.com. Existing home sales, by the way, increased one and a half percent in September. That was in line with expectation. The sales volume year over a year, is up 4%, still way below where it had been a few years ago, but a tiny bit higher than a year ago. And the median price for those sales was down on the month. So the correlation is rather clear. Where prices are dropping a little, volume is picking up, and that's how you would expect it to be. The chart I alluded to, by the way, in the housing and mortgage section of Dividend Cafe is to me a very telling sign of what happens when new supply is.

allowed to come to market. You look at those states where they're encouraging home building, where they're producing new housing stock, and then you're looking at the extra time on market, sellers not selling, not as desperate, and then what you're getting is buyers being rewarded for their patients because they then have more options as there's more inventory in the market. It will lead to reduce prices, but it will take time. But again, that high, higher time on market reflecting that higher inventory. And that is taking place in states that are allowing there to be more inventory via new construction. 20% of mortgages right now have an outstanding rate of 6% or more. That does mean that there's a fair amount,

20%, to be precise, that are subject to refinance possibilities if rates were to drop down into the fives. When you look at rates, when you look at other outstanding mortgages that are below 6%, and there are some between 5 and 6, but we're really talking about it, you know, a few below three, a heck of a lot between 3 and 4. That makes up about 70 plus percent of all outstanding mortgages. The Fed is, of course, meeting this week. They will announce, according to the futures market, that they are cutting rates a quarter of a point that is baked into markets and then some. And I'm far more interested in what the Fed will announce about their balance sheet and plans for quantitative tightening. Oil was basically flat today at $61.50 a barrel

last week. MLPs rallied quite a bit up almost 3% in the week, even as other midstream names were even. My friend Michael Polis sent a chart from the Wall Street Journal today that I used as an against doomsdayism because it isn't just one element of against doomsdayism. It is over a century's worth of data that are all anti-doomsdayism, about growing wages, about change in job sector, how jobs change over time, and yet plentiful jobs are still available, and real wages, that is, of course, net of inflation grow, and in this case have grown massively. And in fact, have even come with less hours worked per week, as a lot of jobs are paying more with less time required to do them as a result of technological advancement

and enhanced productivity. Everything I just said is net of inflation. It's factoring in inflation. And you have to look at the chart to understand how silly so much handwringing is, not to mention just factual revisionism. So we have the Fed meeting. Tuesday and Wednesday with the press conference Wednesday afternoon, as always. Earning season is hitting its peak this week. The bulk of companies for this quarter will announce results this coming week. That always leads to some fun. My dividend cafe on Friday will do a deep dive. A lot of these thoughts inspired by my recent week in New York, meeting with a lot of these very money managers I'm going to be talking about. But a deeper high-level

picture in private credit, private equity, and where people can be wrong on both sides of this debate with various concerns about private markets and also some degree of apathy, and I'm going to unpack it the best I can. I'm going to leave it all there on this wonderful Monday afternoon. Thank you, as always, for listening. Thank you for watching. Thank you for reading the dividend cafe. The Bonson Group is a group of investment professionals registered with Hightower 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. This is not an offer to buy ourselves securities.

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