The Dividend Cafe - Monday - September 8, 2025

Episode Date: September 8, 2025

Today's Post - https://bahnsen.co/47uuMdO Monday Market Update: Analyzing Housing, Jobs, and Fed Policies In this Monday edition of the Dividend Cafe, host David Bahnsen discusses the latest market movements, job figures, and housing market dynamics. He highlights the Fed's anticipated rate cut decisions, sector performances, and policy updates. Boson also provides insights into nominal GDP expectations and the impact of tariffs on various sectors. Listeners are encouraged to visit DividendCafe.com for detailed analyses and a philosophical discussion on the U.S. free market economy from last Friday's special edition. 00:00 Welcome to Dividend Cafe 02:13 Market Recap and Insights 04:02 Public Policy Updates 05:58 Economic Indicators and Job Market 08:21 Housing Market Analysis 10:56 Federal Reserve and Interest Rates 12:25 Oil Market and Health Statistics 13:47 Closing Remarks and Special Mentions 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 the Dividing Cafe. I am your host, David Bonson, managing partner here at the Bonson Group, sitting in our Newport Beach studio with a day of goodies to present for you, round the horn and the normal topics we like to cover on a Monday. A lot on the Fed today, a lot on housing, a lot on the economy, the normal market stuff. You know, it's funny. For a market podcast, the thing that I think is most irrelevant each and every Monday is the

daily recap of market action. We do it as a bit of a courtesy. Of course, we provide the daily recap Tuesday, Wednesday, and Thursday as well, which is largely an excuse to present also the ask TBG to give you answers to different questions that come in. But what the market went up or down on a given day is perhaps the most irrelevant statistical data point I can ever provide. Now, to the extent some people want to know and we'd rather they get it from us than someone else, I mean, we have no problem presenting the number. But I just thought every now and then it might be helpful to refresh you as to what we actually think is important. And one of those things is not how many points up or down the Dow went in a given day. A lot of the other.

other things we're going to talk about are important. So we'll get to that. For those who missed the Dividy Cafe on Friday, I do heartily recommend you go to Dividingcafe.com, where we will have a very special Friday edition about the market, the market economy, the system of free enterprise in the United States that we think serves as a secret sauce to American investor's success for so long and a sort of a philosophical refresher as to the nature of a free market economy and why it is so relevant to relative U.S. strength over other markets and where the uniquely American celebration of risk-taking and entrepreneurialism has been such an incredible driver of economic growth in the United States for so long and what that means for investors. So check that out

a dividend cafe.com. All right. So the market here Monday, September 8th, opened down a pinch, and then it did bounce up and then down and then up again, ending up the day up 114 points, which as a percentage is a whopping quarter of a percent. The S&P was up a quarter of a percent, and the NASDAQ was up a little less than half a percent. So all three major market indices these up, but none of them up a lot. What was up again was the bond market as the 10-year yield fell another five basis points. The 10-year is barely holding about 4%. So the bond rally has continued up and down the curve. Right now, the 10-year closing at 4.04%. This is an incredible message that the bond market is laughing about inflation talk. And yet,

telling you not to laugh about growth. That growth is indeed slowing. This is a byproduct of nominal GDP expectations coming lower. The top performing equity market sector of the day was technology. It was up 67 basis points. All of the defensive sectors were down today, and the worst performing was utilities, which was down a little over 1%. A surprise worth mentioning, though, speaking of risk assets, outside of the defensive sectors, you have small-cap stocks that have done very well, both on a relative and absolute basis as of late, and the home-building stocks. And the home-builder sector does not seem to be one that should have a lot of strength, given the challenges within the home-building world. But again, markets themselves are always in

forever a discounting mechanism. In terms of public policy, I actually don't have a lot to update you on. The various mouthpieces for administration made their way around the Sunday morning news shows, but there isn't anything particularly newsworthy to update. No new policies announced, no new activities with various trade deals, just your normal kind of cheerleading and quarterbacking and whatnot. But I will say that there's more talk about a second record. reconciliation bill, and I remain very skeptical that the politics are such that something

like that could get done. There are things that might be popular that could get some yes votes, but then those very things that could generate some yes votes to get a second reconciliation vote done would cost it votes with others. And so there isn't, the question is whether or not there are enough things that could harmonize the people that would be pulled on yes and no on various particular issues. What would be the harmonizing force to get us to 50 or 51 Republican Senate votes? And with the last reconciliation bill, there were so many things that would have killed that bill

that put various forces at odds with one another. But what harmonized it to get over the finish line was the sort of political urgency of the expiring tax cuts. And with that issue taken away, I just don't see what the uniting force is that is going to coalitionally coalitionally allow a yes vote for another reconciliation package. I don't see it happening. It doesn't mean it can't. And maybe there's something so small ball that it does happen, but it barely even matters. But I'm not sure. Reconciliation bills are hard. And I don't see a budget window getting opened and then a reconciliation, whether it's within a new budget window or the prior, that is going to get the votes necessary without a political emergency attached to it.

Okay, I've gone on too long with other things because I want to get to the heart of the matter here, which is the economic front. First last Wednesday was the ADP number whereby, for the month of August, you had a pretty atrocious result in the private sector. 54,000 jobs created, and that was half of the also low number from July. So you now have a three-month average in ADP private payrolls, 46,000 private sector jobs created per month, and there's a 12-month. average of 120,000. So you're getting close to just one-third of the per-month average over the last year. But then, as I've said many times, the ADP number sometimes is not a great leading indicator to the BLS number, the Bureau Labor Statistics, which is the official governmental data. Sometimes those things are at odds. But in this particular case, the BLS number was even worse, with 22,000

jobs created in August and downward revisions with the administration. and predicted upward revisions for June that actually put the June number in the negative. So payrolls were only 22,000 in August. That's the worst month in a long time, and the unemployment rate rose to 4.3%. Fireings have still not picked up. We're not seeing a substantial amount of layoffs

more than before, but not a high number. But the issue is you're not seeing a lot of new hirings. So there's a certain degree of frozen activity in both the hiring and firing front, which is not what you want out of a robust job market. The trade deficit in July came in at 78.3 billion imports were up an astonishing 20 billion. Obviously a mad dash for American importers to front-run tariffs. And July gave a window to do that before the August announcement of new reaffirmed tariff levels and impositions. Manufacturing jobs declined for the fourth straight month.

The negative job growth we see, by the way, are all in tariff-sensitive sectors, manufacturing, mining, logging, construction, wholesale trade, transportation, warehousing. There's a chart to this effect at dividendcafe.com. On the housing front, I continue to be asked what the administration can do. I presume people are referring to the Trump administration about the housing issue, and I want to continue to make the point that primarily, these things are supply driven, which is primarily state and local and very little the administration at a federal government level can do. Now, with that said, I suspect it's possible that they end up

easing enforcement on immigration in the construction industry, much like they were pressured to do in agriculture. I do believe that certain tariffs on construction materials are having a huge effect on housing. Housing builds, and there is room for some sort of relief about that, but I don't know that they will. I only know that I think they should. Now, lower interest rates could help, but this is somewhat paradoxical because we generally associate lower interest rates with higher housing prices. How is that going to help an affordability issue? But what you do have now that is very unique historically is a frozen market, what we're referring to as a seller's strike, where rates are so low that sellers don't want to sell and trade out a low mortgage

to go have to buy a bigger or more expensive home, but at a higher interest rate. And there's a possibility that you at least unfreeze activity that then is beneficial to driving some housing market activity that might help recalibrate, re-center, rebalance supply and demand. So I think ultimately, the administration is not likely to be able to do anything about the zoning and permitting and regulatory roadblocks that exist at a state and local level. So this is our framework around housing. Another data point that I want to hit real quick that I read in a report last week, from 2012 to 2019, so think of it as the post-crisis pre-COVID moment. It went over almost a decade, you had between 200,000 of the low end and 300,000 at the high end, every single year,

new home purchases by foreign buyers. That number is now below 100,000 each of the last four years. So you are just simply not getting a lift in transactional activity from foreign buyers. It's taken out a net couple hundred thousand a year in this activity. That's a big part of declining volume. Okay, so the Fed, this is just absolutely amazing in light of the atrocious jobs results last month. They're now an 88% chance of a quarter point rate cut from the Fed next week, but it's a 12% chance of a half point.

So there's a 0% chance of no cut in September. Most likely, according to the Fed Fund's futures market, a quarter point small possibility right now of a half point. But then more interesting to us is that in December, there is now an 80% chance that the Fed will be three quarters of a percentage point lower, 75 basis points lower by the end of the year. And there's a 9% chance of a 1% reduction by the end of the year, back to 100 basis points coming out of the Fed funds rate by the end of the year. The odds for that third rate cut just last week before the jobs data were at 24%. They're now at 80%. So more than tripled in light of that job number. The president himself, by the way, on

Friday said his top three finalists for the next Fed chair are Kevin Hassett is the current NEC chair, Kevin Warsh, who is my preferred selection and Christopher Waller, who is a current Fed governor. On the oil front WTI closed 62.41 today, up 1% on the day. It was down 3.5% last week. More talk of OPEC plus production picking up. Whole energy sector was down last week. Midstream itself was down about 2%. There is a chart and some statistics. I brought back the against doomsdayism this week because I came across the data points on Sunday and I just felt the desire to share it Because I continue to hear more and more of this malarkey about how badly our public health is failing us. The fact of the matter is that death rates from leukemia in small children is plummeted by 93% since 1950.

Total cancer deaths have dropped 34% since 1991. That is a byproduct, of course, of much better early detection emphasis. and, of course, certain behavioral and preventative issues primarily around lung cancer smoking. My point being whether you're talking about heart valves or cancer detection, there's been some just staggering improvements in modern health and science that I feel we should have gratitude for, and for that reason I remain against doomsdayism. Larger, longer question and answer that I won't do here on the video or podcast, but you can check out AskTBG at dividendcafe.com, where one is wondering about the growing level of

margin debt balances and what it might mean for increased risk in the system. So I'm going to leave it there. I'm going to say, happy anniversary to my wife of 24 years, Jolene, and I'm going to thank you all for reading, watching, and listening to Dividing 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 or sell securities.

No investment process is free at risk. There is no guarantee that the investment process or investment opportunities referenced to Rian will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. the investment opportunities referenced herein may not be suitable for all investors. All data and information referenced here in are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary and does not constitute investment advice.

The Bonsor Group in Hightower shall not in any way be liable for claims and make no express or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or emissions from the, the obtained data and information referenced your end. The data and information are provided as of the date reference. Such data and information are subject to change without notice. This document was created for informational purposes only, the opinions expressed, are solely those of the Bonson Group and do not represent those of Hightower Advisors LSC or any of its affiliates. High Tower advisors do not provide tax or legal advice. This material was not intended or written

to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client's individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for any related questions.