The Dividend Cafe - Thursday - February 13, 2025

Episode Date: February 13, 2025

Analyzing Market Movements and Inflation Impact In this episode of Dividend Cafe, Brian Szytel from West Palm Beach, Florida, discusses the market's performance on February 13th, highlighting a positive day for stocks and a significant drop in bond yields. The conversation focuses on recent inflation data, specifically the producer price index (PPI) and its effect on market behavior. Brian emphasizes the importance of observing longer-term fundamentals rather than reacting to short-term market fluctuations. He also shares his thoughts on gold as an investment, pointing out its unpredictability and lack of cash flow production. He concludes by encouraging a long-term view and inviting audience engagement with questions. 00:00 Introduction and Market Overview 00:45 Inflation and Interest Rates Analysis 02:07 Long-Term Investment Strategy 03:09 Gold Investment Insights 04:33 Conclusion and Final Thoughts 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. Welcome to Dividend Cafe. This is Thursday, February the 13th. And I'm Brian Seitel here in West Palm Beach, Florida in our office here with you today on an up day overall in markets, which is nice. We've had a bit of a whipsaw type of week with an up down, up down deal around mainly inflation numbers that have been reported, but the Dow ended up closing up 342 points on the day. The S and P was up over a percent and the NASDAQ was up a percent and a half.

So good day across the board for stocks. Bond market yields were down significantly. So we had bonds rally in price. Yield on the 10-year drop 10 basis points. We closed at 453. Remember yesterday, we had intraday move quite a bit up 15 and then closed up just eight basis points. But today the number around what moved interest rates was a second read on inflation, which

is the producer price index. This is the PPI number. And it was in line on core and slightly higher on headline than expected. But it was the revision of December that was probably the bigger needle mover within the number. And we can tell that it's a bit of a nothing burger as far as what it is saying to the market because interest rates went straight down. can tell that it's a bit of a nothing burger as far as what it is saying to the market because interest rates went straight down.

And if it was really a ramp up in inflation, that would be different. You'd have a rally in yields, meaning bonds would sell off, and you'd have a strengthening dollar and inflation expectations would ramp up, so on and so forth. Not really what we saw. And the reason is you can extrapolate using CPI and PPI and get to the Fed's favorite metric, which is PCE. I know that's a lot of acronyms, so bear with me. The personal consumption expenditure index number is what the Fed likes to use the most. And you can calculate it more or less with these figures and you get to something that's also in line. The worry

about yesterday's bigger number and then today's slightly higher number is diffused because ultimately the Fed isn't gonna look at it as a runaway inflation type of paradigm. And so that's why you've gotten a calm down with interest rates, you've gotten stocks that have resumed an upward trend and all is good. And that's what I wrote about today.

My message really isn't a point three versus point four or zero percent on these numbers and why they matter. Frankly, they're arbitrary to most people. It doesn't mean a whole lot. My point is twofold. One, inflation isn't running away. And then two, what ends up happening is it whips sells markets. So rates sell off a lot. Rates rally a lot. Same thing with stocks.

And what I really want to encourage people is to not worry about it. Number one, it's daily noise. It's not anything long term. You can't really predict something long term with just a weekly or a monthly number, first off, and to focus on those longer term fundamentals. Being agile and being able to trade in and out of different things because of this

information is not a good thing. It's a bad thing. It is detractive from long termterm results for everyone and whether you get those trades right in the short term is fine. But since it's not repeatable, at least consistently, I believe it to be a fool's errand and I believe that it's an empirical statement around daily market movement. So take that for what it's worth. I believe it's worth its weight in gold. And speaking of gold, I'll segue into the Q&A.

Gold has done well the last couple years and so there's more questions about it and if we own it and things like this. So now we don't own it. Look, I know people write about it and I know people especially write about it after the fact. Meaning that, hey, at one point I said gold was good because the sky was falling and even though the sky never fell, but now gold's up a lot, so I'll take credit for that. You should have bought it, see? Well, that's fine. The problem with it is that it's just designed to get you to read things and to click on this or that. It doesn't really provide you with any context or helpful information on how to steward your assets to provide for yourself, for your retirement, for your heirs, all these important things. I don't know where the price of gold is going to go. Nobody else does. Okay.

There can be different predictions around tariffs or geopolitics or wars and these different things in flight to safety or inflation or debasement of fiat currency. All those things fine, but that still won't tell you exactly where gold will go. And since I know that it's not going to produce any cash flows for you to live on, and since I know that the price movement of the metal will be unpredictable, it's not a real big passion of mine. I also know that it has underperformed the overall stock market basically over my entire life and I'm 47.

So there you have it. Tell you what I really think, huh? But those are my comments on gold, those are my comments on daily trading activity, and those are my comments on inflation. Those are my comments on daily trading activity. And those are my comments on inflation of where we are today. With that, I'm gonna let you get into your evening here on Thursday. I wish you a lovely weekend,

and I hope you reach out with a question or two. Take care, talk to you soon. 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 Advisors LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC.

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