The Dividend Cafe - Thursday - July 17, 2025

Episode Date: July 17, 2025

Positive Economic Indicators and Market Insights - July 17th In this episode of Dividend Cafe, Brian Szytel discusses the record close of the S&P 500 and Nasdaq, along with positive performances from the DOW. The market rally was driven by encouraging economic data including improved retail sales, jobless claims, manufacturing data, home builder sentiment, and lower than expected import prices. Seitel emphasizes the robust health of U.S. consumers, given the low unemployment rate and wage growth outpacing inflation. He also discusses market multiples, the risk in volatile investments like crypto and AI, and the importance of long-term asset management. Additionally, Szytel addresses questions about government spending's role in GDP and the growth of the money supply. 00:00 Welcome and Market Overview 00:25 Positive Economic Data Highlights 00:49 Consumer Strength and Employment 01:41 Manufacturing and Housing Insights 02:15 Market Sentiment and Risks 03:39 Government Spending and GDP 04:41 Money Supply Growth Discussion 05:15 Q&A and Closing Remarks 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 back to Dividend Cafe. This is Thursday, July the 17th. Brian Sightel with you here today on technically a record close on both the S&P 500 and the NASDAQ. The Dow was up as well. So we had a positive

Dow by 229 points. S&P was up half of a percent. NASDAQ up 7 tenths of a percent. Bond market was a snoozefest. So rates didn't change at all 10 years at 445. And all of this was based on positive economic data pretty much across the board. I'll call it a potpourri of positive data because you had about five data points that came out that were in the board. I'll call it a potpourri of positive data because you had about five data points that came out that were in the green. We had retail sales that were much better than expected. We got a big snapback.

If you remember in May, we had that nine tenths of a percent decline. And this month we had a 0.6% increase when only a 0.2% was expected. So big snapback from May retail sales and lo and behold, you can almost always count on the U S consumer that is fully employed. Remember we've got 4.2% unemployment right now. So people have jobs. You've got real wage growth, at least now where people are making more that inflation is going up.

That is a good thing, obviously. And you've got record strong balance sheets. The consumer has basically never been stronger from a balance sheet perspective. So all that to say they're out to spend money and that doesn't shock me at all. You also had though on the day, initial jobless claims come out better than expected.

We got a 221 print and we're thinking it was gonna be closer to 230. If you remember, we were in the low 200s forever and we started moving higher towards that 250 level that was caused for concern. And now we're drifting back down towards 220s. That's pretty positive for the employment picture. Very balanced labor market right now. We had some manufacturing data out with the Philly Fed for July that was better than expected and meaningfully so.

We got a 15.9 versus a decline of four expected. So big beat on manufacturing in that region. And then we had a home builder sentiment that was positive. Also a good sign for the economy. And then lastly, to top it off, we had import prices for June that were actually lower than expected. So a little cooler on the inflation front

on CPI, PPI, and now imports. And then you had these positive data points on the economic calendar, and then lo and behold, you have the market that's up on the day. And my comment in there is not about the market not being able to trade higher because of course it can. And frankly, with earnings coming out right now and also sentiment remaining midway, somewhat low on stocks, I could even paint a picture that there's a

positive backdrop, but that's not my point. My point is about the multiple. We're trading at 22 and 23 times earnings. And so, you know, these positive data points that we got today on Thursday are great and markets were up a little bit, but that's just warranted of the current multiple. In other words, I don't think there's going to be much of an expansion of multiple. And I think that's a fair statement. Where I do think things are most heavily outside of a positive asymmetric risk

reward skew are on the shiny object. So if you think about the bears, all our crypto bulls or even gold bulls, these sort of really one-sided trades that have just had all this momentum, call it the real frothy AI component, all that stuff. It's not really tied to anything intrinsic, any sort of regular multiple or calculation and that's where I think most of the risk lies. And my comment is that that pendulum will swing back and forth and right now on some of that stuff it's really swung in one direction And that's where I think most of the risk lies. And my comment is that that pendulum will swing back and forth. And right now on some of that stuff, it's really swung in one direction.

And our job is asset managers for real people is to stay focused on the goals. And I view that in a pendulum analogy as that center of mass. And so that's what we're focused on. And that's why we go to work here each day. And so there you have it on the market, at least around the horn. There was a couple of questions in there that I thought were good as well that David answered really, really well. The first one was about why basically government spending is included inside of GDP. If what we're doing really is financing it through issuing debt and going into a deficit each year as we do that. It's a fair question. I like the question actually. The answer is just that one, it's a formula. Okay, so part of the government spending is buying things like

ammunition and aircraft and F-16s. And that is part of the economy. The defense sector and other sectors that the government spends money on is an important calculation. If you removed it, then we wouldn't get GDP. We'd get something less than that. And also it would distort historical reference first off. So there's that. But I think the better way to look at this is to just know that what is spent inside the government sector, called the public sector, was taking away or essentially reducing the amount that can go on the private side. And I would say that the public is more inefficient and the private side is more efficient. And so to understand the ingredients inside the calculation and where one

is better suited is a better way to approach GDP than versus manipulating the formula itself. The other question there was about money supply growth. And the comment was that we've stated several times that it's not growing at all, or at least it's anemic. And the question was about, hey, look, it's been up four and a half percent and keeps going. And the reality with the chart included is just, it's always about timing, right? You can always paint a point depending on what point of reference you're using. But if you look at a three year chart, it's obviously hasn't changed. It's exactly where it has been the entire time. And that's including a lot of expansion and economic growth along the

way and so on and so forth. So there you have it. I'm going to let you go for this evening. Those were great questions. I hope we get more of them. But any shape and size of question will do. It doesn't have to be about money supply growth or GDP calculations.

I encourage people to ask questions just about anything markets related or frankly anything related to financial markets or economics at all. But with that, I will let you go this evening. If I don't speak to you, I wish you a lovely weekend and we'll talk to you soon. Thanks for reading and listening to the dividend cafe. The Bonson Group is a group of investment professionals registered with Hightower Securities

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