The Dividend Cafe - Thursday - June 12, 2025

Episode Date: June 12, 2025

Positive Market Performance and Key Economic Indicators - June 12th Edition In this edition of Dividend Cafe, Brian Szytel discusses the positive performance across major indices with the Dow up 101 points, the S&P rising 0.38%, and the Nasdaq up a quarter percent. Treasury yields showed weakness, and a lower-than-expected PPI number contributed to falling interest rates and a slightly weaker dollar. Initial jobless claims showed a slight increase for the fourth consecutive week, signaling a softening labor market, similar to levels seen in the summer of 2023. Brian also touches on the US-China trade talks, the significance of rare earth minerals and technology exports, and the current state of private real estate investment trusts, like Starwood and Blackstone. He concludes by urging viewers to send in questions and announces upcoming content for the week. 00:00 Introduction and Market Overview 00:22 Treasury Yields and Dollar Movement 00:34 Producer Price Index and Inflation 01:14 Jobless Claims and Labor Market Insights 01:56 US-China Trade Talks 03:22 Real Estate Market Analysis 04:28 Conclusion and Upcoming Updates 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 Thursday, June the 12th, Brian Seitel with you here on yet another positive day here in markets. We had the Dow up 101 points, which is a quarter of a percent. The S&P was up 0.38 percent and NASDAQ was up a quarter of a percent. So broadly speaking, a pretty good trading day.

We closed near the highs for the session. We had some weakness in treasury yields, meaning bond prices rose and yields fell. Tenure was down five pieces, points closed at 436. The dollar was also slightly weaker today. And there's a reason for both of those things since they tend to go hand-in-hand. Lower interest rates tends to lead to weaker currencies. But today we had a producer price index number PPI that was weaker than expected both on headline and core.

It was up just 1 tenth of a percent for the month of May. As you remember from yesterday the CPI number was the same. And so it's a repeat on the wholesale input side here on producer prices. And that's a good thing for inflation. That is why interest rates came down a little bit. It gives the Fed a little bit more breathing room if they need to lower interest rates,

which I suspect they will. A few times before the end of the year, call it 50 basis points is what's been priced in, but that was the larger piece of news. The other thing was initial jobless claims today. We've been watching this now. This is the fourth week in a row where they've just started to creep a little higher. It's not above a level where I think is a cause for a big concern, but I know the Fed pays attention into this stuff, but we got a 248 print on the day, which was

slightly higher than expected. That puts the four week moving average, which is a long enough period of time to start drawing some conclusions of a slightly weakening labor market back to about where we saw in the summer of 2023. If you remember in 22, interest rates went up from zero to 5%. And the talk then was, of course, going to cause a recession that never happened. But you did see a little bit of weakness and jobless claims back then, and we're back to about those levels. So it's just worth paying attention to. And then what David had in the day was more about the US-China trade talks and what we're really talking about. A lot of this is just optics and as I've said on the

media hit a couple of times yesterday, the fact that we're making progress and that there's open dialogue and the fact that things have deescalated and one way or the other, they'll be given, they'll be taken, but we'll settle on something is why markets are behaving better. This isn't just about China giving some rare earth minerals for more ability for Chinese students to attend U.S. universities. It definitely is about innovation and chips and semiconductors

and more advanced AI type of chips that can be exported to China. And there's pros and cons with that. There's a modestly adversarial relationship in different ways and a competing one at the very least. And so having that technology get exported and ultimately copied, isn't necessarily a small thing to have to give up for something we just simply don't have, which is a lot of rare earth minerals. This stuff makes all of the devices I'm speaking to you on today, all of our cell phones or computers, most of the technology that we use today. I do suspect that there'll be more of a drive to either mine it domestically because there are deposits in the US,

albeit smaller, and also to make deals overseas. And part of that Ukraine deal, if you remember, was about rare earth minerals and having access to them in Ukraine in exchange for defense, military equipment, things like that. There was a question in there also about real estate and particularly around just a fund manager that's named Starwood.

It's a very large fund manager and not necessarily company specific here. I'm talking about just the real estate market in general, but when you have private real estate investment trusts and you have periods of time where real estate is weak and you have investor redemptions, these are alternative investments. They're not meant to be daily liquid nor should they be daily liquid. And so there's an ability for fund managers to gate redemption. That's exactly what Starwood did. It's also what Blackstone did during the same period of time. It's in

shareholders best interest. They may not like having to wait to get a redemption request filled, but ultimately it protects the prices. Properties are not liquid themselves. And so it's silly to provide daily liquidity on something like a building that simply just isn't liquid. Blackstone was able to manage through things a little bit better. They also had better capital inflows that offset and it was a short period of time back in 22-23. Starwood is still dealing with that even now but it's still something that we feel is managed fairly well there on the real estate side. So there you have it. Interest rates are set to go down. I suspect that will be positive for real estate so long as fundamentals remain intact, which so far they are. But those are the questions

and those are the topics at the end of the day here. And with that, I'm going to let you go here into Thursday evening. I encourage you to always reach out with your questions, please. We love to get them and answer them. Tomorrow we'll have the long-form dividend cafe in your inbox, and then I'll be back with you next week on Monday, Tuesday, Wednesday for Dividend Cafe as David will be traveling out of town with his family, much deserved. And I'm happy to do that. So we'll see what we get for you next week. But I hope you all have a good weekend if I don't speak to you, and we'll talk to you soon. Thank you very much. The Bonson Group is a group of investment professionals

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