The Dividend Cafe - Thursday - November 20, 2025

Episode Date: November 20, 2025

Market Reflections and Sector Analysis: November 20 Edition In today's episode of Dividend Cafe, Brian Sztyel from Newport Beach, California, provides insights from a down day in the markets despite an initially strong opening. He discusses anticipated earnings reports from major AI chip manufacturers and tech companies, highlighting the market reaction and investor sentiment. Brian explains the observed rotation from growth to value stocks and the current low weighting of defensives. He also addresses questions about the private credit market, noting its significant growth and some stresses, but reassures that systemic risk appears minimal. Economic updates include better than expected non-farm payroll data, an uptick in the unemployment rate to 4.4%, and positive figures from the Philly Fed Index and existing home sales. Brian concludes by encouraging listeners to reach out with questions. 00:00 Introduction and Market Overview 00:04 AI and Technology Sector Insights 00:58 Growth vs. Value Stocks 02:25 Private Credit Market Analysis 04:08 Economic Data Highlights 05:17 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 back into Dividend Cafe this Thursday, November the 20th. Brian Saitel is back with you here from our Newport Beach, California office. On what end up being a down day, although the market opened sharply higher, and there was a heavily anticipated reports out on earnings from the largest AI chipmend. manufacturer in the world and the largest market cap company in the world, which actually had better than expected earnings, albeit marginally better. The stock was up in after hours, and when things opened in the morning, pretty much the entire technology sector and all AI was up over a percent, close to 2 percent. That reversed around mid-morning, and basically what I've written

today is that market participants are realizing that good news is coming, but that it's already been priced into these shares. Valuations are already reflecting pretty much all of this good news happening at this point. And what's needed is the actual revenue that's going to come from whatever productivity gain is going to come of this stuff. So you're just seeing this further rotation from growth into value stocks. The defensives are the lowest weighting they've been in a generation going back 35 years. But I would even argue to say almost ever if you think about it. So it's not to say that this is the first inning of a guaranteed reversion to the mean over the next 10 to 15 years like it was in the year 2000.

But my point is more the idea of going forward that disparity between technology stocks and the defensives, if the underlying idea is let's keep betting that that dispersion keeps widening. I think that's not only long in the tooth. I think it would be an asymmetric risk and reward and not something that we, you know, would feel comfortable with it all. And so it is time to look at some of those other sectors. There's some cheap stocks. They're high quality. Most of them do pay dividends, or many of them do. And that's just where we're going to find more value in what we're doing. I did put a chart in

there today about that relationship between defensives and technology. Technology basically is a 35% waiting in the index of the S&P 500 and defensives, which equals several sectors together, utilities, health care, staples, et cetera, is only at about 19.7. So I would assume, regardless if they're going to converge exactly the way they were in 2000, in other words, just that that delta is going to shrink. Question in there today was about the private credit market and stress and some media, is that the media blowing things out of proportion, or is there some systemic underlying risk in the overall market? And, okay, look, that market, the private credit market has gone from, call it, $300 billion in 2010 to now $3 trillion.

So that's a 10x. So it's hard to have that level of expansion and interest in any market without there being at least some erosion potential and quality. And that's what we have seen in private credit. It doesn't mean that it's all bad at all. In fact, the default rates are very, very low in the space. But there has been a couple of bankruptcies this year. That was first brands and tricolor that existed in the private.

private credit market, and there has been some underlying stress where you're seeing some private funds have gated redemptions for investors that are pulling funds out. Those things are more the exception, at least at this point, than the mean. And what I would just say is overall the quality and the credit quality of overall markets are good. The things that we look at are loan covenants that contain the option for payment in kind. This is called pick. It's the ability for a borrowers, instead of paying back in cash, they can actually pay back in equity as a portion of it. That can be a sign of distress, and it's something that we try to avoid in the portfolios that we're managing. But all of those things aren't indicative of systemic risk, and if you want

the best barometer to measure this stuff, it's really just the high-eal credit spread that you can look at. And when you're talking about something in the low 300s, it's just not indicative of underlying stress, at least at this point, in the credit markets. They're healthy and functioning just fine. There was a couple of pieces out in the economic calendar on the day. Remember, a lot of this data has been wonky because it's been delayed out of the government, but we're just getting the September non-farm payroll report. It did show a better than expected number. We got 119,000 instead of 50 for the month of September, but the unemployment rate itself did tick higher by a 10th. We're at 4.4% now from 4.3. And some of the revisions, particularly in August, were revising

into contraction territory. They actually lost jobs there. A few other pieces of economic news. The initial jobless claims number was a little better than expected. This is a more recent number for weekending of November the 15th. We got 220,000 initial jobless claims and 227 was expected. So some of those September of employment numbers looked, were certainly August revised into contraction, but some of the more recent numbers looked a little better. You also had the Philly Fed Index, that beat expectations, and then he had existing home sales that were up in the month of October. And actually, the median sales price was up 2.1% from the prior year. So that's what I have for you on today's Dividend Cafe Around the Horn. Thanks for listening.

Great to be with you as always. Enjoy your Thursday evenings. Reach out with your questions, and I'll talk to you soon. Thank you again. Bye-bye. 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 ourselves securities. No investment process is free risk. There is no guarantee that the investment process or investment opportunities referenced TIRN will be profitable.

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