The Dividend Cafe - Thursday - September 11, 2025

Episode Date: September 11, 2025

Equities and Bonds Rally Amid CPI and Employment Data; Reflecting on September 11 In this episode of Dividend Cafe, Brian Szytel reports from West Palm Beach, Florida on the positive movements in equity and bond markets, with the DOW, S&P, and NASDAQ showing significant gains. He also covers recent economic data, including the CPI and jobless claims, and their implications for Fed rate adjustments. Additionally, Brian shares a personal reflection on the 24th anniversary of the September 11 attacks, highlighting the collective memory and tribute to those affected. 00:00 Introduction and Market Overview 00:15 Equity and Bond Market Rally 00:47 Inflation and Employment Data Insights 01:33 Federal Reserve Rate Expectations 01:57 Jobless Claims and Fed Policy 03:05 Valuations and Market Sentiment 03:51 Reflecting on September 11th 05:04 Conclusion and Upcoming Content 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 in to Dividend Cafe this Thursday, September the 11th. Brian Sightel is here with you from our West Palm Beach, Florida office on a bit of a rainy day, but a bit of a sunny day overall in the equity markets. The equities rallied basically across the board. had a Dow up about 1.36%, which is 617 points these days, and an SMP that was up 85 basis points, which is about 55 points, and a NASDAQ that was up about 7 tenths of a percent, or about 157.7 points. So broad-based rally across the board. You also saw that rally continuing into the bond market as well. 10-year yields were down two basis points. So yields continue to drift a little lower,

And on top of some softening employment data, and then yesterday's PPI number, we had a CPI report out that was largely in line. Technically, headline was above expectations at 0.4% for the month of August. We were expecting the 0.3 instead of 0.4 for the month. That puts year over year on CPI number at 2.9 on headline. And then if you strip out both food and energy to get to the core number, it was right. right in line with expectations at 0.3% putting year over year on core at 3.1. I'd call these numbers largely in line, a little bit hotter on headline. A lot of that had to do with used automotive and increase in on prices. Again, a lot of that stuff has to do with the tariffs. It's looked at

is a little bit transitory here. And so with yesterday's PPI and with softening employment data, you really are getting a larger increase in Fed futures expectations. We're now at 70 basis points off of the Fed rate before the end of the year. And that's why you're seeing the bond market here rally a little bit. Again, like I've written about a few times, that duration quote unquote trade here seems to be on on the long end of the curve. The jobless number that we got today, initial jobless claims were weaker than expected. We had a 263 print versus a 236. And those numbers have crept up from the low 200s to the 220s. Then we were talking about the 230s. And now this number is a decent jump up here for the week at 263. So there's really no doubt that the Fed is tighter than

they should be. And a neutral rate, if you think about where inflation comes in, somewhere around, call it the mid-toos, you could think of a terminal rate to get to about a point above inflation, about three and a half or three point seven five percent on Fed funds, as we're about four and a quarter to four and a half on it now. And so that's a good amount of rates to come down here, we head into the end of the year. There's an FOMC meeting that ends the middle of next week on Tuesday, and so that's when they're likely going to lower interest rates by 25 basis points, but then they'll have at least one more time to do that before the end of the year and potentially two more time. I probably err on the side of it being a little bit more than a little bit less,

just giving all of these different things they're earning. And so equities have just continued to rally. Risk assets across the board have continued to rally on that. The only thing I'd say to that is valuations need to be heated. And then secondly, just be careful what you wish for because it can be a little bit of buy the room or sell the news. 25 bips off of Fed funds doesn't really do a whole heck of a lot for borrowing costs on long end of mortgage rates and auto loans and credit card rates. You're really pricing in a lot of good things to come off of Fed funds here. There was a question in there today about CPI and does it change the Fed path. I think I went through that quite a bit already. Labor market is telling us that they need to come down. And most of what was priced in on the CPI

raise on the headline number had to deal with just more transitory things like tariffs on autos. But look, this is the 24th year of anniversary of the September 11th, the tax on our country in New York City. And I'll never forget where I was at that time. I graduated college, but was just entering the proper workforce in the only career that I've ever known back then 24 years ago, which is the current one that I'm in, at a firm call UBS. But I was working part-time right before the start of that at an accounting office and had gotten up at 5 a.m. to go into the office that day. Back then, the alarm clock was an actual radio, so the news would come on and heard some of

what was going on right around 8.30, if I remember Pacific time. Of course, for the remainder of the day, we were all glued to the televisions like every other American was, and it was just such a tragedy and loss of life and beyond words at that time. We were emotional. My girlfriend at the time, wife now, and cried most of the day as this unfolded. I'm grateful for all those that gave their lives to help others during that event, and I will never forget. So that's my 9-11 story for you. I'm sure everybody listening remembers exactly where they were as well and how important it was. So let's all stand together and never forget that tragic event and all those that work so hard to keep us safe ever since. We'll be back with you tomorrow. It'll be a Friday, which means long-form dividend cafe, will be in

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