The Dividend Cafe - Tuesday - April 15, 2025

Episode Date: April 15, 2025

Market Analysis Post-Tax Deadline and Economic Insights In this episode of Dividend Cafe, Brian Szytel provides a comprehensive market analysis for Tuesday, April 15th. Key topics include the minor decline in major indices (DOW, S&P, NASDAQ), stable 10-year treasury yields, stalled negotiations between the EU and US on trade, and slight changes in US import prices for March. Brian also discusses the New York Fed Empire State Manufacturing Index and its better-than-expected, though still negative, April results. Additional commentary covers the effect of tariffs on import prices, the dollar and bond market trends, and the potential resumption of quantitative easing. The discussion concludes with an in-depth look at cyclical versus structural recessions, emphasizing the current structural volatility and its real impact on the economy. 00:00 Introduction and Market Overview 01:09 Economic Indicators and Market Reactions 01:56 Discussion on Dollar and Bonds 03:03 Quantitative Easing and Market Expectations 04:01 Recessions: Cyclical vs Structural 05:27 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 Tuesday, April the 15th, and you've done it and made it through tax filing deadlines. So good job with that. I know we had a lot on our plate at the Bonson Group, especially with TBG tax, working extra hours and making it all happen. So I'm very thankful for all of the work that they did. But Brian Sightel with you here on a small giveback day in markets, but honestly not much. The Dow was down one third of a percent. S&P was down 15 basis

points. NASDAQ was flat. So we had an up day yesterday and basically a sideways, slightly negative today, 10 year treasury, not much changed, went down four basis points at 433. So fairly benign day overall, there was an up market actually in the morning. We lost a little bit of traction when some of the negotiations between the EU and the US on trade seemed to have stalled or made less progress than otherwise would have been hoped for. Other than that though, it was just fine. On the economic calendar, we had US import prices, and this is a funny

headline because it's a little delayed. This is for March, but they were down one-tenth of a percent for March while they were up two-tenths of a percent the month before, And this is right when it's a little backward looking in other words. So Trump has come out with tariffs, which would of course affect input prices. And they were down in March coincidentally to start this off. We also had a manufacturing index. This is the New York Fed Empire State Manufacturing Index was better than expected, although still negative.

But we were expecting a negative 14.5. We got negative eight for the month of April. So some pretty positive things on the manufacturing there. There were comments in there really about the dollar in bonds. And the headlines really grab a hold of this stuff. I had just literally got off a phone call with a great client of mine and friend about the same subject. When you're looking at the dollar being down small amount

or fixed income being down and yields up, now those two things are usually reverse correlated. So as rates go up, usually currencies get stronger, not weaker. So there's some anomalies happening there. But number one, the moves really aren't that big. And then number two, the dollar's up a percent here in two trading days.

If you looked at a five-year chart of the dollar, it's actually still higher. And if you looked at the 20 or 30-year chart, it essentially trades sideways because the rest of the world is pegging currency around it. So all that to say, bonds and dollar take the headlines for what they are, which is that fear sells better than anything else out there. So they're not going away anytime soon. But you also had a good couple of Q&A sessions in there, some questions on whether quantitative easing would resume.

Right now they're still tightening technically, although the amount of roll-off they've slowed, so they're tightening less than they were, but will they have to start borrowing bonds again? I'd suspect that they probably will. I think when you have markets that are attuned to that and a gravitational pull towards lower interest rates with over indebtedness globally structurally, and then that's a natural thing that should come back on. I don't think Powell wants to do that though.

And so there's going to be resistance to doing it, but ultimately I think it happens. I just don't know when. And I don't think it would even require anything hyper dire in the economy for that to happen either. I think it's just don't know when. And I don't think it would even require anything hyper dire in the economy for that to happen either. I think it's just a matter of time. And then the other question was about recessions and aren't they normal and healthy? In some degrees, the answer is yes.

That recessions, at least cyclical recessions are normal and healthy. It's part of growing contracting. You can just look at the way the world turns and just life itself to know that growth doesn't just happen in perpetuity in a linear format that there's give and take. And there's different seasons that come and the world changes and we deal with all of those things. So those are normal cyclical recessions. But this isn't that.

What we're talking about is a structural recession potential, which is that it was self-induced. And that's a shame in my book. This volatility that is self-induced is not ideal for real people. And if it causes unemployment to go up slightly, that's real people losing jobs. And that's nothing to joke about or to mess around with. And so the fact that this is self-induced and more structural is less than ideal. But all that to say the intentions are there. And so whether you agree with them or not, I don't know that most people would

disagree that there's at least a goal, a goal, a hope that some of these things would be ultimately positive one way or the other. But we'll see. Time will tell. But yes, cyclical recessions are normal and healthy, structural, something a little bit different there. And that's what we're dealing with now. So I hope that's helpful for today. I'll be back with you tomorrow, which will be Wednesday. And I hope you're well. And I hope you can reach out with any questions. Thank you very much. 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.

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