The Dividend Cafe - Tuesday - April 8, 2025

Episode Date: April 8, 2025

Navigating Volatility: Market Update and Dividend Strategy In this episode of Dividend Cafe, Brian Szytel from The Bahnsen Group provides an update on the current market conditions amidst ongoing volatility due to trade tensions between the US and China. He discusses the recent performance of major indexes, including a significant downturn in the S&P and NASDAQ, and the increase in yields on 10-year notes. Brian emphasizes the importance of a dividend growth approach and asset diversification during turbulent times. He also reflects on historical parallels and reassures viewers about long-term returns and their investment strategies. The session closes with a call for viewers to reach out with any questions. 00:00 Introduction and Market Overview 00:55 US-China Trade Tensions 01:52 Investment Strategies During Volatility 02:23 Economic Indicators and Market Sentiment 04:10 Historical Comparisons and Current Context 05:07 Conclusion and Advisor Contact 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 8th. Brian Seitel with you here from our Newport Beach, California office at the Bonson Group. On what started off as quite a positive day. Obviously we've had several days in a row of downturn here. The S&P is down about 12% here in four days.

But today the morning came out positive. We were up on the day. And as time went on again, more volatility around trade, around tariffs, markets sold off and couldn't hold onto those gains. And we ended up closing lower meaningfully and we closed down 320 points on the Dow. The NASDAQ was down just over 2% and the S&P was down 1.57%.

So negative day in markets, yields on 10 year were actually higher up about three basis points. So there you have it, more volatility, what's it about? We have ongoing back and forth between the US and China. These are the two largest economies in the world trying to negotiate and set tariff policy to their own best interest. And Trump announced an additional 50, taking it up to 104% potential tariffs if China didn't relinquish their reciprocal 34% that they announced a couple of days ago.

So it's still back and forth. We're negotiating or the U S is negotiating, I should say, with over 60 countries at this point, almost 70. Progress is being made on that front and how this will settle out, but that doesn't mean that there's certainty around it and with the lack of certainty comes volatility. That's just the way that this is. Unfortunately, right now, the Chinese Yuan depreciated significantly today on the announcement,

as did the U S stock market. And we ended up in the negative on the day. So tomorrow will be another day. And I wish I could tell you exactly where it would go. Since I don't know what, what these headlines will read and how markets react, I will stick to just telling you the truth, which is this, the dividend portfolio and a dividend growth approach in this environment is, in fact, in most environments is a better suited approach from a risk reward standpoint. It's more defensible, it's more defensive, and in times of volatility, dividends can

be reinvested and shares can be purchased at lower prices. So I'm going to stick with that. The other benefit of asset allocation and diversification, having other asset classes to mitigate some of this volatility and risk, I think, is very important. But tomorrow will be another day. Today on the economic side, we did get a small business survey. This is the NFIB small business survey. It was slightly weaker at 97 than 98, which was expected. A lot of these numbers you're gonna start seeing here. Yeah, this week, next week. They're just going to be a little old news.

What has happened in the last week has changed a lot of the sentiment, of course, but then also eventually should it not change, it'll start to change the actual economic numbers as well. That's not what we're seeing so far. Interest rates that had pulled back sharply are now going up a little bit. Some of the last two trading days, I'm not predicting anything specifically because it's impossible, but I'm just going to tell you from history and from experience over 24 years that the last couple of trading days have started to resemble something we've seen before, which is you

have the initial sell off, which is quote unquote, sell what you want. And what was being sold was a lot of the overvalued technology names that we've spoken about. The delta between defensives and technology was over 10% at one point. That has turned into indiscriminate selling, which is not sell what you want, but sell anything that you can. And that's a deleveraging process that is working itself through the system. That's what's happening now. And so value names, growth names, even today fixed income, all of those things were being sold.

Eventually that gets exhausted. Again, it's hard to know exactly when, but some of those themes will eventually lead to capitulation, in which case there's a general feeling that it won't get better. I'm just going to tell you here that eventually will get better. This too will, this too shall pass and we'll get through this. And that's what we're here to do. And I encourage you to reach out with your questions, but also just to check in and hear from your advisor.

I know that we're doing that very proactively as well. What I will say is this, if you try to compare it to another time period, I don't know that there's a good one. You can talk about a smooth Harley and a hundred years ago and the trade war and the tit for tat and things that went on in that era, But that was a very different world back then. And the US wasn't the superpower that it is today and the dollar wasn't the reserve currency. And the world from an interconnectedness was just different than it is now. You also can look at something like a COVID moment and shutting down the entire world. So no one could go to work. People were locked in their houses. People were dying. It was a health pandemic

and know that the S&P was down 38% during that period of time, which is bad. Also just know that's not what is happening this time. There's a negotiation and a back and forth about trade and how much either barriers or openness there will be between different countries, but that is not people dying and it isn't necessarily the entire world or economy shutting down either So take it with a grain of salt Anything that we can do on our end we're here to do they have a period of time and I know that they're working on this to try to get something through Congress on the tax side and

Hopefully that comes to pass and hopefully there's some better announcements as far as negotiations, but time will tell and in the meantime we're gonna keep doing what we're gonna do and focus on what the fundamentals are and longer term returns and expectations of what clients' actual goals are. Income is not being affected by this, meaning the distribution of dividends, and that's what our job is. So we'll continue to do that. In the meantime, reach out to questions. I hope you have a good evening otherwise, and we'll talk to you again tomorrow.

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