The Dividend Cafe - Tuesday - August 25, 2026

Episode Date: August 25, 2026

Brian Szytel recaps a positive market day with the Dow up about 160 points, the S&P up roughly a third of a percent, and the Nasdaq up two-thirds as rates fell (10-year down seven basis points to 4.63) and oil dropped about 4.5%, aiding a tech and semiconductor/AI rotation. Economic data came in weaker, including slightly lower consumer confidence, softer new home sales, and a weaker Richmond Fed manufacturing index, reinforcing macro-driven moves. He notes the S&P is up about 12% YTD while earnings rose around 15–16%, leading to multiple contraction to about 18.8x forward earnings, though other valuation measures (EV/sales, Shiller CAPE, price-to-book/sales, and price-to-free-cash-flow) remain near historically overvalued levels. He also addresses declining prime-age male labor participation and argues immigration trends show little correlation, pointing instead to broader societal and economic factors. 00:00 Welcome and Setup 00:18 Market Rally Recap 00:41 Rates Oil and Data 01:50 Earnings and Multiples 02:44 Valuation Reality Check 03:28 Rotation to Value 04:04 Labor Force Demographics 06:13 Wrap Up and Disclosures 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 Brian Saitel, your host this evening. On a generally positive day overall in the market, we ended up closing up on the Dow, call it, looks like 160 points. That's about a third of a percent. S&P was also up about a third of a percent, and the NASDAQ was the outperformer at two-thirds. of a percent on the day. So you had more of that rotation back into technology, particularly some of the chip names, semiconductors, some of the EI stuff. Part of the reason of that is interest rates came down

today quite a bit. He actually had the 10-year down seven basis points. We're now at 463. And he also had oil come off here a little bit. You had WTI down about not quite 5%, about 4.5%. So generally speaking, you had rate reprieve, you had oil price reprieve, some inflation reprieve, and he had stocks that rallied a little bit on the news. Not a lot behind the data today in the economic front that was driving some of those things, but mostly weaker figures. I'm going to go through this. Consumer confidence, a little lower than expected at 89 versus 90. New home sales, weaker than expected. And this housing market just across the board, doesn't matter which way you slice it has just been completely soft across the country. So we got 607 new homes instead of 620,000. And then the

manufacturing index. This is that Richmond Fed manufacturer. I missed on the month as well. So call it three out of three on the weaker side. Not anything out of left field, but just some more benign numbers. And again, it was much more about those broader macro interest rate driven, inflation driven themes, at least on the day. But what I wanted to talk about a little bit was the market continuing to perform well. And technically, if you remember coming into this year, we were trading it 22 times in earnings. And what's happened is earnings have gone up quite a bit, call it 15, 16%, so good earnings result. And markets have also gone up, but a lesser amount.

So markets, the S&P is up about 12% on the year. So you've actually got some multiple contraction, and we're now trading it 19 times, actually, just about 18.8 forward earnings. And that's pulling next year's earnings number on S&P of $407 per share, which it's funny for me, just because I remember reporting on this stuff over the last couple of years. we were in the 200s and I remember talking about how robust I thought that was.

So really earnings have just exploded the last two, three years. And markets have technically gotten a little bit cheaper on a forward basis. That's true. But what I want to do include was really a chart and just look at all of the different, call it seven different relative valuation figure. So if you look at enterprise value to sales, if you look at the Schiller Cape Index, if you look at price to book or price to sales, all of those things, price to free cash flow. They're all pegged all the way to the hottest and most overvalued part

of historically what we've seen. So my point to having to earn a saying that the valuation has come down a little bit on forward basis is definitely true, but it's not like it's cheap. Okay, so a lot of these things are just really speaking to a market that is priced to perfection and all of the good things that may or may not come from the AI story. But that's really all there was to kind of go through, at least on the day. I know a lot of these different. I tend to try to invest as best as I can look at some more evergreen topics and things because frankly, a day-to-day machination of what's going on in markets is not really all that relevant to most investors. On the year, what I do think is relevant is if you think about an

S&P up 12 and you think about value and dividend-oriented stocks up considerably more than that, there is this continued rotation thing that we've talked about quite a bit going on, and I believe that's not the first inning, but maybe the second at the very most, and there's just a long way to go in that sort of trade. But the question that came through in there today was about something written several weeks ago, but it was about the change in demographics, and really it was about the labor force participation rate being so low. And the question was about if immigration apology changes, if it changes, then does that impact the fact that prime age men 25 to 54 are still living the workforce? And there's two different ways to think

about that. But one, the reality is that cohort of prime age men working was 96% in the 60s, and it's been drifting lower ever since. It's now around 89% today. So those are people that are young and historically have been the key driver of the labor force in this country. Those have been dwindling. Could be a couple of reasons. Some people have thought maybe immigration, immigrants coming in and taking those jobs. Another thing could be that was also the same era in which the female population entered the workforce, so maybe male didn't have to work as much. But it doesn't matter how you slice it, regardless of those things, the correlation is actually quite little. Technically, if you look at the last year, immigration actually declined and went

negative on the net basis. That's the first time in 50 years. So actually, there was a million fewer immigrants working in the workforce. So intuitively, if your case was, maybe with less immigrants, that would bring back up the natural-born participation in that age group. It didn't because we still had the decline in the labor force participation right there, too. So all that to say, this has something more to do with societal. My opinion is it has to do with the very high standard of living in this country and the ability to maybe not have 100% participation in that age working group. So there's some societal reasons and then also some of those economic realities that allow for that.

And then on the margin, there could also be a dual income household and then also some of the immigration part of it maybe plays into it. But all that to say, that was what I wanted to walk through a little bit on the workforce in this country. We're now at about a 62% labor force participation, and that's down five points over the past generation. So there's something going on there. But with that, I appreciate listening this evening. I know it was a little bit shorter and sweeter on the day. I'll be back with you tomorrow to go through what's left on the Dividend Cafe. The Bonson Group is a group of investment professionals registered with high Hightower Securities LLC member FINRA and SIPC with Hightower Advisors LLC, a registered investment

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