The Dividend Cafe - Tuesday - August 26, 2025

Starting point is 00:00:00 Welcome to the Dividing Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Good evening and welcome the Dividend Cafe. This is Tuesday, August the 26th. Brian Saitel is with you here from our Newport Beach, California. Headquarters, our office here at the Bonson Group on a mixed day and frankly a pretty quiet day overall in market. There wasn't a lot of going on the economic calendar, a couple of different pieces of news that I'll go through, but the Dow ended up closing up 135 points on the day. S&P was up about four-tenths of a percent. NASDAQ was also up about four-tenths of a percent. Ten-year yields were roughly even down about one basis point. We closed at 426. So modestly higher day, obviously following yesterday's is move lower. On the economic side of things, we did have durable goods orders out today that were

Starting point is 00:00:59 negative, but they were better than expected for what it's worth. So we got a negative 2.8% for the month of July. Projections were for negative 4%. So a little bit better there on durable goods orders. And the comment in there today was about some of the mixed data that we've gotten, for example, the Dallas Manufacturing Survey that was out today, compared to the New York manufacturing survey that was out, you're seeing these durable goods orders. And what we're hoping to see is an increase in CAPX because of immediate expense deduction eligibility on them. That was part of the OBBB. It went through Congress. And that's hopefully going to offset some of the tariff volatility. So some of this stuff that you saw at Dallas today, very much a mixed bag, offset by some of what we saw in the New York Manufacturing Index. We'll have to give this more time to see how hopefully capital expenditure can be increased as that would be a benefit to that particular bill to hopefully sterilize some of the offset in what otherwise would have been a detraction with a higher tax rate, which is a consumption tax on There was a question in there today about the Fed and buying bonds and securities, and basically

Starting point is 00:02:07 doesn't that cause inflation? So here's the truth. So the Fed isn't taking their borrowing power and injecting money into people's bank accounts or anything like that for people to go spend it. What they're doing is they're buying securities and essentially swapping them for reserves on the bank balance sheets. And it's up to the banks to lend money out. That's the only way that actual money supply M2.

Starting point is 00:02:29 increases is through those loans. And so just the standpoint of quantitative easing in and of itself is an inflationary. In fact, it's been proven the opposite over history. But again, it's not necessarily putting money into circulation. It's putting money onto bank balance sheets. And it doesn't in and of itself create demand, but the idea would be lower interest rates and more liquidity in the financial system would naturally make it more attractive for borrowers to want to borrow if rates are lower, and also the eligibility for banks to be able to lend if they had more reserves. So that's the idea behind it. A couple of other pieces of economic data out would be the K-Shiller. There's a 20-city home price index that was down for the month of June. We know that

Starting point is 00:03:11 housing remains stuck. We know interest rates remain high on mortgages. And then we know that affordability is also low and stretched. But when you start to see prices finally starting to pull back here a little bit, you got a negative 0.3% for the month of June. And that puts our year-over-year number now the lowest in over two years. We're only up about 2.1% over the course of the last year or so. And if you think about inflation being about, call it 3, that means that there's some deflation happening, relatively speaking, or disinflation, I should say. You also had a consumer confidence number for the month of August out.

Starting point is 00:03:46 We got more or less an in-line number is just slightly above. But this was down from the month prior on some weakness in the perception on the labor market. market. So a mixed bag, I would call it across the board today on different economic pieces and then in some of the market takeaways from it. Nonetheless, we'll have dividend cafe for you again tomorrow. There'll be some more data as we get into the end of this week. We're going to get the PCE number on Friday, which will be the largest piece of most watched news. This is the favorite gauge of inflation that the Fed tends to look at. So with that, we'll let you go for this evening, reach out with your questions, as always, and have a great night. Thank you.

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The Dividend Cafe - Tuesday - August 26, 2025

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