The Dividend Cafe - Tuesday - February 25, 2025

Episode Date: February 25, 2025

Market Shift and Consumer Confidence: Insights from Dividend Cafe In this episode of Dividend Cafe, Brian Szytel discusses the mixed performance in the markets on February 25th. The Dow closed positive while the S&P and Nasdaq saw declines due to significant rotation out of overvalued tech stocks. He highlights a notable drop in the 10-year Treasury yield and a decline in consumer confidence for the third consecutive month. The episode also touches on the Case Shiller Home Price Index and a discussion on government spending and its potential impact on the economy. Seitel concludes with a note about upcoming House votes and invites listeners to reach out with questions. 00:00 Introduction and Market Overview 00:09 Market Volatility and Sector Performance 00:52 Interest Rates and Economic Indicators 01:15 Consumer Confidence and Housing Market 02:15 Government Spending and Economic Impact 04:18 Conclusion and Upcoming Events 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, February the 25th, and Brian Seitel with you here today on a bit of a mixed day in markets, we've gotten some pickup in volatility here the last week or so. We closed off of the lows and actually the Dow ended up closing up 159 points. So the Dow is positive. S&P was negative by about half of a percent, which is a decent move lower. And then the NASDAQ was lower by 1.35%. So continued significant rotation from some of the more overvalued components of the market, technology names in particular, anything with IEI associated with it sold off a good amount today. And then more of that value component and more defensive and dividend side of the market is what has been outperforming that.

Delta is now pretty large between those two different things. Call it 5% on the year. Continued of the same rates, significantly lower on the day. You had a drop of 10 basis points on the 10-year treasury without a lot of catalysts behind that. There was a couple pieces out in the economic calendar, but not necessarily anything that moved 10-year treasuries down to 10 basis points like that. We closed at 430.

So that 10-year yield is continuing to move lower as some of these growth expectations start to come in a little softer. Today you had consumer confidence that missed expectations. We at the Bonson Group don't look at this number a ton just because it tends to be lagging rather than forward-looking. It's a lagging indicator. It's how people have felt just recently. Nonetheless, the number dropped for the month of February. And this is a three month in a road drop. We had a high in November. You probably remember what was going on in the political landscape in the month of November. And it's been lower here for a couple of months

in a row. And I think some of that really not politics related necessarily, but just volatility related. There's been some uncertainty and consumer confidence is coming down here a little bit. The Case-Shiller, the home price index today for the 20 cities for the year of 2024 ending in December was up four and a half percent year over year. Still low volumes, still basically a stuck housing market with rates as high as they are. And prices are basically hanging in with inflation, maybe a little bit more than that for the last 12 months. There was a good Q and A in there and I probably won't do it justice, so I'd encourage you to read

what David wrote on it because I liked it a lot. But it was especially about DOGE, which is going through and looking at wasteful spending in the government and trying to make suggestions for changes. Again, they don't have actually authority or congressional appointed authority to make those cuts and changes, but they're shedding a light on them and so forth. The concern was the decrease in government expenditures cause a slowdown in the economy because the economy is fueled by consumer spending. We don't think at TBG that the consumer is in any duress at this point. The consumer is actually in very good shape. And just so long as there's a job to be had,

consumers in this country tend to spend, period. So there has been very few times when you have a decrease in things like employment, a decrease in things like credit, ability to borrow, to all of these things to contract at the same time to actually have a consumer actually have a lower income, lower access to credit and not be able to spend, they'll usually just find a way. The other part is just the idealistic or the viewpoint on how economies work. This is either supply side or demand side viewpoints. We tend to be a supply side, which is that the economy

and a strong economy creates a strong consumer, which fuels back into, you know, to helping fuel that strong economy by consumption, not the other way around. Meaning consumption isn't the chicken and the economy is the egg. It's that the economy has to be strong in order to support that consumer. The other part is just coming down to a decrease in government spending. If it's sizable enough, and I don't think Doge is, but if it is, would be a positive thing just because technically that would put more privatization behind making up for what was lost in employment in the government.

In other words, would be employed in the private sector, which is a more efficient part of the economy, private versus public, that back and forth. Again, I would read through what David wrote. I think it's very good. By and large, will Doge potentially have effect on GDP? If it does it'll be marginal, so not large. But I suspect it will have something, yes. So with that I will let you go for this evening. There's a house floor tonight on reconciliation and we'll see. It's very tight. It looks like only one vote is the differentiator and there'll be more for you tomorrow in Dividend Cafe dividend cafe in that regard in the meantime

Reach out with your questions as always and have a lovely evening. Thank you The Bonson group is a group of investment professionals registered with Hightower Securities LLC member FINRA and SIPC with Hightower Advisors LLC Registered investment advisor with the SEC securities are offered through Hightower Securities LLC an advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors LLC. This is not an offer to buy or sell securities. No investment process is free of risk. There's no guarantee that the investment process or investment opportunities referenced herein will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities

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