The Dividend Cafe - Tuesday - February 4, 2025

Episode Date: February 4, 2025

Market Recap and Tariff Discussions - February 4, 2025 In this episode of Dividend Cafe, hosted on February 4, 2025, Brian Szytel from the West Palm Beach office covers the market recovery following recent pullbacks related to tariff discussions and earnings reports. He provides updates on market indices, the bond market, and commodities like oil and gold. Szytel discusses recent tariff movements involving the US, Canada, Mexico, and China, as well as the potential implications of these tariffs. He also touches on a Q&A session regarding Trump's announcement of a sovereign wealth fund and the pros and cons of such a fund for the US. Finally, the episode includes a brief overview of recent job openings and upcoming employment data releases. 00:00 Introduction and Market Overview 00:10 Tariff Talks and Market Reactions 00:56 Tariff Implications and Negotiations 01:55 Q&A: Trump's Sovereign Wealth Fund 03:00 Economic Calendar and Employment Data 03:35 Conclusion and Sign Off 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. Hello and welcome to Dividend Cafe. This is Tuesday, February the 4th, and Brian Seitel is with you here at our West Palm Beach office here in Florida. And a recovery day here after a two day pullback, primarily around Tariff Talk and the volatility associated with it,

and then some earnings that have also moved. Some bigger names in the markets as well. But markets were up today nicely across the board, both the Dow, the S&P and the NASDAQ. Dow is up about a quarter of a percent, S&P up maybe about two-thirds of a percent. And Nasdaq about one and a quarter. Some modest moves on the day. The 10-year was down a couple basis points and two basis points closed at 451. So there you go. Oil pulled back just slightly

about 50 cents. Gold was slightly higher. There was back and forth in North America with Canada and Mexico and tariffs announced and then taken back at least for 30 days between both of those countries. China retaliated in tit for tat thing which is an equivalent kind of countermeasure on the tariff side today and enacted 10% tariffs for crude agriculture machinery and autos and a 15% tariff for US coal and liquid natural gas. Ultimately, the tariffs between Mexico, Canada, China, the US is affected a little less,

just because we're the purchaser and have a lot of goods and services, and so if we're putting a higher price or a tariff on them, it affects other countries more than it does us. There's a leverage effect to that. But in any case, we'll see where this shakes out. We've written about it, but a lot of this is a negotiation based on some other policies, particularly around drug trade in North America and in some other things

that is on the agenda, whether the actual tariff policy will get enacted and stuck to as a different story. And I suspect that it will be something less than what is running through the headlines at first glance. David had a really good Q&A session in there on Ask TPG that I liked. It was about Trump's announcement of a sovereign wealth fund. And the answer is, are there pros and cons?

And the reality is that usually countries with positive surpluses, positive account surpluses, will have a sovereign wealth fund because they have extra money to save and they put it to work. Countries that have an expanding and a high level of debt that's issued are already servicing that debt and paying creditors. And so it'd be a little silly to have a big savings account that's sitting next to a big debt account when we could just take that money that we're putting in the savings account and then retire the debt. It also opens up other things like cronyism and the ability for the government to manipulate

and be large shareholders of businesses and what eventually becomes a state-owned enterprise and SOE. You see this with countries like Brazil and China and India, and there's a lot of negative effects to that. It's just not a very good and efficient use of capital, as most government expense and expenditure and involvement in bureaucracy is, generally speaking. There was a couple of things in the economic calendar on the day. We had job openings that were weaker than expected.

We got a 7.6 versus a 7.9 million number. The layoffs, the new hires, and the quit rates were all about the same, a couple percent. So not a lot new there. Still pretty balanced and fairly tight labor market overall. We will have ADP private payroll number out tomorrow and then we'll have the non-farm payroll report on Friday. So there'll be some more meaningful, I'd say, employment data to chew through as the week progresses. But with that, I'm going to let you go for the evening. Please do reach out with questions. We love them. And I'll be back with you tomorrow, which will be Wednesday on Dividend Cafe. Thanks for listening. The Bonson Group is a group of investment professionals

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