The Dividend Cafe - Tuesday - January 14, 2025

Episode Date: January 14, 2025

Market Updates and Economic Insights - January 14th, 2025 In this episode of Dividend Cafe, Brian Szytel provides market updates from West Palm Beach, Florida, covering the mixed yet positive performance of major stock indices. The Dow Jones rose 221 points, S&P 500 saw a slight increase, while NASDAQ declined by about a quarter of a percent. Interest rates remained flat with a notable steepening of the yield curve, indicating positive economic signals. Highlights include a lower-than-expected Producer Price Index (PPI) and a significantly strong NFIB Small Business Survey reading. Comparisons were drawn between current economic conditions and those of the early 1980s. Listeners are encouraged to tune in for tomorrow's Consumer Price Index (CPI) report. 00:00 Introduction and Market Overview 00:48 Inflation and Yield Curve Insights 01:52 Small Business Sentiment 02:40 Historical Economic Comparisons 03:39 Market Recap and Closing Remarks 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, January the 14th. Brian Seitel with you from our West Palm Beach, Florida office. on a generally mixed day, although more positive than negative in markets. On the stock market, on the equity side, the Dow was at 221 points. S&P was slightly positive by about a tenth of a percent. NASDAQ continued its sort of underperformance here in 2025 and was down about a quarter of a percent on the day. So a little mix there. We had interest rates basically completely flat on the day. 10-year closed right at 479. We did see the curve steepen a bit, and you had 30-year yields intraday, breached the 5% figure, been over a year since they've done that. So a steepening yield curve typically signals positive economic data, and that's,

at least in a mixed way, what we did see today, because we got both an input inflationary number on PPI, producer price index, that was much less than expected. So a cooler number on an input side of inflation. We had the PPI number come out on headline at just 0.2%. We were expecting 0.4, or at least consensus was for the month of December. So about half as much, meaningfully lower on the PPI number. And then if you move out food and energy, core PPI was zero, was unchanged when a 0.3 positive was expected. So good news on the inflation side tomorrow, we're going to have the CPI number, which will be a more watched figure. But for today, though, this is a good start on what we're seeing on the inflation side. And we've spoken about the disinflation narrative

for quite some time. So continuing to see it play out, of course, it's never in a straight line. So there's elements in different periods of one way or the other, but a steepening yield curve, some lower inflation figures, a pretty steady interest rate environment. Those things are all good. You also had a small business survey. This is the NFIB small business survey. We don't read into these a ton because most surveys are a little bit more of a lagging indicator. They're based on how people have felt based on what has just transpired more than what may or may not transpire in the future. But for all that to say, the number today was significantly stronger than expected. Consensus was for 100. We got 105 on it. And that's the highest number we've seen in six years. The percentage of people thinking the economy was

going to do positive things in the next 12 months was 52%. That's technically the highest percentage we've seen since 1983. So there's some optimism going through markets. And I wrote a little comment in there just about what was going on during that period of time. We had just turned over an administration back then, if you remember, and actually, coincidentally, Carter had just passed away about a week ago. But it was a transition from Carter to Reagan. And there was some different policies being enacted, particularly on the tax side. There was an Economic Recovery Act in 81, but the tax reform really didn't come until 86. I'm not drawing a distinct correlation between

now and then, but there's some similarities. There was a meaningful election. There was a lower tax regime. And inflation, if you remember in the 70s, which was stuck, and stagflation, which was lower growth and higher inflation, had started to turn and inflation was abating in those early 80 years. Of course, it ended up picking back up in the late 80s, but those early 80s or mid-80s, inflation was going back to low single digits, less than 1% to 3%. Okay, so we've got some similarities till today, and I just wanted to point that out, less than one to 3%. Okay. So we've got some similarities till today. And I just wanted to point that out, not drawing an exact correlation

to it, but there you have it on the economic front on the day, again, mixed market day. We'll take it. We've had a little bit of a sell off year to date. The Dow is about flat on the year. The NASDAQ is down about one and a half percent on the year. So some disparity over difference between some growth and value in that rotation that we've talked about here and a half percent on the year. So some disparity over a difference between some growth and value in that rotation that we've talked about here and there. But with that, I'm going to let you go into the evening here. I'll be back with you tomorrow from Palm Beach, which will be Wednesday. And again, we'll have CPI out. So there'll be plenty to chew through with you tomorrow. And with that, I'm going to wish you a lovely evening. Reach out with

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