The Dividend Cafe - Tuesday - July 1, 2025

Episode Date: July 1, 2025

Market Insights During a Choppy Pre-Holiday Week In this episode of Dividend Cafe, Brian Szytel provides an update on the market activities on July 1st, during a shortened week leading up to the 4th of July holiday. The DOW showed significant gains despite a generally choppy market, with some large healthcare stocks contributing to its performance. The S&P and Nasdaq experienced minor declines. Key economic indicators such as the ISM and S&P Manufacturing Index were discussed, along with better-than-expected job opening numbers from the Jolts report. Upcoming economic data releases, including ADP private payroll and non-farm payroll, are also highlighted. The episode concludes with insights into recent legislation developments and the impartiality of Jerome Powell's decisions at the Federal Reserve. Brian encourages listeners to stay tuned for further updates and to reach out with questions. 00:00 Introduction and Market Overview 00:52 Economic Data Highlights 02:20 Upcoming Economic Events 02:54 Legislative Updates 03:41 Federal Reserve and Politics 05:16 Conclusion and Final Thoughts 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, July the 1st. Brian Seitel with you here on a holiday shortened 4th of July week and a choppy day overall in markets actually. We had, and somewhat frankly, weird. We have the Dow up significantly, almost 1%.

We got a plus 400 day on the Dow while the S and P was down about a tenth of a percent and the NASDAQ was down about eight tenths of a percent. And there's some interesting quarter end rebalancing going on as part of the culprit there, but there was some large healthcare names that are inside of the price weighted Dow that moved the index more than otherwise. So you've got some outperformance there on some of the value and some of the blue chip names over some of the growth names today. The 10 year was more or less flat.

We got a basis point higher closed at 424 on the 10 year on, on treasuries. And an overall fairly quiet day. We did have a couple of pieces of news out in the economic calendar on the 10 year on, on treasuries and an overall fairly quiet day. We did have a couple of pieces of news out in the economic calendar on the day. We had an ISM manufacturing index that was just a 10th below expectations. We got a 49 flat versus a 49 one for the month of June. Anything below 50 as you recall is slightly contractionary, but a decent number there pretty much in line. There was a final read on the S&P manufacturing PMI number that was out today that showed it's still

in that expansionary territory, which it was in May and then also now for June, it was at 52.9. And that was significantly above the expectations of 49.3. So you've got part of the S&P manufacturing KMI showing a little bit higher offset by part of ISM manufacturing showing it a little lower. I'll offset those two and say manufacturing's hanging in there just fine. You had new job openings today, better than expected. This is the Joltz number that we talk about a lot when we look at if the labor market is balanced between how many people are employed, how many people are looking for jobs, and

how many job openings are there. We were expecting 7.3 million and we got 7.769 million. So that's a decent amount above and which is a bullish sign because you have employers that are posting new job openings, meaning they're trying to hire, meaning that they're optimistic about their business and they need the extra work that's usually shifting things from a market that is more led by the employees versus the employers. As far as how salaries get set and all those sorts of things.

I guess I say that speaking as an employer. Tomorrow in the economic calendar, we'll have a couple of things. We've got ADP private payrolls. And just keep in mind, because the good old Fourth of July is this Friday and markets are closed. We'll have a shortened day on Thursday, but we'll also have, because it's the first technically Friday of the month, aka Thursday this week, we'll get the non-farm payroll number out. And we're looking at a number that's going to be close to about 115,000, which will be off of May's level, but that'll be heavily anticipated.

So we'll keep watch out for that. But there you have it. The Senate did pass as expected, the version of the big, beautiful bill through its chamber of Congress. And now it's going to go off to the, to the house. We don't know exactly what will come of it, but a version we'll get through one way or the other, but there's not a whole lot of news until it actually happens, but the ball is moving down the field on that

legislation and we'll keep you posted there. Again, what has been priced into markets is the extension of existing tax cuts from the original Trump administration. The other things like, for example, the salt cap deduction and some other items that are in there that are hot buttons, what happens on Medicaid. Question today was about Powell, summarize it, but essentially about politics and is Powell not like Trump and did Powell like Biden? And the record really doesn't speak to that. The, it actually in many ways, of course, you can look at history and paint a picture

at however you want to spin it. But if you look at what, what Powell did originally in Trump 1.0 is that he lowered interest rates to zero. Okay. So there was that now granted COVID happened in that period of time. But even before that, if you remember in 2018, and of course, I distinctly remember this because markets dropped about 20% right before Christmas time of 2018, which wasn't enjoyable, but the Fed had started hiking interest rates.

Then, and they got up to about two and a quarter percent on Fed funds. And then the market basically said absolutely no more. And we got markets that sold off about 20% or so right into that fourth quarter of 2018. And then of course they ended up cutting rates in 2019 and normalizing things and markets and an interest rate policy that was all under Trump 1.0. And then you also had a massive amount of quantitative easing that they had out there. So it's hard to paint a picture of Powell doing things to hurt Trump in the first

administration and then helping Biden when really he took interest rates from zero all the way up to five and a half percent in that administration's time period. And then now we're cutting rates again in Trump 2.0. So if you're looking at actions, I don't think they speak to politics. And yes, I do think that they speak to a pretty impartial view of what the mandate is, which is full employment and price stability. David walked through that pretty eloquently there in the excerpt for today's Dividend Cafe, a few pieces of important economic data that will come out towards the end of this week.

We'll have a shortened week for the 4th of July holiday. And frankly, markets have been somewhat quiet because of that. Again, today was that big rotation from growth to value. A lot of that had to do with quarter-end rebalancing, so we'll keep you posted elsewhere. With that, I'm going to let you gobalancing. So we'll keep you posted elsewhere. With that, I'm going to let you go for this evening. Please reach out with your questions.

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