The Dividend Cafe - Tuesday - July 22, 2025

Episode Date: July 22, 2025

Market Analysis and Federal Reserve Insights - Dividend Cafe, July 22nd In this Dividend Cafe episode, Brian Szytel from TBG New York City headquarters provides a comprehensive market update for July 22nd. He discusses the mixed market with the DOW rising, S&P staying flat, and Nasdaq falling. Factors affecting this trend include earnings reports and sector pricing. The 10-year interest rate dropped slightly, and there were movements in the dollar and gold prices. Brian also highlights international trade agreements, Federal Reserve discussions featuring past chairs, and the celebrity status of the current Fed Chair Jerome Powell. Additionally, Brian covers the upcoming economic calendar with existing home sales and initial jobless claims. He answers questions about the effect of treasury supply on yields and the role of preferred stocks in dividend growth portfolios. Finally, Brian signs off from New York, mentioning an upcoming client dinner in the city. 00:00 Introduction and Market Overview 00:45 Interest Rates and Economic Indicators 01:17 Federal Reserve and Monetary Policy 02:49 Upcoming Economic Data 03:06 Viewer Questions: Treasury Yields and Preferred Stocks 05:13 Conclusion and Personal Notes 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 Brian Seitel here with you at TBG New York City headquarters on July 22nd, Tuesday. Good to be with you here today on a bit of a mixed market. We had the Dow up 179 points, which these days equates to four tenths of a percent. S&P was essentially flat. NASDAQ was down about four tenths of a percent. So you basically had the big rotation from growth to value on the day. And a lot of that has to do with earnings, but also just expectations of where some of those different sectors are already priced as earnings come out. Some of those value names just happen to be a little more reasonably priced.

And so that's what you got today in the market. On interest rates, you had the 10 year down about three and a half basis points closed at 435. You also have the dollar a little weak, gold a little higher. So you're getting a little lower interest rate paradigm here as rates tend to come down here a little bit. The S&P was right at basically an all time high again here.

And that was positive. So there's your market to minute. You had a deal done with Indonesia and the Philippines and 19% tariff rates, which was a headline out there. There wasn't a lot in the economic calendar, but there was a decent amount of Fed speak. And it's interesting when you have past Fed chairs like Bernanke and Yellen do an op-ed for the New York Times and talk about how the

Fed needs to maintain independence. Nothing wrong with that. I happen to fully agree with it, but just the sensationalization behind the Fed, the importance and what that particular role and chair has now become, which is essentially a pseudo-celebrity, more popular than they ever were. And this sort of goes back to that Alan Greenspan era. And if you can remember those time periods, this was during the turn of the century and

the housing market and interest rates that were back down to low rates. That's when the Fed became more of a personification of monetary policy. You certainly didn't have it when you had Arthur Burns and Paul Volcker previously. And so nowadays you've got 60 minute interviews, you've got cocktail party conversations, and the topic of the day is will Powell be replaced before his term ends? We believe no. Besant was out today, the Treasury Secretary, saying just as much. That said, who will replace him?

Top candidates are Kevin Warsh, essentially, or maybe Besant himself, depending. But the strategy these days for the administration in the White House is going to be to replace him with someone that is very credible so that not only is it perceived to be independent and as it should be, but that the U.S. remains the center for the reserve currency status of the world and the most trusted and most liquid and most transparent central bank out there. Not a lot of econ data for yesterday and today, but tomorrow's a new day. Wednesday, we'll have existing home sales, then on Thursday we'll have

existing initial jobless claims and we'll have PMIs out, and then we'll have durable goods orders out on Friday. So things pick up a little bit here as we get into the latter part of the week. A couple of questions in there, both very relevant for today's topics. First one was about, and this is an intuitive question because it comes up quite a bit, people are looking at the maturity wall of treasuries next year and the following couple of years, actually, but particularly next year, and asking themselves with more supply of treasuries coming to market that has to equal higher yields.

And the problem is history, because if you look at history in both the UK, the EU, Japan and the US, the more supply of debt and the more indebtedness, the lower interest rates have tend to be anchored for a lot of reasons. Part of it is that it's deflationary to have that much debt service. And we've called this Japanification. And I think Japan is a pretty good case study over the course of 35 plus years of what happens when there's an excessive amount of indebtedness above GDP. I want that does to growth and what it does to interest rates, both of which are tethered to that zero bound basically. Second question in there was about do we own preferred stocks inside of our dividend growth portfolio? And the answer, of course, is no. There's a lot of reasons for it.

We do own preferreds and we believe in the capital structure and the high income yield that they provide. But just keep in mind the income from them is always for the most part ordinary income tax versus a qualified dividend tax, number one. Number two, it's fixed, meaning it's a coupon. And so it doesn't increase and it can't grow. And so that in and of itself defeats the eligibility to come inside of a dividend growth portfolio itself.

But we do own it in what we've called income enhancements. This is a culmination of different asset classes with high income yields, mortgage rates, preferred stocks, high yield dividend stocks, things like this, business development companies. It fits perfectly inside of there. And so we believe in the space and we have an actively managed exchange traded fund from a company that we believe highly in and we've owned it for many years. That's how we play that preferred space.

But no, it does not go in the core dividend portfolio, nor will it ever. So there you have it on the two questions for the day, along with a little market wrap here on a quiet day, otherwise big rotation from growth to value, like I like I said but with that I will let you go here in the New York Minute and I'm off to do a client dinner here with my business partner David Bonson here in the city one of my favorite Italian restaurants and it's just good to be back here to feel the energy of New York City and by the way weather is lovely so we're talking high 70s, otherwise in what could be a very sweltering hot city climate. With that, I'll let you go reach out with your questions as always, and we'll talk to you soon. Thank you very much. The Bonson Group is a group of investment

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