The Dividend Cafe - Tuesday - July 8, 2025

Episode Date: July 8, 2025

Market Reaction to Triple B Bill and Upcoming Economic Indicators In this episode of Dividend Cafe, Brian Szytel covers the market downturn dated July 8th, following the passage of the 'Triple B' bill in Congress. Despite the bill's passage, markets experienced a sell-off due to pre-existing pricing anticipations. The episode discusses ongoing tariff talks and the extension of deadlines related to these discussions. Key financial index performances are reviewed, stating that the Dow Jones and S&P 500 saw minimal declines, while NASDAQ and the 10-year Treasury yield remained relatively steady. Important economic indicators such as the NFIB Small Business Optimism Index and New York Fed's consumer expectations survey are highlighted, showing slight declines in small business optimism and inflation forecasts respectively. Brian also touches on the resilience of the US macroeconomy and the subdued growth expectations for the upcoming Q2 earning season. The Q&A segment addresses the role of Jerome Powell and the Federal Reserve in interest rate decisions. 00:00 Introduction and Market Overview 00:12 Impact of the Triple B Bill 00:53 Market Performance and Economic Calendar 01:27 Inflation and Economic Expectations 02:33 Federal Reserve and Interest Rates 03:19 Closing Remarks and Q&A 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 8th. Brian Seitel with you here on another down day in markets. We had a sell-off yesterday of over 400 points. This was after the Triple B bill passed. The big, beautiful bill passed through both chambers of Congress and is a perfect point as to why markets tend to price things in advance. And so most of the good stuff was already priced in. Classic buy the rumor, sell the news action the last two days in markets, at least on that front. But the market was down today and a fairly quiet day on the economic calendar and a lot of it was around continued tariff talks. There's kind of an alluded to at least extension of the July 9th deadline to August 1st.

The White House is still going through and trying to get deals done and has also alluded to several of them being in the works. You know how volatile the tariff news is back and forth and so I'll leave it at that. The Dow Jones was down 165 points. S&P 500 was down just about four points, so call it flat. Nasdaq was up five points, I'll call that flat too. Ten Year Treasury was up two basis points, we closed at 441. There was a couple of pieces of news out in the economic calendar. There was an NFIB small business optimism index. This comes out every month and it was down slightly, but that was largely, by the way, on inventory build, but it was in line with expectations and basically

right at the in line with the average over the last 50 years or so. There was also the New York Fed June survey of consumer expectations, which is an inflation read. And the inflation numbers came down a little bit. May had it at 3.2 from a year from now. The June number moved that down to 3%. And then the five-year number was held steady at 2.6%, which is probably a more normalized inflation reading. I suspect over time that these numbers will continue to trickle down.

That's what we've been talking about now for the onwards of six months. That's what we've seen. We've got expectations for now, just 50 basis points of using this year. That's not a whole lot different than what it has been. It just tends to oscillate between about 50 and 75 basis points. But we're at 50 now, and a lot of that is on the theme of just US macroeconomic resilience. We're just now stepping into Q2 earnings season which is starting to come out next week and there's pretty subdued expectations baked in so my sense is that there could be some upside as earnings actually come out better than expected. Again that's time will tell here as we get through

earnings season but expectations are only for about 8% growth. There was a question in there about Jerome Powell and the Federal Reserve and why is he the punching bag on setting interest rates when there's a whole lot of other Fed governors and chairs and voting members inside of the Federal Reserve? Isn't it not just on him, but the actual committee? The answer to that is yes and no. Of course, there are voting members. Yes, it matters. Yes, they have a voice and they speak and markets pay attention to all of them, frankly. But when it comes down to voting, there's really no precedent for the members going outside of what

the Fed chair is going to go with. And so there's an unwritten sort of tradition of deference to what the Fed chair is. They end up with dissension. There could be members that vote no and otherwise they're going to raise rates, yes, but it's usually a small minority and not the majority. So there's your Q&A for the day. Tomorrow will be Wednesday. For those that are clients, we'll have our weekly portfolio holdings email in your inbox. So stay tuned for that. I'm going to let you go for this evening. I wish you well. When you have questions, please send them our way because we love them Have a good evening. Thank you very much. Bye. Bye

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