The Dividend Cafe - Tuesday - March 11, 2025

Episode Date: March 11, 2025

March 11th, 2025 Market Volatility and Trade Tariff Updates In this episode of Dividend Cafe, Brian Szytel provides a detailed commentary on the volatility of the stock market, influenced by recent trade tariff headlines involving the U.S. and Canada. He discusses the market fluctuations experienced during the day, with the S&P 500 and Dow showing significant losses, while the NASDAQ saw lesser declines. Sitel highlights the complexity and unpredictability of the markets due to ongoing trade negotiations and emphasizes the importance of focusing on fundamentals rather than reacting to hourly news. He also touches on the impact of tariffs on housing affordability and mortgage interest rates. The episode concludes with a reminder about the advisory services provided by The Bahnsen Group and legal disclaimers. 00:00 Introduction to Dividend Cafe 00:21 Market Volatility and Tariff Impacts 02:54 Sector Performance and Valuations 04:38 Housing Market and Interest Rates 05:39 Conclusion and Disclaimers 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, March the 11th. Brian Seitel is with you here from our West Palm Beach, Florida office. On another hectic and volatile trading day, I'll say, we had the markets actually open up on the S&P 500 at least, positive on this morning after yesterday's big drawdown. So we had some recovery early on that led way to losses,

and most of that was around more volatile tariff headlines on taxation and trade between different borders, particularly the US and Canada today. We then rallied before the close with some undoing of some of that tariff talk, and then we ended up closing back down, not quite at the lows, but at least halfway there on the day. So what a day, quite a lot of volatility. Technically the last six trading days in 2025 have seen the worst three days of the year.

So like I said, you know, volatility is really picking up here around much to do with trade. So the Dow closed down 478 points today. S&P down about 0.76% and then the NASDAQ only down about 0.18%. So it was a reversal of some of the rotation from growth to value today. You actually had value sell off a good amount and growth outperform. So essentially we had Trump mention new tariffs on aluminum and steel to Canada this morning, 25% in addition to the 25% already set to take effect tomorrow.

That would bring it to 50%. Canada said they were going to impose a 25% tariff on electricity production that goes basically to the Northeast. And that's a big deal. This comes from Ontario down into the Northeast. And then towards about an hour left in trading, Canada said they would undo that and pause it. And Trump said the same thing with his 25% addition.

So round and round we go here. This is a back and forth. And as we've written about a couple of different times and spoken about, there's something to be said about what will actually happen and what will get talked about and what will be negotiated. And these things are tough to frankly even record and talk about and write about because intra-day, intra-hour, one thing leads to the next. And if the newsfeed is off by an hour, you might read it the wrong way.

Nonetheless, that's the market we're in and I want to make sure that you're aware of it. We look at this as a lot of volatility and noise around that uncertainty. On the economic side of things, it remains to be intact, at least for the time being. But of course, these things can turn into self-fulfilling prophecies and we're paying very close attention to it. So I wouldn't dismiss any of it. This is all meaningful and we're paying attention to it. But I wouldn't look at individual names in a portfolio and say, this one's good and that one's bad because it was down 5% in a day and this one was up. It is literally just based around headlines that oscillate from one minute to the next.

So you look at fundamentals, which companies are good, are not going to just stop being good because of trade policy negotiation in the meantime. Today we had the S&P flirt with the correction territory. We were down just over 10% or right at 10%. I'd say flirting with 10% through the trading day. And then we ended up coming back off of that. We're now down about 9% from the highs. So not quite a correction, but with what has been basically a low

vol market here the past year, I think there's complacency that has been baked in and so people may be feeling this a little bit more. The Nasdaq by the way is down about 14% from the high on the day with stocks like Tesla and Nvidia down 50 and 30 percent you know respectively. So there's some names that most people own that are huge components of the index at least a huge component of the Nasdaq that are down significantly here in all this. If you look at the technology sector, which is sold off by far the most, and you look at where valuations sit and compare it to averages over the last 15 years, it's not

like it's gotten cheap yet. So keep that in mind. It's still at 25 times earnings. Historically, it trades around 19. So it's not that it's come down and now it's a screaming buy or anything like that. It's still expensive in historical terms and technically it should be. I mean, it grows more than most other sectors or all other sectors too from a compounded annual growth rate.

It deserves a higher multiple, but just it's above what its historical multiple is even still now. The only sector really that is below and relatively, I guess, cheap would be the word, would be energy and it's at about, say, 76% of what its normal multiple is now in a reasonable valuation. All the others are slightly above, but technology is that outlier there. There was a question in there about housing and interest rates coming down. Does that make housing, you know, more affordable?

And then the tariffs increased costs and those two things offset one another. First off, the affordability index on housing is way out of whack. So the fact that interest rates on mortgages have come down slightly doesn't really mean that all of a sudden it's affordable now in the housing market. So that's not that hasn't moved enough for that to move the needle yet. Do tariffs on lumber prices affect housing? Of course they do. And you could say that it will affect home builder margins,

which it would, and also you could expect that it would affect pricing as well. So both of those things are at play. Are any of those things hyper positive? No, I do think there's a point at which interest rates going low enough would start to spur activity again in housing. And I frankly think that would be a good thing just from the standpoint of having a clearing price in housing get set at a little bit more reasonable level versus just what everyone thinks houses are worth when they're not trading. So all that to say, more to come on tariffs and how trade will impact all these different sectors and markets and we'll be back with you tomorrow to go through all of it again.

I'll be back with you again. That'll be tomorrow on Wednesday. In the meantime, I hope you have a good evening and reach out with your questions. Thank you very much. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC member FINRA and SIPC with Hightower Advisors LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors LLC. This is

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