The Dividend Cafe - Tuesday - May 13, 2025

Episode Date: May 13, 2025

Market Update and Economic Indicators Review - May 13th In this episode of 'Dividend Cafe' from May 13th, Brian Szytel provides a detailed market update and economic analysis. The S&P 500 showed positive trends, closing up 0.7% for the day, and the Nasdaq increased by 1.6%. Despite a decline in the Dow by 269 points due to a drop in a significant healthcare stock, the overall market shows signs of recovery, currently only 4% off its February highs. The improvement is attributed to the de-escalation in U.S.-China trade tariffs. Additionally, inflation rates came in cooler than expected for April, with Core and Headline CPI both at 0.2%, improving annual core inflation to 2.8%. Furthermore, the NFIB Small Business Optimism Index indicated sentiment below its long-term average, while recession odds have decreased, leading to an optimistic adjustment in S&P 500 targets. Brian emphasizes patience during this period, reassures clients, and previews a light economic calendar for the following day. 00:00 Introduction and Market Overview 00:13 Stock Market Performance 01:29 Inflation and Economic Indicators 02:34 Treasury Yields and Fed Policy 03:08 Small Business Optimism and Recession Odds 03:58 Earnings and Forward Guidance 04:28 Conclusion and Sign Off 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, May the 13th. Brian Seitel with you here from our West Palm Beach, Florida office on a follow through day, at least on the S and P and the NAS from yesterday. So we had a down Dow on the day by 269 points.

And a lot of that was actually just one higher priced stock. That's a price weighted index. And so there was a healthcare name in there and that was down quite a bit and drove the Dow index lower, but the S and P was up 0.7% on the day. NASDAQ was up 1.6% on the day and this technically puts the S&P actually positive on the year by about 0.08% which is basically flat on the year but from being down call it 10 plus earlier about a month and a half ago a little less than that. It's nice to see nonetheless. So we're off the highs now by only about 4% on the S&P 500. So the highs were put in on February 19th and only 4% off the highs now.

So that's good news. A lot of recovery, a lot of it based around de-escalation of trade between China and the United States. Those tariffs were brought way, way down from where they were to more reasonable levels, and there's a process that's going on at least for the next 90 days to in the United States, those tariffs were brought way, way down from where they were to more reasonable levels. And there's a process that's going on at least for the next 90 days to work out where this thing is going to settle out. And so you're getting a follow through and some risk on trading here the last couple

of days. Oil was also up today. WTI was up about 2.87%. So you're seeing some of those things flow through. Big news for today was on inflation. We had CPI out and both core and headline beat expectations. They were cooler than expected. And so you had core CPI, actually, and headline, both came out at 0.2% positive for the month

of April. We were expecting 0.3% on consensus. And so that's better than expected. And that puts the annualized number for core at now 2.8% year over year. And that puts headline at 2.3% year over year. So that was actually on the month, the lowest increase year over year on core since February of 2021. So these numbers are getting real.

They're coming down. Part of the reason is that shelter as we've spoken about for about a year, has continued to just trend lower. The shelter component, the OER, owner's equivalent rent, is now only 0.3%. Still accounted for half of the number of 0.2 for the month, but has come down dramatically from where it was, so that's good news. And frankly, more attuned with what reality is if you look at a real time index on rents. The two year yields on the day,

these are the most sensitive treasury part of the yield curve because they're short term and so they're more tied to Fed funds. Rally today meaning prices were up and rates were down. And that's based on the lower inflation rate and the more support for Fed cuts in that regard. There's still now two priced in for the year. This changes almost every other week so I'm almost afraid to even talk about it but there's not two priced in for the year and the first one looks to set off in

September now and that gets has been pushed back from July. So we also had the NFIB Small Business Optimum Index Survey, which was out today. This is below long-term average for the second month in a row, marginally. The long-term average, by the way, over 50 years is about 98. And today we were below that. We got a number in the 95 levels, a bit below that on optimism. But all in all, these numbers have been fairly good. And with constructive work done on trade, the world ultimately won't stop turning here.

And there's just a negotiation process of where things will end. That's all good for risk assets. And we will take that. You've seen consensus, recession odds come way down. Most large Wall Street firms have brought the odds down for recession in the United States, including today, they were brought down. A lot of them are about 35%, which is somewhat normal. You've also had targets on the S&P 500 start to get re-raised, increased back to where

there were earnings for this quarter were actually largely better than expected. And consensus for forward guidance was for the companies that actually gave forward guidance. Many companies just opted out frankly because there was too much uncertainty but for those that did was also better than expected. So we're getting through all this. We're chopping through and you've been rewarded for your patience if you've held through this and I'm sure at least all of our clients have. But with that I'm gonna let you go for this evening so you can get back to what you are up to and I I will be with you tomorrow, which is Wednesday. There's actually

not a lot in the economic calendar tomorrow, but that doesn't mean that it will be a boring day, especially given everything that's been going on. So I'll be back with you tomorrow on Wednesday. Reach out with questions and have a good evening. Thanks so much. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPCC 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 not an offer to buy or sell securities. No investment

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