The Dividend Cafe - Tuesday - November 18, 2025

Episode Date: November 18, 2025

Market Decline and Economic Data Updates - November 18, 2023 In this episode of Dividend Cafe, Brian Szytel reports from Newport Beach, California, on a market downturn with the DOW, S&P, and Nasdaq all experiencing declines. He discusses the ongoing shift from growth to value stocks and highlights the significant market valuations of some major companies. Despite poor economic data reporting due to government delays, there is a noted cooling in the labor market and mixed signals in housing market confidence. Fed officials continue to focus on inflation concerns, reducing the likelihood of a rate cut in December. Brian also explains valuation metrics like revenue multiples and PE ratios to help understand market valuations. 00:00 Introduction and Market Overview 00:43 High Valuation Concerns 01:46 Economic Data and Labor Market 02:43 Home Builder Confidence and Fed Updates 03:41 Understanding Financial Terminology 05:08 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, November the 18th. Brian Saitel with you from our Newport Beach, California office here in beautiful weather and beautiful sunny in Newport Beach, California. A bit of another down day. This is actually the fourth down day in a row. And the Dow is. down 498 points on the day, S&P was down 8 tenths of a percent, NASDAQ was down 1.2%. So there was again some further rotation from growth to value. The continued sell-off and some of those what we've called shinier objects, speculative high-valuation names like AI and some of the others have sold off more. And so you do have big earnings coming out tomorrow. But in the meantime, when you have one company that's literally trading at a market cap,

that is the size of the entire real estate, the entire materials, the entire utilities, and the entire energy sector of the S&P 500 combined. So think about that. One company is bigger than all of those sectors combined. And that one company is worth about 4.5% of the index net income, but is trading at 9% of its market cap. That just means it's more valued. It's higher valued than everything else. And that is coming home to roost here. Some of that high valuation is starting to be peeled out of the market. And so more of the defensive names, you've started to see the Dow kind of catch up

to the S&P 500 on the year, and we still have six weeks to go. And obviously, some of the value and dividend names have been performing well here the last couple of days compared to everything else. That's what's ongoing here in this process. We'll see how long that plays out. But in the meantime, from an economic side,

the day didn't have a lot out. Remember, the government has reopened, but there's still so much data that was delayed for months. and then is still not coming out here. So all of my reports on the economic data the last couple of months really have been a little bit wonky because of that reason in today's included. So we got a factory orders number from August. So I think it's not even worth me reporting about it at all.

It was up a bit, which is great. The more recent data that we've gotten is a piecemeal employment report that we get out of ADP. It's a weekly, rolling weekly average of employment. And so what we're saying here in a lack of other data is a piecemeal employment, cooling and labor. So the jobs market has declined here a little bit. We're looking at about 2,500 or so jobs for the last four weeks through November the 2nd. So we've got some cooling and labor. The home builder confidence index today was actually better than expected slightly

and positive, but there was a record 41% of home builders that had to lower prices inside of that. So confidence is one thing, but then, and that's how a survey is answered first off, what they're actually doing, which is lowering prices, tells you what the picture of housing is looking like right now. Again, we were supposed to get industrial production that was delayed. And then lastly, you've also gotten continued, I guess, hawkishness in the FedSpeaks. So all the different Fed governors and presidents do these different press conferences and meetings. And they have been definitely talking more about an inflation concern than an employment concern. And so the odds of a rate cut in December have just continued to drift lower

and lower. It'll be interested seeing how that develops here and where we go before the end of the year. The question there today was about just when we refer to things like 10 times revenue or 38 times earnings, what does that mean? And so I think it's important to have now and again to just break down some of the nomenclature and some of the acronyms that get used and just some of the terminology. In this particular case, the example is if you had a company that was creating a billion dollars in annual sales so that's the revenue of the company it's selling widgets a billion dollars of sales and the value of that company meaning the market cap that's calculated by the total number of shares by the share price so if you're going to buy all the shares what would it cost to you

that's the market cap let's say the value was 10 billion the market cap was 10 billion that means the company's trading at 10 times revenue so you've got a billion in sales you've got a market cap of 10 billion that means 10 times similarly if you had a company that was doing a billion in earnings at a market cap of $38 billion, then it would be trading at 38 times earnings. And so that's the PE ratio that we often refer to, the price to earnings ratio. That's most commonly looked at from a valuation standpoint, but there are other ways to calculate this. All of this stuff is designed to try to give you a barometer on relative to either historical context, relative to the overall market, relative to other sectors. Just how were things priced or the expensive or cheap? That's

how we calculate a lot of those things. So hopefully that's helpful to you. But that's what I have for you on the day. I'm going to let you go here for this evening and get into your Tuesday night. Reach out tomorrow. We're back with you on Dividend Cafe, as always, from our Newport Beach Office. Thanks for listening. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and 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.

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