The Dividend Cafe - Tuesday - October 28, 2025

Episode Date: October 28, 2025

Market Recap and Key Economic Catalysts – October 28th In this episode of Dividend Cafe, host Brian Szytel provides a market recap, noting positive performance with the Dow closing up 161 points, S&P up by a quarter percent, and Nasdaq up eight-tenths of a percent. Key drivers include the US-China trade deal, expectations of a 25 basis point rate cut by the FOMC, potential end to quantitative tightening, a government shutdown, and strong earnings reports. Brian also addresses an 'Ask TBG' question about investment decision mistakes, emphasizing continuous learning and client goal achievement. Finally, he highlights economic indicators like improved consumer confidence, Richmond Fed Index, and better-than-expected Case-Shiller home price index. 00:00 Introduction and Market Recap 00:40 Key Market Drivers 01:06 US-China Trade Deal Insights 01:34 Federal Reserve and Economic Indicators 02:33 Government Shutdown Impact 03:12 Earnings Season Highlights 03:51 Stimulus and Tax Package Effects 04:50 Investment Committee Reflections 06:28 Economic Calendar Updates 07:12 Conclusion and Listener Engagement Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividing Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Good evening and welcome in to Dividend Cafe. This is Tuesday, October the 28th. And Brian Saitel is with you again here for your daily recap. On a day that was positive, we actually had positive move yesterday to 1%. So good today. The Dow ended up closing up a hundred, 161 points. S&P was up about a quarter of a percent. Nasdaq was up eight-tenths of a percent. So positive across all the indices, more skewed towards tech. And I'll talk about that a little bit as to why. But tenure was down on the day, a little over a basis point. We're still under 4 percent at 397 on tens. So there's your market recap. Some of the drivers behind this was with all that was a concern with trade and with tariffs and how these things would affect the

economy and growth. We've seen the opposite and a lot of resilience and we've seen markets continuing to climb this wall of worry. But there's now five kind of main broad catalysts that I'm looking at driving some of the positive sentiment with the path of least resistance being you know to the upside. So you've got first off the U.S. China trade deal. This goes back and forth. And of the five things I mention, I'd say my conviction level on this coming to fruition this week is the lowest by far. But there is a meeting set on Thursday. There's been a lot of comments from this administration about it. What is bad news already baked in and the potential for what could be good news that's starting to trickle into markets here. So markets tend to

price things in in advance, as you know. They're discounting the future. And that's starting to come into play. The other thing is you've got FOMC meeting ending tomorrow and an assurity of a 25 basis point rate cut. While that's mostly completely priced in on the Fed futures, removal of any chance of change to that, I suppose, is a positive. And also the bigger component to what will be spoken about will come out in the press conference after the meeting. And really what we're looking for is an end to quantitative tightening. There has been a drain on some liquidity, especially in the short-term funding markets. And so I do suspect that they will end the need to sell a part of the balance sheet at this point. You've got some weakness in labor,

and you've gotten a CPI print on Friday that was, you know, quite a bit cooler than expected, particularly around the owner's equivalent rent, which is the shelter component. So all that to say, they were going to cut anyways. Now they're definitely going to cut. And also with the inflation data, they can probably stop the QT. And so I think that'll be positive. That's also coming into markets. You have a government shutdown, which is completely counterintuitive to me and the most over the years,

which is it causes angst, it causes worry. And so, you know, markets don't like it. That said, of the last 10 shutdowns we've had since 1984, so 40 years, all 10 of them in the market have been positive six months after the shutdown. So that's batting 1,000. There's that historical context. And then there's just the fact that it's not costing us more than whatever political endeavor was sought. And so the end to it, I view is nigh and view it as inevitable. So the ending of the government shutdown would be a positive catalyst.

You've also had positive earnings that have come out. We've got 87% of companies reporting better than expected so far. And the year-over-year growth rate sitting at 9.2%. And then on top of that, you've got some of the real big tech companies, the Mag 7 names, reporting Wednesday and Thursday. There should be some positive momentum behind that. I'll even add in an AI, CAPEX, exuberance into the earnings season as well. And you are seeing numbers flow into bottom lines from the expenditure that has been made.

The question is just for how much that has been spent and how much has been already priced into these stocks is it pencil out in the long run and time will tell. The last thing I put on here is the stimulus. We can't forget about this. This was all part of the tax package that came through the administration this year on the OBBB. The stimulus largely will flow into next year. You have a large amount of tax refunds set to come. you've got extended tax rates, you know, providing certainty, in other words, for a period of time on what tax rates will be. That's a positive. You've got a big incentive for companies to invest in capital expenditure and be able to expense that on their taxes. And then you've got some increase in things like a small child tax credit benefit and then a salt deduction, which is more sizable. But all those things are positive in stimulus. And so when you think about the cost of tariffs and what they are as a consumption tax, they're just, dwarfed by all of these things all added up together. That's why markets are melting up.

But the trade with China could definitely be something is a kind of a black swan in that calculus that we don't know an outcome there. That could change some of those things. But other than that, path of least resistance remains to be higher. There was an asked DBG question about decisions that we made that we were wrong about from an investment committee standpoint. And what did we learn from them? I really didn't mean to answer this in a broad sense, but there's thousands of things I could talk about. And so I really wanted to get at the crux of the way I would answer it, which is, yes, we make mistakes all the time. I think every company and every human does. And yes, they're all learned from and a myriad of different ways. There's been good and bad markets.

There's been names that we bought that we regretted at some point. There's been names that we sold that went higher. And there's been names that we held that ultimately had a worse outcome that we predicted. But in all of those things, the general outcome for the task at hand, which was solving for a client goal has been met. So there's never been anything of catastrophic nature or anything remotely close to that. We're talking about small nuances, 2% of a portfolio performing worse than we thought it would, things like that. But the batting average is extremely high. It's what we obsess over. It's what we love. It's what my passion is. It's what it's always been and probably always will be. But that's the way I would answer it. I'm happy

to go into individual stocks and give you history. I just felt for the sake of the answer for this particular general question. The way I wanted to answer it was in the context of that. But yeah, I mean, the one small example I gave was a company that we held that we were assured would not cut the dividend. And then literally just a few months later in the intra-quarter, the following quarter, ended up doing just that. And so board sway matters CEOs have to answer to shareholders. And there you have it. Again, feel free to call, reach out with questions on individual names. I have some. A couple of things on the economic calendar today. consumer confidence was just slightly better than expected for the month of October, although it was down slightly from last month.

Richmond Fed Index, better than expected, a negative 4 versus negative 9.5, but that was all still a negative number, so take it with a great assault. And then the last thing is the Kay Schiller Home Price Index is actually a little better than expected by 10th. We got a 0.2% for the month of August. So housing continues to remain stuck. inventory and transactions are inventory is is creeping higher transactions still remain low historically although they are also creeping higher and a lower interest rate paradigm is fueling some of those things but that's what I have for you but with that I'm going to let you go for this evening I always appreciate you listening very much love your feedback love your questions keep it coming

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