The Dividend Cafe - Tuesday - September 9, 2025

Episode Date: September 9, 2025

Daily Market Update: Record Closes and Economic Revisions In this episode of Dividend Cafe, Brian Szytel discusses the record-high closes on the DOW, S&P, and Nasdaq, noting a significant boost in the last 30 minutes of trading. He reviews year-to-date market performance and the recent revision in non-farm payroll numbers, which saw a considerable downward adjustment. The episode also covers the unusual yield curve movements, expectations for potential Fed rate cuts, and upcoming economic indicators such as the PPI and CPI numbers. Additionally, small business optimism has ticked up, reflecting a more confident outlook. The bond market's reaction, particularly the decline in 10-year yields, is analyzed, indicating potential continued strength in long-duration investments. 00:00 Introduction and Market Overview 01:02 Employment Data and Revisions 02:24 Yield Curve and Interest Rates 03:20 Economic Indicators and Small Business Sentiment 03:59 Bond Market and Long Duration Investments 04:40 Conclusion and Upcoming Events 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 back to Dividend Cafe. This is Tuesday, September the 9th. Brian Saitel is with you back here again today on a record close for the Dow S&P and the NASDAQ on the day. And actually a lot of that for the trading session, at least. came in the last 30 minutes or so of trading. But we closed at the highs for the day, up modestly. We had the Dow up 196 points. S&P was up a quarter of a percent. Nasdaq was up 0.37%. So that puts year-to-date numbers in the range of about 8% on the Dow, about 11% on the S&P in about 13.5 or so on the NASDAQ. So for whatever it's worth, and for all of the folks that have doubted this market and the political regime and interest rate policy and geopolitical events and all the different

things, health, all this stuff, the market just continues to climb that wall of worry on the year. And you're starting to see that flow into the bond market a little too. You've got a revision on the BLS number that was larger than expected to the downside. So this is the non-farm payroll number that we just got. And it was revised lower by 911,000. That's for the year, though. So that's taking basically April through March of 24 to 25 and taking it off about 911,000, it's about 0.6% or so on the employment rate. So it's a big deal. Although what was expected was about 800,000, the starkest view of what was going to get revised was about a million. The attribution of what was revised was kind of across the board, but you had a large part of it in transportation, about 226,000 of it.

Leisure hospitality, which has really seen a big amount. of hiring is also volatile. A lot of part-time employment there, but you've got 176,000 revision lower, and then manufacturing was only lower by about 100,000, little less, 95,000. Now, for context, you've had negative revisions now for every year for the past three, four years. So you've had, last year I think was in the 800s, year before that was in the mid-300s. So this isn't anything that outlandish. There's just reporting that happens after the report comes out. And then you know, they have to revise the numbers. Not a perfect system. Probably not as bad as some make it seem to be. You had a little bit of a kind of a weird yield curve on the day. You actually had rates up, even though the number was worse than expected on employment, which is counterintuitive. But the 10 year was up four and a half basis points on the day. And then you had a flattening of the yield curve a little bit. You had two year yields up about 6%. I'm sorry, six basis points. Yikes. So a little flattening yield curve, a little slower growth, a little higher, probability of more Fed rate cuts before the end of the year. We're now at 75 basis points before

the end of the year with the odds of a 50 basis point cut this month on the 17th up from zero, basically. They're just under 10%. I think that'd be unlikely, frankly. We are going to get a PPI number on Wednesday and then a more important CPI number on Thursday that will give us a fresh rate into inflation, which I think will be timely given that the Fed Funds meeting is a week from tomorrow, the conclusion of it. The other piece on the economic calendar, you had a small business optimism index survey. This is the NFIB survey.

You had to tick up half a point in the month of August to 100.8. That's also up from the month before. But for historical context, for the last 52 years, it's average 98 even. So small business owners are feeling a little more confident here as things that moved higher. Again, I mean, markets are closing at all-time highs. Employment is hanging in there for the most part, and you have a perception that interest rates are going to come down.

Small businesses are much more affected by the rise and the fall of interest rates, both to the positive and to the negative. Little perspective on rates. So we've got 10-year yields now down 22 basis point in a week. That's after non-farm payroll. And we've got a full 35% lower since the end of July. So call it a month and a week or so. It's a good move lower on 10s. And so that duration trade in the bond market is what's starting to work.

All the long duration investments that are out there. Think mortgage reits or BDCs, you know, long-dated treasuries, long-dated municipalities. You've all seen a decent rally here the last week. I suspect there's more gas in the tank on that, but time will tell here. And I think the inflation numbers that we get on Thursday and Friday will also be an important factor in all of that as well. Again, we've got inflation end of the week, and we'll be back with you tomorrow. with some more dividend cafe. I wish you a lovely evening.

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