The Dividend Cafe - Wednesday - August 13 , 2025

Episode Date: August 13, 2025

Market Insights: Follow-Through, Treasury Secretary Speaks, and Housing Resurgence In this August 13th episode of Dividend Cafe, Brian Szytel from The Bahnsen Group provides a detailed market update from Newport Beach, California. He discusses recent market trends, including significant market breadth with a six-to-one advance-decline ratio. Brian also covers Treasury Secretary Bessant's comments on a potential Fed rate cut and the search for new Fed candidates. He highlights the resurgence in the small-cap sector and notes an uptick in housing activity despite affordability challenges. Brian addresses a common query about The Bahnsen Group's ability to manage assets for international clients and previews forthcoming economic data releases, such as the Producer Price Index, retail sales, and consumer sentiment. 00:00 Introduction and Market Overview 00:47 Treasury Secretary's Comments on Fed Policy 01:46 Small Cap Sector Insights 02:29 Housing Market Trends 04:35 International Client Queries 06:01 Upcoming Economic Data 06:53 Conclusion and Closing Remarks 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. Welcome back to Dividend Cafe. This is August 13th Wednesday, Brian Saitel with you here from our Newport Beach, California, headquarter office here at the Bonson Group. And another nice day here overall in markets. We had some follow-through from yesterday. Actually, yesterday was significantly strongly strong as far as market breadth goes. This is the advanced decline ratio that we talk about sometimes. But it was a six to one advanced decline. That's the highest since May of last year. So quite a big read to have follow through. The day after just shows you that the path of least resistance remains to the upside here. And as I mentioned yesterday, we don't really have a lot of meaningful data, I think, until that employment report comes out in early September. But in the

meantime, there was also Treasury Secretary Bessent was out today talking about the Fed should consider a 50 basis point rate cut. It's not his role to necessarily say that, although he's been pretty quiet on speaking to what Fed policy should be. After that, if you remember back in April, that sort of run up in the long end of the yield curve around some of his other comments, he's been quite ever since. So they are looking for a new candidate. He spoke about a very wide net that they're casting. There's currently 11 different candidates. I'd say there's probably really one or two that is a serious contender, but I don't want to presuppose anything, but I would assume that some of the reasoning behind that is to see what kind of dove they might

catch, frankly. But we'll see how that continues and what comes down as far as a new Fed appointment here. I don't think that'll happen anytime soon. I think you're into next year before you're going to get something finalized as far as PALS replacement, but we'll keep you posted. There was also some follow-through in the small cup sector today. This has been an underloved, under-owned style, really, of investing for some time. It hasn't participated like it usually does in market rallies. It's been a laggard for the amount of risk that's inside of it. Remember, 40% of the Russell 2000 is without earnings. So it's important to us as owners in the space and certain sleeves of portfolios to be very selective in high conviction, which is what we have

in that space. But the point there is that there's follow through in there, and as a contrarian with it being underowned, it's good to see some signs of life there, both from the standpoint of a market rally, but also just for the sector itself. Some green shoots I noted in housing, and this is always with grain of salt, because housing, the issue with it really just remains affordability. If you look at prices and if you look at what an average mortgage payment is now, call it $2,800 a month, it's basically doubled here over the past six years. And that is putting it at a very stretched level from an affordability standpoint. You can talk about all the great demographics that we've underbuilt housing for 30 years. That's all true. Population is now forming

households. That's all true too. And those are meaningful things. But at some point, people just can't afford it. Whether rates come down, whether prices come down, or whether wages go up, all of those things are probably going to have to happen in some way, shape, or form for affordability to dramatically change. But nonetheless, you saw mortgage applications rise 10% week over week. That's a pretty big resurgence, and that's happening before long-term interest rates have moved lower. A 30-year mortgage is still at 6.67%. I guess in our lifetime, I wouldn't call that egregious necessarily from where maybe it was in the early 2000s. But for what most people forming new households today call it in their mid to late 20s, early 30s, there was an interest rate

paradigm in the threes and the fours for a very long time, essentially most of their life. I think it's going to take lower interest rates that hasn't happened yet. But to see refinancings up 23% in a week, even with this high rate environment, is a positive sign. You could say housing is good or bad, but the fact that it makes up a large percentage of the overall economy makes it important. There's been a big rally in the home builder stocks, and they tend to be very volatile investments. They tend to be lower free cash flow, and they tend to be higher just cyclical stocks. And so there isn't grand exposure that we've had historically and already plans to have any. Nonetheless, when you get big moves up in sectors and then you get some signs of life here

in the housing market, I think it's warranted of mention. Questioning there today was a general one. it very often. I'd say weekly, certainly every other week, from folks that live overseas, Canada, Australia, South America, Europe. Nice to see that there's interest across the ponds. The questions are often, I live XYZ country. Can you help me? Can TBG manage assets and do planning and all these different services that you guys talk about and that we've come to love and read about? And the answer is yes and no. There's opportunity for it, yes, depending on the country, depending on the situation. Most of it has to do with complicated taxation between different jurisdictions. So there's different tax treaties, for example, between the U.S. and Canada or the U.S. and the U.S. and

the U.K. matters if folks are used to paying taxes in the U.S. or not, or if they own real estate and have a residence here or not. There's just a lot of nuances around it. But there isn't a closed door. And I thought that the question that came in was a relevant one to include today just because there are clients that we manage and deal with overseas. And so if there's anyone listening or reading that that pertains or is of interest for further discussion, feel free to reach out. But the Q&A section in there was really largely around that. And my comment was to this person that of what I just mentioned, but then in addition, that there is work in progress on a more viable solution that's a little more user-friendly

for some folks. And we'll hopefully have something in the near future there. Until then, there really wasn't anything in the economic calendar today. So marginally, there was a couple of different Fed speakers, but I wouldn't go into it a lot just because I didn't feel like there was anything new to discuss on that side. We will have some more data tomorrow and then through the end of the week. We'll have PPI, so that's the producer price index. This is the front end price levels, so we'll have a number that comes out tomorrow, and then we'll have retail sales for July, and then we'll have that consumer sentiment number from the University of Mission that comes out on Friday. So a good amount of things coming before your weekend on the

economic calendar. And also some manufacturing data at the Empire State and then some production numbers, industrial production that will come out as well. I'm going to let you go for this evening. I encourage you to reach out with questions as always and have a lovely night. Talk to you soon. Thank you. 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.

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