The Dividend Cafe - Wednesday - August 6, 2025

Episode Date: August 6, 2025

Midweek Market Update and Earnings Insights for August 6th In this episode of Dividend Cafe, Brian Szytel provides a market update for Wednesday, August 6th, highlighting a marginally positive day bifurcated between value and growth. Key topics include positive big tech earnings, a quiet day on the economic front, and ongoing tariff issues with India. Brian also discusses market multiples, the performance of top tech companies, and the importance of being selective in investments. Additionally, he answers questions about the real returns on cash investments and adjustments in job statistics by the BLS. He concludes by previewing upcoming economic data. 00:00 Introduction and Market Overview 00:59 Earnings Season Insights 01:19 Valuation Analysis 02:39 Investment Strategies and Market Sentiment 03:08 Addressing Viewer Questions 05:32 Concluding Remarks and Upcoming Data 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 Wednesday, August the 6th, Brian Saitel with you here today on a marginally up day here in markets and it was bifurcated between value and growth. We had some positive big tech earnings, particularly with the largest phone maker, which moved. the NASDAQ. The NASDAQ was up about 1.2% on the day. S&P was up about 7 tenths of a percent. Dow was up marginally about 81 points. Ten-year yield moved up about two basis points. And that was in the context of just a dearth of economic data today, there really wasn't anything out. There was some somewhat devish Fed speak with a few different Fed speakers, Kashkari, Waller. But other than that, it was a pretty quiet day on the economic side of things.

Obviously, there's continued tariff headlines with India being a recent headline and heightened tariff rates there, but overall, not a lot going on the economic calendar. All that said, just to kind of follow on to what we talked about yesterday, because we're about 80% through the earnings season, and we gave some metrics yesterday on how those things are shaking out, which is fairly good, and then also just on overall market multiples and where things live. So I wanted to peel that onion back a little bit. some other layers. If you look at the median, so not just the market cap weighted averages,

but the median, which may be more representative of all 500 companies versus just those top names. But if you look at the median top five largest names, which are all tech names, they're all part of the Fang paradigm, they're trading at about 34 times earnings. Actually, that's not the 40 and 50 times we saw in the year 2000. If you just look at that median number on those top five names, but still it's what's moving the needle the most on the overall median market cap. We talked yesterday of the market cap weighted index being around 23 times. If you look at the median, it's still 19 and a half. So not cheap by in historical measure.

I was trying to ascertain if there was a component of the market that may look a little shinier from evaluation standpoint. And there really isn't. That said, when you look at year over year earnings growth rate, this quarter is coming out somewhere in the 11.5% range. It's currently 11.6. So that may support some of these multiples. The problem is that if you look at the remainder of the year,

there's only another 2 or 3% expected here for earnings growth through the end of the year on the other 493 names. So if you take out those big top tech heavy names, there's not a lot of earnings growth here left in the remainder of the year and we're trading at a high level. There really isn't any way that I can paint the overall market from being historically cheap. There's certainly names within the market that we find and there's plenty of opportunity in them. both from a valuation standpoint, from a dividend growth standpoint, and from what we feel as

an attractive evaluation standpoint. So it's just the time to be more selective. I've spoken about it before, but it becomes even more evident when you have markets that have moved up now on the year. The S&P is up about 8% roughly. The Dow is only up about four. There was two questions out today. One of them was about this magical return of some investment that is, is a higher return than cash that has no additional risk or liquidity constraint. And really, this is, a question is evergreen. It's been around forever and ever. It doesn't matter which period of time.

And the job of the advisor is to try to listen to what people are really asking. And most often is, you know, what can I invest money in to get a higher rate of return? And they're okay, taking a level of risk to get there. And that's a different answer to what I provided today, which is if you look historically at a net of tax and net of inflation, adjusted return of what cash is. is and what it provides, it really does oscillate around the zero level for pretty much always. It's slightly negative almost forever. There are a short period of time when it was positive, call it the early 2000s. Marginally earlier this year, you had a slightly positive real rate

as inflation came down and you were getting five, five and a quarter on your cash. But that was just for a blink of an eye. For the most part, there's a discount price in and that's because you have no risk and you have basically daily liquidity with it. Outside of it, you're a lot of of that there's plenty of other options there's plenty of great opportunities but you're going to take some form of liquidity off of the table and some form of volatility risk on the table as you do that that's fine but we just want to be clear on how we're going to answer this question so that's that's the honest answer it may not be your sexiest answer but my mentor told me that telling the truth is what builds trust so i'm going to stick with that the second question was about the

BLS and it's been in the news a lot lately and the comment was you've mentioned it was operating apolitically there was no mention of the 800,000 reduction in new jobs this spring relative of the last year has that semi-annual adjustment also gone both ways and has been as large and the answer is yes in 2019 there was a 14 downward adjustment comparable to that of something like 0.3% versus 0.4% in 2024 and adjusted seasonally at about 589,000. So that's sort of an apples to apples comparison to the 2019 revision. All that said, the revisions between different presidencies are going to look at Trump in 2019 or Biden in 2024. There's really pretty identical revisions to that.

So from the standpoint of it being politicized and favoring one political party over the other, it doesn't show that way in the numbers at least. With that, I'm going to let you go for this evening on the quiet day that it has been. tomorrow we do have more data for you out on the economic calendar. We'll have initial jobless claims out. This will be Thursday. We'll have some productivity number. We'll have some wholesale inventories, consumer credit. There's going to be more to chew through on the economic side. I'll get to you tomorrow with that. And for now, I wish you a lovely evening. Reach out with questions. Thank you very much. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member Finra and SIPC, and with Hightower Advisors, a registered investment

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