The Dividend Cafe - Wednesday - February 19, 2025

Episode Date: February 19, 2025

Market Insights and Global Oil Trade Dynamics - February 19, 2025 In this episode of Dividend Cafe, Brian Szytel from the West Palm Beach office discusses the day's market performance, including the Dow's 71-point rise, the S&P's quarter-percent increase, and Nasdaq's flat close. He addresses ongoing tariff talks, U.S.-Russia/Ukraine conflict negotiations, and their potential impact on energy markets. Brian explains the global oil trade dynamics with Russia's supply to Asia and its effects on oil prices. He also covers international client considerations for U.S. investments and touches on the day's economic data, including FOMC minutes and housing starts. Audience questions are welcomed and encouraged. 00:00 Introduction and Market Overview 00:21 Tariffs and Geopolitical Tensions 01:26 Energy Market Dynamics 03:34 International Client Considerations 04:44 Economic Calendar Highlights 05:23 Conclusion and Viewer Engagement 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. It is Wednesday, February the 19th. This is Brian Seitel from our West Palm Beach office here on what is another basically quiet day in markets overall. The Dow ended up closing up 71 points. S and P was up a quarter of a percent.

NASDAQ was flat. So very similar to yesterday. There was some talk of tariffs on different industries today, but my new rule is until something feels like, or is getting much closer to actually happening. I don't know that there's a lot of need to discuss what may have been spoken about or what may or may not actually happen. So I'll shelve that one for today. There has been some more talk, at least in the headlines,

of some opening of talks between the US and Russia on the Ukraine conflict. And just to talk about this a little bit, again, there's nothing in the news or definitive happening yet. And frankly, I'd be shocked if there was some deal that was brokered where all of a sudden you had sanctions immediately lifted against Russia on this thing. You still have to go and deal with and speak to the EU. There's just a whole lot of other things going on.

We do know, however, that an agenda item for the current administration is to reduce the price of energy and we also know that there is a desire to end some of these conflicts and things. We'll have to see how this thing shakes out. For now, my comment in here is what actually happens to the energy market if something does come to fruition. A couple of things, look, it would create volatility. So I'm not trying to diffuse that component of it. I think the prices of oil would be volatile. I think prices in the overall markets would be quite volatile

around stuff like that. That's not what I'm saying. But what I am saying is the fact that Russian supply was taken off the market is true. Off of the open market is the key word. It still exists. It's being sold to Asia essentially. China and India primarily are buying a lot of it.

They're paying a discounted price because of the deal that they're getting and Russia can't sell it to the developed world essentially. But it still exists. And whether China or India was buying it from Russia or whether they were buying it from elsewhere, the demand still exists and the consumption still exists. My comment is just changing the sanction paradigm will cause volatility, but it may actually not change the price of oil as much as someone might intuitively think because of that paradigm.

So keep that in mind. Also, just remember that the amount of Russian production of oil is lower than it was before the Ukraine War, yes, but it's only lower by about a million a day. And that is more or less in line with what the OPEC plus countries decided to reduce output to control pricing was. It's not really that much different one to the prices of oil are only about 15% lower. So you would think with reduced production

and reduced supply that you'd have higher prices and that's not really the case. All of that is food for thought for those thinking that there's an immediate trade around some sort of energy deal if this were to come down the pike. The one thing I also wanna say in here too is just as we had supply chains shift after the pandemic, primarily from China to other parts of the world, the natural gas paradigm in Europe likely is permanently shifted

or meaningfully impacted since this ordeal with Russia and Ukraine. And that basically makes the United States one of the larger benefactors. There was a question in there on international, can the TBG work with international clients? We actually get this more than you would think. Almost daily, I would say weekly, and it's not that easy of an answer, unfortunately. I did the best I could here. The short answer is yes, it's possible.

Yes, we have international clients. Okay, that's the first thing. The reality, however, is that most international folks, not in the US and not US citizens, and without US residents, are not paying or filing a US tax return. And if you own US sourced investments, there's tax withholding associated with them. And there are different treaties between the US and different countries, and there's different

withholding rates. For someone not filing a return, that's less than ideal. Now the solution is interest bearing securities. There's some fixed income that can be owned that wouldn't have subject to this NRA non-resident alien withholding. There are different offshore mutual funds that exist that are designed specifically for these types of clients. So there are ways to help people.

So I never shut the door on it. And I wanted to include this question from someone that reached out from the UK to open that discussion. If you have questions, just reach out to me. There was a little bit in the economic calendar today, but really not a ton. There was some minutes released for January from the FOMC. More of the same. They're data dependent. They're going to take their time. They did talk a little bit more about policy from the Trump administration affecting what decisions they may or may not make.

That was some new verbiage, but other than that, it was basically in line. And then he also had January new housing starts that were lower than expected. But of course, December was revised up and then also the new building permits were also higher than expected. Don't read into that too much. These numbers can be volatile. They can be seasonal as well. I will let you go for the evening. Love your questions. Keep them coming and I shall 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 Securities LLC.

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