The Dividend Cafe - Wednesday - February 5, 2025

Episode Date: February 5, 2025

Market Updates and Economic Insights - February 5, 2025 In this episode of Dividend Cafe, Brian Szytel discusses the positive market performance on February 5, 2025, with major indices like the Dow, S&P, and Nasdaq closing higher. Key points include Google's earnings miss impacting Nasdaq, significant intraday movement in 10-year Treasury rates, and a weaker U.S. dollar due to lower interest rates. The economic update covers a better-than-expected ADP payroll number, a balanced labor market with positive wage growth, and a mixed report on ISM services and manufacturing. Additionally, the episode addresses a reader's question about the feasibility of wood as an energy resource, concluding that natural gas is a better option. Lastly, it highlights a significant trade deficit in December 2022, reflecting the second-largest annual deficit in history. 00:00 Introduction and Market Overview 00:36 Interest Rates and Currency Movements 01:13 Labor Market and Economic Indicators 02:07 Ask TBG: Energy Resources 02:52 Economic Data and Trade Deficit 03:48 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. This is Wednesday, February the 5th, Brian Seitel with you from our West Palm Beach, Florida office. In what was generally a positive day in markets across the board, we ended right near the best levels on the day. The Dow was up about 312 points, S&P up about four tenths of a percent, and the NASDAQ,

which trailed everything else, was only up about a 0.2 percent. The reason was that Google's earnings missed, so dragged down some of the other actual upside in some of the EI stocks inside of the NASDAQ, but all that to say was big enough to cause it to be a laggard. Interest rates, probably the bigger news on the day. Ten year was down eight basis points. It's a pretty big intraday move and we're now at 443 on tens and we are down to just about 415 or so on the two year treasury. So these rates continue to move a little bit lower across the curve. The dollar, because interest rates move lower, affects currencies globally as well. You had a strong report in Japan, moved the yen up and the dollar was weaker.

So when you get lower interest rates, you get a little weaker currency. Those two things can be positive for stock prices. So there you have it. The economic side, we had a payroll number on the private side for ADP come out better than expected modestly. We got a 183 versus a 150. So labor continues to be a pretty bright spot really. It's a balanced labor market.

We went from having something like 11 million open jobs in 22, 21 period to now just at about 7.6 million job openings in the country. And the total amount of unemployed in this country is about the same number, give or take. So it's more balanced. The wage growth number has come down to still a positive real number or about a point and a half over what inflation is. So you have some positive real, real wage growth that's good for GDP.

You have a balanced labor market, all those things the Fed wants to see, and that's why they're taking their time on lowering interest rates. And as I've said many times, that's all a good thing, not a bad thing for investors. In the Ask TBG section today, there was a question from a reader about wood being a good natural resource to think about for energy needs based on the demand from AI and data centers. And I had mentioned natural gas in a dividend cafe last week. This person was asking if wood could be something to augment the energy demand.

The short answer is no. It's not very abundant. It's a hyper bad for the environment to burn and it's also highly regulated. There's deforestation laws and rules and things and more than anything else, it's just not very efficient. So the amount of energy that you get from it is a third of what you would get from natural gas

and it's far cleaner burning and more abundant. So there's really not a big use case for a substantial amount of energy coming from wood. Also on economics, you had ISM services a little weaker than expected, So there's really not a big use case for a substantial amount of energy coming from wood. Also on economics, you had ISM services a little weaker than expected, although still positive in expansionary territory. We got a 52.8 versus a 54. Manufacturing has been weaker, services has held in better.

And either way, the fact that we've got still expansion there is a good thing, positive for the economy. And I'll end it here with a slightly negative or just shocking number. For the month of December, we ran a trade deficit in this country of about $98 billion. That was up about $20 billion from the month prior. And that puts us at the end of 24 for the year at just shy of a trillion. So we avoided the T number and we got away with $918 billion in trade deficit for the year, just shy of a trillion. So we avoided the T number and we got away with $918 billion in trade deficit for the year.

So it's a pretty big number given positive things in the economy and global GDP. That's the second largest in history. The largest was 2022, and that was following pandemic anomalies and such. And with that, I let you go for this evening. Appreciate your questions. Hit me up with as many as you got and have a good evening. 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

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