The Dividend Cafe - Wednesday - July 23, 2025

Episode Date: July 23, 2025

Global Market Rally and US-Japan Trade Deal Insights In this episode of Dividend Cafe, Brian Szytel reports from The Bahnsen Group's New York City office on a broad-based market rally occurring on July 23rd. Key highlights include the positive impact of finalized trade deals between the US and Japan, and the US and EU. US markets experienced a nearly 1% increase, while Japan's Nikkei saw a 3.5% rise. Fixed income prices dipped slightly as yields rose. The Atlanta Fed's business inflation expectations decreased marginally, while existing home sales in the US fell 2.7% for June. The US-Japan trade deal, featuring a 15% tariff rate and a substantial investment from Japan, is seen as a significant achievement. The episode concludes with insights on ongoing market valuations and upcoming economic indicators. 00:00 Introduction and Market Overview 00:20 Global Market Rally 00:27 US-Japan Trade Deal 01:19 Economic Calendar Highlights 02:48 US-Japan Market Discount Analysis 04:03 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 to Dividend Cafe. This is Wednesday, July 23, Brian Seitel with you here from our New York City office of the Bonson Group. On a fairly broad- based rally today across the board, I'm actually recording this just a little bit before market close, so give me some grace here on the exact figures. But across the globe, essentially both Europe,

Asia and the US were all positive and this is all based around a trade deal and deals that are in the works and finalized coming down the pike between the US and Japan and also the US and the EU. As we mentioned the other day, there was deals that were constructive and made between Philippines and India. So this administration is trying to get some of these things completed before both the August 1st deadline that they've given and some of the others that they floated out there. But across the board, US markets were up nearly 1%. The Nikkei, which is the Japanese equity market, was up somewhere near 3.5% by the close.

And on the day, you had fixed income that sold off a little in price and you had yields rise here a bit. As of now, we've got 10 year up about four basis points at 439 on the day. So across the board, rally pretty much in risk assets. Couple of pieces of news in the economic calendar that was out today. In addition to the US and Japan deal, you also had the Atlanta Fed business inflation expectation come down a little bit. So a little cooler inflation expectations on the business front out of that Fed,

which was positive, went down from 2.4 to 2.3. And then you had existing home sales that disappointed actually, they were down 2.7% in June, although that was just barely below the expectation of about 4 million for, for the month we got 3.93. So I'll call that almost in line, but a bit of a decline. That said, you have the median single family home sale price at 4.41, which was still up 2% year over year. So prices remain pretty sticky here, even though the housing market is basically stuck.

Interest rates are high. There's not a lot of volume. And that's why you're seeing these home sales keep declining and have just these anemic numbers. But if you look at the deal between the U.S. and Japan, which was the key headline for the day, there was a settlement of 15 percent tariff rates between the two nations. There was a figure originally floated of about 25 percent. So that's quite a bit lower. The Trump administration is touting this as a major victory between the two countries. It's in exchange, by the way, for about a 550 billion. So call it a cool half trillion investment in the United States from Japan.

So it's back and forth. It's positive between the two allies. And that's why the Nikkei was up the way that it was and us markets. Also, one thing I'll point out is the year is still a pretty big discount, both between the U S and the European nations discount, both between the US and the European nations, but also between the US and Japan. Historically, there's always been a bit of a discount priced in usually, or at least historically it's been about 15%.

Right now, at least between the US and Japan, it runs at about 35%. So there's a big discount involved there. There's a reason for that. And that is that you have just lower demographic numbers behind the two countries and the two nations. You've also got basically just a half of GDP between the two countries out as well. So there's a reason why there's a discount in there, but this just happens to be a larger discount than what we have in history.

So the fact that the market was up today, there could still be a case to be made for that to move farther. And it wouldn't surprise me if it did. The economies of yesteryear, call it in the 80s, when they were closer in size and closer in scope and reach and just world order, that has just changed the past 40, 50 years. So I wouldn't suspect that the two valuations would merge to par or back to even historical norms. I think there'll continue to be an outside discount there. But nonetheless, you've got to move up in those markets on the day. We get into tomorrow. Again, we'll have initial jobless claims out. Like I mentioned on Thursday, we'll have things like PMIs. We'll have some durable goods orders on

Friday to talk about. But in the meantime, I'll let you go for this evening. And I wish you well. Please reach out with your questions. Thank you very much. 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. This is not an offer to buy or sell securities. No investment process is free of risk. There is no guarantee that the investment process or investment opportunities referenced herein will be profitable. Past performance is not indicative

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