The Dividend Cafe - Wednesday - June 25, 2025

Episode Date: June 25, 2025

Market Update: June 25, 2023 - Wall Street's Flat Day & Economic Insights In this episode of Dividend Cafe, Brian Szytel reports from the Grand Rapids office in Michigan on a relatively flat day in the financial markets. The DOW fell slightly by 106 points, S&P remained unchanged, and Nasdaq increased by 0.3%. Changes in oil prices and a ceasefire between Israel and Iran were also highlighted. Key economic updates include the potential for future tax legislation, upcoming tariff deadlines, and the Fed's possible rate cuts. Seitel also discusses how to position different assets in traditional IRAs versus Roth IRAs and delves into the recent decrease in new home sales. Upcoming economic calendar events include wholesale inventory numbers, durable goods orders, Q1 GDP revision, and pending home sales data. 00:00 Introduction and Market Overview 01:10 Market Movements and Economic Indicators 02:46 Investment Strategies for Different Accounts 04:27 Housing Market Insights 05:28 Upcoming Economic Events and Conclusion 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, June the 25th. And Brian Sightel is with you today from our Grand Rapids, Michigan office in beautiful downtown Grand Rapids where we are here for a couple of client events and nice dinner tonight with some folks and then I'll be back out tomorrow to the West Coast. In the meantime, quiet day overall in markets. Pretty much flat. We had the Dow down 106 points which these days is only about a one-quarter of a 1% so I can get away with saying pretty flat. S&P was a 0.00 move on the day and Nasdaq was up about three-tenths of a percent. Ten year more or less unchanged at one basis point we closed at 428 and then oil did come up WTI today was up about 1.3% that's after it's down basically

$10 a barrel. We're at 65 and change on WTI. We were mid-70s just a couple of days ago following a ceasefire that was brokered from the U.S. between Israel and Iran, which is still holding place. And so you have markets that are somewhat sanguine. Volatility has come down quite quite a bit from where it was obviously and we're moving forward here. And my comments on this were more to do with things are getting priced in. You've had high yield credit spreads that have come in. You've had gold that has underperformed relative to equities. You've had the financial sector start to move back up and get up to the leaderboard

again, from a sector perspective. And in volatility has come down and all those things are basically what is being baked into markets, which is good things because what is still to come down the pike is more positive than negative. You have a tax bill that will eventually get passed. I don't think it will happen before the 4th of July but I guess anything's possible. It's got to get through both chambers first but that should be positive depending on how it turns out and then you also have this deadline with heightened reciprocal tariffs for July 9th.

And that is potential for some additional trade deals to happen beforehand. Both of those could be positive for markets. And so we continue to climb the wall of worry here. And markets tend to be constructive in the meantime. You also had a second day of congressional testimony from Jay Powell today from the Fed and he actually did note a little potential for an earlier rate cut if some trade deals get done and so on and so forth and so some of the tariff angst comes out but either way there's only about a 25%

chance for July and we're still looking at September for the likeliest next point in which they might ease interest rates. So my comment on valuation was it needs to come down to Q2 earnings and then needs to come down to more importantly Q3 guidance to look at the future on how earnings are going to make these elevated multiples warranted at this level. With that, just a little round the heart on the market, there was a question out on placement of different securities and stocks versus dividend stocks versus growth stocks, whether it's in a traditional IRA or Roth IRA. How do we typically position these things? The real answer is just dependent on every situation. This is different answer from a client that has 100,000 between the two accounts or 100 million

between a multitude of different structures and accounts. But typically in the traditional IRA, we would place things that have a higher ordinary income distribution. So think like taxable fixed income or private credit would be another good example where you have double digit income yields that come out as ordinary income. You put those in the IRA along with some growth stocks and dividend growth stocks and some other assets to balance it out. Could be a multitude of different assets in there. It just depends on the situation. In the Roth, we tend to see smaller balances just because they're harder to fund. The contribution limit gets phased out at middle class income levels.

And so we tend to see smaller balances. I always love when there's larger balances, but we tend to put more aggressive and more growth oriented investment in the Roth. This can appreciate more over time and so that later the value is greater when you take it out as a tax free distribution. So as far as whether we put dividend growth, I think is what most people are getting at. Do we place that in separate account? It's a pretty efficient vehicle if you think about it.

Qualified dividends are taxed at capital gain tax rates. And so you can argue for any of these accounts to make sense. We tend to place them in both after-tax and pre-tax accounts. Hope that's helpful. It's actually a question that's come up before so I know it's something on people's mind. Feel free to reach out and ask a more specific question if you like. On the economic calendar for the day there was a couple of things. We had new home sales that were down significantly in May 13.7 percent which home sales that were down significantly in May. Thirteen point seven percent, which is the softest in about eight months.

They were at six twenty three versus six ninety five. Again, it's all down to interest rates being high and not going lower in a big way on mortgage rates. And then you have just affordability levels that are completely stretched. All that to say, it hasn't shown up in pricing, which isn't all that uncommon. We've actually gone through periods of recession before, by the way, and pricing didn't get impacted. There's a reason for that. Mainly it's because interest rates end up coming down in a recession and that ends up being supportive to real estate. But if it looked like it, the 2001 recession that

we had, real estate actually went up during that period of time, even though employment came off a little bit and the economy shrunk slightly. Very shallow recession, you still had to hire prices. I look at it as more of a lagging indicator. You get enough kind of cracks in the dam and housing, of course prices will eventually follow for now, that's not what we're seeing. So there you have it on the day. Tomorrow, which is going to be Thursday, we'll have a lot more in the economic calendar. We've got

some wholesale inventory numbers, we have verbal goods orders, both core and headline. We'll have a second revision on Q1 GDP and then we'll have pending home sales along with some different Federal Reserve speakers that come out as well. So there should be plenty to go through around the horn. I'll have the written version for you tomorrow with a question in there. And the podcast will actually not be something we do tomorrow just because David and I will both be traveling on a plane out of Michigan to different locations. He's going over to back to New York. I'll be heading back to West Coast for meetings the following day. So unable to record at

that particular time, but the written version will be plenty to walk through. With that, I'll let you go for this evening. Please reach out with your questions as you always do, and we will 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

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