The Dividend Cafe - Wednesday - March 5, 2025

Episode Date: March 5, 2025

Market Reactions and Economic Insights Post Trump's Congress Address In this episode of Dividend Cafe, Brian Szytel reports from West Palm Beach, Florida, discussing the recent fluctuations and overall recovery in the markets following President Trump's address to Congress. He covers various economic indicators, including interest rates, job data, and ISM services performance, highlighting both positive signs for growth and concerns over inflation. The episode also delves into the topic of deflation, explaining why it can stifle economic growth and innovation, and how it impacts savings and debt. Future discussions on tariffs and market responses are teased for the next episode. 00:00 Introduction and Market Overview 00:24 Trump's Address and Market Reaction 01:10 Economic Indicators and Job Data 02:09 Q&A: Understanding Deflation 03:31 Conclusion and Upcoming Topics 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, March 5th. Brian Seitel is with you here in our West Palm Beach, Florida office on a bit of a reprieve here in markets over the last couple of days, certainly last week, a week and a half, we got markets that were up in the morning. They actually gave back all of that and were meaningfully lower mid morning and then have recovered here towards the close.

This is following Trump's address and testimony in front of Congress and his speech last night where he went over the success of his first 43 days in office and some of the agenda items. And I think this morning the market was essentially trying to digest what was a whole lot of different things coming at it at the same time. And you had some volatility around that. But nonetheless, it seems to be a bit of a positive day overall. You did get rates up a little bit today. That was six basis points on tens.

Red run 426 level. There's still about 75 basis points of rate cuts now priced in to the market before the end of the year. That was as low as 25 basis points previously. We've gotten some slowing and weaker growth numbers here as of late, and that's the reason why. Today, by the way way we had ADP private rate payrolls that missed expectations meaningfully by half. We

were expecting about 150 we got about 77,000 in private sector jobs. We'll have a better number with non-farm payrolls out at the end of the week but some job volatility there on employment. We did get some ISM services data though That was quite better than expected and this was the first time since October of 22 where you had new orders supplier deliveries and Employment all in expansion territory across the board stronger on the services side. That's a good sign for growth It's obviously a sticking point on inflation as well. So there's give-and-take here and some of these things But I think what markets are digesting after Trump's speech last night has more to do with

Tariffs and what will actually come to fruition You know what Mexico and Canada are going to retaliate with exactly and what those reciprocal tariffs might be There was a Q&A section in today's Dividend Cafe. Deflation, why isn't it a good thing? If what I can buy tomorrow is cheaper, that means the purchasing power of my savings is higher and that's a good thing, right? The problem with deflation

is that it stifles all economic growth because why would there ever be investment at all? It stifles growth, it stifles innovation, basically forward progress, because you're waiting for things in the future to be less expensive. Why would you invest today if you could do it tomorrow and get a better deal type of thing?

And it causes an excess of amount of savings. People hoard cash in that environment and it's waiting until things are cheap enough to buy and it's a self-fulfilling prophecy. The other thing is remember debt in a deflationary environment doesn't go away, it's still there. And there's something to be said, especially about government, excessive indebtedness and having a slightly positive inflation rate is you're basically inflating the debt away over time.

And the opposite is true in a deflationary environment. So it's not something that can be stomached in the economy, in society, and it's certainly not in an indebted world that we live in these days. So that David did a really good job on that answer inside of the Daily Dividend Cafe. With that, I will let you go for this evening.

We'll be back with you tomorrow, likely talking a little bit more about tariffs and what is coming to fruition and how markets are digesting. Please reach out with questions, and we're here to receive them and answer them as always. Thank you. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC,

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