The Dividend Cafe - Wednesday - May 7, 2025

Episode Date: May 7, 2025

In this episode of Dividend Cafe, Brian Szytel provides a weekly market commentary focused on dividend investment and economic understanding. He details the market's performance, highlighting a choppy trading session that resulted in gains for the DOW, S&P, and Nasdaq despite volatility. Key factors include the recent Federal Reserve meeting, which left interest rates unchanged, and discussions around tariffs, inflation, and employment risks. Technology sector concerns are addressed, particularly the impact of artificial intelligence on search engines. The role of the dollar as the global reserve currency is also explored, with considerations on how changes in its status could affect asset prices and the overall U.S. economy. The episode concludes with a reminder of upcoming economic news and a disclaimer about investment risks and market commentary. 00:00 Introduction to Dividend Cafe 00:19 Market Update: A Choppy Session 01:02 Federal Reserve Meeting Insights 02:07 Technology Sector Developments 02:50 Dollar as the Reserve Currency 03:51 Conclusion and Upcoming Updates 04:07 Disclaimer and Legal Information 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, May the 7th. Brian Seitel with you here today on an update in markets. We broke a two day down streak here after a nine day winning streak. Although it was very choppy session, markets were all over the place, frankly, and mostly traded around fair value. But the Dow ended up rallying towards the close. Few reasons for that, as I'll mention. But we closed up 284 points on the Dow.

S&P was up about four tenths of a percent. NASDAQ was up about one quarter of 1%. So positive across the board. But let me give you an idea of what I mean by choppy session. So on the session, the dollar was up 0.2%, gold was down 0.9%, Bitcoin was up 1.8%, and oil was down 1.7%. So it's an up, down, up, down deal. And that's exactly what the market did.

And a lot of that was around the conclusion of the two day Fed meeting where as was expected, they left rates unchanged. So we're still at four and a quarter to four and a half. They did a pretty good job of walking back any direction on what they're going to do regarding tariffs because they simply don't know. So while it's not hyper reassuring, it is honest at least, and I'll take it, but they said the risks on both sides of their mandate have risen. So the risk to inflation is now higher because of tariffs and the risk to employment is now higher because of tariffs, but they're trying to figure out

or at least get some semblance of a direction before they want to just make a move. And that makes sense to me. I don't think that they need to just look a finger, stick it in the air and see which way the wind's blowing and try to just pick a direction on rates without knowing anything. Technically, employment is holding in there. Inflation has been lower. And that's what they're hired to do. So until some of those things change, so be it.

And if that puts them behind the curve, since we don't know where the curve is going to be exactly, I don't know if you can get in front of it here. They obviously spoke about if current tariff rates were to stay in there, that it would be very bad for both employment and inflation, but they'll have to let things evolve there a little bit. There was some weakness of technology on the day. The largest search engine company was down significantly because of the larger smartphone company stating that they will use artificial intelligence technology rather than the search engine that it is used to inside of their web browser. And so this has been something

that has been concerned for a long time with search. My view on this engine that it is used to inside of their web browser. And so this has been something that has been concerned for a long time with search. My view on this is that it's not going to be one or the other. It's going to be an end. So I believe that the AI companies will end up relying on some of the search engine companies, so on and so forth. So there's an existing infrastructure that needs to be used in order for all of this to work the way that people want it to.

But yeah, I do think the evolution of that landscape is fascinating and I think it'll be an investible in different ways. So we'll keep an eye on that. There was a good question I thought in there about an agreement around the dollar staying the reserve currency simply because there has to be a replacement before it can't be that and since there isn't one that's viable, here we are with the dollar for better for worse as the reserve currency of the world. Well, here we are with the dollar for better or for worse, as the reserve currency of the world. But if it is less of it than it used to be, does that change asset prices? Does it cause asset prices to go lower?

In other words, we get that it's a reserve currency. Yes. But maybe other currencies start to edge up and get closer to becoming one themselves. Does that hurt asset prices in the U.S.? At the end of the day, there's some asset prices that would be higher because of a weak dollar and some asset prices that would be lower because of a weak dollar. And historically, whether the dollar is strong or weak hasn't been very correlated to whether the economy in the US is doing good or bad. I don't think it's something to really be overly worried about. And what we care about is the economy, are real wages advancing or declining?

And if they're declining, then that's bad for things. So asset prices move lower in that environment, otherwise, currencies marginally up or down is not a big deciding factor one way or the other. So there you have it on the day. There wasn't a lot of other economic news out in the calendar. There'll be more as the week progresses. And I'll be back with you tomorrow to talk all of that through. I hope you have a good evening.

Please reach out with your questions and we'll talk to you soon. Thank you very much. I hope you have a good evening. Please reach out with your questions and we'll talk to you soon. 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.

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