The Dividend Cafe - Wednesday - October 22, 2025

Episode Date: October 22, 2025

Market Recap and Economic Insights - October 22, 2025 In this episode of Dividend Cafe, Brian Szytel reports from West Palm Beach, FL, on a downturn in the markets. The Dow closed down 0.7%, S&P down 0.6%, and Nasdaq down about 1%, largely driven by missed earnings in tech. Gold saw another decline following a significant drop the previous day. Key topics include US-China trade tensions, the overvaluation of certain stocks, and the stable but uninspiring economic indicators like oil prices and 10-year Treasury yields. Brian discusses potential market reactions to upcoming trade negotiations and questions the historical constancy of AI-driven productivity gains. Additionally, he touches on recent data regarding architectural billings and previews upcoming economic reports, including existing home sales and jobless claims. 00:00 Introduction and Market Overview 00:53 US-China Trade Relations Impact 01:20 Market Valuations and Predictions 02:10 Oil and Energy Market Insights 03:43 Economic Indicators and AI Discussion 05:25 Upcoming Economic Data 05:57 Conclusion and Recap 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 into Dividend Cafe. This is Wednesday, October the 22nd, and it's Brian Sightel with you here from our West Palm Beach, Florida office. On a down day overall in markets, although we were off of the lows for the day, we still closed down on the Dow about seven-tenths of a point. percent. We were down about six-tenths of a percent on SMPs and down about a percent or so on the NASDAQ. So a little bit wider slide with some missed earnings inside of some tech bellwethers showing the NASDAQ a little lower. Rates were just flat on the day. We're still at about $3.95 on the 10-year treasury. And gold was actually notably lower again. Remember I mentioned this yesterday. It was down the biggest in about 12 years in a day. At least it was a 6% decline for whatever

that's worth and today followed through with another percent decline. So there's some oscillation here around some asset classes. News really was centered around a back and forth on U.S.-China trade relations and mostly for the worse. There was comments that Trump had that may restrict software exports and some autos and also some airplane parts and things for the trade negotiation. So this is just ongoing. And I have a couple things to say about that. In fact, David had a nice write-up in there today that all go through and give my own thoughts along with his. You've got things in the market that have run up a lot. The S&P's at trading at 23.4 times earnings at this point. So if, you know, everything comes

out rosy with the Trump and she meeting between the two world's largest nations in trade, what's more likely that you've got extended rally that takes S&P from 23 to 24, 25, or that the semiconductor space, which has already just rallied through every possible good. news that may come of this trade negotiations with enhanced exports of chips and rare earths back the other way is it likely just to continue or are those things long on the tooth and perhaps what has already sold off may catch a bid and it's something to think about and food for thought often it's by the rumor sell the news those are my words or to quote famous adage in markets but there's a lot to be said about this when you look at oil trading in the mid 50s and what that's saying is

something going on in the economy. That's not a normal paradigm. We're right at levels that it costs to basically produce it and pull it out of the ground. And so that's not speaking to a real healthy demand paradigm. The supply paradigm inside of the energy market right now is over-supplied. And so that's why these prices have come a little lower. So the 10-year yield below 4% doesn't speak to an economy that's booming either. So both of those things, historically speaking, inflation adjusted on oil and just historically on interest rates don't speak to things going crazy well in the economy. And so our point with this stuff is if you get some uncertainty out of this thing, meaning that the trade talks don't go well, so the opposite happens

and things aren't rosy. And we end up in a back and forth, a tit for tat between the two largest nations. What's more likely to happen? Some of those overvalued things coming down a little faster or some of the things that have already basically already adjusted either finding normalcy or already having adjusted trade sideways or even rally at that. point. So I think if you look at PE ratios of Bag 7 stocks, if you look at semiconductor valuations, I think they're just more susceptible to that left-tail risk. And I think it's something to think about. It's not to say that there's any hope for some dire outcome or anything like that, or frankly, even with a good outcome that those other sectors sell off for just the

sake of it. It's just that there's more reasonable valuations to be had in some of these things. You could say that in some of the value names as well. There was a question in there today that Given the 100-year track record of every technology that's come out that was supposed to replace all of human labor, that has never happened. And in fact, if anything, the productivity gain has benefited the economy than otherwise. Why don't people just understand from a history lesson? That's what's likely to happen with this AI invention. And you're right. History has definitely showed us that over time, whether it's cars or technology like computers, that we're all set to automate and replace humans, that it just,

just gained in productivity and added to overall economic growth. And so this time around with AI, it is that the Peace and Dividend Cafe that we wrote last time was just how frothy it is, how expensive it is. But the idea that it's going to replace all human workforce or something, the response of this time is different is going to ever be an evergreen response because it's not something that can ever be learned from a history lesson. It's something that is really just the human condition. David called it anthropology, but that's what he was getting at. So humans are wired a certain way to view the world that way. And so that's not really something that's likely to change. And so, no, there isn't ever going to be a point in time at which some folks won't

say this time is different. But there you have it on the day. A couple of pieces out there wasn't much in the economic calendar. Neither was there yesterday either. But there's at least one thing. There was an architectural billings. This is a real estate indicator. It's an economic growth indicator for a forward-looking indicator because it's billings for construction, design, and things. It actually fell in September from the month prior slightly, but the new projects that are in the pipeline held in, write it about it even. So a mixed deal there on some of the construction comments on there. Tomorrow, which is Thursday, you're going to get some more data finally. You're going to get an existing home sales for September. You're going to get a state

level data for initial claims, and we'll use that to be able to back into the nationwide estimate for jobless claims, in other words. So there's some more data coming out. Then the end of the week, you've got a CPI report, which is delayed and it's going to be released for October. We're looking at numbers in the 0.4 to 0.3% range on core and headline CPI. So that'll be coming out right before the weekend. But there you have it on the day. I appreciate you listening, as I always do. That's your quick market recap minute.

Please reach out with questions, as always, and I'll be back with you on Thursday on the Dividend Cafe. Thank you. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and 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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