The Dividend Cafe - Wednesday - September 10, 2025

Episode Date: September 10, 2025

Market Volatility and Inflation Insights: A Mid-Week Market Recap In this episode of Dividend Cafe, Brian Szytel reports from West Palm Beach, Florida, with a mid-week market update recorded on Wednesday, September 10. The recap highlights mixed performance across markets as a result of the latest Producer Price Index (PPI) numbers, which showed a surprising decline of 0.1% against the expected 0.3% increase. The DOW fell by 0.5%, while the S&P 500 and Nasdaq registered minor gains and flat performance, respectively. The segment also delves into the significant decrease in year-over-year inflation rates and previews upcoming key economic data, including the Consumer Price Index (CPI) and initial jobless claims. Additionally, the script addresses concerns regarding high market valuations and the prudent approach to market exposure. Brian also references historical market behavior to caution against rash decisions based on short-term indicators. 00:00 Introduction and Market Overview 00:56 Producer Price Index and Market Reactions 02:13 Upcoming Economic Indicators 02:25 Labor Market Insights 03:07 Valuations and Market Strategies 05:52 Conclusion and Final Thoughts Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividing Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Good evening and welcome into Dividend Cafe this Wednesday, September the 10th. Brian Saitel is with you here from our West Palm Beach, Florida office, on a mix of day overall in markets. We had some volatility, mostly around a producer price index number that we got, where equities closed off of the lows. The Dow is down about a half of a percent, which is 220 points. S&P was up about a third of a percent. NASDAQ was basically flat. It was up six points.

Ten year was down about four basis points, a little less. We closed it about 404 on tens. We had a pretty good 10-year auction was up a little bit. Cryptocurrencies were down a bit. So just a mixed bag across the board. And again, a lot of this was around this producer price index. So let's walk this through a little bit. what we were expecting, this is the inflation read on the wholesale inventory on the producer side

before products are finalized and get sold to consumers. But for August, headline and core were the same number. So you had an expectation for a 0.3% gain on headline that would have put year over year somewhere near 3.1. And what you end up getting on both headline and core was a loss actually of 0.1. So it's a pretty big move lower on this indicator for inflation on the wholesale level. Two-tenths of a percent is decent. That puts year-over-year numbers for headline at now 2.6, and it puts a year-over-year number on core at 2.8. So we're into the twos now, and I know this was a number that was much lower than expected. And so you got some volatility this morning around it. Equities were a little higher, although there was some geopolitical

turmoil overnight, and so that was a little muted. And then fixed income rallied, and they had rates drop a little bit. That kind of normalized throughout the remainder of the day. Tomorrow, we'll have the CPI number out for August, another big number, probably more looked at, frankly, and then you'll have initial jobless claims out. The one thing that we noted about yesterday's BLS revision number was it equates to something like 76,000 less jobs for the year per month. That's basically the same revision that we saw during the GFC in that recession. So it's a big deal, and it was basically all the private sector.

So this isn't the government reducing headcount or something like that. It was across the board, manufacturing, construction, technology, you name it. 15 out of 17 categories were down. So it's a big change in the labor market and the landscape there. I wrote about it a little bit yesterday, but there was a dividend cafe, a Friday version, a long-form version that you can click on in this particular daily recap and get more information on it. The question in there today was about PE ratios. It was about the valuations being high and the concentration, all the things that we've written about. But what is to be done?

Warren Buffett is holding a very large amount, $300 plus billion in cash, is that assigned for a big dislocation? And then do we need to be worried about that and how do we take advantage of it? All of those good questions. We've walked through a lot of them over the course of the last two years, but they come up a lot because they're important. Valuations are overpriced. That's true. It's just it's a terrible short-term indicator of where the actual market will trade. And so if you try to do it that way, you'll end up shooting yourself on the foot more often than not. And what you're doing in markets and how allocations are should be based around fundamentals, based around goals, based on what you're trying to achieve by doing that, less so about market timing or kind of chicken little about the sky falling, worrying and going to cash type of the thing. But if you look at our dividend portfolio, it's only trading at 16 times versus the market at about 24.

So starting off just to avoid some of the most overhyped up and more or less AI related components that have just traded up to 50, 60, 80, 100 times earnings. But just remember that Alan Greenspan back in 1995, which was the year I graduated high school, talked about irrational exuberance of the stock market. And that was before the 99 blowoff. And if you remember what happened in 96, 97, 98, and 99, there was a currency crisis in 98 in Asia. The market screamed higher through the remainder of the 90s. And so he looked silly. But of course, eventually he was right.

But my point to saying that is just that valuations can stay high for a lot longer than people give them credit for. And markets can stay irrational longer than, frankly, people understand and can afford oftentimes. And that's where leverage can come into hurt people. So if you look at the price to book, price to sales, enterprise value divided by EBITDA, price to free cash flow, all of those indicators are basically screaming overvalued, high valuations. And I do think that they'll have to come lower. Part of that is because of anticipation on lower interest rates. And while I do think they'll come down here a little bit, especially if we continue to get labor disruption or softening and we continue to get lower inflation numbers, there's no reason why they shouldn't at least get back to neutral where a terminal rate will be somewhere around 3.5%. So that's the direction I think that they're headed. But as far as the market goes, I may keep trading higher in the meantime, best to just stay reasonable on your exposure and also where your allocation lies in more of the value space, the more reasonably priced. So that's what we have for you today about markets, about what's going on PPI and inflation. With that, I'm going to let you go for this evening on today's short market recap. Please reach out with questions. 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, 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. This is not an offer to buy or sell securities. No investor process is free risk. There's no guarantee that the investment process or investment opportunity. opportunities referenced Tyrian will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced Tyrian may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, analyses, prices, or other information contained in this research is provided as general market commentary and does not constitute investment advice.

The Bonsor Group in Hightower shall not in any way be liable for claims and make no express or applied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced here in. The data and information are provided as of the date reference. Such data and information are subject to change without notice. This document was created for informational purposes only that opinions expressed are solely those of the Bonson Group and do not represent those of Hightower Advisors or any of its affiliates. High Tower advisors do not provide tax or legal advice. This material

was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client's individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for any related questions.