The Dividend Cafe - Wednesday - September 3, 2025

Episode Date: September 3, 2025

Market Wrap-Up and Economic Insights: September 3rd Edition In this episode of Dividend Cafe, host Brian Szytel provides a market update for September 3rd. The DOW closed slightly down, while the S&P and NASDAQ were up. Key drivers included positive legal news for major tech companies and weaker-than-expected job numbers, leading to lower interest rates. Discussions also covered factory orders, labor market conditions, and the nuances of monetary policy's impact on inflation. Brian emphasized the strength of consumer balance sheets due to resilient mortgage rates. The episode concluded with a shoutout to a recent salmon fishing trip in British Columbia. 00:00 Introduction and Market Overview 00:24 Tech Sector and Job Numbers Impact 01:08 Economic News and Fed Futures 02:13 Inflation and Interest Rates Discussion 02:52 Consumer Balance Sheets and Housing Market 04:23 Concluding Remarks and Personal Note 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 back to Dividend Cafe. This is Wednesday, September the 3rd, and Brian Sightow with you here on a market that technically closed at the highs of the session, although the Dow is still negative just slightly. The Dow closed down 24 points. S&P was up. half of a percent, NASDAQ was up one percent. And this is a reversal of what we've seen the last couple of days with the rotation technically from value back to growth here on the technology side. It was the largest search engine company had some positive legal news and that led into the largest smartphone makers positive move on the day as well. So a couple of big MAG7 names that moved positive that drove the NASDAQ. On top of that, you had new job. numbers come out that were weaker than expected, and so you had interest rates that declined

as a result of that. And so a little bit better news on the tech side, a little bit lower interest rates and fixed income. And voila, you get a generally positive overall day in markets, volatility. It was also lower. And again, we closed really close to the highs of the session. There was a couple of other pieces of economic news out. We did get new factory orders that were down in July 1.1%. That was basically in line with projections and tech. since last month was down almost 5%. It's a step in the right direction. But that new jobs number was what was the main piece of news on the day. And while we got a 7.1 number instead of a 7.3 number, that can indicate a cooling labor market. I would chalk it up to modestly at most,

if that's what markets are reading into this. Fed Fut futures did move higher for a September rate cut. We're down 90%. But just keep in mind, basically hiring and firing and lay are all largely unchanged here. So it's really kind of hard to paint an unemployment rate at 4.2 percent and all these things as something that is falling out of bed because it isn't. And so maybe you get two rate cuts out of it over the course of the next six months. But I don't know that this is speaking to interest rates going back anywhere below, say, 4 percent to say 3.75 in the near future. A question in there today really about inflation and interest rates. It's a very well posed question. And so I would encourage you to read through it. But basically, the reader is

saying this time around rising interest rates didn't cool inflation as much as it has in the past. And so my comment is that monetary policy is designed to increase or decrease the cost of capital and of course influence demand, both on the consumer and business side, but also on banks themselves with their desire to make loans, which is what causes velocity of money and new money into the economy. So that's all true. But at the end, there's free market forces at play. here. And so it's not just monetary policy that's part of that equation. The other part to this thing is that the largest and most interest rate sensitive component of the consumer balance sheet is technically mortgages. And since basically 80% of mortgages are refinanced in the mid-3s,

averages around 3.5% a couple of years ago, they've just been very, very resilient. Consumer balance sheets are hyper strong. Protective equity inside of homes has never been higher. And then folks aren't having to refinance that have fixed rate bargages and or having to move if they can just hold on. And that's why prices have really been steady. That's a part of the inflation conundrum. The other side to that is I would just point out, remember, inflation itself averaged some of the lowest that we've seen in history in this country, call it 1%, maybe 1.5% for 15 years following the GFC when interest rates were basically at zero more or less in that period. They got up to 2% at one point, but a lot of that time period was spent in error zero. So monetary policy,

in and in and of itself, doesn't directly drive inflation higher or lower. And probably the more important thing is that it just works with such a lag effect. It's always that moving target. And then you have a whole lot of other parts of the economy that are moving and changing. The Fed has constantly tried to gauge all those things together. And that's where they find themselves today. They're trying to lay in the ship on bringing interest rates back to a neutral level and doing that before labor further deteriorates. So far, we're not seeing it in the labor market. At least I'm not, but time will tell here as we go forward. So with that, I will let you go for the day and keep this somewhat short and sweet. I encourage you to reach out of questions,

as I always do. And I also want to just give a quick shout out and gratitude for a nice trip I had over Labor Day weekend with a dear friend of mine at Molded Economics who put together a salmon fishing trip up in British Columbia for about 30 or so of his and of our readers and clients and things. It was fun and great relationships were built. Please reach out with questions. We'll talk to you soon. 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. This is not an offer to buy or sell

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