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Monday's Dividend Cafe

Daily Recap

Friday - July 18
DJIA
-142 (-0.32%)
S&P
-0.01%
Nasdaq
+0.05%
2 Year Treasury Yield
3.87% (-4 basis points)
10 Year Treasury Yield
4.42% (-4 basis points)
Top-performing Sector
Utilities (+1.71%)
Bottom-performing Sector
Energy (-1.04%)
WTI Crude Oil
$67.37/barrel (-0.24%)

Podcast

Video

Dividend Cafe History

In September of 2008 the world’s financial markets were brought to their knees by a debt bubble, the likes of which we had never previously seen. The turmoil in financial markets was severe and Wall Street banks were falling by the wayside daily. In this time period, David Bahnsen was working as a Managing Director at Morgan Stanley, responsible for the well-being of his clients. As their anxiety of clients intensified, David began writing a periodic bulletin to them. One bulletin became another, and then another, and all of a sudden, a weekly bulletin was organically born! Well after markets pulled out of the abyss of 2008, the weekly edition continued, evolving into something far more positive than its September of 2008 origins. This commentary distributed by simple email with an ever-growing following morphed into the Dividend Cafe when David and his team launched their own practice in early 2015.

Today, Dividend Cafe is still attempting to do what it was doing in the fall of 2008 – offering truthful perspective that may not be easily found elsewhere. The topics will vary from our dividend growth philosophy, to bedrock investing principles, to the challenges of interventionist monetary policy, to anything else that inspires David in a given week. The underlying objective is the same now as it was when we began – to build trust by telling the truth, not what people want to hear.

History
SUBMIT YOUR QUESTIONS

Get Smart

Dividend Cafe Library
Browse and search for past editions.
Thoughts On Money

T.O.E. (Thoughts On Expenses)

Trevor Cummings
Alt Blend

The Passive Alternative – Part 3

Steve Tresnan

Berkshire Hathaway Annual Meeting Review

TBG Analyst Liping Ouyang

About

Dividend Cafe provides market perspective rooted in first principles, not the fads of the day. Authored by our Managing Partner, David Bahnsen, it covers a wide array of topics, it doesn’t try to do what it cannot do, and it strives to offer needed perspective not readily available in most financial commentary.

The MONDAY Dividend Cafe covers all going on in the present tense in public policy, housing, energy, markets, the Fed, and more.

The DAILY RECAP is rather self-explanatory.

And ASK TBG gives you a chance for daily interaction with our people on any issue important to you.

  • All Posts
  • Dividend Cafe
July 18
What to Learn from the Worst Business Deal in History
What to Learn from the Worst Business Deal in History – July 18, 2025

Today, we have a history lesson in the largest wealth-destructive event in history, and lessons for investors seeking to do the right thing....

More>
LAST WEEK'S DIVIDEND CAFE

Ask TBG

Question:

“Is there a measurement of GDP ex-government, or ex-borrowed money? It seems to me that GDP figures are tainted by being derived from so much deficit spending. Why do we accept GDP numbers at face value?”
~ Todd F

Answer:

GDP is Consumption plus Investment plus Government spending + Net Exports. If we did not include the goods and services purchased by the government (military, infrastructure, etc.), we would not capture the totality of goods and services in the country, and so GDP would not be, well, gross domestic product. Some argue (myself included) that government spending is less valuable and productive than private consumption, but I think more astute economists understand that the solution to that is not to take out the number from the formula (which just creates a different distortion), but recognize that a higher G means a lower C and lower I in the total number. In other words, the debate is not solved by changing the formula, but recognizing that within the formula, the answer to what we are discussing is present. Consumption and Private Investment would be higher with less Government spending, particularly with less productive Government spending. Now, the government spending figure does not include payments of social security or transfer payments, but it does include buying F16 jets – and if it didn’t, we would have a faulty number.

Therefore, I believe government spending must be included in the GDP number if we are to get a real GDP number, but careful economists will favor understanding the ways that the internal ingredients affect each other.
~ David L. Bahnsen, July 17, 2025

Question:

“In view of the mayoral situation in NYC, do you have any thoughts on the credit quality of NYC bonds? Should an investor consider selling due to a potential acceleration of a declining tax base?
~ Bill R.

Answer:

I generally have not found such things to increase defaults even 0.01%… they can increase price volatility, but that is not a major factor for investors in high-grade state munis. Generally, betting against NY has not worked out well for investors, even when the headlines seem to indicate it will be a good thing to do.
~ David L. Bahnsen, July 16, 2025

Question:

“Tariffs can be considered a consumption tax. As a consumption tax, couldn't you claim that it is inherently progressive within the income bracket as well? I am interested in your thoughts on whether or not tariffs could replace the income tax. If you agree this is a consumption tax, would this also be considered anti-growth? Or pro-growth for domestic production? Or none of the above?”
~ Tim T.

Answer:

The idea of tariffs “replacing” the income tax is where my pushback lies. Spending was 1% of GDP when we had tariffs but no income tax; it is now 23%. We import $4 trillion of goods and services, total, per year. Our total federal spending is $6 trillion. We would need a 150% tariff on ALL GOODS AND SERVICES, with zero exemptions. We would need 76x the tariff revenue we have now - 76x – to get there. =)

Consumption taxes are regressive. Higher-income people, by definition, spend a lower % of their income on goods and services than lower-income people, who, by definition, spend virtually 100% of their income on goods and services. My opposition to a consumption tax is that it will never, ever, ever be instead of a production tax – it will always end up being a “both-and.” And it is simply not doable politically.

Finally, I do not believe it is pro-domestic production because:

a) 40% of imports are actually done by U.S. domestic manufacturers importing unfinished goods needed in their manufacturing process; and
b) It ignores the massive impact of retaliatory tariffs; and
c) It ignores the damage done to our exports of services.
~ David L. Bahnsen, July 16, 2025

Question:

“Is it possible that the recent OBBB corporate tax provisions (ex: permanent 100% bonus depreciation, immediate deduction of domestic research and experimental expenditures, favorable limitation on deducting business interest expense, etc.) will mitigate tariff concerns?”
~ Jeanne D.

Answer:

Sure. Some negative impact on tariffs is offset by some positive impact from the pro-growth tax side of OBBBA. Of course, another way to say it, though, is that some positive impact from the pro-growth tax side of OBBBA is offset by the negative impact of tariffs.
~ David L. Bahnsen, July 15, 2025

Looking For Something Specific?

Monday's Dividend Cafe

Daily Recap

Friday - July 18
DJIA
-142 (-0.32%)
S&P
-0.01%
Nasdaq
+0.05%
2 Year Treasury Yield
3.87% (-4 basis points)
10 Year Treasury Yield
4.42% (-4 basis points)
Top-performing Sector
Utilities (+1.71%)
Bottom-performing Sector
Energy (-1.04%)
WTI Crude Oil
$67.37/barrel (-0.24%)

Podcast

Video

Dividend Cafe History

In September of 2008 the world’s financial markets were brought to their knees by a debt bubble, the likes of which we had never previously seen. The turmoil in financial markets was severe and Wall Street banks were falling by the wayside daily. In this time period, David Bahnsen was working as a Managing Director at Morgan Stanley, responsible for the well-being of his clients. As their anxiety of clients intensified, David began writing a periodic bulletin to them. One bulletin became another, and then another, and all of a sudden, a weekly bulletin was organically born! Well after markets pulled out of the abyss of 2008, the weekly edition continued, evolving into something far more positive than its September of 2008 origins. This commentary distributed by simple email with an ever-growing following morphed into the Dividend Cafe when David and his team launched their own practice in early 2015.

Today, Dividend Cafe is still attempting to do what it was doing in the fall of 2008 – offering truthful perspective that may not be easily found elsewhere. The topics will vary from our dividend growth philosophy, to bedrock investing principles, to the challenges of interventionist monetary policy, to anything else that inspires David in a given week. The underlying objective is the same now as it was when we began – to build trust by telling the truth, not what people want to hear.

History
SUBMIT YOUR QUESTIONS

Get Smart

Dividend Cafe Library
Browse and search for past editions.
Thoughts On Money

T.O.E. (Thoughts On Expenses)

Trevor Cummings
Alt Blend

The Passive Alternative – Part 3

Steve Tresnan

Berkshire Hathaway Annual Meeting Review

TBG Analyst Liping Ouyang

About

Dividend Cafe provides market perspective rooted in first principles, not the fads of the day. Authored by our Managing Partner, David Bahnsen, it covers a wide array of topics, it doesn’t try to do what it cannot do, and it strives to offer needed perspective not readily available in most financial commentary.

The MONDAY Dividend Cafe covers all going on in the present tense in public policy, housing, energy, markets, the Fed, and more.

The DAILY RECAP is rather self-explanatory.

And ASK TBG gives you a chance for daily interaction with our people on any issue important to you.

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