Dear Valued Clients and Friends –
Brian Szytel here, and great to be back with you covering the full gamut of topics in today’s Monday Dividend Cafe format (my favorite). I have a balanced rundown of the day with plenty in here for everyone. Enjoy.
Friday’s Dividend Cafe covered the growth-value debate. The written version is here (David’s favorite), the video is here, and the podcast is here.
Off we go …
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Market Action
- We closed well off the highs for the day, but it was a positive trading day from start to finish on improved geopolitical news reported between Iran and Israel and hopes for de-escalation.
- The Dow closed up +317 points, the SP500 was up +0.94%, and the Nasdaq was up +1.54%.
*CNBC, DJIA, June 16, 2025
- The ten-year bond yield closed today at 4.45%, up +4 basis points on the day.
- Top-performing sector for the day: Communication Services up +1.53%
- Bottom-performing sector for the day: Utilities down -0.50%
- One thing that doesn’t seem to get as much attention as a weakening US dollar has been the offsetting effects of a strengthening Euro on its exports. Both wages and industrial production have fallen in the past few months, and the ECB has already cut rates three times in 2025, with further reductions likely to follow. So, yes, the dollar has weakened in 2025, but it has returned to just above the median level it has been for the past 25 years.
- With markets almost back to all-time highs, the bulls-to-bears ratio is not even close to its pre-April level. This is a positive thing for forward returns.
- Total Federal Government Revenues are at an all-time high, now $ 5.11 trillion. This chart below and the fact that revenues are up 5% year over year would be just fantastic if I didn’t have to immediately juxtapose it against the abysmal reality of total outlays being up over 7% with continued deficits running close to $2 T. Full employment in a growing economy with record tax receipts simply isn’t keeping up with spending. I hope this highlights how many things are going economically right despite a problem that is getting worse. We need spending solutions, period.
Top News Story
- Iran has indicated a willingness to re-engage in nuclear talks with the US in a sign of de-escalation. A key fundamental component that preceded this was Israel’s announcement of air superiority over Tehran, opening a significant vulnerability for the Iranian regime. To put this in perspective, Russia hasn’t been able to achieve this over any non-occupied area of Ukraine after three full years, let alone three days. (h/t Renee Aninao of Corbu)
Public Policy
- The G7 Meeting is underway in Canada today as world leaders discuss ways of containing the conflict between Iran and Israel, as well as trade, ahead of the July 9th deadline for rising reciprocal tariffs.
- The Senate is expected to release its updated version of the tax bill any day now. Section 899, which governs the taxation of foreign companies on their US operations, will likely remain a key component of the bill. This has broad implications for foreign investment in the US for countries deemed to have unfair tax policies, and has gotten about as much attention as anything else positive, like extended and potentially lower tax rates in the bill itself. I suspect when all is said and done, the market will be paying much more attention to the latter than the former.
Economic Front
- The NY Empire State Manufacturing Index fell more than anticipated, down -17 points vs. consensus at -5.5. This is the fourth consecutive month of decline in the region, although the outlook for future business activity turned positive for the first time since pre-liberation day.
Housing & Mortgage
- The rising housing inventory, combined with anemic sales and transactions, has led to one of the highest imbalances between sellers and buyers in over 10 years. There are now over 500,000 more people looking to sell their homes than those looking to buy. Now, I imagine some clarity around the SALT cap deduction and slightly lower interest rates may help with some market clearing, but either way, I would expect prices to continue to soften.
Federal Reserve
- The FOMC meets this week, where it will almost assuredly hold rates unchanged. CPI has been trending lower, with both PPI and CPI coming in below forecasts last week. However, the recent advance in energy prices may start to nudge this trend higher. I imagine Powell will mention the slightly weakening employment picture and some geopolitical tensions, but would be surprised by a large change in dot plots. Fed futures have a 63% chance for two 25 bps rate cuts before year-end.
Oil and Energy
- WTI Crude closed at $71.48/barrel, (-2.10%)
- WTI was down over 4% this morning, closing down just 2% on the day, amid hopes that Middle East geopolitical tensions would ease.
- We have gone from being sold in April in the high 50s to near-term overbought in June in the low 70s. Along with the current administration’s push for lower prices, somewhere between those two figures seems to be a market-friendly medium. Seasonality is still positive through June, but often subsides later in summer through early fall.
Ask TBG
| “Does TBG have resources for Opportunity Zone Funds to defer or avoid capital gains taxes on real estate sales?” ~Jeff S. |
| Yes, we have several options in this space. However, just keep in mind the deferral on the original gains you would have this year would be limited at this point. You would have all the upside without capital gain tax if you held for 10 years from there, however. The nice thing is that you can reclaim all your basis from the property you sold and only invest the gain amount, but at this stage, the benefits are less than they once were, both from a tax deferral timeline and an opportunity set. There are several 1031 options we offer, such as a DST (Delaware Statutory Trust)/721 Up-REIT transaction to defer gains into a diversified pool of real estate. These can offer institutional portfolios with professional management and attractive income opportunities. So, pros and cons for either idea, depending on the situation, although I prefer the latter for current income and longer tax deferral potential. |
On Deck
- I’ll be back with you on Dividend Cafe tomorrow, where we’ll review retail sales, industrial production, and home builder confidence in the economic calendar.
- Looking further into the week, we’ll have the FOMC policy rate decision, and then markets are closed on Thursday for the Juneteenth national holiday.
Have a lovely evening, and reach out with your questions as always.
With regards,
Brian T. Szytel
Co-CIO, Senior Managing Director, Partner
The Bahnsen Group
www.thebahnsengroup.com
The Dividend Cafe features research from S&P, Baird, Barclays, Goldman Sachs, and the IRN research platform of FactSet.
