Tuesday - August 12, 2025
The Dividend Cafe
The Dividend Cafe - The Bahnsen Group
4.9 • 572 Ratings
🗓️ 12 August 2025
⏱️ 7 minutes
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Summary
Market Rally and Economic Indicators: August 12th Update
In this episode of Dividend Cafe, host Brian Szytel discusses the significant market rally on August 12th, with the Dow closing 483 points up and the S&P and Nasdaq also seeing gains. The episode covers a fresh Consumer Price Index (CPI) report showing minimal change in inflation, which has led to increased expectations for the Federal Reserve to lower interest rates. Sitel also discusses predictions for future rate cuts, the upcoming Jackson Hole symposium, and the anticipated September non-farm payroll report. Additionally, recession odds have decreased significantly, now less than 20%. Finally, a better-than-expected small business optimism survey is highlighted.
00:00 Introduction and Market Overview
00:55 Inflation and CPI Data Analysis
01:36 Federal Reserve and Interest Rate Predictions
02:43 Upcoming Economic Reports and Market Sentiment
03:04 Recession Odds and Data Sources
04:16 Small Business Optimism and Conclusion
Links mentioned in this episode: DividendCafe.com
Transcript
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| 0:00.0 | Welcome to the Dividend Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. |
| 0:12.1 | Welcome to Dividend Cafe this Tuesday, August the 12th. Brian Sightel with you here from our Newport Beach, California, TBG HQ on a nice rally day overall |
| 0:24.2 | in markets actually, and one that we haven't seen here in a little while, the market was up |
| 0:28.4 | over 1%. The Dow closed up 483 points on the day. S&P was up 1.1%. Nasdaq was up 1.3, almost 1.4%. So a big move higher across the board in stocks. |
| 0:42.9 | Small caps, by the way, were up the most, and they're the most interest rate sensitive, if that |
| 0:48.9 | alludes to the reason as to why equities were all up today. But small caps were up almost two and a half percent on the |
| 0:54.5 | day. Good move higher there across the Russell 2000. Ten year yields didn't move much on an inflation |
| 1:00.3 | day, which is a good sign. You had yields on tens up a basis point, closed at 429. Call it a good day |
| 1:06.2 | in markets. That's what I would chalk it up to. The reason is we had a fresh read on CPI. We got an inline figure pretty much across the bore. |
| 1:13.6 | Headline was a 0.2% for the month of July, which was exactly what was expected, although year over a year was at 2.7% and there was a 2.8% priced in. |
| 1:24.4 | So the year of a year number came down a little bit on headline. If you move out |
| 1:28.2 | food and energy from it, we got a 0.3% for the month and puts us at a 3.1% year-over-a-year, |
| 1:35.7 | which technically was basically in line. It was actually on the year-over-year number a little |
| 1:40.5 | higher by about a 10th. This is the reason markets were up. It had nothing to do really |
| 1:44.9 | with, in the fact that inflation was largely unchanged, it had everything to do with the green light |
| 1:51.5 | that has now been given to the Federal Reserve to now start lowering interest rates, because |
| 1:55.2 | inflation, the delta on it is no longer, it's not a positive. It's not moving higher anymore. It's marginally |
| 2:02.1 | staying the same or moving lower. And so that gives them the opportunity to, with a weakening |
| 2:06.2 | labor market, which is what we saw two weeks ago in the non-farm payroll report, gives them |
| 2:11.4 | the opportunity to now lower interest rates. So odds of a rate cut went from about 85% chance |
| 2:17.3 | to 91% for a September rate cut. |
| 2:20.6 | Remember, there's a Jackson Hole symposium that Powell will speak at in 10 days. |
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