The Dividend Cafe Monday - May 19, 2025
May 19, 2025
This discussion highlights Moody's surprising downgrade of U.S. debt, which surprisingly didn't faze the market. It also digs into U.S.-Japan trade negotiations and President Trump's talks with Putin regarding Ukraine. Economic insights reveal a drop in the producer price index, affecting inflation, while the housing market and retail sales paint a mixed picture. Key developments in the House budget bill provide insight into market stability, making it clear that geopolitical events and fiscal policies are pivotal for investors.
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Market Ignores Moody's Downgrade
- Moody's credit downgrade of U.S. debt to AA1 is largely symbolic since this rating aligns with competitors' previous assessments.
- The market and bond investors barely reacted, showing confidence in U.S. debt despite fiscal deficits and debt levels.
Trade Talks Beyond Tariffs
- Tariff tensions impact sectors differently; healthcare rose almost 1%, while energy dropped by 1.5%.
- U.S.-Japan trade talks focus less on tariffs since Japan charges 0% on auto imports from the U.S., but non-tariff barriers remain a complex issue.
Ukraine Talks Lacking Progress
- President Trump's lengthy call with Vladimir Putin and subsequent talk with President Zelensky suggests ongoing diplomatic engagement on Ukraine.
- Despite talks of ceasefire, no substantive progress has been announced yet, highlighting ongoing uncertainty.