The Dividend Cafe Wednesday - August 20, 2025
Aug 20, 2025
The host discusses a recent shift in the market from growth to value stocks, especially in the AI sector. Insights from the July Fed meeting reveal market reactions to pending economic data. The housing market faces challenges for builders despite rising stock values. There's also an interesting talk on understanding nominal versus real returns. The episode wraps up with a preview of upcoming jobless claims and existing home sales, keeping listeners informed about future economic indicators.
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Episode notes
Growth-To-Value Rotation
- Markets are rotating from growth to value, with AI names selling off and defensives outperforming.
- Interest rates stayed largely unchanged while the market digested hawkish Fed minutes and a weak payroll report.
Hawkish Minutes Then Payroll Shift
- July Fed minutes showed more concern about inflation than employment and were viewed as hawkish.
- The subsequent weak payrolls shifted market expectations toward a higher chance of a September rate cut.
Don't Overreact To Jackson Hole
- Don't expect Jackson Hole to meaningfully change September rate-cut odds given the market already prices a ~90% chance.
- Treat Powell's remarks as unlikely to move the needle unless new information emerges.