On Wednesday, March 25, Brian Szytel reports markets finished higher for the first time in a week, with the Dow up 305 points, the S&P 500 up 0.5%, and the Nasdaq up just over 0.7%, while yields and oil fell (10-year down about five basis points to 4.33; Brent down a few percent). He attributes the move to renewed U.S. rhetoric about a 15-point proposal to Iran aimed at de-escalation, followed by Iranian media calling it illogical, framing this as typical negotiation as a U.S. offer window nears expiration. He notes equities are only about 5–6% off highs and credit spreads have not moved much. He shifts to concerns about AI-driven market concentration, heavy AI venture capital exposure, and unresolved ROI. He explains how information gets “priced in” via many participants and probabilities, and cites hotter-than-expected February import (1.3%) and export (1.5%) prices.
Welcome to the dividend cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life.
Welcome to dividend cafe. This is Wednesday March 25th, right? I tell tell back with you from our West Palm Beach Florida office here on another beautiful sunny day before we have a client dinner later this evening.
I'm happy to be with you here the market was actually higher and for the first time all week and maybe even some of last week really we had a market that held on to gains so we started up higher than we closed although we basically traded around the same exact level through the entire day and we just haven't seen that predictability at least intraday trading.
We ended up with the Dow that was up 305 points S&P was up half a percent NASDAQ up a little over 7 tenths of a percent so positive across the board and a little more skewed towards the NASDAQ yields dropped and oil dropped so you had the 10 year down about five basis points at 433 and Brent was down a few percentage points so it was WTI obviously that market trades ongoing here so you've got foreign markets now open and it's already changing but that's my around the horn at least what went on in the market.
And the reason is that there was more rhetoric from the U.S. on a 15 point plan the U.S. had provided to Iran on a structure for a deal to deescalate the situation and this included all the usual suspects of no more missiles no more nuclear project opening of the straight of hormones things like that in a few hours later the Iran media announced that they thought it was not logical and they demanded all these other sorts of things.
But like I said the last couple of days inside of dividend cafe this is part of the negotiation process and we still have now a couple of days left here before this offer by the U.S. to not attack is going to expire and I just don't think that Iran is going to give up their leverage point in the meantime so that this is this is a common back and forth between between these two things and I say that not knowing if there is in fact these conversations going on I have to have faith in what's being reported in our media to some degree.
But also understand as best as I can the leverage points in what's at stake and try to report those things to you and not necessarily prognosticate on how those will turn out since that is unknowable but to tell you how it is affecting the markets and so what I have said is of course there's some volatility but markets are only down about five to six percent or so from highs.
That's not a lot and credit spreads haven't moved much and that's something to keep in mind on the market hanging in there through all of this.
But the comments in there today really are about shifting of gears from what has just been an Iran conversation to the AI conversation because we really can't forget how just top heavy the market is at this point with everything associated with AI basically all or at least 60% of all venture capital holdings are AI related and there's still this ROI that needs to be figured out inside of markets to be able to price these things appropriately and there's a risk in that and that's why markets are expensive.
And that's separate from what we're dealing with in energy markets and with the geopolitical stage.
The question in there today was about things being priced into markets because we talk about that how do we know when things are priced in and how do they get priced in.
The answer is this it's not a black and white scenario things get priced in because millions of market participants set prices on the buying cell side of something based on all known information that is available.
There's a book that was written that I read in college that is called the efficient to market hypothesis and the random walk down Wall Street those two things to separate pieces.
Ultimately when things get priced in is if there's something known there's a new tax rate that comes out for example that's pretty easy to get priced in right away across the board.
If there's a consideration for a potential of a new tax increase then of course some buyers and some sellers will set prices based on the expectation and the probabilities of that happening.
But since it includes data that is that is flawed the pricing itself will be flawed.
And so there's a chance for things to get reprised as the actual news comes out.
It's the best way that we can answer it. What I will say is that the market is always going to be taking all the known data and trying to extrapolate on a forward basis.
Obviously what I believe future prices are going to be. It's actually a simple question, but there's a lot behind it.
And if you have more to it feel free to reach out to us on an email and let us know because I can walk through it a little bit deeper.
The only piece of economic news that was out on the day was import prices for the month of February.
They were actually hotter than expected by almost double. So we got a 1.3% increase.
We're going to chuck that up to tariffs related and then you can look at export prices and notice that they were also above expectations at 1.5%.
So imports were up 1.3 exports were 1.5.
And if you think about if that's good or bad, I guess the delta on export prices being higher than imports would be considered a slight advantage.
Both of those numbers the delta was the highest since we've seen since 2022.
I'm going to keep this one a little bit short here and just take this for what it is, which is positive.
And then we'll be back with you tomorrow to go through the remainder of the week.
So with that, I'll let you go. Reach out with questions. Thank you for listening.
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