The Dividend Cafe

Brian Szytel reports a broad market decline driven by a bond selloff, with yields rising across the curve in a bearish flattener; the 10-year finished near 5.11%, while the 2s/10s spread remained about 21 bps. He attributes the rate move to stronger flash PMI data in services (58.7 vs. 55.7) and manufacturing (57 vs. 53.5), alongside hotter input inflation tied to fuel and transportation. Energy markets showed angst amid Iran-related developments and discussion of a possible U.S. diesel export ban, with WTI up about 2.7% to nearly $93. He then addresses comparisons between the 1990s internet boom and today’s AI boom, arguing that even profitable, durable companies like Cisco and Microsoft suffered massive drawdowns due to valuation, cautioning that today’s highly valued AI names may have too much optimism priced in. 00:00 Market Selloff Recap 00:51 Yield Curve and Recession Talk 02:02 Flash PMI Surprise 03:02 Inflation and Energy Risks 04:09 Dotcom vs AI Debate 05:49 Valuation Lessons Cisco 06:16 AI IPO Pricing Caution 07:16 Closing Thoughts and Thanks Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Brian Szytel recaps a mixed market day: the S&P 500 finished flat, the Dow fell 185 points, and the Nasdaq rose about 0.5% as long-end yields eased slightly and the 10-year held near 4.95%. He notes financial conditions have loosened a bit since the Fed’s recent hike, with stocks higher, tight credit spreads, and long yields down, while markets still price more restrictive Fed policy even as WTI slipped below $90. He observes a previously strong negative correlation between AI/semiconductors and software stocks is becoming more nuanced, creating potential opportunities. Addressing a listener question, he explains how the long-running yen carry trade was amplified by U.S. rate hikes and Japan’s zero rates, but is now unwinding as Japan raises rates, reducing arbitrage, prompting deleveraging and some risk-asset pressure, though orderly so far. 00:00 Market Snapshot 00:27 Rates and Fed Conditions 01:11 Oil Move and Inflation Signals 02:05 AI Semis vs Software Rotation 03:45 Outlook for More Hikes 04:32 Carry Trade Explained 05:52 BOJ Shift and Deleveraging 07:23 Wrap Up and Calendar Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4y9YwqV David Bahnsen delivers a quick Monday Dividend Cafe update from Chicago after travel disruptions, covering a strong market day led by communication services and technology while energy fell on a nearly 5% drop in oil; he notes the S&P 500 is near an all-time high even as market breadth has deteriorated sharply. He discusses rising margin debt and how its use has shifted toward non-purpose lending, highlights record ETF inflows into technology as a contrarian signal, and reviews news including media access litigation, progress on the Paramount/Warner Brothers deal, Apollo buying a 16% stake in the New York Yankees, and a newly announced AI task force. Economic data included flat industrial production, stronger retail sales, weak homebuilder sentiment, and declining housing starts, while Fed commentary shifted toward expecting a possible October hike and noting Chairman Warsh’s skepticism about a knowable neutral rate and strict data dependency; the Bank of Japan also raised rates. 00:00 Welcome and Travel Update 01:17 Market Rally and Sector Moves 02:13 Market Breadth Warning 03:29 Margin Debt and Leverage 05:15 Tech ETF Inflow Surge 05:39 Headlines and Deal News 06:27 Policy and Global Trade 07:30 Economic Data Roundup 08:04 Housing Slump Signals 09:16 Fed Outlook and Warsh Takeaways 11:18 Oil and Midstream Positioning 11:55 Wrap Up and Disclosures Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Today's Post - https://bahnsen.co/4j4mxuI David Bahnsen discusses the Fed’s quarter-point rate hike, arguing it was largely “performative” because markets had already tightened financial conditions and the Fed is now following rather than leading. He notes the fed funds futures market implies an 87% chance of another hike this year and reviews the political speculation around Chairman Kevin Warsh and President Trump, including Trump’s post calling for 1% rates while diverting attention to trade deficits. Bahnsen highlights the unanimous 12–0 vote, the Fed’s focus on price stability amid supply-shock pressures, and the neutral mechanics of paying 3.9% on reserves. He reviews muted bond-market moves, elevated mortgage rates near 7%, and cautions against overreading immediate stock-market reactions, emphasizing earnings, AI, oil, and valuations as bigger drivers than the fed funds rate. 00:00 Welcome and Fed Week 00:44 Why the Fed Matters 02:08 Performative Rate Hike 05:11 Politics and Independence 10:54 Midterms and Next Hike 11:52 Unanimous Vote Rationale 14:34 Bond Market Reaction 17:02 Stocks and Volatility 19:05 Practical Takeaways 21:28 Closing Thoughts Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Brian Szytel reports a pre-close market rebound from Newport Beach on Thursday, September 17, with the Dow up over 300 points, the S&P up over 1%, the Nasdaq up about 1.5%, and the 10-year yield falling to 4.95% as the curve flattens; oil prices eased and recent sector rotation briefly reversed as tech regained bids and equal-weight indexes underperformed cap-weighted. On the economic calendar, the Philly Fed Manufacturing Index beat expectations and initial jobless claims fell to 196,000 versus 208,000, while housing starts and pending sales missed slightly. He addresses fears about AI by noting historical patterns of technology skepticism and euphoria, citing the 1990s productivity paradox and subsequent productivity surge. He also answers a question on $100+ oil alongside Fed hikes, saying it has not always signaled recession and that current expected rate increases are modest unless policy overdoes it. 00:00 Market Rebound Snapshot 00:26 Rates Oil And Rotation 00:57 Economic Data Check 01:47 AI Fear And History 03:06 Oil Fed And Recession 03:57 Wrap Up And Next Read Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com