Monday - March 16, 2026

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio

and dividends in your understanding of economic life.

Hello and welcome to the Monday Dividend Cafe.

I feel like I have not recorded from our Newport studio for some time, but we've had a very

full day here and I want to go around the horn with you quite a bit on the Around War

of course other updates with markets and our normal Monday activities.

First I do want to say that at Dividend Cafe.com in today's Dividend Cafe you will find

a link to a short hit I did on Varney Fox Business this morning.

You will also find at Dividend Cafe.com Friday a more extensive coverage of everything going

on in markets.

The five major themes that have already unfolded in early 2026 of course as always there

is the written Dividend Cafe along with a link to the video and podcasts.

So with that said today markets opened up 300 points and stayed up basically throughout

the day.

There was a little zigging and zagging around that baseline but closed up 388 points almost

1% on the Dow the S&P was up 1% the NASDAQ was up 1.2 you got to kind of inverse of what

the market has been for most days this year.

Top of the pack was technology consumer discretionary bottom of the pack was energy and consumer

staples now when I say bottom of the pack they were all positive so you had a day where

markets weren't up that much basically 1% and yet 11 out of 11 sectors were up but the

things that have been leading the pack were at the bottom today things that have been

struggling a little more were at the top today.

There is a few market comments I want to make let me go ahead and first finish up today

that 10 year bond yield closed at 4.22% so the yield was down 6 basis points on the day

a pretty good little rally in the long bond 43% of S&P 500 companies coming into today

were at a 20 day low that is not that bad considering the elevated volatility we've seen

in the last two weeks since the war began and oil prices shot up you would need a much higher

percentage of companies to be at a 20 day low than 43% it's worth sharing now it's entirely possible

that you end up not seeing this worsen but that would really represent a pretty benign

geopolitical sell-off to only see less than half of the market even hit a 20 day low.

Interesting comment I of course have talked for quite some time about the elevated

concentration level in the S&P 500 with 10 companies representing 40% of the index and how

a historical that is compared to the way things have been most of the last 50 plus years

but it's interesting to point out that that is the current state of the S&P 500

that actually if open AI, if entropic, if SpaceX, and there's a link into the cafe about this

all companies are discussing public market offerings in 2026 they've all three of them

were to go public this year you could very easily see the top 10 out of 500 companies

equaling 50% of the S&P 500 that concentration is just

monumental to even think about and drastically changes the risk-reward profile.

Speaking of risk-reward profile of all this piling on about private credit I just can't tell you

how surreal it is to hear all the conversation about imminent defaults and just all this problem

while spreads in the high yield bond market sit at 3.17% which is a little bit higher than the

historical lows that have been at but I mean still a very tight very comfortable range spreads

around 3% in junk bonds and we're talking about an imminent explosion of defaults I mean it could

happen but it does I guess seem improbable we're watching those spreads for a worsening

of credit conditions there has been a decrease in prices and delivered bank loan market but again

the private credit data I just want to continue to make clear when people are talking about

default issues there they are prophesying they are not describing and maybe they're good profits

but that is not in the data as of yet okay what else do I want to highlight here

let's move on for markets get to the Iran stuff the U.S. did end up bombing

cargo and over the weekend but it was a very targeted bombing and didn't have it was not intended

to go take out their oil infrastructure so what it did was essentially leave a lot of critical

energy infrastructure in place but targeted certain military targets and I continue to believe

that the administration is doing that on purpose because there is hope that there is going to be

some successor in Iran that they want to have the infrastructure in place a permanent hit to

Iranian energy capacity changes the succession options quite a bit the street of Hormuz continues

to be the major story in Iran much of the analysis that I am reading continues to focus on a safe

reopening of control we understand it needs to be sooner than later for markets to feel good

but that it may not be possible without a willingness to incur casualties that it can happen

and in fact if it needs to it eventually will happen but the question is what commitment

in trade-off to life are they willing to make and I think that that's a very difficult situation

but I want to quote from my friend Rene and now of Corbucci in theory and I am reading verbatim

in theory a military solution to the Hormuz trade problem but in practice a political logistical

constraint that impedes mission execution on the time frame consistent remarket requirements

that's the tension we're seeing in the trade-off Hormuz that is left oil prices into the 90s they

close today above $94 down several percent from where they had been they and creeped up again

back near 100 over the weekend closed in the mid 90s that's not cheap but again trying to see

this not boost up into the hundreds is I think what markets are hoping for and certainly

administration is hoping for I think China is going to end up being a role in the

trade-off Hormuz solution I certainly believe the administration wants that the president

did announce after market hours today that they've asked China to delay the pending meeting

with President Trump and President G for a month and there does appear to be a lot of back channel

communications about where China has some incentive economically to play a role in the

trade-off Hormuz reopening so more on the around war at the written dividend cafe.com I'm going to

move on to the economy because we got a downward revision in Q4 GDP we already been expecting

2.5 percent annualized real economic growth in Q4 and it had come in in the first Q4 number a

couple weeks ago 1.4 percent now it was revised down to 0.7 percent so it had gone from 2.5 to 1.4

to 0.7 and what happens is when you're measuring the real economic growth it is deflated by the

inflation and the PCE number being higher was part of it but on a nominal GDP basis where there's no

discounting for the inflation rate the nominal GDP growth was reduced by 0.6 percent itself

so you end up getting a total year over year 2025 real GDP number of 2 percent

not terrible but not what many had hoped for and per Peter Bukvar data center built out

alone represent half of last year's GDP growth. Other economic news new orders for durable goods

have started the year completely flat that's not really pointing to this new supply side capital

investment boom we're hoping for orders were better if you're excluding a big drop in defense

aircraft but just total durable goods pretty flatish on the year the increase in gasoline cost

for American consumers is 65 percent higher than the amount of tax refunds American consumers are

going to get for the month so let me make this queer a lot of arguing with people making for

this stimulus coming economy is that people are getting bigger refunds in normal because the

withholdings and the actual taxable events to 25 were not paired up and there was going to be

excess money coming back most of that is true but it appears now that a lot of that is going to be

absorbed by excess gas cost now you could say okay that's a glass is half empty interpretation

because the glass is half full interpretation is hey a lot of the excess gas cost problem of the

Iran war is being absorbed by tax refunds so you can cut both ways industrial production up

is 0.2 percent in February decent decline in utilities output a decent increase in mining and then

manufacturing was just barely up at all so it's a fed week but they're not doing anything futures

are at a hundred percent of no fed change in rates but you have the fed announcing this week the

European Central Bank announcing this week the Bank of England announcing this week and Bank

in Japan I expect actually most of the central banks of the developed world will be sitting

tight this week on the energy front WTI again in the mid 90s midstream last week was down 0.6 percent

now again the S&P was down 1.6 last week midstream had been up the week before the S&P was down

3 percent week before that so midstream continues to be very contrary to the markets now I want

to be clear on both midstream and upstream that if there ends up being some resolution in Iran

I think the whole energy sector at this point could very well see a repricing

but where reprices would still be higher than where it had been before that there is an elevated

risk premium that is becoming more structurally entrenched and that is one of the defensive

benefits to investing in the energy structure and speaking of which energy sector is 26 percent

above its own 200 day moving average it's in a 95th percentile of its historical relationship to

its own 200 day moving average so what do we have this week we have more coming and going every

single day with Iran more coming and going later in the week with the fed and central banks and

it's not about what they do on the policy rate because they're not going to do anything but it is

about their announcement their language their tone all the normal things with forward guidance

and then you know what else we have at the end of this week is march madness

thanks so much for listening watching and reading the dividend cafe

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