The Dividend Cafe - Monday - April 13, 2026

Episode Date: April 13, 2026

Today's Post - https://bahnsen.co/4cmGmIS In this Monday Dividend Cafe, David recaps a volatile session in which futures fell 400–500 points after Iran negotiations failed, then markets rallied into the close as investors weighed a new U.S. strategy: a blockade of the Strait of Hormuz aimed at halting Iranian trade and forcing reopening. Oil spiked about 8% overnight but ended up roughly 1.5% to around $98, while estimates suggest the blockade could cost Iran about $275M/day in exports and $150M/day in imports. Bahnsen expects continued volatility and notes a tariff threat tied to arms sales to Iran was not taken seriously by markets. He also reviews CPI (3.3% headline, 2.6% core; gasoline up 21% MoM), weak existing home sales, uncertainty around Fed leadership and rate cuts, why U.S. producers focus on futures pricing, and the start of earnings season, with an AI-focused episode planned Friday. 00:00 Market Whiplash Recap 00:43 Iran Blockade Strategy 01:35 Oil Spike and Volatility 02:59 Blockade Costs and Outlook 04:05 Inflation and Tariff Talk 04:55 Housing Market Check 05:24 Fed Uncertainty and Rates 06:25 Why US Oil Output Lags 07:19 Earnings and AI Preview 07:39 Wrap Up and Thanks Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividing Cafe, weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Hello and welcome to the Monday edition of Dividend Cafe. We have closed a wild day in the markets. Futures were down about four or five hundred points last night after the failed Iran negotiations fell apart. And then right at the market open, we were down, but then more or less almost from the beginning. began going higher and rallied all the way into the close. There's a number of reasons for that we're going to cover. I'm going to try to spend most of our time today on market-oriented issues related to Iran,

some of the updates of what's taking place in the Iran strategy. And then we have a couple anecdotal things on the Fed on housing and inflation. So let me basically say that what took place over the weekend that we know was that the negotiators went home no deal was found. The sea spire remains in effect, essentially, at least it seems to be. But what the president announced is that he is instituting a blockade of the Strait of Hormuz, where what he intends to do is basically force a reopening by halting any Iranian trade. Any vessels that have been paying a toll to a round to get through will be seized, and they are taking a very different approach to try to force Iranian cooperation.

You could argue it's a bit of a strategy shift from military leverage to economic leverage. And perhaps by the end of the day today, what you saw in markets was a pretty broad confidence that this strategy may just work. Oil had gone up 8% overnight and then closed only up 1.5%. I believe it closed it right at $98. It's still very high, but it had gone all the way back into the 106, 107 range came off of. that. My own view is that we don't know exactly how it will play out, but I will say that I talked to a dozen people between last night, this morning and throughout the day to day, and it was about split half and half as to expectations. I suspect that it would be a little

bit polyanish to assume that we've seen the worst and everything is going to be rolling smoothly from here. But I would not rule out that this strategy could end up proving effective. And I actually would like to be on record as saying I certainly hope it will be. But the kind of more draconian idea of targeting Karg Island energy infrastructure assets remains something the administration could do and it would be very effective at shutting down the Iranian country's activity. I say draconian because it becomes very hard to come back from it. You not only have used that car to lose that leverage once you shoot the hostage, so to speak, but you, You also then have a very different rebuild scenario where I think the administration is very much hoping to have a rebuild that can become favorable to the West in a lot of ways.

The estimates that I read today from two different sources are that this blockade should cost Iran about $275 million a day in exports and $150 million a day in imports. that's obviously most severe with oil and energy liquids, but it does bleed into petrochemicals, and it bleeds into other goods as well. So this economic pressure is a big deal. I still believe people should just assume that there's going to be more volatility that markets will respond negatively to bad press. And in the meantime, the general expectation markets have, I think, is somewhat founded, which is that without clarity as to how we're going to get there, we are going to get there. Straight of Ormuse will end up being reopened. And there's bigger questions about what the military and geopolitical success will be, but that the economic success is going to come one way or the

other. And I wish I could tell you more or with the crystal ball of how that will come to be. But I can't and I most certainly wouldn't listen to anyone who claims they could. The CPI report came out last week. Inflation for the month headline was 3.3% year over year. you look at core inflation, which excludes food and energy, it was at 2.6 percent, so still quite elevated. Gasoline prices were up over 21 percent on the month. That obviously was the biggest contributor. President Trump did say today that if it's true that China or any other country is providing arms or military equipment to Iran, that we will implement an additional 50 percent tariff on them, which, of course, is paid by the American importers buying product.

I don't believe that will happen, but I do certainly support the idea of seeing to it that no other country is selling equipment to Iran, but I don't think that the tariff threat is taken very seriously, and that's why I wasn't responded to in markets today. Existing home sales declined 3.6% in the month of March. They're down 1% from the level they were a year ago, and where they were a year ago, of course, was in the midst of a multi-year low. all four geographic regions saw decline. So it wasn't just one season, one weather-specific area. The absolute level of sales volume nationally, this is combined multifamily and single-family product. Is it a nine-month low? I do want to point out that while many still believe additional rate cuts are not going to happen this year, because of oil prices or bond yields or some economic factor that will keep new chairman Kevin Warr, after he's confirmed from being able to cut rates. I think part of it is that there's a lot of uncertainty

as to what the timing of his confirmation is going to be. The Senate is not taking up the hearing yet. Senator Tom Tillis of the Great State, North Carolina, is coming through and is promised to block anything until the DOJ investigation of Chairman Powell is off the table. And so in the meantime, there's an uncertainty in Fed Fund's expectations not only about what they should do, but even the timing of who will be there.

And then let's assume Warsh is in sooner than later as chairman. I think there's questions as to whether or not they believe he'll be able to sell his fellow Fed governors on a rate cut. A lot of ambiguity there, but the futures market for at least a month now has been saying that there won't be any additional rate cuts. I mentioned oil closed at $98. A lot of people wondering, why aren't U.S. producers just going full throttle more production based on the fact that it's so profitable right now with oil prices this high.

If there are buyers in the high 90s into the hundreds, production costs being so much lower, why are we not seeing more rigs activated and rig count go higher? The answer is very simple, that they are pricing it off of where the oil futures curve shows prices will be in six months, not in six days. And there's still a general expectation that oil is going back to $70. So those investment decisions was something that has a very slow light switch being turned on and off, are reflecting those midterm, let's call it, six to nine month prices, not the immediacy of the short end. I think that's entirely rational.

Earning season is in full throttle now starting this week. Goldman Sachs kick things off today. There'll be more financial companies throughout the week, and then we'll really get into the fund in the two and three weeks ahead. Dividendon Cafe this coming Friday, we'll do a deeper dive into AI and some new thoughts on the disruption of the AI moment. I'm going to leave it there. We really encourage you to reach out with questions. Congratulations to Rory McElroy for just wonderful master's weekend, two years in a row. And please understand that your questions are appreciated. And we do get that there continues to be a lot of noise. And we want to be the kind of exception.

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