The Dividend Cafe - Monday - April 20, 2026

Episode Date: April 20, 2026

Today's Post - https://bahnsen.co/4tWfYfM From Newport Beach after returning from New York, David explains how rapid news flow from the Iran war has repeatedly made weekend research obsolete, citing futures swinging from down ~500 points to a nearly flat Dow close (-0.01%) amid conflicting reports on the Strait reopening, peace talks, and ceasefire timing. Oil fell sharply last week (~13–14%) then rebounded ~5.8% Monday to near $89; an Iranian ship was seized and shipping disruptions continue, with air cargo rates up 40%. Markets were modestly lower in S&P/Nasdaq, the 10-year yield held just above 4.25%, materials led, and communication services lagged. Q1 bank earnings started strong overall; attention shifts to broader earnings and LNG-exposed midstream guidance. Private-credit LMEs have declined over nine months, breadth improved, and small caps remain ~9.6% ahead of big caps YTD. Politically, Senate control odds have tightened to roughly 50/50, but flipping enough seats is still difficult; prospects for a new House reconciliation bill look low. Fed chair nominee Kevin Warsh hearings are expected this week, pending a DOJ/Powell-related issue. 00:00 Monday Setup 01:39 War News Whiplash 04:15 Market Recap 04:22 Earnings Season 05:18 Private Credit Signals 06:05 Breadth And Small Caps 06:33 Senate Odds Breakdown 10:40 Policy And Macro Watchlist 11:33 Energy And LNG Focus 12:11 Wrap Up And Next Steps 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. Well, hello and welcome to the Monday edition of Dividend Cafe. I'm going to give you a little inside baseball here as we get started. First of all, I am back in our Newport Beach, California office where I arrived in the middle of the night coming back from New York City. and I wanted to tell you that very often the Monday Dividendon Cafe received a lot of tender loving care over the weekend. I do a lot of reading and writing and actually love working on different elements of research in the Dividendon and Cafe over the weekend. And I would say that since we transitioned the Monday edition of Dividendon Cafe, which had its genesis in the old D.C. today, which itself had its own origin from the COVID and markets days, that there's been two, three times that I could think of where I wrote a bunch of

stuff over the weekend that by Monday I couldn't use because something had made it obsolete in the news cycle or in markets. And in the last seven weeks since the Iran war began in the military operation there, I think it's been five out of seven weeks where something or some version of that not always quite as dramatic took place where there was something that I spent a lot of time on over the weekend and it really was not usable by Monday because of just the reality of certain things being said Friday by the administration or by parties involved in the Iran war and then things moving and shaking over the weekend that changes it and that's kind of to be expected in the volatility of war if you will but this particular weekend I was very careful to

not get too deep because there was a lot of news Friday in the Iran War. There was a lot of things bouncing around this weekend. And I thought, well, there's a pretty good chance. Some things are going to flip around by Monday. Sure enough, I wanted these numbers right. I was at JFK last night getting ready for my red eye back to California. And futures were down about 500 points. When I got to LAX, the middle of the night, they were down 350. Very early this morning, between 4 a.m. and 5 a.m., they were down 250. That's Pacific time now. By the time the market opened, they were flat. And it did end up dropping about 150 points intraday, but then rebounded. And we closed the day on the Dow literally about as flat as could be down 0.01%. So you see these things kind of move

sometimes. And a lot of times the news itself is moving. There's something with oil. There's something with this particular case. The news, Friday that pushed markets up at one point, I think 1,300 points was, oh, the Strait of Hormuz is reopened. And then over the weekend, we said, well, maybe no, not really. Peace talks are set to begin tomorrow, but Iran is saying news to us that they don't have plans to attend, but then there are people saying they are attending. You hear that the envoy representing the U.S. is on their way. You can hear things back and forth, and markets might respond for a minute or an hour, but my point being, it's really tough right now without certain clarity. You know, oil prices

dropped a lot Friday for good reason. It had been down throughout the week. I think oil last week was down 14 percent, down 13 percent last week. Today, oil was up about 5.8 percent responding to the Friday drop. We do know that an Iranian ship was seized over the weekend. And we do know that shipping traffic had come to a halt. One ship was fired upon. The ceasefire was supposed to end tomorrow. Right now, my understanding is the president said it will end Wednesday night. There's talk of another extension beyond that, but there is also talk of both parties saying, no, we're not going to extend. And there's escalated threats of her need bombing. So all of this remains in flux. I'd be happy to report to you what he said, she said, or what Twitter said about the latest and greatest.

But I don't think you need me for that. And I don't even think it's very helpful. And I most certainly know it isn't useful from the vantage point of why I'm here, which is markets in coherent investing. In terms of markets, though, I mentioned the Dow is basically totally flat on the day. Both the S&P and NASDAQ were down a quarter of a percentage point. We have banks now done with their Q1 earnings results. And it was off to a great start, I thought.

I mean, basically net interest income, total growth, stopline revenues, fee income. were all higher than expected, pretty much across the banking sector space. Now, net interest margins were mixed. Various expenses and loan loss provisions were mixed, meaning some were a little worse than expected, some better and expected. But all in all, it's been a good start to earning season, but of course, once you get past the banks, now you get into the real deal, and we'll have plenty more this week and a heck of a lot more than next two weeks.

The 10-year bond yield today pretty much flat. closed right above four and a quarter, up one basis point on the day. Top performing sector for the day was materials, which were up 56 basis points. Communication services were down 141 basis points. In the ongoing saga of private credit, there's a thing called LME's liability management exercises where borrowers do a transaction with their lender to avoid a technical default. And sometimes it can announce to restructuring of terms. Other times it extends the maturity of the loan.

But they're doing some action because there's a problem. But they're avoiding a default by doing what is very, you know, innocuously referred to as a liability management exercise. So right now, with all the talk of increased distress in private credit, these things must be skyrocketing higher, right? Well, actually, they've declined to substantial. over the last nine months. The market breadth in this recovery the market's had in the last couple weeks has been quite significant. 50% of the stocks in the S&P 500 are now at a 20-day high.

It should be pointed out that small cap on the year has not suffered as a result of the rebound who's seen in Mag 7 and Big Cap. Small Cap is still about 10% better. I think it's 9.6% better than Big Cap on the year. On the public policy front, can I just say a lot of ink has been spilled about the idea of Republicans losing the Senate in November, in the midterms. I wrote in my annual white paper at the beginning of the year, my year ahead projections that the Democrats were going to keep the House, Republicans are going to keep the Senate. But I did acknowledge that there was much better odds about the Democrats keeping the House side of that prediction than Republicans keeping the Senate side.

And I would have said that it was 99% odds on the House and 90% on the Republicans keeping the Senate. I would now move that to about 70%, although Mark Halperin texted me this morning and is placing it at 75%. And I have no interest in being in a different place than Mark Halper on this. But there's two charts in Divinity Cafe.com today showing where the betting odds are in the prediction markets. Kalshi has it at 50-50 and Pauley Markets has it at, I think, 54% to the Democrats' favor. So let's call it 50-50. But my point is that on one hand, that shows you how much the sentiment has changed and how different the odds are that we might, in fact, end up with a Republican forfeiture of the majority in the Senate. But they have a three-seat lead right now,

so the Democrats have to flip four seats. And the reason that most people thought that this was very unlikely, and I still do, is just simply a byproduct of how tough the math is. is for the Democrats because of which seats are up for grabs and how many have to be flipped, it's going to be hard. And you go, well, they've got to win four seats. But they have to also hold seats that are by no means gimmies to hold in New Hampshire, Michigan, and Georgia. Now, you would say Michigan, you know, they always seem to hold that seat with the Senate. We know President Trump won it in 16 and 24, but he barely won it. And the Democrats held Senate and governor seats through all of that. It's true.

But it does look like the Democrats are about to nominate the most far, far, far left-wing progressive they've ever run in that state and pretty much the most far-left candidate that they would have in the Senate. And so they might lose that seat. So then they have to flip five. Now, Georgia, I think they're going to hold. Their Democrat incumbent there is reasonably popular. He's running a good campaign, New Hampshire. So I don't think the Democrats will give up any of those other seats, but they have to fight for those two.

And the Michigan one now becomes problematic. But then you say, okay, they have to win Maine, North Carolina, and Ohio. They have to flip those seats. And again, those all seem doable to flip, but they're not foregone conclusions. And particularly in Maine, Senator Collins there has been counted out so many times, and she has repeatedly won re-election against all odds. I have a hard time betting against Susan losing that race in Maine. The Ohio one, it's a popular state for President Trump or has been in the past, but that is a

loseable seat for the Republicans, and the polls look like they may lose it. But I just want to point out that the reason why this is so hard is that you don't have a singular vote, Republican Senate, Democrat Senate. You have a combination of some total of races. And even if the Republicans lose North Carolina, Ohio, and Maine, and the Democrats hold on to New Hampshire, Georgia and Michigan, they still have to win another between Alaska, Texas, Iowa, and Nebraska. And I don't know which of those the Democrats can win. I'm told Alaska is the most likely. But you see, when you ever hear in a situation where six out of six things have to happen,

that's why it's tough with betting odds. All six might happen. And then that those odds end up being about right, but it's tough. Things have moved for sure in the probabilities this year from when I first wrote the White Paper, but that's why I think this is from a market standpoint very difficult to assess. Speaking of which markets, I don't think that there's a great odds right now of a new Republican reconciliation bill in the House. As much as theoretically, I might love to see one if it was going to have certain pro-growth supply side initiatives in it, but there doesn't appear to be a realistic political path for such happening. On the economic front, air cargo rates, we're talking so much about shipping tankers. My friend Peter Bookfar pointed out in his daily bulletin that air cargo

rates are up 40 percent, and of course they're up 40 percent for the same reason because tanker shipping is so dramatically subsided with the straight closing. Well, there's a lot more on the line with straight-of-hormoos than just oil prices. The confirmation hearings for Kevin Warsh to be the new chairman of the Federal Reserve are supposed to begin this week. Senator Tillis is saying he still is not going to go forward unless the DOJ matter with Chairman Powell is resolved, that all remains an item in flux. Oil closing near $89 per barrel up 5.8% after Friday's drop. Midstream was down 2.7% last week as oil prices dropped 13%. Upstream energy, producers, drillers, explorers were down about 7%. The thing I'm most interested to watch in earning season with midstream is the LNG exposed companies giving their forward guidance.

Do we have even more upside baked in to a lot of what's gone very well for our LNG exporters so far this year? So earnings season picks up this week. Clients will get their normal week to report Wednesday. Dividing Cafe coming Friday. I do not have a topic picked yet. Think about that. In the meantime, reach out with any questions. Any time. Thank you for listening. Thank you for watching. And thank you for reading the Dividing Cafe.

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