The Dividend Cafe - Monday - February 2, 2026

Episode Date: February 2, 2026

Today's Post - https://bahnsen.co/4qULYQz In this edition of Dividend Cafe, David provides a market update from an unconventional setting at JFK airport. He discusses January's market rotation, with a spotlight on small cap and value stocks outperforming large cap and growth stocks. Key sectors such as energy, materials, and consumer staples are highlighted, alongside underperformers like technology and communication services. Bahnsen reviews Bitcoin's decline, diverging trends in gold and silver, and significant movements in major indices and the bond market. Additionally, it covers notable corporate news related to AI funding, Oracle's significant capital raise, potential shifts in Nvidia's investment in OpenAI, and positive developments in the ISM manufacturing index. David also touches on declining rent prices and previews an upcoming detailed analysis on Kevin Warsh's Federal Reserve Chair nomination in the next Dividend Cafe episode. 00:00 Introduction and Travel Update 00:46 January Market Highlights 01:29 Sector Performance and Market Rotation 02:47 Bitcoin and Gold Analysis 04:14 AI and Tech Industry News 05:49 Economic Indicators and Housing Market 06:52 Upcoming Federal Reserve Analysis 07:33 Oil Market and Closing Remarks 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. You may notice I'm not in my normal setting here. I'm sitting in the Admiral's Club at JFK where I had to run to the airport from the office, hence the change in outfit and the expedient nature of today's Div Cafe because my flight tonight got canceled. able to get our earlier one. And I'm headed back from the three-degree tundra of Manhattan to the 75-degree tundra of California. Then off to Arizona for a big client event, Tuesday night, be in our Phoenix office Wednesday back in California, Thursday, Friday. So the moving around is what it is, but I did not want to leave you without the Monday Dividendon Cafe. It was an adventurous

day and even weekend. We're now, of course, done through the month of January. Some quick, highlights around all that, it was very much a month of rotation. And one month does not represent the entirety of 2026, but this was, of course, a big theme of ours for the year. What it does in January has nothing to do with what we'll end up doing for the whole year. But you just saw significant rotation. And really across the board, equal weight S&P up 3.3% where the cap weighted S&P only up one and four. The small cap index, Russell 2000, up four. 5.3 with the S&P only up 1.4, value up 4.4, large cap value, with large cap growth down one and a half. So in all of those major metrics that kind of size up this rotation theme,

from small to large, from value to growth, from even weight to cap weight, the rotation was really profound. And across the sectors of it all as well, energy, materials, consumer staples, top performing sectors, the bottom of the barrel was technical. technology and communication services. The NASDAQ, speaking of which, by the way, has not made a new high since October, and 40% of its constituents are treating below their 200-day moving average. So there are plenty of technical issues there with the NASDAQ. But by the way, today the NASDAQ was up half a percent. The SPP was up half a percent. The Dow was up over 1 percent. And all three sectors opened the day down significantly and had a big reversal off of the open.

And really from almost just minutes after the open markets rebounded, the Dow closing up over 500 points today. Let's do what else you want to highlight. The bond market was down a little today, the 10-year yield up four basis points to 4.28%. Top performing sector today was consumer staples up 1.58%. And that had been one of the leaders in January. But then the worst performing sector today was energy was down 1.98, and that had been the top performer in January. The thing that's got hammered, and I just want to highlight it to give you the illustration of how incredibly uncorrelated it is to things people think it is. Bitcoin is now down 13.3% year to date. It's down 38% in the last three months. But it was hammered on Saturday. There was apparently a leveraged owner that had to sell over a billion dollars on Saturday. And it didn't make any kind of rally around that today. It dipped further, came off and out. But the reason I bring that up is you have this major move in gold over the last few months up and then a major move in Bitcoin down. And I get really tired of people talking about both things.

things is some sort of hedge against the dollar when they're not even correlated to one another at all, are asking, speaking of that gold silver action, what my take is on that. And again, when you see, like, Friday, the worst day for metals since 1980, but coming off of what had been just a massive move in the months prior, that's not a market action that I can comment on intelligently. And I don't think it's market action. Anyone can comment on intelligently. What is moving those sort of trading gyrations, these are not things that are going to have a rational explanation. And if someone is positive, they know why and what they're going to do and all that, then more power to them.

But it's something I'd be very cautious of trying to understand these type of trading anomalies moving at that level of violence without any kind of fundamental driver. And on the market side of things, there's links to all these stories inside Divida Cafe today because I thought it was somewhat interesting that over the weekend, there's reports of SpaceX potentially combining with XAI, two of the major Elon Musk brain children, and then the potential of even wanting to fold some of those in with his publicly traded company, Tesla. You had Oracle announced this morning that they were tapping capital markets to raise $50 billion of debt and some equity to help fund a lot of their AI projects.

Oracle is down 50% from its September high. And again, that whole AI CapEx story changes. It's got its own dangers when meta, Google, Amazon are paying for this stuff, cash, Microsoft. But when you are talking about it becoming a leveraged, borrowed scenario, changes the risk profile substantially. Then finally, the biggest story by far, when we have to pay a lot of attention to because it has a lot of connectivity and tentacles around it is the story. We've already talked about the circularity of the funding model in AI and companies paying each other for orders and then getting reinvestment from the company being paid for the order and so forth. Reportedly, the $100 billion investment that NVIDIA is going to be making an open AI is now

on ICE may not happen, may get redone, restructured, renegotiated. So there was always an MOU in place, a memorable of understanding. It was not a done deal. And now if that is even being called into question, I think that we're going to want to continue paying attention to the AI funding and AI expenditure story. On the economic front, the producer price index, the PPI, was up. half a percent in December, where it was only expected to be up 0.2 percent, and PPI was up for the year, 3 percent. So producer prices up 3 percent as 2025 came to an end. On the good news side,

today the ISM manufacturing rose to 52.6, our first month of expansion in a year. New orders and production were up quite a bit. Employment continues to be the problem. Employment was still negative. But again, one month is not a trend, but we want to see if we can get two or three. months of positive movement manufacturing, that would be great for CAPEX and hopefully productivity. New leases in terms of housing were fell. The price was down 0.2% per apartment list and is down 1.4% year over year. Rents are being tracked inside CPI as if they're growing 4% a year. The market measurements are actually showing deflation of rent prices. I, of course, consider that positive. There's so much I can say about Kevin Warsh being chosen.

I was on CNBC, the first guest on Friday morning on Squackbox talking about it. You can go to our YouTube channel to see the whole interview. And I will tell you that the Friday Dividing Cafe this week is going to be fully devoted to a pretty comprehensive analysis I want to do, not just to Kevin, our new to be Fed chair, but what it means for the Federal Reserve and a little deeper dive around that. And I'm really excited for some of that commentary. I'm going to give you Friday in the Dividing Cafe. I am not surprised. This is what I've been predicting for some time, and I'm not upset. This is who I was hoping he would pick. But if you'll allow me, I'm going to say a lot more about it in the Dividy Cafe on Friday. Oil got hit today. It was down 4%. But it was up quite a bit last week. And I would encourage you to look at the oil and energy section in Dividingcafe.com today for a few tidbits about midstream, which was up another 2.5% last week, closed out January up over 8%. But a big week last week in oil.

and some fun things about midstream to look at in Dividing Cafe. I have to leave it there because I have to jump on the flight, but I do want to thank you, as always, for listening, watching and reading the Dividing Cafe. Brian and I will be with you throughout the whole week, as always, with daily recaps, and then Friday Dividendon Cafe Special Edition, Federal Reserve, Kevin Warsh. Thanks so much.

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