The Dividend Cafe - Monday - June 1, 2026

Episode Date: June 1, 2026

Today's Post - https://bahnsen.co/3RD5fcA This Monday Dividend Cafe reviews a mostly routine market update: after May’s strong gains (S&P 500 up over 5% in May and 10.7% YTD), stocks opened lower but finished higher with tech leading and utilities selling off; the 10-year yield ended flat at 4.46%. The episode highlights record household equity allocation, elevated valuations across large and small caps (Russell 2000 up 70% from its 2025 low), and a Goldman index showing concentration/valuation/rally conditions similar to 2021 and 2000. It notes inflation-adjusted IPO fundraising plans from SpaceX, OpenAI, and Anthropic exceeding 300 combined internet IPOs from 1999–2000. Iran’s renewed Strait of Hormuz blockade threats lifted oil ~6%, Florida filed a lawsuit against OpenAI, manufacturing ISM rose to 54, rent growth slowed, and futures imply 50% odds of a rate hike with no cuts expected. Friday’s episode will feature the host’s graduation commencement address. 00:00 Intro 01:23 Market Recap and Valuations 04:51 IPO Mania and Tech Froth 05:42 Geopolitics and Policy Updates 06:50 Labor and Manufacturing Data 08:30 Housing Inflation and Fed Odds 09:44 Energy Oil and Midstream 10:38 Week Ahead and Friday Twist 11:32 Conclusion Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

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 edition of Dividendon Cafe where we go around the horn and all of our normal topics. And today it is really a pretty normal Dividing Cafe Monday edition. There's a few fun things to talk about, but we're just going to go short and sweet through all the major bullets that you get on with your evening. Quickly say, though, that the Friday Dividendon Cafe, if you missed it, don't. Whether you're a podcast video or a reader, go check it out. There is an important discussion about the reality of an independent Fed, what to expect with monetary policy, what to expect of the new Federal Reserve regime as it pertains to independence. I think you'll find it historically and, shall we say, economically.

Interesting. Dividing Cafe from Friday. There are a couple links that we've put up in today's Divida Cafe. If you're interested in my appearance on Maria Barthromo's Wall Street show over the weekend that we recorded from the Reagan Library on Friday, as well as a brief hit I did on Varney Fox Business this morning. So markets today opened down 150 points. Keep in mind, it's the first trading day of June, the S&P 500 was up a little over 5% in the month of May, is now up 10.7% on the year. Keep in mind, it was almost down 10% at its low level. So you're talking about a 20% recovery from the low very quickly, and another 5% added on in May from the big rally in April. Today's action, though, the Dow, down 150 to start.

Hamden Hodge for the first kind of half of the trading day, then recovered into the second after the trading day. You had a Dow up 46 points, which is only nine basis points, but nevertheless off of its negative territory. You have the S&P up a quarter of percent, and you have the NASDAQ up about 40 basis points. Right now, we do have the highest household allocation to stocks that we have ever had. We have valuations basically at all-time highs. That's not used. universally true because there are different metrics people are looking at to gauge valuation. So some are higher than the famous March of 2000 valuations, but some are a bit lower. All of them are in that neighborhood.

By the way, the Russell 2000 is no longer immune from this valuation discussion either. For so long, we talked about how S&P 500 mega-cap, big tech was hitting all these valuation levels, but small cap was not participating at all. The Russell 2000 is now up 70% from its 2025 low. And just to refresh your memory, 2025 was last year. So just massive rally in the small cap side as well. The 10-year bond yield today closed at 4.46%. It had spiked five basis points in the middle of the day,

bringing bond prices down, but it gave all that back by the clothes, so the yield closed basically flat. I will point out that this is interesting because you'll recall the tenure was above 4.6% a couple weeks ago, and not only has it come back down and seen a little relief into bond prices, but just leveling in this area where it's been for most of the last few years, I think is a pushback at this time for those that are fretting a big bond sell-off. The top performing sector day was technology, which was up two and a half percent, which was largely led by software, by the way, even as communication services was down on the day. The worst performing sector was a pretty big sell-off in utilities.

Several of the defensive sectors didn't do well. The combination of concentration, valuation, and then the magnitude, of the rally. Goldman Sachs puts this together in a little index that they graph, and it is now showing basically numerical equivalence, more or less to where those combined factors were in 2021, right before we recall what happened in 22, but also in 2000. So there's a chart at divinacethafe.com if you want to look at it. I don't think we're going to have time to put it up on the video here, but you'll see it at divinitycafe.com. All right, what else we want to come? cover here. Just an interesting anecdote. I want to give a hat tip to Michael Burry and Peter

Bookvar, but the combined amount of money that SpaceX Open AI and now Anthropic have stated they're looking to raise in these pending IPOs, not the market cap of the companies, the amount of money they're looking to raise, which apparently is going to be 5% or less than the total flow of the company. These three companies are looking to raise more than the amount of 300 internet IPOs combined from 99,000, and that is adjusted for inflation. So I say that because I know that a bunch of people are going to go, well, that number sounds kind of massive, but when you think about inflation, blah, blah, blah, fair, except for no, this is adjusted for inflation.

Holy moly is all I have to say. So the news of the day Iran is threatened to completely block the straight of Hormuz again, says the peace talks are over. President Trump says he's fine with that and he'll continue with the blockade. And so the beat goes on. Oil prices did move higher by about 6% in response, but markets didn't seem to care. In the public policy front, the Attorney General in the great state of Florida announced a lawsuit filing against Open AI for various AI related risks and harms. this does appear to be the first state case being brought against a company for just broad-based,

you're doing bad stuff type of thing, and we'll see where this goes. On the front of that $1.8 billion anti-weaponization fund from the White House that had created so much pushback and actually got a judge to come put a temporary kind of pause on it pending a hearing, there's conflicting media reports as to what the White House intends to do from here. My sources tell me they do intend to walk away from it altogether. It obviously generate a lot of controversy. As it pertains to labor markets, Torsten Slocke of Apollo put out a chart over the weekend

that does indicate a bit of why I feel a little more optimistic these days about the state of labor markets than I did entering the new year. We're still not seeing the hiring that I want to see in small business, but hiring overall has picked up, And it's basically what you see throughout history. Disruption from AI creating new hiring opportunities, as you're seeing a lot of additional job searches in areas that are doors being open from AI.

Economic front, the May ISM manufacturing was above estimates by about one point on the month. It's now again in an expansion mode at 54. New orders were almost three points higher on the month. There are a lot of companies stockpiling in preparation for Middle East concerns and disruptions, kind of a supply chain story, that skews the date a little bit, but it doesn't explain all of it. 16 out of 18 sectors were up and showing expansion. And I really think you have to assume that there's some modest improvement there as a result of the bonus depreciation in the Big Beautiful Bill Act.

Now, of course, AI CAPEX is a major factor as well. Now, if some were to say, well, okay, not only that, but I guess we're getting this resurging in manufacturing hiring as well, not so fast. 32 months in a row of decline in manufacturing hiring. All right. Housing and mortgage-related housing prices nationally, according to FHFA, we're up a tiny bit. according to Kay Schiller, down a little bit, but either way, they just simply don't really do that on a national basis very often. To be in a decline or flatish range from a price standpoint nationally,

when prices generally have a very steady trend line up, it does indicate that there's certain pockets that are seeing much more significant decline. Rent growth, by the way, was only up 1.9% from a year ago per Zillow's reported rent index. So this should help once it catches up with the data to bring the overall inflation rate down because having a rent growth level below the national inflation rate should put downward pressure on the total rate

because shelter is between 34 and 38% of total inflation in terms of the waiting. I'm not going to do much on the Fed here just because the whole Friday Divida Cafe was devoted to the Fed, but we are now at a 50% chance of some form of rate hike between now and the end of the year, according to the Fed Funds futures market, we're at zero percent chance of a rate cut at this point. I mentioned oil was up

6 percent on the day. Oil was down 17 percent in the month of May. Midstream was hammered last week, down about 7 percent on the week. On the month, though, even with oil down 17 percent, midstream ended up only being down 2.9 percent, and obviously all of that and then some was from last week alone. it remains up over 20% year to date. There is a lot of impact happening. I mean, I would say a kind of mitigation of impact from the Strait of Hormuz being closed from a high degree of inventory levels we had in our commercial inventories of crude oil before all this began. But now those inventory levels have drawn down significantly.

That leads to the bad news that this appears to be nearly at the end there. expect that would catch up with prices if straight of her moose remains closed. So we have the May jobs report coming from BLS this Friday. Clients will receive their weekly portfolio holdings report on Wednesday per euse. And on Friday, it'll be a very different, and I mean very different dividend cafe in that I am delivering the commencement address at the graduation ceremony of Pacifica Christian I School of Orange County tomorrow night, Tuesday, June 2nd.

And we're going to use that speech and my transcript to that speech along with a few bells and whistles I'll throw in there as Friday's Dividy Cafe. I have no idea if some of you will find that to be an interesting twist from what we normally do in Divida Cafe or that you will just be desperate for me to get back to Fed Talk. But either way, that's what you're getting in Dividy Cafe this Friday as we enjoy this graduation season coming into June of this year. I'm going to leave it there. Thank you, as always, for listening, watching, and reading the Dividend Cafe. Reach out with any questions anytime, and go, Nix. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, and registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors LLC.

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