The Dividend Cafe - Monday - June 29, 2026

Episode Date: June 29, 2026

Today's Post - https://bahnsen.co/3R54h8Z David Bahnsen previews a forthcoming mid-year Dividend Cafe recap and notes a CNBC interview on market excesses in AI/tech and investor behavior. Markets rose sharply (Dow +300, S&P +1.1%, Nasdaq +2%) led by communication services; Google’s first day in the Dow coincided with Verizon’s exit, while materials fell. He argues recent breadth versus index performance supports rotation over correction, and questions whether stock and bond markets are truly pricing Fed rate hikes despite high futures-implied odds; the 10-year ended flat at 4.37%. He reviews Iran-US ceasefire uncertainty and Supreme Court activity, including sending the Lisa Cook firing dispute to lower court for due process while upholding an FTC firing. He flags bipartisan interest in taxing/data-center limits, discusses a likely housing bill with limited impact versus state/local barriers, cites rising supply-chain cost indicators, weak new-home sales and falling prices, notes Fed balance-sheet growth, oil at $70.50, and upcoming JOLTS and jobs data (Thursday). 00:00 Welcome and Week Ahead 02:12 Market Recap and Rotation 04:17 Fed Hike Debate 07:04 Geopolitics and Supreme Court 10:03 Data Centers and Housing Bill 12:59 Economy Housing and Fed Sheet 15:14 Energy and Jobs Week 16:05 Wrap Up and Thanks 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 Dividend Cafe. I'm your host, David Bonson, coming to you from what is about to be very warm New York City throughout this week. I don't know if there's the same kind of heat wave that's going on all over the country. But I do think the concrete jungle is getting hot. And I do think that it has been a fascinating first half of the year. And by the time you get your Friday Dividing Cafe at the end of the week, we will be into the second half of 2006 and we're going to devote our Friday Dividendon

Cafe as you go into your Fourth of July weekend with a very thorough recap of the first half of the year, but with some perspective on it that I don't think you're going to get anywhere else. So we'll review what's gone on. We'll offer our commentary and we'll update various projections. and perspectives and thoughts on what to expect in the second half of the year. As far as today goes, I do want to do our normal around the horn. We have a little bit of information in every category we normally cover in Monday Dividy Cafe. I will first say that I was on CNBC Squawk Box this morning in the second hour of the show

and had a very long interview actually talking about the excess in markets, concerns in some of the AI and tech names. Talked a bit about SpaceX, talked about investor behavior right now. And so if you're interested in watching that interview, the clip is at our YouTube page and certainly can get the clip right there at diviningcafe.com as well.

And then I will point you to Friday's Dividendon Cafe from a couple of days ago where I wrote a piece suggesting that markets should be understood more comprehensively than just as the stock market. but rather that venue of not only human cooperation, but specifically commercial endeavor that is inerately optimistic, that if you're looking for a place where hope and a positive view of the future can be found right now, markets are probably the best place to look.

So with all that said, let's get into today's Monday recap and then we'll let you get on with your Monday night. The markets opened, the Dow, opened about 300 points, and closed up 300 points. Now, in between, there was a little bit of movement above that and below that, but you basically had an up 300 point day from start to finish today. And one thing I do want to point out that represented almost 60 basis points of upside in the Dow, but you had a pretty big down day in Verizon and a big up day in Google, and this was the first day that Google is in the Dow,

and the first day the Verizon is not. So that was a pretty nice first day for the Dow do have that kind of flip-flop in terms of its constituents. The S&P was up over 1.1%. The NASDAQ was up over 2%. So you had a very strong day in communication services driving a lot of the upside for markets today. That sector was up over 3% on the day.

The worst performing sector was materials, which were down almost 2%. The basic correction idea that some have thought about versus my theory of more of a rotation that we've seen throughout the month. Now, again, you had some of these reversals reverse from the reversal today to some small degree, but in the empirical data,

you've had the index that has been declining over the last several weeks, while the amount of advances in the market is increased, and the amount of decliners has decreased, even as the overall market is declined, and that is as textbook empirical support for rotation theme, as you're ever going to see. Bond markets were dead flat today.

The 10-year closed at 4.37%, which is where it started. I want to remind you that after the Warsh Press conference, the new Fed chair, Kevin Warsh, that the 10 year went up to 4.51 percent. That was not even two weeks ago, and now you have the yield back into the four threes. I thought I'm going to leave you with about markets before we start going into some of the news things

and Fed and economy and public policy and all of that stuff. One take is that, oh, there's a little bit of a contrarian play here. I mean, there's always folks to just say, let me just bet with the crowd, and if the momentum continues or the crowds guess on things continues, then there's money to be made. But obviously, a lot of people understand you can make a lot more money betting against what everyone else is already doing than you can with it.

And yet, it doesn't always make a lot of sense to bet against the crowd for the sake of betting against the crowd, sometimes thoughtfulness and intelligence and perspective and judgment, sound judgment or good ideas. Well, I say that to bring up that I'm one who is a little skeptical of the idea that the Fed really will raise rates, but there's no question that there's elements of markets that are of the belief the Fed will raise rates.

And so one could easily say, look, if the market believes the Fed is going to raise rates and they don't, then, you know, there's certain elements that could be real opportunistic. Like, for example, a stronger dollar that we've seen that has really pummeled certain areas, you should get a dollar reversal, if the Fed doesn't go forward raising rates.

And that all makes a great deal of sense to me. And I understand that certain markets have very much are acting as if they believe the Fed's going to raise rates. Gold has gotten pummeled. Certain emerging markets you look at Hong Kong, South Korea, have gotten pummeled. But let me just ask you, does it seem to you as if the U.S. stock and bond markets are acting

as if the Fed is going to be raising rates? Now, I understand the Fed Funds futures market is an 80% implied probability. It was 90%, but it's still at 80%. There's a almost 20% implied probability in the futures market of no rate movement, but then there's somewhere between 30, 40, 80, depending on how many rate hikes we're talking about, of rate hikes between now the end of the year. And I guess I am not totally sure that one would make. money, betting that the Fed doesn't raise rates, because I'm not totally sure that the stock

and bond markets are acting like they believe the Fed's going to raise rates. There are certain elements that are, and the futures market is hard to argue against, but can you really say that the way that S&P stock and bond markets have been acting, that they're pricing in Fed tightening at this point? There's things that don't add up, and I think it's worth thinking about. On the news cycle, you did have this weekend, I recognize everybody. I guess I'm in this list to some degree as well, but everyone is so unbelievably desensitized and numb to all of it. About the Iran-U-S. Hostilities were supposedly in a ceasefire, were supposedly an MOU, a memorandum of understanding about ending it all.

And then you had Iran strike some targets in Kuwait and Bahrain over the weekend. And then the U.S. strike back. And then I ran threatened a strikeback for our strikeback. And then all of a sudden, just as futures were getting ready to open last night in financial markets, they said, okay, hold on, let's all take a breath here. So there's still some uncertainties in where a lot of that's going to happen. In the meantime, they are saying that commercial vessels are allowed to continue moving freely in the straight. The other thing that happened today was quite a bit of rulings from the Supreme Court as they get ready to wrap up.

their season, if you will. And there were a handful of verdicts that went against what the White House and the president were wanting. And I just want to point out how ridiculous it is, obviously, if anyone thought that the Supreme Court exists, to be an arm piece and extension of the executive branch, regardless of his president, it reflects a very, I think, dangerous lack of understanding of separation of powers in our constitutional republic. But if anyone believes that the Supreme Court has behaved that way, it just simply isn't true. And there's no question. They've given some verdicts that were in line with what this particular president would have wanted, but they've given a ton that are against what the president would

have wanted as well. And you can like what they've done or dislike what they've done or like some and dislike some. Everyone definitely is allowed to have their own opinion of the rulings and their verdicts. But I'm not sure that an opinion that they are giving rulings to be in line with the executive branch is very coherent at this point. And we'll talk about. in a moment about probably the most material ruling today. Well, we could do it now. They basically punted the firing of Fed Governor Lisa Cook back to the lower court just saying she has not received due process. Let's remember that regardless of the paperwork issue on some of these mortgage application, she hasn't even been accused of a crime yet, let alone convicted. And so the Fed,

on a matter of policy, just said, yeah, she can't be fired for that. Now, they did, though, uphold the firing of an FTC commissioner under the unitary executive power that the executive branch has that level of oversight. And they ruled there to have been a better process in this case and upheld that. So there were, you could read it divinitycafe.com and I'm sure you've already seen some of the news cycle yourself of some of the other verdicts that came through that the president did not agree with, but it was a busy day for the United States Supreme Court. More and more bipartisan talk about potentially taxing data centers.

There's a Democrat congressman in New Jersey right now who's called for a total moratorium on data center construction. I am not sure if data center issues will become a really significant campaign issue between now and the midterms or just something in the background. Right now, it's more background. creeping up a little bit, but that's something we want to keep our eye on based on how significant data center construction has been towards the GDP growth we have gotten in the last year, year and a half. The bipartisan housing bill that was overwhelmingly passed by the House and

the Senate, the president has now not signed and saying, I'm not going to sign until you signed the SAVE Act, which is a voting bill that he wants to see signed into law. However, he hasn't vetoed it, so it then just goes into law after 10 days anyways, or if he does veto it, the numbers are clearly there to override the veto. So I do expect that this bipartisan housing bill comes through, and I've kind of brushed over this thing so much because I don't think it's a very big story, and obviously markets haven't treated it like a very big story either. And again, you know the nature of the partisanship in both the House and Center right now. So when something is being overwhelmingly done on a bipartisan basis, I think it's a very

fair question to say, is there really any meat on this bone to begin with? And so by way of quick summary, the housing bill is streamlining some of the environmental reviews and federal regulation that are involved in the construction of certain federally sanctioned affordable housing. But it's worth pointing out that the vast majority of regulatory and environmental headwinds to getting new housing supply built, and there is a ton of headwinds to new supply, is at a state and local level. The housing bill would add some federal mortgage programs for small mortgages under $100,000 that are not readily available through current conventional means. It provides for some grants to certain states and counties if they will reform their zoning and permitting rules

that are deemed to be impeding new housing instruction. And then it limits corporate ownership of single family homes to 350 with a bunch of caveats and nuances around it. One of the things is a classic case of being able to say that you did something that isn't really being done at any substantive level anyways. So look, there's a couple of things in the bill that are silly and a couple of things that are window dressing and a couple of things I agree with. But at the end of the day, our housing supply deficit is largely a result of state and local impediments, and I don't think that there's a ton the federal government can do, but this bill is

most likely going to become law, and that's that with that. On economic front, I read a piece from Torsten Slocke of Apollo over the weekend, and I just want to point out, as Torston did in his weekend report about container freight rates, truck transportation cost, dry van spot rates, canal transportation cost, New York Fed supply chain. All of these things are different indicators, but they're all adjacent to various elements of supply chain costs. And I've all seen pretty noticeable upside price pressures in the last month. And I think it is very fair to say that they're measurable, substantial price increases evident throughout the supply chain. On the housing front, speaking of the bill, new single-family sales,

the volume of new single-family homes was down 7.3% in the month of May, down 6.8% from a year ago. Inventory is sitting at 10.3 months has moved up even higher. So you have a very, very low number of transactions taking place. And a continued drop in prices, that's per square foot. A lot of people say, well, yeah, houses are come down a bit in price, but they're smaller or whatnot. But we're measuring this on a per square foot basis. So for the total volume of transactions to pick up, just actual sales activity of new and existing homes, I don't have any doubt that you're going to have to see prices come down.

They are doing so, but not at a level that is allowing the market to clear. So I mentioned the Supreme Court ruling on Lisa Cook as far as Fed news goes. I do want to point out that the Fed has added on the year $200 billion to its balance sheet. They have $300 billion of additional treasury bonds, but they have rolled off $100 billion of mortgage-back securities. And we will see where the Fed balance sheet goes between now and the end of the year. And I already mentioned the implied probability of rate hikes by the end of the year. So WTI crude oil was up almost 2%.

on the day closed at $70.50. Midstream energy stocks were up 3.7% last week when oil prices were down 6%. He had a big comeback from what had been a bad week the week before in midstream energy, natural gas demand continuing to feed that story. So this week, we do get both the Joltz data tomorrow job openings from the month of May. There's a bit of a lag in that day. There's a bit of a lag in that And then the June BLS report, the jobs report will come out on Thursday. Friday is a market holiday for the 4th of July weekend. So the main June jobs report will come on Thursday instead of Friday. My Dividend Cafe will be that special mid-year report I already talked about.

And other than that, we're going to leave it there in this week's Monday Dividing Cafe. Thank you as always for listening. Thank you for watching. And thank you for reading the Dividing Cafe. The Bonson Group is a group of investment professionals registered with High Tower Securities LLC, member FINRA and SIPC, and with High Tower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through High Tower Securities LLC. Advisory services are offered through High Tower Advisors LLC. This is not an offer to buy ourselves securities.

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