The Dividend Cafe - Monday - March 2, 2026

Episode Date: March 2, 2026

Today's Post - https://bahnsen.co/3NdZ2Sm In a Monday Dividend Cafe recorded before the market close, David Bahnsen discusses the market and energy implications of weekend U.S. military actions involving Iran, emphasizing the show is not for strategic or editorial war analysis. He notes futures opened down about 500 points but equities recovered to roughly flat, while oil rose about 6–9% to around $70 and U.S. LNG-related names moved on the prospect of greater export demand if Middle Eastern supply is disrupted. He highlights the absence of a traditional “flight to safety,” with Treasury yields higher across the curve (10-year up about 9 bps, 2-year up about 11 bps) and defensives lagging while energy and technology led. Bahnsen argues outcomes hinge on conflict duration, but elevated valuations and broader uncertainties (AI, private credit, tariffs, courts) raise risk and volatility. 00:00 Monday Market Setup 00:51 What This Show Covers 02:21 Futures Drop Then Recover 03:26 Oil Moves And LNG Angle 04:50 Conflict Duration Scenarios 06:47 Why Markets Stay Calm 08:16 Bonds And Sector Signals 10:09 Valuations And Uncertainty 11:59 Closing Thoughts And Prayer 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 the Dividend Cafe where there is a lot going on. For one thing, I'm actually recording before the market has closed today, which I never like doing. But because of the schedule of things after the market closes, the written Dividendon Cafe and our numbers and everything at the daily recap, and your inbox will be the final closing numbers. But it's just on the podcast and video here right now, I'm recording with a couple hours to go in the trading day. And that's a good thing because there has already been quite a bit of movement within the day.

And I want to be able to address market relevance, market sensitivity around the Iran military efforts and endeavors over the weekend. Obviously, that being the biggest story in the week. world right now. I want to first just make abundantly clear that I have some things to say about the relevance of the weekend's events to the energy sector, to markets, to the economy. I'm going to address these things quickly and particularly talking about what we're seeing already here today. But if one is looking for more strategic or military analysis, then Divida Cafe is clearly not the best place for that. And hopefully you have various sources for you think,

you can get good coverage on that subject. And I would add, too, that if you're looking for editorial coverage, the do's and don'ts and they shouldn't of or they should, they shouldn't have done something or they should have done something, most of us probably have opinions on the propriety of a lot of these things. But again, I talk all the time about what I believe is right or not right in the economics sphere in Dividing Cafe, because it's directly relevant to, I don't know how to talk about economics without sharing my opinion on matters of economic policy. On something like this, I'm just not going to do it here at the dividend cafe. It's not to avoid giving offense. I don't really ever think about that. I'm not much in the business of sanitizing

the things I say. It's that I don't believe Divide Cafe is the venue for those things. And so if you are looking for a lot of opinion as to what we should have or shouldn't have done, again, I think you probably have better resources for that. But where I do think Divinity Cafe is, Cafe is a good resources to talk about the market reality of what's taking place. So you may know that the future Sunday night opened down 500 points. Now, let's just say that the market was not even or slightly up as I'm sitting here talking right now, which it is, that the market had not recovered 500 points of being down on the day, which it thus far has. Let's say we were down 500 points. You would say, okay, well, that looks like the markets are really responding to.

this Iran war effort, what has happened, there's fear. 500 points is nothing. It's not even 1% essentially. And you're talking about there being a ton of days that have seen far more than 1% up and downside already this year. And it's the beginning of March. So the denominator is so high now that when the numerator is 500, it really, it really, really isn't a very big deal.

1% does not suggest some sort of major event, let alone 0%, which is where we are now. Now you'd say, well, oil prices moved last night, 8 or 9% as I'm sitting here talking there, I'm 6 or 7. Again, 6 or 7 isn't that much. And by the way, it's also needing to, like getting up to, not starting from, but moving to on oil price of about $70. So when Russia had invaded Ukraine and we were already in the 80s and then it went up above 100, those are big numbers that have a big input cost to producers and obviously a big

consumption tax for U.S. consumers. At $70, we're kind of below a median range of where the oil and gas sector wants to be anyways. That's not to say there's no relevance in this with oil and gas. I think the bigger element you're seeing is if some of these other Middle Eastern countries that have cut off their LNG production, lukified natural gas, then more and more buyers need to end up getting imports from the U.S., meaning the U.S. exporting more LNG. That becomes an interesting investment story.

And you've seen a lot of the LNG, the Likified natural gas players in the U.S., whether be the pipelines, producers, terminals, all seeing some price action around that here today. So to get to the underlying point, there is no one today that includes David Bonson in the Dividendon Cafe that can give you analysis of where this military endeavor is going. I can tell you that if it ends up being three days, even three weeks, and pretty minimal, Lord willing, loss of U.S. life, that it will likely end up being no kind of market story at all. And that if it were to become a three month and it's not going to become a three year thing. So people are starting to make comparisons to like the Iraq War in 2003.

This is not going there for a whole lot of reasons I won't get into now. But my point being even three months, six months, I am very skeptical. I would consider that above 0% probability, but a very low percentage probability. And I think the idea that all the bombing from the U.S. and Israeli forces is going to be done in the next day or two is pretty low probability too. But the base case, the highest probability, is a shorter term conflict. And what exactly the end run ends up being, I do not know. The reason I bring this up is that I think our market expectation has to be tempered by the uncertainty of how long this ends up going. Bottom line, the longer term geopolitical instability leads to greater volatility in risk assets, and the shorter term leads to a flatter volatility and a more benign outcome in risk assets.

So what have we seen today besides stock market drop and then almost? almost immediately begin recovering. Just punishing the overnight speculators is really what that was. And the fact oil prices are up, but not a lot. I can also look to the recent effort when we took out the nuclear facilities a few months back. When you look at the market response after the horrific October 7th attack of Hamas on Israel, two and a half years ago, when you look at the Iranian attack on Saudi, the drone attack on Saudi oil fields, I believe that was in the third year of the first Trump term.

But regardless of the exact timing, there's been a handful. And I wrote a Diven Cafe about it then, a handful of geopolitical events in the Middle East that in times past, we would have thought would see oil up a lot, equities down a lot, and there wasn't much response. You're seeing that again here. And I think that a lot of that has to do with the repricing and market functions that the Middle Eastern efforts. are expected to be shorter, not longer, and more airbound than ground-bound than they used to be with less capacity for retaliation and for domestic terrorist cell involvement and other things of that nature. Look, that's not to see this thing can't get worse on that front, but if I had just said, for anyone who's been in markets for decades or studied history for decades, we had this

major historical U.S. military strike on Iran, what do you think it's happening with stocks? I don't think many people would have said by 1.30 Eastern time, the market would be up on the day. And I don't think, and this is the more significant factor we talked about with our investment committee this morning, that the bond market would be down, the so-called flight to safety that usually sees treasury yields go down and treasury bonds jump up. And today you actually see the bond market, I'm going to give you the exact numbers as we're talking, but up and down the yield curve. Right now, the 10 year is up nine basis points, the yield. So you've seen bonds all sell off today. The two year is up 11 basis points. So the entire term structure of U.S.

Treasury bonds is down as yields have come up. That, to me, is obviously the opposite of fight to safety in tandem with oil prices being up, but not that much. In tandem, with equity markets all having a reasonably benign response. As I'm sitting here talking, the S&P 500 is dead flat. The Dow is basically dead flat. The NASDAQ's up a little bit. Now, energy is the top performing sector here on the day, and that's not a big surprise when you look at oil prices. They're off of their highs, but the WTI is up about 5.5%. That's not the type of stuff you expect to see if you think the Strait of Hormuz is going to be shut down and we're going into a World War III scenario in the Middle East. But it is partially a byproduct of what happens

when U.S. has significant energy independence. So as I'm talking, top performing sectors on the day are energy and then behind it technology. And then the worst performing sectors are some of the defensives. So again, you would think your consumer staples and health care would be the big rally points in a flight to safety day. We're just not seeing any of that. So that is the basic encapsulation of where things stand. I think that we still want to get more information as to where a lot of these things are going. But I think that my big takeaway for market watchers is that this is not fundamentally about the Iran efforts. It is how that plays into an additional factor with the questions about AI, the questions about market valuations, all these concerns about private credit.

I wrote an entire Divinity Cafe Friday addressing that. My point is you have a kind of ecosystem of uncertainty, some of which I think are nonsense, some of which I think are more valid, but then you stir it together and add in a very significant geopolitical story. On the margin, it leads to higher uncertainty. But the uncertainties that exist with these various headline events have to be understood in the context of when President Bush invaded Iraq in 2003. We were off of almost three-year savaging bear market. Valuations were very low. Markets had been pummeled. Right now, it's the polar opposite. We're near the highest valuations we've ever seen. So you're basically dealing with a very different starting point. Now, we're not going into a four-year war the way that we did with Iraq, but whatever we're going into it, whatever we're dealing with from private credit, AI, and tariff impact, and Supreme Court

uncertainty and all these things. The point is it's uncertainty events, some more valid than others, combined with elevated valuations and elevated valuations if nothing else changed the risk profile. That's what I would suggest is the big takeaway. Readdividendoncafe.com for more update, and I hope that this has been somewhat worthwhile. We're going to continue watching it each day. You'll hear from me again tomorrow in the daily recap. And in the meantime, thank you for listening.

Thank you for watching. Thank you for reading the dividend cafe. And I will say from the bottom of my heart, I earnestly hope and pray for the safety of all U.S. troops. God bless America. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member Finra and SIPC, 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.

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