The Dividend Cafe - Monday - October 5, 2026

Episode Date: October 5, 2026

Today's Post - https://bahnsen.co/3Tqofwe The Monday Dividend Cafe is recorded mid-day during a “money manager week” of meetings at Apollo, Blackstone, and Golden Tree. With earnings season starting, quarterly earnings expectations have risen 1.8% in five days, with upward revisions concentrated in technology and downward revisions in consumer staples and industrials, shaping the bar for surprises. Yield-sensitive areas have dropped in recent weeks, creating potential recovery setups for REITs and alternative asset managers as fundamentals like asset gathering and slowing private credit retail redemptions remain solid. President Trump announced a federal AI “super intelligence” task force chaired by Jay Clayton. With midterms four weeks away, Senate control is described as a 50/50 proposition. Economically, Friday’s jobs report was weak (29,000 jobs, unemployment 4.2%, soft wage growth), shipping costs have surged, ISM Services dipped, and October rate-hike odds fell to 22% while year-end hike odds remain near 90% amid cautious Fed comments. 00:00 Midday Recording Setup 01:24 Earnings Season Expectations 02:33 Yield Sensitive Selloff 03:58 AI Task Force Policy 05:01 Midterm Senate Outlook 06:35 Weak Jobs Report 07:29 Rates Inflation Signals 08:28 Energy Midstream Notes 08:41 Wrap Up Disclosures 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 Dividend Cafe where today I'm doing something we've never ever done. I am recording right now at 120 in the afternoon, Eastern time, which means the market is not closed yet. I am not going to be able to sit here and tell you how the Dow S&P NASDAQ oil prices bond. yields in different sectors closed for the day. But I have to record now because I'm in between meetings. We just came from Apollo's World Headquarters where we had four different portfolio manager meetings there this morning. And the second I am done recording now, we move over to Blackstone's World Headquarters, where we actually have four meetings there as well, and then end up

today at another meeting at Golden Tree. So it is Money Manager Week. Nine meetings in one day is a little heavy, but we will have quite a few throughout the rest of the week each and every day. But I did not want to skip the Monday Dividendon Cafe. If you missed the Friday Dividendon Cafe, it had to do with some very fun things about the past, present, and future of the Bonson Group. And this coming Friday's Dividend Cafe are going to have some very fun things to say about bond yields. What could be more fun than that? As far as today, let me just tell you that earning season is getting ready to start. And it's pretty rare that you see. expectations go higher for earnings on the quarter year over year, 1.8% in the last five days.

So there's a pretty high expectation and high expectation growth, including in the most recent of days, baked into this coming quarter. That puts the bar up a little higher on what investors are expecting. The revisions upward have been most intensified in technology. The revisions downward have been mostly in consumer staples and industrials. So markets tend to be about expectations, and this tends to now lend itself to the possibility of some upside surprises from a lower bar in some of those downward revision sectors. I mentioned staples and industrials. And you do have a little bit more of a possibility of good numbers that were already baked in on the tech side. But we'll see how this earnings season goes. Over the last three to four weeks, I want to be clear that you've

seen all the yield sensitive areas drop. And I think that you're going to see things like alternative asset managers are a great example. Reiths are a great example where it was really not fundamental at all. And therefore, any just slowing, stalling, pausing, let alone reversal of bond yields moving higher set you up for a bit of a recovery there. On the alternative asset manager space in particular, not only were the higher bond yields a factor, but I think asset gathering has remained strong. That is the kind of core of the business in terms of fee-related revenue. Redemptions from retail ownership of private credit have slowed. Fundamentals seem rather good. So you just have a nice little setup there. I said before, I can't tell you where the tenure, the top sector, the bottom

sector of the day, I'll close today, but it will be in the written dividendcafe.com. By the way, as much as tech has rallied in the last couple weeks, it's worthy of noting that health care is one of the other sectors that has as well. There are far more sectors that have deteriorated than gone higher because of the fact that markets moved higher while breadth was deteriorating, means more things were going down than up, but not in the broad sector sense. So public policy-wise, President Trump announced over the weekend the creation of a super-intelligence force to serve as a sort of coordinating body with the federal government on American development of AI.

And I generally do have a pretty low opinion whenever I hear any governmental body talking about any task force, committee, stuff that is somewhat nebulous and ambiguously empowered and whatnot. The vagaries of it all tend to be somewhat token, if not even just excessively bureaucratic. The one thing I want to say here is that Jay Clayton was appointed by the president to kind of chair this. And I know Jay to be a very serious person and very capable. And so I do think that there are other serious and capable people on the task force. And I'd be very surprised if some of them were willing to sit on this if it were just going to be a token cosmetic body. So we shall see. There's a number of combinations of what could end up happening out of it, but I'm a little more

optimistic or hopeful than I would have been if it weren't for Jay Clayton being a part of it. On a separate policy thing, just as we get now into the final four weeks before midterms, and I've spoken before about the very, very, very high regard I hold Mark Halperin in as a political pundit. Mark now believes, I mean, everybody you could possibly talk to Republican or Democrat, right or left, red or blue, believes that North Carolina is a goner for the Republican. in the U.S. Senate. But Mark now believes that the second most vulnerable seat, and there are several quite vulnerable seats, is not Ohio, not even Iowa, Alaska, but Kansas. And so if that is, in fact, true, then you look at Ohio. This is an order of vulnerability, from most vulnerable for Republicans

to least vulnerable for Republicans, Ohio, Alaska, Iowa, Texas, Maine. If Maine is the least vulnerable of seven that speaks to the resilience of Susan Collins. But remember, the Democrats need to flip four total. Let's say they do have two in the bag. They need two more. And when you are looking at anywhere from a plus two for Democrats to a plus six, and the need is plus four, that's basically a 50-50 proposition. And I know some say it's more than 50 percent. And others say it isn't, but I would just say, I think if you're setting odds in the world of nonpartisan, objective odds making, I think that the Senate's majority control is literally a 50-50 proposition right now. On the economic front, it was a really poor jobs number on Friday,

29,000 jobs created and another downward revision of 60,000 from July and August. The unemployment rate ticked up to 4.2%. Average hourly earnings were up just 0.1% in the month. They are up 3% year over year, so barely in line with where price level has moved. Not a lot of real wage growth over the last year. Some positive is that the household survey and the ADP number from two weeks of four in the private sector was a little bit better, but there's always that disconnect or frequently a disconnect month over month. We're averaging now 40,000 new jobs a month for the last year.

We're averaging 65,000 over the last six months. It's a little bit better. We really need to be in 150 to 200,000 range to feel good about things. Shipping costs have exploded, and that is most certainly leading to a lot of higher input prices in various other elements that are seeing some price pressure. ISM services came out this morning. It was down 0.5% in September. construction of data center is strong, construction of everything else is weak, and that's

kind of hurting because that does flow through to the services side. With the weak jobs number on Friday, you did get a rate hike expectation in October that dropped all the way down to 22%. But the rate hike expectation by the end of the year is still somewhere around 90%. But when you had Fed governors Bowman, Michelle Bowman, John Williams in New York, all coming out more, saying, oh, we don't really think we need to do it right now. Let's wait for more data. I would just say that that probably indicates they're not going to go in October, and that doesn't seem to indicate that forward guidance has been muted. They're either going rogue or something's going on.

Midstream was kind of flat last week as the market was down a bit and oil prices were down. A lot of positive things happening out there are permitting reform, which I think would be great policy and also great for the midstream sector. Read your Ask TBG at divinacethafe.com. Like I mentioned, a really fun one coming on Friday and the Friday Dividedin Cafe about bond yields and a couple links in our more to chew on inside Dividycafe.com as well. I'm going to leave it there and get to our next batch of meetings. But thank you, as always on this beautiful Monday afternoon for listening, watching, and reading the Dividy Cafe.

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