The Dividend Cafe - Monday - September 28, 2026

Episode Date: September 28, 2026

Today's Post - https://bahnsen.co/4AC4xy1 From Las Vegas ahead of an investment conference, the host recaps a volatile market day (Dow -347, S&P -0.77%, Nasdaq -0.92%) while the S&P sits near all-time highs despite very weak breadth: ~60% of S&P 500 names are down 20%+ and the market has seen repeated 52-week lows exceed highs; he clarifies a misunderstood stat showing the weighted average decline among 430 down names is 21.7%. He ties the damage to rising yields (10-year ~5.23%), notes defensives led on the down day (staples, healthcare, energy), and argues mega-cap rallies can occur within a longer consolidation after stretched valuations, with a “rubber band” in relative sector valuations. He also covers friendlier U.S.–China tone with mostly status-quo trade, election prediction-market odds, flat August durable goods, more housing price cuts and rising inventory, mixed office-market trends by city, Fed proposals to raise bank oversight thresholds, and oil near $93 with Iran/diesel-export headlines; Q3 ends this week and TBG begins annual manager meetings next week. 00:00 Welcome From Vegas 00:51 Friday Energy Plug 01:43 Market Drop Recap 02:38 Breadth Warning Signs 05:51 Bond Yields And Sectors 07:00 Mega Cap Rally Context 08:13 Valuation Rubber Band 09:30 China Talks Update 10:37 Election Odds And Senate Map 13:18 Economic And Housing Data 15:04 Fed Oversight Proposal 15:40 Oil And Energy Headlines 16:44 Week Ahead And Wrap Up 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 Dividend Cafe Monday edition. I am recording from my hotel in Las Vegas where I am going to be speaking at an investment conference after I'm done recording. And then I'll be heading back to New York City early in the morning. I'm kind of excited for today's Monday Dividend Cafe. I mean, I really do believe that every week covering public policy, the updates in economic data, updates around housing, mortgage, real estate related matters, the Fed, the oil and energy. You know, there's always been these different categories, and I enjoy all of them.

But at the end of the day, this is a markets commentary. And today we just seem to have plenty of fun stuff to cover in markets. Maybe not seem fun to everybody, but I will say that it's important. and we're going to get into all of it. Why don't I first do my little plug for Friday's Dividendin Cafe because we got a lot of feedback on it. I think it's a very important topic. There is all at once a macro commentary in Friday's Dividendin Cafe about the energy sector

and an investment case made about where I would argue an absolutely extraordinary investment opportunity exists. And that's hard to say. this point in time with so many valuation stories stretched to places that might cause some investors to be concerned, we think that you have a very compelling investment case that is not subject to some of the valuation concerns that many other places are. That is unpacked in Friday's Dividend and Cafe. Okay, so today markets opened down 300 points and the The day's trading action didn't see things get a lot better, but they moved higher throughout the middle of the day a bit, but then kind of reverted back to where we were by the close.

The Dow was down 347 points, which is 67 basis points on the day, but the S&P worse, down 77, the NASDAQ down the most at down 92. Now, that was today's down day, but coming into today, the S&P has been within a whisker of an all-time high, and it's worth, I'm going to go through a number of statistical things here. I want you to bear with me because some of them are actually flabbergasting. Some of them need to be explained a bit, but they all point to a certain narrative that I think is important. First of all, 60% of the names in the S&P, 500 are down 20% or more. Now, with 60% below their 100-day moving average, even as the S&P is at a near all-time high, this is more than just simply that the breadth of the market is very unimpressive,

that the advanced decline line is really quite negative. It's that those things are coexisting at a time that the overall market action on a cap-weighted basis has not been that bad. It exacerbates the risk of low-market breadth. Friday was the ninth day in a row of more 52-week lows than highs. I don't know if Monday is going to make it even 10 or not, but I strongly suspect it will. And this next stat is the one I'm most worried about being misunderstood. 430 companies in the S&P 500 are currently down 21.7%. Now, what that is doing is taking all the S&P companies that are down from their highs and blending them.

So some may only be down 3%, and some may be down 30. And when you blend it all together on a cap-weighted basis, it's 21.7. It is not to say that there are 430 companies that are individually down that much. And some of the social media reporting of this data point misconstrued it and reported it wrongly. I think it's dramatic enough that I don't need to add to melodrama with inaccuracy. But maybe that's why I don't have millions of followers on X. But I will try to get this right for you all. The weighted average of 430 companies is,

is down 21.7, and that's happening when the total market, 70 companies are up versus 430 down in this particular period of time, have blended all 500 together to be near an all-time high. So why does this matter? Why does this statistical lack of breadth that I've been describing make a difference? Well, the last time we've seen breadth this low was 1973 and 1999, and And I am a very big skeptic of the current market concentration dynamics and market valuation, but I don't even believe that there's necessarily a timing mechanism at play here. And I certainly don't think that we should hear these data points and assume historical repetition.

I'm not doing that. What I will say is that these basic facts from a risk-reward standpoint all do point to a, in my opinion, reminder of the benefits of portfolio quality, value, and fundamental metrics versus some of the other things that I think are a play right now. Now, one of the things doing a lot of the damage within the breadth of markets is the higher bond yields. Certainly, yield sensitive sectors have been hit. Most utilities, financials, we'll talk more about that in a moment. the pressure upward of bond yields did not let off today.

The tenure was up another five basis points to 5.23%. But one of the things that happened today, and again, it's only one day and it has not been playing out this way over the last couple weeks. But in the midst of some of these market breadth issues, the defensive sectors have not been doing well. I'm going to put a chart up in a moment. But for now, what I'll say is that today, the top performing sectors in what was a pretty meaningfully down day across all three market indices were consumer staples up 40 basis

points, health care up 29 basis points, and energy up 22 basis points, where the worst performing was communication services down almost 1.7%. So, yes, utilities and financials, I consider to be two spaces that are probably most oversold. I don't think I have to get into what is probably most overbought. But one of the things I think is worth pointing out is when you go through the mag seven names or the top 10 names, and we look at this period where all of a sudden the last few weeks, some of these mega-cap, giant cap names have retaken the spotlight, that this is a miniature rally within a period

where many of those names are down year-to-date or down over the last 12 months, and some may not be down but have a very, very flatish-type return profile. There's a couple that's not true of, But what I would say is this is a very common dynamic of rallies within a period of consolidation. That's obviously been my big thing for some time that we're in a period that will prove to be very range bound over a longer term period of time of consolidation amongst a lot of these mega cap type names that just simply got to a point of stretched valuations. And within a multi-year period of consolidation, you're absolutely going to appear. of rallies, and yet, much like some would be shocked to see what the returns are over the last

9, 12, 18 months on some names, that it's really quite underwhelming. I want to put this chart up now before we move out of the investment talk to the relative valuations relative to the overall market, their own historical averages in the kind of tech sector. We call it on the chart TMT, Tech Media, Telecom, because of the way the sectors were organized in the 1990s, doing apples to apples to what it all captures now. And then you look at those defensive sectors. And Callum Thomas, who I read quite a bit, has a term for this, a relative value rubber band based on how much relative value can get disconnected before there is a sort of snap back type event. And in this case, when you're talking about a rubber band, it's not just one side of it.

You know, sometimes you get things that revert because a thing that is too high comes down or a thing that's too low comes up. But with the rubber band, you tend to get both at once. And that is the way this looks on the chart here now. But again, divorced of any timing mechanism. All right, we'll go through our other categories. Please feel free to read more at dividend cafe.com. just because there is a lot here, and I'm going to hit the bullets quickly. We know the meetings of China took place last week, a lot of, you know, kind of pomp and circumstance about hosting Chinese leadership. What's interesting is the tone and tenor, much like my forecast about the, you know,

many people predicting the Trump administration was going to be a thorn in the side of China. And I thought, no, it's actually going to be a lot of accommodation and a lot of friendship or attempts at least at friendship. And we've seen that over the last a year and a half, two years of the new administration. The fact of the matter is tone and tenor is a lot friendlier and a lot more cordiality in the relationship. But then fundamentally, as far as China potentially playing a role in the ending of the matters that are at play on the global stage geopolitically with Ukraine, with Iran, you could add North Korea in that list. There's not really any indications of any kind of fundamental move. They extended and basically announced a status.

quo maintenance of things on the trade front, and we are expecting a softening of other restrictions of things that China will be allowed to buy in the months ahead. I will just quickly say, I am such a contrarian that I'm starting to wonder if things will be as bad for the GOP in five weeks just simply because of the pile on taking place now. I'm not a political strategist, and I would never want to be. but if I were playing that role for either party right now, I would personally recommend a bit more work and expectations setting,

but that doesn't seem to be the play. The Kauci forecast, the prediction markets rather, are up to 62% expectation for the Democrats to take a majority of the Senate. And again, that doesn't really matter how they were to go about doing it. There's so many moving pieces. We know the math is they need a, net of four seats and they could lose one or two. So then they would need more of pickups. If they were to lose Michigan or lose New Hampshire, they may not lose either. They are looking

like a sure thing to pick up a couple. And so there's different ways in which the math could come together. But again, the prediction markets, forecasting that will happen. And then obviously we know the expectation on the House. My guess is that those things play out and it's going to be very close in the Senate and that the House is going to flip. But the margins may not be as high. When I hear things about like, oh, maybe South Carolina and Mississippi Senate seat or up or grabs, I think those things are kind of outrageous. And I've seen it before. And it doesn't usually go real well for those making the forecast. Now, look, I do believe the Texas Senate seat could go either way. I know what the polling is suggesting. And I also realize how unbelievably hard

it is for a Democrat to win a Senate seat in the great state of Texas, but then you look at the various challenges that exist there and it could very well happen. I get people telling me there is no possible way a Democrat can win the seat, and I assure you there is a way, but that's not the same as saying it will happen. It's just that the data there is closer, but Mississippi, South Carolina, I just, I find it kind of unlikely. But if that were to happen, because never see never,

been wrong on plenty of political pronostications in my adult life. What I would say is that then you're talking about not just a blue wave, but a black swan type of vent, at least in the political world of how monumental that would be. But forecasting that or setting that into expectations doesn't seem to me to be a very smart politicking. On the economic front, the only data point I'll highlight is durable goods orders for August were unchanged. Orders are up eight and a half percent year over a year.

There were a couple of downward revisions in past months, but durable goods orders definitely paused in the month of August. On the housing front, 20% of listed homes saw a price cut in August. That is the highest percentage in a single month since 2020. There are 1.5 million homes for sale, which is up 46% since 2023. But the time to sell is for up to 50 days on average, which is higher than an average. have been, but still not that high, but on a relative basis, directionally moving higher. There are 58% more sellers than buyers right now, and that's the highest delta we've seen since this data began being collected and formally organized going back to 2013.

There's also a report I put in Divida Cafe today about commercial real estate and the office market, how the occupied space has moved higher in Dallas, Atlanta, Miami, and vacancies have picked up in Chicago, Los Angeles, and continues to struggle in Portland, Oregon. And then you're seeing really robust office demand in New York. And even in San Francisco, San Francisco still has higher vacancy and it's historically had, but just a huge recovery, especially in the higher quality spectrum of New York and San Francisco office in both finance and legal, but also technology in both cities. And in San Francisco, that's surprising with a lot of the resurgence around some of the AI

companies. On the Fed front, the only thing I'll say is that there is a proposal coming where the Fed who has the jurisdiction over bank supervision proposing to raise the asset thresholds for stricter oversight from 700 billion of assets to 960 would be that top tier, and of the bottom tier would go from $100 billion to $150 billion, largely keeping up with some of the indexed moves higher, the inflation index moves higher, and some attempt to just be a bit less regulatory heavy relative to the past administration. Crude was up almost 1% a day, closed up, a little over $93. I've already alluded to the big coverage of the energy sector in Friday's David and Cafe. Interesting reports coming out of the White House over the

the weekend, particularly Secretary Besson talking about Iran being down to only 15 million barrels that are on the water and that final deliveries to China are about to happen and that there really won't be anything left beyond that. It's very hard to know when some of these announcements come, what's true, what isn't, but that could be an event that catalyzes some sort of page turning out there. Midstream, by the way, was hit last week with higher yields. Utilities we talked about were down, and they were down over 3%. Midstream was down 4%. Midstream was down 4%. percent oil prices themselves were down, 8 percent. Refinery stocks, which we don't own at the Bonson Group, but they were hammered last week on a lot of that absurd talk about diesel export.

When I say absurd, it went from, oh, we're going to do it to no, we never said that to now back saying maybe they are looking at something. So it's a little mixed messaging out of the White House on this. Read the homepage.com for the AskTBG. There's a new question answer up there, basically every day. This week, we have President Trump hosting some of the AI lab heads at the White House tomorrow. Q3 has just two trading days left,

Tuesday and Wednesday, and then we will be done not only the month of September, but the third quarter of the year, headed into Q4 of 2026. And next week, beginning, bright and early Monday morning, Kenny Molina, the director of alternatives

at the Bonson Group, Brian Saitel, my co-CIO, and myself, the three of us, will be embarking on over 20 meetings next week through various money manager partners in New York City, this being now our 21st year in a row of annual Money Manager Week. Look forward to bringing you a big report from some of these robust conversations, multi-asset. Looking forward, doing some key takeaways to share with you all. Several links and more to chew on divinaccafe.com. You know the whole

deal. I'm off to give my speech, and I look forward to being back with you. And what I I am really excited about Friday's Dividend Cafe, where there is something I want to unpack and explain and get into that is a little different than you might be expecting. I'm leaving you in suspense. Thanks for listening. Thanks for watching. Thank you for reading the Dividing Cafe. The Bonson Group is a group of investment professionals registered with High Tower Securities LLC,

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