The Dividend Cafe - Thursday - April 23, 2026

Episode Date: April 23, 2026

Brian Szytel hosts Dividend Cafe on Thursday, April 23 from West Palm Beach, noting a modestly lower, directionless stock market (Dow down a few hundred points, S&P down 0.25%, Nasdaq down 0.5%), flat bonds with 10-year yields around 4.30, and oil up about 1.5% amid ongoing Middle East tensions. Economic data was mostly good: jobless claims were slightly higher, services flash PMI came in at 51.3 vs. 51, and manufacturing flash PMI beat expectations at 54 vs. 52, a nearly four-year high with new orders strongest in about four years. With about 15% of the S&P reporting Q1, roughly 88% beat expectations with an average 13% beat and revenue growth supporting high margins. He discusses a sharp software selloff alongside continued strength in semis and recommends David’s prior AI write-up. He also explains that private credit is a riskier, illiquid alternative with floating coupons and default risk, while fixed income refers to liquid public bonds used as portfolio ballast. 00:00 Market Recap Snapshot 01:03 Economic Data Check 02:00 Earnings Season Strength 03:36 Tech Rotation and AI Nuance 04:58 Private Credit vs Bonds 06:59 Closing Thoughts 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. Good evening and I welcome you back to Dividend Cafe. This is Brian Saitel with you here as your host on this Thursday, April the 23rd. I'm here in our West Palm Beach, Florida office this week and we'll be heading out here shortly. And I'm actually recording this a little bit before the close, so give me some grace here. But the qualitative things I'll talk through won't be changed, but if market metrics change slightly at the close, so be it. All that to say, you had a mix somewhat directionless and tilted towards the downside day in the stock market. The Dow was down a few hundred points here.

S&P was down a quarter of a percent. Nasdaq was down a half of a percent. So modestly lower. Bonds were about even on the day. You really just had tens trading again, just right in that 430 range. And then you had oil prices that were up about a percent and a half, right? roughly across the board. So continued the same story in the Middle East, back and forth, so on and so forth. You had a decent amount of economic data, most of which was quite good that I'll go through. And then, of course, some comments around some undertones in the markets. But let's start with the economics side first. A couple of things out. We had initial jobless claims. This is a weekly number. About in line, it was actually a little bit higher, which is a bad

thing on initial claims. Existing claims, by the way, were also a little bit higher. So nothing to write home about, but jobless number. numbers were a little weak. You had two flash PMI numbers today, flash services and flash manufacturing. Okay, services first. Basically in line, it was actually tilted to the positive slightly. We got a 51.3 versus 51, so we'll take it. But the manufacturing number that came out was largely in the green above expectations. We got a 54 instead of a 52. That's a four-year high, almost. It's 47 months from what we've seen. So that's a really good number. And new sales, I'm sorry, new orders coming in were the strongest that we've seen in about four years.

Robust on the manufacturing side, obviously a good side for the economy. So there's your economic front. We're three out of three. So we're abouting 1,000 there. My comments today are about what's going on in markets, first fundamentals. I wrote about this yesterday a little bit, but I wanted to tilt it a little differently. We've got about 15% of S&P reporting so far for Q1. Of those names, call it 90 or so, there is about 88% of them that have beat expectations.

Okay, that's really robust. We've been saying something in the 70s for quite a while now, 75. There's a whole lot more to go, exactly 85% more to go, but so far so good on that front. The average beat, by the way, has been by 13% above guidance. So that's also a big number. We've seen more about the 7, 8% type of range historically. So you've got robust things coming out on the earning side, coupled with an employment report, like I said, that is largely in line, and then the manufacturing numbers that were robust. So all those to say, what I am telling readers is there is more good than bad going on in the markets right now. There's plenty to be said about the Strait of Hormus and oil prices and what that does to inflation, what it does to interest rate policy, what the new Fed chair, assuming he will get confirmed, we'll have to deal with in all of those different things.

But fundamentally, we're looking decent in markets. The other nice thing I'll say about earnings coming out is you can see top line revenue come in, and it's actually still growing nice. We talk about those margins that are bigger than historical norms and at record highs of 19.8%. But if top line is still growing, you've got a protection to those margins. You will have some offset to that

with, of course, energy flowing through and as an input cost. But that said, there's plenty of margin there. The big sell-off today in software names, and it's interesting because you had a 17th day in a row that semis were up, which is great. You're talking about semis as a pretty broad industry as you can imagine. It doesn't all serve artificial intelligence equally, but they're all up,

and then you've got basically more or less all software companies and throw IT in there too, all down on the day significantly. Like names down 5, 6%. This should not be treated as a monolith. Not all of these things are equal. So it's great. It's going to change things and be a benefit for productivity. But to have the entire software space sell off in unison when some things, some of those companies will really benefit from the margin expansion, from the operating leverage, from the productivity gain that they're going to get out of utilizing AI, I think is a little silly. And David wrote a wonderful Dividend Cafe on Friday, and it is one of my favorites. So I put it in here again today because I really think if you haven't read it, just spend some time, grab a cup of coffee and read through it. It's a fascinating write-up on what's really going on in the AI landscape, how it relates to software.

There's some takeaways in the long term, too, about different periods of time with, different technologies and them all being treated at one point, usually like a monolith, where because of this, then this happens and that's black and white. That's not going to be the case, of course. So take it for what it is, not regurgitating the Friday version of Divided Cafe, but it spoke to me and I wanted to make sure everyone was able to get a hold of it and read it. Questioning that of today, the difference between private credit and fixed income. At first glance, look, that's a pretty simple question. It's a valid one, and it comes up quite a bit. I do think that there are advisors that sold private credit as fixed income, but of course, that is definitely

not what it is, since one, the coupon of private credit is floating and not fixed, so just by definition, it's not fixed income. But also because it's a totally different asset class, private credit is an alternative investment. It has risk to it. These are private loans made to middle market businesses from asset managers, essentially, and BDCs, which are business development companies. They're not liquid. They do have risk of default. Those companies are not going to the syndicated bond. market. They're not going to JPMorgan to issue public debt. They're going to private markets for a reason. They want to finance their companies. They want to grow. They don't want the world to know about it. And that's a strategic benefit. And because of that, they're paying an extra, call it 2 to 4%

on the spread over treasuries. So there are 10, 12% yields. As an investor, that's a good thing. You capture a higher yield. You also just have lilaquidity in risk associated with default. And so it's really just for high net worth people that have a balance sheet that can afford it and understand that there's risk in it. This is not a bond. It's not safe, in other words. So attractive, sure, times like this where liquidity is constrained is when people are hopefully not, but are maybe rudely awakened to the realities of the asset class. When we talk about fixed income, though, it's different. We're talking about treasuries and corporates and munis and agencies, all the liquid publicly traded day-to-day marked stuff out there.

This is the safe money in a portfolio. It's fixed income typically. There are some floating rates, but most of them are fixed. And they move up and down every day a little bit with interest rate movements, and that's called duration. But this is the ballast of a portfolio. It's something that we would look at as safe, liquid, and more of a savings type of allocation versus investment.

So that's the difference between the two. I hope that's distinctive enough, but if it isn't, I hope that you can reach out and let me know. But with that, I'm going to let you go for the day again or wish you a lovely evening. If I don't speak to you, have a great weekend, and we'll talk to you soon. Thank you. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with Hightower Advisors, LLC,

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