The Dividend Cafe - Thursday - July 9, 2026

Episode Date: July 9, 2026

In this midweek Dividend Cafe (Thursday, July 9), Brian Szytel notes a mixed recovery in markets amid renewed volatility tied to Middle East tensions, while oil prices pulled back slightly and interest rates were flat to slightly lower. Economic updates included initial jobless claims coming in a bit better than expected, suggesting steady, healthy employment, and weaker existing home sales (down 3.4% to 4.09 million), reflecting affordability pressures from high rates and a stuck housing market, with modest price declines seen as healthy clearing. He reviews June FOMC minutes showing a divided committee, some discussion of potential hikes, continued attention to AI demand, geopolitical risks, tariffs as a GDP drag, and higher inflation projections for 2026–2027, with expectations split between hikes and no change. He also explains that business cycles persist due to real-economy lags in capital, credit, inventories, labor, and policy transmission. 00:00 Market Recap Volatility 00:46 Jobs And Housing Data 01:32 Housing Affordability Reset 02:37 Fed Minutes Takeaways 03:54 Dot Plot And Guidance 05:05 Why Business Cycles Persist 06:53 Wrap Up And Q&A 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. Welcome back to Dividend Cafe. This is Brian Sightel, your host here in this midweek Dividend Cafe session on Thursday, July 9th. In a bit of recovery, although mixed and uneven, the last couple of days market volatility has picked up because of geopolitical peatedness in the Middle East. and that continues on today, but there was more of a recovery trade going on. There wasn't a lot out in the economic calendar. A couple of things I'll walk through. Brent and WTI both ended up pulling back just a little bit on the day, so you got some reprieve there in oil, and then interest rates were flat, just slightly lower, actually.

So markets tend to be shrugging off here a little bit of the volatility that we've seen. And overall, earnings have continued to be positive, as is the economy that we're seeing overall. The economic side of things out on the day, let's see, we walk through the, these. We've got initial jobless claims a little better than expected. We got a 215 print and expecting a 218. So employment continues to be healthy, I would call it. It's not necessarily getting better or worse. It's hovering right around the 4.2, 4.3% unemployment level. That would be considered quite good. Existing home sales, and we've talked about this quite a bit, the real estate market continues to be, I've called it stuck, but the numbers that we've seen

over the past years, over the past one year at least, have continued to be a little bit weaker, and we saw that today. Existing home sales, we're down 3.4% for the month, which is meaningful. We're now at 4.09 million versus consensus at 4.2 million. So we know there's this demographic imbalance. There's household formation going on, and we've underbuilt homes for two generations. That said, interest rates have not come down, and affordability is at all-time lows. And so you're just having a moment where people that, own houses aren't willing to move and pay higher property tax rates and higher mortgage rates.

And those that are trying to form new households are just unable to afford it at this point. And home builders can absorb some of this to a certain degree, but on the existing home sales side, it's just anemic. And so you're seeing not just that the sales are going down. That's what we saw today, but the prices have also started to come down here a little bit. For what it's worth, I actually think that's a healthy thing. I think it's a normal thing. That's how markets are supposed to clear.

and we're not talking about a 30% decline like we saw in the 2006 environment. We're talking about 5 to 10 to reset an affordability index. And if you get interest rates that come down and help with that, along with continued strength in employment and jobs and the economy doing normal things, then I think those things can normalize. But in the meantime, housing just remains a bit stuck. The minutes that we got from the FOMC meeting were out actually last night. This was Warsh's first meeting. This was the June meeting. There were a couple of things I thought notable, you know, most of which was to be expected.

We already know, because it's in the past, that they held rates the same. The minutes just show what they spoke about during the meeting. And there was quite a division amongst the different participants. You did have a few actually talking about raising rates that meeting, which futures weren't pricing in, but those participants ended up opting for a hold before the end of the meeting. But that was notable. There was also the talk of AI-related demand, the continued Middle East. conflict and then tariffs themselves, believe it or not, were still part of the conversation,

even though the IEPA was overruled. The Section 122 that was put in on 10% global tariff still has the Fed talking about the fact that a consumption tax is a slight detractor from GDP, call it a third of a percent. So some back and forth, some division there. They also raised their inflation targets for both the year of 26 and also next year of 27. So those things would be more concerned about inflation. They were very balanced on the economy and on labor, and so you know that they're tilting more towards being a little hawkish, at least in the meeting that was 30 days ago, or sorry, two weeks ago now. As far as guidance, just to give you an idea on the dot plot, this is where they expect rates to be in the future. Eight of the 19 members saw at least one hike before

the end of the year. Eight saw rates unchanged, I'll call that hyperdivided, meaning half and half and only one of them saw a rate cut. Warsh himself, by the way, abstained from even giving any dot plots. As he's noted forever, basically, he's not a fan of forward guidance. And so I suspect that you'll see more of him not providing it and also the committee itself providing less. And you'll see it in the press conferences after different FOMC meetings and things. There's just going to be a little less forward guidance. For what it's worth, I think that's a healthy thing for markets, I think overguiding and talking too much ends up driving a market narrative. And it's a self-fulfilling prophecy. The market ends up wagging the dog here a little bit on where the Fed can

ultimately do things. I'd prefer it the other way that Fred is the leadership on what they need to do for full employment and stable prices. And markets will just trade wherever they trade. But that was the topic I wanted to talk through a little bit here today as we continue through just a sideways action in overall markets. The question that came in today was about something that I had wrote maybe a month ago, and this was a topic about late cycle markets, and there was some indications that markets were acting like a later in the business cycle. The question is, with all the information and everybody in the know and so many actors now and traders, how are those cycles even still possible? Why is there a market cycle like that that is considered late cycle?

So my answer is regardless of all of that prowess, all of the technology, all of the information, the more employees, the more people trading, the access to retail investors to trade on their phones, all that stuff. At the end of the day, those are financial and market related things. And what we're talking about with business cycles are much more economic phenomenon. So they exist because you've got lags in capital deployment. You've got expansion in credit and contraction. You've got inventories that get built up. There's monetary policy transmission delays. just all these different labor market dynamics, and there's a cycle to those things. There's a business cycle. When companies build a factory and start investing in their businesses to grow, there's a lag effect before that actually affects the economy. Same thing with how interest rates may move. Those things don't happen and change the economy overnight. They take six to 12 months. All of that means that it affects somewhat of a normal ebb and flow of a business cycle, and you get markets that end up reflecting that in different sectors, different parts of it,

where there's different sectors that do better when interest rates are low or interest rates are high and so on and so forth. Regardless of the speed and the amount of information, you still have the business cycle. And since you still have a business cycle, markets can tend to relate to some of those late market cycles with different sectors performing differently. So I hope that explains the question and answers it for you. That's what I've got for you on the Around the Horn today in Dividend Cafe. I encourage any more questions. Please reach out. I've got a handful of them to go through next week.

But with that, I'm going to let you go this evening, and I appreciate you listening, as I always do. Thanks again. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors LLC. This is not an offer to buy or sell securities. No investment process is free risk.

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