The Dividend Cafe - Thursday - June 11, 2026

Episode Date: June 11, 2026

Brian Szytel recaps a sharp market reversal after a broad sell-off tied to Iran war rhetoric gave way to gains on news of progress toward a deal, with the Dow up about 900 points, the S&P 500 up 1.7%, and the Nasdaq up 2.25%. He notes meaningfully lower interest rates (10-year down 9 bps to ~4.45%) and oil’s reduced sensitivity to Strait of Hormuz headlines as shipping reroutes and supply adjustments develop. Economic data included a hotter-than-expected headline May PPI (1.1%) but cooler core PPI (0.4%) alongside slightly worse initial jobless claims (229k). He highlights earnings growth concentration in energy (+117%) and technology (~60%) versus weak growth in consumer discretionary and financials, and responds to a college grad’s question by framing AI as a tool, emphasizing human trust and expressing optimism about job opportunities. 00:00 Welcome and Setup 00:23 Market Reversal Rally 01:38 Rates and Oil Calm 02:41 PPI Inflation Breakdown 03:52 Jobless Claims Update 04:05 Earnings Sector Split 05:48 AI and Entry Jobs 07:21 Closing Remarks 07:37 Disclosures and Disclaimer 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 to Dividend Cafe. This is Brian Saitel with you here from our West Palm Beach, Florida office here at TBG. On your Thursday afternoon, June the 11th, and what a reversal day this is. Yesterday, we had a big down day across the board, larger sell-off in tech, and it was mostly related to heated comments on the water. in Iran and a threat to have the U.S. start reengaging targets in life bombing again. And then today we actually did get some PPI numbers and I'll talk about that that moved markets. But we were already up before that early in the day. But it really built on some gains when the exact opposite

news came out that the bombs that were potentially going to drop are not going to on the day because there was some progress being made on the deal with Iran. So markets are basically doing a 180 from how much they sold off yesterday to how much they are up today. I am recording this just a few minutes before the close, but the Dow's of 900 points, which these days means 1.8%. Again, that's a reversal of yesterday almost to the point. And then you have the S&P 500 up 1.7% and the NASDAQ up 2.5%. So if yesterday spooked you and you sold out, that would have been a painful lesson here. And that's what markets do. and that's why we stay the course. That's why we stick to acid allocation,

and that's why we focus on the fundamentals that we always talk about. All that aside, you did have interest rates move meaningfully lower on the day. The tenure was down nine bases points. We're at 4.45 on tens. We've been drifting a little lower, and partly because oil has seemed to calm down a little bit. And also, as I wrote about yesterday,

oil movement on the different geopolitical headlines has started to become less sensitized to either positive or negative news regarding the Strait of Hormuz. Like today, you've got oil down about 3%. Yesterday it was up something like 4%. So if bombing one day and then not bombing the next day is basically moving the price of oil 3%. There was a time in the beginning where it was moving 10% plus.

So we're getting a little desensitized. And like I said, there's reasons for that. Shipping is being rerouted. Countries are making due. Partnerships are forming. Some countries are making up the slack, particularly the United States. So the world keeps spinning here. And eventually, the need of having that waterway open becomes less. Does it become zero, but it becomes less. So on the day, let's go through the

economic side of things. We did have a PPI number. This is the producer price index for the month of May. Came out hotter than expected on headline. We got a 1.1% figure for the month and we were thinking it was 0.7. So that's not good. We got higher prices at the producer level on the headline. But energy is part of that. So when you strip out food and food, energy, it was up less than expected, which is 0.4% on the month versus a 0.5 consensus. So what does that all mean? Yesterday, we got cooler than expected core numbers on CPI. And then today, we technically did get cooler than expected core numbers on PPI.

So I'll chalk both of those up to being encouraging signs. We need much more months in a row of the trajectory being that way. And then, of course, we ultimately will need energy prices going back to somewhere closer to where they were. Let's call it getting into the mid-70s or even the low 80s. And then you've got inflation numbers overall that would start to calm down a little bit. Also a key point. Remember, inflation is about the delta in prices, meaning the increase of prices. So when you get oil trading for a long enough period at a higher price, eventually the inflation of it tends to slow down. But all that to say, that was the main news on the day. You also had initial jobless claims

out there on the day, and that was a little worse than expected. We had, a 229, $229,000 for the week. We were expecting $220,000 on the week. So there's your market recap. A few things I'll note is about really the sector bifurcation in the earnings growth rate for the year. Right now, as earnings growth is expected to be very robust, we're expecting 22%. That's huge. Why? Because part of that in the growth side has been from energy. Energy earnings are going to be up 117% from the prior year. So that's a double. Why? Because oil prices have gone up. You also have technology that is expected to grow at about 60%. That's also a huge number, and it's mostly related to what we're talking about with capital expenditure and AI.

So those are the two big drivers of EPS growth. But when you take a look at all of the other sectors, you get sectors like consumer discretionary at 5.2% and financials at about 6%. Those are dismal, really. That's a low growth rate, especially for consumer discretionary. And it speaks to a few things. one, you have basically high corporate margins. Part of that is because of inflation, raising prices and pricing power.

Those prices get passed through to consumers. So that's good for corporations. It's bad for consumers ultimately. And so when you see a sector like financials and consumer discretionary in the low single digits like that, it's usually a sign of later cycle. It doesn't mean always. And there's every ability for this market to broaden out, especially if that war in Iran is going to end and oil prices come back down.

but I just wanted to take a walk in the park through some of the sector realities that are going on right now because they're vastly different. If you were to take out energy being up so much and normalize it and then he put tech at something more reasonable, call it 30% versus 60, then you've got an EPS growth rate of, say, closer to revenue growth rate, which is around 11, 12%. So I'd be prepared for that here as we go forward. Question in there today was actually from a college grad about AI and it's taking over intra-level jobs and it was such a good question from such a broad. right young college student. My answer in there is a little longer, but I wanted to be as thorough as I could. I remember back in the day when Robo advisors came out and the thought was that these computer algorithms were going to outdo financial advisors and replace them. They could be more quick and thoughtful, maybe about allocation, about tax loss harvesting, all these things.

And then of course, the first bear market really sent that idea down the drain. They didn't perform better, number one, worse. And then also without a human connection and a relationship that you trust, it just doesn't really matter about the technology behind it. At the end of the day, if your life is on the line or your freedom, meaning legal, livelihood is on the line, or all of your financial assets in volatile markets is on the line. Humans do tend to go to humans that they trust for help. And AI is a tool, and it'll be used in a good one, a very good one. But I don't know about it being one or the other. I think it's both of those things. The other small comment, and I believe this with my whole heart, is that the opportunity for

college grads now, I believe, is greater than it was when I graduated college 27 years ago. And I think there'll be plenty of jobs, plenty of opportunity, and even more so than the previous generation. That's what we've seen post-industrial revolution every single time. And at every technological advancement, while it is increased and needed higher human skills, all those periods resulted in better productivity and ultimately everyone benefited together. So that's my take on it. Call me optimistic. But that's what I've got for you today. That's my walk around. at Dividend Cafe. I appreciate you listening. Thank you as always. Have a great weekend if I don't speak to you. I actually won't be with you on Dividend Cafe quite as much next week. I'm traveling, but still reach out

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