The Dividend Cafe - Thursday - March 19, 2026

Episode Date: March 19, 2026

Brian Szytel recaps a volatile, mostly down trading day with a late rally that still ended negative, warning against trying to time markets off Middle East headlines as volatility persists absent de-escalation. He notes Brent spiked to 111 then closed near 107 and WTI around 95–96 amid strikes affecting global LNG and energy infrastructure, and argues oil over 100 can shave GDP over time; markets appear priced for tensions to abate, with repricing risk if the conflict drags on. Offsetting positives include $160B in Q1 tax refunds (up 14% YoY), a shift from QT to balance-sheet expansion, GSE mortgage purchases, and financial deregulation reducing bank reserve requirements. He explains Strait of Hormuz risk (20% of global supply) drives prices, with speculation playing a role; the U.S. still imports ~35% of consumption. Data: jobless claims 205 vs 215, Philly Fed beat, wholesale inventories -0.5%, new home sales 587 vs 719. 00:00 Market Volatility Recap 00:55 Oil Shock and GDP Drag 01:43 Tailwinds Stimulus 03:12 Timing the Crosscurrents 04:14 Hormuz and Price Mechanics 05:18 US Imports and Refinery Reality 05:53 Economic Data Scorecard 06:36 Close and Sign Off 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. Welcome back into Dividend Cafe. Brian Sightel here as your host this evening on Thursday on a down day overall in markets. And it was basically traded lower the entire trading day, although about an hour ago you frankly got a late day rally into positive and then ended up still closing down into the negative. and my comment around that is just if you're trying the time what's going on in markets based around what Netanyahu says in Israel about the Strait of Hormas or this or that, you are bound to get your face ripped off. This market is volatile and more or less directionless inside of the volatility, albeit the Dow is down about 7% from the highs. So today was no different and that's what we've been talking about. Volatility is going to persist until you see more of an

off ramp or some sort of de-escalation materialize. And that isn't what we're seeing as of yet here in the Middle East. With that, you had Brent up to 111 midday. It actually ended up closing around 107. But with Iran striking Qatar's Rosloffin gas fertility, which is like 17% of global liquid natural gas. And then Israel striking South Pars, which is in Qatar. You just have Brent trading at 107, you've got WTI in the 95-96 area. And all of every day that goes by when you have oil over 100, you're starting to really start to shave tenths of a percentage point off of GDP. So that's what we're dealing with.

That's the same story that we've been dealing with here for the last 20 days or so in the Iran War. Inside of that, though, that's all the bad. So I have served you the vegetables first. So now let's get into the dessert, I suppose. We've got $160 billion of tax refunds hitting in the first quarter, call that right now. You've got an increase over last year of 14%. So that's a meaningful amount of stimulus. This is a lot because of the OBBBB and a lot of expensing and deductions and depreciation

that is happening both consumers and on the business side. So that would be a positive thing. Other thing that's going on in the positive is you technically do have that transition from quantitative tightening since 2022, transition right back into quantitative. Easing in December, and so you've got a Fed balance sheet that's slowly expanding, that's providing a lot of liquidity. Part of that is around the tax refund paradigm with tax payments and refunds, but nonetheless, you've got an expanding Fed balance sheet that's historically good for risk assets. You also had, for better or for worse, the GSEs buy mortgages, and the idea there was essentially

a form of quantitative easing to try to lower interest rates on lending and spur housing activity. marginal results so far, but it's hard to paint that as necessarily market negative in the short run. And then lastly, but not least, because I think it's a big deal, is you do have financial deregulation. This is a decrease in bank reserve requirements that should free up lending, liquidity, and basically credit that is driving a velocity of money in the economy. So those are all the good things. So they're vegetables first, followed by dessert, and then I guess we're having coffee now here, my last paragraph. The comment is really just about timing. You've got a lot of the good stuff that I mentioned is not permanent. It's temporary.

Tax refunds will get spent, but they're not going to be technically ongoing every month. So those things are going to end. Some of the benefits of those other things, too, are likely to dissipate. And so you've got a timing between the benefits of those and oil over 100 in the skirmish in the Middle East. Right now, I can tell you what markets are priced in, which is that the tension in the Middle East is going to abate. at some point sooner than lasting long-term and entrenched economic damage occurs, because the market's only down 5 to 7%. Market will have to reprice if that changes, and you get a longer drawn-out situation.

And then the question just comes down to whether Trump will taco or Trump won't taco. That's what we're dealing with at this point. It's a game of time. And none of what I'm saying is discounting any of the human tragedy and loss and risk in unfortunate things that are going down in the Middle East either. I'm just talking about economics here. Okay, question also, non-coincidentally, was about the Strait of Harmoos and if such a minor percentage of U.S. consumed oil is transported through it anyways, why are prices rising so dramatically is that commodity speculation? My comments are this.

20% of global supply moves to this rate. So a disruption to that is going to raise prices across the board. Doesn't matter if it's produced in West Texas or in Qatar. So prices are going up if there's less of it on the supply side. Simple. Demand stays the same. Supply shrinks by 20% price. goes up. You've actually seen that. Gasoline prices are up 20%. You've got oil prices up 40 since

this thing began. And the question on regionalization as far as, you know, the U.S. WTI is lower. The delta is 98 to 110 roughly. And so there is a difference. And as far as speculation, sure, that definitely exists. That's what futures markets are for. And that's how they work efficiently to set prices between longs and shorts based on different outcomes and different risks and different unknowns, but that's not a bad thing. That's a good thing. Long story short is more risk, higher price. It's so simple. The other thing I just want to point out is to the question from this person, I don't view it as minor here at all. So the U.S. still imports about 35% of total consumption every year. Yes, we're a net exporter of light, sweet crude, but all of our refineries are

built around refining the heavy sour. And so that's what we're importing. So about 35% is imported, most of which but 20% is from Canada in Mexico and then 15% is still from OPEC. So if you start shutting things down, that's nothing to sneeze at. That's going to move things around. So that's my round of the horn for you on markets on what's going on and the way to look at it

and on the Q&A. As far as the economic points, I'm going to hit you with four. One, initial jobless claims beat slightly. We got 205 versus 215. Okay, I'll check that as good. Two, Philly manufacturing survey better than expected by a huge margin, that's another one that's good. So we're two out of two.

Third, we've got wholesale inventories dropped more than expected. They were down 0.5%. We were expecting to gain a 0.2. When you get a drawdown on wholesale inventories, it speaks to consumer spending demand, by the way. So that's technically a good thing. And then, so we're 3 out of 3 on positives. Okay, number 4. The one negative on the day was new home sales missed. We got 587 versus 719. So 3 out of 4 ain't bad. I'll say that. Overall markets were down, but in the grand scheme of things on the day, we ended up closing down 203 points on the Dow,

about a quarter of a percent on the S&P of NASDA. Not all that bad. Maybe down a quarter is the new up here in this thing. We'll see. But that's what I have for you today. If I don't speak to you, please have a great weekend, and we'll talk to you soon. Thanks again.

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