The Dividend Cafe - Thursday - October 8, 2026

Episode Date: October 8, 2026

Brian Szytel records shortly before the close on October 8, noting a modest down day with the Dow and S&P off about a third of a percent and the Nasdaq down about two-thirds, as value holds up better than growth amid sharply higher oil (WTI around $92, Brent around $106) and slightly higher rates. He observes the yield curve has been flattening over the past two weeks as long rates come down somewhat, with news out of France adding bond-market reverberations, and highlights better-than-expected initial jobless claims. Drawing on meetings with multiple portfolio managers, he discusses strong near-term earnings expectations—particularly in South Korean memory names—but cautions that forward-looking markets can quickly reprice if longer-term demand, productivity, or capex payoffs disappoint, arguing against over-concentration. He also explains that a 15-basis-point move in the 10-year is dramatic but more common than assumed, occurring about 34 times in five years. 00:00 Welcome and Setup 00:31 Market Snapshot Today 00:51 Oil and Rates Impact 01:36 Economic Data Check 01:50 NYC Manager Meetings 02:22 AI Memory Stock Caution 04:07 Rate Volatility Explained 05:23 Wrap Up and Sign Off 05:40 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 Sightel with you this Thursday evening here, October the 8th. I'm still here in New York City in our office here at the Bonson Group in Manhattan walking around to different portfolio manager meetings. And I am recording this 30 minutes or so before the close. So take my numbers with a grain of salt. but we've got a down day overall in the market modestly. It actually opened up lower than it is now. In fact, futures were lower before it opened.

So it's come off the lows a little bit here. But on the day, at least as of now, you've got Dow down a third of a percent, as is the S&P and NASDAQ down about two-thirds of a percent. So value holding up better than growth. And some of the reason is oil prices are up significantly. You've got a 5 percent move so far on WTI and Brent. That puts WTI at 92, Brent at 106.

That's what markets are disliking on the day. And then you've got interest rates that are slightly higher, of course, with higher oil prices. I will note the yield curve continues to come down, meaning flattened here as I'm looking at it on my screen over the course of the last two weeks. So the first knee-jerk reaction after Warsh hiked interest rates was for that thing to steepen aggressively with long rates really going higher. That's actually coming off now. You've gotten a flattening of the curve. Long rates are actually coming down a little bit. There was some news in France of some fiscal woes, and that's sending some rebrand.

verbiations through the bond market, but that's your around the horn at least here on the day, as far as markets. On the economic side, there was initial jobless claims that were much better than expected. We thought it was going to be somewhere around 200. They beat it handily. That number keeps oscillating in a similar fashion, but this number was a little better than we've seen recently. But what I wanted to talk about a little bit, and some of this goes partly with some of the meetings that we're having as we're walking around the city this week. As many of you know, this is a week where we spend. I think it's 24 meetings in about five days here in New York City. We're meeting with all of our different portfolio managers. And so we're getting to hear from

equity manager perspectives, emerging market equity managers perspectives. Structured credit was this morning. We're off to our midstream manager here at lunch. So it's really fascinating and I've got a lot of notes. And if you're ever interested in some of this more granular information, you can always reach out to me. But it goes in part to what I wanted to say today, which is some of the earnings expectations, particularly in some of the memory names, and they happen to be located in South Korea, the two largest there that make up over half of their index. They look very cheap. Why? Because the E and the earnings is expected to be extremely robust. And I would agree, you know, if you go a year out from now, which is sort of a blink of an eye,

at least at my age, it's not very far out. And so you've got a pretty good line of sight on what backlog of orders are and what demand is, and it's just out of this world very strong. And so you can see the earnings. And I think that's fine. But my point, though, is stocks are very forward-looking. And so when you look out of two years or three years, how much line of sight do you really have on such a technology that has yet to prove a lot of productivity gains and more importantly, revenue gain associated with it

to make all of the capital expenditure pencil. And my only point isn't that these stocks aren't exciting. They are. The growth story is exciting. All of that is true. My point is simply, for those that get overly exuberant on what the future holds, when it really is unknown, we don't know exactly how the technology will play out, just like we didn't exactly know in the internet day is how it would play out.

It's hard to get overly concentrated on certain sectors and certain individual names. So some of that's an evergreen comment. You shouldn't be overly concentrated really on any time, at least if you're needing some form of diversification and stability in the assets you're managing. But that's my comment. It's just that things that look cheap can look expensive in a pretty short period of time when sentiment changes. And just the first whiff of supply outpacing demand

and the first whiff of the technology has advanced to the point of, needing less compute. We need less chips to power the same amount of AI model response. So keep that in mind, and I think relevant in several of the meetings that we're having around the city, and something I wanted to mention for the day. Question in there today was about moves and interest rates, and there was a 15 basis point move on the 10-year, and the question was a good one, because it's simply dramatic. How many times has that really happened? The treasury market is so deep. How could that be happening? Look, it happens more than you think, first off. Both stocks and bonds move up and down intraday more than people give them credit for. A 15 basis point move at a 5% 10 year

is something around a 3% move in the rate. So if you put it in percentage terms, you know, that happens quite often, albeit it's far above the average on the daily move. So the question is valid. But then, you know, when you're thinking of the old days when 10 year was at 2%, you know, a 3% move was only 6 bibs. Same kind of like when people used to talk about a thousand point move in the Dow being a big deal. Today it's not even a 2% move. And so at a 50,000 Dow. Same kind of sticker shock as what I'm talking about when you got a 15 basis point move. We just haven't seen it in basis point terms and absolute terms in a long time because interest rates have been low for 20 years and now they're a little higher. But to put it in perspective, it's happened something like 34 times in the past five years. So yeah, I mean, that's a lot of trading days and only 34 times. So like I said, valid question. Only 14 or about half of those were to the upside. The others were to the downside. But there's my perspective on interest rates and then daily intraday volatility in both stocks and bonds. But that's what I've got for you today. I'm keeping this short and sweet and fast like a New York minute.

But technically, I think it was more like six and a half minutes. So there you go. But I appreciate you listening. We'll have the full-fledged dividend cafe in your inbox for tomorrow. I'll be around for anything. Appreciate you reaching out. Talk to you soon. Thank you.

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