The Dividend Cafe - Tuesday - April 14, 2026

Episode Date: April 14, 2026

Brian Szytel reports a second strong up day in stocks (Dow +317, S&P 500 +1.2%, Nasdaq nearly +2%), led by tech, software, and semis, as markets and oil futures price in a nearer-term resolution to the Iran conflict and a ceasefire extension, making a retest of recent lows historically unlikely. He describes severe degradation of Iran’s military capacity, economic base, currency, and potential oil-revenue losses under a Strait of Hormuz blockade, framing the situation as economic warfare aimed at protecting commerce flow. He argues recent sector moves and private credit worries are mostly noise versus fundamentals, noting limited non-accrual pickup and potential AI-driven operating leverage for software. Economic data showed cooler March PPI (0.5% vs 1.1% expected; core 0.1% vs 0.5%) and weaker NFIB optimism (95 vs 98 long-term avg). He explains why a bypass canal/pipeline is impractical due to terrain, cost, geopolitics, and missile vulnerability. 00:00 Market Rally Recap 01:28 Iran Conflict Impact 03:22 Sector Rotation and Credit 04:13 Ignore the Noise 05:04 Inflation and Small Biz Data 05:54 Strait Bypass Q&A 07:20 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 welcome back to Dividend Cafe. This is Brian Saitel, your host for this evening here from our New York City Manhattan office here at the Bonson Group on a beautiful spring day and actually a beautiful day in the markets too. We got a second follow-through update in stocks. We had the Dow close up 317 points. On the day, S&P 500 was up about 1.2% and the NASDAQ was up almost 2%. So big, robust move and more skewed towards tech, software, semis. A lot of the leaders before we went into this Iran conflict are now starting to resume that leadership role as we're starting to come out of it. Of course, we've got a slim period of time before that ceasefire is going to end. And there's a lot of different negotiating components to go through, particularly around enriched uranium.

and then, of course, opening the Strait of Hormuz and some other big factors, but the market itself is pricing in something happening and some resolution happening sooner than later. And oil futures are also saying that as well. And so, of course, those things can change. But a recovery that has been actually this robust and this short a period of time, just historically speaking over the last 75 years, call it since 1950, it would be highly unusual and improbable that we would retest the lows based on. historical data, okay? So take that for what it's worth. It has happened before, but it's something like four times out of that period of times. So that's where markets are looking forward to at this point. And what has happened here, militarily speaking, there's just no question that Iran has been taken out on that side of things. We've, or the U.S. has destroyed 80% of its missile capabilities

and 90% of its Navy. And it was something like 80% or so of its small boat, craft, and different things like that. So there is remaining military equipment, but it's just a fraction of what it once was. And also the manufacturing base and the economic base to support rebuilding that stuff has really been decimated at this point. The currency in Iran has just dramatically depreciated against everything else. And so they're in a tough situation. And then when you add on the blockade of the Strait of Hormuz for them being able to sell their own oil, which is their only revenue source, remember during this period of time Iran along with Saudi was one of the only couple of countries that were actually able to benefit from rising oil prices because they were still able to move

it around the world and to sell it and if there's a blockade in place it's essentially going to cost about $13 billion a month in lost oil revenue in an already very ailing situation and so they just don't have a lot of time to mess around with that and that's what I've written about before, the longer that this drags on, the longer in the upper hand the U.S. basically is going to get in this situation. And it isn't that the U.S. couldn't take the Strait of Hormuz militarily. It's that the cost of doing that would be so dramatic as far as the price of oil globally that that pain is hopefully going to be avoided, or at least that's the idea of an economic warfare component that is added in. But all of this is basically aimed towards creating a strategic victory,

again, which is the flow of commerce through that straight and removal of future exploitation of it. And but so that's the Iran side of things. This is an ongoing deal. You've seen what markets have done particularly this week with not a whole lot of news other than supposedly the negotiations over the weekend in Islamabad went poorly. It's now looked at as maybe they didn't quite go as poorly as markets originally thought. But in the meantime, like I said, you've seen those sectors recovery, you've seen small caps take a leadership role again, and you've seen some of the the software names that really have gotten decimated, but not necessarily because of Iran or anything. This is all because of the AI component and the competitive edge that it may have to disrupt a lot of

those business models. Some of that stuff just was overdone, and so you have valuation coming into play. And then you also have a rebound in a lot of the financials with the most private credit exposure. Now, those two things go hand in hand. If you remember the private credit stuff that was most vulnerable was the software names. And so a recovery in software names means private credit stuff's going to do better. But my point here today is that all of those things are basically noise. You have short-term market sentiment that drives short-term market movements one way or the other, and then you have fundamentals that either get swayed or move or don't, and ultimately price discovery gets set around that ballast of the fundamental reality. Inside a private credit,

you just did not have non-accrual pick up enough, and inside the software names, business models are different and changed, and guidance may have been lowered, but that doesn't mean they're falling off of the planet either, and ultimately software names will benefit from the margin and expansion and operating leverage that AI will give them just as much or more than many other industries. So that's my point for today. Some say that avoiding the noise is easier said the done, but we don't find that to be the case. We find it pretty easy to see through that stuff. There was two pieces of information on the economic calendar. One is an inflation data point. This is the PPI number, the producer price index. We got a much lighter read for March. This was a 0.5%.

We were actually expecting 1.1. And when you remove food and energy and just look at core PPI, it was an even cooler number. You just got a 0.1% for the month when a 0.5% was estimated. So that's good. Okay, across the board. No doubt about it on the inflation front. And then he had a NFIB Small Business Optimism Survey Index that was weaker than expected. Again, that's pretty par for the course when you have oil that has gone up the way that it has, and that's a huge input cost into businesses, and so they're less optimistic. Okay, the long-term average is 98, so 95 versus 98. Yeah, it fell off a bit. Those are the two pieces of economic data. Okay, Q&A session in here is intuitive, and it's a common one, and it's been floated for many years.

What about just creating a canal or a pipeline that went over? There's a kind of a thin peninsula that juts out around the Strait of Hormuz and just to avoid the waterway, why don't we just, why isn't there just a pipeline or a canal that's built around it so that ships can go through it or oil can flow through it? So this has been looked at for many years. And the reality is this isn't just a flat piece of land. It's a mountain, basically. So 6,000 feet elevation, it's rugged. It's tough terrain. And to cut through that stuff would take decades, number one, and cost hundreds of billions of dollars. There's just this big barrier to entry to try to pull that off. The second thing is then you come up with who's going to,

you've got a volatile region to see the least, and who would control it, who could take it over, and what kind of geopolitical risk comes out of it, all of those things, who's going to run the thing? And then, moreover, the real issue is that since Iran can reach it with missiles anyway, what have you really done? There's still the idea that it can be exploited and held hostage, essentially. So you still have the same problem. So it's expansive, it's not realistic, and there's geopolitical risk and it doesn't really do anything. So there's my answer. There actually are small rerout, different routes,

and different pipelines and different things in the area. There's just not something as robust as an engine the ocean, okay, to be able to just drive ships and tankers across it. So there you have it. There's a Q&A. There's my Around the Horn for the Day and my takeaway. I hope it was helpful. I'll be back with you tomorrow from the Big Apple

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