The Dividend Cafe - Tuesday - April 21, 2026

Episode Date: April 21, 2026

From West Palm Beach on April 21, Brian Szytel recaps a broadly lower market close near the day’s lows (Dow -293, S&P 500 -0.6%, Nasdaq -0.6%) amid ongoing Iran–U.S. tensions, which lifted oil, inflation expectations, and interest rates (10-year up 4 bps to 4.30%). He reviews economic data: March retail sales beat expectations (1.7%; 1.9% ex-autos), pending home sales rose 1.5% vs. 0.5% expected, and business inventories were slightly higher but dated. Szytel discusses Kevin Warsh’s Senate Banking Committee testimony, potential committee gridlock tied to a DOJ investigation into Jay Powell, and the possibility of an interim Fed chair if confirmation stalls past Powell’s May 15 term end. He also explains “rotation” away from Mega-cap tech into broader sectors, benefiting value and market breadth though not in a linear way. 00:00 Market Wrap and Geopolitics 00:53 Oil Inflation and Rates 01:12 Economic Data Check 02:37 Warsh Testimony and Senate Gridlock 04:36 Fed Balance Sheet Concerns 06:48 Market Rotation Explained 08:24 Closing Thoughts 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 to Dividend Cafe. This is Brian Saitel with you from our West Palm Beach office here in Florida Day. It's April the 21st. Down day overall in markets, we ended actually right near the lows of the day, but the Dow was down about 293 points. SMP 500 was down six-tenths. as was the NASDAQ. So broadly lower, the market is getting a bit impatient with the Iran and U.S. conflict. I was going to say the word annoyed, but I do believe it wants to move past it, and it's certainly trying to. Markets are essentially back to highs. You still have this ongoing saga of the U.S. in the blockade fashion. Iran's refusal to reopen the straight at this point and a finite

timeline of how long this sort of de-escalation can last before the markets really start due caring about it again. In the meantime, you just get this back and forth here in markets a little bit. You did have a move higher in oil because of that turmoil. And so with oil up, you also had inflation expectations up. And with inflation expectations up, you also had interest rates move up. And there's why the market, actually, the stock market that is, sold off a little bit. So the tenure was up. Four basis points on the day were at 4.30. There was a few pieces of information out in the economic calendar that I'll go through with you first. I would give a couple of positive with a slight negative, but all of the data is a little delayed.

So take all of this with a grain of salt. Okay, first, retail sales better than expected. So super good number here. Retail sales are the consumer. That's what we're spending and buying. This is a robust number for the month of March. We got a 1.7% versus a 1.5 estimate. But if you take out autos, which are a more volatile part of that, you got a 1.9 handle

on the number, and that's a positive figure there for consumer spending. Pending home sales were much better than expected. We got a 1.5% gain for March. We were only expecting a 0.5. It's good to see as housing remains stuck, as I've called it for years. Interest rates have gone up and everyone has a 3% mortgage and folks don't want to replace it with a 6%. There's also different deductibility, grandfathering and things that they did on the tax

code that has caused some of the slowdown and there's just no transactions going on. So to see a pickup is a positive thing and a pretty big part of the economy. Lastly, you had business. business inventories grow a 10th more than expected. This is actually a February number. I'm just not even going to go into it, but business inventories, just for a definition, give you a glimpse on a forward indicator. If they grow, that means consumers are consuming less and the inventories are growing and vice versa. So it would technically be a negative number, but again, it's two months old now. So let's forget about it. What I want to get into a little bit here is

today was the only day of the testimony that Kevin Warsh gave to the Senate Banking Committee. Remember, this is a 12-person committee, Senate banking. It's essentially a 50-50 tie between Republicans and Democrats. I say that because Tillis is holding out. He's a Republican, but he may not vote for this to proceed unless the DOJ removes its investigation into J-Powl. And so right now you have what would otherwise be a 12-vote deadlock if that's going to happen that way. Of course, he can change his mind. I would put the odds of that at not 50%, but something not.

not zero either, so call it 30. But all that to say, it can't go to the Senate to actually get consummated until it gets through the Senate Banking Committee, and it's unlikely to do that. And you've got a period of time between when Jay Powell's term ends, which is May 15th. And so that gives us like, what is that, three, three and a half weeks here. If nothing happens and there's still this investigation and there's gridlock in the banking committee, then what you can get is an interim chair or vice chair or something to come in the the interim. I actually don't think markets won't love that, okay, but they're not going to be, they're not going to throw up over it either because you have still a priced in. Warsh is going to be

the next guy. We just don't know exactly when. And in that paradigm, markets will get over it. That's not the end of the world. If it starts to reprice into where Warsh is going to literally have problems getting in there, that's a different story, but I just don't see that as likely at all. So that's where you have this sort of multifaceted deal going on. It was a super political testimony today, not from Warsh, but from the posturing of the Senate-of-Baking Committee because half of them are Democrats and half of them are Republicans and you've got this sort of gridlock thing going on. But I do think it'll happen. And I do think he's the right person for the job. And that's probably the more important market-moving component to this, which is his policies are going to be good,

in my opinion. I think he's the right person. I think his stance on removing the sort of just the Fed's balance sheet is used when markets are too volatile to make everyone feel better and buy stuff and then make markets calm again may feel good. But it's, and then they wanted a king type of adage. You end up with the unintended consequences of that where risk assets are distorted. People take more risks when they don't understand what those things are because of that. And that daddy is always going to fix everything is just not a very American way to do it. And it ruins the efficiency and the dynamism of what has other. otherwise the world's best free capital market on God's green earth that's ever happened. I'm not a fan of having an overreaching Fed and an overreaching Fed balance sheet, but the

genie is already out of the bottle because we released the GD and the GFC because frankly we didn't have too much of a choice. The financial world was ending. So, okay, but we never put the genie back in the bottle. And then we've used those powers and not only just use them, but what was once debated as something that was even legal to begin with, became just second nature during the pandemic. And again, you can say people were dying and that was also the end of the world and the health side. And I'm with you. I'm not diminishing that part of an emergency. But just the swiftness

and the expansion of it. They started buying munis and they started buying high yield bonds and ETFs and mutual funds and just more than anybody ever dreamed. So what happens the next time? So there's another crisis at some point. And then what do they start buying? Are they going to put stocks on the balance sheet, or are they going to start buying, who knows what? So I'm just, it's a slippery slope, and I don't think it will end well. And I also think, like I said, it's going to distort capital markets and this efficient mechanism that we've built for hundreds of years. That's a little extreme. Okay, but take it for what it is. I think reducing some of that in returning the Fed and its role back to its traditional mandate of just

protecting stable pricing and employment is the right thing to do. And I think he's the right person for that job. So that's my feeling on it. There was an entire dividend cafe devoted to this subject, and David did a far better job than I just did on recapping it. And so I put the link in there, and I think you should read it if you haven't. Question in there, and I'll end it with this, was about the word rotation. We use it a ton. The media uses a ton. They probably use it too much. You know, what I'm talking about it, what I'm saying is that it's a rotation to the previous leadership in the market. Let's call it technology stocks. and let's say that they were expensive because they were

into other parts of the market, other sectors, other things that weren't as overly priced. These are more the defensives. They're the staples, industrials, particularly. They've had a huge run. Healthcare started to catch up. Obviously, the financials have been outside of some private credit names have been really good.

So that's the rest of the market. So if you take out the Mag 7 that drove all the return for their past probably two years, and now you have a 26 where it's being driven by these other sectors, things. I think that's a good thing. You want a broader market and more participation. And yes, it bodes well for value stocks more than it has for growth year to date. That said, that oscillates dramatically in just the past week or so. You've seen a huge recovery in the software names and a huge recovery in a lot of the AI-related names. So it's not to say it's a linear path, is to say

that I don't necessarily care one way or the other because as a dividend growth investor, it's going to be on the value side of that equation regardless of whether it's popular or in vogue, as I've called it, or not. But that's what I'm talking about with rotation. That's a phenomenon that has been going on. And I do think it will continue. I just don't think it will be linear. That's not me hedging that.

It's just that it's the truth. It won't be linear. There'll be times when growth comes back in style and is on fire and vice versa. So those are my comments and walk around the market here today. And with that, I'll let you go here. It's a reasonable time, although I've gone almost 10 minutes now. I appreciate you listening. Reach out with your questions.

They're good, and I'll go back to you on them. I'll be back with you tomorrow on Dividend Cafe. 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.

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