The Dividend Cafe - Tuesday - April 28, 2026

Episode Date: April 28, 2026

Brian Szytel recaps a mixed market close on Tuesday, April 28, with tech and the NASDAQ down about 0.9% while the Dow was flat and the S&P 500 fell about 0.5%, driven by AI concerns and competition after OpenAI missed numbers amid market-share losses to Gemini and Anthropic. He notes the importance of sector divergence and warns that semiconductors alone are about 17% of the index, nearing the combined weight of several major sectors. Treasuries were flat, while oil surged (WTI up ~3.7%, Brent over 104 and WTI near 100) on ongoing Middle East tensions and the Strait of Hormuz remaining closed, potentially weighing on GDP and global growth. He addresses record margins as largely reflecting index composition shift toward higher-margin tech. Economic updates: Case-Shiller home prices rose 0.9% in February, consumer confidence beat expectations in April, and the Richmond Fed Manufacturing Index was 3. 00:00 Market Close Recap 00:31 AI Tech Selloff 01:19 Oil Spike Geopolitics 01:55 Semis Index Concentration 03:17 Record Margins Explained 04:45 Key Economic Updates 05:39 Wrap Up and Thanks 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. Welcome to Dividend Cafe. This is Brian Saitel, your host for this evening on Tuesday, April the 28th. Mixed day at the close pretty much down across the board, although we were off of the lows for the day. And this was one of those days where big bifurcation and stuff. sector performance. Tech really sold off quite a bit more. The NASDAQ was down about nine-tenths of a percent, and the Dow was flat. S&P was down half a percent. So an odd day there, mainly around AI concern and the sustainability of the CAPEX that has gone into that sector,

the largest company in the space, Open AI, missed numbers, and it was because of a loss of market share to its largest competitors in Gemini and Anthropic. And we've spoken about this for a very long time about that being inevitable, that they can't all win together, that there's going to be some that will compete with others and take market share back and forth. It doesn't mean it has to be a win-lose environment. There can be win-win, just not equally. So there's a natural sort of component of market efficiency and also a normal way of how this competition is going to play out over time. It's also a new technology, and so we don't actually know exactly how it will reshape things. But that's the reason my tech sold off the most on the day.

You ended up with a 10-year flat and oil up a good amount. WTI was up about 3.7% on the day. So same story there. You've got Middle East tension. US-Iran conflict isn't ending anytime soon. Strait of Hormuz still closed. So far, there hasn't been a very clear and good off-ramp to it. And so oil is still trending high.

You've got Brent over 104. You've got WTI right at 100. Yeah, at these levels, you're starting to shave real points off of GDP and slowing global growth. But that story has been largely in place for some time. It's a good thing when you've got divergence and performance based on competition inside of markets. Everything going up, the tide rising and lifting all the boats at the same time can cause excesses and companies get just wildly overvalued. I did point out the semiconductor space.

This isn't to say that it isn't important, arguably the most important, or one of them sectors out there, but just understand that semiconductor space alone, so not technology, just semis, are now 17% of the index. So that's the same or getting darn close to all of the healthcare companies, all of the energy companies, all of the Staples companies, and also all of the utility companies combined. So is that an excess? Time will tell, but that's a pretty remarkable story nonetheless. And it's something to keep an eye on. And, you know, what I put in there was just a quote by Benjamin Graham. In the short run, the market is a voting machine in the long run.

It's a weighing machine. It's going to weigh ultimate financials, earnings, growth of earnings, quality of earnings, those things over time more than it will on what's popular or what's deemed to be the most exciting new sector. Again, that's not to say semis aren't hyper-important to how the world turns. They are. But just keep in mind those four other sectors, being healthy and having energy and electricity and being able to buy household goods and normal things like that run your everyday life

are also pretty darn important too. There's a question in there today about record high all-time margins that I wrote about last week, and doesn't that indicate that companies were boosting prices under the guise of inflation hysteria? Yes and no. Inflation, first off, has not come down. We're not in a deflationary environment. Prices aren't deflating.

They're just going up at a slower rate, so it's disinflation. The other thing is, maybe there was some company. on the margin, pun intended, that we're able to juice prices for the sake of it because everyone was doing it. But over time, it tends to work itself out and they become less competitive, and you end up just hurting your own sales by being less competitive with higher prices. So I wouldn't view that necessarily as systemic. What I would say is that the composition of the entire index has shifted dramatically. And that is one of the main reasons as to why the historic margins at these levels are at an all-time high.

It's because 30 plus percent of it is in tech. And companies that sell software as a service or cloud services or AI backbone and things just trade at much higher margins and operate with higher margins as businesses. They're more scalable as companies. When you think about energy companies, utility companies, telecom companies, those huge barriers to entry of investment and just equipment and material that need to get put in there is more costly. And they have lower margins. financials have lower margins even, believe it or not, than technology companies. So that's also part of the reason. But it was a good question from a good reader.

There were three pieces of information on the economic side that I'm going to run through quick here before I sign off. Case Shil, there are 20 city home price index. I know a lot of readers pay attention to this because we all own houses. House prices have hung in there, quote, unquote, even though the sector remains pretty stuck. But the number we got for February was up nine-tenths of a percent. That was a tenth-tenths of a percent.

I still think it's remarkable prices are hanging in there, frankly, when there's no transactions happening. So I'll take it for what it is. That was also a February number, so that's a bit delayed. And then two other things, consumer confidence actually beat expectations in April. That's because Iran has a month old at this point, the skirmish there, and people get desensitized and feeling more optimistic. And then the Richmond Fed Manufacturing Index was just slightly below expectations at three, but that was up from March's flat reading. So a bit of a mixed bag on the economic side. I thought a good Q&A session there on margins,

and then, like I said, tech sold off more because of competition and AI. That's my around the horn. That's my story, and I'm sticking to it. But I appreciate you listening, as I always do. Reach out with your questions. Have a good evening. Thanks again. The Bonson Group is a group of investment professionals

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