The Dividend Cafe - Tuesday - February 10, 2026

Episode Date: February 10, 2026

In this episode of Dividend Cafe, Brian Szytel covers the market performance on February 10th, highlighting mixed results with slight gains in the DOW and declines in the S&P and NASDAQ. He discusses significant moves in the bond market, including a drop in 10-year Treasury rates, and comments on the anticipated impacts of incoming Fed Chair Kevin Walsh. Szytel also reviews economic data, noting a lower-than-expected Small Businesses Optimism Survey and flat retail sales for December. He touches on the potential effects of upcoming CPI data and AI-related market volatility, projecting that AI will be a transformative technology despite the current volatility in its investment landscape. 00:00 Introduction and Market Overview 00:34 Bond Market Movements 01:29 Economic Data Insights 02:37 Upcoming CPI Report 04:00 AI Volatility Discussion 05:06 Conclusion 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. Welcome to Dividend Cafe this Tuesday, February the 10th, Brian Saitel with you. Here on a mixed day, overall in markets, the Dow actually did squeak out a small gain of about 10 basis points, but the SMP and the NASDAQ were both down. S&P was down a third of a percent, NASDAQ was down two-thirds of a percent, and actually small caps were also. down about that much as well. Decent sell-off in stocks, although we closed off of the worst levels. Continued rotation, we saw the equal weight SMP 500 outpaced the cap-weighted by about 70 basis points on the day. And I would say the biggest move really in markets, it was more of the bond market. He had rates come down pretty much across the board. So bonds rallied a 10-year was down about six

bases points. We're at 4-14 now on the 10-year. So that's been 4-25, 4-30 for quite some time. At one point, we were talking of it getting up to four and a half, and now it's coming back down the other way. Of course, we have a new Fed chair coming in, Kevin Warsh, and the thought is he will lower short-term interest rates, likely why he got the job to begin with, because that's a big priority for this administration. But in the process, his goal is to reduce the maturity inside of the balance sheet and also reduce the aggregate level of the balance sheet. It's at about $6.5 trillion now. So have that come down some. And then the trick of all of that will be, of course, can you do that without disrupting the money market fund accounts

and just credit conditions and financial conditions along the way? There was a few pieces of economic data out. You had the NFIB Small Businesses Optimism Survey come out. This was below expectations. We were expecting something in 99.8 and we got 99.3. So it was a little bit below. So you've got some trepidation going on with Small Business Index reporters on that. front, obviously small businesses or two-thirds of this or more employment in the economy. So it's a

big deal. But you also had some retail sales that were flat for December. It's a delayed report, so I'm not going to go into it a ton, just because this is all the way February now. But we were expecting a four-tenths increase in December, and we got a flat number. That's a pretty big miss. You've talked about seasonality, the weather, or government shutdown, all that stuff had a part of it. Nonetheless, that's your number. The employment cost index, was a little lower than expected. This would be considered good news. This is an input cost for employers and their largest expense mostly on employment. Having to be a 10th below at 0.7% for the quarter would be a good thing. But that's pretty much across the board on the economic side of things and where markets

traded on the day. There is a CPI number coming on Friday. And so obviously we don't know exactly what this is going to be, but it is a fresh read. This will be a January number. So it would mean an important one. We've seen the employment picture weaken here a little bit, but then you've seen some of the economic numbers. I was on Bloomberg yesterday talking about this, but you've got this sort of tug-of-war between some positive things in the economic side and then some negative in the labor side, offsetting one another, and then you've just got volatility around AI and then the return-on-investment ROI that you'll get from it and the time period it will take to get that.

But nonetheless, we'll have an inflation read this Friday. And the one thing that we'll point out still, even now, is that the owner's equivalent rent part of that component, which is over a third of it, is still going to be elevated from what is reality. And so that's a lagging number. We still think as that comes down, it'll give a good amount of reason for short-term rates to come back down. And our thought is that if you thought of a 1% real rate, so interest rates at Fed funds pegged to something like 1% over what inflation ultimately will be, let's call it two That brings you to a 3% handle on Fed funds.

We're at 350 to 375 now, so that gives worse something like 50 to 75 basis points of leeway before the end of the year, all things being equal. Question in there today was about AI volatility, and it's a good question because we get it a lot because there's been a ton of it. I don't have a lot to say about the volatility. I suspect it will continue just because a lot of that stuff is expensive. And when you have parabolic moves and some names, then you get volatility around. them. You can think of Bitcoin or gold or anything else, silver. These things are volatile once they get up that high. Nonetheless, the theme is the same, which is that we believe that AI will be a game changer, that it's important, that it'll add to productivity. Those are all very good things.

It's a great technology. The $500 to $700 billion of capital expenditures are spent on it will have to have certain time period before that money can actually turn a profit. And then the question is just what are you going to pay for the company you're buying to wait that period of time before you see the profits. So that's the paradigm. And around all of that, you get a lot of volatility. And not just that, you're going to get some winners and some losers because as companies will compete in for one another, for the market share to be the dominant player, there's going to be some losers in that scenario. So those are our comments for you on the day. A little bit shorter of a podcast for it, as you probably can hear, I'm a little under the weather.

but I should be back 100% for you tomorrow, and I'll be with you on the Dividend Cafe. Thank you for listening. 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. No investment process is free risk.

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