The Dividend Cafe - Tuesday - January 13, 2026

Episode Date: January 13, 2026

Market Update and Inflation Insights - January 13th In this episode of Dividend Cafe, Brian Szytel provides a market update, highlighting a 398-point drop in the DOW and smaller declines in the S&P and Nasdaq indices. The episode features an in-depth analysis of the latest Consumer Price Index (CPI) data, indicating modestly above-target inflation at 2.7% year over year, with core inflation at 2.6%. Brian discusses the Federal Reserve's modestly restrictive policy stance amid current inflation rates and anticipates further inflation trends. He also addresses the potential impact of the Trump administration's announcement of $200 billion in Fannie and Freddie mortgage bond buying, expressing skepticism about its long-term benefits. The episode concludes with an invitation for listener questions and provides insights into upcoming economic indicators. 00:00 Market Overview and Daily Performance 00:41 Inflation Update and CPI Read 02:35 Fed Policy and Interest Rates 04:11 Government Interventions and Housing Market 05:47 Conclusion and Final Thoughts 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 here on this Tuesday, January 13th evening. In a down day overall in markets, the Dow ended up closing down about 398 points, which is off of the lows for the session, but close to them. That's about eight-tenths of a percent. SMP was down marginally about 20 basis points. NASDAQ was down about 10 basis points. So not big moves in some of those other more tech-heavy indices.

Some of this stuff that we've seen, dollar index continues to weaken a little bit. And the parts of the market that are more sensitive to driving revenues from overseas actually have a small benefit to some of the weaker currency in the short run. And so we've seen some of those things play out. But really the bigger news on the day was with a fresh CPI region, So we got an inflation update. And headline came out in line. We got three-tenths for the month of December, which is what we were expecting.

That puts us at 2.7% year-over-year. If you move out food and energy, the core number is what beat expectations. And we got a cooler print coming in a tenth below expectations at 0.2. And that put the year-over-year number at 2.6. We're getting closer to the 2% target, but we're still modestly above it. And also, if you peel back the onion here a little bit and you look inside of these numbers, there's not that much to get too excited about it. It was more or less in line because you had things that beat and other things that disappointed.

For example, core services were at 0.3 for the month and Shelter was at 0.4. Both of those were above expectations and important part. It's about a third, a little bit more. If you combine the two, it's certainly more than that, about 40% of the inflation number. You also had some data that remains, I guess I'll call it wonky with a government shutdown for that period of time, and it's just still not completely flowing through. There was a vehicle insurance component that wasn't in there that can move things a little bit too. But all in all, that's your CPI read on the day. And if you want to look at what went on in the bond market and Fed Futures and also to your inflation breakevens, all of those things would move if this was an actual much cooler print.

and none of them did. So the 10 year was down about one basis point on the day. So no move there really at all. And actually on the year, with all these things that we're talking about, the yield curve is actually flattened just a little bit. So long term rates versus short term rates have actually come down rather than have gone up. Okay. So that's a lot to unpack.

That's your inflation update on the date. What I'll say about that is that Fed policy here is modestly restrictive. You can't say that it's hyper-restrictive, because we've come down a ton. We were over 5 and a quarter percent on Fed funds. We're now below four, okay? So that's a big move. But it's still modestly restrictive. We've always looked at basically a 1% over inflation to be somewhere near a terminal rate

or a neutral type of rate. And I guess if you think inflation is actually a 2.6, then Fed funds that wear it at is right at that sort of neutral level. Fair enough. But what we think will eventually happen is I think inflation will continue to trend lower over time. That's not to say that in 26, there won't be reasons for it to come higher and different things like that. But just over time, the amount of indebtedness tends to be deflationary versus inflationary. And I think that that gravitational pull over time will start to show up here.

But in the meantime, look, the inflation rate is modestly above target. And that's why the Fed policy rate is also modestly restrictive. Those two things tend to track. The one component, though, that is important, and we're going to have five more non-farm payroll reports before the next June meeting is the employment side of things. And I think that'll move the change or the delta in that is what's going to tilt the scales here in this equation in the meantime. And so more to come on that front. But right now there's only a 30% chance for even a March rate cut. And then all the way out to June, you're only at 70%.

So that's what we're at for Fed policy and interest rates and inflation. Question in there. Today was about the announcement of this Fannie and Freddie mortgage bond buying amount of $200 billion that the Trump administration announced will that lower mortgage rates and that raise housing prices. To be fair, look, the announcements recently of the government intervening and completely functioning private markets and saying defense companies shouldn't pay dividends or institutions, large hedge funds, things like that, aren't allowed to buy residential houses, or we're going to have the GSEs basically enter into quantitative easing and buy bonds from the market, which injects capital into the

system. I think all those things are bad for the system long term. So that's my disclosure to you. So take it with a grain of salt. But look, if you look at mortgage bank security spreads and also prices, did they move a little bit? Sure. Did they move a lot? No. And do I think that'll drive prices higher in houses? I don't. And actually, part of these announcements were really aimed at raising affordability and lowering prices. So that's what that removal or hope of blocking institutions from buying residential houses was aimed at. It was to actually lower prices. And I suppose in a perfect world, if you could lower the price of a home and also lower the borrowing rate of a home, those two things tend to work in the opposite direction. But if you were able to accomplish that,

then affordability would go up. I just don't think you can accomplish it without a supply demand equation that would warrant that, and I don't think that they'll end up being able to pull that off in such a large market like that. So that's my thoughts on that one. Feel free to reach out with further clarity, but I think that pretty much sums it up. That's basically what we've got for you today in this round robin on dividend cafe. I'll, of course, be back with you tomorrow. Please reach out with your questions, as you always do. If I don't speak to you, have a great evening. Thanks again.

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