The Dividend Cafe - Tuesday - March 24, 2026

Episode Date: March 24, 2026

Brian Szytel recaps a choppy, directionless market day marked by early heavy losses, a midday rebound, and a late fade amid negative sentiment tied to Middle East tensions: the Dow fell 84 points, the S&P 500 lost just over 0.3%, and the Nasdaq dropped about 0.8%, with tech weaker while defensives, dividend payers, and energy (helped by higher oil) held up better. He discusses conflicting reports about U.S.-Iran negotiations and expects uncertainty to persist for several days, while noting markets still seem to price in a potential off-ramp. He highlights that high-yield credit spreads remain tight at 319 bps over Treasuries, not signaling recession risk. Addressing a stagflation question, he argues current conditions differ from the 1970s despite tariff-driven one-time price effects. Economic updates were broadly positive: services and manufacturing PMIs stayed above 50, Q4 productivity was revised to 1.8%, and the Richmond Fed index was flat but beat expectations. 00:00 Market Recap Today 01:04 Middle East Tensions 02:05 Markets Still Hopeful 02:28 Credit Spreads Check 03:24 Stagflation Question 03:50 Why Not the 1970s 04:48 Tariffs and Inflation 05:35 Economic Data Rundown 06:36 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. Welcome to Dividend Cafe. This is your host, Brian Saitel, with you today from our West Palm Beach, Florida office here at a nice sunny day. In another day in which markets started off trading much lower early in the morning. So we had heavy losses, several hundred points. Then we actually regained some of that midday. And then, of course, gave it all back before the close. So the directionless and the rudderless and the more or less negative sentiment in market is ongoing around Middle East tensions.

So the Dow ended up closing down 84 points. SMP was down a little over a third of a percent. And the NASDAQ was down about eight-tenths of a percent. So a bigger skew towards tech. And those names selling off more, the value names, the defensives, the dividend pairs all fared better. And then, of course, energy was positive because you had a move up with oil prices here after yesterday's sell-off in them. Yesterday's movement, while positive, the breadth internally was actually not that robust. I would call it mediocre at best. It was five-to-one advanced decline.

And so you've got this announcement with negotiations ongoing between the U.S. and Iran, and then you've got a denial of that announcement by the other side. And the reason is just the leverage of negotiation that Iran has is, with the home route's straight closed and with oil prices that are choking global GDP and putting pressure on the U.S. And so I don't think they're going to give way to admitting to positive negotiations and progress and things that are going to cause both of those things to get better in the middle of it. That doesn't surprise me at all. Now, there was still shots fired to neighboring countries. There's still Israel's involvement and ongoing work that they're

doing against Iran as well. And so this is far from over. said, we've got another four days here until this current period of time is going to end, and I imagine that that is all going to continue until the last day or somewhere near the end of it, where we'll either know if negotiations were positive or if they weren't or if they existed or if they didn't. If you look at markets and you combine yesterday's action with today's action, technically it's still optimistic in some sense that something will get done. The reason is that whether there is a definitive nature to any of this is still as unknown, that said, at least there was an off-ramp, a mention of an off-ramp that Trump brought up as far as a negotiation.

And so I think that's positive. The things that I look at, I guess, would be economic numbers, fundamentals. And then also really, if you're looking at just underlying contagion and real risk in markets, you would start seeing it in credit spreads. And credit spreads really haven't moved all that much. So if you look at high-yield credit spreads, this is the yield that you have to get paid to own jump bonds over treasuries. That's what that means. So the higher the number, the more risk and the more volatility and the more fear, there's going to be defaults in mass recession and all the bad stuff.

Right now, we're only 319 basis points over treasuries. That's pretty tight. That's not indicative of an economy that's falling out of bed. To put that in perspective, in liberation day period in April of last year, we were over 400 wide. And then if you look at the lows of 2022, in the fall, we were at 600 wide. Markets are perceived from an economic and fundamental perspective, half as risky as they were in the sell-off of 2022. So take that for what it is. Question in there today I thought was a good one it was about

with the producer price index coming in double what the estimate was and tariffs looking to be more structural than transitory, isn't that the exact recipe for stagflation? And don't markets always hate that? I'll start by saying this. If we were in a stagflationary environment and a real one, and in a trenched one, then yes, I think a market trading at 21 times would certainly be overpriced and would sell off. That said, that's not where we're at today.

So this is not the 1970s. First of it, it's a different Fed. But more than that, and more importantly to that, we were dealing with double-digit unemployment. We had a deep recession. We had double-digit inflation numbers, and it was entrenched, and it was ongoing. And the Fed was trying to raise rates to calm inflation down and at the same time hurting the economy. So it was a tough situation and much different. Obviously, we reported most of our oil at that time from OPEC nations from the Middle East.

That's different than today. You've got employment that is fairly well anchored. You've got the economy that is growing. Granted, only at 2%, but it's still growing. You've got positive EPS. You've got high margins in corporate America. All of those things are good. We've talked about tax refunds that are now hitting accounts as of this month, and those things

are stimulative. Then, of course, you've got the negatives. of $100 oil and some of these other items that we're talking about. But it's not necessarily a stagflation environment. And when you look at tariffs, yes, it's a one-time cost increase because it's essentially a consumption tax and importers have to pay it. And what they do is either absorb a portion of it and then pass through the rest of consumers. And so it causes higher prices. But what it also does when you raise taxes in the economy is it does lower productivity and the amount of goods and services that is offered on the supply side is technically decreased.

So if you think about how inflation works, it's simply just too much dollars chasing too few goods and services. And that this can be a component of that. All that to say, don't attribute this to the 70s. I would not say this is a static inflationary environment at all. Credit spreads, the market trading where it is, all of these things would not be that way if that was the truth. So those are my comments on that question. There was a few things out in the economic calendar. I'm going to run through because they're both flash numbers.

on PMI services and manufacturing. Both of them were over 50, so that means expansionary. So we'll say that's good. The services PMI number was slightly below consensus, and the manufacturing PMI number was slightly above. So mixed bag there, but generally good. The other point was non-farm payroll productivity for Q4 was revised, slightly lower.

We thought it would be 2%. It was at 1.8, so productivity has come off a little bit. I actually wrote about that before and how surprised I was, how robust it was. So it's come down a little bit, but still quite positive. A 1.8 number is still considered good. So now I'm going to call all three of those things technically still more to the positive. And then the fourth was the Richmond Fed Manufacturing Index was flat, but much ahead of the negative 5 that was expected. So I'm going to go 4'4 on the economic calendar for today.

But that's what I've got for you. I appreciate you listening, as I always do. keep those questions coming on in, and we'll be sure to answer them as fast as we can. Have a good evening. Thank you. 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.

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