The Dividend Cafe - Tuesday - March 3, 2026

Episode Date: March 3, 2026

On Tuesday, March 3, Brian Szytel reports a volatile session where the Dow opened down about 850 points, fell as much as 1,200, and recovered to close down about 400, with the S&P 500 and Nasdaq down about 1% and moving more in unison; the 10-year yield rose only 1 bp after being up over 6 bps earlier. Markets reacted to fears around a near-closure of the Strait of Hormuz, which briefly lifted oil over 9% before closing up 2.8%, and to U.S. assurances of tanker insurance/protection that eased inflation expectations; TIPS breakevens jumped about 20 bps. He notes LNG is cut off to most Middle East countries and export transportation is down 20%, with U.S. gas about 40% cheaper than Europe/Asia. He previews key week data (ADP, PMI/ISM services, Beige Book, claims, productivity, and the employment report) and answers an AI question: U.S. power upgrades are “when, not if” despite regulatory delays and natural-gas advantages, while China faces chip export controls; U.S.–China AI partnership is unlikely due to national security concerns. 00:00 Market Selloff Recap 00:36 Strait Tensions and Oil Spike 02:03 Energy Supply Disruptions 02:27 War Headlines and Market Context 03:16 Inflation Breakevens and TIPS 03:32 Staying Calm in Volatility 04:12 Week Ahead Economic Data 04:52 Ask TBG AI and Energy 05:24 US Power Buildout Outlook 06:33 China Chips and DeepSeek 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, March the 3rd. I'm Brian Sightel, your host for the day on a volatile day overall in the stock market. We actually opened up down about 850 points on the Dow. We got down to about 1,200 below fair value midday. but then markets started to react a little better and markets recovered. We ended up down only 400 points on the Dow in about 1% on the S&P and about 1% on the NASDAQ. So all three indices much more moving in unison today than what has been the case recently. The bond market was only up in basis point terms on the 10-year one basis point. We were actually up over six basis points.

and there was follow-through because of what has turned into a closure, essentially, of the Strait of Hormuz. And I'll talk about that a little bit more, but that essentially sends oil prices higher, and we saw them close only up 2.8%, but we actually, at one point on the day, we're up over 9%, because there's such a large amount of oil that goes through there, about 21 million barrels a day go through there. Forty-five percent of that, for what it's worth, is actually for China as well. So the issue with some of those. tensions are if that gets shut or you get loss of these tanker boats and these losses of energy supply China has already said that it wants both sides to make

sure that doesn't happen if that ends up happening the worst thing would be China's involvement to try to get things reopened and we haven't heard that or anything but that's the fears that go through markets early in the morning and overnight gets priced in and then things calm down a little bit throughout the trading day what did happen is the US assured towards that same period of time that they would either beef up insurances for those tankers, which have to get that war insurance to go through the straight or provide protection or both. And that is what brought inflation expectations down a little bit. It's what brought interest rates down and then brought

stocks a little bit back up from negative 1,200 to negative 400. A couple of key points, though, at this point, that the liquefied natural gas is actually cut off to most of the Middle Eastern countries at this point. And that's where transportation is actually down by 20 percent. difference between the netty gas price in the United States versus European in Asia is about 40% right now, meaning cheaper in the U.S. So it's a pretty big deal. I would assume that would drive demand. We'll see. The comments from both the presidents and the defense secretary to have a willingness to put boots on the ground and accept loss of life, I think was definitely for Iranian years and less so for what is reality, what may happen. Keep in mind, just for context,

the Ukraine conflict that started, markets actually bottomed about a week after the start date. So we're not quite to a week yet. This is what four days here since Saturday. But keep that in mind how markets react. Things get priced in pretty early on and then fundamentals seem to take over. There's much of a chance that this will have other different volatility to it that can change that, but that's what we're seeing here. One of the things we've noticed too is that the tip spreads. So these are inflation breakheavens I've written about this, but they've jumped up 20 basis points because that higher oil price really is a big component of CPI inside of inflation.

So there you have it around the horn. Just remember in these volatile times, the business, TBG, is here to answer questions. Reach out to your advisor if there's any questions or concerns about what's going on. The media is getting things right. It's getting things wrong on both sides. And so there's just a lot of information that is unknown. And so I'm sure that causes some angst out there.

Less so at the Bonson group, just from the standpoint of understanding all the positions that we own and why and that these things while create volatility. And we've seen that today. The VIX actually was upwards of 28 in the morning and closed down towards 22. So you had high volatility in the morning. But when that volatility spikes, that's what we're here for. So please reach out. Lastly, I just want to give you a couple things. First off, there's an ASTBG that I thought was pretty good that I answered that I want to go through.

In the meantime, just to give you a lay of the land on what's on deck for the week. We've got 80 fee private payroll. We've got global U.S. services on PMI numbers, and we've got ISM services numbers and some Fed-Bage book info all out tomorrow. On Thursday, we're going to have some non-farm productivity, labor costs and some initial claims. And then we've got the actual employment report and a retail sales cap for the week on Friday. Those are big deals there, so especially the employment report. So there's a lot going on this week outside of what's just going on in Iran. Okay, a previous dividend cafe that David had spoken about and did a podcast and written about

regarding AI. And the question was about China and the fact that the U.S. has got the intelligence and the ingenuity for AI and the demand for it, but lacks proper energy infrastructure, whereas China has the opposite issue. It has proper energy infrastructure and also the ability to build nuclear reactors overnight, but doesn't have the demand the same way the U.S. does. And what does that mean between the relationship between those two countries and interests? The reality is this. Yes, there is an adequate infrastructure here in the United States on the energy side. It's been no way for a long time. A lot of those utilities and energy facilities and things were built. Around the time I was born, which is in the late 70s and early 80s, and they're old, as I am I.

So the issue there, though, is that there's a will to do it and there's capital to do it. There's just a regulatory impediment, and they take time to build because they're big factories and big production plants and things. It's not about if, it's more about when. So when they will get improved to meet the demand, the United States is just historically known always to meet demand with ingenuity with supply and with the profit mode of a free capital market. So I'm not too worried about that. But the delta between how long it takes and then the rising demand is a gap that needs to get filled. And you're right, that creates opportunity, but it also creates some of the issues that we see behind AI. Also keep in mind unique with the U.S. that people don't write about as much.

we have the most natural gas in the world. So part of that can be used to power this energy gap as well. I suspect it well, whereas China does not have that. But the thing that is holding China back from developing the technology isn't the talent or ability to. It's because there's export controls on the advanced ships to do this stuff. And I don't see that changing anytime soon on the advanced side. And so that gap will probably still remain for some time. But we know that they're going to narrow that to China because they came out with a program called Deep Sea.

But Deepseek really was a tool that was designed from weaker processors, and it was more efficient because it had to be because the processors were weaker. So maybe there's an advantage to that, I guess, in a roundabout way. I look at those two paradigms on the first, like I said, is if, is when, not if in the U.S. to meet the power demand, and then it's more like if, if not when in China to see if they can be competitive on the ingenuity side on the AI front. And as far as a partnership goes between the two countries, if that's what was alluded to, I think that's far-fetched just given the national. security concerns. So that's my answer for the U.S.-China AI story there. And everything else that went through the market on the day again, I will be back with you tomorrow. And I wish you a good evening. Thanks 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

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