The Dividend Cafe - Tuesday - May 5, 2026

Episode Date: May 5, 2026

Brian Szytel reports stocks higher (Dow +356, S&P +0.8%, Nasdaq +1%) with bonds quiet and the 10-year at 4.42%, drifting up on Middle East turmoil and higher inflation expectations tied to energy prices. Oil continues to whipsaw amid geopolitical risk between the U.S. and Iran, including limited U.S. military escorts through the Strait of Hormuz and some fire exchanged. He says equities are holding up because S&P 500 earnings are strong: about 60% have reported with revenue growth near 10%, earnings growth around 27%, and record margins above 20% helped by a more tech-heavy index. Economic data was mostly positive: JOLTS job openings at 6.8M, new home sales at 682K, and ISM Services at 53.6. He also explains Fed currency swap lines as a longstanding liquidity tool supporting the dollar’s reserve status. 00:00 Market Wrap Overview 00:30 Rates and Oil Whipsaw 01:19 Why Stocks Hold Up 02:18 Economic Data Check 03:22 Fed Swap Lines Explained 05:02 Closing 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 Sightel, your host for this evening from our Newport Beach, California headquarters here at the Bonson Group. On a bright sunny day, albeit I'm a little wary for the worst after a very long travel day last night that was far later than I had hoped. But that's besides the point here. We've got an update in stocks, and I'm going to take that. We've got Dow that closed up 356 points. We've got S&P that was up eight-tenths, and we've got the NASDAQ that was up a full percentage point.

Bond land was fairly quiet tenure was at 442 at the close. We've drifted a little higher from the 420s up to now the 440s, and it's all related to turmoil and Middle East to higher inflation expectations because of rising energy prices. So yesterday, with tensions in the Middle East again, as the culprit, you had WTI up 4%, and today you've got it down 4%. So it just continues to be this whipsaw, this seesaw in energy markets as they try to guess and price in the risk in the geopolitical front between the U.S. and Iran. They have started to escort some ships through the Strait of Hormuz, the U.S. military has, but it's few and far between at this point, and there was some fire exchanged back and forth. not anything insurmountable from a conflict standpoint. Nonetheless, that's what's ongoing. But the comments that we have in there today are why is this market continuing to perform so well if you've got that sort of risk?

And our answer to that is earnings. And I've talked about this a few different times. But you now have about 60% of the S&P 500 that has reported. It's got revenue growth up 10%, and it's got earnings growth now up 27%. Those are big numbers, all positive. And you also have these record margins I keep talking about. about over 20% now. I thought it was crazy at 16, then 17, then 19. Now we're into the 20s. Part of the reason is that shift in the composition of the S&P 500 that I've spoken about,

it's just more tech heavy, obviously, now, and those businesses happen to be higher margin businesses. Those two things are correlated to one another. But if you're wondering why the market is doing so well and not caring, so to speak, about what's going on in the Middle East, It's because it's driven from a multiple of earnings and earnings are increasing. And so if multiple stays the same, that means stock prices are going higher. There was a couple of pieces of economic data out on the day. You had a big move up in the semiconductor space earlier today as well. But on the econ side, you've got the Joltz number.

This was the new job openings number that we talk about for the month. That was up $6.8 million. This is in line and a healthy number. This is a forward-looking indicator on employment. If employers are looking to add more positions, that's a good sign for the economy, obviously. We were upwards of 10 million during COVID period coming out of it and have come back down to a more normalized, to call it 7, 7 million-ish range. And that's where we continue to be. New home sales for March were just above expectations by about 22,000.

We got a 682,000 numbers, so a little better than expected. And then you had the ISM services number that came out just a little bit below expectations at 53.6. This was for the month of April. A consensus was for 54, but anything over 50 is expansionary. And so I would chalk all the numbers up today to be more on the good side, three out of three, than anything else. A question in there that David answered, which I thought was good. It's come up before. It was about if currency swap lines with the United States is deemed a good idea in general.

And would the new Fed share push for something like this? So the answer is that they've existed for two generations now. this is post-World War II. They were set up as the U.S. dollar became predominantly used in global commerce. That's a good thing for a lot of reasons that you would expect. But in order to grease the wheels of that financial system around the world, you need to have swap lines set up with major central banks. And so we have permanent central bank swap lines set up with the ECB, with a bank of England, Bank of Japan, Singapore, Canada, and a few others. And we can open swap lines with other central banks temporarily, and we've done that before, too, to assist. Basically,

what we're doing is providing liquidity, cash, dollars in exchange for currency from a foreign central bank set at a certain exchange rate that's agreed upon, and they have the ability to swap back on that, and there's collateral involved. I'm comfortable with the idea because I think it helps fuel and fund the system that we benefit from, which is the dollar being that reserve currency. If we didn't have something like that, you would end up with countries that had obligations due in U.S. dollars, but without the dollars to pay them. And so they'd have to sell the U.S. assets that they have. We don't really want them dumping a bunch of treasuries and corporate bonds and real estate or whatever else they're going to own to come up with the cash. Better just to

take some collateral, provide them the liquidity that they need. So that's what I'll say about it. So I'd say in theory, it's great. In practice, I'd say it's mediocre at best as far as a benefit. But again, think of it as the grief. But that's what I've got for you today. I'm going to keep it somewhat short and simple for you today. Generally positive. I'll be back with you tomorrow on Dividend Cafe. And in the meantime, reach out with your questions. Thank you so much. Have a good evening. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with Hight Tower Advisors, LLC. A registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. This is not an offer to buy or sell securities. No investment. Securities are offered through Hightower Securities, LLC. This is not an offer to buy or sell securities. No investment. or process is free risk, there is no guarantee that the investment process or investment opportunities referenced Tyrion will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced

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