The Dividend Cafe - Tuesday - September 1, 2026

Episode Date: September 1, 2026

Brian Szytel recaps a down market day driven by heightened Iran-U.S. tensions, higher oil prices (WTI up 5.9% near $90; Brent near $95), and rising interest rates (10-year around 4.79%), with the Dow down 419 points, S&P 500 down 0.7%, and Nasdaq down 1% as long-duration assets weakened. Economic data was slightly below forecasts but still constructive, including 7.2 million job openings and an ISM manufacturing PMI of 54.6 (eighth month above 50). He notes a gap between Fed dot-plot projections and futures-implied rate paths and emphasizes how unreliable rate forecasts can be given policy lags. Addressing questions about foreign Treasury selling (China and Japan), he explains foreign ownership has fluctuated historically and argues the core issue is U.S. deficit spending and rising debt costs, while the dollar’s basket weight recently increased to 43%. 00:00 September Market Recap 00:24 Oil Spike and Rates Jump 01:13 Stocks Slide and Rotation 01:45 Economic Data Check 02:23 Fed Dots Versus Futures 03:07 Why Rate Forecasts Miss 04:11 Foreign Treasury Holders 06:06 Dollar Basket and Deficits 06:38 Wrap Up and Q&A 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 back to Dividend Cafe, Brian Saitel with you this Tuesday afternoon here, first day in September. So we're rounding third base on the way home here for 2026. And it's crazy how fast this year has flown by. But we still have several months to go here. So there's plenty to go through here at the Bonson Group until the year's over. over. But in the meantime, what did we get today? We had markets down pretty much across the board. Simple reason. Heat up in Iran and U.S. tension and you had oil go up a bit. You had WTI of about 5.9%.

Brent was flat, but that puts us at 90 bucks on WTI and 95 on Brent. So it's creeping back towards 100. And then you had interest rates breached above its level that it hit in 2024. It's high level. So it hit upwards of 4.8%. It actually closed at 4.79. So that's up about five basis points on the day. So interest rates have crept up, and that's because of oil and inflation still being sticky, and also because Warsh, not quite explicitly, but implicitly said his key measurement is really headline PCE. And if you look at that number, it's 3.7%. And he firmly stated that he wanted it too. The market is reading that is rates are going higher and sooner than later. So on the Dow, you had it down about 419 points. S&P 500 was down about 7,000.

10th of a percent, NASDAQ was down a percent. Remember, those long duration assets, we'll call that AI or some of the shiny stuff, Bitcoin and such. The longer duration stuff, when you have long rates go up, of course, long duration means that stuff is going to go down in price. So that's what you're seeing a little bit more here in rotation. We actually close more or less at the lows of the day. But 7 tenths of a percent on a downstock day, really, these days. I know the points sound dramatic, but that's not a whole heck of a lot, frankly. And there was a couple of positive things that are semi-positive in the economic calendar. We had job openings, a good forward indicator on employment, just slightly below estimates, but so amiss, but just slightly, 7.2 million. And then he had

ISA manufacturing PMIs that were also below forecast slightly. We got a 54.6 versus a 55.8. But just anything over 50 is expansionary, and this is the eighth month in a row that we've been at over 50. And so that's a good thing. This is expanding manufacturing data. So I don't know that those things were anything other than status quo as far as markets, but nonetheless, the sell-up was related to those other factors. And what I wanted to mention a little bit was just you've got the Fed that has dot plots and all these Fed governors have their estimates of where they think Fed funds is going to be over the next three years. And then you have a lot of stuff that happens in the meantime between FOMC meetings. And so what's happened now is futures are

pricing in a much higher rate path. When I say much, take that with a grain of salt. We're talking about 50 basis points different. But the futures are pricing in something different than what the Fed is predicting. So you have dots that are showing 3.6% next year and then 3.4 by 2028. And then you have real life futures, which is pricing every second of every day, showing 4% by the end of this year, 4 and a quarter next year. And then that holds steady. So just keep that in mind. Those things need to adjust and I believe that they likely will. Another thing to keep in mind is that historically speaking, the forecasting accuracy of those things is really bad. So markets tend to move a whole lot more. volatile, both in the prices of things, but also the interest rates and policy. And so keep that in

mind. In other words, the dispersion of reality around what actually is just politely forecasted of rates going up only 50 basis points is unlikely to happen over three years. Lots of things can happen. That said, the other thing I'll say is if really that's how markets are looking at this, like 50 basis points higher on Fed funds, and then PCE is going to go from 3.7% back to 2% magically in a fast way. That's a little wishful thinking, right? So it doesn't really make sense. That's not a big move in rates. And that's why my first statement is true, which is the disparity of returns is so much more because rate policy works with a big lag. Sometimes it frankly doesn't work. Markets and demand can do their own thing. Fed tries to shape it with the cost of money. It's an indirect

relationship and it has a big lag effect. So it's hard to get it perfect. The question in there today was a thoughtful one. So I spent some time answering it for this person and also included a chart and you'll see that. But it's about the disposition of foreign holders on U.S. treasuries as a percentage and that it's lower. And the statement was about the sale of China moving its position down to $633 billion, the lowest since 2008. And the Japan sold $26 billion, so on and so forth. And does that change or lower the currency basket of what the dollars weighted globally? In other words, is this predicting the collapse of the dollar and is it's inflationary and all the fun stuff. Look, the reality is if you look at over our lifetime,

but really, depending on how old you are as you're listening, could be a little longer than your lifetime like it is for me. But if you go back to World War II, that ending and you look at percentages of foreign holders of our treasuries, it was nothing after World War. Two, why? Because we were in a world war. Countries didn't have any money to save or buy treasuries. One, two, if they were going to, they were doing other things and not buying their enemy's debt. That makes sense to me. That said, we crept up after World War II, the 70s. It hit 28% of total treasuries owned by others. And then in the 80s, decked down to the midteens. And then the peak was during the GFC. It went all the way up to 56% of our outstanding debt

was owned by foreign nations. And then today we're at 31. So my comment is just keep in mind, there's ebbs and flows to this. And it's not just that people are selling or buying. It's that there's accounts surpluses or deficits in other countries. So they have to recycle. that or not. And then also our debt can be growing at a faster rate as other people buying it too. So we're a debtor nation and we're spending more than we're making from the standpoint of government. And so the problem isn't necessarily who owns it. It's the amount of spending. It's deficit spending. That's the problem. That's what we should be talking about. And as far as the dollars weight in the basket, it actually went up the last time they reviewed it. So it's at 43%. So if you're

having a dollar weighted more against the other world currencies on the planet of Earth, it's hard to say that one is the really worst one, and there's an imminent collapse. It doesn't mean that we need to take that for granted or anything like that. And like I said, the real problem to all of that is that there is a massive amount of debt being piled on and the rate of growth and the interest expense of it is going up and exceeding some other important things like military spending and such. That was a whole lot for today. So I'll leave it there from my around the horn. I appreciate you listening as always. I've got a little backlog of questions, but that doesn't mean I don't want you to keep signing them. Please do, because I like to get them. And sometimes I just reply. Other times

I'll include it in D.C. But they're always helpful. So I appreciate the engagement. Thanks for listening. Have a good evening. 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 investor process is free of risk. There is no guarantee that the investment process or investment opportunities referenced

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