The Dividend Cafe - Wednesday - July 15, 2026

Episode Date: July 15, 2026

On Wednesday, July 15, Brian Szytel reports modest market gains (Dow +150, S&P 500 +0.4%, Nasdaq +0.6%) amid a positive early Q2 earnings tone, though Middle East tensions temper sentiment and momentum tech (semis and software) has been pressured. He highlights notable strength in financials, citing rising lending, M&A, and capital markets activity, with investment banking up about 30%, capital markets up over 15%, and financial earnings up over 6%, viewing this as a forward-looking sign of economic confidence. The day’s key news was a second straight cooler-than-expected inflation report: PPI fell 0.3% vs flat expected and core rose 0.2% vs 0.4% expected, implying a favorable PCE read. He discusses potential market impacts if Strait of Hormuz disruption persisted (higher oil, inflation, rates; pressure on long-duration assets; benefits to U.S. production), while noting futures imply ~$75 oil in a year, and adds a strong Empire State manufacturing print (15.6 vs 8.4 expected). 00:00 Market Close Recap 00:23 Earnings Season Pulse 01:00 Financials Lead Strength 02:26 Cooler Inflation Data 03:40 Hormuz Risk Scenario 05:15 Futures Reality Check 05:28 Manufacturing Beat Wrap 05:57 Final Sign Off 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. Good evening and welcome back to Dividend Cafe. This is Brian Saitel, your host here this midweek edition on Wednesday, July 15th. Positive day overall in markets modestly. We had the Dow close up 150 points. S&P was up almost 4 tenths of a percent. NASDAQ was up 6.000. tens of a percent. So positive in stocks. We had some continued positive earnings of the undertone.

We're now about five, six percent into reporting season in Q2 on the SMP 500, tilted towards positive bias. And so the underlying tone in the markets is to the upside. You still have this ongoing back and forth in the Middle East, and that is continuing to put some a lid a little bit on some animal spirits in markets, but nonetheless, the backdrop remains fairly positive. As we've written about, a lot of the momentum names have come off, including the semiconductors. They continue to be under a lot of pressure, software names, also the same the last month or so. But what I wanted to talk a little bit about, just because we are into earning season here, is the strength we've seen in the financials. I always love seeing this, because when you've got strong financials, it's really hard to have a real weak or deteriorating economy underlying those financials.

Lending and bank activity and M&A, all being up big notes. numbers. Investment banking so far in these big banks that have reported has been up 30%. Capital market activity just in general is up over 15%. So earnings on those financials are up over 6%. And those are all positive things. And if you remember during the zero interest rate period, ZERP in 21, you had this huge explosion in M&A transactions because they all of a sudden all penciled. They're leveraged buyouts, a lot of them. So you can borrow at 1%. All of a sudden, the numbers make sense. You had this huge boom. You went from something around $2.8 trillion the year before to double that in that particular year. And that's all coming back. And now you're starting

to see those numbers pick back up. We're in the fours now again. So those are positive signs. Those transactions are typically good forward-looking indicators. It means there's confidence in the economy and how those numbers pencil. And it's not like interest rates have moved all the way back to zero here or anything like that to make all those deals pencil. You're just getting good fundamentals. I think that's a positive undertone in markets, and I like seeing the positive action that I'm looking at in financials. I wanted to talk about that a little bit. But the news on the day largely was a second day in a row of cooler than expected inflation, which is good. Today, we got the producer price index. On headline, it actually went down a 0.3% on the month,

and the consensus was for it to be unchanged, flat. That's good. We could than expect it, in other words, And then you had core when you move out food and energy at a 0.2% increase and we were expecting a 0.4. So those numbers are good. Remember, the Fed's favorite indicator to read into inflation and it judges and bases a lot of us decisions on this is the PCE. And what feeds into that is, of course, the last two days of data, which is the CPI number and the PPI number. With both of those cooler, the PCE estimate that I come up with was around 0.1% negative on PCE. and that should be a good sign and a welcome sign. It doesn't mean the Fed is necessarily not going to talk about still raising rates.

I'm not predicting necessarily that in my comment today. We've talked about that enough. We believe they may be on hold for a period of time. Nonetheless, whatever they do, the path of both PPI, CPI, and then PCE all looking better than expected the last month or so. I'm going to call that a good thing. Question in there today was if the war in Iran lasts longer than expected and the Strait of Hormuz is disrupted for longer than expected. What does that do to markets? My first comment is just, honestly, I don't know exactly how that would play out. There's just too many moving parts, nor does anyone else. Take my words

in my speech here with a grain of salt. I'll give you some kind of low-hanging fruit of things that would move. First, oil in the 80 to 85 range would likely be 115. So there's that. That would get repriced, likely. You'd also have elevated inflation with energy being higher. And so you could assume interest rates would move higher across the yield curve. That would put pressure on a lot of long duration assets. So long bonds would be weak in price. So with tech stocks, things like that. You'd probably get a benefactor in the U.S. domestic production trade and U.S. midstream as a derivative to that all playing out. In other words, prices would be high and demand would be high. And so that'd be good for production in the United States. And while oil was less of a drag on GDP than it

used to be, it still would shave over a point off of global GDP likely if oil was in the 115 range. And so you could expect that maybe not driving it into a global recession, but having what is estimated at global GDP isn't something that would be fun or enjoyable, and that's painful. Over time, what I would say is that things would adjust. You'd have pipelines that get rerouted. You'd have shipping routes that get changed. The show would go on. The world would be fine, but it would be disruptive and economically harmful in the short term.

So that's my comments. That's my guess. Now, all that to say, what you have in oil futures is showing a $75 a barrel price a year from now. It's just not what is expected at this point. So it's not the likeliest outcome. Nonetheless, that's my walkthrough of it for you today. The last thing that I'll mention in there today is we did get a strong manufacturing number in the Empire State region. This was almost a double of what was expected, 15.6 versus 8.4. That's positive on the manufacturing side. And like I said, a positive. on the inflation side today as well. So we're two out of two on the day, and I'm going to end it with that on a positive note. Positive for stocks, positive for bonds, actually, because rates were down a little bit, and then you had some positive in the inflation rate. With that, I shall let you go.

Have a good evening. Reach out with questions. We always appreciate them. Thanks for listening. The Bonson Group is a group of investment professionals registered with High Tower Securities LLC, member Finra and SIPC, and with High Tower Advisors, LLC.

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