The Dividend Cafe - Wednesday - March 4, 2026

Episode Date: March 4, 2026

Brian Szytel recaps a rebound day in markets with broad gains (Dow +238, S&P +0.8%, Nasdaq +1.3%) amid headline-driven volatility tied to Iran and renewed tariff discussion. He notes Secretary Bessent’s comments on Section 122 potentially moving tariffs from 10% to 15%, which would still mean $65–$70B less in taxes than under IEPA, helping especially smaller and mid-sized businesses. Key market watchpoints are oil and shipping through the Strait of Hormuz and bond yields, which rose with higher energy and inflation expectations rather than signaling a flight to safety; the 10-year is around 4.07%. He reiterates a midterm outlook of Democrats taking the House and Republicans holding the Senate. Economic data were strong, led by ISM services at 56.1, alongside services PMI at 51.7 and ADP private payrolls at 63K. He also addresses software stocks, viewing AI-driven selloffs as selective opportunity with potential margin benefits. 00:00 Market Rebound Recap 00:42 Tariffs Back in Focus 01:45 Iran Risks and Oil 02:41 Volatility and Bond Yields 03:49 Midterm Politics Update 04:27 Economic Data Rundown 05:33 AI and Software Stocks 06:47 Wrap Up and Tomorrow 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 your host, Brian Saitel, with you here on a rebound day in markets, which was nice to see. We had across the board green numbers here on the stock indices. The Dow ended up closing up 238 points. S&P was up 8 tenths of a percent. Nasdaq was up 1.5%. NASDAQ was up 1.1.5.5. So overnight, we had futures oscillate. We actually had futures positive as we headed into the open, but they were really back and forth between up 100 and down 100, pretty dramatic. And some of that volatility obviously is around Iran war and changes in the Strait of Hormuz and some of these big ticket items that we were seeing in headlines these days. But the other one was around tariffs

again. So Secretary Bessent was on CNBC talking about Section 122 being able to move current tariffs from 10% to 15%. We always knew this was a possibility. Again, this isn't a permanent fix. And it doesn't get the tariff numbers in percentage terms back to what they had with IEPA before it was ruled illegal and non-constitutional. But it does take that tax on importers back from 10% to 15. But either way, you end up with something around $65 to $70 billion less in taxes for those importers compared to what IEPA was. So it's still stimulative for American businesses and particularly the smaller and mid-sized companies that are going to be more affected by these things. And if people that own these businesses, tariffs have been a really big deal because they just don't have the margin to absorb 10, 15, 20, 25 percent increases on some of these things. So I suppose in most ways it's a good thing.

Markets have been favorable. Part of the reason separate from Iran is because of this, and that's what's going on. The situation Iran is a market-moving event. We've spoken about it quite a bit since Saturday, but to break it down and just give you the sort of two main points that we're looking at right now, it's about oil prices in the strait of Hormuz and what's going to happen there. It's not just oil that goes through that passageway. We're talking about economic activity, all the shipping, all of the, yes, oil, but other goods and things that go through that. other parts of the country and the world are very important to have. A key thing to look at is going to be the military actions themselves, obviously. War is tragic in the sense of loss of life. But that aside, there's more chaos to it. It fuels volatility. You've seen markets go up and down a ton.

Like I said, yesterday we had a down 1,200 turned into a down 400 at the close. This morning, you had positive 100 futures, go to negative 100 futures. And then, of course, throughout the entire day to day, the market just rose and then strengthened. and basically close very positive on the day. It's going to be hard to time and trade this thing, but just so you know, technically we closed back to where we were before this thing started. This is a lot of volatility and not a lot of actual directional movement.

And just for those trying to time it and get in and out of things, they're just getting their faces ripped off here in that stuff. But other thing is bond yields are watching this stuff. And one of the reasons that we weren't overly concerned fundamentally was just the bond market didn't move. You had interest rates actually go up, not down. That never happens when you have a flight to safety. Flight to safety means yields drop.

It means dollar appreciates. It means that stocks sell off. You're basically pulling assets at a risk and putting them into safety. That's not what we saw here. We saw bond yields move up because energy prices moved up, because inflation expectations moved up. Not something indicative of the world turning the other way on its axis necessarily as far as economic activity. But all that to say, we're at 4.07 on tens.

It's 20 basis points lower than we were a month ago, but it's 10 basis points higher when we're just a hot minute ago. So it's a low number. It's not something indicative of something falling out of bed yet. That can change fast. So we're paying attention to this stuff. Last thing I'll finish up on is just some politics. And I won't spend a lot of time on this.

But the consensus view that we've had that the Democrats are going to take the House in the midterms and the Republicans will hold the Senate is we're going to stick to our guns on that, pun intended, because I'm talking about Texas primary last night. and we've got a contested Senate seat in November. Some of these things can change. The last 20 years, we've seen Democrats attempt a major seat in Texas, but it has really failed to happen. So if that changes, then I suppose our tune will change, too, on who's going to hold the Senate and he's going to hold the House. But until then, we'll stick to our original thesis.

A couple of things in the economic calendar that were out on the day. You had February ISM services number, much better than expected by a wide margin. we got a 56.1. Just remember, anything over 50 is expansionary. A 56 is a pretty high number historically. We were looking at 53.5 as expectation, but just for context, this puts it as the strongest services number that we've seen since August of 22. So that was coming off of a big rebound after COVID.

If you remember that other piece of economic news, this is the final global U.S. services PMI. Another measure was also a 51.7, which is expansionary, a little less than expected on that one. And then finally, we have ADP private payrolls. We got a stronger number at 63,000 versus 50 expected. So pretty much across the board, we got good numbers on the day, and that's why markets were hanging in there. The other part of it is a new Supreme Leader, suppose it talks between progress attempted between the two nations of Iran and the U.S. That's been contested by Iran at this point.

Nonetheless, it looks like they've got to someone that they're looking at to choose there for a continuation and leadership. Lastly, there was a good question that came in. It was about software stocks, and does the sell-off because of AI represent opportunity or more risk because they have further to go? I think it's opportunity. And we say that because we've added the largest software name to our growth portfolio because of this reason. Obviously, that business is very diversified and services-oriented.

But nonetheless, the discount on the names, I think, is warranted because you have AI that's going to supplant a lot of what those businesses do, especially on the more easily commoditize part of their businesses. But I think the market is underestimating those software businesses being able to use the AI tool itself to also create a heck a lot of operating margin in the business and how a lot of efficiencies and expanded margins. Now, that may mean that some software programmers on the entry level may have tough time getting jobs for a time. Obviously, if Jevitt's paradox, the more efficient these types of things are, the expansion of usage and the bigger the market you end up getting. So I'm not really worried about employment and

those areas over the long term. This is a transition period, just like the internet was and just like other things. But that's the way I look at it. So yes, opportunity, no, they're not going away. I think there'll be winners and losers. And I would be selective. And I would have you let us do that for you. So that's what I have for you today. We'll be back with you tomorrow. We each out with your questions as always. And we'll talk to you soon. The Bonson Group is a group of investment professionals registered with Hightower Security's LLC, member FINRA and SIPC with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC.

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