The Dividend Cafe - Wednesday - May 13, 2026

Episode Date: May 13, 2026

Brian Szytel recaps a mixed market day on Wednesday, May 13: the Dow fell about 67 points while the S&P rose nearly 0.6% and the Nasdaq gained 1.2%, led by semis even as many software names sold off; rates and energy prices ticked higher amid ongoing Middle East unrest and uncertainty around a ceasefire. The key economic event was a much hotter-than-expected Producer Price Index, with headline PPI up 1.4% (vs. 0.7% expected) and core PPI up 1.0% (vs. 0.3%), leaving year-over-year headline at 6% and core at 5.2%, driven largely by services and broad demand, with tariffs, stimulus, and lower interest rates also cited. He notes these inflation readings complicate Fed policy as Warsh arrives and Powell’s term ends the 15th. The Ask TBG segment explains time value of money and why longer horizons can justify higher volatility for higher expected returns. 00:00 Market Wrap Overview 00:18 Tech Leads and Rates Rise 00:37 Middle East Tensions and Oil 01:15 Hot PPI Inflation Surprise 02:21 What’s Driving Prices 03:24 Fed Constraints and Policy Outlook 03:48 Ask TBG Time Value Money 04:58 Closing Thoughts 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. Good evening and welcome back to Dividend Cafe. Brian Saitel with you here again as your host. This is Wednesday, May the 13th. On a mixed day in markets, you had the Dow that was down, about 67 points. SMP actually closed higher by almost 6 tenths of a percent and the NASDAQ was up 1.2%. So obviously, a big outperformance day on the technology side. Although when I say weird, it's because most of the software names were just pummel today. So pretty bifurcated. Semis have been volatile, obviously have been up a lot this year. We're up a lot today again. So there you have it all in the stock market, at least. Rates were up a little bit across the curve. You had energy prices that moved slightly higher also on continued unrest in the Middle East and really no end in sight. There was

talked from Trump today about the ceasefire essentially being a life support, meaning there's a very small chance that it's going to just stay where it is, and likely there could be a new escalation to ultimately get the straight reopened, but it's not a great situation. All in all, the market has held in there because of the strong consumer, strong economy and all those positive things. We just can't take that stuff for granted. I was actually on Bloomberg this morning talking about that. There's a link inside of Divina Cafe, if you want to watch it. the day, what we got was the PPI number. And again, this number was out after I was actually on TV. So I didn't talk about it then, but we got a huge number across the board. If you look at headline PPI, we were up

stunning 1.4%. We were only expecting a 0.7.0.7 is high, but remember, that includes energy. So we know that energy is going to be a lot higher. So that number was already perceived to be high, but we doubled it. So not a good thing. If you take out food and energy, those volatile things, core PPI, again, this is the producer price index we're talking about, price of finished goods, was still up 1% versus only 0.3% expected. So on both numbers, headline was up 6% year over year. Core was still up 5.2% year over year. Both not good. The Fed will ultimately be mandated to raise interest rates to stop inflation if it's outside of just energy.

be one thing if it was energy only, but it isn't that. And what is causing a lot of that is broader parts of the economy. You've got really inside of the core number of PPI, what drove it was the services sector. That's two-thirds of our economy. So this is just broad-based demand, growth, call it AI CAP-X trickling down, call it anything that you want. But at the end, consumers have money, their spending economy is doing good things, and that's flowing through into higher prices. You also have weirdness around tariffs coming out of the economy and now coming back in. You also have a good amount of stimulus from the One Big Beautiful Bill Act with advanced expensing and all that cap X. That's money being spent for long-term goods to drive business expansion.

That fuels the economy in and of itself. And interest rates have come down. They were over five. Now they're in the middle threes. And so all those things are keeping us humming along in the economy. But that's not to say all things are rose-cut. because there's still a lot of risks in the economy. I'm just giving you what drove the PPI numbers.

And as we get through the remainder of the week, we'll have more economic data, but I suspect this producer price index is going to be the main event for the week. As Warsh gets in, and he's just coming in now, Powell's term ends the 15th of May. As he comes in, he's got a lot on his plate, because I know what he wants to do, which is shrink the balance sheet, and at the same time potentially lower short-term rates,

but you can't really do that. You'd have too many dissenters inside of, the Fed voting committee at this point. If you've got inflation, that's running 5, 6% on PPI. Ask TBG question in there today was about time value of money. There's an investor that knows that he or she has at least 10 years or maybe more. Does it call for a different mindset or the same regardless in the time firm doesn't matter. So there's different things going on when you say time value of money.

First off, if you look at like a macro, high level, just broad definition, we're just talking about more compensation to be detached from your money. So if you're going to buy a 30-year government bond, you should be paid more than if you're going to buy a two-year government bond. That's not the best example, because the delta between the two is literally 1% these days, a 30-year yields 5 and a 2-year yields 4. Nonetheless, that's the idea of it, so you can get my point. But for an investor that can be detached or doesn't need money for 10 years, then, yeah, they can accept a higher rate of return and a higher fluctuation and a higher, quote-unquote, volatility or perceived risk to be separated from it for that risk premium, that higher rate of

return. It's a formula. So it'll work over any curve that you want to give it, two years, 10 years, 30 years, with the idea being the longer period of time, the higher rate of return. There is a bell curve to it at some sense. But that is the definition and the answer for you today. That's my around the horn on the day. We'll be back with you tomorrow and we'll get some more earnings results. We'll have some more economic data, although it's slowing down towards the end of the week, and then we'll see if there's any updates here on the Iran-U-S conflict. With that, I will let you go for this evening. Thank you for listening, as always. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with

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