The Dividend Cafe - Wednesday - September 2, 2026

Episode Date: September 2, 2026

Brian Szytel recaps a modest market rebound after three down equity sessions, with weak internals and low volume as investors await Friday’s non-farm payrolls and next week’s CPI. The Dow rose 295 points, the S&P 500 gained 35 points (nearly 0.5%), and the Nasdaq added about 0.4%; rates were largely unchanged with the 10-year near 4.78, oil held around $90 WTI, and the yield curve remained steeper than recent periods. Economic data were mixed: ADP private payrolls missed slightly (38K vs. 47K expected) while July factory orders rose 0.9%. He then addresses whether buying back one’s own debt is intrinsically wrong, arguing it’s virtuous for individuals paying off loans, but for countries it often reflects refinancing via central bank actions (e.g., QE), which can support liquidity yet distort markets if done excessively. 00:00 Market Rebound Overview 00:24 Key Data Ahead 00:52 Rates Oil And Internals 01:16 Today Economic Prints 01:43 Debt Buyback Question 01:56 Personal Debt Payoff 02:21 Central Bank Mechanics 02:53 QE And Yield Curve Effects 04:05 When It Goes Too Far 04:43 Closing Thoughts Links mentioned in this episode: DividendCafe.com TheBahnsenGroup.com

Welcome to the Dividing Cafe weekly market commentary focused on dividends in your portfolio and dividends in your understanding of economic life. Welcome back to Dividend Cafe. Brian Sightel is with you here this Wednesday afternoon. It's September the 2nd here. And we did get an update. We've had three down days in a row in equities, that is. Today we got some rebound day. Markets were up. Not a lot of news drove that, so just call it a bit oversold. internally in the market, it's still quite weak. The volume today was very low. And what I do believe is the market is more focused on non-farm payroll number that's going to come out on Friday, and then more focused on the CPI number we're going to get next week. So some of the, you know, information, all else being equal in the meantime, is an incredibly market moving. But nonetheless, we had the Dow up 295 points on the day. We had the S&P 500 up 35 points, which is about almost half of a percent and then the NASDAQ was up about four-tenths of a percent on the day.

Interest rates largely unchanged, 10-year was down a basis point. We're at 478. The old curve continues to be steep from where it has been a week ago, a month ago, certainly a year ago. Well, on the day was unchanged, and so we're still sitting at that 90 on WTI levels. Markets are kind of muddling through internals at a week, volumes are low, so things are just feeling a bit fatigued overall in the market. The economic site, we did get an ADP private payroll number, as we always do, before the non-farm. It actually missed a little bit, but it was close enough. We got a 38,000 print versus a 47 on it. So again, just sort of sluggish, not necessarily super bad, but muddling through. And then we got factory orders that were actually pretty good. They rose more in July than we

thought they were up nine-tenths of a percent. Kind of a mixed bag overall, but that's kind of my around the horn for you today. The question that I answered, I thought was a simple but good one. Is there something intrinsically wrong with a country or even a person buying back its own debt? So my answer is yes and no, and I wanted to just walk through it a little bit. On the latter, as far as someone like a person buying back their own debt, what we're talking about is them paying off their loan. And not only there's nothing wrong with that,

I'd call it one of the most virtuous and, you know, stalwart positions inside of the premise of just finance, lending, borrowing money, having someone lend it to you, and having it being paid back with that default and getting an interest rate that was serviced the entire time. There's nothing wrong with that. So all good there. As far as what countries do, different story. And these are tactics and tools that central banks have used all of them.

But what we're talking about there isn't extinguishing the debt. They're not paying off the debt. What they're doing is essentially refinancing it. They're getting rid of old debt and either funding it with new debt or they're funding it with adding bank reserves in order to do that. That's a little bit different than just creating money or creating or printing money, but it's transitioning a new reserve onto a bank balance sheet in exchange for a treasury debt, for example. That was what we saw during QE.

And so in that environment, you're basically having one government balance sheet entity, the Federal Reserve, add debt to its balance sheet in exchange for bank reserves. The Treasury then has to make the coupon payments to the Fed, and the Fed has to make the overnight reserve interest payment to the banks at it. gave the bank reserves to. So it's circulatory there. The net difference, which of course would be the difference between short-term rates, bank reserves, versus long-term rates in that scenario, would be remitted back to Treasury. And so that's what we've seen. And actually, interestingly, and somewhat counterintuitively, during 22, when the Fed raised short-term rates,

short-term rates actually went up. Remember the yield curve being inverted? So what happened then is the amount the Fed had to pay to banks for bank reserves actually was much higher than they were receiving from the Treasury and coupon payments. And so they actually ended up creating a deficit. That has since corrected itself with a right-sized yield curve. But that's an example of this sort of nutshell game going the other way on this. But yeah, that isn't a scenario in which debt is being repaid. It's basically being transferred and shifted around.

As far as that being intrinsically bad, look, mechanically it's not. There's different reasons that they would do that to help markets function and provide liquidity, to make sure interest rates don't get way out of whack for some dislocation reasons. Those are all the reasons, and those all make sense. But when those things are done in excess, and you start to actually just distort the yield curve and distort how markets are going to set prices to equal the right amount of return on an interest rate for the amount of risk in the credit profile,

then I think that is intrinsically wrong over time. And I think it distorts the free capital market function, and that's basically the dynamism within capitalism itself. So slippery slope with some of these things have done in excess. But that's my answer for you on the question. I hope it was helpful. I will let you go there tonight on a short and sweet, a bit of a lackluster day overall in the economy.

And hope you enjoy your evening. I'll be back with you tomorrow. Thank you for listening to the Dividend Cafe. 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, a registered investment advisor with the SEC. Securities are offered through High Tower Securities LLC.

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