The Dividend Cafe - Wednesday - September 23, 2026

Episode Date: September 23, 2026

Brian Szytel reports a broad market decline driven by a bond selloff, with yields rising across the curve in a bearish flattener; the 10-year finished near 5.11%, while the 2s/10s spread remained about 21 bps. He attributes the rate move to stronger flash PMI data in services (58.7 vs. 55.7) and manufacturing (57 vs. 53.5), alongside hotter input inflation tied to fuel and transportation. Energy markets showed angst amid Iran-related developments and discussion of a possible U.S. diesel export ban, with WTI up about 2.7% to nearly $93. He then addresses comparisons between the 1990s internet boom and today’s AI boom, arguing that even profitable, durable companies like Cisco and Microsoft suffered massive drawdowns due to valuation, cautioning that today’s highly valued AI names may have too much optimism priced in. 00:00 Market Selloff Recap 00:51 Yield Curve and Recession Talk 02:02 Flash PMI Surprise 03:02 Inflation and Energy Risks 04:09 Dotcom vs AI Debate 05:49 Valuation Lessons Cisco 06:16 AI IPO Pricing Caution 07:16 Closing Thoughts and Thanks 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. Well, welcome back into Dividend Cafe. This is your host, Brian Saitel, with you this Wednesday afternoon, September the 23rd. Down day overall in markets. Meaningfully, the Dow was down 352 points. S&P was down 7 tenths of a percent. NASDAQ was down about 1.5. 1.13% on the day. And most of the down draft in equities was because of a down draft in bonds. In that you had bond prices sell off and yields rise pretty much across the curve, but certainly much more of what I would say is a bearish flattener on the yield curve where you have shorter term rates moving higher faster than longer term rates. So you had 10 year today of 15 basis

points. We closed at 511. It's technically a post-GFC high on the 10 year. Just barely. But so these yields have crept higher and some of the reason isn't necessarily all bad. First off, the yield curve is getting less steep, as I've mentioned, meaning it's closer to inversion, but not inverted. We're still two tens differential is still about 21 basis points as of today. That is about where we were in about 2024 during that period of time. It was coming out of the, believe it or not, two full year period where we spent the year wildly inverted on the yield curve. Short-term rates were actually higher than long-term because the Fed raised rates as aggressively as they ever have. They went from essentially ZERP, zero interest rate policy,

up over 5% in a year. So it was a big deal, and he had an inverted yield curve. And historically, what everyone has always said is an inverted yield curve predicts the next recession. And I guess you could correlate the next recession a whole lot of different things, but the most notable one is that, In fact, that happening. And of course, we never had a recession, 25, 26, and likely in the next year, we aren't looking at one either. So if it's going to predate one, maybe, but if it's five years away, I don't really know how good of an indicator that is. All that to say, my point now is the numbers as to why rates went higher today were because of stronger growth numbers. We got the flash PMI numbers.

When it says flash, this means it's a preliminary read because the month isn't over. but on services for the month, we got a number that was 58.7 versus 55.7. So I know those sound arbitrary, but anything over 50 is expansionary and a 58 would be a high number. So that's good. Services, two-thirds of the economy, right? Flash manufacturing on PMIs were also stronger than expected at 57 versus 53.5 expected. So again, not just a little strong or quite a bit stronger, very robust. So whether that's a read-through into economic growth coming from higher productivity, from AI,

other things, all of the things, nonetheless, it's stronger growth equals higher rates. But inside of those numbers, the reason why the market, a 10-year-up 15 basis points on a day is a big move. The reason why it was up more was because inside of those number, the input inflation was hotter than expected because of rising fuel and transportation. I spoke yesterday about some of the inflation figures being a little bit more entrenched than just, an energy number, but we're starting to still see the effects of what's going in the Iran deal. And actually, the U.S. and Iran have made some progress because talks at least have reopened, whether they end up in something that is actionable or positive we'll see. Nonetheless, speaking is better than not speaking, and it's better than bombs continuing to drop.

So we'll take that. That said, they are considering an export ban on diesel from the U.S., which would be a terrible idea, and I'll probably spend another dividend cafe going into why I think that. but that has the ability to really destabilize the energy markets. And so you had some inks flowing through on the energy side today. Crude was up about 2.7% on WTI. So we're back to almost $93 a barrel there. So a lot of frown cross currents going on here in markets across the board.

But that's my around the horn for what I saw in there today as far as what was on my mind. The question that came in today was about the dissimilarities between the 90s internet time and the AI time. I've spoken about that a few times. I think David has two. And so the reader was saying, actually it was different because back then, companies made no earnings. And this time around, they're making a whole lot of earnings. So you can't compare them.

My answer is yes and no. There's no period of time that's identical to another period. First off, I know that wasn't the inference on this question. But I would say that first. And if you took some of the real junk in the dot-com era, pets.com was one of those things. This company had no earnings. And actually went public in February of 2000.

So a month before the peak, which was bad timing, but also was just an idea, really, that was floated. It had a $300 million valuation. That's a million with an M. It eventually went bankrupt in about eight months and then it was delisted in about 11 months. So that's a pretty evident dumpster fire of what can happen in a euphoric market where anything can go public that is just an idea. We can send 50 pound bags of dog food for cheap over a Federal Express and the problem with free shipping. Their business model just doesn't make sense. It's heavy stuff. Okay, I'll leave that aside.

So if you're going to compare that to something like Anthropic or SpaceX, I get it. Yes, it's not the same. And that was much junkier and what we have now is higher quality. Furthermore, though, back then, losing money on Pets.com or Webvan, shipping 50 pound bags of potatoes, things like that with free shipping, those business models were flawed, but we ended up with something similar. Amazon came out of that and we can order food and we can order pet food or regular food and all sorts of stuff. and it gets delivered, no problem. So it isn't like the technology was bad or the companies were bad or even the ideas were bad.

And actually, there's a lot of companies in the 90s and early 2000s that made a ton of money. My example is Cisco. Cisco was trading at 200 times earnings and 31 times sales in March of 2000. It went on to lose 90% of its valuation over the next few years, and it took a full 25 years for it to get back to the same price. Did Cisco go bankrupt? No. Did it go away?

No. Did it make less money? No. It kept making more money. That wasn't the issue. The issue was valuation. There was a similar story behind Microsoft at the time. And if you compare that to companies like Anthropic today, which is targeting $2 trillion debut on its IPO. And also, non-coincidentally, about a 30-time sales number, which is about 900 times earnings. It doesn't mean that company isn't amazing. I believe that it is amazing, truly. And I think it's going to change a lot of things in a lot of industries and it's fantastic.

But that doesn't mean it's priced in a reasonable way to own it necessarily at this. price if you bought it when it was a $10 billion valuation and you made a bunch of money, I love it. But at this point, just keep in mind what's going to market like SpaceX or an Open AI, they don't have rings of those latter two. And they're already trading with all the good stuff baked into it. So you've got to be careful what you wish for. And be aware that just because Microsoft and Cisco are excellent companies today and we're the entire time, you made no money for 20 years. So my point is just that's my comparison. Isn't about that this area is totally different and that all the companies are making money, and back then they didn't.

I'll end it there for it today. I think my point is well made. But it's a good question. I appreciate it. And I really enjoy when readers read our stuff and then push back or have a counter to something. It's fun to engage that way. But with that, I think I'll let you go for this evening. That was a good around the horn.

I'll be back with you tomorrow, as always, on Dividend & Cafe. The Bonson Group is a group of investment professionals registered with Hightower Security's LLC, member Finra and SIPC, and with High Tower Advisors, 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 ourselves securities. No investor process is free risk. There is no guarantee that the investment process or investment opportunities referenced

Tyrion will be profitable. Past performance is not indicative of current or future performance and is not a guarantee. The investment opportunities referenced TIRAN may not be suitable for all investors. All data and information referenced herein are from sources believed to be reliable. Any opinions, news, research, and national. analyses, prices, or other information contained in this research is provided as general market commentary and does not constitute investment or vice. The Bonsor Group in Hightower shall not in any way be liable for claims and make no express or implied representations or warranties as to the accuracy or completeness of the data and other information, or for statements or errors contained in or omissions from the obtained data and information referenced here in.

The data and information are provided as of the date reference. Such data and information are subject to change without notice. This document was created for informational purposes only, the opinions expressed, are solely those of the Bonson Group and do not represent those of High Tower Advisors' LLC or any of its affiliates. High Tower advisors do not provide tax or legal advice. This material was not intended or written to be used or presented to any entity as tax advice or tax information. Tax laws vary based on the client's individual circumstances and can change at any time without notice. Clients are urged to consult their tax or legal advisor for any related questions.