The Dividend Cafe - What’s Next in Iran and Markets?

Episode Date: April 10, 2026

Today's Post - https://bahnsen.co/4c53g8A David Bahnsen reviews a volatile market week dominated by headlines around an Iran war and a newly announced two‑week ceasefire, noting that markets largely “didn’t buy” extreme rhetoric and then rallied sharply on ceasefire news amid oil price swings and rapid trader unwinds. He argues key terms remain unclear (Strait of Hormuz activity, enforcement, nuclear capability, enriched uranium, regional actors), and expects zigs and zags that could mean more volatility, while concluding the president appears biased toward ending the conflict sooner, potentially via concessions. Bahnsen emphasizes that short-term market moves are not sustainable signals and urges investors toward “non-action”: a properly constructed portfolio should not change because of Iran. He expects oil to settle higher than pre-war, an ambiguous economic backdrop, double‑digit earnings already priced in, AI returning to focus, and a “muddle through” market with high valuations. 00:00 Welcome and Setup 01:24 Markets React to War Headlines 03:37 Ceasefire Uncertainty and Open Questions 08:52 Investor Expectations and Volatility 11:58 Why Headlines Mislead Markets 13:31 Portfolio Discipline Through Conflict 14:19 Five Takeaways for Markets 16:39 Post Iran Market Themes 18:10 Closing Thoughts and Next Week 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, hello and welcome to this week's Dividend Cafe. I am your host, David Bonson. I am recording from our beautiful office here in Minnesota, where I will soon be leaving and heading back to New York City. And it has been a whirlwind of a week. And it has not just been a whirlwind of a week for me and traveling and seeing clients. doing dinner events with clients in both New York and Minnesota, but it's been a whirlwind of a week in markets,

and I'm going to give you a little summary of what has transpired in markets this week and talk to you about why and what we think it means going forward. I am not a big fan using the Dividing Cafe to talk about a given week in the markets. I don't care what happens in markets in a given week. I don't have any projection of what's going to happen in markets next week. And those of you who listen to the dividend cafe or read the dividend cafe frequently know how we feel about this. But the issue today we're talking about is not the immediate short-term action in markets. It is the theme, the subject, the broader category of the Iran War, what has transpired, and what might possibly be going forward.

And then ultimately, I'm going to conclude today with some very actionable comments on the non-action you ought to be taking. So bear with me, and this will all come together in due time. Sunday of last week, we were told that some form of civilization faced extinction, that the Iran operation was going to be escalating to an entirely new level. And there was a lot said and a lot of military threat and possibility and whatnot put out there. A lot of pop-ups on Easter Sunday across my various sources of news. and this and that. And futures didn't move at all. And then on Monday, markets were basically about flat, as we were told there was a deadline of Tuesday night for potentially taking Iran off

of the map. And then markets closed up on Monday. And oil prices were higher, but markets went higher by 150 points. They dropped about 400 points on Tuesday for a few hours. and then closed up over 150 points. So in the midst of the highest level of rhetoric and escalation and talk about where things stood in this particular operation, markets weren't really buying it. And then on Tuesday night, it was announced that, lo and behold,

there was a ceasefire. And there would be a kind of cessation of escalation for two weeks. And oil prices came down, but it came down from somewhere around $112 to just barely under $100. At one point, they did actually drop into the low 90s, but came back to the high 90s. And then the markets on Wednesday were up over 1,000 points. And the rally continued on Thursday. And as I'm sitting here recording on Friday morning, Dow's down a tiny bit.

S&P's up a tiny bit, so not a lot of movement. But you basically had an up market week, and in the middle of the week, significantly up market week. And that was from both the initial side of saying this could get very, very, very severe. And then going to, no way, there's a ceasefire. I'm going to explain why I think markets didn't buy it to begin with and why markets responded the way that they did. Where things stand now is not so much about market activity, but I'm going to read you a list

of questions that I think are very relevant and unanswered. answered right now in a moment. But before I do that, I want to reiterate that there could be change from the time I'm done recording before my team has done editing and distributing this. There could be changed 30 seconds after that, 30 minutes. My focus is not on any of those things, not even what could happen in the next 30 days, because I do believe that certain things will happen the next 30 days that are not in line with what people are expecting right now. The ceasefire has been announced, markets are higher, but the Strait of Hormuz is not reopened. There is less than 10% of pre-Aran war Strait of Hormuz activity taking place right now. That could change.

The entirety of the president's beep session yesterday with the NATO Secretary General was really about European activity or support in the Strait of Hormuz. There's a lot of just sort of hot items. that are very much TBD. There's not even a total agreement as to what it was that was done in the ceasefire where Lebanon fit in, et cetera. So where it's going, whether or not Iran keeps some of its nuclear capability,

what happens with the enriched uranium stockpiles they have, and obviously what happens with Strait of Hormuz. They're both geopolitical, military, and then, yes, the part we're here to talk about today, market ramifications to all of this. But what I would suggest to you is that it is extremely challenging to assess these things based on the commentary you will get in the news, which I have yet to find any that is not to some degree agendized. And I'm doing my

very best to have an objectivity that I find absolutely logical and inescapable in the way we think about what is going on here, that there are some who want to interpret everything in the worst possible scenario. I hate that expression, Trump derangement syndrome, because some people say that when all it means is you disagree with the president. I don't think there's anything deranged about that. And certainly there are some that approach it with a kind of deification as if we're supposed to believe everything happening is almost divinely ordered.

I reject both of those theories of the case. And I think that those often are poisoning attempts and an assessment of where things stand. It doesn't strike me as very complicated to say that there are a lot of issues here still to be worked out that may very well not get worked out favorably. And that that is not to criticize what has been done positively so far,

that there's been really a kind of striking success in many aspects of the military operation and there is unfinished business that if it were over at this time, if it does end up ending without Strait of Hormuz's clarification, if it does end up ending without Iran's nuclear capability taken away or adequate clarity and settlement about the enriched uranium. I think it's perfectly acceptable for people to say,

I don't find that to have been a success that we thought we were getting. But when I scorecard this in terms of market expectation, I want to be able to remove the kind of tail ends of the way people are insisting on either making this the greatest thing that's ever happened or the worst thing that's ever happened and understanding the kind of appropriate, objectively defined middle ground that is where the reality seems to sit right now. I think it is very fair to ask what is it that we expect to happen after the ceasefire ends? Is this a pause? Is this real peace? Is there some scenario whereby real peace will come to be? The face-to-face negotiations, we understand Vice President Vance is going to be leading them. We understand the special envoy Steve Whitkiff is going to, Steve Whitkoff is going to be there, along with the president's son-in-law, Jared Kushner. Our others involved is the Treasury, excuse me, the State Department

present. There's not a lot of clarity on some of those things, but we'll know that soon enough. where will the enforcement mechanisms be? What, of course, are the exact terms of the ceasefire. That has not yet, three days later, been clarified as they still debate about where Israel's actions against Hezbollah and Lebanon stand. Is Iran supposed to have fully reopened the Strait of Hormuz? If they are, why isn't it open? Are they supposed to be charging tolls?

If they're not, why are they? If there are fees, if they've been agreed upon, I can go on and on. There's a whole list of questions. One of the great political commentators of our day, Mark Halperin, who runs an outlet called Two-Way, gave a list of a couple dozen questions. And I have that list there at diviningcafe.com. I think it's very pertinent to our subject here. But what I want to get at is what is most likely to happen from a market standpoint, investor standpoint, out of this ceasefire moment. And I get to start with my favorite answer of all, which is I don't have the foggiest idea.

And neither is anybody else. but what I do know is the part that I think is most relevant for investors. I, number one, am going to be very surprised if in the course of the coming days and weeks, there's not movement forward and movement backwards, zigs and zags, spurts and starts, etc. Including the times false alarms, the things that look like it's gotten much worse and there's a military escalation coming and other times false hopes where it appears things are going in the right direction and don't. I expect all of that, which leads to what? The very strong

possibility of enhanced volatility and what's already been in an enhanced volatility environment. Perhaps that doesn't come to be, but it seems to me to be a reasonable expectation, but it doesn't tell us anything about what the end run will be, what the bottom line will be. The other piece I think is very relevant to investors besides the fact that there's going to be ups and downs through this process and enhanced volatility, which is totally immaterial to us, is that number two, I do think we have enough clarity to know and conclude that the president unambiguously wants this to be over. I think the very fact that he has Vice President Vance, who is the only one in the inside of the administration, who is opposed to the effort to begin with,

him leading the negotiation effort, I think, is a rather loud tell in a lot of ways. This does not mean we know exactly what the president will agree to and will not agree to get it to an end, but what markets can logically, and I think accurately conclude, is that the base case leaning and bias is towards the president desiring an end sooner than later, and that that likely leads to greater concessions. I'm also confident that whatever victory gets declared, there will be some who will say it was inadequate. There's a very good possibility, those saying so will be right. There are certain outcomes. here that I think are going to be very difficult to spin into a victory.

If at the end of it, Strait of Hormuz remains vulnerable, if at the end of it, Iran remains capable of nuclear power, whether through enriched uranium in the future or something else. So there's a missional standpoint of what the basic criteria of victory has to look to, and there's a political and geopolitical ramification to that. But then from a market standpoint, I think the standard for success and especially closure, is lower than the missional one. And so the market participant response, I think you can expect the possibility of escalation, expect the possibility of de-escalation, but expect an ending.

And that the very particular path along the way there, someone will say, come on, you got to give me something. I need to know more than that. No, you do not. No, you're not going to. And I believe that what you saw this week, when in the run-up to things from last week, markets had a kind of extra leg down near the end of March and early April. And then the big rally this week, people go, well, see, that shows you once this thing's over, markets really want to rally.

It does not. It does not. What it shows you is that at quick headline news that goes one way, there are a lot of traders caught off sides, speculators that end up having to unwind positions and do so quickly. That's the game that they are in. And vice versa, the other way. that there is an upside geopolitical scenario, in other words, ceasefire, declining oil prices, better outcome that then means some of the excessive hedges or speculation on less satisfactory market outcome go the other way. And the analogy I use is what I've always talked about with the market response to the immediate aftercome of a Fed press conference, that you don't, you have absolutely nothing sustainable that comes out of that ever, but a 45-minute period.

of pretty insane trading, higher volatility, and big unwinds because people load it up on one way or the other and therefore then some encampment of traders and speculators that are off-sides have to unwind. Quick unwinding leads to big market movements. It does not tell you what the market direction will prove to be in any sustainable and directional way. And I think the same thing is true in some of the immediate headlines you might expect out of the Iran matter in the weeks and months ahead. But when all is said and done, the most important thing I believe has to be considered, regardless of where this goes, is when it ends, regardless of how it ends, what do we think about markets, strategy, and a coherent portfolio if we were back to the pre-Iran

place geopolitically? In other words, assuming this all ends one way or the other in some reasonably soon time frame, do we really believe that our portfolios should look different than they do now? If so, why? If not, why concern ourselves with the particulars of how this Iran matter plays out? My view is that a properly constructed portfolio before Iran should be a properly constructed one now and be a properly constructed one on the other side. First of all, and I'm going to give you five quick points and we're going to call it to a conclusion, the Iran operation may not be over in two weeks, but it's very unlikely that it's going to be two years. The zigs and zags and whatnot, the real possibility of some escalation before it ends, those things all being what they are,

combined with what I'm claiming to be the president's bias to get to a point of claiming victory, there is some version of outcome in the middle of where some of these timing things may be. But number two, whether it starts to subside in April or June, it seems unlikely to me that oil prices come down to $65 anytime soon. Getting them off of 95 to 110 will be a good thing for the consumer and a good thing for business cost inputs. But it's very likely to be settling

somewhere between 75 and 85. And I think that has to be factored as a bit higher of an input cost to the U.S. economy. Number three, before there was Iran, the economic state of affairs has been ambiguous. There still is. labor markets, capital spending, GDP growth, financial conditions. There's a list of things that are by no means clarified.

None of them are terrible. None of them are great. They're ambiguous. And I think that has to be the theme of how we think about a post-deron market. Number four, corporate profits growing in double digits. I think they're going to. It's most certainly baked into markets. And I think it's accurately baked into markets, which all at once means,

why would it be a catalyst to future market growth if it's baked in? and then number five, the AI story that got out of the front page because of Iran. It didn't go to page eight like the Fed did, but it went to page two. It comes back to page one and it forces us to reengage with the AI story. Now, I'll do a diviny cafe next week on AI disruption, but the fact of the matter is that the Fed story that's moved all the way to page eight, does one believe the Fed is going to go cut rates two, three, four times for the end of the year? That combined with double-digit earnings growth?

Does that give a big catalyst to markets? Perhaps. I think it's very unlikely the Fed does that and might even be unlikely that if it does the market response because if the Fed does that, it probably means the economic news has gotten horrifically bad and it's hard to see markets rallying with horrifically bad market news.

I would suggest that on the other side of Iran, what you're dealing with is a muddle through market. That index investors in a best case scenario or dealing with very high valuations where a lot of good news that could exist is priced in and potential bad news is not. But it strikes me as very, very, very silly to have a totally different investment plan

after Iran than you did before. The rotation theme, energy had been too low priced before, my belief that housing activity will pick up, but will pick up in response to lower housing prices and that being a good thing, defensive's being underappreciated in the market. These are the things. we had before Iran. These are themes we have still now. And some of those things have gotten

tail in because of cyclical circumstances, but that's not the investment theme we would have. I would encourage you to look at the chart of the week, how Fed cut expectations have been so highly correlated with the market is. And in the meantime, I do believe there's a lot of national interest and geopolitical interest in what will take place with Israel, Iran, and these negotiations and the U.S. efforts to see a ceasefire enforced and then ultimately find a deal. But I will say that those interests are a bit different than market expectations, which are either doing with short-term volatility that I think is much less relevant and ignoring the longer-term picture that are these other themes we've tried to talk about that I'll be resuming coverage of

next week in the Dividendon Cafe. Thank you, as always for listening, watching, and especially reading The Dividendin Cafe. Have a wonderful weekend. Look forward to being back with you from New York, Monday in the Dividing Cafe. The Bonson Group is a group of investment professionals registered with Hightower Securities LLC, member FINRA and SIPC, and with Hightower Advisors, LLC, a registered investment advisor with the SEC. Securities are offered through Hightower Securities LLC. Advisory services are offered through Hightower Advisors, LLC.

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