Dear Valued Clients and Friends –
Markets started off down today but reversed after the open and rallied all the way into the close. The setback in Iran negotiations over the weekend did not change the market’s major view – that one way or the other, this operation is headed to an end that results in the Strait of Hormuz opening and minimal U.S. escalation.
I was on Varney today with a short highlight reel here. I was on Hugh Hewitt’s show this afternoon with a clip here.
Dividend Cafe on Friday looked at the Iran war, the reality around the cease-fire, and the short-term and long-term questions that mattered. It suggested that investors have other questions to be asking besides what will happen in Iran, such as the same questions they were asking before the war started. The written version is here (my favorite), the video is here, and the podcast is here.
Off we go …
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Market Action
- Markets opened down this morning and rallied throughout the day
- The Dow closed up +301 points (+0.63%) with the S&P 500 up +1.02% and the Nasdaq +1.23%
*CNBC, DJIA, April 13, 2026
- Coming into today, the market had recovered about 75% of its drop from the recent low, all the while maintaining the rotation vs. reverting to prior leadership.
- Small-cap has been quite resilient through the Iran sell-off – largely reflecting more domestic focus in that universe of companies.
- The ten-year bond yield closed today at 4.29%, down 2.4 basis points on the day
- Top-performing sector for the day: Financials (+1.73%) and Technology (+1.72%)
- Bottom-performing sector for the day: Utilities (-1.19%)
Top News Stories
- Negotiators from Iran and the United States went home this weekend with hopes of a deal falling apart. More on all Iran-related news below.
- Viktor Orban, the longest-serving leader in any European Union country, lost his re-election bid as Prime Minister of Hungary in a massive and stunning landslide, and Peter Magyar will be the new Prime Minister of Hungary, apparently with a super-majority on his side in Parliament, as well.
- Rory McIlroy won his second consecutive Masters championship in a thrilling weekend tournament that saw a half-dozen golfers climb the leaderboard to make it competitive, and for the second year in a row, saw Rory give up a big lead, only to come fighting back to win the championship.
Iran Update
- With negotiations having broken down, the cease-fire is allegedly still in effect for another week, and the U.S. intends to set up a blockade of the Strait of Hormuz, essentially forcing a reopening, but halting any Iranian trade. It is intended to stop Iran from collecting tolls on maritime trade and provide the U.S. control over Hormuz activity. Iran claims they have “major untouched levers” to counter a Hormuz blockade. I have read a dozen analysts and commentators in the last 24 hours opining on what to expect from a U.S. blockade in the Strait, and it pretty much splits down the middle between those who believe it will be effective and those who do not.
- The assumption is that if the blockade is not as effective as the administration hopes in stabilizing the Strait of Hormuz, there will be long-awaited attacks on Iran’s Kharg Island oil assets. This becomes a somewhat irreversible policy decision if/when it happens because while it is likely to be highly effective in crippling Iran economically, it takes a lot of options and leverage for a rebuild and forward-looking approach off the table.
- But the blockade itself is expected to cost Iran $275 million per day in exports and $150 million per day in imports. The impact is obviously severe in oil but also bleeds into petrochemicals and various other goods too.
- Economic pressure on Iran vs. military pressure may, may, create a different leverage that proves to be more successful at driving a more expedient resolution. I do not assume any positive market day is proof that it is all over and won. I pray it all will be, of course, but I take for granted that an unknowable short-term future lies ahead.
Public Policy
- President Trump said over the weekend that any country selling arms or military equipment to Iran will face a “50% tariff.”
Economic Front
- The Consumer Price Index came in at 3.3% headline inflation last month, with core inflation (not factoring food or energy) at +2.6%. Gasoline prices were up +21.2% on the month.
Housing & Mortgage
- Existing home sales declined -3.6% in March and are down -1% versus their very low level of a year ago. All four major geographic reasons saw declines, and it was seen in both multi-family and single-family products. The absolute level of sales volume is now at a nine-month low.
Federal Reserve
- Some of the dampened expectations for additional rate cuts this year have to do, not merely with higher oil prices and a belief that Warsh should not cut rates, but also that the timing of Warsh’s entering the Fed is completely up in the air. Until the DOJ investigation into Chairman Powell is off the table (and believe me, it will be), the Senate cannot take it up (as the votes are not there to proceed). But there is also a belief that Warsh, once confirmed, won’t have a majority of governors on board with him for a rate cut.
Oil and Energy
- WTI Crude closed at $98, having bounced +8% when futures opened Sunday night, but then closing up just +1.4%
- One of the most frequent questions we are getting now is also one of the simplest to answer: With oil prices up so much, why are producers not going full throttle with additional production, and why is the rig count not moving higher? And the answer is literally no more complicated than, “no one believes this will last.” To set production investment decisions around the assumption of $100 oil prices when most expectations are for a return to $70 at some point on the other side of this does not make a lot of economic sense for U.S. oil producers.
On Deck
- Earnings season has begun and hits full stride tomorrow with key financial companies reporting
- Clients will receive their weekly portfolio report per usual this Wednesday morning
- Dividend Cafe on Friday will be a pretty deep AI update, combing the world for information on “expected disruption” – what it means, and doesn’t mean, for investors
Reach out with questions – we have you covered!
With regards,
David L. Bahnsen
Chief Investment Officer, Managing Partner
The Bahnsen Group
www.thebahnsengroup.com
The Dividend Cafe features research from S&P, Baird, Barclays, Goldman Sachs, and the IRN research platform of FactSet.
