Dear Valued Clients and Friends –
I generally dedicate a fair amount of my weekends to the Monday Dividend Cafe, often because I have the time and space for reading, research, and writing and because I genuinely love it. Since the Monday Dividend Cafe format evolved out of the old DC Today format (which evolved out of the old Covid and Markets format – IYKYK), there have been a few times, but not many, where I spent a fair amount of time writing something on Saturday and/or Sunday that was obsolete by Monday mornings because of markets and the news … Not a ton of times, but more than a few. But since the Iran activities began in early March, it has been very disincentivizing to go too deep into at least that aspect of the Monday Dividend Cafe over a weekend because by Monday, the weekend angles are more often than not obsolete. I am sure it has happened five of the last seven weekends. Well, all that to say, more on the latest in Iran below, but I promise it was all written on … today.
Dividend Cafe on Friday looked more extensively at the fears around AI disruption and asked whether or not some disruption is understated, some is overstated, and some is just plain wrongly stated. The written version is here (my favorite), the video is here, and the podcast is here.
Some of you may be interested in an article I recently wrote in National Review magazine on the impact on the economy that a broken legal system is creating.
Off we go…
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Market Action
- Markets opened flat this morning and closed where they opened, more or less.
- The Dow closed down 5 points (-0.01%) with the S&P 500 and Nasdaq each down -0.25%.
*CNBC, DJIA, April 20, 2026
- When I was working at JFK last night before my redeye to California, the futures were down nearly -500 points in the Dow. When I arrived at LAX in the middle of the night, they were down -350 points. By 5 am PT, they were down less than -250 points. By the time the market opened, we were basically flat (though the S&P and Nasdaq were down). It did drop -150 points intraday before rebounding.
- With the only part of earnings season complete being the banks’ Q1 results, we can say that revenues, net interest income, and fee income were all higher than expected across the board for the sector. Net interest margin, though, was mixed, and various expenses and loan loss provisions were also mixed. All in all, a good start to the earnings season…
- The ten-year bond yield closed today at 4.26%, up 1.2 basis points on the day
- Top-performing sector for the day: Materials (+0.56%)
- Bottom-performing sector for the day: Communication Services (-1.41%)
- In the ongoing saga of the state of private credit, you will be shocked to hear that LME’s (liability management exercises whereby borrowers do a transaction with their lender to avoid technical default, such as extending the maturity of the loan or otherwise restructuring the debt) have… declined... substantially the last nine months. Not the verb you were expecting there, right?
- Market breadth in the recovery has been significant, and 50% of the stocks in the S&P 500 are at 20-day highs.
- It should be pointed out that small-cap is nearly 10% better off on the year than big-cap.
Iran Update
- On one hand, we hear new “peace talks” are set to begin tomorrow. On the other hand, Iran says they currently have no plans to attend new talks with the U.S. Oil had dropped to the low 80s on Friday; it was back to the high 80s this morning. On Friday, we were told the Strait of Hormuz is open. Over the weekend, we were told an Iranian ship had been seized, and shipping traffic had come to a halt after one ship was fired upon. The cease-fire was supposed to end tomorrow, but now we are told it will end on Wednesday night, and there is talk of another extension, but there is also talk of no extension and threats of renewed bombing.
Public Policy
- There is a lot of ink being spilled now about the idea of the Republicans losing the Senate in the November midterms. I wrote in my annual Year Ahead paper that the Republicans would keep the Senate, but the odds of that being wrong were higher than the other call (about the Democrats taking the House). I would have said the odds then were something like 99% about the House call and 90% about the Senate call. I would now say the House call is 99.9%, but my Senate call has moved to 70% or so. That said, the prediction markets now have the Senate all the way to a ~50/50 call…
- I said 70% above for my call, but that was before Mark Halperin texted me 75%, and if I had to pick between Kalshi’s 49% or, Polymarket’s 45% or, David Bahnsen’s 70% or Mark Halperin’s 75%, it is not a close call. Therefore, the correct answer right now is 75% odds that the GOP keeps the majority.
- Now, the majority party in the Senate is not determined in a single vote but in the sum total combination of a bunch of races. The Democrats, currently the minority in a 53-47 split, need to take a net of four seats, and do so in what just happens to be a tough cycle with contestable races favoring the Republicans. First of all, they have to hold New Hampshire, Michigan, and Georgia – and in Michigan, the Democrats are about to nominate the single most left-wing candidate they have ever, ever nominated in that state (and maybe the most left-wing they have anywhere in the country). But assume the Democrats hold all three (I do think they will in New Hampshire and Georgia). Then, they have to flip all three races in Maine (betting against Susan Collins over the years has been like flushing money away), North Carolina, and Ohio. And maybe they will. But that is a really tall order. And THEN, they have to win either Alaska, Texas, Iowa, or Nebraska. And of course, one of those could, when you think about the odds of just winning one out of four, but they are favored to lose in all four right now. Bottom line: For a variety of reasons, the odds of the Republicans keeping the Senate majority after the midterms have dropped since the beginning of the year, but it is still much more likely than not based on the math of the races at play.
- As much as I am intrigued by the discussion of a new reconciliation bill, I do not see any path to one happening at this time (being politically realistic).
Economic Front
- Air cargo rates are up 40% since the end of February, as air rates have had to increase to accommodate the fact that tanker shipping has so dramatically subsided. A lot more is riding on the Strait of Hormuz than oil prices.
Federal Reserve
- The confirmation hearings for Kevin Warsh as the new Fed chair are supposed to begin this week. Sen. Tillis continues to say he will not vote to move forward until the DOJ matter with Chairman Powell is resolved.
Oil and Energy
- WTI Crude closed at $88.71, up +5.8% after Friday’s drop.
- Midstream was down -2.7% last week as oil prices dropped -13% and upstream energy stocks were down about -7%.
- What I am most looking for this earnings season from the midstream energy sector: I am very curious about forward guidance for LNG exporters.
On Deck
- Earnings season picks up steam, and the weekly portfolio report will hit client inboxes, per usual, on Wednesday morning.
- Dividend Cafe this coming Friday… and as of right now, the topic is… TBD!
- I will be on 2-Way this Wednesday at 5pm talking markets…
Do not hesitate to reach out with any questions, any time.
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.
