Dear Valued Clients and Friends –
A pretty standard trip around the horn today …
Dividend Cafe on Friday looked at the ten economic principles, concepts, and tenets we cannot let go of (as investors, or as citizens). 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 a hundred points this morning and had a few moves up and down throughout the day, but it was mostly a reasonably boring day across all three major market indices.
- The Dow closed down -61 points (-0.11%) with the S&P 500 down six basis points and the Nasdaq down -0.32%
*CNBC, DJIA, August 10, 2026
- Credit spreads have tightened in the last ten business days substantially. The High Yield spread was 287 basis points less than two weeks ago, and is 270 now, undoing all the widening of June/July in just a matter of days.
- The ten-year bond yield closed today at 4.7%, up four basis points on the day
- Top-performing sector for the day: Energy (+4.6%)
- Bottom-performing sector for the day: Real Estate (-1.2%)
- Just like that, 73% of S&P 500 companies are above their own 200-day moving average (and I should add, over 90% of Financial companies are).
- The point Torsten Slok is making with this chart is very simple: Aggregate margins have improved as the operating margins for the big tech firms have obviously improved. But they are the sellers … At some point, don’t the buyers of AI enterprise and application have to see their margins improve, too? Isn’t that supposed to be the point?
- There are now 33.6k unsold companies that are private equity owned (13.5k of which are in the U.S.), up from 32.5k at the beginning of the year. Another way to put this: 1,100 more companies have been bought by private equity sponsors this year than have been sold.
Top News Stories
- Because I do not take seriously anything that is said (from anyone) day by day or week by week regarding the state of affairs in the Iran matter, I hate even writing about it each week in the Monday Dividend Cafe. Every time I tell myself it is best to just not even cover it at all, I end up deciding, “Well, you’re supposed to say something.” So what I will say is that Netanyahu has said the Gaza peace plan is not going to happen as written until Hamas is fully disarmed. President Trump has said Iran owes compensation to the U.S. for the war. Iran has said the U.S. owes it compensation for the war. And as best I can tell, everything is same-old, same-old.
Public Policy
- Before the Senate broke for recess, they voted to fund the government through the middle of December. However, they do not have a budget blueprint for a potential reconciliation bill, though they claim they will start trying again in September.
- The Clarity Act did not come up for a vote (a crypto bill that many crypto insiders are pushing for), meaning its passage is also delayed at least until September (it will require 60-vote filibuster-proof numbers to pass, so we shall see).
Economic Front
- The jobs market saw a loss of 23,000 jobs in July, much worse than the expectation of an 80,000 gain. We also had another 103,000 of downward revisions for the last two months. And to top it all off, the labor force declined by 264,000.
Housing & Mortgage
- The latest Redfin data shows that homes are selling below their asking price in 38 out of 50 U.S. states. The biggest discounts are being seen in Florida and Texas, where much of the run-up was most overstated. Ironically, sellers in New York City, San Francisco, and Boston are, on average, seeing the highest price relative to ask (where there had previously been less appreciation and less new supply). Nationally, 55% of homes were selling above their asking price in 2022; that is now down to just 25%.
Federal Reserve
- The Fed has hiked rates when 3-month average jobs growth has been just 20k (where it is now) just 9% of the time … 70% of the time there has been a cut within six months, and 21% of the time no move at all.
- That said, the futures market still reflects an 81% probability of some rate hike by the end of the year, though we are down to a 50-50 jump ball for next month’s meeting.
Oil and Energy
- WTI Crude closed at $82.09, up +5% on the day
- Midstream was down about -2.5% last week. The total energy sector fell -5% as Hormuz headlines and all the incoherence that goes therewith reasserted themselves. With Energy down so much and Oil prices down about -8%, midstream was likely only down 2-3% because of very strong earnings results that offset the sentiment and headlines.
- The strong operating results from the prior quarter were one thing for many key midstream companies, but the planned projects going forward also indicate significant growth still on the horizon. What struck me, company by company, was the sheer size and magnitude of some of the expansion projects underway throughout the midstream ecosystem. As strong as results have been in this space for several years, nothing seems to be slowing down.
- The oil in the U.S. Strategic Petroleum Reserve (SPR) is at its lowest since 1983, below 300 million barrels. To give you an idea of how long ago 1983 was, the #1 songs in the country that year were Every Breath You Take by The Police, Billie Jean by Michael Jackson, and Flashdance (by someone no one has ever heard of).
Ask TBG
| “I enjoy reading your weekly Dividend Cafes and have learned a lot from them. However, in this week’s edition I was surprised to read that you refer (even twice) to God. Presumably, your audience is diverse. Some may believe in God, some not. Some of those views are undoubtedly quite different from your idea in that regard. It seems therefore unnecessary for our argument to call upon your God, and is possibly bewildering to people with a different view of God. I support freedom of religion (as did the founding fathers of your country), so this is not about your personal religious view, which I respect. It is simply a suggestion to use Occam’s razor; calling upon your God is not necessary for your argument, and may even alienate or baffle some readers.” ~ Walter L. |
| I believe I refer to God in one way or another every single week. I do understand not everyone shares my beliefs. I hope some readers are okay reading things they don’t fully agree with – I find it unavoidable. But I do respect their decision to not read it if it bothers them. What I won’t do, and indeed, can’t do, is not write what I want to write in the way I believe it needs to be written. For one thing, it is, well, my writing. But for another, the arguments I made in Friday’s Dividend Cafe presuppose a transcendent God, and upon closer inquiry would fall apart without one. I feel a need to be honest about that. Thank you for your note. |
On Deck
- Clients will receive their Weekly Portfolio Holdings Report on Wednesday, per usual.
- This coming Friday’s Dividend Cafe will be a letter to my daughter as she heads off to college next week.
More to Chew on
- TBG’s own Thoughts on Money crew bringing the thunder on when to claim social security
- You don’t say?
- College, the place to go for open inquiry???
- Tom Wolfe was a national treasure, and a prophetic one at that.
To all, a good Monday night … Reach out with 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.
