Dear Valued Clients and Friends –
It is a full day in the Dividend Cafe today as we have action to report on in Iran, lots of market and economic and Fed action, and perhaps most importantly, a Knicks championship to discuss. So get ready to around the horn in the Monday Dividend Cafe.
Dividend Cafe on Friday looked at the IPO Mania we have entered, the realities of the particular high-profile IPO’s in front of us, and the tell in investor behavior that sits at the heart of it all. The written version is here (my favorite), the video is here, and the podcast is here.
I was on The Big Money Show (Fox Business) for an hour today with a highlight reel here.
Off we go …
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Market Action
- Markets opened up over +600 points this morning and rallied throughout the day. It gave up about 300 points in the final two hours of trading and closed at the low of the day, but was still substantially up.
- The Dow closed up +469 points (+0.92%) with the S&P 500 up +1.65% and the Nasdaq up a massive +3% after the turmoil of the last two weeks.
*CNBC, DJIA, June 15, 2026
- The theme so far in June (until today) has been rotation, and the theme today was tech and ex-energy. Small-cap has continued to be the big outperformer.
- The AI hyper-scalers have issued more debt in the five months of 2026 than in the first five years of this decade. Debt issuance among hyper-scaler big-tech companies is one of the biggest changes to markets in the last year.
- The ten-year bond yield closed today at 4.47%, down just one basis point on the day
- Top-performing sector for the day: Technology (+3.39%)
- Bottom-performing sector for the day: Energy (-3.58%)
- In what can only be called a perfect summary of what I wrote about Friday, 517 million shares of SpaceX (SPCX) traded on Friday, the first day of the IPO. Now, the company only sold 555 million shares to the public … So at first glance, it looks like nearly every single person who bought in the IPO sold on the first day, right? Actually, it is even worse than that. Obviously, not everyone sold, but a whole heck of a lot of IPO buyers did flip out on day one. But the reason the share volume is so high, and yet many buyers obviously did not sell, is that the same shares were sold twice, three times, four times, etc. In other words, that volume is explained by a large portion of IPO buyers selling the same day, and a lot of those who bought from those sellers turning around themselves and selling (multiple times), also same day. It is all just so, so stupid. Oh, by the way, it traded another 245 million shares today.
- Bond yields have relaxed quite a bit since late May, and that created a lot of recovery in REITs, Utilities, Industrials, and Materials in the rotational rally of the last two weeks. If someone asked me what I thought would be most important to markets in the next few months: The Iran settlement, the SpaceX IPO, or bond yields, it wouldn’t even be close (the last one).
- Most of us are exposed to a lot of dumb financial ideas (either from free mainstream press or social media, or in the paid/research world I have to live in). There are plenty of brilliant things out there, too, but they can’t be found without the dumb stuff, too. In the dumb list – the idea that “the S&P sold off last week as investors had to get money prepared for the SpaceX IPO.” They both were up a lot today.
Top News Stories
- We will start with the Iran announcement. Oil prices dropped -5% as the announcement was made that an agreement had been reached to end the war in Iran (though said agreement reportedly will not be signed until Friday). The Strait of Hormuz is supposed to be reopened [soon?] with the U.S. ending its blockade. A lot of questions remain unanswered (how security gets guaranteed, for one) and there seems to be some ambiguity about whether or not Iran is going to be allowed to charge for ships passing through (the U.S. has said they cannot charge “tolls”, and Iran has said they can charge “fees,” and if you are not sure of the difference, neither am I). The market responded favorably today to the likelihood of some deal being announced and to oil prices being in the low 80s (better than the low or mid-90s). And I believe this appears to have landed more or less exactly where I have long believed it would … with people’s opinion of the deal largely a reflection of their own priors. The full deal has not been released to the public yet, and I am not fully sure why. But Vice President Vance did say it will be released in full this week. What happens with sanctions, with funds, with enriched uranium stockpiles, with enforcement, etc., all should be answered when the full deal is released (I think?). And then, of course, despite a sigh of relief from markets, there will be questions into the future about compliance with the deal and what happens from there.
- We will next discuss the Knicks’ championship win. I could have put this at the bottom, but then it may have gotten missed. Of course, some of you can skip past this if you don’t care. Look, I was as ecstatic as I have been in a long time Saturday night. I have raised my youngest son as a Knicks fan since Joleen and I became bi-coastal nearly ten years ago, and absolutely loved attending Knicks games with my little guy (who is now 16) over the years. But I have been a basketball fan since my early teen years, and as is true for many basketball lovers, the NBA has become harder to watch for me in the last 5-10 years. The Knicks have changed that. I could watch Jalen Brunson play basketball all day, and this team just hit a stride this year heading into the postseason that would have made me love watching it even more, apart from being vested in them as a team. The game four comeback was one of the greatest sports moments in any of our lifetimes, and I truly believe that no fan base deserved this championship more than the Knicks. So I will let you all get back to Dividend Cafe now, but this journey came to an end that was utterly thrilling. The greatest city in the world deserved this.
Public Policy
- If the Senate can confirm Jay Clayton as the new Director of National Intelligence this week, then Bill Pulte will not need to take the “interim” role the President has named him for. I am watching this closely for a variety of reasons.
Economic Front
- Industrial Production was up +0.1% in May, while expectations were for +0.3%. Mining was the positive element, but every other category was down on the month. High-tech manufacturing continues to be the bright spot.
Housing & Mortgage
- The so-called “housing affordability” bill is coming back to the Senate this week, supposedly with some changes. There are reports that House GOP members needed for passage are not in agreement with some of the changes.
- The June NAHB Home Builder Sentiment Index dropped further, reaching 35 (from the prior month’s 37), well below the “neutral” level of 50 … Prospective buyers’ traffic is at a dismally low 25. The average price reduction for houses that did sell was 6%. 62% of transactions also utilized some form of sales incentive.
Federal Reserve
- The European Central Bank (ECB) raised interest rates on Thursday, its first rate hike in over three years. To be fair, their rate was at 2% (versus ours at 3.5-3.75%), and they raised it to 2.25%. This move was well-anticipated by markets
- I loved this op-ed in the WSJ about Warsh’s plans to get the Fed to start saying less.
Oil and Energy
- WTI Crude closed at $81.31, down -4.2%
- My belief that even the hope of Hormuz reopening would bring oil down to the low 80s, but not the high 60s, seems validated, so far. There may be further downside for crude prices if and when we get more clarity on the logistics of Hormuz’s reopening.
- Midstream was up about +0.7% last week despite oil dropping -6% on the week, though the correlation resurfaced today. Total return for midstream sits at about +25% YTD.
- Gasoline prices were $2.90/gallon before the war began (national average). They reached $4.56 a couple of weeks ago. They sit at $4.07 now.
Ask TBG
| “Why does high quality dividend growth investing deliver persistently higher returns? Why don’t investors see that this strategy delivers persistently higher returns and bid up the price of assets making up this strategy so that it no longer delivers persistently higher returns? Efficient markets and all that .” ~ Mike L. |
| It doesn’t “persistently” deliver higher returns. It has periods of under-performance and periods of over-performance. There are some companies that out-deliver in execution and others that under-deliver – and then times where those two lists switch places. The madness of the crowds might have times where it overdoes expectations in this category of investment, but that is less definable than you may think, since the universe of dividend growth contains a wide array of investment categories. No proposition of mine for dividend growth investing comes down to “it will persistently outperform others.” The proposition is, actually, counter to that whole mentality. I am not interested in what others will do or think (markets – your question). I care about what the companies are doing, and that is the underlying argument for dividend growth investing – removing the investment thesis from exogenous factors to endogenous ones. |
On Deck
- The Fed meets tomorrow and Wednesday, and we will see our debut of Kevin Warsh on Wednesday. The Fed is almost 100% assured of no rate change at this meeting.
With all of that, have a wonderful Monday evening, reach out with any questions, and congratulations to the Knicks once again. Sometimes in life, not giving up is the key to everything. I believe that with every ounce of breath in my body.
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.
