Dear Valued Clients and Friends –
A pretty standard Monday Dividend Cafe today after a Friday market holiday …
On Friday, Dividend Cafe asked the question, “Is this the dreaded top?” It looked at certain market occurrences, a certain “vibe,” and, yes, a potential change in the Fed’s posture, and asked if all is well in the areas people are most excited. 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 up over +200 points this morning, and just kind of bounced around in that range throughout the day.
- The Dow closed up +148 points (+0.29%) with the S&P 500 down -0.37% and the Nasdaq down -1.33%
*CNBC, DJIA, June 22, 2026
- The first quarter was a strong time for Energy in the market, and it stayed as such in Q2. AI got hammered in late Q1 and early Q2, but then rallied huge from there. The S&P ex-AI and ex-energy on the year? Negative.
- The outperformance and leadership of small-cap over big-cap has been something to behold.
- The average trading volume of SpaceX in its first week since public trading began has been MORE than that of the S&P 500 and the Nasdaq. More people are flipping in and out of this one company than are buying the index that drives trillions of dollars of American investment.
- The average price paid since the stock began trading? $181.56. Current price? $154.60. It closed today still above the coming out price of the IPO, but basically below any price it has traded at since coming public (down -16.4% today alone and down -31% from its post-IPO high.
- The ten-year bond yield closed today at 4.51%, up 6 basis points on the day
- Top-performing sector for the day: Real Estate (+1.38%)
- Bottom-performing sector for the day: Communication Services (-3.83%) – several Mag7 names in this space were hammered today.
- The fact that the 2/10 yield curve is now 28 basis points when it was nearly 80 basis points just three months ago is the biggest story in all of finance this year.
- So the Friday Dividend Cafe tried to illustrate some of the silliness in markets now that might, maybe, perhaps indicate a bit of, well, concern. Then I read this over the weekend. Emphasis is mine:
“Allbirds Inc., the maker of once-viral wool sneakers that suddenly announced a pivot to artificial intelligence earlier this year, has officially renamed itself Smartbird Inc. and is tapping the former leader of a Danish AI infrastructure group as its new chief. Smartbird is among the many struggling companies that have sought another lease on life by seizing onto the buzziest trend, AI in this instance. Such name and business switches were legion during the dot-com bubble. Newly branded crypto-treasury companies surged when that was all the rage. And in February, a tiny karaoke company’s stock soared — and triggered a fierce selloff across the logistics industry — when it trumpeted its AI tool for trucking companies. Going forward, Smartbird plans to focus on the business of supplying AI infrastructure as a service, a field that has exploded in recent years given the computing resource-intensive nature of AI models and tools.”
What could go wrong?
Top News
- The UK Prime Minister, Keir Starmer, has resigned. Andy Burnham is widely expected to replace him in the coming weeks.
- The U.S./Iran talks continue, and there have been several setbacks over what the expectations are around Hezbollah attacks on Israel in Lebanon.
Public Policy
- The Senate is supposed to vote at the end of the day today on a housing bill, and if it passes, the House is supposed to vote later this week.
- Talks continue about a new reconciliation bill to come out of the House, but I remain very skeptical.
Housing & Mortgage
- The average 30-year mortgage rate is sitting at 6.54%, not materially different than where it was a year ago or even two years ago
Federal Reserve
- There is an 88% implied probability of some rate hike before the end of the year in the fed funds futures curve. There is almost a 20% chance of three rate hikes, a 36% chance of two, and a 34% of one. Let’s just say that a 22-23x forward multiple in the S&P 500 does not suggest to me that the market believes the fed funds futures market is accurate.
- Long-time Federal Reserve Chair Alan Greenspan passed away this morning at the age of 100. He served as the Federal Reserve chair from 1987 to 2006 and was most certainly the most famous, well-known, and significant central banker in history. I can say a lot about his legacy and contributions to the Fed, but today I will say RIP. A profoundly important life and legacy, no doubt.
Oil and Energy
- WTI Crude closed at $75.19, down -1.84% on the day
- Some indications are that Hormuz movement has picked up substantially, but it does appear it came to a halt Sunday when Iran responded to the escalations with Israel and Hezbollah in Lebanon. This will be a very, very important thing to monitor in the days, weeks, and months ahead … Is the Strait of Hormuz basically open, except for when it isn’t, and that optionality is in the full control of Iran?
- Midstream was down about -3% last week as oil prices were down -10% in the aftermath of this “deal” with Iran.
- The JP Morgan Energy Conference takes place this week in New York City, and that provides us with lots of new information we plan to take in for all it is worth (and potentially gives the market more of an update about certain companies’ capital spending plans).
On Deck
- Clients will receive their Weekly Portfolio Holdings Report before the sun comes up on Wednesday morning, per usual.
- I am speaking at the annual Acton Institute symposium in Grand Rapids, Michigan, this week before returning to NYC on Friday.
- Dividend Cafe this Friday will look at the hope embedded in markets, and why, in a world of growing negativity and cynicism, capital markets and entrepreneurialism offer an inescapable belief in a better tomorrow.
To all, a good Monday night! Reach out with any questions …
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.
