Dear Valued Clients and Friends –
It was a good day for Google to be in the Dow and Verizon not to be … And it is a great day for the Monday Dividend Cafe’s trip around the horn.
Dividend Cafe on Friday looked at markets as the last, best hope. The inherent optimism of capital investment and entrepreneurialism is explored and defended. The written version is here (my favorite), the video is here, and the podcast is here.
I was on CNBC’s Squawk Box this morning talking market excess, SpaceX, and so much more.
This coming Friday’s Dividend Cafe will be a very thorough and very picturesque look at the first half of 2026. We will check in on the themes I set out at the beginning of the year, and evaluate the surprises, the predominant drivers, and what to expect for the back half of the year.
Off we go …
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Market Action
- Markets opened up +300 points this morning, and despite some movement up and down throughout the day, it closed basically where it opened.
- The Dow closed up +307 points (+0.59%) with the S&P 500 up 1.18% and the Nasdaq up just over +2%
*CNBC, DJIA, June 29, 2026
- The strongest evidence of a “rotation” versus “correction” is not in a narrative but in the empirical data: As the index has declined in recent sell-offs, the number of advancers has increased, and the number of decliners has decreased.
- The ten-year bond yield closed today at 4.37%, flat on the day.
- That 4.51% yield for the 10-year post-Warsh press conference didn’t last long, did it?
- Top-performing sector for the day: Communication Services (+3.11%)
- Bottom-performing sector for the day: Materials (-1.86%)
- A simple thought for consideration: If one believes market expectations for Fed rate hikes in the second half of the year are wrong, what does that mean for the U.S. dollar? And if that plays out – markets do expect rate hikes, those rate hikes don’t happen, and that brings a sell-off to the dollar – what investible areas are most likely to benefit? Now, before one starts thinking there is an easy path to contrarian money here – the Fed may very well hike rates, but there is another risk to the above scenario, even apart from getting a contrarian call right (that is, being right that they won’t hike when markets (and the dollar) expect they will: What if markets don’t really expect it? I mean, I know gold has gotten pummeled. I know what we’ve seen in certain emerging markets (Hong Kong, South Korea). I know the fed funds futures say what they say (see below). But are U.S. STOCK and BOND markets (the deepest, most liquid financial markets in the world) really saying Fed rate hikes are coming? Like, really?
Top News Stories
- I know a lot of you thought the U.S.-Iran hostilities were over. On Saturday, Iranian drones struck two commercial vessels in the Strait of Hormuz. The U.S. responded over the weekend with airstrikes against various Iranian military sites (drone storage locations, etc.). On Sunday, Iran fired missiles at U.S. military sites in Kuwait and Bahrain. Then by Sunday night (before market futures opened), the U.S. announced that both sides would stand down for now and commercial vessels would continue to move freely in the Strait.
- The only thing that comes close to the idiocy of believing that the Supreme Court is supposed to give a President all the rulings that the President wants is the belief that the Supreme Court does that, or has done it, or will do it. No matter what rulings people in their own legal interpretations believe were in error, no objective person of either political party can sanely claim that this court has been deferential to the wishes of the President. Most notably today, the court ruled that states can continue to set their own rules about mail-in ballots, and that a civil verdict against the President could not be reheard. See the Federal Reserve section for more info on today’s high court rulings.
Public Policy
- There is more and more [bipartisan] talk about taxing data centers. A Democrat Congressman in New Jersey, Frank Pallone, has called for a total moratorium on data center construction.
- The bipartisan housing bill was supposed to be signed by the President last week, but he has now said he will not sign it until Congress passes the Save America [Voting] Act. However, it will automatically become law, anyway, if he does not veto it, and even if he does veto it, its passage margin was greater than the amount needed to override a veto. So, what does this bipartisan housing bill do?
- It streamlines environmental reviews and federal regulations to accelerate the construction of affordable housing (where there were federal headwinds).
- It adds federal programs for small mortgages (under $100,000).
- Provides grants from the federal government to states and counties to reform their zoning and permitting rules that are impeding new housing development.
- Limits corporate ownership of single-family homes to 350 homes (with a variety of other caveats and nuances around that).
Truth be told, there are a couple of things in the bill that are just silly, some that are counter-productive, and some that are pure cosmetic, but the one thing that may be more substantial than anything else is the streamlining of federal red tape. Most of our housing supply deficit is a result of state and local regulatory impediments, but any progress towards reducing regulatory headwinds is a good thing.
Economic Front
- With a h/t to Torsten Slok, it is worth noting that container freight rates, truck transportation costs, dry van spot rates, canal transit costs, and the New York Fed supply chain index have all seen noticeable price pressure in the last month. Measurable and substantive price increases are evident throughout supply chain indicators.
Housing & Mortgage
- New single-family home sales were down -7.3% in May and are down -6.8% versus a year ago. Inventory picked up to 10.3 months. The sales volume represented a number much worse than even pessimists anticipated. A continued drop in prices (and what we now clearly see in the median price-per-square foot, too) is the only way I see transaction volumes picking up any time soon.
Federal Reserve
- The Supreme Court ruled today that a decision by the executive branch to fire Fed governor Lisa Cook over an accusation of a mortgage application issue (she has not yet been convicted or even charged with a crime) had to be returned to the lower court. The opinion was essentially around the lack of due process, thus far. The court ruled that the White House’s firing of an FTC commissioner was allowed to stand. The nuances of the process matter.
- Don’t look now, but the Fed has added $200 billion of assets to its balance sheet so far this year (from $6.539 trillion to $6,735 trillion). The Fed has added $300 billion of Treasuries this year but allowed $100 billion of mortgage securities to “roll off” at maturity.
- We are up to almost 20% implied probability of no rate hike by the end of the year in the fed funds futures market (double what it was a week ago). The odds of three rate hikes are down to 10%. A base case (40%) is for one rate hike between now and the end of the year.
Oil and Energy
- WTI Crude closed at $70.52, up +1.89% on the day.
- Midstream was up +3.7% last week despite oil prices dropping over 6%. There was not a lot of news out of the JP Morgan Energy Conference, but the ongoing demand surge for natural gas continues to be the backdrop of the pipeline story.
Ask TBG
| “The major defense contractors have typically been good dividend growth stocks. Following up on an executive order by President Trump, a bill now in Congress could block defense companies from paying dividends or buying back stock without special permission. Are the major defense contractors now un-investable as dividend growth stocks?” ~ Wallace A. |
The bottom line is:
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On Deck
- The Dividend Cafe on Friday will be a very special “mid-year” report, analyzing the state of markets, checking in on our 2026 perspectives and themes, and looking ahead to the second half of the year.
- The May “JOLTS” data on Job Openings will come out tomorrow. The June BLS Report will come out on Thursday (since Friday is a holiday with all markets closed and so forth in honor of the Fourth of July).
Have a wonderful Monday night and reach out with any questions anytime.
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.
