MONDAY – September 21, 2026

Dear Valued Clients and Friends –

This is my favorite kind of Monday Dividend Cafe, where I get to truly go around the horn and cover all the relevant bases, free of drama and such.

I was on Fox Business this morning talking Fed, energy, and markets …

Dividend Cafe on Friday looked at how the Fed’s rate hike will impact all of you, how it will impact the chairman’s relationship with the President, and what to expect going forward.  The written version is here (my favorite), the video is here, and the podcast is here.

Off we go …

Market Action

• Markets opened up +300 points this morning and, after a dip post-open, worked their way back near that high spot throughout the day
• The Dow closed up +366 points (+0.71%) with the S&P 500 up +1.49% and the Nasdaq +2.26%

*CNBC, DJIA, September 21, 2026

• There is nothing more concerning in markets right now than the S&P 500 being back near an all-time high, as its own internal breadth collapses (the percentage of companies in the index above their own 200-day moving average has gone from 75% to barely 50% in just a couple of weeks – I do not see this often)
• The ten-year bond yield closed today at 4.95%, down five basis points on the day
• Top-performing sector for the day: Communication Services (+3.86%)
• Bottom-performing sector for the day: Energy (-2.57%)
• I get asked pretty regularly if I am concerned about the rising margin debt we see, which has historically been a huge contrarian indicator for markets (i.e., evidence of excess and euphoria in advance of a market correction that self-perpetuates from built-up leverage in the system).  And the answer is, yes, of course, it is something I watch, consider, and generally wish were different.  But that said, my own experience and inside knowledge lead me to believe that the current peak levels of margin debt are not perfectly analogous to past peaks of margin debt. Past margin borrowing was almost exclusively to borrow money collateralized by various portfolio holdings to buy more of those portfolio holdings …  In the last 10-15 years there has been a large increase in margin borrowing for what we refer to as “non-purpose lending” (that is, brokers and custodians making credit lines available, collateralized by the portfolio holdings, for low-cost borrowing that is not necessarily correlated to leveraged stock purchases – used for things like real estate purchases and tax payments, etc.).  I spoke about this on CNBC a couple of months ago.

• For all the contrarians out there …  let’s just say, flows are flowing.  I will add to this chart’s message: tech sector ETFs just experienced their largest inflows in history.

Top News Stories

• President Trump announced on Friday that he was banning Politico, MSNBC, and CNN from the White House
• It appears the states that were suing to block the Paramount/Warner Brothers deal have agreed to a deal with Paramount, and the acquisition is set to clear remaining legal hurdles
• Private equity behemoth, Apollo, will be taking a 16% interest in the New York Yankees, valuing the team at over $12 billion

Public Policy

• The President announced Saturday morning (via social media) that he was creating an “AI Task Force” and coming up with an “AI czar” to lead it.  He did not say what exactly it would do or who would be on the task force.  It does not appear the idea has been discussed yet with his Commerce or Treasury Department, and other technology sector people involved in advising the administration up until now were unaware of the decision.  There is some speculation that the White House may try to create this task force out of the Pentagon as opposed to using civilian oversight.
• Canada and the European Union have had talks about Canada joining the EU as an “associate member” (in response to the hostile trade position of the U.S.).  President Trump has threatened more tariffs on Europe if that were to happen.

Economic Front

• Industrial Production was flat in August versus an expectation of a +0.3% monthly gain.  Utilities output led the way while Manufacturing declined
• Retail sales were up +1.2% in August and are up +6% year-over-year.  Building materials saw a decline but most other categories (internet, gas stations, restaurants, bars) saw increases.

Housing & Mortgage

• The NAHB Home Builder Sentiment Index fell by three points on the month, sitting at an extremely low 32 (where 50 is the “breakeven” level of neither good nor bad).  The Present Situation dropped on the month, but the Future Outlook dropped even more.  Prospective Buyers Traffic stayed the same – at a brutally low 23.  Buyer traffic has weakened in every region.  38% of builders cut prices in the month (average price cut being 6%), and 66% used sales incentives to move product.
• Housing starts declined -2.6% in August and are down -1.2% versus a year ago.  Multi-family starts are especially down (-14.6%) over the past year.

Federal Reserve

• I dedicated Friday’s Dividend Cafe to this topic, but I will add a few more comments, some of which are inspired by Rene Aninao’s extraordinary post-Fed report.
  1. Goldman Sachs disagrees with me and believes the second rate hike will come at the late October meeting right before the election, not in December.  And as I said on Friday, it is incoherently stupid to think the election six days later should be a factor (in perception or reality).  But my prediction was that it would be a factor and now I am second-guessing that, not so much because of Goldman’s analysis (which was good) or Rene’s (which was even better), but because of Warsh, who I think I am not giving enough credit to – and who I think is navigating the President far better than people understand
  2. An underrated element of Chairman Warsh’s comments last week were publicly and convincingly disputing the very idea of a precise neutral rate that can be ascertained by mere mortals (even ones with Ph.Ds).  The reorientation of monetary policy to something driven by financial conditions is going to take time, but will be profoundly impactful.
  3. I may write more about this, but his mocking of the idea of “data dependency” as a “dangerous preoccupation” because of the noise of data is, well, music to my ears
• The Bank of Japan increased its policy rate by 25bps up to 1.25%.  These seem like paltry and low numbers (because they are), but just remember Japan has been at 0% (if not negative) in their policy rate for most of the last ~20 years

Oil and Energy

• WTI Crude closed at $95.49, down -4.8% on the day
• Midstream energy stocks were down a bit last week despite oil being up +2% and natural gas being up +2.5%, as most income-oriented stocks were down last week behind higher bond yields.  The large move higher in oil prices the last few months has not really been material to the midstream space (which is still up over +30% YTD) as the main impact has been to the benefit of refiners.  We are just two weeks away from our annual money manager week in NYC (over 20+ meetings with our various asset management partners), and one I am especially looking forward to is our annual lunch with the UMI management team from Miller-Howard.
• It should be noted – the Canadian midstream space traded well last week.  The diversification of MLPs, U.S. corps, and Canadians has proven to be a successful way of capturing the total midstream return an investor wants while mitigating the nuances that take place within the categories of the space

Ask TBG

On Deck

• Clients will receive their Weekly Portfolio Holdings Report on Wednesday morning, per usual.  There is a lot there this week …
• The Friday Dividend Cafe will be a very important update on the Energy sector.  Bulls and bears in the space will want to pay attention.

More to Chew on

• A great company vs. a great stock – our own Ishan Chhabra
• Fox News poll on voters and the economy

I somehow got out of NYC today despite the radar being down and have meetings in Chicago all day tomorrow (where it is positively beautiful right now) … back to NYC tomorrow night.  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.