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Monday's
Dividend Cafe

Daily Recap

Thursday - September 25
DJIA
-174 (-0.38%)
S&P
-0.50%
Nasdaq
-0.50%
2 Year Treasury Yield
3.66% (+6 basis points)
10 Year Treasury Yield
4.17% (+3 basis points)
Top-performing Sector
Energy (+0.87%)
Bottom-performing Sector
Health Care (-1.67%)
WTI Crude Oil
$65.28/barrel (+0.45%)
Economic Front
Initial jobless claims beat expectations for the week, coming in at 218k vs. the consensus of 235k.
The third revision of Q2 GDP came in better than previously estimated at 3.8% vs. 3.3%.

Podcast

Video

Dividend Cafe History

In September of 2008 the world’s financial markets were brought to their knees by a debt bubble, the likes of which we had never previously seen. The turmoil in financial markets was severe and Wall Street banks were falling by the wayside daily. In this time period, David Bahnsen was working as a Managing Director at Morgan Stanley, responsible for the well-being of his clients. As their anxiety of clients intensified, David began writing a periodic bulletin to them. One bulletin became another, and then another, and all of a sudden, a weekly bulletin was organically born! Well after markets pulled out of the abyss of 2008, the weekly edition continued, evolving into something far more positive than its September of 2008 origins. This commentary distributed by simple email with an ever-growing following morphed into the Dividend Cafe when David and his team launched their own practice in early 2015.

Today, Dividend Cafe is still attempting to do what it was doing in the fall of 2008 – offering truthful perspective that may not be easily found elsewhere. The topics will vary from our dividend growth philosophy, to bedrock investing principles, to the challenges of interventionist monetary policy, to anything else that inspires David in a given week. The underlying objective is the same now as it was when we began – to build trust by telling the truth, not what people want to hear.

History
SUBMIT YOUR QUESTIONS

Get Smart

Dividend Cafe Library
Browse and search for past editions.
Thoughts On Money

Taxes & Fees

Trevor Cummings
Alt Blend

Brush. Rinse? Repeat. – Part 3

Steve Tresnan

A Philosophy of Investing

TBG Founder David L. Bahnsen

About

Dividend Cafe provides market perspective rooted in first principles, not the fads of the day. Authored by our Managing Partner, David Bahnsen, it covers a wide array of topics, it doesn’t try to do what it cannot do, and it strives to offer needed perspective not readily available in most financial commentary.

The MONDAY Dividend Cafe covers all going on in the present tense in public policy, housing, energy, markets, the Fed, and more.

The DAILY RECAP is rather self-explanatory.

And ASK TBG gives you a chance for daily interaction with our people on any issue important to you.

  • All Posts
  • Dividend Cafe
When Labor Market Reality and Cultural Crisis Become One – September 26, 2025
September 26
When Labor Market Reality and Cultural Crisis Become One

Dear Valued Clients and Friends, The third quarter of 2025 will come to an end next week.  I do not believe very many people would consider it to have...

More>
LAST WEEK'S
DIVIDEND CAFE

Ask TBG

Question:

“I have been hearing people speculate that not all is well in the bond world and that we will begin to hear the Fed (or those trying to co-opt the Fed, such as our President) talk about a 3rd Fed mandate: Controlling the yield curve.  I am generally curious if you think this is a reasonable concern.”
~ Dave R.

Answer:

The Fed already has a third mandate – it is just never talked about: “moderate long-term interest rates.”  It is literally in the same Federal Reserve Act that mandates full employment and price stability.  As for the bond world, it is not up for debate that the bond market has behaved very well, that the curve is positively sloped, that rates have come down, and that the yield curve is currently healthy.  The long-end dropping would make the administration happy, but it shouldn’t do so if it is because of declining growth expectations.  The long end rising a lot (1% or so from here) would be problematic, and is not likely to happen.

Question:

“I have been hearing people speculate that not all is well in the bond world and that we will begin to hear the Fed (or those trying to co-opt the Fed, such as our President) talk about a 3rd Fed mandate: Controlling the yield curve.  I am generally curious if you think this is a reasonable concern.”
~ Dave R.

Answer:

The Fed already has a third mandate – it is just never talked about: “moderate long-term interest rates.”  It is literally in the same Federal Reserve Act that mandates full employment and price stability.  As for the bond world, it is not up for debate that the bond market has behaved very well, that the curve is positively sloped, that rates have come down, and that the yield curve is currently healthy.  The long-end dropping would make the administration happy, but it shouldn’t do so if it is because of declining growth expectations.  The long end rising a lot (1% or so from here) would be problematic, and is not likely to happen.
~ David L. Bahnsen
, September 25, 2025

Question:

"I would be grateful to learn why “C-Corps and Canadians leading the way and MLPs lagging".
~ M.H.

Answer:

Canadian markets and mid-stream names in particular have performed better this year, generally. There has been more capex in Canada in the space, leading to more access to international (non-US) markets, and multiples have expanded. As such, there has been increased production relatively speaking in the US. The C-Corp vs. Partnership question in the US is more nuanced, with varying returns company by company. C-Corps have generally fetched a higher multiple, partly due to them having simpler tax structures and being included in major indices like the SP500. They also typically have been more aggressive in using free cash flow for capex, which is why you see lower current dividend yields, but the potential for higher growth of dividends relative to their partnership counterparts. Our MLP positioning includes all three: US Partnerships and C-Corps, as well as Canadian names.

Question:

"I would be grateful to learn why “C-Corps and Canadians leading the way and MLPs lagging".
~ M.H.

Answer:

Canadian markets and mid-stream names in particular have performed better this year, generally. There has been more capex in Canada in the space, leading to more access to international (non-US) markets, and multiples have expanded. As such, there has been increased production relatively speaking in the US. The C-Corp vs. Partnership question in the US is more nuanced, with varying returns company by company. C-Corps have generally fetched a higher multiple, partly due to them having simpler tax structures and being included in major indices like the SP500. They also typically have been more aggressive in using free cash flow for capex, which is why you see lower current dividend yields, but the potential for higher growth of dividends relative to their partnership counterparts. Our MLP positioning includes all three: US Partnerships and C-Corps, as well as Canadian names.
~ Brian T. Szytel
, September 24, 2025

Question:

“Do you believe that we are getting to the point (or already there) where the popularity of passive index investing might cause significant inefficiencies in capital markets in the US?"
~ John I.”

Answer:

The conversation about where passive index volumes and mechanics are and are not relevant to pricing in U.S. capital markets, and yes, to potential efficiencies (and inefficiencies), is a big topic and a worthy one. I prefer to devote a whole Dividend Cafe to the subject because it covers more ground than it used to, and I would want to give it a thorough treatment. That said, the drive-by answer is that I believe there are different [structural] risks in passive investing now than there were when the index craze first took off. And I also believe that nothing has or ever will change the reality that, structural noise notwithstanding, price always reverts to value eventually. Always. In other words, I believe the popularity of index investing (and sheer size of it) has created some dynamics that are different from those we have had in the past (mostly on the buy-side of a bull market, thus far, but would apply to the sell-side of a bear market, too). And I believe that those dynamics are noise, and not anything that supersedes the reality of price and value.

Question:

“Do you believe that we are getting to the point (or already there) where the popularity of passive index investing might cause significant inefficiencies in capital markets in the US?"
~ John I.”

Answer:

The conversation about where passive index volumes and mechanics are and are not relevant to pricing in U.S. capital markets, and yes, to potential efficiencies (and inefficiencies), is a big topic and a worthy one. I prefer to devote a whole Dividend Cafe to the subject because it covers more ground than it used to, and I would want to give it a thorough treatment. That said, the drive-by answer is that I believe there are different [structural] risks in passive investing now than there were when the index craze first took off. And I also believe that nothing has or ever will change the reality that, structural noise notwithstanding, price always reverts to value eventually. Always. In other words, I believe the popularity of index investing (and sheer size of it) has created some dynamics that are different from those we have had in the past (mostly on the buy-side of a bull market, thus far, but would apply to the sell-side of a bear market, too). And I believe that those dynamics are noise, and not anything that supersedes the reality of price and value.
~ David L. Bahnsen
, September 23, 2025

Question:

“Thank you for your usual good work making complex issues at least a bit easier to understand. I was surprised you didn’t mention the impact on monetary policy of continuing $2 trillion+ deficits. That continuing deficit spending makes me wonder if we need rate cuts or not and what impact they will have.”
~ Jeff H.

Answer:

I do believe I erred in not discussing this in Friday’s Dividend Cafe because I think there is simply no doubt that one of the more structural challenges the Fed faces is aligning monetary policy with the structural fiscal reality they are forced to deal with. While it is not unique to this quarter or this meeting or this rate cut, the embedded reality is that, as much as massive resets of commercial real estate or levered loans matter, there is no question that the term structure and cost of borrowing of the $30 trillion of U.S. public debt matter, too. And I do believe a structural accord between monetary and fiscal policy exists. And I believe this accord contributes to Japanification, even when the accord is softer than the one in Japan.

Question:

“Thank you for your usual good work making complex issues at least a bit easier to understand. I was surprised you didn’t mention the impact on monetary policy of continuing $2 trillion+ deficits. That continuing deficit spending makes me wonder if we need rate cuts or not and what impact they will have.”
~ Jeff H.

Answer:

I do believe I erred in not discussing this in Friday’s Dividend Cafe because I think there is simply no doubt that one of the more structural challenges the Fed faces is aligning monetary policy with the structural fiscal reality they are forced to deal with. While it is not unique to this quarter or this meeting or this rate cut, the embedded reality is that, as much as massive resets of commercial real estate or levered loans matter, there is no question that the term structure and cost of borrowing of the $30 trillion of U.S. public debt matter, too. And I do believe a structural accord between monetary and fiscal policy exists. And I believe this accord contributes to Japanification, even when the accord is softer than the one in Japan.
~ David L. Bahnsen
, September 22, 2025

Looking For Something Specific?

Monday's
Dividend Cafe

Daily Recap

Thursday - September 25
DJIA
-174 (-0.38%)
S&P
-0.50%
Nasdaq
-0.50%
2 Year Treasury Yield
3.66% (+6 basis points)
10 Year Treasury Yield
4.17% (+3 basis points)
Top-performing Sector
Energy (+0.87%)
Bottom-performing Sector
Health Care (-1.67%)
WTI Crude Oil
$65.28/barrel (+0.45%)
Economic Front
Initial jobless claims beat expectations for the week, coming in at 218k vs. the consensus of 235k.
The third revision of Q2 GDP came in better than previously estimated at 3.8% vs. 3.3%.

Podcast

Video

Dividend Cafe History

In September of 2008 the world’s financial markets were brought to their knees by a debt bubble, the likes of which we had never previously seen. The turmoil in financial markets was severe and Wall Street banks were falling by the wayside daily. In this time period, David Bahnsen was working as a Managing Director at Morgan Stanley, responsible for the well-being of his clients. As their anxiety of clients intensified, David began writing a periodic bulletin to them. One bulletin became another, and then another, and all of a sudden, a weekly bulletin was organically born! Well after markets pulled out of the abyss of 2008, the weekly edition continued, evolving into something far more positive than its September of 2008 origins. This commentary distributed by simple email with an ever-growing following morphed into the Dividend Cafe when David and his team launched their own practice in early 2015.

Today, Dividend Cafe is still attempting to do what it was doing in the fall of 2008 – offering truthful perspective that may not be easily found elsewhere. The topics will vary from our dividend growth philosophy, to bedrock investing principles, to the challenges of interventionist monetary policy, to anything else that inspires David in a given week. The underlying objective is the same now as it was when we began – to build trust by telling the truth, not what people want to hear.

History
SUBMIT YOUR QUESTIONS

Get Smart

Dividend Cafe Library
Browse and search for past editions.
Thoughts On Money

Taxes & Fees

Trevor Cummings
Alt Blend

Brush. Rinse? Repeat. – Part 3

Steve Tresnan

Write Off the Sunset: Planning Around the OBBBA

TBG Director Matthew Gregory

About

Dividend Cafe provides market perspective rooted in first principles, not the fads of the day. Authored by our Managing Partner, David Bahnsen, it covers a wide array of topics, it doesn’t try to do what it cannot do, and it strives to offer needed perspective not readily available in most financial commentary.

The MONDAY Dividend Cafe covers all going on in the present tense in public policy, housing, energy, markets, the Fed, and more.

The DAILY RECAP is rather self-explanatory.

And ASK TBG gives you a chance for daily interaction with our people on any issue important to you.

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