Tuesday - April 28, 2026

Welcome to the Dividend Cafe, weekly market commentary focused on dividends in your portfolio

and dividends in your understanding of economic life.

Welcome to Dividend Cafe.

This is Brian Cytel, your host for this evening on Tuesday, April the 28th.

Mixed day at the close pretty much down across the board, although we were off of the lows

for the day.

And this was one of those days where big bifurcation and sector performance tech really

sold off quite a bit more.

The NASDAQ was down about nine tenths of a percent and the Dow was flat, S&P was down

half a percent.

So an odd day there, mainly around AI concern and the sustainability of the CapEx that has

gone into that sector.

The largest company in the space, OpenAI, missed numbers and it was because of a loss of

market share to its largest competitors in Gemini, in Anthropic.

And we've spoken about this for a very long time, about that being inevitable that they

can't all win together, that there's going to be some that will compete with others

and take market share back and forth.

This doesn't mean it has to be a win-lose environment, there can be win-win, just not

equally.

So there's a natural sort of component of market efficiency and also a normal way of how

this competition is going to play out over time.

That's also a new technology and so we don't actually know exactly how it will reshape

things.

But that's the reason my tech sold off the most on the day.

He ended up with a 10-year flat and oil up a good amount, WTI was up about 3.7 percent

on the day.

So same story there, you've got Middle East tension, U.S. Iran, conflict isn't ending

any time soon, straight of harmony is still closed.

So far there hasn't been a very clear and good off ramp to it.

So oil is still trending high, you've got Brent over 104, you've got WTI right at

100.

But yeah, at these levels you're starting to shave real points off a GDP and slowing

the global growth.

But that story has been largely in place for some time.

It's a good thing when you've got divergence and performance based on competition inside

of markets.

Everything going up, the tide rising and lifting all the boats at the same time can cause

successes and companies get just wildly overvalued.

I did point out the semiconductor space, this isn't to say that it isn't important, arguably

the most important or one of them, sectors out there.

But just understand that semiconductor space alone, so not technology, just semis, are

now 17 percent of the index.

So that's the same or getting darn close to all of the healthcare companies, all of the

energy companies, all of the staples companies and also all of the utility companies combined.

So is that an excess, time will tell, but that's a pretty remarkable story nonetheless.

And it's something to keep an eye on.

And you know what I put in there was just a quote by Benjamin Graham in the short run

the market is a voting machine in the long run, it's a weighing machine.

It's going to weigh ultimate financials, earnings, growth of earnings, quality of earnings,

those things over time more than it will on what's popular or what's deemed to be the

most exciting new sector.

Again, that's not to say semis aren't hyper important to how the world turns they are,

but just keep in mind those four other sectors being healthy and having energy and electricity

and being able to buy household goods and normal things like that run your everyday

life are also pretty darn important too.

There's a question in there today about record high all time margins that I wrote about

last week and doesn't that indicate the companies were boosting prices under the guise of inflation

hysteria.

Yes and no inflation first off has not come down it's we're not in a deflationary environment

prices aren't deflating they're just going up at a slower rate so it's disinflation.

The other thing is maybe there was some companies on the margin on intended that we're

able to juice prices for the sake of it because everyone was doing it, but over time that

tends to work itself out and they become less competitive and you end up just hurting

your own sales by being less competitive with higher prices so I wouldn't view that

necessarily a systemic what I would say is that the composition of the entire index has

shifted dramatically and that is one of the main reasons as to why the historic margins

at these levels are at an all time high it's because 30 plus percent of it is in tech and

companies that sell software as a service or cloud services or AI backbone and things just

traded much higher margins and operate with higher margins as businesses they're more scalable

when you think about energy companies utility companies telecom companies those huge barriers

to entry of investment and just equipment and material that need to get put in there is more

costly and they have lower margins financials have lower margins even believe it or not

than technology companies so that's also part of the reason but it was a good question from a good

reader there were three pieces of information in the economic side that I'm going to run through

quick here before I sign off case show there are 20 city home price index I know a lot of readers

pay attention to this because we all own houses house prices have hung in their quote-unquote

even though the sector remains pretty stuck but the number we got for February was up nine tenths

of a percent that was a tenth shy than expectations I still think it's remarkable prices

are hanging in there frankly when there's no transactions happening so I'll take it for what it

is that was also a February number so that's a bit delayed and then two other things consumer

confidence actually beat expectations in April that's because Iran is a month old at this point

the skirmish there and people get disensitized and feeling more optimistic and then the richman

fed manufacturing index was just slightly below expectations at three but that was up from the

marches flat reading so a bit of a mixed bag on the economic side I thought a good Q&A session

there on margins and then like I said tech sold off more because of competition in AI that's my

around the horn that's my story and I'm sticking to it but I appreciate you listening as I

always do reach out with your questions have a good evening thanks again the Bonson Group is a

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