The Dividend Cafe Tuesday - January 20, 2026
Jan 20, 2026
Political tensions over Greenland spark a significant market sell-off, with the DOW plummeting 870 points. The discussion dives into the impact of the 'Magnificent Seven' tech stocks, highlighting their limited contribution to recent gains amidst volatility. Rising bond yields threaten growth stock valuations, complicating market dynamics. Insights into potential housing policy changes and shifts in Federal Reserve leadership add to the complexity, setting up expectations for upcoming geopolitical events and their implications.
AI Snips
Chapters
Transcript
Episode notes
Markets React To Strange Political Catalysts
- Markets can sell off for strange political catalysts that don't need to make rational sense to investors.
- David L. Bahnsen stresses that sell-offs often lack a sensible single cause but still move markets dramatically.
The Mag-7 Aren't Carrying The Market
- The 'Magnificent Seven' lacks strong correlation and hasn't uniformly driven market gains this past year.
- Bahnsen notes five of seven Mag-7 have sub-market or negative twelve-month returns, so the market isn't living off them.
Broadening Toward Cyclicals Signals Reflation
- Market breadth shows reflation: transports, emerging markets, industrial metals, and shipping have rallied.
- Higher bond yields alongside cyclical strength would reinforce a pro-cyclical market regime, but they hurt expensive growth valuations.