Daily Commentary

The Swiss National Bank (SNB) re-entered familiar territory last Thursday, cutting its benchmark interest rate by 25 basis points (bps) to 0%. The widely expected move spurred chatter about a return to negative interest rates along with the possible implications for financial markets and the economy at large. Last time around, zero and negative rates were terra incognita for Europe, making any chatter largely speculative. But now we have actual history and results to look at. So let us explore what zero (and negative) rates did and didn’t accomplish for the SNB—which can inform investors’ expectations about the potential efficacy of central bankers’ actions today. The last time the SNB adopted an effective zero rate—commonly referred to as Zero Interest Rate Policy, or ZIRP—was in August 2011, when the policy rate dropped to 0.00% - 0.25%. At the time, the eurozone debt crisis was in full swing, causing the Swiss franc to strengthen as European investors sought a local safe haven. The SNB considered its currency “to be massively overvalued … This current strength of the Swiss franc is threatening the development of the economy and increasing the downside risks to price stability in Switzerland.”[i] Many viewed a strong franc as an export headwind (since it theoretically makes goods and services more expensive for foreign buyers), and the Swiss economy depends heavily on trade. Meanwhile, the strong franc also raised the potential to “import deflation,” which some cast as an economic headwind. Rates stayed at zero until late 2014, when falling oil prices and a plunging Russian ruble sparked renewed demand for “safe investments” (e.g., the franc), prompting the SNB to go a step further and adopt negative rates. As the central bank argued, “The introduction of negative interest rates makes it less attractive to hold Swiss franc investments, and thereby supports the minimum exchange ...

With a ceasefire appearing to hold in the Middle East and the S&P 500 back above pre-conflict levels, other news is starting to find its way back to headlines. Wednesday brought an interesting smattering, featuring stock buybacks, long rates’ recent slide and yet more presidential jawboning about Fed appointments. Let us take a look! The Complicated Truth About Stock Buybacks Per The Wall Street Journal, S&P 500 stock buybacks hit a record high in Q1 2025, topping the previous high notched in Q1 2022, with Tech and Financials leading the charge.[i] Tradition holds that stock buybacks are bullish, yet the S&P 500 fell in Q1 as the correction began mid-February. Financials rose, but Tech was the second-worst performing sector in the index that quarter. And Q1 2022? That was the start of that year’s sentiment-induced bear market. In our view, it is all a good reminder that while buybacks are bullish in nature, they are not automatically a catalyst for positive returns. Stock prices, like all prices, derive from supply and demand. Buybacks, all else equal, reduce supply. But they are only one supply driver, and sometimes firms use them to offset secondary share issuance (e.g., shares awarded through employee compensation), so buybacks don’t always mean total supply is falling. And demand matters, too. If investors are less eager to buy, as they were in late winter and early spring, that can swamp a supply decrease. The stock market is a complex beast. But we aren’t here to pooh-pooh buybacks. And it doesn’t shock us that companies might see them as an excellent use of cash during a volatile spell, buying at a discount and boosting earnings per outstanding share (by reducing the denominator). Recent history has overwhelmingly shown that buybacks and capex can coexist, despite politicians’ frequent gripes to the contrary. We just think it is good to bear in mind that buybacks don’t automatically mean rising prices or ...

Over a week into the latest Middle East conflict, a lot is happening. The US became officially involved over the weekend, Iran’s legislature voted to block the Strait of Hormuz on Monday, and both sides (and their allies’ assets throughout the region) continue taking fire. The situation remains tragic, complex and unsettling, and our hearts go out to all affected. Yet markets seemed to take it all in stride.[i] European stocks fell a bit Monday, but the S&P 500 rose 1.0% in price terms and oil actually erased much of its recent rise. While short-term volatility is always a wildcard—unpredictable—so far, it looks like markets are gradually moving on from the initial scare. Stocks’ reaction has been rather muted from the start, with returns basically flattish and daily moves far milder than April’s tariff-induced wildness. Oil appeared to be where investors registered the bulk of their fears, tied to supply concerns. The prospect of Iranian crude leaving the market or a blocked Strait disrupting tanker traffic caused Brent crude, the global benchmark, to leap from $70.84 on Thursday June 12, the day before Israeli forces struck Iranian nuclear targets, to $76.00 the next day.[ii] That closing price was actually down from intraday highs, indicating fear was perhaps giving way to a rational assessment of global supply. Oil mostly bounced sideways over the next week as the fighting continued and rhetoric escalated. But after oil futures jumped Sunday night following the US airstrikes, crude fell sharply Monday. As we write just after stock market close PDT, it trades below $72.00, down significantly from $76.99 at Friday’s close.[iii] Yes, US airstrikes, Iranian counterstrikes on a US base in Qatar and a parliamentary vote to close the Strait all added up to a steep down day for crude. At first blush, that seems like a headscratcher. But markets tend to like falling uncertainty, and we are gradually getting it. US airstrikes ...

Editors’ note: MarketMinder is nonpartisan, favoring no party nor any politician, and assesses political developments solely for their potential effects on the economy, markets and personal finances. On Monday, the Senate Finance Committee released its version of the One Big, Beautiful Bill Act (OBBBA) the House passed in May. A new poll showed Americans disapprove of the bill two to one ... but also don’t know what is in it.[i] If there is a better indicator of today’s prevailing pessimism, we are hard-pressed to find it. It also highlights the uncertainty hanging over markets lately, but clarity is gradually arriving. As the wrangling continues, markets continue digesting it and weighing all the probabilities, sapping surprise power. So what are markets digesting? Here is a rundown of the items most relevant to investors. The Senate’s bill hews closely to the House blueprint, chiefly—and permanently—locking in current federal tax brackets and standard deductions from 2017’s Tax Cut and Jobs Act set to expire at yearend. But there are some differences: Perhaps most notably, the House’s $40,000 cap on state-and-local tax (SALT) deduction—up from $10,000 currently—is so far absent in the Senate’s bill, which keeps it at $10,000 as a placeholder. This doesn’t rule out a higher SALT deduction but highlights a major sticking point to be negotiated, which extends uncertainty for households in high-tax states. Another big change makes more business tax breaks permanent, including tax deductions for R&D and new equipment expenses and expanded debt interest write-offs. These breaks would expire in 2029 under the House bill, which focused more on populist cuts than measures to support private investment. The Senate would also bring a more gradual end to clean energy tax credits: for solar and wind by 2028 and for hydropower, nuclear and geothermal by 2036. The House’s ...

Ah, the beginning of summer, with its abundant sunshine, soft June air and lovely long days! The perfect time for picnics, long walks, nature hikes with the kiddos, long evenings on the patio with good conversation and, of course, sifting through the MarketMinder mailbag.[i] Let us see what is on your mind this month. Is it better for stocks to “climb a wall of worry” than when everyone agrees things look good? “Better” is relative and subjective. It isn’t that returns are automatically higher earlier in bull markets, when investors are more skeptical than they are later, when optimism and then euphoria reign. Stocks can deliver great returns late in bull markets, as investors enjoyed in the very late 1990s. And volatility can strike early and late in a bull market alike. As can a bear market, as a wallop is always possible—something huge, sudden and broadly unseen can strike at any time. The added wrinkle late in a bull market is that euphoria can raise the risk of even modest negatives being big, bad surprises. It isn’t that the euphoria itself is a risk, but that it blinds investors to risk. Not better, not worse, just different. All stages of a bull market have their challenges and the potential to deliver great returns. The nuance is what keeps the challenge fresh. What counsel do you have for someone who just started investing during a volatile period? We know it may sting to start or start something new—only to see a correction strike. But breathe deep and remember why you invested in the first place—your long-term goals and the returns you need to reach them. Whatever you invested in, if done wisely, you chose it because you deemed it to have a high likelihood of doing what you need it to do over the full length of time your money needs to last. So if you are in stocks, if you are like most people we talk to, you likely need at least some long-term growth over many years or even decades and deemed stocks ...

Between the G-7 summit, trade talks, ongoing strife in the Middle East and tomorrow’s Fed meeting, Tuesday’s economic releases didn’t get much ink. In a way, that says a lot about where sentiment is right now—things everyone once watched for hints of how tariffs are affecting the economy and recession risk now get short shrift as new fears take over. The fear morph is part and parcel of how bull markets work, but the data themselves are still worth a look, as they help illuminate what markets have been dealing with. No Surprises in Retail Sales Though it fell off the front pages swiftly, coverage of retail sales’ fall was broadly pessimistic. Headline sales fell -0.9% m/m, which some outlets called a sign tariff anxiety is weakening spending and, therefore, growth.[i] Others focused on the -0.9% drop in restaurant sales as potential evidence cash-strapped consumers are pulling back on discretionary spending and affordable luxury.[ii] Given food service is the lone services category within retail sales—and given services is the majority of consumer spending—some coverage extrapolated the decline as a bellwether for services and spending generally. It all strikes us as reading too much into monthly swings. Sales jumped earlier this year as consumers front-ran tariffs before the Trump administration’s Liberation Day announcement. That big, 1.5% m/m jump in March was never going to be a sustained growth rate. Rather, it smelled like a one-off that pulled demand forward. Whenever pending changes pull demand forward, whether tariffs here or Japan’s sales tax hike several years ago, they tend to leave a pothole in the ensuing months. The US’s retail landscape appeared to be in that pothole in May. Consider: While restaurants got attention for falling the most since 2023, the primary detractor was auto sales’ -3.9% m/m decline, which followed March’s 5.7% boomlet.[iii] People knew tariffs were about to ...

Tensions are high again in the Middle East after Israel launched widescale strikes on Iran early Friday morning local time, prompting counterstrikes from Tehran. With the world watching the hostilities unfold between the two regional powers and tough statements from their allies, oil prices jumped and global markets dipped modestly—though stocks’ pullback intensified after Iranian missiles hit Tel Aviv shortly before US market close Friday. Many understandably fear the prospect of a broader conflict. But during times like this, we urge investors to take a breath and see how markets normally deal with such things: Regional conflicts like this may stoke short-term volatility somewhat, but they are unlikely to disrupt economic activity sufficiently to drive a bear market. As many likely know, this is the latest episode in a longer-running conflict in which both sides have suffered the loss of life and destruction. It is a complex, tragic issue with many sociological and political implications, and we empathize with those affected. But like stocks, our focus is on the market-related implications only. And as is typical when tensions flare, uncertainty is driving volatility. Some quick background: America and Iran were set to meet for another round of nuclear talks this weekend. Iran had threatened to strike American assets in the Middle East if Israel attacked Iran over its nuclear program. On Friday, Israel made good on its overtures, attacking Iranian nuclear facilities and killing military leaders and scientists. Tehran responded first with drone strikes and then ballistic missiles fired toward Tel Aviv, some of which slipped through Israel’s staunch defenses. Those planned US – Iran negotiations have since been called off. Global oil prices jumped as high as 13% on the news before paring back gains. Global stocks largely retreated, but their pullback deepened after news of Iran’s counterstrike.[i] Both the S&P 500 and MSCI World ...

How have tariffs affected the job market? This question was top of mind when May’s report hit the presses last Friday. It is perhaps predictable many sought hints about tariffs’ fallout—both negative and positive—since this is the first jobs report covering an entire post-Liberation Day period. But in our view, these data don’t support any of those takeaways, regardless of the short-term conclusion you may draw. Late-lagging jobs data take a long while to confirm whatever forward-looking markets are pricing in. First, the numbers: Nonfarm payrolls rose by 139,000 in May, beating consensus estimates for a 130,000 gain and moderating from April’s downwardly revised 147,000 increase.[i] The unemployment rate held at 4.2%, remaining in the 4.0% - 4.2% range since May 2024.[ii] Many observers expressed relief, having expected some tariff-induced labor market weakness. But in our view, May’s jobs report was never likely to support tariffs’ theorized effects on jobs—negative or positive. A lot of mainstream economists believe the Trump administration’s tariffs will lead to higher prices. To control costs, businesses would have to slow hiring plans—or, worst-case scenario, let workers go. On the flipside, others claim tariffs will create jobs since more expensive overseas goods would motivate manufacturers to produce more here—allegedly meaning more manufacturing workers. But May’s report doesn’t back either of those hypothetical outcomes: The results were mixed, with no big outliers. For example, the supposedly tariff-sensitive manufacturing and transporting and warehousing industries didn’t see large gains. The former shed -8,000 jobs while the latter added 5,800.[iii] In contrast, service-providing industries—which are generally less sensitive to tariffs—drove jobs growth, led by private education and health services (87,000).[iv] Exhibit 1: May’s One-Month ...

At the risk of stating the obvious, Wednesday was chock full of tariff news—as if any day of the week isn’t lately. But there really was a smorgasbord of nuggets showing what markets continue dealing with. Here is the rundown. The China “Deal” Gets Reheated The biggest news: The Trump administration’s deal to make a deal with China is back on. Last month, both sides agreed to chop triple-digit tariffs to double-digit for 90 days while they negotiated a broader deal. The US’s additional tariffs on China dropped to 30% (blanket 10% tariff plus the 20% levy tied to the fentanyl emergency), and China’s additional tariffs on the US dropped to 10%. But as with the agreement with the UK, it wasn’t an actual deal, but rather a framework of what they eventually hoped to agree to. Think of it as a tariff ceasefire while trade peace talks continued. But those talks seemingly fell apart quickly as each side accused the other of violating the preliminary agreement. Tariffs didn’t go back over 100%, but as the US talked tough over student visas and military-related exports and China rationed rare earths, it raised fears that the truce would expire without a deal, taking us back to April’s sky-high rates. However, President Donald Trump and Chinese President Xi Jinping broke the ice last week, teeing up fresh talks between trade delegates in London this week. Those talks are now done, with both sides agreeing late Tuesday night to extend and firm up May’s deal. It is another deal to make a deal, subject to approval by Trump and Xi. Trump blessed it Wednesday, confusing some people by noting it brings US tariffs on China to 55%, which is a lot higher than 30%. But this isn’t a change. It is the total tariff rate, including the 30% additional tariff plus the 25% levy enacted during Trump’s first term, which got lost in most coverage last month. So tariffs didn’t change this week, and they remain ...

Touting a long history of high returns, Wall Street is pushing for everyday investors to gain access to unlisted, private investments. Proponents claim they want to benefit the masses by bringing this previously exclusive, lucrative option to 401(k)s and more, via revising rules governing retirement accounts and requirements governing private investments. But behind the scenes, we see another possible explanation for the push: Many private or hedge funds are facing a cash crunch. In our view, today’s liquidity issues highlight why investors should think twice before diving into private equity if it becomes more accessible—and are reminders of everlasting considerations investors must weigh in approaching these options. Recently, private equity returns have cooled significantly, lagging broader markets and driving funding issues. For context, these funds boasted flashy returns for decades, often leveraging up big and making concentrated investments. From 2000 – 2023, some estimates put their net annualized returns at 13%, topping public equity’s roughly 8% over that span.[i] But they aren’t assured to outperform. By many accounts, global stocks outperformed private equity from 2022 to 2024—the first time since the dot-com bubble.[ii] Today’s lower returns are tied to several factors. Some blame slower dealmaking and initial public offering (IPO) activity. Others cite broad writedowns of stakes taken in 2021, before trouble in Silicon Valley’s private markets came to a head.[iii] Costlier credit can play a role, too, raising funds’ interest expenses. And given unlisted assets’ opaque nature, these factors—along with broader economic uncertainty, inflation and geopolitical conflict—are making it tricky for buyers and sellers to agree on valuations for these unpriced assets. This may be particularly true in funds that invest in commercial real estate—but it isn’t limited to that. As a ...

Over two months on from Liberation Day, US tariff collection continues missing worst-case-scenario forecasts by a country mile, which we think has a lot to do with US stocks’ ongoing recovery from the springtime tariff shock. Markets pre-priced those worst-case estimates quickly, then recovered as things didn’t go as bad as feared. We see a few reasons for the positive surprise, and the latest trade data from Asia hint at a big one: transshipping. Exhibit 1 shows China’s exports to the US, Taiwan and the Southeast Asian trade bloc (ASEAN) since the start of last year. As you would expect, shipments to the US nosedived after Liberation Day. The decline deepened last month despite both sides backing down from triple-digit levies as businesses here scrambled to avoid the still-high 30% charge. Meanwhile, Chinese exports to ASEAN and Taiwan stayed strong. Exhibit 1: Chinese Exports by Geography Source: FactSet, as of 6/9/2025. Bilateral Chinese exports, January 2024 – May 2025. During Trump’s first term, businesses skirted higher Chinese tariffs by transshipping products through lower-tariffed neighbors. Vietnam was a huge beneficiary. In some cases, it seems goods just took a quick pitstop for unpacking and relabeling as Vietnamese products. In others, businesses sent components from China for assembly in Vietnam, then on the journey to the US. Data now hint pretty strongly that this is happening again in Vietnam and elsewhere in Southeast Asia. US import data for May aren’t out yet, but as Exhibit 2 shows, a lot of that April bump seems to have made its way to our shores. And Taiwanese data, out today, show its exports to the US jumping an astounding 87.4% y/y in May.[i] Similarly, Singapore reported a 113% y/y boom in “re-exports” in April.[ii] (Data for May aren’t out yet.) Some of this is probably frontrunning the potential return of reciprocal tariffs next month, but it wouldn’t surprise if Chinese ...

Negative volatility can shake the confidence of any investor, regardless of experience—especially right after a correction or bear market. Many understand exiting markets during or immediately after a drop could easily be a mistake that locks in losses. However, many also see the exits looking sunnier when markets reach a certain level. One common trigger: stocks returning near earlier highs. That allows investors to “breakeven”—you get out and don’t “lose” anything. We refer to this thinking as breakevenitis, and succumbing to it isn’t just one mistake robbing you of potential future growth. It is the accumulation of multiple mistakes that, in our view, flies in the face of why you are investing in the first place.  This article aims to explain the mistakes you make (and risks you take) when you sell at breakeven. We will first review each step of the investment process, from identifying investment goals and objectives to determining the blend of stocks, bonds and other securities best positioned to reach those goals over your entire time horizon. Focusing on breakeven runs counter to this entire process. We will also discuss the times you should sell (hint: not after solely breaking even) and end with a look at the risks tied to selling after breakeven—chiefly, the long-term returns you may give up. In conclusion, if you give in to breakevenitis, we think you are making a behavioral mistake. Maybe you get lucky and it works out short term, but this isn’t a recipe for repeat success—and the time to carefully consider that is before committing such an error. Let’s begin. Why Are You Investing? Selling at breakeven goes directly against why you are invested in the first place: achieving your personal investment goals and objectives over your time horizon. This is always the place to start when considering a major action: Revisit why you are investing. You want your money to provide something ...

False fear morphs are hallmarks of bull markets—which, after all, climb walls of worry. With tariffs siphoning attention from inflation, there is a new worry dominating. But as inflation shows, once markets get the measure of a story, even when it is fundamentally bad, they can quickly look through it and move on. Let us run through some recent inflation data to show you how and why. Eurostat released eurozone inflation data Tuesday showing the bloc’s harmonized index of consumer prices (HICP) easing to 1.9% y/y in May. (Exhibit 1) The return to sub-2% inflation—below the ECB’s target—while notable, isn’t new. HICP hit 1.7% y/y last September. The blip upward from there, though, caused many to fret—and fight the last war, worrying renewed price pressures would sink stocks anew. Exhibit 1: Eurozone Inflation Rates Back to Historical Norms Source: FactSet, as of 6/5/2025. But as you can see, while post-traumatic inflation stress can embed itself in people’s mindsets, it doesn’t dictate the future. The past isn’t prologue. Successful investing, in our view, requires looking forward—like markets do—and seeing how reality is likely to differ from the crowd’s expectations, which are often unduly shaped by prior events. Back in the USA, the Bureau of Economic Analysis reported the Fed’s targeted measure of inflation last Friday. The headline personal consumption expenditures (PCE) price index dynamically weights its components based on consumers’ monthly purchases—versus CPI’s fixed weights—better accounting for households’ actual inflation experience. Exhibit 2 shows the latest April headline reading at 2.1% y/y, back at last September’s rate. Like the eurozone, this seemingly spells relief.[i] After the PCE price index’s brief blip higher, it is within spitting distance of the Fed’s (squishier) 2% average inflation target. In our view, it ...

The fine folks at the Congressional Budget Office (CBO) have been busy bees, releasing not one but two reports on US fiscal policy’s projected effects Wednesday! Oh what fun! And as per usual, coverage is playing fast and loose with the details, throwing around big numbers with little context. While we think this is all moot for stocks, considering these forecasts are opinions and exercises in straight-line math, understanding what they do and don’t say is key to assessing whether sentiment matches reality. The reports in question aim to assess the budgetary effects of new tariffs and the House’s “Big Beautiful Bill” to (among other things) extend 2017’s tax cuts. If you take most of the corresponding headlines at face value, you will get the impression that the House bill increases the deficit by $2.4 trillion … but that this is ok, because the tariffs cut it by $2.5 or $2.8 trillion, depending on the CBO’s forecasting methodology. Big number, bad, but made better by another big number. Eek? Woohoo? We say: None of the above. First off, despite what numerous outlets claimed, the CBO doesn’t project the tax bill adding $2.4 trillion to “the deficit” in the way people would normally interpret that language—it doesn’t raise the annual budget deficit from $1.8 trillion in fiscal 2024 to $4.2 trillion in 2034. Instead, the CBO projects that if the House bill were to take effect, the total of all deficits from 2025 through 2034 would be $2.4 trillion higher than it would be if Congress did nothing. For 2025, the CBO projects spending cuts would exceed revenue cuts, so the deficit would be $107.6 billion smaller than its baseline do-nothing scenario. In 2026, it anticipates the deficit would be $484.5 billion larger. In 2027, $536 billion larger. Sum every year’s projected change from the do-nothing scenario, and that is how you get to $2.4 trillion. It is a projected $2.4 trillion debt ...

Waiting is one of life’s most important skills, and investing offers copious opportunities to practice it. Waiting for compound growth to bear fruit. Waiting for short-term volatility to even out. Waiting for an investment thesis to play out. And one we practice a lot: waiting for data to confirm a theory. Like this one: Two months ago, as the UK’s payroll tax hike took effect, we studied historical data and determined that—contrary to widespread fears—the increase was unlikely to cause mass layoffs and economic trouble. But there is always a period of limbo where we must wait to see if that proved right. And while UK stocks are up bigtime since early April, that also coincides with global stocks’ rebound from this spring’s correction—and reading into short-term volatility is as much of an error when the volatility is good as when it is bad. But now, happily, we have a smidge of actual data. We refer to S&P Global’s Services Purchasing Managers’ Index (PMI), a survey measuring the percentage of businesses reporting better, steady or worse conditions across a range of metrics. Readings over 50 indicate a majority of businesses reported improvement, which generally corresponds to growth. The tax hike was supposed to hit services firms hard, hammering employment and demand while forcing companies to raise prices. That was the narrative. Yet in May, the UK Services PMI rose to 50.9 from April’s 49.0—returning to expansion after a very brief contraction.[i] Output rose, new orders’ decline slowed to an “only marginal” rate, and businesses reported a rise in demand from European clients that offset weaker demand from tariff-spooked Americans.[ii] Survey respondents blamed April’s weakness on those tariffs and the uncertainty they generated, not domestic tax changes. And while headlines spent months warning those modestly higher taxes would force businesses to cut back and raise ...