Daily Commentary

MarketMinder’s View: This article, which covers the forthcoming review of the US-Mexico-Canada act (arguably the most important trade development coming this year), gets pretty political. So please keep in mind we favor no politician nor any party, assessing matters solely for their potential market effects. With that review about to commence, it is worth getting into the specifics of what the titular “tear up” would actually entail, as that seems to be terminology commentators commonly play fast and loose with, as this piece capably demonstrates. Here is what it actually means, as it explains: “When the USMCA agreement was struck, the three countries agreed to a joint review after six years and, if they agreed it was satisfactory, to leave it in place until 2042. If they don’t agree to that extension, the existing agreement remains in place, but will be subject to annual reviews over the next decade. If, at the end of that period, there still isn’t a consensus, the agreement is terminated.” It is not subject to immediate termination. It is not a wholesale renegotiation. It means mooted reviews would happen more frequently, with the deal itself remaining in effect. This is good because, despite the claims of tariff hits in this piece, some 80% of North American trade is currently devoid of tariffs under the deal, a share that has grown since last year’s tariff tirade broke out. It also makes much of the divisions among the parties without noting separate comments from Canada’s Prime Minister Mark Carney that he seeks tighter ties on aluminum, cars and critical minerals. Point being: The angle of this article is more dour than almost any of the details support. While this deal is unquestionably important and the talks are worth watching, the realities suggest it isn’t a make-or-break factor for stocks—especially given the wide and overwrought media coverage on the subject. It is, like most tariff-related matters, largely pre-priced into meaninglessness for stocks.

MarketMinder’s View: This pithy piece shows the follies of holding more than you need for emergencies or big short-term purchases in cash, whether out of fear or waiting for a better time to deploy dry powder. “Cash earns something these days, but not much—basically zero after taxes and inflation. Over any longer period, the opportunity cost of holding it is likely to exceed that of poor timing in the stock market.” Correct! While holding a sizable cash buffer can make you feel more secure, it raises the risk of missing out on crucial market returns, potentially jeopardizing your long-term financial goals. The example herein demonstrates how this can play out over the long run: Regardless of your market timing, an annual $5,000 investment into US stocks from 1980 – 2023 would have yielded between $4.3 million (with the poorest timing) and $5.6 million (with perfect timing), dwarfing the $350,000 end value received by parking the same amount in cash. This illustrates how stocks deliver amazing compound growth even with some big downturns along the way. This return gap can massively affect how and when you retire, your cash flow in retirement and any other key goals and objectives. Yes, stocks’ (and bonds’) short-term bumps can be unsettling. But volatility is the price you pay for massively higher expected long-term returns. For those rationalizing the extra cash as fuel to snap up cheap shares on a decline, we would add that few people actually “buy the dip” since that is when fear strikes hardest. For more on this topic, see Fisher Investments founder and Executive Chairman Ken Fisher’s June 2025 New York Post column, “The Big Problem With ‘Cash Cushions’ and ‘Dry Powder’ in Your Investing Portfolio.”

MarketMinder’s View: Focusing on problems is what humans, policymakers—and headlines—do. So we remind you MarketMinder is politically agnostic, preferring no politician nor any party and assessing policies for their market implications only. Keep in mind, too, that while this article discusses some sociological challenges of an aging population, markets don’t deal with sociology. They focus on the economic and political factors affecting corporate profits and sentiment toward them. So our primary concern with this piece is the economic claims, chiefly that an aging population will strain the social safety net, requiring “rising public debt, cuts to benefits, or tax increases,” all of which are implied to be problematic. But for investors, look at demographic challenges from a market and global perspective, and a wealth of history shows population growth (or lack thereof) is generally irrelevant to stocks. Consider Japan, the developed market with the highest old-age dependency ratio at over 50% (50 elderly dependents for every 100 workers, per the OECD). Yet Japan’s economic expansion continues, its stocks have climbed over 150% during 10 years through yesterday’s close (per FactSet, MSCI Japan in USD) and its bond yields remain among the developed markets’ lowest. If demographics were destiny, Japan should be in a tailspin—it isn’t. Why is that? For one, Japanese companies are globally competitive—and multinational. They can go where the growth is and draw on talent and resources wherever they are. A global company’s revenue and profits don’t depend on any one country’s demographic profile, even the one it is based in. Then, too, as the article shows, population growth may be slowing, but folks are also living longer—and the services-oriented jobs an increasing amount of them do are conducive to longer careers. Demographic reality is better than portrayed. Moreover, these are long-running trends that aren’t catching markets by surprise. And if markets—and the people and businesses that make them—are anything, they are adaptable, continually learning and solving problems in front of them, including demographic ones. Demographics move too glacially to move markets.