Daily Commentary

MarketMinder’s View: This article is heavy on theory and light on supporting evidence, and it operates on a theory history has rebuked many, many times. When you get down to brass tacks, this wants to argue a weakening labor market would pull the rug out from under the economy, which would reveal that stocks have run off a cliff edge, a la Wile E. Coyote. But the reality, historically, is very, very different. One, the labor market isn’t showing uniform signs of weakening. And regardless, stocks lead the economy, and economic growth leads jobs. Consider recent peaks in unemployment. In 2020, the bizarrely brief bear market began in mid-February and ended in late March. The first weak jobs report hit April 3, 2020. The headline unemployment rate peaked in April. That is after. Around the financial crisis, stocks peaked in October 2007 and hit their low March 9, 2009. The recession ran from December 2007 to June 2009. Unemployment peaked in October 2009—later. The same pattern held from 2000 – 2003, 1990 – 1992 and more. Go to the St. Louis Fed’s website, FRED. Chart the unemployment rate using the code, “UNRATE.” You will see it. Throughout history, the normal pattern is stocks move first, the economy second and the labor market third. Now, this article adds to its miscasting of the historical pattern theories about the K-shaped economy (one in which higher income folks drive growth despite lower income folks’ spending contracting). We don’t dismiss the hardships the elevated cost of living has placed on many, many people. But higher earners’ share of spending has been on the rise for eons. It isn’t really a cyclical feature. And the only evidence offered here that this is problematic now is a consumer sentiment survey, which has been disconnected from macroeconomic growth for the better part of three years.

MarketMinder’s View: This article obviously dives into politics and there are partisan angles discussed herein, so please note MarketMinder favors no politician nor any political party, analyzing developments solely for their potential market and/or economic effects. Here those effects are very limited. Yes, the Senate passed a bill to fund government and end the record-long partial shutdown Monday, and the House is returning to vote on the bill this week with the expectation it will pass swiftly. Loads of articles discuss who won the standoff, which we don’t really traffic in because it has zero market relevance. With this shutdown seemingly near its conclusion, we have yet another example supporting the basic premise that shutdowns don’t faze markets. Through Monday’s close, FactSet data show the S&P 500 has climbed 2.3% since Uncle Sam went on hiatus September 30. Now, we could be setting up another fight in the not-so-distant future, as “The package includes a three-bill ‘minibus’ that would fund the Department of Agriculture and the FDA, the Department of Veterans Affairs and military construction projects, and the operations of Congress for all of the current fiscal year — the product of months of bipartisan, bicameral negotiations between top appropriators. All other agencies would be funded through Jan. 30.”

MarketMinder’s View: While much of the financial world seemingly focuses on $2,000 tariff rebate checks to selected American households that would require legislation, seemingly exceed the tariffs collected and aren’t at all probable, this article focuses on a pending development that seems more doable. Months after President Donald Trump hit Switzerland with 39% tariffs, it seems a deal is close by that could lower the rate as far as 15%, matching the EU’s rate. Now, sources close to the matter stress this isn’t a done deal and could collapse. But it would ease pressure on Switzerland’s exports, likely delivering some relief. That said, it is also a mistake to overrate the effects. Yes, the US received 19% of Swiss exports in 2024, per FactSet data, which isn’t insignificant. However, pharmaceuticals and gold were large parts of this—and both are exempt from the 39% tariffs. Now, the former could see tariffs if specific firms aren’t deemed to be investing in the US sufficiently, but Switzerland’s main pharma firms have already announced plans that would likely exempt them. So a deal, should one be reached, is nice. But the effect of Trump’s headline 39% tariff was already smaller than most presumed.