Daily Commentary

MarketMinder’s View: There is obviously a lot of politics here, so please bear in mind we prefer no politician nor any party and assess developments for their potential economic and market implications only. And when we critique articles in this sphere, we focus on the market- and economy-related pieces of the argument. All the rest is sociology, which markets look past. So in that vein, we agree the Trump administration’s tariffs and trade threats on America’s commercial partners are an economic negative, hurting the imposer more than its targets—one reason US stocks underperformed non-US markets last year (which has continued year to date in 2026, per FactSet). Yet as this article also points out, “The power of the American economy makes it tough to dent, nevermind topple. The ‘sell America’ trade last year fizzled, and stock indexes reached new record highs just last week.” So while non-US stocks outperform, US stocks can still do well in absolute terms as reality keeps beating expectations. We have numerous problems, though, with the article’s alleged risks to America’s safe-haven status. First, the dollar isn’t going anywhere any time soon. Not because the US is forcing the rest of the world to use it, but because of its convenience as the most liquid currency to trade in, with the most abundant supply of reserve assets. Part and parcel of that: Treasurys—the world’s deepest bond market. Yes, America services a “high level of debt,” but that is because its credit is rock solid—which is why there is plenty of demand for it. Same with Corporate America’s debt for that matter. As for the claim high stock valuations signal a market especially vulnerable to these risks, high price-to-earnings ratios are a nothingburger since past prices aren’t predictive, especially the very backward-looking (and bizarrely inflation-adjusted) Shiller P/E. All these false fears show there is plenty of room for US stocks to keep running up the wall of worry.

MarketMinder’s View: While the US Supreme Court has delayed ruling until at least late February on President Donald Trump’s tariff implementation on international economic emergency grounds, the other major economic case is set to kick off this week. Here is a good preview of the case involving Trump’s attempt to fire Fed Governor Lisa Cook by social media, pointing to alleged mortgage fraud as “cause” that permits him to remove her. This case is worth watching in light of fears of Trump politicizing monetary policy by swaying decisions to his liking. Some think this hinges on whomever he names to replace Chair Jerome Powell in May, but it is more complex than that. The Fed sets monetary policy via the vote of the 12 member Federal Open Market Committee. That consists of the seven governors, the New York Fed president and a rotating panel of four other regional Fed presidents. The five regional presidents are selected by the branches. Most of the governor posts aren’t up for reappointment this year. If Cook is removed, that would give Trump one seat. Stephen Miran (whom Trump appointed to a temporary post late last year) is another, as his seat opens late this month. And if—if—Powell resigns his governorship after removal as chair in May, it would be a third. That is, at this time, the maximum influence he would have. So this case is worth watching to see how that develops. It is possible Trump could have only one seat to fill—and it is already occupied by a Trump second-term appointment. As ever, we favor no politician nor any political party and assess said matters solely for their potential market and/or economic effects. This is a matter we are watching for potential fallout, positive or negative.

MarketMinder’s View: Japan’s ultra-long bond yields pierced 4% for the first time since their debut in 2007 (which isn’t that long ago!), which this article pins on new Japanese Prime Minister Sanae Takaichi’s dissolving parliament and setting up snap February 8 elections—and the associated fiscal plans. “Bond yields have been rising, reflecting a fall in the price of the debt, since the prime minister unveiled a $135bn fiscal spending plan in November. Takaichi on Monday also confirmed her intention to suspend Japan’s 8 per cent sales tax on food for two years. That has fuelled investors’ concerns about Japan’s mixture of high debt and rising yields.” With debt over 200% of GDP, many see this rise as a bond investor freakout. But in our view, this is reading too much into relatively minor wiggles. Yes, her plan to dissolve parliament and hold early elections is stoking political uncertainty. But it isn’t assured her scandal-ridden Liberal Democratic Party can really win back a lower-house majority in the Diet—and it lacks one in the upper house, too, which isn’t holding new elections. Even if the party improves its stance from the current minority, it isn’t assured to win enough seats to ram through her fiscal policies. And even if it does, Japanese debt isn’t the crisis that many, citing surface-level figures like debt-to-GDP ratios, argue. That comparison is a stock-flow mismatch (debt accumulates over time; GDP is an annual flow of economic activity). Looking at more meaningful metrics like interest payments’ share of tax revenue reveals a much healthier picture. Besides, Japanese yields have been rising for many months now, before Takaichi was even in office. Stocks have climbed and the economy has grown.