Daily Commentary

MarketMinder’s View: No stock market implications here per se, but it is a good read that signals some important things about the economy and who the long-term winners from technological gains are. The jumping-off point is the revelation that new-business applications hit a 20-year high last year and are on track to pass that halfway through 2026. Indirectly and anecdotally, this shows many people who have been laid off and not taken another corporate job likely aren’t exactly idle, even as their new endeavors don’t count toward nonfarm payrolls. It is also a strong reminder to watch what people do, not what they say, as it coincides with a rise in people who say they like “socialism” and dislike “capitalism.” If that were actually broadly true, you wouldn’t see a jump in people trying to take advantage of the free market system. People who go out and start a business are telling you they like the current system just fine (which tracks with deeper surveys showing “socialist” leaning folks don’t actually think government should own the means of production and do love “free markets”). Also interesting is the article’s second half, which shows how AI tools both help entrepreneurs by lowering overhead and spurring new business ideas. We often note that the biggest winners from new technology in the long run aren’t the technology creators or providers, but the creative users who deploy them to solve problems in new ways, creating businesses or entire industries out of whole cloth. This all happens too far in the future to be the basis of investment decisions now, but it is a compelling counterpoint to those who continue insisting AI will consign humanity to a future of sofas and government cheese. 

MarketMinder’s View: This dives deep into politics, so we remind you MarketMinder is politically agnostic, preferring no politician nor any party and assessing developments for their potential economic and market implications only. It is also a shining example of a new genre of journalism: trying to predict what incoming UK Prime Minister Andy Burnham will do based on things his advisors or rumored cabinet picks have said in the past. In this case, a member of his team once said the Bank of England should focus on supporting economic growth as well as fighting inflation, versus its current mandate to solely target price stability. Mooted solutions are adjusting the bank’s mandate, curbing its political independence by formalizing its joint efforts with the Treasury and more. We guess it is an interesting thought experiment, but it is entirely speculative. We also think it is beside the point. The BoE and ECB both have price stability as their core mandate, while the Fed has a dual mandate of maximum employment and price stability. Yet all three have had remarkably similar policy over the years, with balance sheets and interest rates tracking closely in direction if not magnitude. It isn’t clear changing the BoE’s process on paper would yield different policy. At any rate, watch what people do, not what they say.

MarketMinder’s View: Well by “stalls,” it means: “Factory output, which accounts for three-fourths of total industrial production, was unchanged after an upwardly revised 0.1% increase in May, Federal Reserve data out Friday showed.” Some durable goods categories declined, but growth elsewhere offset it. Not that this is a hugely strong report, but it isn’t the decline pundits insisted the war in Iran would cause as energy costs rose and supply chains kinked up. It also just extends the recent trend of modest ups and downs netting out to meh, which was fine for US stocks and GDP. Nothing here shows some massive change in stocks’ economic driver.