Daily Commentary

MarketMinder’s View: As always, MarketMinder prefers no politician nor any party and assesses developments for their potential economic implications. And there are developments in Japan, where new Liberal Democratic Party (LDP) leader Sanae Takaichi’s path to becoming prime minister got clearer today as the LDP and Japan Innovation Party (JIP) made progress on a potential governing coalition. The policy talks aren’t done yet, but JIP co-leader Fumitake Fujita is placing his focus on the LDP, not a competing candidate: “He also said it would be difficult for the JIP to continue talks on working with the Constitutional Democratic Party of Japan and the Democratic Party for the People, saying it would be challenging to come to an agreement before Tuesday, when an extraordinary Diet session is set to convene.” An opposition-fielded candidate can’t win without JIP support, and the LDP’s former coalition partner, Komeito, also ruled out supporting the opposition earlier, so Takaichi is getting closer. For markets, simply knowing the prime minister should ease uncertainty, allowing the reality of gridlock to shine—fine for Japanese stocks.

MarketMinder’s View: This one is most relevant to our UK readers, but the principles apply for investors everywhere. With the UK’s 2026 Budget about six weeks away, there is nonstop speculation and rumor about potential tax hikes. One rumor making the rounds is that Chancellor of the Exchequer Rachel Reeves will try to raise revenue by reducing the tax-free lump sum pension withdrawal limit, effectively undoing a roughly 10 year-old change designed to give retirement savers more tax-friendly options. In response, some folks are scrambling to take tax-free lump sum withdrawals earlier than they had planned, lest this change go through and be retroactive. This piece, minor quibbles aside, nicely explains the downsides of letting tax change speculation—and taxes in general—drive big investment decisions. For one, no one knows what Reeves will announce, and this all could be entirely beside the point. Even if the changes do go through, taxes are just one consideration, and after-tax returns could still be worth keeping funds in the pension wrapper, invested and growing with the market over time. A lot of it depends on individuals’ long-term goals, needs and time horizon. While we understand the temptation to focus on taxes, this is a behavioral error. “As investors, we have a tendency to equate big with important. We should avoid this. Any piece of information can be judged in two ways – its strength and its weight. Confusing the two can easily force us into either over or under-reaction. … Viewing a dividend cut in the way most investors do leads to an under-reaction. In the same way, a focus on a big, but in market terms unimportant, event like a regional war (or even a Budget) might lead to an over-reaction. Strength but no weight. This is just one example of how investors tend to misjudge the significance of events. A related behavioural bias is over-emphasising the visible over the invisible, the tangible over the intangible.” Taxes are visible and tangible. But that doesn’t mean they are paramount.

MarketMinder’s View: This article reads like a conspiracy theorist’s corkboard, with a bunch of random things pinned on and connected with color-coded yarn. It exemplifies a common fallacy: correlation without causation, the presumption that because things are happening simultaneously, they must be causing one another or directly related. And when you get down to it, this is just a microwaved rehash of the old “everything bubble” fears from the 2010s. Then, as now, because a bunch of assets were up simultaneously, headlines called it a bubble. Same now, only supposedly more speculative because online gambling is involved alongside stocks—specifically AI stocks—gold and crypto. And enabled by Washington’s deregulatory push, which is supposedly pumping a lot of air into the bubble while the Fed is spiking the punch bowl (rate cuts) instead of pulling it (rate hikes). There is a lot here, much of it meandering, but here are some counterpoints. One, people have tragically gambled since the dawn of time. Online gaming simply makes more visible what was always happening at sad local horserace tracks and in back alleys. Two, mainstream stock exchanges’ tie-ups with betting platforms look more about technology and infrastructure improvements. Three, and MarketMinder doesn’t make individual security recommendations, but the Tech companies namechecked here all have solid earnings to back their investments and cash-rich balance sheets. This isn’t the dot-com era, when a legion of startups were burning through cash while operating deep in the red. Four, bubbles tend not to happen when everyone calls for them. The fear is self-deflating. True bubbles are the ones no one calls bubbles, where there is no skepticism to rein them in because irrational, euphoric investors see perma-profits in some magical new economy that can’t shrink. Five, the US has the highest policy rate in the G7, making it hard to see how the Fed is spiking the punch. We aren’t calling the market risk-free, but this fear soup seems more like bull markets’ wall of worry than a valid case for the bull market’s imminent end.