Daily Commentary

MarketMinder’s View: Considering “buffer” ETFs (exchange-traded funds that provide limited downside protection while capping upside)? A few tips: First, keep in mind there is no such thing as a free lunch, as the risk you take is commensurate with its return. Second, look at it from the other side—what is in it for the provider (i.e., what is their compensation)? Last, but not least: Is it likely to meet your investment objectives? Buffer ETFs, as the piece explains, employ an options strategy that limits your downside up to a specified threshold (e.g., if the market goes down -15%, a 10% buffer ETF would shield you from the first -10%—your return would be -5%). The cost of that limited downside protection is your upside potential. Beyond a cap to the positive side, you make nothing. Then, for conveniently packaging this “service” for you, the ETF charges a fee, which can be, “well above the average expense ratio for typical ETFs.” The article compares some buffer ETFs against an otherwise equivalent 50/50 stock-bond portfolio over the last five years and concludes: “The average buffer ETF—regardless of the buffer level—performed in line with a balanced portfolio on a risk-adjusted basis ... and could be a good holding for an investor looking to hedge against market losses—but only if your buffer ETF provider is charging an average fee.” While we don’t make individual security recommendations, we see some big problems with this! Does a 50/50 asset allocation even match your financial goals, needs and time horizon? Furthermore, stocks are usually up three-quarters of the time, and the frequency goes up the longer your time horizon—which is likely more than five years if you are near retirement. Buying expensive hedges year in and year out is probably counterproductive for most investors, especially when their benefits are so limited. Negative volatility isn’t comfortable, but it is typically temporary (though bear markets can be long). Think of it as the price to pay for stocks’ long-term returns. Then weigh that against the cost of short-term certainty—much lower long-term returns—and the tradeoff makes little sense to us. For more, please see our March commentary, “Why ‘Buffer’ ETFs Aren’t What They Are Cracked Up to Be.”

MarketMinder’s View: To address the titular point, this article rounds up evidence worldwide. “According to the latest data from the UN’s trade and development body, UNCTAD, in 2025 the value of global trade likely crossed $35 trillion for the first time in history. That’s 7% more than the previous year. The White House can tax trade, but it can’t shut it down. Technology, markets, and human ingenuity will stop that from happening.” Moreover, the piece points out how tariffs don’t directly hit many services, a sector that comprises the majority of economic output in most developed nations. “The global economy is dematerializing much faster than economic nationalists can legislate. You can stop washing machines or steel ingots at your ports, but it’s much harder to stop your companies from buying cloud computing contracts or chip designs from abroad.” As the article also notes, for goods, restricting supply can increase the price, increasing the value of goods traded. That alongside nations building trade relationships with new partners also contributed to better-than-expected global trade outcomes. “That’s why, even though South Korea struggled to deal with Trump’s tariff and investment demands, its exports may have simultaneously crossed $700 billion for the first time. Taiwan estimates its trade grew at 7.37% in 2025, faster than for 15 years. Those predicting the imminent death of trade clearly forgot about services, technology, and the strange, chaotic mathematics of value addition. But the biggest thing they failed to account for is people. Entrepreneurs find a way to make money, and producers find a way to sell their goods. ... The search for resilient supply chains is giving way to the hunt for reliable markets. As UNCTAD pointed out, South-South trade grew quicker than the global average, while intra-regional trade in East Asia rose 10% on last year’s figures.” Global trade is more resilient than many think, which global markets recognized—and that better-than-appreciated reality benefited non-US nations more, since tariffs hurt the imposer more than its targets. For more from a sector perspective, please see today’s commentary, “2025 by Sector.”

MarketMinder’s View: Please note, MarketMinder is nonpartisan, preferring no politician nor any party, as we evaluate political developments solely for potential market implications. In this case, what sway is President Donald Trump likely to hold over monetary policy in the coming years after his likely appointment of a new Fed head in May? “Whoever gets the job will have enormous discretion over setting the contours of the policy debate inside the Fed, as well as determining staffing priorities and personnel decisions. But the next chair will be influential only so far as he can drum up support from other officials. Pushing for more aggressive cuts than what the economy is calling for, for example, is likely to face significant opposition from the current cast of policymakers. But that pushback could wane if there is significant turnover among the top ranks because the president is able to remove Fed officials at his discretion.” So who the next Fed head will be is something to watch, but don’t overrate it—focus on their actual decisions. Policy is more important for markets than personality—and prospective Fed members often act differently once in office—see “Martin’s little pill” (named after 1951 – 1970 Fed head McChesney Martin), which seemingly makes them forget everything they ever knew before. Then too, monetary policy works at a long and variable lag, with no preset effect on the economy or markets. (Though that doesn’t mean monetary mistakes can’t happen—see 2020’s money supply surge, the primary driver of 2022’s price spike, with any questions.) For more on why the next Fed head—or its vaunted “independence”—is nothing to fret, please see Todd Bliman’s July column, “‘Independent’ Shouldn’t Mean ‘Beyond Criticism.’”