Daily Commentary

MarketMinder’s View: After Russia’s Ukraine war upended Europe’s energy supply chains, the Continent rapidly adapted, mitigating once-feared disruptions. Many now fear the Strait of Hormuz’s closure and its effects, but as Spain shows—after working out some initial teething pains with more diversified energy sources—its power infrastructure has become even more resilient. As this story relates, Spain suffered widespread blackouts last year, which many first pinned on its renewable energy adoption. While grid regulation may be harder to manage given renewables’ inconsistent power generation, the added resources can also help—with more experience managing them. “One of the reasons voltage oscillated outside normal bounds this time last year was because Spain’s grid operator has traditionally limited the capacity for wind and solar generation to contribute to voltage control. ... this has very recently changed, with renewable technologies providing voltage compensation services since April.” So with better knowledge on how to handle power surges, “Spain added 13.8 gigawatts of new solar in 2025, compared with 12.3 gigawatts in 2024,” leaving it “relatively protected [against spiking gas prices] compared with other countries because of its existing investment in renewable energy.” The lesson for investors here: Incoming freight trains of fear (energy supply disruptions from war, tariffs, etc.) seldom prove catastrophic because when everyone sees the problem looming, they take steps to soften the blow if not work around it altogether. Reality proves better than feared, and markets move on.

MarketMinder’s View: Since today’s orders are tomorrow’s production, March’s revelation that “core capital goods orders, a proxy for investment in equipment that excludes aircraft and military hardware, jumped 3.3% after an upwardly revised 1.6% advance in February” is a welcome sign business investment continues expanding. And since capital expenditures are the economy’s main swing factor, we see this as further confirmation a downturn isn’t close. The article touches on America’s trade picture in March, too, focusing on the “deficit” (more imports than exports), but that misrepresents the health of trade. While everyone agrees more exports are good, more imports are great, too, because it signals healthy domestic demand. Per FactSet, March’s 12.9% m/m export gain was nice, but so was imports’ 19.0% surge after two months of decline. Accelerating trade (exports and imports) and capital goods orders show why stocks’ recent record new highs aren’t unearned. The bull market runs on reality exceeding expectations, and this helps show how that happened.

MarketMinder’s View: “Housing starts increased 10.8% to an annual pace of 1.5 million homes in March, the highest since December 2024, according to figures released Wednesday by the Census Bureau. That topped all estimates in a Bloomberg survey. New single-family home starts rose 9.7% to a 1.03 million annualized rate, while multifamily groundbreakings also advanced. Wednesday’s report suggests residential construction is beginning to stabilize as builders continue to offer sales incentives to lure potential buyers into the market. ... Starts increased across all four regions of the country, led by the Northeast.” As new home building is the main factor in GDP’s residential investment component, economists may be revising up their estimates a smidge for tomorrow’s Q1 release. But only a smidge, as residential investment itself is only 3% of GDP (per FactSet). So while nice to know residential construction appears to be perking up some, don’t overrate it—especially since March (and Q1) data are all water under the bridge for markets at this point.