Daily Commentary

MarketMinder’s View: This discusses some recent geopolitical happenings, so please note, our interest in the story is solely with the global economic and market implications (or lack thereof). As reported here, “US President Donald Trump on Monday announced a 25% tariff on any country that does business with Iran ‘effective immediately.’ ... Although it is unclear whether Trump’s new tariff would apply only to goods, include services like banking and shipping, target indirect business ties or set any minimum thresholds for ‘doing business’ with Iran, the new tariff could bring significant risks for China.” In a vacuum, we agree a sudden 25% levy sounds like a market negative—it could create uncertainty, imperil America’s trade truce with China and rekindle escalating tariff threats that hit global stocks in the immediate aftermath of last year’s Liberation Day. However, we suggest investors hold their horses. For one, despite presumably being “effective immediately,” the administration has yet to issue an official statement—nobody knows what “doing business” actually means, which countries are affected and the legal authority under which the tariff would operate. Beyond that, though, like the article notes, “As one of the US’s largest export markets, China retains considerable leverage in negotiations with Washington, especially for agriculture and manufacturing,” which it has already used to lower seemingly steep trade barriers with America. Then, too, how would this newly threatened levy be enforced? “China uses so-called teapot refineries—non-state-owned facilities—to process Iranian oil and buys via front companies based in third countries.” So, while we don’t dismiss the risk of renewed trade tensions, just like before, we suggest investors take a wait-and-see approach. Reacting to a headline fear that ends up being a nothingburger would be a mistake, in our view.

MarketMinder’s View: We don’t think trade surpluses—when a nation exports more than it imports—are very meaningful. While most view exports positively, the presumption is that imports are a negative. But we find that isn’t true—rising imports reflect growing domestic demand, which is a positive. Through that lens, China’s latest trade figures are a boon to the global economy: December exports rose 6.6% y/y and imports by 5.7%. That indicates global demand for Chinese products was strong and suggests domestic demand within the country remains resilient as well. But how could this be, with all the trade friction between China and America last year? Here is what the breakdown reveals: “Exports to the U.S. dropped 20% in 2025. Meanwhile, exports to a bloc of Southeast Asian countries jumped 13%, while those to the European Union rose 8.4%, to Latin America grew 7.4% and to Africa surged 26%.” Bilateral tariffs and other trade barriers ended up rerouting trade. Though China’s US exports dropped, much of that went to Southeast Asia and Latin America (perhaps some for reexport to the US). China also strengthened trade ties with the rest of the world, helping boost shipments more. Trade reality proved better than expected last year, and we expect that to continue in 2026. As the article notes, “Global demand should remain resilient, and Chinese manufacturers have proved their competitiveness despite tariffs. A trade truce between the U.S. and China has created tentative stability in tariff policy.” That last bit is worth watching for any changes, as tariffs can present obstacles to trade and stir uncertainty. But as 2025 showed, there are plenty of workarounds that can blunt, if not wholly offset, the worst outcomes.

MarketMinder’s View: The forward-looking market implications of November’s shutdown-delayed retail sales report are negligible. Besides being two months old, the information here provides a narrow picture of consumer demand. “Since the retail data aren’t adjusted for inflation, a gain in spending could reflect the impact of higher prices rather than stronger demand. Weaker figures could also be reflective of steep holiday discounts. The data largely reflect purchases of goods, which comprise roughly a third of overall household spending. The figures may have gotten an extra boost from federal workers, who recouped lost wages from the government shutdown.” But the release does confirm shopping held up fine last quarter. “The value of retail purchases, not adjusted for inflation, increased 0.6% after a downwardly revised 0.1% drop in October, Commerce Department data showed Wednesday. Excluding cars, sales climbed 0.5%. ... Ten out of 13 categories posted increases, including sporting goods and hobby stores as well as building materials retailers and clothing outlets. Motor vehicle sales bounced back after the expiration of federal tax incentives on electric cars restrained sales in the prior month. Higher receipts at gasoline stations also contributed to the overall gain.” Again, November data are ancient news to forward-looking stocks, but for investors, this is additional evidence the US economy was on solid ground late last year.