Daily Commentary

MarketMinder’s View: German industrial production topped expectations in May, which this piece ties to companies’ frontrunning tariffs. “Output increased 1.2% from April, the statistics office said Monday. Economists had predicted a 0.2% dip, according to the median estimate in a Bloomberg survey. Car, pharmaceuticals and energy production all rose.” The article suggests May’s rise reflects importers of German goods cranking up orders before Germany’s trade relationship with the US becomes “more complicated.” Fair enough—add German industrial production to the pile of data hinting at tariff frontrunning. That development lacks surprise power at this point. Rather, for investors, more interesting to us is the reaction about what this means for the German economy going forward. In our view, it speaks volumes about sentiment toward Germany. Namely, the article meets better-than-expected growth in Germany’s much-maligned industrial sector with skepticism—highlighted by the Bundesbank’s gloomy estimates for 2025 and 2026 (worst-case scenarios point to further GDP contractions). That suggests sentiment toward Europe’s biggest economy remains low—indicating reality has a low threshold to produce positive surprise.

MarketMinder’s View: Some politics at play here, so a friendly reminder that MarketMinder is nonpartisan. We assess political developments solely for their potential market/economic effects only. With President Donald Trump’s constant criticisms of Fed Chair Jerome Powell garnering lots of attention lately, we found this piece mixed. On the positive side, the titular statement is mostly correct. For one, the Fed chair is just one of Federal Open Market Committee’s (FOMC’s) 12 voting members, and: “The amount of control Trump has over who gets on to the FOMC is limited. The committee has seven Fed governors who serve 14-year terms. Those governors are appointed by the president and confirmed by the Senate. The other five members are presidents of regional Federal Reserve banks, who are selected within the Federal Reserve system.” Moreover, today’s divided Senate must confirm Trump’s appointment, which isn’t guaranteed—see the body’s decision not to confirm Judy Shelton in 2019 for more. Our biggest disagreement here? The article overrates the Fed’s influence, claiming rate cuts will boost the economy and stocks. But markets have disproven this time and again—the Fed funds rate is only one factor among many influencing economic growth. Rate cuts are probably a fine thing in the current environment, but don’t put too much weight on Fed policy, regardless of who decides it.

MarketMinder’s View: In a flashback to the pandemic-era retail trading craze, this piece suggests speculative buying of unprofitable companies is underpinning markets’ recent rebound to new highs (it also mentions several publicly traded companies along the way, so please note MarketMinder doesn’t make individual security recommendations). The proof? Some unprofitable companies have had hot returns since the low. Which is a fine enough observation, but that which gets hammered the hardest on the way down tends to benefit disproportionately on the way up, and these case studies appear to be no different. But cherry picking performance from the market’s low three months ago tells you nothing. Longer-term, the story looks much different. Mostly, we see this piece as an example of dreary sentiment. When a handful of large Tech firms were allegedly solely responsible for stocks’ returns, people groused about those giants masking weakness elsewhere. It wasn’t true—market breadth was overall fine—but that was the zeitgeist. Now people are noticing a broad rally and that is somehow bad too? Trying to have it both ways is a time-honored hallmark of negative sentiment. That it reigns today tells us stocks likely have a big wall of worry to climb despite the alleged euphoria that may or may not lurk in a small handful of speculative plays.