Daily Commentary

MarketMinder’s View: This touches on politics and mentions a few individual stocks, so please keep in mind MarketMinder favors no politician nor any political party, assessing developments solely for their potential economic or market effects. And we don’t make individual security recommendations. In the course of documenting a congressperson’s recent push for more steel tariffs and government backing for the steel industry, this article recounts a little-known and illuminating history: Steel tariffs aren’t new, never worked and actually undercut the industry itself, to a great degree. This article walks through that in some depth, noting importantly that “The policies discouraged quality improvements and led to overinvestment and inflated labor contracts, merely postponing the necessary adjustments.” And of course they would postpone investment. Most of the tariffs in question had expirations, leading to mass uncertainty. This is a side effect of tariffs too many gloss over: If an industry requires government “protection” to operate profitably, fear that the protection will go away will always be an overhang. As this notes, “Sixty years on, the scoreboard is unambiguous. Domestic steel production was lower in 2024 than in 2017, the year before President Trump imposed major ‘national security’ tariffs on steel imports. Capacity utilization was lower in 2024 than in 2015, and employment was lower too.” All in all, with tariffs back in the news, we think underreported effects like these are worth revisiting.

MarketMinder’s View: This is a measured take on July’s UK retail sales drop, showing why one month isn’t necessarily a trend and why retail sales may not show the full economy’s health. Sales volumes fell -0.5% m/m, reversing June’s downwardly revised 0.7% rise (which followed May’s 1.3% jump). The major heatwave, not weak consumer fundamentals, is getting the blame, which sounds right to us: “Non-food stores took the biggest tumble, falling 1.3%, on the back of a drop in clothes shopping, after retailers brought forward cut-price sales into June while heatwaves in July resulted in more people staying home than hitting the high street. … Demand for furniture also took a dive, with fewer households looking to change decor during the extreme heat, while department stores suffered because of a drop in available stock. Some retailers had warned of lengthier delivery times during recent heatwaves.” Meanwhile, because UK retail sales don’t count pubs and restaurants, a potential major positive is omitted: “The British Beer & Pub Association said last month that late opening hours and England’s progress to the semi-finals gave a big boost to the industry, with pubs pouring an extra 30m pints than normal over the course of the tournament. That produced an extra £150m in added sales for its members.” This will show up in monthly and quarterly GDP, which is a reminder that retail sales focus only on physical goods, a small share of total household spending.

MarketMinder’s View: Here is a friendly, detailed reminder to working-age folks to see whether all their IRA and 401(k) ducks are in a row. Diligent saving and generous employer matches have helped folks build big 401(k)s. Great! But for folks whose savings are all in traditional tax-deferred 401(k)s and IRAs, this can present some tax headaches in retirement. “Here’s a simplified example. John and Mary, who are in their mid-70s, have traditional IRA assets of $3.5 million and total income of $260,000. That includes $140,000 of required withdrawals that they don’t need all of. As a result, they owe higher Medicare income-based Irmaa premiums; they won’t get $12,000 of senior deductions enacted last year; and they’ll owe the 3.8% surtax on part of their investment income, among other things. This will continue. If this couple had more savings that didn’t require withdrawals—such as Roth 401(k)s and IRAs or taxable accounts—they would have more flexibility and perhaps lower taxes.” If this could be you, you might find it makes sense to save more in a traditional brokerage account. You don’t get the tax deferral, but the capital gains tax rates you will pay will likely be lower than ordinary income rates. Another option: If you estimate your eventual 401(k) and IRA withdrawals will face higher income tax rates than your current top marginal rate, saving more in Roth 401(k)s and Roth IRAs perhaps makes sense (though, as the article notes, this is seldom likely for people in their peak earning years). What is right for you will depend on your unique situation and needs, but checking in is always a good idea.