Daily Commentary

MarketMinder’s View: A useful corrective for those fearing the demise of the United States-Mexico-Canada Agreement (USMCA), underpinning $2 trillion in North American trade: “For starters, a missed deadline today simply means the deal will revert to annual reviews until it’s either extended for 16 more years or expires in 2036—ten years away. This will inject uncertainty into North American supply chains, likely hampering investment on the margins. But in terms of day-to-day trade among the three nations, it’ll be unnoticeable.” Which we think is a good reason why stocks seem to be taking all of this in stride. But even beyond this, President Donald Trump’s threats to withdraw ring hollow given “... he’s quietly offered USMCA-related exemptions for virtually every major tariff action he’s taken—exemptions that US importers have seized upon ...” Actions speak louder than words. Meanwhile, “There are also political and legal impediments to US withdrawal—and to fundamentally altering the deal in the current trilateral negotiations. Thus, we should expect lots of USMCA theater and a handful of marginal changes in the coming months, but not termination or even a major overhaul of the current agreement.” So despite all the sound and fury in USMCA renegotiations—or lack thereof—we think the bluster is mostly a tempest in a teapot.

MarketMinder’s View: The metric discussed here—net profit margins—helps show why valuations, including forward price-to-earnings ratios, aren’t anything to go by: “The net profit margin for companies in the S&P 500 rose to 14.8% in the first quarter, according to FactSet. This marks the highest net margin, a measure of the profit generated from every dollar of revenue, reported by the index since the data provider began tracking this metric in 2009. The previous peak of 13.2% was set just a quarter earlier. It isn’t just tech companies, either. In the first quarter, multiple sectors including financial services and industrials reported net margins above their five-year averages. ... Corporate earnings have historically been one of the biggest drivers of stock gains, and the latest earnings season has shaped up to be much better than expected.” (As the article names some specific companies as examples, please note MarketMinder doesn’t make individual security recommendations and features this for the broader theme only.) Now, the quarterly net profit margins discussed here are indeed backward-looking, but they confirm Corporate America went into the Iran War on solid ground. This is very old news to stocks, but it may help investors see the American economy doesn’t rely on Tech or AI alone—America’s private sector is broadly resilient.

MarketMinder’s View: Setting the stage: “Gallup runs an annual poll to determine America’s most popular long-term investment. In nearly two decades of polling, Americans have never picked stocks. ... In a 2026 poll, when respondents were asked to choose among six ‘best’ long-term investments, the top answer, by a wide margin, was real estate.” But hold up. While stocks seem perennially unloved, “From 1992 and 2024, the S&P [500] yielded an average return of 10.4% a year, according to Investopedia. In the same years, home prices grew by about 5.5% annually.” And that isn’t even taking into account property taxes, homeowners’ insurance, maintenance and repair. So what gives? As the article notes, compared to stocks’ short-term volatility, “A home feels like a safe investment. So do savings accounts, CDs and gold, the asset classes that topped the Gallup poll at times in the [2007 – 2009 bear market].” (Gold, we would note, is a lousy safe haven, even more volatile than stocks, while returning less long term.) Now, stocks do have the risk of short-term declines. But this is just one of many risks investors must contend with, and real estate isn’t immune. Home prices fall. Plus, what about inflation risk? And liquidity risk? Our point is, investors’ personal goals, objectives and time horizon should determine their asset allocation. For those who require long-term growth, stocks make a lot of sense. For more on stocks as investors’ best road to riches, please see “The Path to Wealth Isn’t Through Homeownership.”