Daily Commentary

MarketMinder’s View: If the headline didn’t give it away, there are lots of politics here, so bear in mind MarketMinder is politically agnostic. We prefer no politician nor any party and assess developments for their potential market implications only. That mindset is critical for this article, which posits that investors are living in some new wild west where White House proposals and actions shift stocks on a dime—sometimes companies, sometimes sectors, sometimes the broad market. The article shows its work, citing numerous examples (e.g., military actions in Venezuela affecting Energy stocks, chatter about credit card interest rate caps hitting Financials), but it makes a critical error: It doesn’t look back to prior administrations to see if this is truly new. Do so, and you will find it isn’t. It is totally, completely normal for presidents from both parties to spout policy ideas in public and for markets to react quickly, pricing in the projected consequences (good or bad) if those proposals became actual rules. Presidents Obama, Biden, Bush, you name it—all posed ideas that had at least temporary affects on sentiment and returns. More broadly, “buy the rumor, sell the news” is a maxim for a reason: It refers to markets pre-pricing developments in the “talk” stage, then doing something different than everyone expects in the “action” stage. Investors’ task has always been to sift the news from the noise and discern between short-term sentiment moves and longer, actionable trends. To illustrate the importance of this, consider: Just last year, all the hype around the Trump administration spurring a boom in crypto and fossil fuels led to … crypto declining on the year and fossil fuel stocks lagging global markets while renewables led. Nothing has changed. We live in the same old normal. It is still an error to presume first-order effects form political talk are bound to manifest in market outcomes.

MarketMinder’s View: Please note, MarketMinder isn’t for or against any specific policy—rather, we highlight this development to discuss a broader theme. (This article also mentions a publicly traded crypto exchange, and as a reminder, MarketMinder doesn’t make individual security recommendations.) As reported here, the Senate Banking Committee put its discussion of an anticipated crypto market-structure bill on ice for now, as some industry players don’t support the latest version. “The market-structure bill, designed to improve the legitimacy of digital assets, was supposed to go through markup — a process involving discussion and amendments — on Thursday. On Wednesday, Brian Armstrong, chief executive officer of Coinbase, said on social network X that he was pulling support for the latest text of the bill due to ‘too many issues.’ … The delay could potentially derail the legislation, which may be harder to pass this year ahead of midterm elections.” The issue appears to be payment of interest-like “rewards” by crypto-exchanges to holders of chiefly stablecoins (those pegged to a currency and designed to act as purely a payment mechanism). Banks cite the high yields paid as a risk to Main Street financial institutions, but crypto firms insist on their inclusion, with the lobbying generating a standoff. But above the specifics, take this delay as yet another reminder not to overstate the supposed positives (or negatives) any new administration may bring. Talk is cheap, and what one promises on the campaign trail can fall flat once reality comes into play. If your bullishness on crypto (or any asset class) depends on the hope of potentially “friendly” legislation, you must also be aware those changes (even of the bipartisan variety) aren’t a given. Besides, the whole thesis that “legitimizing” crypto via legislation would be bullish for coins is a little odd, considering much of the point was decentralization and creating a payment system outside the government’s reach. For more on crypto in 2025, please see our November commentary, “Bitcoin’s Wild Ride to Nowhere.”

MarketMinder’s View: Please note, MarketMinder is nonpartisan, preferring no politician or party over another. Our discussion of politics centers on the economic and market implications only. With Japanese Prime Minister Sanae Takaichi reportedly set to dissolve the lower house of parliament and call a snap election (likely in early February), the opposition is mobilizing. The Constitutional Democratic Party of Japan (CDPJ) and Komeito (which has historically had strong ties with Takaichi’s Liberal Democratic Party) plan to cooperate in the election by forming a new, currently unnamed party. “CDPJ and Komeito members in the lower house will leave their parties and join the new party. Such procedures will be conducted next week, [CDPJ President Yoshihiko] Noda said. [Komeito leader Tetsuo] Saito said Komeito agreed to withdraw from races in the single-seat constituency segment of the lower house election, including the four constituencies currently held by Saito and other Komeito lawmakers, once a new party is formed.” This development is noteworthy since voters choose their local candidate (not the party leader), making party affiliation a critical consideration. Consolidating the number of choices could make it easier for the opposition to win votes—important to note, as part of the reason Takaichi seems set on a vote so soon is to avoid giving the opposition time to organize and campaign. But as the conclusion also notes, establishing a new party in a short campaign season is a tall order. Logistically, some voters may not know which candidate their vote supports! So Japan does face some short-term political uncertainty here, but because the election will likely occur in weeks rather than months, those unknowns should dissipate quickly. For more, see yesterday’s commentary, “Sanae’s Snap: Elections Incoming in Japan.”