Daily Commentary

MarketMinder’s View: Judging by the press coverage the last several weeks, you might think AI is the only thing driving the global economy—and markets—but as helpfully pointed out here, that isn’t quite right. (Since this article mentions specific companies as examples, please note MarketMinder doesn’t make individual security recommendations and our discussion relates to the broader theme only.) “When you zoom out, consternation in some AI‑exposed sectors is masked by rotation into others. The main U.S. stock indexes are actually little changed for the year to date, and global stocks are doing better and are up about 4%. Pull back further to view the U.S. macro economy, and the hundreds of billions of dollars in AI-related capex are a huge factor. But that’s not the only one—and when you zoom out further still, the global economic picture shows AI is still only one part of what’s happening across industry worldwide.” The piece further details how the global industrial sector has resumed growing—an overlooked positive—and consumer spending remains resilient. Now, it attributes some of this under-the-radar resilience to rate cuts and government spending, which we think undersells global private sectors’ firm footing. Around the world, stimulus is overrated—just look at the UK. But dimmer outlooks abroad are evidence of cooler sentiment, a bullish factor to us. Consider, “... the AI capex story is the cherry on top of a broader global industrial sector that’s already growing again ... As it stands, AI is not the only driver of global activity—there’s still plenty of life in the old economy yet.” This suggests to us there is lots more left in the tank for US and non-US value stocks alike.

MarketMinder’s View: Determining where we are in the sentiment cycle is more art than science given how fickle human emotion is, and the answer isn’t always clear-cut. This article leads with how US stocks’ flattish year-to-date returns have “pushed the number of bears in a closely watched survey of investor sentiment past the bullish group for the first time since November.” But it also lays out how “equity bulls ... point to a broadening of the rally, as investors continue to move from Big Tech into riskier smaller stocks and emerging markets.” Sounds like a mixed bag to us, as further polls and surveys cited here suggest. For investors, note that sentiment measures are, at best, coincident indicators and aren’t predictive for stocks. It isn’t surprising moods are mellower after four months of “relentless churn.” Would optimism have cooled if markets were continually making new highs? We doubt it. We also broadly agree with the equity strategists quoted here: Rising bearishness is nothing to fear. As Sir John Templeton said: “Bull markets are born on pessimism, grow on skepticism, mature on optimism, and die on euphoria.” Sentiment that retrenches from warming optimism to something more fearful is no bad thing—it rebuilds some of the bull market’s wall of worry. Debates about it underscore how stocks are far from euphoric, which absent a wallop (which we don’t see), is reason to remain bullish. Lastly, we would be remiss not to point out that Q4 earnings—two months in the rearview—aren’t “concrete reasons for optimism.” Stocks always look roughly 3 to 30 months forward. Never backward.

MarketMinder’s View: More evidence the “sell America” trade is off base: “Treasury International Capital figures published last week showed that net foreign purchases of U.S. stocks and bonds in calendar year 2025 totaled a record $1.55 trillion. That was up 30% from the year before. Almost all of that came from private sector investors who more than doubled their purchases of equities from the year before to more than $650 billion ... Foreign private sector investors also bought over $440 billion of U.S. Treasury notes and bonds last year, dwarfing the modest net sales by foreign official institutions. That was a bit less than in 2024, but still a hefty amount that punctures the argument that the world is unwilling to lend to Uncle Sam.” Now, it is true American stocks are “lagging the major European, UK and Japanese indices,” but that doesn’t mean they are doing poorly (the S&P 500 Total Return Index rose nearly 18% last year, per FactSet). Rather, non-US stocks have a higher wall of worry to climb given more abundant fear and relatively cooler expectations. There just isn’t much evidence investors are unloading American assets: “For the rest of the world, Wall Street’s liquidity, historical returns, scale, dynamism and relative ‘safety’ still make it an attractive place to be.”