Daily Commentary

MarketMinder’s View: As data nerds, we enjoy a thorough discussion about new economic measures and information collection strategies as much as the next market commentary website. This article focuses on various AI-related metrics in development, and as relayed here, the experts are having a tough go at it. “Researchers can’t even agree on basic questions like how many companies are using A.I. or which workers are most vulnerable to the disruptions it could cause. The conflicting signals partly reflect the challenge of detecting economic shifts in real time. Government statistics are inherently backward looking, and they are better at measuring broad trends than developments in specific sectors or regions.” As one outfit highlighted here notes, both government and private data are muddy—a firm may have an AI chat subscription, but how does that translate into company-wide productivity gains (if it does at all)? That doesn’t mean it isn’t worth trying to measure AI’s effects, but as the concluding paragraphs here note, AI is just one component of the economy to consider—other variables, from monetary policy to other industry trends, matter, too. For more, see Elisabeth Dellinger’s 2023 commentary, “The Long-Term Perspective Lacking in the Recent AI Craze.”

MarketMinder’s View: Under new Fed head Kevin Warsh, many analysts worry a Fed that talks less means more market volatility since investors won’t have official monetary policy clues. The central misperception in this is that the Fed’s “forward guidance” actually reduced uncertainty and volatility. It didn’t, folks. Former Fed head Ben Bernanke adopted the approach first, yet the guidance about tapering the Fed’s quantitative easing program in 2013 caused a selloff—and the Fed reversed course. His successor, Janet Yellen, guided for hikes when unemployment fell below 6.5% “or that kind of thing” yet eschewed them long after that mark was met, triggering needless questions and uncertainty. Warsh’s predecessor, Jerome Powell, downplayed rate hikes in 2021 and early 2022 before steep hikes in mid-2022, which also surprised markets. The underlying fallacy here, in our view, is that the Fed or any other central bank has special insight into the economy. But central bankers’ forecasting prowess is vastly overrated (so the “dot plot” of Fed folks’ target rate forecasts also often proves wrong), and their actions usually follow the market. Now, we won’t predict whether the Warsh Fed will be stingier with its word count than its predecessors for long—central bankers’ actions are unpredictable—but less prose to pore over and fewer Fed forecasts to forget sounds like a benefit to us. For more on the Fed, see yesterday’s commentary, “Declaring Fed Independence Fears False.”

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.”