Daily Commentary

MarketMinder’s View: This piece highlights May Chinese economic data, which were mixed overall. As the title suggests, retail sales surprised positively. “Retail sales in China grew 6.4% year-over-year in May, according to data released Monday by China’s National Bureau of Statistics. That topped the 5.1% increase in April and the 4.9% growth anticipated in a Wall Street Journal poll of economists.” A government trade-in program likely contributed to the beat, perhaps some evidence that Chinese domestic demand is more resilient than appreciated. Things on the heavy industry side weren’t as strong. “Growth in industrial production slowed to 5.8% in the first five months of the year, from 6.1% growth for the January-to-April period. Investment in buildings, factories and other fixed assets slowed to 3.7% in the January-to-May period, compared with 4.0% growth recorded in the first four months of the year.” Not great, but that is consistent with oodles of data outside China showing tariffs were a headwind for factory activity. As the article also notes, China’s long-struggling real estate sector continues to detract, though stocks are well aware of this development—so we don’t see much surprise power here, either. While the cloud of uncertainty hasn’t yet dissipated, the latest data indicate the world’s second-largest economy is holding up.

MarketMinder’s View: Earlier this year, some feared tax revenues would plummet due to big staffing cuts at the IRS (one of President Donald Trump’s Department of Government Efficiency’s initiatives). Both the US Treasury Department and IRS (along with economists and other officials) predicted a -10% decline in tax revenues. However, the latest data suggest reality wasn’t as dour as feared. “Tax revenue the IRS collected in April jumped 9.5 percent to $850 billion total, according to the Treasury Department. In May, tax revenue soared 14.7 percent over the 2024 mark, for $371 billion overall.” So not a drop but a rise. Technology likely contributed since the overwhelming majority of taxpayers today file electronically, allowing for quicker tax collection process. So, while we aren’t necessarily cheering that America’s tax burden keeps growing, better-than-appreciated results confirm reality wasn’t as dire as feared.

MarketMinder’s View: This article centers on politics, so please note MarketMinder is nonpartisan, preferring no party nor politician and assessing developments for their potential economic and/or market effects only. We also don’t make individual security recommendations, and any products or individual companies mentioned here are coincident to the broader theme we wish to highlight. We have long observed investors’ political preferences influence their portfolio decisions, which this piece details. Unsurprisingly, most investors think their political party is best for stocks while the opposing party is worst. “A Gallup poll this spring showed that Democrats who expected stocks to tumble over the next six months exceeded Republicans by 59 percentage points. Republicans expecting stocks to climb over that period topped Democrats by 47 percentage points.” The article lists several other examples of this, going all the way back to 2001. Again, this isn’t new—we have observed this phenomenon for years, and we think recommend investors ditch this mindset. Neither political party is best for stocks, as Republicans and Democrats alike have been in power during bear markets and bull markets. It isn’t about who is governing, in our view, but rather how expectations square with reality regarding policies’ size, scale and effect on businesses.