Daily Commentary

MarketMinder’s View: Central banker speculation isn’t just a US (or even Western) pastime. In Japan, Prime Minister Sanae Takaichi’s government nominated two academics considered to be “reflationists” (i.e., policymakers who favor fiscal and monetary policy to boost demand)—supposedly harkening back to the late Shinzo Abe’s “Abenomics” economic program. Observers presume these nominees are against the Bank of Japan’s gradual interest rate hikes and will favor an easing approach. The evidence: One nominee talked about proactive fiscal policy at a past Liberal Democratic Party meeting while the other gave a lecture in 2023 extolling the benefits of a weak yen. But just as with the Fed, Bank of England and European Central Bank, whatever you think of these concepts or theories, don’t treat what people have said in the past as a roadmap for how they will act when they become a central banker. We reckon Japanese central bankers take “Martin’s little pill” as well, seemingly forgetting their prior views. Moreover, should the appointees receive the Diet’s approval, they will be two of nine BoJ Policy Board members. Like the Fed, the BoJ determines monetary policy via committee, so even if these two appointees behave as experts assume they will, they won’t be able to determine policy on their own. And public pressure has been pretty negative toward Japan’s recent trend of rising prices, which could give these “reflationists” pause, to say nothing of the others on the board.

MarketMinder’s View: The European Commission’s monthly eurozone economic confidence gauge weakened this month, as the headline index dipped from January’s 99.3 to 98.3 (disappointing the consensus, which expected a rise to 99.8). The subcomponents were mixed: While services and industrial providers’ confidence dipped, consumer and retailers’ sentiment improved (though both readings remained negative). The economist interviewed here said January’s relatively upbeat results made February’s disappointment less of a concern, anticipating economic sentiment to improve over the course of 2026. We agree moods are warming across the pond, though sentiment is coming off a much lower base compared to the US (where fear has returned to a degree). Lower expectations toward the eurozone are a big reason why we think non-US markets are likely to lead this year—more wall of worry to climb.

MarketMinder’s View: When a seemingly negative development looms (e.g., oil production disruption due to regional conflict), businesses don’t sit idly, twiddling their thumbs. They act preemptively to minimize the fallout. With concerns of US military action in the Middle East rising lately, Brent crude prices have ticked up slightly, from a low of $59.93 in mid-December to $70.91 today, per FactSet data. Now “Saudi Arabia is on course to export the most crude in almost three years this month, while Iran has been rapidly filling up tankers in recent days. Combined flows from Iraq, Kuwait and the United Arab Emirates are set to climb almost 600,000 barrels a day from the same period in January, Vortexa Ltd. data show.” Producers in this historically volatile region understand conflict—while unpredictable—is frequent and know how to deal with it. The article points out Saudi Arabia also ramped up production before a US attack on Iran last year to ensure supply remained steady. Then, “Volumes fell in the weeks that followed when it became apparent there wouldn’t be widespread disruption.” And prices never soared or spiked to massively high heights. Fisher Investments founder and Executive Chairman Ken Fisher would call this “Anticipation is mitigation” in action, and it is one reason why global oil supply doesn’t necessarily plummet even if fighting breaks out and causes short-term disruptions.