Daily Commentary

MarketMinder’s View: This piece rests on a false premise: that money is pouring out of UK stocks. It doesn’t outright call this bad for returns, but the implication seems threaded throughout the article. It starts by discussing chronic equity fund net outflows, then segues into the shortcomings of recent legislation aimed at addressing them by giving the government the option to mandate pension funds invest a set portion of their assets in UK stocks or private investments. We agree mandates probably have unintended consequences, though it is worth noting the legislation was watered down heavily before passage, so this is all just theoretical for now. We also agree legislation like this is a band-aid covering the structural issues causing the long-running decline in the number of companies trading on the London exchange. Yet we think all of this is beside the point for long-term investors, as none of this has prevented UK stocks from delivering compound growth. The article leads with a lament that UK equity fund outflows hit a record in July, yet the MSCI UK IMI jumped 5.3% that month (with net dividends in USD, per FactSet) and is up 11.7% year to date (through Thursday’s close). Net fund outflows didn’t drive negative returns. Nor should they, when you remember that for every seller, there is a buyer. In an auction marketplace like the stock market, it is buyers’ eagerness to pay more that drives returns. Looks to us like there was plenty of demand to drive prices up as some folks pulled out.

MarketMinder’s View: Yes, July US retail sales dropped -0.6% m/m. That is the biggest drop since May 2025, and it missed expectations for a 0.1% rise. Yet peel the onion a bit, and it starts looking less bad. Declining sales of autos and gas drove most of the decline, with sales outside these categories down a milder -0.2% m/m. Home improvement, clothing, department stores and food service all rose, indicating plenty of discretionary spending happened. Also, one month isn’t a trend. Monthly data, especially in this series that omits the majority of spending (on services), can be noisy in the short term, and past one-off dips haven’t snowballed into sustained drops. And when the US economy does eventually enter a downswing, it will probably show more in business investment-related categories first, given this is the traditional swing factor. For now, all looks fine on that front.

MarketMinder’s View: Some nice news from the Great White North! Manufacturing sales volumes rose 1.2% m/m in June, capping overall solid Q2 growth. So solid, as it happens, that it potentially points to an upward revision in Q2 GDP. “The Bank of Canada last month projected second-quarter growth of 2.5% annualized, or a sharp rebound following two consecutive quarters of slightly negative growth. Prior to the manufacturing-data release, economists had upgraded their second-quarter forecasts amid a string of positive Canadian data to above 3%.” Canada’s rebound from its early year soft patch (which some called a “technical recession” since GDP fell two straight quarters) looks to be solidifying, and these data also show industry there seems to be moving on from tariff headaches. Businesses are adapting, as they always do eventually.