This Week in Review | Market Volatility, Tariffs, SpaceX

Transcript

Hello and welcome to This Week in Review.

This weekly segment is designed to highlight a few important developments you may have missed this week, what they may mean for markets, and most importantly, the potential impact for investors. To stay up to date with our latest market insights, subscribe to our YouTube channel or visit FisherInvestments.com. Now, let's review what happened this week.

First, recent market volatility.

Volatility returned to markets this week, with stocks and cryptocurrencies falling while Treasury yields and oil prices rose. Tech and tech-like stocks were hit the hardest, with headlines continuing to focus on escalating geopolitical tensions and AI bubble fears. Importantly, despite this week's drop, stocks remained nicely positive for the year, while treasuries continued to trade within the same narrow range they had been trading in for the last few years. Even oil's much feared rise above $100 per barrel is below highs seen in the spring, with futures contracts still expecting prices to fall later this year. While we empathize that geopolitical conflicts carry real costs to those directly affected, for investors, we viewed this week's movements as part of the usual noise of bull markets. The specific details may be new, but the overall fears are old. Stocks have been digesting Middle East tensions and AI fears for many months now. Of course, we continue to monitor risks as things can always evolve in unexpected ways. But, for now, we believe markets remain well-positioned to move on past today's fears and end the year nicely positive.

Next, an update on tariffs.

On Tuesday, President Trump announced a new 50% US tariff on Canadian goods across various sectors, though goods covered under the USMCA —or United States-Mexico-Canada agreement—are expected to remain exempt. Additionally, on Thursday, President Trump announced new sweeping tariffs meant to replace a set of tariffs set to expire today. While the moves add another layer of uncertainty, markets have spent much of the past year navigating tariff headlines just like these. That familiarity likely limits how much surprise these announcements carry. Looking at the details, Thursday's tariffs mostly maintain the current status quo, while the proposed tariffs on Canada could affect a meaningful share of Canadian exports to the US. The negotiations remain ongoing and the measures are not expected to take effect until August, so we'd encourage you to view this as part of a broader negotiating strategy, not a foregone conclusion. There's still room for revisions or delays before anything is finalized. For investors, it's important to remember what markets have already digested. Last year, blanket tariff announcements helped fuel a large market correction as investors were caught off guard and volatility spiked. Many more tariff announcements followed, but as time went on, markets saw smaller and smaller swings on subsequent tariff news. By February, when the Supreme Court overturned most of last year's tariffs, markets reacted with far more normal, everyday volatility. This week, volatility has been heightened, but as noted earlier, there are several other fears markets are weighing today. beyond just tariffs. For globally diversified investors, the direct impact is likely limited. We continue to believe the global economy is positioned to expand, and the broader bull market can persist, even with ongoing tariff uncertainty and geopolitical headlines in the mix.

Finally, SpaceX.

On Tuesday, SpaceX announced it will report earnings the first week of August. That report matters on its own, but it also sets the stage for another key event that follows shortly after: the expiration of the lockup period for the first tranche of insider shareholders. Recall when a company goes public, it typically puts an agreement in place that prevents executives, employees and early investors from selling their shares for a set period of time after the IPO. Those restrictions expire on a rolling basis over many months, so August 6th will represent only the first major batch. Once those restrictions expire, millions of additional shares can become eligible for trading. While insiders aren't obligated to sell, the increased share supply can create short term volatility. That possibility arrives after another widely anticipated catalyst fell short. Many expected SpaceX's rapid inclusion into the Nasdaq 100 and other major indexes to boost its share price as index funds stepped in to buy shares. Instead, the stock has fallen roughly 20% since joining the index and is down roughly 15% from its IPO price, illustrating that forced buying from passive funds doesn't automatically outweigh other market forces. Elevated expectations, valuation concerns and the prospect of additional share supply can all negatively weigh on a stock's price. For investors, this reinforces a lesson we've highlighted before. The excitement surrounding an IPO doesn't always translate into immediate returns. Newly public companies frequently experience heightened volatility as the initial enthusiasm fades and markets form a clearer picture of the underlying business. Rather than rushing to buy the latest high-profile debut, history suggests there's often a better buying opportunity in the future for patient investors willing to wait for these post-IPO dynamics to play out.

That's it for this week.

Thanks for tuning in to This Week in Review. If you're looking for more insights, then don't miss our other series Three Things You Need to Know This Week, released every Monday. You can also visit FisherInvestments.com any time for our latest thoughts on markets. Thanks again for joining, and don't forget to hit Like and Subscribe.