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: Please note, MarketMinder is nonpartisan and doesn’t prefer one politician or political party over another. Our analysis focuses solely on politics’ economic and market effects, and in this case, our interest is with a broader theme: the issues with polling. As this piece and others have pointed out, the election results from two recent Democratic primaries (for governor in Wisconsin and for a Senate seat in Michigan) have diverged bigly from polls—in the case of the Democratic gubernatorial primary in Wisconsin, a candidate with a 22-point polling deficit won the race. Polling misses aren’t new—remember how national polls didn’t reveal which presidential candidate had an Electoral College advantage in 2016?—and we think investors benefit from keeping a few nuances in mind, especially as midterm campaigning heats up. Besides candidates’ popularity (or lack thereof) outside their most ardent supporters, polling itself faces a unique set of challenges—especially when it comes to primaries. “With randomised poll response rates in the low single digits, calling people is often prohibitively expensive and time-consuming, so most pollsters increasingly rely on online, typically opt-in, methods to reach people. These are cheaper, but they come at a cost. The type of person who responds to an online poll is often more politically engaged than the average citizen. With the proliferation of large language models, they can also be bots. … As a result, pollsters have to estimate how many people will show up on election day and reweight their answers based on their assumptions. This is especially hard to do in primary elections since the traditional model of a polarised Democrat-Republican split does not hold.” We don’t envy pollsters’ position, as trying to predict whether the youth will turn out or how voters will respond (or not) to an unexpected controversy is a tall order. That is perhaps doubly true in a race like Wisconsin’s, where the field was split among multiple candidates until days before the vote, when dropouts (and Crowley’s re-entrance) narrowed the field. While we aren’t advocating for completely ignoring polls since they are information that helps set consensus expectations, investors should keep their limitations in mind and avoid extrapolating any one local vote into a national trend. Reality is often more complex than headlines portray it, which is worth keeping in mind with November’s midterms looming. Lastly, we would note that these polls got heaps of attention because people were focused on candidates’ personalities and ideologies. Markets generally set these things aside, focusing simply on policies and whether gridlock keeps radical change at bay regardless of which party pushes it. Midterms typically increase bullish gridlock, and we doubt this time is different.