Daily Commentary

MarketMinder’s View: Entering 2026, analysts cited flagging tourism as a big economic risk for Japan. Prime Minister Sanae Takaichi had just angered Beijing with some remarks about how Japan would handle a conflict in Taiwan, and China responded by declaring Japan off limits to Chinese tourists. This raised the specter of Japanese hotels, restaurants and shops (particularly luxury shops) losing massive foot traffic and sales as Chinese folks took their custom elsewhere, starving Japan’s economy of a supposedly key input. Well, the latest data suggest that was overwrought. March tourist traffic rose 3.8% y/y even as visitors from China and the Middle East plunged. “Among visitors from East Asia, the number of tourists primarily increased from South Korea and Taiwan, the JNTO said. Southeast Asian visitors increased the most from Vietnam and Malaysia, and among tourists from the Americas and Europe, there was significant growth in visitors from the United States and the United Kingdom.” All this stuff tends to even out. Japan’s economy didn’t tank the last time China’s government discouraged tourism to Japan, and it seems it won’t this time, either.

MarketMinder’s View: This is handy as a roundup of some of the small programs developed-world governments have launched to help folks get over the hump of temporarily higher fuel and energy costs, and with its focus on debt fears, it helps show sentiment remains pretty dreary despite stocks’ return to all-time highs. But it doesn’t do enough to put those fears in context, largely because of a critical omission: scaling. It reports the size, in dollars, of various countries’ assistance plans: $1.9 billion in German temporary fuel tax cuts, $1.7 billion in Canadian fuel tax relief, $354 million in Greek fuel subsidies for low-income motorists, $590 million and $285 million for temporary fuel tax cuts in Italy and Australia, respectively, and Japan’s $10 billion in pledged support for fuel-starved Southeast Asian nations. Then it segues into the IMF’s handwringing about these programs’ effect on government debt, implying everyone is storing up trouble. Yet these figures, while big in absolute terms, pale next to all of these countries’ economies and extant debt load. Consider: Italy finished 2025 with about $3.7 trillion in public debt. Relative to this, $590 million rounds to zero percent. Germany’s fuel tax holiday bill is 0.06% of its $3.3 trillion in debt as of 2025’s end. Australia is a low-debt nation and a miniscule $285 million in added borrowing won’t change that. None of this is big enough to move the needle, even if countries have to borrow a little more to fund it. Nor will the interest on that borrowing break the bank despite the warnings here about higher long-term interest rates. Italian 10-year bond rates are below where they spent most of 2022 and 2023. We don’t recall borrowing then causing a debt crisis. You can repeat this math across all the countries mentioned. Overall, we think this false fear is a brick in stocks’ wall of worry.

MarketMinder’s View: The EU’s aggressively pro-consumer approach to mergers—particularly cross-border mergers in the bloc—has shot down many corporate marriages over the years, partly why the 27-nation conglomerate holds relatively few of the very biggest publicly traded firms. Only 1 of the top 50 MSCI All-Country World Index (ACWI) constituent firms by market capitalization is EU-domiciled—and just 9 of the top 100. (Data from FactSet.) Now Brussels, under European Commission President Ursula von der Leyen, is proposing to change this, claiming the rigidity affects the creation of pan-EU giant firms that can effectively compete on the global stage. There is likely some truth to this, and relaxing the rules could be a plus. But don’t overstate the case. For one, lingering nationalism is a reason many cross-border European mergers don’t take effect. National governments have a say and still would under the reforms. Two, there is a major concentration of Tech firms atop the market-cap ranks and on an industry basis, the EU lacks that while America, South Korea, Japan and China have much more. The EU’s chief industries happen to be value-oriented Industrials or Financials, which are often smaller. But also, size doesn’t always convey competitiveness. Some of the world’s most innovative firms in the Industrials sector are European. So while reforms like this may be a cyclical tailwind (e.g., the investment banks that broker the deals would reap big fee revenue), the idea Europe lacks “Champions” isn’t really much of a mark against it from an investor’s viewpoint.