Daily Commentary

MarketMinder’s View: If the headline didn’t give it away, there are lots of politics here, so bear in mind MarketMinder is politically agnostic. We prefer no politician nor any party and assess developments for their potential market implications only. That mindset is critical for this article, which posits that investors are living in some new wild west where White House proposals and actions shift stocks on a dime—sometimes companies, sometimes sectors, sometimes the broad market. The article shows its work, citing numerous examples (e.g., military actions in Venezuela affecting Energy stocks, chatter about credit card interest rate caps hitting Financials), but it makes a critical error: It doesn’t look back to prior administrations to see if this is truly new. Do so, and you will find it isn’t. It is totally, completely normal for presidents from both parties to spout policy ideas in public and for markets to react quickly, pricing in the projected consequences (good or bad) if those proposals became actual rules. Presidents Obama, Biden, Bush, you name it—all posed ideas that had at least temporary affects on sentiment and returns. More broadly, “buy the rumor, sell the news” is a maxim for a reason: It refers to markets pre-pricing developments in the “talk” stage, then doing something different than everyone expects in the “action” stage. Investors’ task has always been to sift the news from the noise and discern between short-term sentiment moves and longer, actionable trends. To illustrate the importance of this, consider: Just last year, all the hype around the Trump administration spurring a boom in crypto and fossil fuels led to … crypto declining on the year and fossil fuel stocks lagging global markets while renewables led. Nothing has changed. We live in the same old normal. It is still an error to presume first-order effects form political talk are bound to manifest in market outcomes.

MarketMinder’s View: A trade deal straggler is a straggler no more, with Taiwan inking a deal to lower US tariffs in exchange for investment commitments, following the blueprint Japan and South Korea used with the Trump administration. The US tariff drops from 20% to 15% and, crucially, “wouldn’t stack on top of existing most-favored-nation duties, according to a statement from the cabinet in Taipei.” That is key, rendering the tariff rate genuinely more competitive (in contrast to the UK deal, which has a lower headline rate but stacks on top of existing duties). As for the other side of the deal, the $250 billion in Taiwanese investment commitments also echoes the deals with Japan and Korea in that it isn’t $250 billion in newly committed money. $100 billion of the total is an investment plan announced by Taiwan’s eponymous semiconductor manufacturing giant last year, which reminds us, MarketMinder doesn’t make individual security recommendations and features this for the broad themes and implications only. “In addition, Taiwanese semiconductors would receive relief from future tariffs. Companies building new US operations would be able to import 2.5 times their current capacity tariff-free during construction, with a lower rate applied to shipments above that quota. That cap would lower to 1.5 times current capacity once production facilities are complete.” As for the longer-term implications for US growth and chipmaking, they are probably far outside the window markets typically price (the next 3 – 30 months), as it can take several years for a chip fab to go from idea to built, staffed and functional. So this is significant primarily as another burst of falling uncertainty, not a big near-term economic driver.

MarketMinder’s View: Please note, MarketMinder isn’t for or against any specific policy—rather, we highlight this development to discuss a broader theme. (This article also mentions a publicly traded crypto exchange, and as a reminder, MarketMinder doesn’t make individual security recommendations.) As reported here, the Senate Banking Committee put its discussion of an anticipated crypto market-structure bill on ice for now, as some industry players don’t support the latest version. “The market-structure bill, designed to improve the legitimacy of digital assets, was supposed to go through markup — a process involving discussion and amendments — on Thursday. On Wednesday, Brian Armstrong, chief executive officer of Coinbase, said on social network X that he was pulling support for the latest text of the bill due to ‘too many issues.’ … The delay could potentially derail the legislation, which may be harder to pass this year ahead of midterm elections.” The issue appears to be payment of interest-like “rewards” by crypto-exchanges to holders of chiefly stablecoins (those pegged to a currency and designed to act as purely a payment mechanism). Banks cite the high yields paid as a risk to Main Street financial institutions, but crypto firms insist on their inclusion, with the lobbying generating a standoff. But above the specifics, take this delay as yet another reminder not to overstate the supposed positives (or negatives) any new administration may bring. Talk is cheap, and what one promises on the campaign trail can fall flat once reality comes into play. If your bullishness on crypto (or any asset class) depends on the hope of potentially “friendly” legislation, you must also be aware those changes (even of the bipartisan variety) aren’t a given. Besides, the whole thesis that “legitimizing” crypto via legislation would be bullish for coins is a little odd, considering much of the point was decentralization and creating a payment system outside the government’s reach. For more on crypto in 2025, please see our November commentary, “Bitcoin’s Wild Ride to Nowhere.”