Daily Commentary

MarketMinder’s View: First, this article touches on politics, so please note MarketMinder favors no politician nor any party, assessing developments solely for their market and/or economic effects. This piece covers the Trump administration’s filing a petition for a writ of certiorari—the formal appeal to the Supreme Court—on the matter of tariffs, which the Court of International Trade ruled illegal in May, a ruling upheld by the US Court of Appeals for the Federal Circuit last month. In it, the document includes letters written by various officials expressing their opinions on why the court needs to a) take up the appeal and b) do so swiftly. One of them is a letter from Treasury Secretary Scott Bessent that results in the eye-catching headline figure here—that if the “reciprocal,” baseline and fentanyl-related tariffs are overturned, the government could have to refund “$750 - $1 trillion” in tariffs. In some corners, fears are bubbling up that tariff refunds would inflate the deficit and send interest rates higher. But here is the thing: As the article notes, the current amount subject to refund is at most $72 billion, a small fraction of the total and a drop in the bucket for the US budget. And, while tariff collection is significantly higher this year, it far undershoots most Wall Street estimates. The $750 - $1 trillion figure is an estimate of what the government could collect by next June, should the Supreme Court wait that long to rule. But if receipts continue undershooting estimates, the lofty headline figure here seems like a stretch. Regardless, even if there is much more collected than the $72 billion noted here, we suspect it would take a significant amount of time to refund it. It isn’t as though Treasury would cut a check the day after the ruling or something. Bond markets would likely take this in stride.

MarketMinder’s View: This piece argues that increased market involvement from Indian domestic investors is insulating the country’s markets against allegedly dire, bearish factors like punitive 50% US tariffs on the country’s exports that would otherwise have Indian stocks tanking. It runs through various pieces of “evidence” like domestic investors’ share of market ownership rising by eight percentage points over the past decade and anecdotes of a buy-and-hold, ride-the-wave mentality among locals. But here is the thing: This is all a sign of elevated sentiment, which makes India less resilient over time. It is likely why Indian stocks are lagging both Emerging Markets and the MSCI All-Country World Index by wide margins this year (per FactSet data in US dollars or Indian rupees, take your pick). We mean, MSCI’s India Index is up just 3.9% year-to-date in rupees, while Emerging Markets and global stocks are up 25.0% and 18.8%, respectively. Does that like a local investor boost? Furthermore, we would add: The idea this should be far worse presumes US tariffs would have a huge, fundamental impact on India’s economy. But goods exports are 11% of its GDP and less than a fifth of those go to the US, per FactSet and India’s government. So while the tariffs may not help India, don’t overstate the drag, either.

MarketMinder’s View: Recent years’ hot inflation didn’t manifest as much in Japan as it did elsewhere, peaking at 4.4% y/y on a headline basis back in January 2023 (per FactSet data). The measure this notes, which excludes fresh food, hit 4.2% the same month. But, as this article notes, it seems to have left its mark on many consumers nonetheless—especially after decades of stagnant or even falling prices. Prices have since cooled—as this notes, the consumer price index (CPI) excluding fresh food rose 3.1% in July. And if you exclude food and energy, CPI rose 1.6% y/y in the month, a sign prices outside volatile food and energy prices—which are greatly affected by non-monetary factors like weather and can prove quite fleeting—have crested. However, all the discussion here of people increasingly visiting price-tracking websites and documenting trends like “shrinkflation” seems like entrenched sour sentiment. It is, in our view, the latest example of the global tendency for investors fight the last war. Don’t get us wrong—we understand the pain and scarring inflation left worldwide. All that keeps sentiment low relative to economic fundamentals, a bullish backdrop.