Daily Commentary

MarketMinder’s View: Is a crypto-coin renaissance underway with President Donald Trump’s second stint in office—and should investors get in on it? As always, MarketMinder is nonpartisan, preferring no party nor any politician, and focuses solely on personal finance matters here. We also don’t make individual security recommendations and wish only to highlight the broader theme: cryptocurrencies’ lack of fundamental drivers. “Investors typically scrutinize balance sheets and income statements when deciding where to allocate their funds, while currency traders will examine economic factors like trade flow and GDP growth when placing their investments. But relying on these traditional measures don’t work with meme coins because they aren’t tied to an underlying asset or economy, experts note.” As the article discusses further, memes—supposedly “viral” ideas or images—are a dime a dozen and making them collectible through cryptography doesn’t change that. These coins’ value changes with people’s whims—feelings, not fundamentals. Which is fine! Have fun collecting them if that is your thing. But for investors, consider coins’ portfolio role and whether that is likely to help you toward achieving your long-term financial goals. Particularly given “Meme coins are a highly volatile corner of the crypto sector that often start as a joke and have no intrinsic value, although they can surge in price if enough people are willing to buy them. Because of those dynamics, their prices are prone to sudden and extreme swings.” Which, sure, but also isn’t that all crypto? If anything, meme coins are more transparent about the whole thing and not pretending to have some underlying value. The others don’t have underlying value, either.

MarketMinder’s View: Who says America is turning away from the world? According to this article tallying “announced greenfield projects—where companies build or expand new facilities and operations in a foreign country,” these new American investments “in the 12 months to November 2024 rose by more than $100bn to $227bn, according to fDi. The data is based on corporate announcements, press reports and fDI estimates for the lifetime of the project, rather than annual capital spending.” Actual amounts may vary but this would boost America’s share of global foreign direct investment (FDI) to 14.3% from 11.6% in 2023. Driving this shift, the piece credits America’s “AI innovation, lower energy costs and investment incentives as part of the Biden administration’s Inflation Reduction Act and the Chips Act” for the FDI surge—a stark contrast with China and Europe, where weak growth presumably makes those locales less attractive. We see a couple takeaways for investors. First, this further confirms our view US capital expenditures are trending higher as businesses that retrenched in 2022 for a recession have been going on offense—evidence countering recession concerns. Second, it reflects widespread attitudes that America is doing great while the rest of the world isn’t as much—lopsided sentiment that can present opportunities depending on how reality shakes out. These data won’t tell you about future investment, but the reaction here can inform investors about areas where reality may meet, miss or exceed expectations.

MarketMinder’s View: Please note that MarketMinder is nonpartisan. Nothing we say is for or against any party or politician—we seek only to discern political developments’ likely market ramifications, if any. Key to this, in our view, is separating fact from fiction. In this case, President Donald Trump has proposed an “External Revenue Service,” which sounds like it would raise money from foreign exporters selling into the US. But as this article points out, that isn’t how it works. Rather, “The exact contours of that new agency are still unclear, but it is probably best thought of as a public relations maneuver rather than a meaningful policy change. After all, there’s already a governmental entity that handles tariff collection—that’s the ‘customs’ in U.S. Customs and Border Protection. Changing the name won’t change anything about the transactions that occur.” As for tariffs themselves, many fear (or cheer) what may be coming down the pike, but it remains speculative. Many also thought they would be coming on “day one,” which didn’t happen. Doesn’t mean they won’t, but history—and recent rhetoric—suggest Trump uses tariffs as leverage to achieve other aims (e.g., renegotiating trade deals, stricter migration and drug enforcement). They are political, not economic, tools. Global trade, economic growth and the bull market survived the last go ’round, worth keeping in mind for this round of possible tariffs.