Stocks Slip as Midnight Shutdown Deadline Nears

Market Overview & Outlook - Equity market experienced a phenomenal recovery, with low stocks up 38% since Liberation Day [1] - A potential 5-10% correction is possible, considering the S&P's forward multiples at approximately 22 times earnings and the 10-year Treasury yields slightly above 4% [2] - The market is expected to see a rolling rotation, with profit-taking from the "Magnificent Seven" benefiting small-cap, value, and international stocks [3] Earnings & Revenue Performance - Second-quarter revenues increased by 6% year-over-year, and earnings increased by 12% year-over-year, both exceeding expectations [4] - Third-quarter revenues are projected to increase by approximately 6-7%, with earnings expected to show solid double-digit growth [4] - Federated Hermes is reevaluating and increasing its earnings estimates for the remainder of the current year and the following year [5] Economic Indicators & GDP - The U S GDP estimate for the next year is 28%, while the blue-chip consensus is 15% [6] International Markets - International stocks are considered attractive due to valuations being 40% cheaper than domestic stocks, compared to a typical discount of 20% [8] - The dividend yield on international stocks is approximately 29%, significantly higher than the S&P's 12% [8] - A weak dollar and accommodative foreign central banks are expected to facilitate stronger economic and earnings growth in international markets [9] - The company maintains an overweight position in international assets, viewing them as a favorable subcategory [10]