Artisan Partners, an investment management company, released its “Artisan Mid Cap Value Fund” third-quarter 2025 investor letter. A copy of the letter can be downloaded here. In the quarter, the fund’s Investor Class fund ARTQX returned 0.97%, Advisor Class fund APDQX posted a return of 0.98%, and Institutional Class fund APHQX returned 0.97%, compared to a 6.18% return for the Russell Midcap Value Index. Equity markets continued their rally in the third quarter as investors overlooked tariff concerns, driv ...

Market Reactions to Trump's Policies - The stock market remains highly reactive to Donald Trump's policy announcements, often leading to unpredictable fluctuations in various sectors [1][2] - Trump's threats of tariffs have significant impacts, as seen with John Deere, which faced a potential 200% tariff, causing its shares to drop initially but later recover [3] - The pharmaceutical sector reacted positively to Trump's 100% tariff announcement on imported drugs, as U.S. companies with domestic manufacturing were exempt, leading to a rise in their stock prices [4] Sector-Specific Impacts - The entertainment industry faced declines following Trump's announcement of a 100% tariff on foreign films, with major companies like Netflix and Disney seeing their shares drop significantly [5][6] - Healthcare stocks experienced volatility due to Trump's mixed signals regarding the Affordable Care Act, with shares of companies like Molina Healthcare and Centene rising sharply after reports of a potential extension of subsidies [7][8] Geopolitical and Trade Developments - Trump's foreign policy announcements, such as the operation against drug trafficking in Venezuela and tariffs on South African exports, have created uncertainty in global markets, although immediate impacts on oil prices were not evident [9][10] - A potential trade deal with Taiwan aimed at boosting the U.S. semiconductor industry could benefit companies like TSMC, NVIDIA, and Intel, although specific market reactions were not yet reported [11] Communication Channels and Market Sentiment - Trump's use of Truth Social to communicate policy changes and whimsical thoughts has become a significant factor in market sentiment, with some announcements being largely ignored by investors [12] - The overall market environment under Trump's influence is characterized by a blend of economic analysis and the need to interpret often contradictory policy statements, leading to a state of ongoing uncertainty [13]

Economic Impact of Tariffs - Trump's tariff policies are central to his economic strategy, with claims of strengthening the U.S. economy and curbing inflation, while the stock market has reportedly hit an "ALL-TIME HIGH for the 48th time in 9 months" [2][3] - A proposed $2,000 "tariff stimulus check" for middle-income Americans, funded by tariff revenues, raises skepticism among economists who argue that tariffs are typically paid by U.S. importers, leading to higher consumer prices [3][4] - Historical data shows that a significant increase in tariffs can negatively impact S&P 500 earnings, with Goldman Sachs estimating a 1-2% reduction in earnings per share for every five-percentage-point increase in tariff rates [4][6] Market Reactions and Volatility - Trump's announcements have led to significant market volatility, with major indices experiencing fluctuations despite achieving record highs, as seen on November 21, 2025, when the S&P 500 was down 2% despite a 0.92% rise in the US500 [5][12] - The VIX, a measure of market volatility, reached the mid-40s in April 2025, indicating extreme investor anxiety following tariff announcements [6][12] - The market's relationship with Trump's economic statements is characterized by unpredictability, with analysts noting that his pronouncements can trigger significant intraday market swings [11] Sector-Specific Impacts - Trump's directive for the Department of Justice to investigate the meatpacking industry over alleged price manipulation caused immediate stock price drops for major companies like JBS and Tyson Foods [8] - The pharmaceutical sector reacted sharply to Trump's price reduction promises for GLP-1 weight loss drugs, with stocks of companies like Novo Nordisk and Eli Lilly experiencing declines following his announcements [9][10] - Subsequent agreements to set drug prices at around $350 per month for Medicare and Medicaid recipients indicate a significant shift in the market landscape, although initial reactions were negative [10] Overall Market Sentiment - As of late November 2025, major indices showed a mix of gains and losses, reflecting the ongoing volatility and uncertainty in the market, with the S&P 500 down 2% despite a 1% increase on the same day [12] - The market continues to grapple with the implications of Trump's policies, oscillating between moments of optimism and underlying concerns about potential policy shifts [12]

Market Performance - The S&P 500 Index has surged 18% since Trump's election win on November 5, reaching an all-time high and ending October on a six-month winning streak [1] - A version of the S&P 500 that strips out market-cap bias is up just 5.2% for the year, indicating the significant impact of Big Tech and AI on overall market performance [4] Impact of Big Tech and AI - Big Tech companies, particularly Nvidia, Apple, and Alphabet, have driven substantial market gains, with Nvidia becoming the first $5 trillion company and the seven largest tech firms accounting for over half of the market's advance [5] - The median stock in the S&P 500 has only gained 1.2%, highlighting the disparity in performance between tech stocks and other sectors [4] Volatility and Policy Uncertainty - Market volatility has been significantly influenced by Trump's trade policy changes, with tariff threats causing the highest level of policy uncertainty since 1900 [2] - The AI rally has been juxtaposed with ongoing policy-induced volatility, particularly around tariff threats, affecting individual companies and industries [7] Investment Trends - Investors have increasingly focused on AI-related firms, with a notable shift away from defensive sectors during periods of market turmoil [6] - The belief in AI's potential for future advancements has led to a surge in investments in this area, leaving other market segments behind [6]

Summary of Key Points from the Conference Call Industry Overview - The focus of the conference call is on the **US Dollar (USD)** and its associated risks, particularly in relation to global economic conditions and monetary policy dynamics. Core Insights and Arguments 1. **USD Weakening Expectations**: The expectation is for the USD to weaken over the next year, particularly against risk-sensitive currencies, due to falling US real yields and narrowing growth differentials with the rest of the world [8][11][12] 2. **Growth Convergence**: US growth is projected to slow to approximately **1.3% in 2026**, converging with growth rates abroad, which is consistent with the "dollar smile" framework [27][28] 3. **Policy Risks**: The narrowing of the USD's discount to yield-implied fair value is anticipated, with expectations that it may re-widen due to ongoing trade policy and Federal Reserve independence risks [8][11][40] 4. **Fiscal Concerns Abroad**: Easing fiscal concerns in countries like Japan, the UK, and France are expected to reduce the positive premium on the USD, contributing to its decline [8][50][52] 5. **Current USD Positioning**: USD positioning is currently slightly long, indicating a shift from previous short positions, which reduces the risk of significant price swings [12][67] Additional Important Insights 1. **Interest Rate Forecasts**: The forecast indicates that **10-year TIPS yields** will decline to **1.25%** by mid-2026 and further to **0.9%** by the end of next year, contributing to a bearish environment for the USD [14][15] 2. **Trade Recommendations**: Recommendations include maintaining short positions on USD against currencies such as EUR, JPY, GBP, CAD, and AUD, with specific target prices provided for each currency pair [16][69] 3. **Risks to USD Outlook**: Upside risks to the USD could arise from stronger-than-expected US growth or a downturn in sentiment regarding investment opportunities outside the US [11][34][36] 4. **Yield Differential Dynamics**: The narrowing of US-RoW rate differentials is expected, with **2-year US yields** projected to decline to **2.0%** by next year, while **2-year German yields** are expected to decrease to **1.6%**, significantly compressing the spread [20][21] 5. **Fiscal Sustainability**: Concerns about fiscal sustainability in Japan and the UK are expected to ease, which may further weigh on the USD as these countries stabilize their fiscal positions [50][52][61] Conclusion The conference call presents a comprehensive analysis of the USD's outlook, emphasizing the interplay between interest rates, growth differentials, and fiscal policies. The overall sentiment leans towards a bearish outlook for the USD, with specific trade strategies recommended to capitalize on anticipated currency movements.

Market Sentiment - Market experiencing a "melt up" despite policy uncertainty [1] Source - Bloomberg Surveillance is the source of the information [1]

Core Viewpoint - The labor market has shown signs of weakness in the first half of the year, attributed to uncertainty surrounding significant tax hikes and global trade policy changes [1][2][3] Economic Uncertainty - Firms may have delayed investments due to uncertainty over tax legislation and trade negotiations, leading to a weaker economic outlook [2][3] - Recent developments, particularly China's decision to renege on previously made trade deals, have reintroduced uncertainty into the economic landscape [3][4] Policy Implications - The balance of risks has shifted, indicating more downside risks to growth than previously anticipated, necessitating a reassessment of policy measures [5][7] - There is a call for policymakers to move towards a more neutral policy stance quickly, as current restrictive policies may leave the economy vulnerable to shocks [7][8] Economic Indicators - The labor market has weakened, with a gradual increase in the unemployment rate and signs of reduced domestic demand compared to the previous year [18] - The housing market, a key transmission channel for monetary policy, has been sluggish, largely due to high mortgage rates [19] Neutral Policy Rate - The neutral policy rate, which indicates a balance between stimulating and restricting the economy, is difficult to observe but essential for guiding monetary policy [11][12] - Recent economic shocks have altered the perception of where the neutral rate lies, suggesting it may have moved more rapidly than traditionally expected [13][15] Market Reactions - The bond market's response to rate cuts has varied, with recent cuts leading to a decrease in long yields, indicating a more favorable market reaction compared to the previous year [22][23]

Core Insights - The content emphasizes the importance of conducting personal due diligence before making any financial decisions [1] Group 1 - The website provides general news, personal analysis, and third-party content for educational and research purposes [1] - It explicitly states that the information should not be interpreted as investment advice or recommendations [1] - Users are encouraged to consult their own advisors and consider their financial situation before making decisions [1] Group 2 - The website includes information on complex financial instruments such as cryptocurrencies and contracts for difference (CFDs) [1] - It highlights the high risk associated with these instruments and the potential for significant financial loss [1] - Users are advised to fully understand the workings and risks of any financial instrument before investing [1]

Dollar Strength & Uncertainty - The strong dollar bet earlier in the year was based on U S policy uncertainty and reserve managers rotating out of the dollar [1] - Political and policy uncertainty in Europe (e g, France) and Japan are contributing to a strong dollar narrative [2] - The dollar's previous appreciation over 13 years reached unsustainable levels, making a return to February/March levels unlikely [4] Yen Weakness & Market Impact - A weaker yen benefits the operating margins of Japanese multinational stocks, particularly those selling high-value industrial products [5] - Recent yen weakness, driven by political turmoil, has correlated with a strong stock market performance in Japan [6] - The yen's weakness is perceived more as a reaction to central bank policy speculation than a reflection of fundamental economic weakness in Japan [6] Federal Reserve & Interest Rate Policy - The Federal Reserve has sufficient third-party and internal data to make informed decisions, even during a government shutdown [8][9] - Current interest rate policy in the U S is not considered overly restrictive, given the stock market highs, gold prices, and corporate bond spreads [10] - A Federal Reserve rate cut would likely be reluctant, considering the financial market performance [11] - The September rate cut was viewed as an "insurance cut," not necessarily signaling a prolonged series of rate cuts [12][13]

Core Insights - The American Dream, traditionally associated with financial stability and homeownership, is increasingly perceived as unattainable for many individuals today [1] Economic Challenges - Rising costs, reliance on debt, and economic uncertainty are identified as the primary reasons making it harder for individuals to achieve financial milestones [3] - Median household income has increased to $80,610 in 2024 from $21,650 in the 1980s, but this figure is misleading when considering the rising costs of housing, education, and childcare [4] Debt Burden - Credit card interest rates are currently between 21% and 24%, with the average American holding over $6,700 in credit card debt, which disproportionately affects younger generations [5] - This debt prevents younger individuals from investing or saving, forcing them to focus on bill payments and interest [5] Systemic Issues - Financial challenges are not solely due to individual choices; systemic issues like wage stagnation, wealth inequality, and policy uncertainty significantly contribute to the current economic landscape [6] Housing Market - The median home price has increased from 2.2 times the median household income in the 1980s to 5.2 times today, making homeownership much less accessible [7] Education Costs - Tuition for private colleges has risen from approximately three months' worth of income in the 1980s to about six months' worth today, while the value of degrees is declining due to increased accessibility and alternative job opportunities [7] Childcare Expenses - Childcare costs have escalated from 1% of median income in the 1980s to around 16% per child per year, representing a significant financial burden for working families [7]