Investment Rating - The report indicates a "sell signal" triggered by cash levels falling to 3.9% [14][15][86] Core Insights - Investor sentiment is the most bullish since February 2025, with a significant surge in profit optimism and risk appetite over the past three months [2][17] - 59% of investors believe a recession is unlikely, a notable shift from 42% in April, with 65% expecting a soft landing [3][26][27] - The most crowded trade is "short US dollar," with a net 20% overweight on Euro, the highest since January 2005 [5][55][62] Summary by Sections Macro Insights - 42% of investors expect Q2 2025 EPS to beat consensus, while 19% anticipate disappointment [30][36] - AI is perceived to be increasing productivity by 42% of investors [32][37] - Expectations for a global recession have decreased, with only 9% expecting a hard landing [26][28] Policy Insights - The trade war is viewed as the biggest tail risk, with expected final tariff rates on the Rest of the World rising to 14% [4][49][48] - 81% of investors forecast one or two rate cuts by year-end, with only 11% expecting a rate cut at the upcoming FOMC meeting [38][44] Asset Allocation - FMS equity allocation improved to a net 2% overweight, while bond allocation remains net 4% underweight [120][121] - Investors are most overweight Eurozone equities, with a net 41% overweight, the highest in four years [63][65] - There has been a significant increase in allocation to tech stocks, with a net 14% overweight, the highest since January 2025 [68][70] Investor Sentiment - The FMS cash level has dropped to 3.9%, indicating a sell signal, with historical median losses following such signals averaging -2% [14][20][86] - Risk appetite has surged, with a net 31% of investors expecting weaker global economic growth, a significant recovery from previous months [23][92] - 68% of investors believe high-quality earnings will outperform low-quality earnings [101][103]

Market Overview - The Nasdaq reached a record closing high as the second-quarter earnings season begins, with President Trump announcing a 30% tariff on Mexico and the EU, prompting negotiations before the August 1 deadline [1][2] - The S&P 500 is expected to see 4.7% earnings growth on 4% higher revenues for Q2, indicating a slowdown compared to previous quarters [3] Earnings Reports - JPMorgan Chase reported Q2 earnings of $4.96 per share, exceeding estimates by 9.98%, with revenues of $44.91 billion also surpassing expectations [9] - Nvidia's stock rose approximately 4% after announcing plans to resume sales of restricted H20 GPUs to China, with government assurances of license approvals [11][12] Historical Context - The S&P 500 experienced a significant rally, advancing over 25% from April lows, a feat accomplished only five times since 1957, with historical data suggesting double-digit gains in the following year [7] - The first half of the year was marked by volatility due to trade tensions, but market performance improved as trade-talk progress became clearer [5][6]

Contributing analyst to the iREIT+Hoya Capital investment group. The Dividend Collectuh is not a registered investment professional nor financial advisor and these articles should not be taken as financial advice. This is for educational purposes only and I encourage everyone to do their own due diligence. I'm a Navy veteran who enjoys dividend investing in quality blue-chip stocks, BDC's, and REITs. I am a buy-and-hold investor who prefers quality over quantity and plans to supplement his retirement income ...

Core Viewpoint - The impending tariffs, scheduled to take effect on August 1, could significantly impact consumer prices and the economy, despite Wall Street's perception that they are mere posturing [2][3]. Group 1: Tariff Implications - Tariffs are essentially taxes imposed on imported goods, which can lead to increased prices for consumers as businesses are likely to pass on the additional costs [4][10]. - Affected products include a wide range of goods, from cars to groceries, with potential price increases of up to 15% or more [5][11]. - The broad nature of the tariffs will create ripple effects throughout the economy, influencing prices even for domestically produced goods [8][11]. Group 2: Economic Impact - Past trade disputes have shown that tariffs can lead to inflation, supply chain disruptions, and job instability in sectors reliant on global trade [6][12]. - While some domestic industries may benefit from tariffs, the overall effect on the average consumer is likely to be higher costs [13]. Group 3: Financial Strategies - Companies and consumers are advised to take proactive financial measures, such as making major purchases before price increases occur [15]. - Stocking up on non-perishable essentials and seeking domestic alternatives can help mitigate the impact of rising prices [16][17]. - Strengthening emergency funds and considering inflation-resistant investments, such as commodities and Treasury Inflation-Protected Securities (TIPS), are recommended strategies [21][23].

Investment Rating - The report indicates a bearish outlook for the Asian economy, suggesting a potential slowdown in growth due to rising effective tariffs and the unwinding of frontloading and transshipment activities [6][15][25]. Core Insights - Asian growth has been supported by low effective tariffs on US imports, but this is expected to change as tariffs rise and scrutiny on transshipment increases [1][6]. - The first half of 2025 saw significant frontloading of exports, particularly in the tech sector, with annualized export momentum reaching nearly 20% [2][5]. - China's export performance has been resilient, with a 20% quarter-on-quarter growth despite punitive tariffs, largely due to transshipment through third countries [3][10]. - Effective tariff rates in Emerging Asia (excluding India and China) are currently around 11%, but could rise to 20.3% if no trade deals are reached [11][15]. - The report forecasts a sharp decline in GDP growth for Emerging Asia, from an average of 3% in the first half of 2025 to 1.3% in the second half [15][16]. Summary by Sections Export Dynamics - Frontloading of exports has significantly boosted growth, with tech exports showing an annualized momentum of 60% [2][5]. - Transshipment of Chinese goods has mitigated the impact of US tariffs, with exports to the US declining by 40% but offset by new markets [3][10]. Tariff Implications - The US has proposed higher tariffs, with a potential doubling of effective rates for many Asian economies if no agreements are reached [11][15]. - Current effective tariff rates are much lower than initially feared, particularly for semiconductors and pharmaceuticals, which are crucial for economies like Taiwan and Singapore [5][12]. Economic Outlook - The report anticipates a significant slowdown in growth, with EMAX GDP growth expected to drop to less than half of the first half's pace [15][16]. - Monetary policy is expected to play a crucial role in supporting growth, as inflation remains benign and central banks are likely to continue easing cycles [23][25].

Trade & Tariffs Impact - Tariffs are essentially taxes that will be paid by American companies, small businesses, or consumers, not by other countries [2] - Current actions are perceived as raising costs for families, impacting food prices at grocery stores [3] - Farmers, manufacturers, and small businesses are experiencing uncertainty and chaos due to tariffs, which they consider worse than previous trade wars [3] Brazil-US Trade Relations - The US imports various goods from Brazil, including minerals that are essential for powering cars and energy sectors [1] - These Brazilian imports are also linked to daily routines, such as coffee consumption [1] Economic Policy - The current economic situation is being referred to as "Trump's economy" [2] - Previous promises focused on lowering costs for people [2]

Tariff Landscape & Trade Policy - The US administration is considering raising tariffs on Canada to 35%, up from the current 25%, though exemptions for USMCA-compliant goods and a lower 10% tariff for energy are likely to remain [2] - The US President is considering raising the universal baseline tariff from 10% to 15% or even 20%, potentially increasing the cost of all imported goods by at least 15% [4] - The US has postponed the July 9th deadline for reciprocal tariffs but has introduced new tariff threats for Canada and Brazil, including a potential 50% tariff on copper and a possible 200% tariff on pharmaceuticals [5][6] - The US President believes that uncertainty is the best negotiating leverage and is keeping it up [9] - A potential doubling of the universal baseline tariff to 20% on all imports could bring the US back to pre-post-war economy levels, impacting the US services economy and increasing the cost of goods [13][14] Geopolitical & Company Strategy - Canada is strengthening its partnerships throughout the world, signaling a shift in trade relations amid tariff disputes [3] - Nvidia's CEO Jensen Huang's visit to the White House and subsequent trip to China amid tariff discussions and export controls suggest potential negotiations for lifting export controls, which would benefit Nvidia [15][16][17][18] - The US President's rhetoric towards China has become more upbeat, with potential trade negotiations on the horizon [17]

Market Trends & Trade Relations - US equities experienced a downturn due to escalating trade tensions initiated by Trump [1] - A 35% tariff was threatened on some Canadian goods [1] - The possibility of increasing levies on most other countries was floated [1]

Trade Policy Changes - US President considers raising universal baseline tariff from 10% to 15% or even 20% [4] - Potential doubling of the baseline tariff, impacting the cost of goods bought from abroad [4] - Initial postponement of major tariffs deadline suggested a potential softening of trade stance, but subsequent threats indicate otherwise [5] Canada Trade Relations - US President announces 35% tariffs on imports from Canada [1][2] - Canada is the second largest US trading partner and the largest buyer of American goods last year [2] - Exemptions for USMCA compliant goods and lower 10% tariff for energy imports may soften the impact [2] - The decision on tariffs is not final [3] Broadening Trade War - New tariff threats against Canada and Brazil [5] - Potential 50% tariff on copper and 200% tariff on pharmaceuticals [6] - A vast expansion of the trade war on multiple fronts is occurring [6]

Trade Relations & Economic Impact - Vietnam's economy is heavily reliant on exports, representing approximately 90% of its GDP [4][8] - The US is Vietnam's largest export market, leading to a significant trade surplus and making it a target for potential tariffs [1] - Potential tariffs from the US, such as a proposed 46% tariff, could profoundly impact Vietnam's economy and manufacturing sector [2][10] - Vietnam experienced substantial foreign investment, exceeding $600 billion since 1988, contributing to export growth [7] Geopolitical Strategy & Manufacturing - Vietnam has become a major player in the global supply chain, manufacturing goods for various American companies and global brands [3][4] - The "China Plus One" strategy led companies to relocate some production to Vietnam to avoid tariffs on Chinese goods, benefiting Vietnam during US-China trade tensions [8][9] - Vietnam employs a "bamboo diplomacy" strategy to navigate complex relationships between the US and China, balancing economic and geopolitical considerations [15][16] - Vietnam's government is proactively engaging with the US to mitigate trade imbalances, including purchasing US products [12] Historical Context & Economic Development - Post-war Vietnam was one of the world's poorest countries, but economic reforms and policies to attract foreign investment have driven significant growth [5][6] - Vietnam's strategy of offering tax incentives, infrastructure development, and an open attitude to global manufacturers has been successful in attracting foreign investment [6]