Brazil’s economic activity dropped far more than expected in May, a signal that sky-high interest rates are starting to weigh on Latin America’s biggest economy. https://t.co/y2f5GCOefh ...

Trade War & Tariffs - US President threatens 30% tariffs on EU and Mexico if better trade terms are not agreed by August 1 [1][4][46] - Brussels delays retaliatory tariffs while negotiations with the US continue [1][46] - A 30% tariff rate could disrupt trade between the EU and US [12][77] - EU is considering engaging with other nations hit by US tariffs to counter the threats [9][76] - The EU Foreign Ministers are meeting to discuss progress on trade talks [76][78] Market Impact & Economic Outlook - Stocks fall as trade war escalates, with investors bracing for data on tariff impacts [1][46] - European markets are down, impacted by the possibility of European tariffs going up to 30% on August 1 [3][12] - A 30% tariff could be a "real challenge" for European manufacturers and could tip the Euro Zone into a recession [13][14][15] - Germany's growth is already flat, and a 30% tariff could lead to negative growth [16] Monetary Policy & Fiscal Policy - Markets are focused on the physical outlook, with Germany having a solid footing with debt GDP around 65% [19] - There is a likelihood of a more dovish shift from the ECB due to the risks around growth and weakening trade relationships [25] - The market is underpricing the risk of the Fed chair being forcibly removed or dismissed [93] China's Economy & Trade - China's export growth has accelerated, driven by demand and helped by the trade war truce with the US [28] - China had a $590 billion surplus in the first theft of the year, which will help drive growth [28] - Companies worldwide are trying to buy as much Chinese products as they can due to price deflation [31] Panama & International Relations - Panama was removed from the EU's list of high-risk regimes [33][34] - Panama's relationship with the US is "very good," with close cooperation on commerce and security [36][37] - There is "no Chinese influence" in Panama or the Panama Canal [38][39][40] Renewable Energy & India - India is making strides in clean energy to reduce reliance on fossil fuels, which account for 5% of GDP in imports [55] - The Indian clean energy sector is mostly domestically focused, with a 6% annual growth in the electricity system [57] - The Indian government is taking a strategic view to localize the manufacturing of clean energy equipment [62][63]

Investment Rating - The report maintains a moderately positive outlook for Asian equity markets, forecasting a 9% USD price return over the next 12 months with a revised MXAPJ index price target of 700, which is 3% above the previous target of 680 [3][47][54]. Core Insights - The macro risk environment has improved, with reduced US economic policy uncertainty and expectations of Fed rate cuts, which are likely to support regional equities [4][32]. - The tariff environment remains fluid, with potential impacts on GDP growth and earnings forecasts, but the overall growth impact may not be as negative as previously feared [14][19]. - Earnings growth is expected to be the dominant driver of returns, with forecasts of 9% and 10% EPS growth for 2025 and 2026, respectively [48][52]. Summary by Sections Current Conditions - The macro risk environment has improved due to moderated US economic policy uncertainty, eased financial conditions, and firm activity data, leading to a 25% rebound in the MXAPJ index [4][5][6]. Tariffs - The tariff situation is expected to influence equity performance, with potential higher rates but greater certainty. The final tariff rates may differ from current expectations, impacting GDP growth and earnings forecasts [14][15][19]. Rates - The Fed is expected to begin cutting rates in September, with a total of five cuts anticipated by mid-2026, which should support regional equities through a weaker dollar [32][33][36]. Returns - The report anticipates a wide dispersion of expected returns across markets, with a forecasted 9% USD price return over 12 months based on earnings growth and a revised index target [47][49][54]. Allocations - The report emphasizes North Asia, maintaining overweights in China, Japan, and Korea, while downgrading Malaysia to underweight. Sector upgrades include capital goods and tech hardware, while autos and consumer staples are downgraded [59][60][69][75].

I'd like to bring in a true economics expert now, Ken Rogoff. Ken formerly, as I mentioned, served as the chief economist and director of research at the International Monetary Fund. He's a professor of economics at Harvard University. He's the author of multiple books, including the recently published Our Dollar, Your Problem, an insider's view of seven turbulent decades of global finance and the road ahead. Ken, welcome back to the show. Good to see you. Thank you, Ally. That was a great overview. I'm sti ...

For much of this year, bond investors were all but certain that the Federal Reserve would resume cutting interest rates by September. Lately, that confidence has been wavering https://t.co/iQMufa2MUP ...

Core Viewpoint - Investing in blue chip companies is a strategy for building long-term wealth, offering reliable dividends and steady growth, appealing to both seasoned and new investors [1][2]. Group 1: Berkshire Hathaway - Berkshire Hathaway has delivered 20% annualized returns since 1965, turning a $100 investment into $5.5 million today [4]. - The stock has declined 12% since Warren Buffett announced his retirement at the end of 2025 [4]. - The company benefits from a diversified portfolio across various industries and a steady cash flow from its insurance operations, which totaled $2.9 billion in interest income in the first quarter [5][6]. - Berkshire is well-capitalized and diversified, making it a potential buy despite leadership changes [7]. Group 2: Progressive - Progressive is the second-largest automotive insurer in the U.S., known for its disciplined underwriting and direct-to-consumer model [8]. - The company has maintained a combined ratio of 92% over 23 years, outperforming the industry average of 100% [9]. - Progressive's pricing power and ability to earn interest on float position it well for continued performance amid inflation and rising interest rates [11]. Group 3: Chubb - Chubb is a leading property and casualty insurer, recognized for its underwriting discipline and global diversification [12]. - The company has increased its dividend for 32 consecutive years, with a yield of 1.4% and an average annual total return of 11.7% over the past two decades [13]. Group 4: S&P Global - S&P Global holds a 50% market share in credit ratings, benefiting from high barriers to entry [14]. - The company has raised its dividend for 53 years, offering a modest yield of 0.7% while achieving a 15.3% annual return over the past two decades [16].

Fed Chair Nomination Context - Betting markets indicate a 34% chance that no Fed chair successor will be announced before December, while Powell's term ends in May 2026 [5] - Historically, the lead time between announcing a Fed chair successor and their assuming office is about 2 to 4 months [6] - Markets are forward-looking, so traders and investors will begin pricing in the newcomers policy leanings [7] Leading Candidates and Their Potential Impact - Christopher Waller is considered a favorite, with his remarks already impacting the 2-year Treasury yield, dropping 20 basis points after a speech [10][12] - A Waller Fed is expected to lead to lower short-term yields, a flatter yield curve, and a lighter dollar, potentially benefiting stocks and crypto [15][16] - Kevin Walsh is viewed as more hawkish, advocating for avoiding rate cuts until inflation is firmly on a sustained path back to target [21][23] - A Walsh chairmanship could lead to a stronger dollar, growth stocks down, and a scramble out of risk assets, with restrictive policy rates potentially weighing down crypto [26][27] - Treasury Secretary Scott Bessant expects a rate cut by September and is implementing measures to keep long-term interest rates from rising, potentially creating a risk-on environment [30][36] - Kevin Hasset advocates for rate cuts to support GDP growth, potentially leading to a weaker dollar and a market-wide rally for stocks and crypto [40][41] Wild Card Candidates - David Malpass, a former World Bank president, argues the Fed is behind the curve on cutting interest rates [42][43] - Fed Governor Michelle Bowman has expressed support for a July rate cut if inflation stays subdued [44] Market Volatility - The announcement of the next Fed chair, or even the teasing of the decision, is expected to cause bursts of volatility [48]

Housing Market Trends - Gen Z is finding resourceful ways to buy homes despite high interest rates and housing prices [1]

Monetary Policy - Steve Forbes suggests the Treasury should issue gold bonds to provide a metric for assessing whether Washington is undermining the dollar's integrity [1] - The suggestion is a response to the Federal Reserve's refusal to cut rates [1] Economic Commentary - The proposal aims to address concerns about the dollar's integrity in the context of monetary policy [1]

Tariffs and Market Risk - The market is largely discounting the risk of higher tariffs, viewing President's threats as saber rattling [2][3] - There is a risk that tariffs, with an effective rate of 13-14%, will start to impact second quarter earnings, as they began to kick in during May [4] - Mega cap tech companies are relatively invulnerable to tariffs [12] Interest Rates and Fed Policy - The Fed is split on interest rate policy, with approximately 50% favoring rate cuts due to concerns about unemployment and 50% worried about the inflationary effects of tariffs [6] - Chicago Fed chairman Goulsby is considered dovish and signals potential rate cuts [5] Yield Curve and Banking Sector - A steepening yield curve is generally considered positive for the overall economy and is beneficial for banks, as they borrow short and lend long [8] - The banking sector is fundamentally benefiting from the current yield curve [9] - Mega cap banks like JP Morgan are trading at high valuations (250% of book value), but regional banks may still offer attractive opportunities [10] Tech Sector - Tech names are showing strong positive indications pre-earnings, with approximately 60% of positive pre-announcements coming from the tech sector, compared to about 14% for industrials [13] - Mega cap tech companies still have room to grow, driven by long-term growth pathways, despite recent pullbacks for profit taking [12]