Daily Commentary

MarketMinder’s View: According to this piece, investors who focus on age and expected lifespan when constructing their portfolio may end up with an asset allocation (the mix of stocks, bonds, cash and other securities) that isn’t aligned with their investment goals and individual circumstances. We agree! However, the titular questions presented here to help investors dig deeper seem oversimplified to us, and the piece still leans too hard on age. For example, the first question about whether your asset allocation is “reasonable” at your age overlooks some critical points raised in question two about individual considerations (i.e., what if you want to leave asset to heirs?). Rather than zero in on age alone, we think investors are better served asking about what kind of growth they require. Having a “high” stock allocation capable of delivering long-term growth may make sense for an 80-year-old investor if they want to leave a gift or legacy that lasts beyond their lifetime. It may also be necessary to support cash flows and reduce the risk of outliving your assets, especially if you have a younger spouse or dependents. We agree with the thrust of questions three (do your allocations reflect a long-term strategy or reaction to recent market movements?) and four (do you have sufficient diversification?). We would add diversification means spreading your assets within your strategy’s components, not simply owning many things. For more on that, see this week’s commentary, “Investing Isn’t Collecting, Private Equity Edition.”

MarketMinder’s View: After President Donald Trump paused tariffs for most trading partners, some shipping and logistics firms are reporting that businesses are re-booking recently canceled orders. (As a reminder, MarketMinder doesn’t make individual security recommendations, and companies mentioned here are coincident to the broader theme we wish to highlight.) We think the expected surge in freight orders highlight two notable themes. The first: businesses’ adaptability. When governments announce changes, companies don’t sit around and wait—they act. As one container line CEO mentions here, “We are seeing order [sic] in everything from construction equipment, engines, truck parts, dinnerware, cranes, agriculture equipment and booze among a lot others. The ships are filling up.” The second theme: Tariff policy has created a lot of uncertainty, which makes it more difficult to do business. As a freight service company executive out of Mexico noted, tariff uncertainty has discouraged commerce, with companies putting many shipments on hold until they get more clarity. Now, from an investment perspective, we don’t think folks benefit from trying to trade based on tariffs. Unless you know something others don’t, you would likely be acting on information many others are already aware of (and acted on), which is therefore priced in. In our view, staying patient focusing on your longer-term goals is the wisest move right now. For more, see yesterday’s commentary, “Positive Volatility Still Calls for an Even Keel.”

MarketMinder’s View: First, the data: US CPI rose 2.4% y/y in March, slowing from February’s 2.8%. On a monthly basis, CPI fell -0.1% m/m, its first dip since May 2020. Looking at the underlying, “Gasoline prices fell 6.3% [m/m]. Crude oil prices have declined on growing concerns the global economy is stagnating. Food prices rose 0.4% after climbing 0.2% in February. Grocery store prices increased 0.5%, boosted by a 5.9% rise in the cost of eggs.” Excluding these volatile categories, “core” CPI slowed to 2.8% y/y (0.1% m/m), also decelerating from February’s rate (3.1%). In a vacuum, March’s report extends a longer-running trend of disinflation, which we would think would cheer many observers. However, “The Consumer Price Index data for March was largely dismissed as dated because it likely captured only a fraction of the first wave of Trump's barrage of import duties, including a 20% tariff on Chinese goods and levies on steel and aluminum.” Many commentators worry President Donald Trump’s tariffs will lead to an inflation reacceleration and think the Fed must step in before prices get out of control. We understand the high-level logic: Tariffs are a tax businesses pay, and if they pass those costs on to their customers, consumer prices rise. But reality is more complicated. One, consider the scale: Tariffs apply to goods, and goods imports are about 11% of US GDP (per FactSet). So while new duties may make some price categories more expensive, they won’t apply to broad swaths of the economy. And for cost increases to stick, consumers would have to be willing to pony up—demand would have to be strong enough to support it. (One large retailer that rhymes with Small Cart already said they don’t plan to try passing them on at this time.) Therefore, to get hot inflation again, money supply must surge alongside tariffs, and the former is growing at a prepandemic pace—not a period known for its galloping prices. As for the Fed, central bankers’ ability to finetune the economy is vastly overrated, so we wouldn’t look to them to tamp down prices. We are monitoring developments closely, but tariffs reigniting inflation seems like a false fear to us.