More than half of global equity markets are trading at new highs, and very few are trading at new lows. If the second Trump administration is anything like the first, buoyant markets may lead to escalation on tariffs. Recently announced sectoral tariffs on copper sent prices sharply higher. Constantly changing tariff rates are making earnings forecasts more difficult. Fed policy is still restrictive, but it’s not as far from historical norms as you might think. High beta vs low volatility.
1. 2025 has been a strong year for global equities, not just U.S. ones:
2. The last period of international equity outperformance, from the perspective of U.S. investors, coincided with a falling Dollar:
3. The administration has reiterated many of the liberation day tariff rates following the July 9th deadline but, so far, the market has brushed it off:
4. Copper inventories have risen throughout the year in anticipation of sector-specific tariffs:
5. The U.S. imports about half of its copper from abroad:
6. Deutsche Bank expects a muted impact from tariffs in the second quarter:
7. The real yield on a 10-year treasury is only 50 basis points higher than its historical average:
8. The Fed may not follow the Taylor Rule, but it’s still a good sense check on monetary policy:
9. Low vol outperformed for decades until 2021. Since then, high beta has taken the spotlight:
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