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“Try and fail,but don’t fail to try.” – John Quincy Adams
Below is a snippet of commentary from today’s Morning Lineup. Start a two-week trial to Bespoke Premium to view the full report.
The S&P 500 hit another record high yesterday as certain speculative areas of the market continued to surge. This morning, though, bulls are taking a break as the latest round of tariff announcements from the President set the stage for a negative end to the week. The latest announcement causing the damage is a 35% tariff announcement on Canadian imports in what the President says is a response to the country allowing fentanyl to cross the border into our country. He then added that the 35% levy will go even higher is Canada retaliates. More broadly, President Trump also said he was planning blanket tariffs of 15% to 20% on any countries he hasn’t already sent letters to.
Futures are negative in response with the S&P 500 and Nasdaq indicated to open down 0.5% at the open. Treasury yields are also higher, but the 10-year yield remains below 4.4%. Crude oil and gold are both up 1%, but the gains in other precious metals like silver, platinum, and palladium are even larger at 3%+. The biggest moves to the upside are in the crypto space as Bitcoin is surging close to 4% at a record high of just under $118K while Ethereum is trading just under $3,000 with a gain of 6%.
Like the declines in US futures, Asian markets were mostly lower last night on concerns related to the latest Trump Tariff announcements. Those losses also overflowed into Europe as the STOXX 600 faces a decline of nearly 1% to close out the week.
In terms of what is leading the market, mega-caps remain in charge. The chart below shows the relative strength of the S&P 500 equal-weight (RSP) vs market cap weight (SPY) indices. When the line rises, it indicates outperformance of the equal-weight index, while a falling line indicates that the market-cap-weighted index is outperforming. At this time last year, RSP was in the middle of a short-term burst of massive outperformance, but the gains were fleeting, and by the end of the year, RSP had given up all of its outperformance relative to SPY. In the first quarter of this year, RSP outperformed again, but just like the fourth quarter of last year, the second quarter of this year saw RSP once again give up all of its outperformance. At one point, RSP will take the lead and keep it for a while, but for now, SPY keeps retaking the lead.
Looking ahead, depending on your time horizon, the calendar is either a good friend or an adversary. Over the last ten years, the S&P 500’s median performance in the week following the close today has been a gain of 1.32% and ranks in the 93rd percentile of all one-week periods throughout the year. Over the next three months, though, the S&P 500’s median gain of 0.64% ranks in just the 15th percentile as the months of September and October become a larger part of the three-month view.
