Macro

RFK Jr. confirmed as HHS Secretary; vaccine/pharma and FDA fear

Trump's tariff escalation raised construction and material costs and kept inflation and rates elevated, leaving housing sluggish and office CRE still distressed though bottoming in some markets; a grinding, modestly negative year for owners.

The US imposed a 15% tariff on most EU goods effective July 1, 2026. The USTR also proposed up to 12.5% Section 301 forced-labor tariffs on 60 trading partners, with a hearing scheduled for July 7. A temporary 10% global tariff set to expire July 24 faces uncertainty as Congress debates its extension following the Supreme Court's February ruling against IEEPA tariffs.

Industrial sentiment improved slightly despite new tariffs, as markets anticipated short-term supply chain disruptions to be offset by increased domestic production activity. The Trump administration’s broad tariffs on Canada, Mexico, and China tightened import cost pressures, but also catalyzed nearshoring momentum and capital retooling in U.S. manufacturing. Sector performance was underpinned by expectations of rising capital expenditure to adapt to trade barriers, tempering the negative impact of tariff-driven uncertainty.

The US imposed a 15% tariff on most EU goods effective July 1, 2026. The USTR also proposed up to 12.5% Section 301 forced-labor tariffs on 60 trading partners, with a hearing scheduled for July 7. A temporary 10% global tariff set to expire July 24 faces uncertainty as Congress debates its extension following the Supreme Court's February ruling against IEEPA tariffs.

Raw materials are trading higher this month despite tariff-driven trade tensions, as the imposition of U.S. tariffs on Canada, Mexico, and China has disrupted supply chains and increased input costs for processed materials. The resulting price dislocations and expectations of rerouted global flows have boosted near-term valuations for base and industrial metals, particularly those reliant on cross-border supply chains. Market sentiment is further supported by inflation hedging demand and inventory repricing, outweighing near-term demand risks from trade fragmentation.

Financial markets absorbed the latest round of tariff announcements without significant dislocation, as the measures—while broad in scope—were largely anticipated and did not introduce new mechanisms beyond existing trade policy frameworks. Sector sentiment remained neutral as investors focused on resilience in credit markets and stable banking sector performance, which offset modest downside risks from potential trade friction. The absence of immediate escalation or financial system-specific interventions kept the sector broadly on hold.

Consumer sector sentiment is flat, as the imposition of tariffs on Canada, Mexico, and China has yet to materially disrupt supply chains or pricing for most finished goods. Broader import cost pressures remain contained, allowing retailers to maintain margins and promotional flexibility. The neutral read reflects limited near-term impact on consumer spending behavior despite elevated trade tensions.

Meta, Amazon, Alphabet, and Microsoft plan up to $320 billion in combined AI and datacenter spending in 2025, up from $230 billion in 2024, driven by competitive pressures and cloud growth opportunities. Despite market concerns and short-term cloud performance hiccups, executives remain committed, signaling sustained investment to maintain technological leadership and capitalize on long-term AI demand.

Tech sentiment is neutral this month despite the projected $320B AI spending by megacaps in 2025, as that bullish signal is fully priced in. The sector’s mood is stable but not euphoric, with no new near-term catalysts to lift valuations further. Broader market resilience supports the backdrop, but tech trades on expectations already baked into current multiples.

Meta and Alphabet AI-ad strength kept owners positive, interrupted by the January DeepSeek shock and April's Trump tariff selloff that raised hardware-cost and recession fears. Positive with a spring dip.

The late-January DeepSeek shock briefly crashed our AI-power trade on fears demand was overstated, but the data-center buildout and nuclear and gas-turbine supercycle reasserted themselves, keeping owner sentiment strong through tariff-driven volatility.

Oil producers were squeezed as OPEC+ raised output into tariff-driven demand fears and prices tanked, but power generators, nuclear, and gas-for-electricity boomed on record capacity prices and relentless AI data-center demand; a brief June war spike round-tripped…

European rearmament (the EU 'ReArm Europe' plan), the June NATO 5% spending target, and the June Israel-Iran war with US strikes on Iran's nuclear sites drove euphoric demand; China's rare-earth export curbs added an input-supply risk but demand overwhelmed it.