Worldly Thoughts
Uncertainty everywhere... The foundation of a portfolio... New all-time highs again today... Early earnings-season trends... Hard data on tariffs... A case for more gains in U.S. stocks... About those crypto bills...
I was sitting across from someone from the 'Davos crowd'...
We're not going to betray anyone's confidence... But without naming names, I (Corey McLaughlin) will tell you about a member of the world's financial "elite" I met yesterday in Washington, D.C.
He's a former Wall Street investor... has been a multiple-time business owner and successful CEO... and is a member of the World Economic Forum that gathers in Davos, Switzerland each winter. That's the conference where so many attendees come by private jet, and where Argentine President Javier Milei has been somehow invited to give a speech two years in a row.
During our chat, the person I was talking to discussed business and seemed a bit stressed. Eventually, I asked for his opinion on a question that I suspected was on his mind: What's most concerning to you about the economy today? He paused for a few seconds and said...
We live in an interconnected world, and there's so much uncertainty of so many different kinds, everywhere. An incident anywhere in the world can quickly hit people all over the world... It's just a volatile world right now.
It is. We all know that. Politics. Wars. Tariffs. We can go on...
Around the same time we were speaking, news was breaking of hackers successfully attacking Microsoft (MSFT). The cyberattack focused on servers that host the company's SharePoint software, which countless businesses and government agencies use for sharing and managing documents.
The Davos crowd will probably be fine, but the point stuck with me... about the hesitancy that many people might feel about being in the market at all today, or putting new money to work, given the risks that seem to be coming from all angles.
But what are we to do? Nothing?...
No. I was also reminded of something our founder Porter Stansberry said during a free presentation he released last month.
While detailing one of those risks – the "fiscal cliff" that the U.S. is facing – Porter also said this...
What I want people to understand today is this... Owning America's best businesses is still the absolute No. 1 way to protect and grow the value of your wealth right now. Frankly, it might be the only way at this point.
Don't lose sight of this big picture: As a foundation for your portfolio, own shares of high-quality businesses and trust them to protect and compound your wealth, no matter what's going on with tariffs, war, politics, or anything else.
Manage risk, of course. Be aware of what could be coming around the corner. That's why we're always eyeing up potential "surprises"... or gauging if fear or greed is dominating the market. We're watching for buying opportunities and looking out for times when the market is too giddy.
As we wrote on Friday, this current rally is real and so is risk (with both individual traders and Wall Street money managers' behavior back in the greedy category). And the market keeps pushing higher.
Today, the benchmark S&P 500 Index and the tech-heavy Nasdaq Composite Index once again hit new all-time highs. Volatility was subdued again, with the CBOE Volatility Index ("VIX") once again sticking under 17. Even Microsoft shares were essentially flat today.
Early earnings-season trends...
It's early yet, but this earnings season – which began in earnest last week with the big banks reporting – hasn't done anything to cool bullish market sentiment.
As of Friday, 12% of the S&P 500 had reported second-quarter numbers and 83% reported a positive revenue "surprise" versus Wall Street expectations, according to FactSet. That's higher than the 10-year average of 64%.
Part of this outperformance comes from Wall Street's lower expectations. That's due to all that uncertainty, including around tariffs. Still, better-than-expected numbers are good, and they support the theory that tariffs won't be "as bad" as originally thought.
Now, that may or may not be true...
Tariffs have been a hot topic in our pages lately. And we wrote last week that inflation impacts may just be starting to show up in the "official" data, as shown in the June consumer price index ("CPI") report.
Our Director of Research Matt Weinschenk dug deeper into the inflation numbers in his latest This Week on Wall Street report on Friday...
When you dig deeper, you see that inflation is hitting goods more than services. The very products you'd expect to show inflation from tariffs are showing, well... inflation from tariffs...
One benefit of Trump's tariffs was supposed to be growth in U.S. manufacturing and related jobs.
But we haven't seen that yet. In fact, the number of manufacturing jobs is declining...
Overall, we're still trying to understand how these tariffs will affect the economy.
Classic economics told us they would bring inflation. And so far, it looks like they have. Any manufacturing benefits, on the other hand, will take longer to materialize.
Read Matt's full piece here, or watch his weekly This Week on Wall Street video on our Stansberry Research YouTube page...
And be sure to like and subscribe to get more of our free video content, like our Stansberry Investor Hour interviews, Diamond's Edge Live sessions, and more.
The Magnificent Seven vs. the field...
Another thing to watch for the rest of this quarter's earnings is the performance of the "Magnificent Seven" versus "everyone else." Because if the popular mega-cap tech stocks disappoint, the major U.S. stock indexes will likely feel the pain.
We mentioned that companies have beaten Wall Street's low expectations so far. But Wall Street has high hopes for the Mag Seven (Apple, Amazon, Alphabet, Nvidia, Meta Platforms, Microsoft, and Tesla), anticipating their earnings to rise 14.1% from this time last year. The rest of the "S&P 493" are only expected to grow quarterly earnings by 3.4% year over year.
Alphabet and Tesla report after the close on Wednesday. Stay tuned.
The odds are in your favor...
Our colleague and DailyWealth Trader editor Chris Igou shared some research today that suggests more gains in U.S. stocks by year-end.
He looked at prior instances since 1990 in which the S&P 500 gained at least 6% in the first six months of the year (which just happened this year)...
It's easy to miss that the S&P 500 Index turned positive going into June. That's because in late May, we were still in the red. And just a month before, we'd watched the S&P 500 drop near bear market territory.
But while the move up in June may seem trivial, it's actually an important shift. That last month put the S&P 500 up more than 6% for the year on a total-return basis. Check it out...
Sure, you might see that number and think, "So what? It's not a record-breaking number." And you're right, it's not. But we still wanted to highlight what typically happens when the market has a 6%-plus move in the first half of a year.
Looking at more than 30 years of data, similar cases have led to gains over the next year 77% of the time. And a modest, but productive 11% gain is the base case. As Chris continued...
Let's look at the breakdown of buying after similar cases to today...
The typical gain over six months is 4.7%, slightly below the 5.2% return over the 35-year period. But that return goes up to 11.2% over a year, beating the buy-and-hold strategy.
Even more, these are just the base cases. There were six instances where the S&P 500 rose double digits in six months. Yet, there was only one double-digit loss.
The upside gets better when you look at the one-year results. Half of the winning trades were double-digit gains. And the biggest winner was up 29%.
In short, these numbers aren't off the charts. But they do show that there's plenty of upside from here as this bull market continues.
After the bull run we've seen since mid-April (the S&P 500 is up 27% since April 8), it's reasonable to expect a slowdown in returns through the second half of the year – and history suggests just that. But it would be just a blip in a favorable long-term trend.
And about those crypto bills...
Last week, we wrote to you about the three cryptocurrency bills that were up for debate in Congress...
On Friday, President Donald Trump signed one of them into law: the GENIUS Act. Two others have passed through the House of Representatives but still need to clear the Senate.
As our Crypto Capital editor Eric Wade explained in his latest weekly video update for his subscribers on Friday...
The GENIUS Act establishes a regulatory framework for stablecoins... the Clarity Act makes clearer what falls under the U.S. Securities and Exchange Commission ("SEC") and the Commodity Futures Trading Commission... and a third bill prevents the Federal Reserve from issuing its own digital currency.
Bitcoin, the world's most popular crypto, has been trading between about $117,000 and $120,000 over the past few days. That's just a few percentage points off its all-time intraday high of around $123,000 set one week ago.
Bitcoin is another asset we've long suggested owning as part of a diversified portfolio, along with high-quality stocks, some gold (up more than 1% today), and cash.
It's a financial recipe to survive a volatile world.
New 52-week highs (as of 7/18/25): Alpha Architect 1-3 Month Box Fund (BOXX), CBOE Global Markets (CBOE), Cameco (CCJ), Crispr Therapeutics (CRSP), Comfort Systems USA (FIX), GE Vernova (GEV), iShares U.S. Aerospace & Defense Fund (ITA), Neuberger Berman Next Generation Connectivity Fund (NBXG), NetEase (NTES), Ormat Technologies (ORA), Planet Fitness (PLNT), Sprott (SII), TransDigm (TDG), Global X Uranium Fund (URA), and Utilities Select Sector SPDR Fund (XLU).
In today's mailbag, more thoughts about tariffs... Do you have a comment or question? As always, e-mail us at feedback@stansberryresearch.com.
"In the 7/18 Digest subscriber D.M.'s comments are spot on in my experiences. Hopefully, the Trump administration's emphasis will be on bringing the manufacturing of essential goods back home once the dust settles in the trade balance which is what the tariffs are all about. Then they can see more clearly which non-essential products can and should be made overseas." – Subscriber Michael U.
"I have tried mightily to stay out of the fray since most comments have covered the two sides of the deficit/trade story. But Ryan S. 'got my goat' [in Friday's mailbag]. He believes that paying for the groceries he buys is a 'trade deficit'? If that is true, he has a huge deficit with his employer for the cumulative wages his employer has paid him over the years he has worked there. Is he thinking of paying them back?
"Adam Smith in 1776 (a long time ago), did describe how nations can increase their wealth: the low-cost widget producing country(A) exports to the higher cost country(B) and vice versa. The key point is the vice versa part of the equation. What if country A does not allow (blocks) imports from country B of the products that country B is the low cost (or higher quality) producer of? This is the modern-day economic dilemma.
"Since WWII practically every country in the world has blocked imports from U.S. companies and runs annual trade surpluses with the USA. Why? To keep their population employed. How? Government subsidies. And U.S. corporations have been more than happy to cooperate in this process since they get access to dirt cheap labor. The USA let this process continue for decades as Japan, Pacific Islands, and Europe were decimated in WWII and they had to rebuild (and we wanted them and helped them to rebuild). But when is it enough and when is it time to revisit Adam Smith? In my opinion the time is now." – Subscriber Jim P.
"STANDING APPLAUSE FOR SUBSCRIBER JOHN W.'S 'TOUGH' RESPONSE [ON TUESDAY]." – Stansberry Alliance member William C.
All the best,
Corey McLaughlin with Nick Koziol
Baltimore, Maryland
July 21, 2025