Enjoy the 'Everything Rally' While It Lasts
Dear subscriber,
This week on Wall Street, markets ripped higher...
On Monday, President Donald Trump announced that his administration would pause its 34% reciprocal tariff on China and only impose the 10% baseline tariff. China would do the same, as the two countries continue negotiations.
That's on top of a deal he made with the U.K. to partially roll back tariffs on beef, ethanol, and autos.
Details are still sparse. And with the China tariff news specifically, it's yet again just another 90-day pause.
Still, this news was enough to send the broader market higher. The S&P 500 Index is up nearly 5% as we close out the week.
Today, there are two things I want to point out about this market...
First, it's an "everything rally."
Second, even though it puts the market higher than before "Liberation Day," that doesn't mean we can pretend like the market turmoil of the past three months never happened.
Let's start by talking about the everything rally...
A couple weeks ago, we covered how emotions run markets. But emotions on the way down are often very different than those on the way up.
When everyone gets scared, they just decide to "sell everything." When that happens, everything starts falling at the same time... Old hands say that, in a panic, "correlations go to 1," meaning everything is correlated.
But when the market rises, investors are more discerning. The market rise tends to be more logical. While there's such a thing as panic selling, we've never really seen panic buying... that is, until today.
See, this rally is about as close to panic buying as it gets.
Investors haven't been calculated in their buying recently at all. They've bought everything, sending the broader market right back to where it was.
As you can see, nearly all of the sectors that had fallen in the market downturn have popped right back up. The only real rocky territory has been in health care...
This kind of rally is strange.
Normally, you can watch a market rebound for signs of what's appealing to investors. But this broad rally isn't giving us any ideas about whether investors truly feel good about consumer spending... or technology... or industrials.
That's because everything is up.
Investors just want to buy stocks. Any stocks.
The tariff drama may have eased since Liberation Day, but nothing has actually changed in the economy over the past few months to warrant this kind of response.
For instance, shouldn't there be real reasons for certain sectors or stocks to be rising? Shouldn't something look different in industrials or manufacturing or retail? Isn't the point of tariffs to reshape the economy?
Like I said, the market is back to where it was in February... but the same can't be said for the economy.
Yes, Trump announced big tariffs... the market fell... and then he slowly walked his tariffs back until the market rebounded.
So no harm, no foul, right?
Not quite.
I'll set aside some of the bigger issues for now... like what this economic antagonism may have done to the long-term value of U.S. assets or the dollar. We've covered that.
Rather, I'll focus on the fundamentals – specifically, corporate earnings.
Even though the market hasn't set new highs, it's already as expensive as it was back in February.
That's because earnings expectations for the S&P 500 have contracted. Both expectations for 2025 and 2026 have been falling since the start of January...
Now, perhaps with the tariff relief, those estimates have gotten too low. Maybe expectations will be raised... or the companies in the S&P 500 will beat expectations.
But if you look at the bigger picture, earnings estimates are lower because economic growth expectations have sagged.
And that's due to terrible sentiment among consumers and businesses.
We've covered this at length, though we still don't yet know just how consumer spending will change whether there are tariffs or not.
On Thursday, retail sales came out. Growth was slightly positive. And that's better than expected... But we're still getting dangerously close to retail sales contracting.
So while the market is back to where it was, the prospects for the economy have changed.
These aren't easy markets to navigate. They can whipsaw investors in and out. And many of the challenges investors have faced – like a weakening dollar and bonds falling alongside stocks – are outside the risks normally considered.
Most don't have a playbook for times like these.
For instance, at Stansberry Research, we have a premium product called the Total Portfolio. Part of our Portfolio Solutions suite of products, it holds stocks and other assets that will help protect you in the event of a market downturn. It's focused on safer, less volatile positions that will help you build long-term wealth.
And while the market is down 1.4% since the start of February, our Total Portfolio has gained 4.4%.
I only point that out because it has taken an enormous effort and a full team of experts to be able to produce that kind of return. But most importantly, it didn't come from reacting to the market.
We only made two trades over the past three months.
You need to consider the risks and understand your portfolio before the markets go wild.
Right now, this rally looks fairly overextended... and powered by "FOMO" (a "fear of missing out"), rather than a sober analysis of the future of the economy.
You should be watching consumers. See how busy your local mall is. Talk to people about what they've bought – or held off on buying – as the tariff story has played out. And of course, watch the economic data coming in.
That – along with continued tariff relief – is what's going to drive this market.
What Our Experts Are Reading and Sharing...
This is the tough part about negotiations. China played hardball and got a better trade deal. Now, India is doing the same. According to Bloomberg, India threatened retaliatory tariffs on the U.S. just hours after the U.S.-China trade deal was announced. And this comes after a previously passive negotiation, where India had already offered several concessions to the U.S.
A few months ago, the Federal Reserve Bank of St. Louis published a simple explainer about egg prices. As it discusses, egg prices are determined by supply and demand. They have a "surprisingly sophisticated marketplace" called the Egg Clearinghouse. And unfortunately, egg prices are expected to rise another 41% in 2025 due to the avian flu.
After centuries of trying, scientists have finally (accidentally) found a way to turn lead into gold. They only produced about 29 trillionths of a gram. And it took the $4.75 billion Large Hadron Collider high-energy particle accelerator in Switzerland to do it.
New Research in The Stansberry Investor Suite...
Every 39 seconds, a hacker tries to gain access to someone's computer or network.
That's more than 2,000 attacks per day, where someone either tries to steal data, cause damage, or disable operations.
Often, hackers will break into a system, lock it up, and only unlock it when paid a big ransom. Between 2018 and 2023, these "ransomware" attacks against U.S. health care systems rose by 264%.
Overall, Americans reported more than $16 billion in cybercrime-related losses to the FBI in 2024 – a sixfold jump from 2018.
The average cost of a single data breach in the U.S. clocks in at $9.5 million. But in some cases – like with hospitals, banks, or major manufacturers – it can be much higher.
For these companies, it's crippling when their computer systems go dark. The longer it takes to recover data, the more they stand to lose.
But what can you do? If you pay the hackers, it just encourages them to continue what they're doing. They'll find new targets and keep getting paid.
If you don't pay them... well, you likely have to rebuild your entire business.
This month, the Stansberry Innovations Report team has found a company with a better solution...
Like most great technologies, the idea is fairly simple to explain (even if the tech itself is highly complex).
This company offers protection against cyberattacks, but it goes even further... It offers "cyber resilience."
It helps companies back up files... detect breaches... respond to cyberattacks... and recover quickly when the worst happens. That way systems can be reinstated in a flash.
The company partners with some of the biggest names in the tech industry, including Microsoft (MSFT), Cisco Systems (CSCO), and a subsidiary of Alphabet (GOOGL).
And that's helping it grow its business fast. Sales are expected to rise more than 30% in its fiscal 2026 and another 25% in fiscal 2027.
This is a growth stock in a growth industry.
Stansberry Investor Suite subscribers can read the entire report here.
If you don't already subscribe to The Stansberry Investor Suite – and want to learn more about our special package of research – click here.
Until next week,
Matt Weinschenk
Director of Research
What do you think about This Week on Wall Street? Send any and all feedback to thisweek@stansberryresearch.com. We read every e-mail you send in.