Daily Stock Market Articles

Welcome to the Start of a New Bull Market?


“The more things change, the more they stay the same.” French writer Jean-Baptiste Alphonse Karr

What a run stocks have been on the past two months! We came into this year with everyone all bulled up after back-to-back 20% years, then stocks tanked in historic fashion after Liberation Day, so those same bullish Strategists and 50 person institutional research shops cut their S&P 500 targets near the April lows, now with stocks back up near new highs they are upping their targets.

This great chart from our friends at Yahoo! Finance sums it up.



We never cut our view on the S&P 500, leaving our target at a range of 12-15% for 2025, even when stocks were down 15% for the year on April 8. As we noted that exact day, it was still quite possible for stocks to come back to positive when the year was all said and done, especially with some good news on trade, which is exactly what has happened.

Three times historically we saw stocks down 15% or more for the year and get back to positive and all three of those times gained more than double digits for the year, something we still think is likely this time around. As I’ve said before, this is like a beachball under the water and once it gets momentum it can really get moving.



What a Two-Month Run
It is crazy to think just how bearish everyone was two months ago. I was hearing from people I hadn’t heard from for years and they were all convinced Trump’s tariffs were going to wreck our economy and crash the stock market. We did of course have a near bear market and one of the worst two-day drops ever after Liberation Day, so emotions were no doubt running high. Still, this is why sentiment is so powerful, as the opportunity was there to fade what nearly everyone was saying and be open to a major snap back, which is exactly what has happened.

We went from one of the worst two-month returns ever to one of the best. As we’ve noted time and time again this year, investors need to be aware that the worst and best days tend to happen in clusters and if you sell after some bad days, you’ll likely only miss out on the best days, which is exactly what happened to many investors.



So just how rare is it to see stocks up more than 20% in two months? Very rare and the good news is it is also very bullish. Only five other times since 1950 have stocks been up more than 20% in such a short period and those times were all great times to be looking for continued strength.

As you can see below, stocks gained after this rare signal 1-, 3-, 6-, and 12-months later every single time. Up a year later by more than 30% on average! Of course, all those other occasions saw much bigger prior selloffs, so we aren’t calling for such a big gain (but we wouldn’t complain!), but this is yet another reason to remain optimistic the second half of 2025. I mean, look one more time at those dates: February 1975, October 1982, December 1998, April 2009, May 2020, and now. Those were times to be open to much better times and this time should join them.



A New Bull Market? Nope
Stocks are officially up more than 20% from the near bear market lows of early April, so are we in a new bull market? If down 20% is a bear market then is up 20% a new bull market? I’d say no, as we never left the bull market is my take. As the quote from Karr above implies, things might have changed some earlier this year, but we are now right back to your regularly scheduled bull market.

Here’s a nice chart we’ve shared before that shows bull markets tend to be choppy and frustrating right around now, which sure played out this time. The good news though is once you can get past this rough part of the bull, better times are coming and they can last many years.



Lastly, we found 17 bear or near bear markets going back to World War II and once stocks were up more than 20% off those lows (like what just happened last week), continued good times usually were right around the corner. You’d think up 20% would mean you’ve missed the rally, but history would say the bull still has plenty of gas left in the tank. Incredibly, stocks were higher a year later 16 out of 17 times, with a very impressive average return of nearly 19%. Oh, and that one time that didn’t work? It was a 100-year pandemic.





Thanks for reading. It isn’t lost on us you can get financial research from so many other places and we are honored you are coming to our team. We won’t always be right, we won’t always be wrong, but we will always be honest. And honestly, things still look pretty darn good.

 

4 Reasons We Believe That Israel’s War Against Hamas Won’t Be Market Moving and 2 Things That Could Change That


We have received several questions about the potential market impact of Hamas’ brutal terrorist attack on Israel, the Israeli response, and the on-going aftermath. Thinking about these kinds of issues is our job, but we are also well aware that these considerations are trivial compared to the events themselves and the lives they impact.

Looking at the numbers, after just a few trading days markets have been resilient overall. On Monday and Tuesday combined:

• The S&P 500 Index was up 1.2%.
• The more economically sensitive Russell 2000 Index of small cap stocks was up 1.7%.
• The MSCI EAFE Index of international developed stocks, which tends to be more sensitive to oil supply shocks in the Middle East, was up 2.2%.
• Oil (West Texas Intermediate) did jump on Monday but was down slightly Tuesday, with a still meaningful two-day gain of just under 4.5%.
• U.S. bond markets were closed Monday, but the 10-year Treasury yield declined sharply Tuesday, Treasuries’ role as a safe haven asset dominating any inflation fears from higher oil prices.
• Gold, sometimes also treated as a safe haven asset in the face of geopolitical risk, climbed 1.6%, a meaningful but not outsized move.

The reaction thus far has been somewhat benign compared to geopolitical shocks historically. Markets are a forward-looking and typically will look ahead to the economy recovering from the initial shock even as some uncertainty persists.

Looking at a list of similar historical events (that still vary in scale quite a lot) median performance over the next year is somewhat lower than historical returns. The average return is also weaker than the median return, signaling some asymmetrical downside risk. But context here is very important.



Keep in mind that much of the negative market behavior is likely not driven by the geopolitical event itself. For example, the U.S.S. Cole bombing was coincident with the tech bubble bursting in 2000. What stands out from the chart is not so much the downside risk of geopolitical events, but the coincidence of drawdowns and recessions independent of geopolitical risks. If you look at the major drawdowns, most take place during or near a recession, including 1956, 1973, and 2000-20001.

But there are cases where geopolitical risk played some role in the decline. For example, Russia’s invasion of Ukraine worsened already building inflationary pressures, eventually contributing to an aggressive Federal Reserve and weighing on equity markets. But that has been the exception rather than the rule. Markets saw strong gains despite the start of the Iraq invasion in 2003 and Israel’s Six-Day War in 1967. And, of course, the bigger picture beyond the more tactical 12-month time frame is that the markets have always recovered.

Despite several Middle Eastern conflicts that did not lead to market drawdowns, the Yom Kippur War in 1973 played at least some role in the ensuing market sell-off, but we believe the current circumstances are quite different. In October 1973, an Arab coalition led by Egypt and Syria launched a surprise attack against Israel on Judaism’s holiest day, Yom Kippur. After detecting Soviet resupply to Syria and Egypt, the U.S. began a massive resupply of Israel. The oil cartel OPEC responded by declaring an oil embargo against the U.S. and other countries. In 1973, the U.S. had grown increasingly dependent on foreign oil. As a result of the embargo, oil prices tripled and the added strain on the economy was one of the causes of the recession.

While there are several themes in play related to the current conflict, times have changed significantly.

• Hamas has tried to expand the conflict by implicating Iran’s support, much as the Yom Kippur War also became a Cold War flashpoint. The claims have been treated as suspect thus far by U.S. and Israeli military intelligence but the issue is unresolved. Nevertheless, Iran is not the cold war Soviet Union and Russia itself is depleted by its ongoing war in Ukraine.
• While there are various degrees of tensions between Israel and its neighbors, as of now the scope of the conflict is relatively narrow, focused geographically on Gaza.
• The dependency of the U.S. on foreign oil is dramatically different than it was in 1973. In the 1970s the amount of oil demand that could be met through domestic production was in decline. Today, U.S. production alone could meet almost all of the domestic demand. In fact, the U.S. is able to export a little under half its oil, actually making it a net oil exporter. As seen in the chart below, in 1973, oil exports were 4% of imports. In 2022, they were 115% of imports.
• In addition, Canada, not OPEC, is the largest source of foreign oil, and accounts for approximately four times the imports from all of OPEC.

Two risks do remain:

• There is, of course, the possibility for the conflict to expand and the Middle East remains a sensitive region. We view this as unlikely but still uncertain at the margin.
• The largest economic vulnerability for now is similar to the Ukraine conflict. Central banks, businesses, and consumers remain sensitive to inflation risk even as disinflation continues to be the primary path that prices have been following. As a result, broader sensitivity to higher oil prices may be more acute than usual. And even if OPEC’s role has diminished, particularly in the U.S., oil supply and demand is still a global phenomenon. But keep in mind that we are still well off peak oil prices from the last year and consumers have remained resilient even at higher price levels. The most salient impact of oil prices on American is via gas prices, and the good news is that prices at the pump have been falling recently despite the run-up in oil. Shrinking refining margins means pump prices are likely to fall even further. That’s a tailwind for American households, and consumption.

The Carson Investment Research team has not changed its overall market outlook in response to the conflict, although we continue to monitor the situation closely. We remain overweight equities but do favor the energy sector. In addition, we remain cautious on rates but have recommended adding duration (interest rate sensitivity) to bond portfolios as rates climbed sharply higher, although our recommended positioning remains below the duration of the Bloomberg U.S. Aggregate Bond Index. Most importantly, we think the U.S. economy can continue to avoid recession on the resilience of the U.S. consumer.

 

More Chaos, but That Shouldn’t Be a Surprise


Thursday, June 12, has been a tragic and exhausting day. It started with the terrible crash of an Air India flight in India, killing over 250 people—the worst aviation disaster in India since 1996. Then the day ended with Israel striking Iran, targeting their nuclear program and killing several top Iranian military officials (including the head of Iran’s powerful Islamic Revolutionary Guards Corps).

This is coming on the heels of the Liberation Day tariff situation, which was subsequently reversed after the market went through a near bear market. The S&P 500 had just about been approaching its prior new high. And now this. However, as tragic as these events are, let’s keep some perspective, at least from a market standpoint.

It sounds like a lot and it is, but as my colleague Ryan Detrick says, chaos is normal. Here’s a chart he created that sums it all up nicely. Amid some of the worst events in history, stocks have continued to eventually move higher, suggesting all those scary times and lower prices were really good opportunities. They sure didn’t feel like it at the time, but they were.



That doesn’t mean you should ignore these events, as they can cause a lot of volatility in markets, and even the economy. Russia’s invasion of Ukraine tipped inflation over the edge, and we got the higher inflation in 40 years back in 2022—ultimately resulting in a bear market for stocks, with bonds failing to provide diversification. 9/11 was another tragic event that pushed the economy over the edge into a recession, and pulling the dot-com crash into its third year. But the reality is bad news eventually will give way to good news. What that chart above doesn’t show is all the good things that have happened throughout history and it is safe to say they dwarf the negatives. If anything, the fact that the line in the chart has moved up and to the right over time tells you about the dynamism of the US economy, and US companies in particular, as they navigate all sorts of crises.

Volatility Is Normal
Of course, investing in stocks doesn’t come easy, and the return premium you get for investing in stocks over bonds (and pretty much most other asset classes over time) in part reflects the fact that they are volatile. We just went through a near bear market in April, with the market dropping just about 19%. I have no idea what happens over the next few days, or even weeks, but I do know that another bout of volatility would not be surprising. A market correction of 10% happens most years, and sometimes more than once. They are more normal than you might think.



The table below shows geopolitical events that have occurred over the last 80+ years (note that they vary a lot in terms of scale), along with median performance of the S&P 500 over the following year. The median return is a bit lower than the historical average return overall. The average return is also weaker than the median return for these events, signaling some asymmetrical downside risk. But context here is very important.



As my colleague Barry Gilbert wrote after Hamas attacked Israel in October 2023, much of the negative market behavior after these geopolitical events is often not driven by the event itself. For example, the U.S.S. Cole bombing was coincident with the tech bubble bursting in 2000. What stands out from the chart is not so much the downside risk of geopolitical events, but the coincidence of drawdowns and recessions independent of geopolitical risks. If you look at the major drawdowns, most take place during or near a recession, including 1956, 1973, and 2000-2001.

But there are cases where geopolitical risk played some role in the decline. For example, Russia’s invasion of Ukraine worsened already building inflationary pressures, eventually contributing to an aggressive Federal Reserve and weighing on equity markets. But that has been the exception rather than the rule. Markets saw strong gains despite the start of the Iraq invasion in 2003 and Israel’s Six-Day War in 1967. And, of course, the bigger picture beyond the more tactical 12-month time frame is that the markets have always recovered (going back to the first chart).

Despite several Middle Eastern conflicts that did not lead to market drawdowns, the Yom Kippur War in 1973 played at least some role in the ensuing market sell-off. In October 1973, an Arab coalition led by Egypt and Syria launched a surprise attack against Israel on Judaism’s holiest day, Yom Kippur. After detecting Soviet resupply to Syria and Egypt, the U.S. began a massive resupply of Israel. The oil cartel OPEC responded by declaring an oil embargo against the U.S. and other countries. In 1973, the U.S. had grown increasingly dependent on foreign oil. As a result of the embargo, oil prices tripled and the added strain on the economy was one of the causes of the recession.

Could oil prices surge again? Perhaps, but OPEC has plenty of capacity to ramp up production (and will be under immense pressure from the Trump administration to do so). US shale will also be bolstered by oil prices rising above $70/barrel, and that is another major potential source of supply. Of course, the scale of disruption matters here, as we saw after Russia’s invasion of Ukraine.

Diversification Helps, Even More So Now
Diversification has not been a portfolio allocator’s friend over the last decade, but it’s proven its mettle this year after the Liberation Day tariffs. Uncertainty related to policy has been high this year, and as we’ve noted across several blogs this year, “when in doubt, diversify it out” (credit to my colleague Grant Engelbart for coining this). We do remain overweight equities, but are underweight small and mid-cap stocks, which helps reduce overall portfolio volatility. Also, since the beginning of the year (even prior to Liberation Day) we moved to a more neutral weight across US and international stocks.

One striking thing that’s happened post-Liberation Day is that even as stocks (and bonds) have more or less retraced their moves, the dollar has continued to weaken. During the early moments of the latest Middle East tensions, it was noteworthy that the dollar didn’t strengthen as much as it has during previous risk-off situations like these. S&P 500 futures plunged over 1.5% after the news came out, but even bond yields didn’t drop as much as you’d normally expect given the situation. Within a few hours of the strikes, the US dollar index was up less than 0.3% and the 10-year yield was down just 0.02%-points. It was clear that the typical “safe haven” bid for the US dollar and US Treasuries was missing. It’s hard to say whether there’s a structural shift—there’s enormous uncertainty around that. But if the dollar continues to weaken, that’s going to help international stocks relative to US stocks.

Even beyond stocks, one thing we have been discussing for a couple of years now is the need to diversify our diversifiers and go beyond bonds to diversify portfolio risk. Bonds may work well in a deflationary recession type environment, but not in one where we see more inflation volatility. And that’s certainly a possibility given potential supply shocks across the world (including tariffs, but also geopolitical tensions). This is why we are overweight low volatility stocks and include other non-correlated asset classes like gold and managed futures (which often includes commodities exposure) within our diversifier bucket. At the same time, we still have longer-term bonds as part of the mix.

Here’s a table Barry’s shared for some time now, showing which diversifiers worked (or didn’t) in major drawdowns since 1998’s 19.2% S&P 500 decline. What’s worked best has depended on the market environment. Most generally, bonds have fared well and commodities have fared poorly in downturns, but sometimes it’s been dramatically different, like in 2022 when inflation (and oil prices) spiked. Outside of 2022, it makes sense that commodities have underperformed—stock downturns often happen during periods of economic weakness, when lower demand weighs on commodity prices. But gold is not primarily an industrial commodity, so its pattern has been different.



From a portfolio perspective, the takeaways are that diversification is important, but it’s not enough to rely on a single source of diversification in a portfolio all the time. It’s important to understand what environment you’re in. And if the environment is uncertain, as we think the current one is, having exposure to different kinds of diversifiers can be beneficial.

The Carson Investment Research team has not changed its overall market outlook in response to the conflict, although we continue to monitor the situation closely. The economy is not as strong as it was a year ago, or even two years ago. The labor market is looking more shaky amid weak hiring, and elevated rates and tariff uncertainty has led to struggles within the housing and manufacturing sectors. As I wrote last week, our own proprietary leading economic index tells us that risks are higher than they were at the end of last year, and that’s something to be aware of. This is a big reason why we’re cautiously overweight equities, rather than pedal to the metal (as we were over the last two years). And why our portfolios are more diversified than they have been in the past.

 

Volatile June Quad Witching Options Expiration

The second Quadruple Witching Week of the year brings on some volatile trading with losses frequently exceeding gains. NASDAQ has the weakest record on the first trading day of the week, down 23 times in 43 years. Quad-Witching Friday is usually better, S&P 500 has been up 12 of the last 22 years, but down 8 of the last 10.

Full-week performance is choppy as well, littered with greater than 1% moves in both directions. The week after June’s Quad-Witching Day is horrendous. This week has experienced DJIA losses in 29 of the last 35 years with an average performance of –0.81%. S&P 500 and NASDAQ have fared better during the week after over the same 35-year span. S&P 500 averaged –0.48%. NASDAQ has averaged -0.01%. Sizable gains in 2021 and 2022 during the week after improved historical average performance notably.

 

Christmas in July: NASDAQ’s 12-Day Midyear Rally Could Deliver New All-Time Highs

Tech’s influence in the market continues to grow and the market’s focus in early summer often shifts to the outlook for second quarter earnings of technology companies. In anticipation of positive results, over the last three trading days of June and the first nine trading days in July, NASDAQ typically enjoys a rally. This 12-trading-day run has been up 31 of the past 40 years with an average historical gain of 2.5%. Look for this rally to begin around June 26 and run until about July 14.

After the bursting of the tech bubble in 2000, NASDAQ’s mid-year rally had a spotty track record from 2002 until 2009 with three appearances and five no-shows in those years. However, it has been quite solid over the last fifteen years, up thirteen times with just two losses. After struggling during the bear market in 2022, NASDAQ resoundingly snapped back the past two years recording gains of 4.1% and 3.8% in 2023 and 2024 respectively during its 12-day midyear rally. Based upon today’s closing price of 19546.27, NASDAQ could easily be at new all-time highs by its midyear rally’s end.

 

July Best DJIA and S&P 500 Month in Post-Election Years & Top Month of Q3

Historically July is the best performing month of the third quarter, however traditionally tepid August and September tend to make the comparison easy. “Hot” Julys in 2009 and 2010 where DJIA and S&P 500 both gained greater than 6% combined with strong performances in 2013, 2018, and 2022, have boosted July’s average gains since 1950 to 1.4% and 1.3% respectively. DJIA, S&P 500, and Russell 1000 have been up ten straight Julys (2015-2024). NASDAQ declined 0.8% in July 2024, ending its streak of July gains at nine in a row. Russell 2000 has been up eight times in the same period (down in 2015 and 2021). Such strength inevitability stirs talk of a “summer rally”, but beware the hype, as it has historically been the weakest rally of all seasons (page 76, Stock Trader’s Almanac 2025).

Post-election-year July rankings are stellar, ranking #1 for DJIA and S&P 500, averaging gains of 2.1% and 2.2% respectively (since 1950). For NASDAQ (since 1971) post-election-year Julys rank #2 with an average gain of 3.2%. July ranks #3 in post-election years for Russell 1000 and 2000 since 1979.

 

The Three-Year Itch


“Don’t confuse brains with a bull market.” Humphrey B. Neill

The wild ride in 2025 continues, as stocks surprised many and gained 1% on Monday after the US attacked Iran over the weekend, while crude oil declined nearly 14% from the open to the close, one of the largest intraday reversals in history.

But is this choppy and frustrating action so far in 2025 really a big surprise? You’ve heard of the seven-year itch, right? It says that seven years into a relationship (or a job, a car, or something else) the level of satisfaction begins to decline and the need for a change increases. Well, it turns out bull markets have a three-year itch as we’ll discuss more in detail below.

Year Three Tends To Be Choppy
The S&P 500 gained more than 22% the first year off the October 2022 bear market lows, followed by nearly another 34% in the second year. As anyone who has invested lately knows, things have been quite choppy and frustrating so far in 2025, especially from the February 19 peak to the near-bear market April lows.

As we noted in our Outlook 2025 coming into this year, the third year of a bull market tends to be choppy historically after a typical two-year surge off of lows. This didn’t mean we were bearish, as we said 2025 could still see stocks up 12 – 15%, but it did imply there could be some frustrating moments early in the year. Well, that has sure played out, so maybe we shouldn’t be so surprised by the third-year itch?

Here’s a table we’ve shared before and it shows that bull markets that make it to their second birthday tend to be rather weak in that third year, up just over two percent on average. In fact, the third year hasn’t been up double digits since the third year of the 1982 – 1987 bull market.



The good news? Years four and five of bull markets tend to be quite strong after the well-deserved break in year three. We’ll worry about that when we get there, but we remain constructive on this bull market (and the remainder of 2025) and we very well could have more gains coming down the road after this choppy year-three action.

This Looks Familiar
We love the quote from Mark Twain that “History doesn’t repeat, but if often rhymes.” Well, looking at past bull markets more closely shows similar action to what we’ve seen this year.

One of the longest bull markets ever was the 11-year bull market that started in 2009 after the Great Financial Crisis. Look at how that one saw a near-bear market at nearly the exact same time as this one. Back then we almost saw a bear market after the first US debt downgrade in August 2011, but what matters to us as investors is how things rebounded and continued to move higher.



Here’s another look at our current bull market, but this time compared to the longest bull market ever, from 1987 to 2000. That bull market was weak from around now until the end of its third year, but again, better times were coming once we got past the third-year itch.



Lastly, here are the five bull markets over the past 50 years that made it past their second birthday and into their third year. Chop and frustration were perfectly normal in year three much of the time, but so was a bull market that lasted several additional years. In fact, five years is the shortest bull market we’ve seen for those that made it as far as we are now, with an average of eight years. We don’t think any investors will be too upset if there were that many years left to this bull market.



Thanks for reading and stay cool out there, as it is HOT

 

Typical July Trading: Strength Early, Beyond Midmonth Mixed

July begins NASDAQ’s worst four months but is also the seventh best performing NASDAQ month since 1971, posting a 0.9% average gain. Lively trading often accompanies the first full month of summer as the beginning of the second half of the year tends to bring an inflow of new capital.

This creates a bullish beginning, middle, and a mixed/flat final third. On average, over the last 21 years, nearly all of July’s gains have occurred in the first 13 trading days. Once a bullish day, the last trading day of July has had a modestly bearish bias over the last 21 years. In post-election years since 1950, July has exhibited a similar pattern to the recent 21-year period with some modest weakness just ahead of Independence Day.

 

Mega-ETFs
Wed, Jun 25, 2025

Investors continue to pump money into ETFs, and there are now 188 in the US with more than $10 billion in assets and 13 with more than $100 billion.

The 188 ETFs that each have more than $10 billion in assets have a combined AUM of $8.7 trillion, while the 13 that have more than $100 billion each combine for $3.7 trillion. Similar to the mega-caps dominating the S&P 500, the "mega-ETFs" dominate the ETF world.

Below is a list of the largest US ETFs by AUM along with their year-to-date performance and expense ratios.



The three biggest ETFs all track the S&P 500. The Vanguard S&P 500 ETF (VOO) is the biggest with $682 billion in AUM, followed by the first-ever ETF - SPY - at $611 billion and the BlackRock-owned iShares Core S&P 500 ETF (IVV) at $585 billion.

The next two largest are Vanguard's Total Stock Market (VTI) at $486 billion and Invesco's QQQ Trust (QQQ) at $337 billion.

Vanguard's FTSE Developed Markets ETF (VEA) is the biggest global stock market ETF, followed by the iShares Core MSCI EAFE ETF (IEFA).

There are two fixed income ETFs with $100+ billion in AUM: Vanguard's Total Bond Market (BND) and iShares' Core US Aggregate Bond (AGG). And finally, the SPDR Gold Shares ETF (GLD) has also eclipsed the $100 billion mark recently after gaining 26.5% on the year.

Of the ETFs shown, GLD has the highest expense ratio at 0.40% per year, but that's not too bad considering all the gold it has to store!

While not yet at $100 billion in AUM, the iShares Bitcoin Trust (IBIT) is currently the 24th largest US ETF at $71 billion. That represents roughly 3.3% of Bitcoin's total market cap of $2.14 trillion. With a 0.25% expense ratio, that's a cool $177.5 million in annualized fees for BlackRock (BLK) from that ETF alone. That's also $2 million more than the $175.5 million they get from the 3 basis points charged on their S&P 500 ETF (IVV).

 

The Bespoke Report - Equity Market Pros and Cons - Q3 2025
Fri, Jun 27, 2025

This week's Bespoke Report is an updated version of our "Pros and Cons" edition for Q3 2025.

With this report, you’re able to get a complete picture of the bull and bear case for US stocks right now. It’s heavy on graphics and light on text, but we let the charts and tables do the talking!

On page three of the report, you’ll see a full list of the pros and cons that we lay out. Slides for each topic are then provided on page four and beyond.

Below is a look at the performance of key ETFs across asset classes so far in Q2 and year-to-date.

After a very rough March and early April, equities both domestically and globally have surged since. The S&P 500 (SPY) is currently up more than 10% in Q2 with just one full trading day left on Monday. The Tech-heavy Nasdaq 100 (QQQ) is up much more at 17.4%, while the Semis (SMH) are up more than 30%.

As good as it has been in the US, it has been an even better first half and second quarter for much of the rest of the world. The All World ex US ETF (CWI) is up 18.5% on the year versus a gain of 5.7% for the US (SPY), and countries like Germany (EWG), Italy (EWI), Mexico (EWW), and Spain (EWP) are sitting on 30%+ YTD gains.

As a reminder, quarterly rallies this strong aren’t the norm, so enjoy it but don’t get too cocky heading into Q3. Mr. Market loves serving humble pie to the face of investors that think they have it all figured out.

 

International Revenues
Fri, Jun 27, 2025

Equities have returned to record highs, but performance during the fall from grace earlier this year and the subsequent rebound off the April lows has not exactly been even. With tariff headlines being one of the main focuses of the market this year, performance has been sensitive to how exposed a given stock is to international trade. One proxy for this international exposure is the percentage of revenues that a company generates inside versus outside of the US. As shown below, from the election last November through Liberation Day when President Trump first announced reciprocal tariff rates, the best-performing cohort of Russell 1,000 members was those that do not generate any revenues outside of US borders (about 27% of member stocks in the index). That group averaged a 1.36% gain over that span compared to an average loss of 6.24% for the stocks that generate over half of their revenues outside the US (a little less than 20% of member stocks) or a more modest 2.65% average loss for all stocks in the index. Obviously, with the index trading at fresh records, stocks have amazingly been in rally mode in the wake of Liberation Day, with the average Russell 1,000 now sitting on a 4.6% gain in that span. Those internationals that had formerly been hit the hardest have since shifted to the best performers, averaging a 6.28% gain.



Breaking the Russell 1,000 into deciles (equal-sized groups ranked by their share of revenues generated internationally from low to high) is another way of telling the story. As shown in the first chart below, from Election Day through Liberation Day, the only decile to average a gain was comprised of the stocks with zero international revenue exposure. Conversely, decile 10 of the most heavily exposed dropped 8.16% on average, the worst of any decile. That trend of outperformance of domestics with underperformance of internationals has been turned on its head in the past couple of months as decile 10 is now the best performing group since Liberation Day..



Using data from our International Revenues Database, a little over a quarter of the Russell 1,000 generates all of their revenues domestically (or in North America). That reading has been mostly flat in the past few years and is also down versus the high 30% range in the late 2000s. By comparison, the share of stocks that rely on international sales for a majority of their revenues is a little less than 20% which is right inline with the typical reading observed for most of the past decade.



Of course, the type of business a company is involved in is a major determinant of international revenue exposure. For example, Utilities are, in a sense, natural monopolies as well as heavily regulated. Logically, that makes it hard for these companies to break into new markets, especially outside the US. As such, nearly all of that sector's revenues are generated within US borders, whereas an area like Tech is the polar opposite. Easier trade restrictions and largely frictionless supply chains for things like software mean that the Tech sector sees almost half of its revenues come from outside the US.