Beyond Markets

Last week, OpenAI CEO Sam Altman said, “Are we in a phase where investors as a whole are overexcited about AI? My opinion is yes”. Altman compared the widespread interest over Artificial Intelligence today, to the “tech bubble” of the late 1990s. But, the Magnificent 7 companies’ valuations today are less than half what the top five technology companies were, at the peak of the dot-com bubble.With over 90% of S&P 500 index companies having already reported their Q2 results, earnings growth is settling in at 12.0%, and the consensus forecast of 4.8% for Q3 is starting to look too low. Higher-than-expected July producer prices and nominal retail sales may both be signalling that the full impact of tariffs is yet to come. We expect producers to pass on the increased cost to consumers in the months ahead.

In this episode of Beyond Markets, Mark Matthews, Head of Research Asia at Julius Baer, speaks with General David H. Petraeus, Partner at KKR and former US Army General, about leadership lessons from his distinguished military career and how they translate to the corporate world. Their conversation explores recent conflicts, including the India–Pakistan skirmish, the US withdrawal from Afghanistan, and the Russia–Ukraine war, highlighting the critical role of deterrence. They also examine the future of US energy policy amid shifting dynamics in the Middle East and global oil markets, consider China’s growing influence in the Western Hemisphere and its implications, and explore regions with strong potential for development.(00:52) - Lessons from the General Petraeus’ military career (03:24) - Parallels with the corporate world (05:52) - Takeaways from the India-Pakistan and Russia-Ukraine conflicts (11:38) - Energy independence, and the future of US policy in the Middle East (19:47) - The effectiveness of US sanctions (25:30) - China’s growing influence in the Western hemisphere (29:01) - Growing interest in the Arctic (30:45) - Singapore and Dubai’s success story (34:00) - Countries with great potential and opportunities

The S&P 500 index made new highs last week, and results​ from the Q2 US earnings season have been amazing. With 90% of companies having reported, the blended earnings growth (actuals for reported and estimates for companies yet to report) is 11.8%, versus the consensus of 4.9% y/y earnings growth estimated in June. Yet strangely, the percentage of S&P 500 stocks trading above their 50-day averages has fallen from 80% in early July to 56%. That means a smaller number of stocks are taking the index up today than was the case then. ​We should never take averages​ as guaranteed outcomes for future performance. But for what it’s worth, August has historically been a “neutral” month on average, with a return since 1950 of zero. And September is the only month since 1950 with a negative average return.

Despite a lacklustre Chinese economy, the Hong Kong stock market has remained very popular, with the Hang Seng Index up 24% year-to-date. Concurrently, the Chinese Mainland A-share market has significantly underperformed the Hong Kong H-share market. What are the reasons behind these disparities in the Chinese stock markets? Does the Hong Kong market have further to run, and what are the sectors that are driving the market? This episode is presented by Richard Tang, Head of Research Hong Kong at Julius Baer, and Hong Hao, Managing Partner and CIO of Lotus Asset Management Ltd.

The US imposed an unexpected 39% tariff on Switzerland, sparking market concern. Although there are some caveats to the tariff terms, this development will have a material impact on the Swiss economy. However, there are still a few days to the tariff’s effective date of August 7th, so a deal is still possible. Meanwhile in the US, last Friday’s poor non-farm payroll numbers sent rate cut expectations for September up to 90%, and caused a 2% pullback in the US market. The Chinese market also suffered a week of correction. Despite these macroeconomic challenges, we remain constructive on China. This episode is presented by Richard Tang, Head of Research Hong Kong for Julius Baer.

So far this month, the S&P 500 index has returned more than twice its long-term average return for July. Notably, the S&P 500 Equal Weight index, which gives equal importance to small and large companies alike, reached two all-time highs last week from none for this year. The index’s two largest sectors are industrials and financials, sectors that follow the ups and downs of the overall economy. When many stocks are participating in an uptrend, it usually means the uptrend is stronger.Meanwhile, the recent US-EU trade deal, which includes a 15% tariff on European goods, should put pressure on Mexico and Canada to get deals done by the Friday deadline. However, negotiations may not be as straightforward: Canadian Prime Minister Carney said last week that Canada "will not accept a bad deal", and Trump said, “We haven't really had a lot of luck with Canada. I think Canada could be one where there's just a tariff, not really a negotiation."

This week’s episode covers the S&P 500’s new record highs as US fiscal policy proves stimulative, despite ongoing tariff headlines and persistent inflation concerns. We examine the fresh trade deal with Indonesia, rising political uncertainty in Japan, and what August’s looming tariff deadline could mean for global trade. Q2 earnings season is underway, with strong results from US banks and tech stocks. We explore what these developments could mean for portfolio positioning amid shifting market dynamics. This episode is presented by Eric Mak from the Equity Research Asia team at Julius Baer.

This week's episode explores how markets are moving beyond tariff fatigue, with attention shifting to the surge in copper prices and renewed interest in European assets. We also touch on the latest US tariff announcements and their implications for trade partners. Meanwhile, diverging views within the Federal Reserve and strong technicals continue to shape sentiment in Asian credit. We discuss what these developments could mean for portfolio positioning.This episode is presented by Magdalene Teo, Head of Fixed Income Research Asia at Julius Baer.

President Trump’s 90-day pause on the imposition of tariffs was meant to come to an end on 8 July, but this has now been extended to 1 August. So, what is the latest with regard to the tariff dispute and how does it impact inflation, recession risk and interest rate policy in the US? And what is the impact on both financial markets and other economies?In this episode of the Beyond Markets podcast, David Kohl, Julius Baer’s Chief Economist, talks to Bernadette Anderko about his current thinking and why the impact of tariffs has still not fed through to the key data that the US Federal Reserve is monitoring when it comes to making monetary policy decisions. They discuss the implications of the tariff dispute on financial markets as well as looking at its potential impact on the trajectory of the US dollar. They also examine the impact on other regions and reflect on what this means for investors going forwards.(00:31) - Introduction (00:58) - The impact of trade disputes & tariffs (04:47) - Tariffs’ July 9th rollover impact (06:35) - Likelihood of US recession? (08:04) - Impact on US monetary policy (11:44) - Will Trump be satisfied with 3.5% Fed Funds rate? (12:38) - Impact of a ‘shadow’ Fed chair (14:18) - Where the US dollar goes from here (18:14) - A look at Europe (21:31) - The China situation (24:53) - Summary Would you like to support this show? Please leave us a review and star rating on Apple Podcasts, Spotify or wherever you get your podcasts.

Historical trends suggest that S&P 500 index tends to rebound strongly after periods of sell-off and recovery, with the index always higher a year later. Meanwhile, US Treasury Secretary Scott Bessent said countries that haven’t signed trade deals by August 1 will face the tariffs detailed on April 2. The market, however, is unfazed, and seems to think intimidation followed by negotiation is the modus operandi of this administration. In other news, Thailand is the worst-performing emerging market stock market in the world this year, down 20% The country has had 17 prime ministers in the past 20 years, and the politics could be eventful in the months ahead.