June 09, 2025
4
min read
💬 Daily Observation
“Risk comes from not knowing what you’re doing.” — Warren Buffett.
Even seasoned investors can stumble when they chase the latest fad instead of sticking to a plan rooted in understanding. Why it matters? Clarity on what you own helps you stay the course when markets wobble.
A schoolteacher, we"ll call her Sarah*, I spoke with on Friday, likened her portfolio to a bookshelf: she arranges bonds, stocks, and alternatives like books by topic—then reshelves rather than discarding when a title goes out of fashion.
Treating assets as parts of a bigger story helps you resist knee-jerk reactions.
☕ So grab your coffee, and let’s start the week informed with today's fresh edition of Diversification Daily.
🗞️ Today's stories that matter (and why)
1. 🇯🇵 Japan revises Q1 GDP contraction to –0.2%
Japan's Q1 2025 GDP contraction was revised to an annualized –0.2%, improving from the initial estimate of –0.7%. This revision was attributed to stronger private consumption and inventory accumulation. On a quarterly basis, the economy remained flat instead of the previously estimated –0.2% contraction. Capital expenditure rose by 1.1%, while net external demand subtracted 0.8 percentage points from growth.
Why it matters: A smaller-than-expected contraction indicates resilience in domestic demand, which could ease pressure on Japan’s exporters and property markets amid looming US tariffs.
Assets in focus: Equities
2. 📉 China's May export growth slows to 4.8% YoY
In May, China's exports grew by 4.8% year-over-year, down from 8.1% in April, marking the slowest pace in three months. Exports to the US plunged by 34.5%, the steepest drop since February 2020.
Imports fell by 3.4%, deepening factory-gate deflation, with the Producer Price Index (PPI) down 3.3%, a 22-month low.
Why it matters: Weaker trade flows heighten deflation risks in China, which may prompt further stimulus measures, impacting commodity exporters and influencing foreign exchange markets.
Assets in focus: Commodities
3. 🛢 OPEC's May output rises less than planned
OPEC produced 26.75 mn bpd in May—150,000 bpd above April but shy of the 310,000 bpd increase agreed by five members—according to a Reuters survey.
Saudi Arabia led with a 130,000 bpd boost, while Iraq cut production to offset past overages.
Why it matters: Underwhelming supply increases can support stronger oil prices, benefiting commodity-linked portfolios and energy equities.
Assets in focus: Commodities
4. 📊 US Consumer Price Index due June 11, forecast at 0.2% MoM
Analysts surveyed by the Financial Times expect headline CPI to rise 0.2% month-over-month in May, lifting the annual rate to 2.5%, up from 2.3% in April. Core CPI (ex-food and energy) is forecast to increase 0.3% MoM, taking its year-over-year pace to 2.9%.
The Labor Department report is due Wednesday, June 11, at 8:30 a.m. ET.
Why it matters: A soft, but upward-tinged, inflation print would reinforce the Fed’s “higher for longer” stance—likely anchoring Treasury yields and giving equities a tailwind as investors digest the prospects for rate cuts.
Assets in focus: Fixed Income
5. 💱 Dollar slips after rally as focus shifts to US.–China trade talks
The US dollar weakened against major peers on Monday following a brief rally spurred by stronger-than-expected jobs data. Investors are now focusing on high-stakes trade negotiations in London between US Treasury Secretary Scott Bessent and Chinese Vice Premier He Lifeng.
Despite Friday’s solid employment report, the dollar index is down 8.6% year-to-date, with the Japanese yen and euro both gaining on diverging monetary outlooks. Meanwhile, China’s yuan slid amid continuing export weakness and factory-gate deflation, underscoring broader global growth concerns.
Why it matters: A softer dollar can boost multinational exporters’ earnings and lift emerging-market assets, but it also raises import costs for US companies, affecting profit margins and equity valuations.
Assets in focus: Currencies
🌀 Diversification Score – Have you evaluated your portfolio's diversification?
Are you spread across the right risk factors—or leaning on just a few big bets?
📊 Market Movements Snapshot
Asset Classes:
- 🟢 Large Cap US Equities (S&P 500) +2.46 YTD. The S&P 500 has rallied on hopes for Fed rate cuts and standout “Magnificent 7” earnings, overcoming stretched valuations and geopolitical jitters to post a gain for the year.
- 🟢 Developed Market Equities: +15.42% YTD. European rate cuts, a softer dollar, and progress on U.S.–EU trade talks underpinned a stronger rally overseas, leaving global developed markets well ahead of their US counterpart.
For the full list, click here
Sectors:
- 🟢 Industrials: +9.36% YTD. Cyclical industries led the “relief rally” as easing tariff concerns and stronger PMI readings reignited manufacturing confidence, with infrastructure spending and capex plans adding further tailwinds.
- 🔴 Health Care −3.19% YTD. Rising labor, drug, and supply costs squeezed margins amid ongoing reimbursement reforms and muted M&A activity, weighing on sector performance.
For the full list, click here
🤯 Alternative investment highlight: 🧱 2024 Brickfact study shows LEGO® sets return 15.63% annually
In their peer-reviewed study “LEGO: The Toy of Smart Investors,” Dobrynskaya and Kishilova show that retired, mint-condition LEGO® sets have delivered average annual returns of at least 11% (8% after inflation) between 1987 and 2015—significantly outperforming large-cap stocks, bonds, and gold.
Building on this, a community-sourced 2024 Brickfact analysis reports even higher recent gains—annualized returns of 15.63% on secondary-market transactions—highlighting the asset’s continued strength.
Collectors looking ahead to 2025 lean on Splintinvest’s December 2024 guide, which identifies limited-run Icons and major franchise tie-ins (e.g., Star Wars, Marvel) as the sets most likely to appreciate post-retirement. Blockapps corroborates these findings, noting peak flips of up to 613% for marquee sets like the Ultimate Collector Series Millennium Falcon.
Market data firm WilcoToys tracked over $140 million in secondary-market LEGO sales in H1 2024 and projects the “brick economy” will reach $625 million by year-end. Meanwhile, BrickEconomy’s platform offers real-time pricing and return forecasts—think a Bloomberg Terminal for bricks—enabling investors to spot scarcity-driven opportunities across thousands of sets.
🧠 From the Education Center: Diversification, a Practical Guide
Diversification is powerful—but only when it’s done right. Learn how to spread risk smartly across assets, geographies, and time.
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*For compliance reasons, these stories are complete fiction with made up characters and portfolios. Possibly influenced by real interactions, and definitely not financial advice."