June 11, 2025
4
min read
💬 Daily Observation
“I think that the first thing is you should have a strategic asset allocation mix that assumes that you don’t know what the future is going to hold.”
— Ray Dalio
While we can’t know what the future holds, resilience lies in having a prudent, academically grounded strategy—and the emotional fortitude to stick with it through all seasons, especially the stormy ones. Yesterday we talked about the importance of emotional intelligence; today, let’s focus on data and knowledge.
Backing ourselves up with data it's crucial. For instance, tools like PortfolioPilot.com offer features that help you understand your risks, optimize your portfolio, and even perform scenario modeling using Monte Carlo simulations. These simulations assess investment risks by modeling portfolio performance under various market conditions, allowing investors to estimate potential returns and losses.
By knowing both your “average” odds and your tail-risk outcomes, you can gain the insight—and the confidence—to make proactive, data-driven adjustments, ensuring your plan can endure not just typical years but the stormiest ones too.
☕ So grab your coffee, and let’s dive in today's fresh edition of Diversification Daily.
🗞️ Today's stories that matter (and why)
1. 🧾 US consumer prices rise moderately in may
The Consumer Price Index climbed just 0.1% month-on-month in May and 2.4% year-on-year—slightly below economists’ forecasts—while core CPI, excluding food and energy, also edged up 0.1% as shelter costs rose and used-car and apparel prices cooled.
Markets have dialed back expectations for further Fed tightening, with futures now fully pricing in a pause through the summer. Still, housing remains a stubborn source of inflation, with rents and owners’ equivalent rent contributing most of the gains. Like a slowly deflating balloon, price pressures are easing but haven’t dissipated entirely.
Why it matters: Softer-than-expected inflation gives the Fed room to hold rates steady, yet persistent housing inflation could keep borrowing costs elevated.
Assets in focus: Fixed Income
2. 🧮 Tariffs to stay in place while legal challenge fast-tracked
A US federal appeals court ruled that President Trump’s broad “Liberation Day” tariffs will remain in effect during the appeal process, overruling a lower court’s finding that he exceeded his emergency-powers authority.
The full 11-member Federal Circuit will hear oral arguments on July 31, underscoring the case’s “exceptional importance.” At the same time, US and Chinese officials agreed on a provisional framework to roll back certain export controls—chiefly on rare earths and semiconductors—pending presidential approval.
This duality of sustained tariffs and tentative détente illustrates how policy moves can tug markets in opposite directions.
Why it matters: Continued tariffs keep cost pressures on multinational supply chains, while a potential rollback of export controls hints at easing trade tensions—both will shape sector returns and risk sentiment.
Assets in focus: Equities
3. 🏦 Trump’s Fannie Mae & Freddie Mac privatization could cost home buyers
President Trump’s push to release Fannie Mae and Freddie Mac from conservatorship risks lifting mortgage rates by up to 1% initially, adding thousands in interest over a typical 30-year loan.
Without clear federal backstops, investor uncertainty could widen risk premiums further, nudging consumer borrowing costs higher. Critics warn that shedding government guarantees would hit lower-credit and moderate-income borrowers hardest, potentially cooling purchase activity.
Why it matters: Even a modest uptick in mortgage rates directly tightens homebuyer budgets, cools real-estate demand, and risks broader property-value pressures.
Assets in focus: Real Estate
4. 🛢 Oil steady near seven-week high ahead of inventory data
Brent crude held at $66.96/barrel and WTI at $65.16 as investors awaited detailed US inventory figures and digested the US-China trade framework reuters.com. A preliminary report showed US crude stocks drew by 370,000 barrels last week, adding to the sense of tightness.
Meanwhile, OPEC+ plans a modest 411,000 bpd output increase in July, balancing the market’s needs amid gradual easing of earlier cuts. Think of it as a seesaw: supply edges up just as demand hopes hinge on policy progress.
Why it matters: Inventory trends and output plans will determine near-term energy prices and earnings for oil-sensitive sectors.
Assets in focus: Commodities
5. 🏠 Contract cancellations climb as buyers gain leverage
In April, 14.3% of US home‐purchase contracts were canceled—up from about 12% pre-pandemic—as sellers’ sentiment shifts in a growing buyer’s market. That translates to roughly one in seven contracts falling through, reflecting increased willingness by buyers to walk away amid more options and concessions.
Mortgage delinquencies, however, remain modest at 0.57%, well below crisis levels. As cancellations return homes to the market, buyers can negotiate harder on price and terms.
Why it matters: Rising cancellations signal growing buyer leverage and potential for further price softening, altering negotiation dynamics for would-be homeowners.
Assets in focus: Real Estate
🌀 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:
- 🟢 Gold: +21.09 YTD. Gold continues to clock one of the strongest rallies of the year, buoyed by safe-haven demand amid U.S.-China trade uncertainty and aggressive central-bank buying.
- 🟢 Developed Market Equities +15.45% YTD. Developed-market stocks (proxied by MSCI Europe) have surged nearly 20% year-to-date, drawing record inflows as investors rotate away from U.S. fiscal-policy concerns into more attractively valued regions.
For the full list, click here
Sectors:
- 🟢 Industrials: +9.27% YTD. The Industrials sector has led the pack in 2025, powered by resilient aerospace, defense, and infrastructure names—analysts at Wells Fargo and FactSet rank it among the top four outperformers going into year-end.
- 🔴 Health Care −3.34% YTD. Health Care remains the laggard, pressured by patent cliffs, higher medical-cost fears, and profit-forecast downgrades at major insurers like UnitedHealth—YTD returns for the sector sit below breakeven.
For the full list, click here
🤯 Alternative investment highlight: 🎉 Meme-Coin dinner with President Trump sparks ethics probes
You might have heard of this, but last month, on May 22, 2025, President Trump hosted an exclusive dinner at his Trump National Golf Club for the top 220 holders of his $TRUMP meme coin, who collectively spent estimated $148 million to qualify for the event. According to Yahoo Finance, winners paid in crypto through a contest run on-chain, with the top 25 holders investing an extra $111 million combined for an ultra-VIP reception—complete with a limited-edition $100,000 Trump Tourbillon watch for the four largest investors.
Entities controlled by the Trump Organization still hold roughly 80 percent of $TRUMP’s remaining supply and have earned over $320 million in trading fees since launch, underscoring the personal financial stakes involved. The event drew bipartisan condemnation: Sen. Cynthia Lummis decried it as “selling access to the presidency”.
In response, the Senate Homeland Security Permanent Subcommittee on Investigations has formally expanded its probe to include the dinner, and Rep. Jamie Raskin’s House Judiciary Committee inquiry is examining potential emoluments violations. Legislation introduced by Sens. Jeff Merkley and Chuck Schumer—the “End Crypto Corruption Act”—would bar senior executive-branch officials (including the president) from profiting off cryptocurrencies during their terms, directly in reaction to this episode.
🧠 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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