July 12, 2025

💬 Weekly Observation

Today we’ll feature two quotes to start our weekend after a long post-holiday week full of changes:

“The best portfolios aren’t built in a week, they’re curated over weekends and seasons.” – Shelby Cullom Davis

Think of your portfolio like a leisurely Saturday stroll: a bit of sunshine (equities), some shade (bonds), and the occasional detour into something unexpected (alternatives). True balance comes from pacing yourself and enjoying the journey, day by day, week by week.

And when markets move fast, especially now, emotional balance matters just as much:

“If you can’t control your emotions, you can’t control your money.”
– Warren Buffett

Buffett’s point is simple but profound: fear, greed, and impatience are wild cards in investing. By mastering our impulses, pausing before panic selling or sticking to our plan when euphoria strikes, we keep decisions rational. Over time, that steady discipline separates consistent compounders from those chasing fleeting trends.

☕️ So grab your coffee and let's dive in in today's fresh edition of Diversification Weekly.

🗞️ Week's stories that matter (and why)

1. 🏦 Fed minutes signal no rate cut for now

Minutes from the Fed’s June 17–18 meeting reveal limited support among policymakers for an interest‐rate cut in July. 

Only “a couple” of officials backed a near-term reduction, with most citing persistent inflation pressures, particularly from tariffs, and preferring to await clearer data before easing policy.

Why it matters:  Reinforces a cautious Fed stance, supporting higher bond yields and a firmer dollar, while dashing near-term rate-cut hopes for equities.

Assets in focus: Fixed Income

2. ₿ Bitcoin surges to record high ahead of “Crypto Week"

Bitcoin topped $118K, its highest ever, on July 11 as institutional inflows and anticipation around US legislative bills (Genius Act, Clarity Act, Anti-CBDC Surveillance State Act) fueled optimism.

Why it matters: Renewed regulatory clarity and institutional adoption are repositioning crypto as a portfolio diversifier, yet volatility and political risks remain high.

Assets in focus: Alternatives

3. 💵 Dollar records worst first-half slump since 1973

The ICE US Dollar Index fell about 11% through June, the steepest H1 decline since currencies began floating in 1973, as tariffs, fiscal deficits, and Fed-cut expectations weighed on the greenback.

Why it matters: A weaker dollar boosts US export competitiveness and lifts non-US asset returns in dollar terms but raises import costs and may fuel domestic inflation, impacting bond yields and portfolio hedges.

Assets in focus: Currencies

4. 🏠 Investors snap up 27% of US home sales in Q1

Real-estate investors bought 27% of all US homes in Q1, 265,000 properties, the highest share in at least five years, as affordability constraints sidelined many traditional buyers and elevated cash-buyers’ market power.

Why it matters: Investor dominance tightens supply, may drive prices higher, and shifts rental vs. ownership dynamics, critical for portfolio allocations to REITs and housing-related sectors.

Assets in focus: Real Estate

5. 📑 US sends new reciprocal tariff letters, extends pause to Aug.1

On July 7, President Trump sent letters to roughly 20 trading partners announcing updated “reciprocal” tariff rates to take effect August 1, while formally extending the existing 90-day pause on duties, originally set to expire July 9, through August 1.

New rates span from 10% up to 70% depending on the country, 25% on Japan and South Korea, 35% on Canada, and steeper levies on others, covering goods from autos and semiconductors to steel and agricultural products.

Why it matters: These recalibrated duties could disrupt global supply chains, alter cost structures for exporters and importers, and keep inflation and policy uncertainty elevated at least through early August.

Assets in focus: Equities

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📊 Market Movements Snapshot

Asset Classes:

• 🟢 Developed Markets Equities +16.94% YTD. Solid corporate earnings in Europe and Japan, especially in autos and luxury goods, have powered the MSCI EAFE index to a near-17% gain, as investors shrug off tariff jitters and lean into global cyclical recovery.
• 🟢 International Bonds: +1.73 YTD. Yields outside the US have climbed, Britain’s 10-year gilt yield neared 4.5% and Germany’s bund yield hit 3%, capping price returns for global-bond funds despite their higher coupons.

For the full list, click here

Sectors:

• 🟢 Industrials:  +12.37% YTD. Renewed interest in infrastructure spending, higher defense budgets, and reshoring of supply chains have powered demand for heavy machinery and components, driving the Industrials sector up over 12% this year.
• 🔴 Health Care: -2.26% YTD. Rising labor costs, persistent workforce shortages, and regulatory headwinds, alongside uneven recovery in elective procedures, have weighed on Health Care, leaving the sector down just over 2% year-to-date.

For the full list, click here 

‍🧭 Three macro themes to remember

1. Policy on pause, but patience wanes
   The Fed’s June minutes show almost no support for a July rate cut, underscoring a cautious stance even as inflation moderates, and setting the stage for bond yields and the dollar to stay elevated until clearer data emerge.
2. Trade uncertainty keeps markets on edge
   Updated “reciprocal” tariffs, ranging from 10% to 70% and extended through August 1, have widened the policy backdrop beyond traditional trade talks, sowing volatility across equities, commodities, and FX as supply-chain cost pressures linger.
3. Diversification drivers: currency swings and alternative uptake
   The dollar’s steep 11% H1 decline reshapes global returns and hedging needs , while Bitcoin’s leap to $118K amid “Crypto Week” optimism highlights growing institutional appetite for true diversification beyond stocks and bonds.

🤯 Alternative investment highlight:🌾 Farmland meets cryptocurrency

Platforms like Agrotoken now enable farmers to trade soy and corn harvests as blockchain-based collateral, streamlining a sector that contributes 25% of Brazil’s GDP—and Brazil’s CVM reports R$1.3 billion (≈$250 million) in tokenized agricultural assets for 2024. 

Preliminary projects on platforms such as AgriLedger, GrainChain and Agrotoken have demonstrated annual yields of 15–25%, outperforming 10-year U.S. Treasuries by 8–14 percentage points. Agrarium’s RWA tokens allow investments as small as 0.01 hectare (≈$100), slashing traditional farmland-entry minimums and offering a programmable, liquid real-estate play.

Issuers must still navigate SEC rules, most tokenized-farmland offerings qualify as securities under Reg D exemptions, adding compliance layers for platforms and investors alike. To bolster trust, many tokenization initiatives partner with agricultural cooperatives for land stewardship and subject their smart contracts to audits by firms like Polymath and BlockApps.

By merging real estate’s inflation-hedge qualities with crypto’s liquidity and programmability while delivering yields that dwarf traditional fixed-income, farmland tokenization is reimagining access to one of the world’s oldest asset classes, even as it hinges on evolving regulations and robust governance.

🧠 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. 

🔗Learn more

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