July 16, 2025

min read

“In a volatile market, diversification is your best defense.” — Peter Lynch

Just earlier this April, one of our clients*, Sarah, who’d funneled 70% of her portfolio into a single tech fund, watched it plunge 10.5% over two days, mirroring the S&P 500’s fifth-largest two-day drop since 1950. By contrast, another client*, Miguel, whose portfolio was diversified across US large caps, investment-grade bonds, gold, and a small real-estate allocation saw his total portfolio fall just 4%, letting him carry on without missing a beat.

Stocks will wobble, that is their rhythm, especially in times like these. Overconcentration simpy turns volatility into panic. Spreading your investments isn’t theory, it’s the shield that keeps you centered when markets lurch.

☕️ So grab your coffee and let’s dive into today’s fresh edition of Diversification Daily.

🗞️ Today's stories that matter (and why)

The US Producer Price Index for final demand was unchanged in June, matching forecasts of a 0.0% month-over-month change and marking the smallest gain since last year.

Year-over-year, PPI rose 2.3%, slightly below May’s 2.7% and economists’ expectations, as service-sector price declines offset tariff-driven goods inflation.

Assets in focus: Fixed Income

Why it matters: Stable upstream costs can alleviate margin pressures for businesses and slow pass-through into consumer prices, supporting both bond and equity valuations. Long-term investors may view this as a signal that aggressive Fed rate cuts are less likely near-term, but that the Fed could pivot if input costs remain muted.

2. 🛡️ Political pressure on Fed spurs investor hedging

After President Trump renewed calls to replace Fed Chair Powell, investors piled into Treasury Inflation-Protected Securities, driving five-year breakeven inflation rates to three-month highs as a safeguard against politicized monetary policy.

Why it matters: Eroding central-bank independence could fuel higher inflation and volatility, underscoring the value of real-asset and commodity exposure.

Assets in focus: Fixed Income

3. 💼 Major banks beat Q2 expectations, stocks tick higher

Bank of America, Goldman Sachs and Morgan Stanley all reported stronger-than-expected Q2 profits, lifting their shares modestly in premarket trading (BOA +0.4%, GS +0.4%) as robust trading and advisory revenues offset headwinds in other divisions.

Why it matters: The resilience across diversified banking franchises highlights the benefit of broad financial sector exposure rather than single-name concentration.

Assets in Focus: Equities

4. 🏠 Home-insurance premiums surge, fueling delinquency risk

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Average US home-insurance premiums surged 20% from 2022 to 2024 and are projected to rise another 8% in 2025, driven by climate-related losses and rebuild-cost inflation.

Lower-income borrowers, especially those with FHA-backed mortgages, are increasingly unable to cover both insurance and mortgage bills, raising delinquency risks.

Why it matters: Rising delinquencies on insurance and mortgage bills can strain mortgage backed securities and signal broader housing-market affordability pressures for investors.

Assets in Focus: Real Estate

5. 💱 Dollar firms despite deep first-half slump

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The US dollar strengthened on Wednesday, rising 0.23% against the euro to $1.1572 and hitting a 3.5-month high versus the yen, as Treasury yields climbed on concerns that Trump’s tariffs are feeding into inflation and delaying Fed rate cuts.

Yet in the first half of 2025, the ICE US Dollar Index plunged 10.8%, its steepest six-month fall since 1973, driven by political uncertainty, policy shifts, and investor repositioning.

Why it matters: Moves of this magnitude (10.8% drop) can materially impact returns on international holdings and portfolios with FX exposure, underscoring the need for currency diversification and hedging strategies.

Assets in Focus: Currencies

🌀 Diversification Score – Have you evaluated your portfolio's diversification?

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📊 Market Movements Snapshot

Asset Classes:

🟢 Emerging Market Equities: +12.03% YTD . Rally driven by signs of stabilization in China, easing inflation across key economies, and targeted fiscal stimulus in India and Brazil.
🟢 Gold: +21.14 YTD. Continued safe-haven buying amid lingering geopolitical and market volatility, plus steady central-bank purchases, has kept bullion near record highs.

July 16, 2025..

For the full list, click here

Sectors:

🟢 Communication Services: +9.58% YTD. Sector buoyed by renewed digital‐ad spending and AI-powered campaign strategies at major players like Omnicom and Meta.
🟢 Consumer Staples +5.79% YTD. Defensive flows into essentials stocks accelerated as hedge funds pivoted into staples amid tariff worries and recession fears.

July 16, 2025.

For the full list, click here

🤯 Alternative investment highlight: ⏳ Life-settlement funds bet on longevity, exposing investors to human-lifespan risk

SPACs, known as Special Purpose Acquisition Companies, are shell firms that raise money in an IPO and then hunt for a private business to merge with, letting that company go public without a traditional listing.

In 2025 alone, 71 SPACs have launched, raising over $30 billion, even as the 2021–22 boom turned sour . One eye-catcher: Colombier Acquisition Corp. II is set to merge with firearm e-retailer GrabAGun, blending gun sales, celebrity backing, and retail speculation in one ticker.

Turning private-company deals into blank-check spectacles highlights how creative—and combustible—today’s capital markets have become, offering fresh liquidity routes but also fueling bubble risks.

🧠 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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*For compliance reasons, these stories are complete fiction with made up characters and portfolios. Possibly influenced by real interactions, and definitely not financial advice."