July 22, 2025

💬 Daily Observation

“The most important quality for an investor is temperament, not intellect.” — Warren Buffett

Buffett’s insight reminds us that emotional discipline, staying calm under pressure and resisting the crowd, is more critical than raw smarts. While analysis drives idea generation, temperament determines whether you stick to your strategy when markets wobble. By focusing on temperament, investors can avoid common pitfalls like panic selling or speculative herding.

FYI – Buffett’s composure shone during the 2008 crisis. In September 2008, Berkshire Hathaway invested $5 billion in Goldman Sachs preferred shares at a generous 10% dividend, backing a major bank amid market chaos. By March 2011, that move generated about $3.7 billion in profit, demonstrating that composure can deliver returns.

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

🗞️ Today's stories that matter (and why)

1. 🏛 Fed reform could have bigger market impact than Powell’s fate

‍In a London analysis published July 22, Reuters highlights that proposals to overhaul Federal Reserve policy tools and governance, such as adopting formal inflation targets or restructuring the Federal Open Market Committee, could exert more lasting influence on US interest rates and market expectations than any change in Fed chairperson.

The article notes that even subtle shifts in the Fed’s reaction function may recalibrate rate-cut timing and the yield curve’s trajectory.

Why it matters: Deep institutional reforms can redefine how markets price risk for years, potentially reshaping bond yields and stock valuation frameworks regardless of who holds the Fed chair’s gavel.

Assets in Focus: Fixed Income

2. 🏭 China signals capacity cuts to combat deflation

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Beijing hinted it may begin industrial capacity reductions to fight persistent deflation, raising the prospect of reduced global commodity supply and renewed price pressure.

Why it matters: China’s move could tighten markets for steel, aluminum, and other raw materials, potentially supporting prices and benefiting diversified commodity allocations when growth elsewhere slows.

Assets in Focus: Commodities

3. 🏘 Homebuilder PulteGroup tops Q2 revenue estimates on incentives pull-forward

‍PulteGroup (NYSE: PHM) reported Q2 net income of $608.5 million, or $3.03 per share, beating consensus of $2.88, as builders accelerated incentives to draw buyers amid high mortgage rates.

Why it matters: Builders’ earnings strength despite rate headwinds suggests housing supply, and related REITs, may outperform if mortgage costs plateau.

Assets in Focus: Real Estate

4. 💰 JPMorgan explores crypto-backed loans

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JPMorgan Chase is considering offering loans secured by clients’ bitcoin and ethereum holdings as early as next year, in a move to integrate digital assets into traditional lending products.

Why it matters: Allowing borrowers to tap crypto collateral could deepen institutional engagement in digital assets, but also raises questions about valuation swings and risk management for portfolios exposed to volatility.

Assets in Focus: Real Estate

5. 🤫 Calm before the reports: futures flat ahead of KO, GM and Bitcoin moves

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Stock futures are little changed in premarket trading after tech stocks boosted the Nasdaq to a record high for the sixth straight session Monday, with investors watching for more corporate earnings. Coca-Cola (KO) and General Motors (GM) are among the firms releasing results today.

Meanwhile, the price of Bitcoin (BTCUSD) is on the rise, trading above $119,000.The yield on the 10-year Treasury note is slightly higher at 4.39%.

Why it matters: Early-session calm belies a market intensely focused on earnings catalysts and cross-asset signals, reminding investors that, even when futures sit still, portfolio allocations can swing sharply when releases and macro data hit.

Assets in Focus: Equities

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📊 Market Movements Snapshot

Asset Classes:

• 🟢 US Growth Equities (NASDAQ): +9.15% YTD. Fueled by AI-led rallies in mega-cap tech (QQQ up ~10% YTD as of mid-July) and the run-up to big-tech earnings, heavyweights like Tesla and Alphabet have driven sentiment despite tariff jitters.
• 🟢 Gold: +21.57 YTD. Supported by a retreating U.S. dollar and falling Treasury yields, alongside record central-bank buying (over 1,000 tonnes YTD) amid geopolitical and inflation concerns.
  

For the full list, click here

Sectors:

• 🟢 Industrials: +12.80% YTD. Lifted by strong defense and aerospace earnings, General Motors and RTX both posted upside surprises, and robust machinery orders as infrastructure projects accelerate.
• 🔴 Energy: -0.21 YTD. Stalled by cautious OPEC/IEA demand forecasts and rising trade-war worries that have kept oil prices range-bound despite summer fuel demand.
  

For the full list, click here

🤯 Alternative investment highlight: ♻️ JPMorgan pilots blockchain platform to tokenize carbon credits

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JPMorgan Chase’s blockchain arm, Kinexys, is piloting a new application that converts traditional carbon‑credit certificates into digital tokens at the registry level.

Each token will represent one tonne of CO₂ avoided or removed, with on‑chain recordkeeping for issuance, transfers, and “retirements,” powered by smart‑contract automation for audit‑ready compliance and streamlined settlement.
By tokenizing credits, Kinexys aims to democratize access to the voluntary carbon market, boost liquidity, and enhance transparency, laying the groundwork for institutions and retail investors alike to participate in the fight against climate change under a unified, digital framework.

📤

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🧠 From the Education Center: Is scarcity mindset killing your investment returns?  

Playing it safe can quietly cost more than any market crash. Holding too much cash out of fear may feel responsible, but it often means missing the upside.

Over time, missed growth can erode wealth more than short-term losses ever would.

Explore how scarcity thinking sabotages long-term returns: 🔗Learn more

‍

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