This is no longer a one decision market, 'Times They are A-Changin'

Just a few thoughts of mine as I think about the changes possibly coming in the macro/micro influences on the market and global economies. I think the DeepSeek news was a lasting news story and not just a one time flash in the pan. I think a stock market regime change is upon us in that the Mag 7 stocks are no longer the dominant force driving returns. All will remain special (we can all debate to the extent) companies in many regards but in terms of stealing all the stock market thunder away from everything else, those days could be over. I emphasize 'could.'

In a way, the big 7 have become its own reserve currency where foreigners around the world have parked their money in and keeping a bid under the US dollar. For example, the Norges Bank, the central bank of Norway, owns 324 million shares of Nvidia and thus worth about $45 billion at its current quote. The Swiss National Bank owns 69 million shares worth almost $10 billion. What will it mean for the US dollar if these big stocks are not the same incredible market leaders they've been? This is really an important question because if a multitude of tariffs get implemented, the US will need to maintain a stronger dollar in order to mitigate its impact on US importers and thus in a way, we need stock market strength in the Mag 7 to keep these foreign holders from selling them.

Also as part of this potential shift, Europe's impressive stock market performance year to date might not be a flash in the pan either. It seems European leaders, and highlighted by a Mario Draghi editorial over the weekend in the FT titled 'Europe Has Successfully Imposed Tariffs on Itself' saying that "High internal barriers and regulatory hurdles hurt growth far more than anything the US might do", finally get the economic ineptitude they have created for themselves via excessive regulation and bureaucracy. Also, they are on the cusp of spending a huge amount of money on upgrading and adding to their defensive capabilities. Their stock market rally likely has legs.

China's economy seems to be bottoming, though real estate will still take time to recover. The DeepSeek news seems to have brought some swagger back in their economic step and now we have President Xi meeting with Jack Ma and other entrepreneurs over the weekend realizing that the only economic ticket he has to success is via the private sector, not the state. By the way, more than 80% of employment in China is with private sector companies. That is not to say his authoritarian approach will change much but he's at least understanding the error of his ways in strangling the private sector it seems. The Hang Seng by the way rose another 1.6% overnight and is up 14.5% year to date.

We also have the likely rebuild of Ukraine and Gaza and just imagine the demand for building materials that this will bring. Commodity prices are likely going higher and bond yields are going to take another leg up as well as inflationary pressures will be well bid.