We typically rally into holiday weekends, and it would be downright un-American not to be optimistic heading into the 4th of July, especially considering it is the 250-year anniversary celebration that is expected to be spectacular in Washington, D.C.
The stock market is also benefiting now from the Russell index realignment that is creating a lot of buying in small-to-mid capitalization stocks. Additionally, SpaceX (SPCX) was added to the at the start of the week. Furthermore, we are also in the midst of quarter-end window dressing, where fundamentally superior stocks typically benefit from institutional investors making their portfolios “extra pretty” before they do their quarter-end reviews.
Yet, there are naysayers. Most are emanating from the British and other European press. I realize that Europe has been hot and miserable lately. However, that is no reason to trash America. Let me give you an example of the negative media emanating from Britain. The Telegraph reported that “The Bank for International Settlements (BIS) said on Sunday that “excessive” spending on new AI data centers and opaque transactions risked a financial meltdown similar to the global credit crunch nearly two decades ago. The BIS, known as the bank for central banks, said there was growing “peril” in financial markets from the complex web of financial ties between AI giants, shadow banks and data center builders unravelling.” The BIS concluded by saying “Financial stability could … be at risk in the event of an AI bust.”
In the meantime, the technology war between Europe and the U.S. persists. President Trump on Truth Social recently said, “Numerous European Countries have been discussing the imminent implementation of a Digital Services Tax on American Companies. Some of these Countries are close to actually doing this. Please let this statement serve to represent that any Country that imposes such a Tax will immediately be met with a 100% TARIFF on any and all Goods sent to the United States of America. This TARIFF will supersede Trade Deals made with the Country, whether implemented, signed, or not. Additionally, the 100% TARIFF will be immediately imposed if they proceed.” Apparently, we are at war with the EU, and the fight over taxing American technology companies persists.