Today
Markets are looking to end a turbulent week lower, with stock futures falling this morning after yet more tariff threats. Trump threatened to impose a 25% tariff on Apple if it does not manufacture iPhones in the U.S., challenging Apple’s current model of manufacturing most of its iPhones in China. He didn’t stop there though, threatening 50% tariffs against the European Union after he noted that there has been no progress on current negotiations. In other news, this week was dominated by a bond market sell-off, driven by two key factors: a disappointing 20-year Treasury auction and mounting concerns over the U.S. fiscal outlook. On the fiscal front, Trump’s recently passed tax-and-spending package is expected to increase deficits by $2.7 trillion over the next decade. Coupled with investor anxiety following Moody’s downgrade of the U.S. credit rating, which stripped America of its AAA status, bond markets have had plenty to absorb. Elevated yields and ongoing fiscal uncertainty may continue to weigh on sentiment as investors brace for potential volatility ahead.
G-7 leaders must be thrilled. Trump will attend the G-7 summit in Alberta from June 15–17, amid strained relations with key allies over trade policies and the ongoing war in Ukraine. Trump’s protectionist tariffs and lukewarm support for Ukraine have raised concerns among European leaders, who are frustrated by his failure to pressure Russia into a ceasefire. While consensus may be found on addressing China’s trade practices, divisions remain over many other areas. The summit, hosted by Mark Carney, comes as Trump continues to challenge traditional diplomatic norms.
Speaking of G7 leaders, the G7 finance ministers and central bank governors wrapped up their summit in Banff with a focus on unity amid a complex global backdrop. While the official communiqué highlighted collaboration on issues like financial crime and support for Ukraine, it notably left out any mention of U.S. tariffs. That omission may have been intentional to avoid airing internal tensions (and upsetting you know who), especially with trade-sensitive topics still evolving ahead of national elections. Still, Canadian Finance Minister François-Philippe Champagne confirmed that tariff concerns were raised behind closed doors and stressed the importance of open dialogue among allies.
While there are reasons to be bearish on the U.S. dollar, such as rising debt, policy uncertainty, and the Trump administration’s trade agenda, some strategists believe the recent wave of selling may be excessive. The dollar has dropped 5% since early April and 10% since January, driven by concerns over trade wars, attacks on the Fed, and fiscal instability. Investor sentiment and positioning have become extremely negative, with hedge funds holding one of the largest short positions in years and dollar exposure at its lowest since 2006. Despite weak fundamentals, the recent downturn may be overdone, especially given the limited Fed rate cuts now priced in and potential for a near-term correction as sentiment cools.
Prices for new pharmaceuticals in the U.S. more than doubled last year compared to 2021, with a median annual list price exceeding $370,000, driven largely by an increase in high-cost therapies for rare, or “orphan,” diseases. These drugs, which now make up 72% of new launches, often target small patient populations and benefit from incentives like extended market exclusivity. Gene and cell therapies, including some priced over $1 million annually or one-time treatments exceeding $4 million, contributed to the surge. Despite government efforts to curb drug costs, experts say high prices are unlikely to abate without lowering development expenses. While drugmakers argue that these therapies reduce overall healthcare costs, critics note the burden on healthcare systems and patients remains significant, even after insurance rebates and patient assistance programs.
Where do people stand sit on this? If you ever felt guilty after reclining your seat on a flight, you are not alone. A recent study suggests 68% of flyers avoid reclining their seat out of courtesy, despite airplane cabins becoming increasingly claustrophobic. Since the 1980s, seat width has shrunk from 20 inches to just 17–18 inches, and legroom has tightened from 34–36 inches to a cramped 28–31. Airlines have squeezed in more passengers (and perhaps a few more mid-air arguments), turning comfort into a scarce commodity and fuelling an ongoing etiquette debate about seat reclining. While you may feel bad about reclining, there is apparently an etiquette to the process. Etiquette coaches suggest looking back before reclining to ensure you’re not encroaching on someone’s limited space, especially taller passengers, and if possible, give a polite heads-up to the person behind you. We’re sure these two thoughtful gestures will make those being reclined on feel much better as their already limited space all but disappears.
Diversion: Great execution
