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    Key takeaways

    Tariffs, Tech, and Tailwinds: A 2025 Market Midyear Check-In

    We were pleased to host Mila Jankova, Investment Director at Capital Group, for a wide-ranging discussion on the markets, international investing, and global innovation. Here are the key themes from our conversation: 

    Tariffs Are Back in Focus 

    • Management teams are bracing for volatility but showing resilience. 
    • Some firms, like Inditex (Zara), are positioned well thanks to proximity sourcing. 
    • Companies have quietly restructured supply chains since the first Trump term. 
    • Capital Group uses four lenses to understand tariffs’ motivations and potential impacts: Funding, Decoupling, Rebalancing, Negotiating. 

    European Business Sentiment May Be Turning 

    • Germany has shifted from fiscal austerity and lifted defense spending caps. 
    • A shift toward more business-friendly regulation and fiscal expansion could boost growth. 
    • European equities still trade at much lower valuations than U.S. stocks. 

    International Stocks Are Having a Moment 

    • YTD, non-U.S. markets are far outpacing the S&P 500. 
    • Valuations outside the U.S. remain attractive. 
    • Global markets are broadening, with sectors like industrials and energy equipment poised to benefit. 

    AI as a Global Megatrend 

    • U.S. tech leads (NVIDIA, Broadcom). But global supply chains (e.g., TSMC) are critical players. 
    • Europe and China are innovating too — from DeepSeek to Ray-Ban’s AI-enhanced smart glasses. 
    • Healthcare may see major gains from AI in drug design and trial efficiency. 
    • Investors tend to overestimate the impact of technological shifts in the near term and underestimate the long-term impact.  
      • PC and Internet penetration is far beyond what most people expected at the dawn of those technologies.  

    Currency 

    • A weakening dollar has boosted international returns for U.S. investors. 
    • Capital Group considers currency risk mostly at the company level — where goods are made and revenue earned.