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.