Morning Brew August 18 2025

Good Morning

The summit between Donald Trump and Vladimir Putin remained somewhat inconclusive, with many differing interpretations. The biggest event risk now lies in today’s U.S.–Ukrainian summit in Washington, as well as the Jackson Hole conference taking place Thursday through Saturday.

Retail earnings will offer valuable insights into the state of the U.S. consumer:

• Home Depot reports tomorrow.
• Target follows on Wednesday.

Last Friday’s U.S. retail sales were in line with expectations, but economic sentiment was weak and inflation expectations came in much higher than anticipated.

Equities closed mixed on Friday, but ended the week on a positive note:

• S&P 500: +0.94% Nasdaq: +0.81%  Dow Jones: +1.74% Russell 2000 (Small Cap Index): +3.13%

Today’s primary event risk centers on the meeting between Donald Trump and Volodymyr Zelensky at 19:15 CET, followed by a summit involving the heads of Britain, Germany, France, Italy, Finland, NATO, Trump, and Zelensky.

As I write this, trading remains calm. The US 500 is at 6,450, the US Tech 100 (NASDAQ) at 23,730, EUR/USD at 1.1700, and GBP/USD at 1.3544. Gold and Silver are trading at 2,350 and 38.10, respectively.

Bitcoin and Ethereum are unable to hold their highs and are currently at 115,200 and 4,265.

Sam Altman believes we may be experiencing an AI bubble similar to the dot-com bubble of 2000. He considers the technology to be valid and here to stay, but questions whether some valuations are realistic.

There is little key economic data scheduled for this week. As a result, politics, news, and central bank developments are expected to be the primary drivers of market activity.

Notably, the Federal Reserve Minutes will be released on Wednesday, ahead of the Jackson Hole conference, which often provides important signals on monetary policy direction.

Trade safely

The case for diversification into Asia for global investors by Charu:

Key points:

• Asia is a growth engine with diversification benefits: Contributing about 60% of global GDP growth, Asia’s economies offer uncorrelated cycles, diverse currencies, and sector exposures missing in Western markets.
• Country-level structural themes are investable: Japan’s corporate reforms and reshoring, China’s innovation leadership, India’s digital demographic boom, and Taiwan/Korea’s dominance in AI hardware provide long-term growth drivers.
• Passive investing isn’t enough: The MSCI World index allocates only ~8% to developed Asia (mostly Japan) and excludes China, India, Taiwan, and Korea altogether. This means that the world tracker leaves investors underweight Asia’s growth engines.
• Attractive entry points and valuation appeal: Many Asian markets trade at discounts to U.S. peers, creating opportunities for selective, sector-led investments that can enhance portfolio resilience.