Cover:
-The Barron's Roundtable predicts a stall or sink in the stock market due to high prices, potential inflation from tariffs, and tepid economic growth. Despite these concerns, there are 55 promising stocks to buy, with many in neglected sectors or attached to companies with temporary challenges. The Roundtable's investment pros were initially skeptical about the market's prospects but are still searching for bargains. Rajiv Jain, an investment pro, expressed more anxiety due to complacency in the bond market and the fiscal setup. Jain highlighted the fiscal deficit running at 6.5% of U.S. GDP for five years, indicating the significant impact of Covid-related stimulus and deficits on corporate earnings.
Interview:
-No update
Tech Trader:
-Tech earnings later this month are expected to reveal more massive outlays for artificial intelligence, as Amazon, Google, Meta Platforms, and Microsoft remain in a costly race to build data centers and buy Nvidia chips to fill them. To slow the pace of spending, hyperscalers are sourcing chips not made by Nvidia, such as Broadcom and Marvell Technology. Both companies develop application-specific integrated circuits (ASICs), which can be designed for predictable, high-volume workloads and cost an average of several thousand dollars compared to more than $30,000 for Nvidia's latest GPUs. Morgan Stanley analysts estimate that the custom AI chip share of the market stood at 11% in 2024 and will rise to 15% in 2030. The AI accelerator market is set to grow to $390B by 2030, making Broadcom and Marvell valuable diversification in the AI trend.
The Trader:
-Oil prices have been volatile this year, with oil prices increasing by 0.5% this week. WTI Crude, the U.S. benchmark, is down 16% from its 2025 high of $80.04 in January but up 18% from its low of $57.13 in May. Despite this, oil prices have held up even after OPEC announced a larger-than-expected supply boost on July 5. This resilience suggests that concerns about oversupply are already reflected in the price, though a shift in the economic or political winds could always cause volatility to resume. In such an uncertain environment, investors should look for oil companies that are relying on more than higher prices to boost profits. Chord Energy, a $6.2 billion company, fits the bill by implementing efficiency measures that can boost its free-cash-flow margins. Resources, California Resources, and SM Energy, which currently have margins below 20%.
-President Donald Trump's tariffs are causing concern among investors, with the S&P 500 index dropping 0.9% in the first two days of the week. The iShares Expanded Tech-Software Sector exchange-traded fund has declined only 0.2%, suggesting it should be more volatile than the stock market. Software companies tend to buy fewer physical products, making them less vulnerable to rising prices. Demand isn't as economically sensitive as for other industries, so if the economy takes a light hit from increased levies, software isn't among the market's top concerns. If tariffs get slightly worse, software will trade well. The recently passed tax bill allows software companies to expense research and development spending immediately, resulting in higher near-term expenses and lower tax bills. According to Morgan Stanley analyst Keith Weiss, the three software stocks that benefit the most from the changes in the law are Okta, Autodesk, and CrowdStrike Holdings.
Features:
-Venture capital firms have been investing in gambling and gambling treatment since the opening of nationwide sports betting in 2018. New Hampshire-based alumni Ventures, part of an initial investment round for Sleeper, raised $2M in 2017, which was later valued at $400M. This past August, alumni Ventures invested $1.5M in Kindbridge Behavioral Health, a gambling addiction treatment firm. Bettor Capital, a devoted gambling VC firm, also invested in Kindbridge in March. In total, six VC firms have simultaneously invested in gambling and gambling treatment. The investment thesis is that as more people gamble, more will eventually develop a gambling problem and seek help. Venture-capital firms see the market for treatment growing in lockstep with the market for gambling. American VC firms have invested $2B in gambling businesses since a US Supreme Court ruling opened the door to nationwide sports betting in 2018.
-Luxury stocks have been a topic of discussion in recent years, with companies like Burberry Group and Chanel struggling to maintain exclusivity and avoid brand dilution during the Covid-era boom. However, the luxury sector has seen a decline in recent years due to weakness in China, hit-or-miss merchandising, and tariffs. LVMH Moët Hennessy Louis Vuitton, Gucci owner Kering, and Prada have all seen their stock drop over the past two years. However, the One Big Beautiful Bill provides a 2.3% tax cut to top earners, who are also getting richer as the stock market rises. This is good news for luxury, which has seen an uncharacteristic boom/bust cycle in recent years.
Europe:
-European equities have been the global market's surprise of 2025, with a surge in European equities and high-yield corporate bonds. In June, investors ate up EUR 23B ($27B) in subinvestment-grade corporate paper, with Europe remaining a small junk-bond fish with around $350B in total issuance compared to $1.5T in the US. The market has hit a Goldilocks range that suits both borrowers and investors, with tight spreads and attractive yields. Average gross yields below 5.5% lag behind the 7% available in U.S. high yield, but with U.S. interest rates more than two percentage points higher than in the euro area, the alchemy of hedging can make up the difference. European junk on average is safer, with two-thirds of the market rated BB, the upper limit of high yield, compared with half in the US Market exuberance has opened the door for higher risk/reward credits, with Austrian auto parts manufacturer Benteler International and UK-based Punch Pubs placing paper at more than 7% annual interest. European high-yield offerings are diverse, with no single sector accounting for more than 10% of the market. Most European issuers are domestic-facing, minimizing exposure to Donald Trump's threatened US tariffs. Auto makers represent around 10% of the European market.
Emerging Markets:
-No update
Commodities:
-Copper prices have been experiencing a surge, with President Donald Trump's recent threat of a 50% tariff on copper imports causing market shock. The consensus was for a 10%-25% levy, but Commerce Secretary Howard Lutnick has announced a 50% tariff will be implemented by August 1. Investment banks like Goldman Sachs and many traders believe the threat is credible, with Goldman analysts seeing a 60% chance of a 50% tariff priced into December 2025 contracts. Copper is considered a leading indicator for the global economy and industrial activity. Demand for copper has been healthy, with the US heavily dependent on imports for the past few years. The US has imported nearly half of its copper, mainly from Chile and Canada, with Peru and Mexico accounting for 9% and 6%, respectively. A stockpiling rush as companies try to front-run tariffs is distorting prices, with copper in the US trading nearly 30% higher than prices on the London Stock Exchange. If Trump backs off from a 50% tariff, prices could tumble back to where they were before the tariff announcement. Additionally, US buyers who bought excess inventory may exit the market as prices stay elevated.
Streetwise:
-CVS Health has introduced a new feature for weight loss patients, reducing weight loss. The company's pharmacy benefit manager, Caremark, has made Wegovy its preferred obesity-fighter and dropped coverage of Zepbound. This change has affected around 200,000 Zepbound patients, but overall, Eli Lilly has been adding 500,000 Zepbound patients per month. Investors should expect a dent to revenue growth when the company reports second-quarter financial results on Aug. 7, followed by a reacceleration in the third quarter. The stock selloff hasn't left Eli Lilly's valuation particularly lean, but earnings gains through the end of the decade could be humongous. Bulls are predicting big stock returns from here. Eli Lilly's stock has been up 174% since a follow-up column two years ago, while Novo has underperformed. The company has an even newer obesity drug called retatrutide, which appears in trials to be more effective than existing meds. The bigger development might be Eli Lilly's orforglipron, which showed promising blood sugar reduction and weight loss in a late-state diabetes trial reported in April and could hit the market next year, pending approval.