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WEEK AHEAD
July 7-11, 2025
Even with a truncated week, equities remained remarkably undeterred, shrugging off potential headwinds to notch robust gains across all major sectors – a somewhat defiant move, considering the much-discussed 90-day exemption to reciprocal tariffs approach its July 8 expiration. And for those keeping score, Sowell’s technical signals are still firmly in the green, indicating a fully invested and decidedly bullish stance.
A Week of Fireworks (and Dividends!)
Well, folks, as we wrapped up last week ending on our nation's birthday, the markets were in a celebratory mood of their own. Building on a rather stellar June, we saw continued positive vibes, largely thanks to some surprisingly robust banking news and a jobs report that, while a bit of a mixed bag, ultimately showed some resilience. Let's dive in.
The Week's Big Takeaways:
This past week reinforced the market's penchant for corporate strength and ample liquidity. While some economic data points gave us pause, the underlying narrative is one of cautious optimism. As we head into the Q2 earnings season and the upcoming FOMC meeting on July 29, all eyes will be on corporate performance and interest rates to see if this positive momentum can truly be sustained. Stay tuned!
"This is a country that has built itself through a process of rupture and repair. We go through these hard periods, but then we repair."
— New York Times Columnist David Brooks, PBS NewsHour, July 4, 2025.
They Taxed Paper. We Tax Silicon. The Medium Changes, the Instinct for Control Doesn’t.
The Medium Changes, the Instinct for Control Doesn't.
By Gregory Lai
In recent weeks, I've sat through a handful of town halls—the kind where financial titans share space with academics, and everyone's armed with models, context, and opinions. One, hosted at UC Irvine, brought together alums and faculty for a discussion that veered from monetary policy to historical parallels. But what stuck with me wasn't a forecast—it was a prop: Dean Maurier holding up an original eight-page copy of the Townshend Acts from June 29, 1767.
The result wasn't just taxation—it was agitation. The Townshend Acts inflamed colonial resistance, sparking boycotts, street protests, and eventually violence. It's no stretch to draw a straight line from those duties to the Boston Massacre in 1770, where British soldiers killed five colonists in a crowd of protesters. Tariffs may start with revenue, but they can end with revolution. Nine years later, the colonies became the United States of America.
Let's not kid ourselves: China isn't an American colony—but our neighbors, Canada and Mexico, still play the same role in the supply chain that the colonies once did. The anxiety behind tariffs hasn't changed—just the actors and acronyms.
Paper: The First Medium of Control
Long before silicon chips, cloud storage, or AI inference engines, paper was the original data infrastructure. It carried laws, contracts, news, strategy, and dissent. Taxing it was a way to throttle the spread of ideas. The Townshend Acts taxed paper so granularly that they listed dozens of paper types by name and rate—from Atlas Fine at 12 shillings to Foolscap Second at six pence.
This wasn't a revenue play. It was information control. The British weren't just taxing reams; they were taxing communication itself. That friction sparked unrest—and eventually, revolution. Ideas want to move. Tariffs block the lanes.
Chips: The New Paper
Fast-forward to today. Semiconductors have replaced paper as the core medium of modern power. When a chip doesn't ship, a missile doesn't launch, a server doesn't compute, and an Instagram doesn't post, or worse, Siri goes silent.
The United States and China both understand this. Which is why 2020s tariff wars aren't about fair trade—they're about technological sovereignty. About who controls the infrastructure of the modern state.
The parallels are hard to miss. Just as Britain tried to preserve its grip on the colonies by taxing critical goods, the United States is now trying to maintain its edge by imposing tariffs on Chinese semiconductors, EVs, and solar tech. On the surface, it's policy. Beneath it, it's fear.
Tariffs follow anxiety. In 1767, it was the anxiety of a crumbling empire. Today, it's the anxiety of a global power watching the future shift East.
For Investors: Watch the Narrative, Not the Math
This isn't just policy noise. For investors, it's narrative risk. Tariffs are smoke signals. They tell you where the power struggle is most intense—and where the market might pivot next.
Globalization, despite its flaws, has created immense wealth. It lifted billions out of poverty and gave rise to a generation of hyper-efficiency. But now we've reached globalization's Garden of Eden moment—a place of impossible access, impossible speed, and the creeping realization that paradise came with a cost: dependence. The serpent in this version of Eden isn't temptation. It's a loss of control.
The question isn't whether tariffs "work." They rarely do, long-term. The real question is whether they delay the inevitable—or accelerate the transition.
Back then, they taxed parchment. Today, they tax processors. Either way, the story is the same: control the medium, and you control the message.
And the trade deficit? It's not just a number. It's dependence—the quiet tax we pay for someone else's control.
Disclosure: This material is for informational purposes only and should not be considered investment advice. The opinions contained herein are subject to change without notice.
Advisory services offered through Sowell Management, a Registered Investment Advisor. The views expressed represent the opinion of Sowell Management. The views are subject to change and are not intended as a forecast or guarantee of future results. This material is for informational purposes only. It does not constitute investment advice and is not intended as an endorsement of any specific investment. Stated information is derived from proprietary and non-proprietary sources that have not been independently verified for accuracy or completeness. While Sowell Management believes the information to be accurate and reliable, we do not claim or have responsibility for its completeness, accuracy, or reliability. Statements of future expectations, estimates, projections, and other forward-looking statements are based on available information and Sowell Management’s view as of the time of these statements. Accordingly, such statements are inherently speculative as they are based on assumptions that may involve known and unknown risks and uncertainties. Actual results, performance or events may differ materially from those expressed or implied in such statements. Investing in securities involves risks, including the potential loss of principal. While equities may offer the potential for greater long-term growth than most debt securities, they generally have higher volatility. International investments may involve risk of capital loss from unfavorable fluctuation in currency values, from differences in generally accepted accounting principles, or from economic or political instability in other nations. Past performance is not indicative of future results.