Month: March 2024

Good Morning Ladies and Gentlemen

“Government spending is taxation. When you look at this, I’ve never heard of a poor person spending himself into prosperity, let alone of a poor person taxing himself into prosperity.”

by Arthur Laffer, Professor of Business Economics and member of President Reagan’s Economic Policy Advisory Board

Zero gravity

According to an excerpt from Wikipedia, weightlessness is the complete or almost complete absence of the sensation of weight, i.e. the absence of apparent weight. It is also referred to as zero-g force or zero-g (named after the g-force) or sometimes incorrectly as weightlessness. Gravity also exists in space. It prevents satellites from flying straight out into the interstellar void. What is missing is the “weight”, the resistance to the force of attraction by an anchored structure or a counterforce.

The Swiss National Bank

The Swiss National Bank (SNB) is reversing its monetary policy and lowering interest rates as the first one among the large global national banks. The central bank announced on Thursday that their key interest rate will be lowered by 0.25% to 1.5%.

The Swiss National Bank II

“The easing of monetary policy was made possible because the fight against inflation has been effective over the past two and a half years,” the central bank explained. Inflation has been below 2% for several months, and within the range, the SNB equates with price stability.

SNB Chairman Thomas Jordan

SNB Chairman Thomas Jordan’s comment to the media yesterday included: “With our decision, we are taking account of the lower inflationary pressure and the real appreciation of the Swiss franc over the past year. The interest rate cut also supports economic development. Today’s easing, therefore, ensures that monetary conditions remain appropriate.”

Well, well, well

Yes, Ladies and Gentlemen, as mentioned in the previous “Stefan’s Weeklies”, I would not be surprised to see the ECB and Fed lower their base rates in June. One interesting statement by the SNB claimed that inflation will likely remain in “this range” (i.e. below 2%) for the next few years.

But why?

But why is the Swiss Franc so incredibly strong compared to other currencies? The answer can probably be found in the Swiss government’s discipline regarding household policies. A balanced annual financial statement is still regarded as a politically accepted normality, even if leftist politicians tend to favour ever more social benefits, regardless if this means more debt.

Ratio

The evolution of the Swiss Franc monetary aggregates M1, M2 and M3 (Monetary policy | Federal Statistical Office (admin.ch)) is in percentage, more or less in line with the evolution of the percentage increase (production) of the amount of global gold (Global gold production from mines 2023 | Statista). Interesting, no?

A blessing and a curse / the feeling of zero gravity

A strong Swiss Franc helped Switzerland to keep inflation down massively compared to other G20 nations, which was a blessing for the general public. However, most Swiss companies export, and thus, the strong Swiss franc made their exports challenging and more expensive for customers from non-Swiss franc currency zones. For some of the exporters, therefore, the strong Swiss Franc certainly seemed to be a curse. Nevertheless, in a tense global economic environment, Switzerland has been able to maintain its economic stability in recent years thanks to decades of government budgetary discipline, and the strong Swiss Franc made the majority of the Swiss population feel like it is in “zero gravity”, while in other currency areas all around Switzerland and Liechtenstein, purchasing power plunged.

Good Friday

There will be no “Stefan’s Weekly” next week due to Good Friday Holiday. Thanks for your understanding.

Ladies and Gentlemen

As always, please share your opinion with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li

Many thanks, indeed!

I wish you an excellent start to the day and the weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

“The belief that security can be obtained by throwing a small State to the wolves is a fatal delusion.”
by Sir Winston Leonard Spencer-Churchill

Awards

I am very proud of my colleagues, Ladies and Gentlemen. It seems we are winning awards without end. Not only have the Incrementum All Seasons Fund and the Uranium Resources Fund won a Lipper Award each, but the Uranium Resources Fund has also taken first place at the Mountain View Fund Awards 2024 in the “Megatrend Natural Resources” category. The two funds are managed by my partners, Dr Christian Schärer and Hans Schiefen, who also act as each other’s deputies in the respective funds. If you ask me, that is a sign of remarkable consistency. Morningstar awarded a maximum of five stars for both of these funds, and then we have just learned that Incrementum AG has been ranked 10th out of over 500 asset managers by the German magazine “Wirtschaftswoche” (WiWo). This makes me happy, Ladies and Gentlemen!

Sir Winston Leonard Spencer-Churchill

I received a few positive comments on last week’s quote by Winston Churchill, which is why I allowed myself to include another in this week’s “Stefan’s Weekly”. It is interesting because it can serve as food for thought in today’s political landscape, as it did in 1938.

Your bests so far

I sense a certain bullishness among my readers. Your bets are going through the roof. In recent years, most of my readers have been bullish on gold, silver, and Bitcoin but not so much on the S&P. This year, almost all of you are bullish on the S&P, and even for Nvidia, the quotes are roughly fifty-fifty. One very low bet forecasts a crash in the stock, if not in the sector, but there are also bullish bets around USD 1’000 and above.

S&P

So far, the highest bet on the S&P stands at 5’651 and the lowest at 4’000. Yesterday, the S&P traded at USD 5’150.

Gold

So far, the highest bet on gold stands at 2’500 and the lowest at 2’050. Yesterday, gold traded at  USD 2’163.

Nvidia

So far, the highest bet on Nvidia is 1’250, and the lowest is 195. Yesterday, Nvidia traded at USD 773.

Ladies and Gentlemen

As always, please share your opinion with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li

Many thanks, indeed!

I wish you an excellent start to the day and the weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

“I had great anxiety and no means of relieving it.”

by Sir Winston Leonard Spencer-Churchill

Descriptive perception

Descriptive perception is thought to mean understanding how the individual, society, or world actually is.

European Central Bank (ECB) I

Despite a faster decline in inflation, the European Central Bank is waiting to cut interest rates for the first time since summer 2022. Yesterday, the ECB Governing Council left the key interest rates in the 20-country currency area unchanged for the fourth time in a row. The most important interest rate for supplying the banking industry with fresh central bank money remains at 4.5%. The deposit rate, which banks receive for parked money, remains at 4.0%.

Normative perception

Normative perception is thought to mean understanding how an individual, society, and the world should be.

European Central Bank (ECB) II

Central Bank president Christine Lagarde indicated yesterday in Frankfurt after the ECB Governing Council meeting that a change of course could occur at the June 6 meeting. She clarified: “We did not discuss a rate cut in this meeting. We have just started discussing the withdrawal of our restrictive stance.”

Reason

The recent development of the inflation rate makes the euro currency guardians more confident but “not sufficiently confident,” explained Lagarde. We clearly need more evidence and more data. We will know a little more in April, and we will know a lot more in June.”

Federal Reserve

According to Neel Kashkari, head of the Minneapolis Fed, the US Federal Reserve is only likely to lower interest rates max. twice this year due to stronger economic data since the beginning of the year

Same same

It looks like both central banks are going to lower their key interest rates in summer at the earliest, and it seems this is going to be somewhat orchestrated between them.

Impact

The impact will probably be that risk assets like equities, gold, and cryptos continue to perform well as the interest rate fantasy remains alive. We will see soon enough, in three months from now we are going to be in summer. Time flies, Ladies and Gentlemen.

Year-End competition

Next week, I will give an update on the state of this year’s year-end competition. We will look at the guessed price ranges in the different asset classes and share some information about the Incrementum partners’ guesses. If you have not participated so far and still want to, please feel free to send in your bets.

Ladies and Gentlemen

As always, please share your opinion with me, but please do not forget (instead of hitting the reply button) to send your messages to smk@incrementum.li

Many thanks, indeed!

I wish you an excellent start to the day and the weekend!

Yours truly,

Stefan M. Kremeth
CEO & Head of Wealth Management
Incrementum AG – we love managing assets

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li