Month: January 2026

Good Morning Ladies and Gentlemen

”I’d rather be an optimist and a fool than a pessimist and right.”

Albert Einstein

Politicians often grant loyalty to corporations, which can result in rewards or penalties based on political cycles. Being linked to a particular politician may invite regulatory scrutiny or retaliation as political dynamics change. This topic appears intriguing enough for further exploration, and I plan to share my thoughts on it in my upcoming “Stefan’s Weekly.”

The Carry Trade: A Definition

Ladies and Gentlemen, a carry trade is a trading strategy in which an investor borrows funds at a lower interest rate to invest in assets that offer potentially higher returns. This approach often exploits interest rate differentials between two currencies, enabling traders to profit from the spread. Carry trades are especially popular in the forex market, where traders seek to capitalise on the differences in interest rates between currencies.

The Carry Trade: A Classic

The classic carry trade in financial markets is shorting the yen while going long on the USD (either bonds or equities).  Therefore, the yen carry trade works when a trader borrows yen, converts the funds into dollars, and invests in higher-yielding U.S. government bonds or U.S. equities. It is effective only if the interest rate differential between Japan and the US either widens or remains stable. So far, so good.

The Carry Trade: A Danger

However, currently, this differential is narrowing. Additionally, if the dollar/yen exchange rate declines (indicating a strengthening yen), taking a short yen position may not be advisable. In such cases, the cost of repaying loans in yen increases. This decline in the dollar/yen exchange rate can be further intensified by panic, as feedback effects may compel buyers of yen loans to cover their positions. With this context in mind, the question arises: what is the scale of the yen carry trade? Recent data from the Bank for International Settlements (BIS) indicates that open positions exceed USD 260 billion. While this figure is substantial, it pales in comparison with exaggerated claims from less credible online media sources, which have reported figures as high as USD 20 trillion.

The Carry Trade: A Reversal

The reversal of a carry trade could adversely affect the U.S. dollar, interest rates, and stock markets. The USD would most likely decline, as would equity markets, and interest rates would likely rise. All of this, of course, only if the U.S. Treasury Department does not intervene.

The Carry Trade: Additional Noise

The Danish pension fund Akademiker Pension (https://akademikerpension.dk/) announced last Tuesday that it plans to divest approximately USD 100 million in US government bonds by the end of the month. Chief Investment Officer Anders Schel-de stated that the decision stems from concerns about the deteriorating state of US public finances, prompting the fund to explore alternative strategies to manage liquidity and risk. While the move is not directly tied to the ongoing dispute between Denmark and the US regarding Greenland, Schelde noted, “Of course, that didn’t make the decision any easier.” Following this announcement, a report indicated that the large Swedish pension fund Alecta (https://www.alecta.se/this-is-alecta) acted the next day similarly, selling a significant portion of US government securities due to perceived political risks. The volume of Alecta’s sale is reported to be between USD 7.7 billion and USD 8.8 billion.

White House Reaction

There appears to be a growing unease, as the U.S. President has cautioned European nations about the potential need to sell U.S. bonds on a substantial scale. I believe this approach is understandable but unsustainable. Firstly, former allies may remember these threats and feel compelled to implement defensive strategies. More importantly, this tactic fails to address the fundamental issue of persistent budget deficits and the United States’ ever-increasing national debt.

Ladies and Gentlemen

Feel free to send your messages to smk@incrementum.li. Many thanks, indeed!

I wish you an excellent start to the day and 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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”We cannot add days to life, but we can add life to days.”

Young woman at the funeral service in Crans-Montana

Politics often focuses intensely on the present while remaining largely indifferent to the future. This oversight is especially concerning as it ultimately impacts our children and grandchildren. Ladies and Gentlemen, I believe it is essential to uphold the principle of intergenerational justice, the right of young people to access an equitable distribution of freedom, opportunities, and responsibilities over time and across generations, grounded in their fundamental right to liberty. Unfortunately, due to short-term political opportunism, this principle is frequently overlooked, which leads to a slow numbing and creeping poisoning of political discourse and action

Multiple Existential Crises

The world is currently grappling with several existential crises, be it concerns about Greenland’s annexation by the U.S., or Taiwan’s integration into China, Canada becoming the 51st state of the USA, Germany’s imperative to arm Ukraine, European regulatory frenzy, ever more sanctions and tariffs, and rising prices for daily goods. In this context, the pursuit of balanced budgets has been set aside. For the first time in decades, we see an almost global trend towards fiscal stimulus in advanced economies.

Bullish on Crude

Ladies and Gentlemen, keeping such “multiple existential crises” in mind, there is no need for over-analysis; it is clear that gold, silver, and copper are experiencing significant price increases, and I believe that global growth is likely to exceed expectations, and therefore, the real surprise to me would be if oil does not rise alongside these other commodities.

Will this Lead to Inflation

I believe higher inflation is likely to occur eventually. However, for the first half of 2026, I anticipate that inflation will be under control due to base effects. Last year, we saw considerable inflationary pressures in several economies, but at present, that does not appear to be recurring. This situation (positive base effect) should contribute to lower inflation rates, and, possibly by Q2, we may also see a reduction in interest rates in the U.S., and, who knows, potentially in the EU as well.

Higher Prices vs Lower Prices

It is important to emphasise that a decrease in inflation should not be confused with lower prices. A reduction in inflation simply indicates that prices will not rise as rapidly as they have in the past, but it does not imply that prices will actually decrease.

Today’s Quote

As some of you may have heard, there was a most unfortunate, terribly sad incident, a deadly fire in a club for young people in Crans-Montana, Switzerland, my home country. 40 young people lost their lives, and another 120 were partly life-threateningly injured. During the main funeral service in a regional church, which was broadcast on TV, a young lady in mourning said, “We cannot add days to life, but we can add life to days”. To me, this was very touching, so I immediately wrote it down to share it with you. The statement is relevant, and I will try to keep it in mind.

Ladies & Gentlemen

Feel free to send your messages to smk@incrementum.li. Many thanks, indeed!

I wish you an excellent start to the day and 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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”More than 30% of U.S. market capitalisation now trades above 10x sales.”

GMO (Grantham, Mayo, Van Otterloo & Co. LLC)

Who won?

Finally, and once again, the sleepless nights are over; it is time to declare our year-end competition winner.
As every year, the data comes from Finanz und Wirtschaft (fuw.ch).

Shanghai Composite

According to the source mentioned, the Shanghai Composite Index closed the year at 3’968.84, finishing in clearly positive territory. Some of my readers had predictions around 2’500.00. However, the closest prediction came from Mark T., who estimated that the Shanghai Composite Index would close the year 2025 at 3’974.66, just 5.82 points aside. Well done, Mark T.!

10-Year U.S. Treasury

According to the source mentioned, the 10-year U.S. Treasury closed the year at 4.121468%. The closest prediction came from John and Antoine, both of whom estimated that the 10-year U.S. Government Bond would close the year at 4.1%. Well done, John and well done, Antoine!

Silver

Ohhh, Ladies and Gentlemen, Silver was my favourite investment for almost two decades, and it never took off and in 2025 – woooosh!
The slow long-term performance, the volatility, and the frustration were tough to manage for me, and now, what am I supposed to do? Should I sell or stay greedy and hope for more?
Anyway, let us have a look at our winner in this category. According to the source mentioned, Silver closed the year at USD 71.31. The highest and closest prediction came from Mark L., who guessed USD 54.50, well ahead of the others. Well done, Mark L.!

The Winner

Ladies and gentlemen, this year’s competition was once again very close, particularly between Mark L., Mark T. (former winner) and my partner, Hans, who runs our flagship fund with great success for years now.
And the winner is… Mark L.!
Yes, this marks his first victory in the Incrementum Year-End-Competition, making him the 2025 champion.
Congratulations, Mark L.! A wonderful one-ounce silver coin will be sent to you. Well done!

Thank you!

Thank you very much for participating. Maybe there will be another Year-End-Competition for 2026. But first, I wish you all the best for 2026. Stay healthy and fit, and take care!

Ladies and Gentlemen

Feel free to send your messages to smk@incrementum.li. Many thanks, indeed!

I wish you an excellent start to the day and 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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li