Author: Stefan Markus Kremeth

Good Morning Ladies and Gentlemen

”Every champion was once a contender who refused to give up.”

Rocky Balboa

People often remain unaware of perspectives outside their bubble, a realisation that is not particularly new. Nevertheless, instead of responding with indignation to the Trump administration’s tariffs, I believe that global political leaders and the media should adopt a more nuanced approach to the current U.S. administration. They should prioritise alternative markets and, most importantly, focus on best-in-class products. While this transition may require time and could involve some painful adjustments in the short term, it ultimately has the potential to foster a more efficient, productive, and competitive economic landscape in many countries outside the U.S., thus leading to more resilience in the long run.

Shift in Mindset

Such a shift in mindset may enable us to refrain from primarily preaching morals and ethics in international trade, a practice Western politicians often feel entitled to. It also encourages us to redirect our attention towards trade and recognise that differing perspectives, regardless of their underlying reasons, can be valid in other countries.

My Take

The Dow Jones Transportation Average is a cyclical indicator of the US economy and has recently fallen below its four-year GDP trend. This marks the first occurrence of such a decline since the crash prompted by the coronavirus in 2020. According to the GDPNow forecast from the Atlanta Fed for the first quarter of 2025, real growth is projected at -2.8%. Meanwhile, US consumer sentiment is deteriorating, with rising consumer inflation expectations (as indicated by the University of Michigan and the Conference Board’s consumer confidence indices). It remains to be seen how the tariffs may contribute to inflation while simultaneously hindering economic growth. As indicated in one of my “Stefan’s Weekly” from February, the risk of entering a stagflationary phase is increasing. After all this, I would not be surprised to see the Federal Reserve still lower the key interest rate this quarter.

Tax on Imports

Ladies and Gentlemen, importers, particularly American importers (companies, farmers, restaurants, hotels, etc.), bear the cost of those tariffs, which are nothing but taxes levied on imported goods. Therefore, while the Trump administration positions itself as a proponent of low taxes, tariffs directly increase the tax burden on goods that the average consumer purchases. Foreign export companies also face indirect costs due to these tariffs. The increased prices of their products in the U.S. market make them less competitive. To mitigate this disadvantage and maintain competitiveness, many foreign exporters may lower their prices, resulting in reduced profit margins. We must not fool ourselves; ultimately, the American consumers pay the price. Neither the foreign exporter nor the domestic importer can fully absorb the impact of a 20, 30, or whatever percent tariff by lowering their profit margins. Consequently, the burden of the tariff is passed on to consumers.

Rocky Balboa and the Swiss Government

The Swiss government has declared that it will not implement any immediate countermeasures in response to the tariffs imposed by the United States. This decision is judicious, considering the broader implications for international trade relations.

Last but not least, I think the quote presented today resonates strongly with the theme of this week’s “Stefan’s Weekly.”

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

”The public buys the most at the top and the least at the bottom.”

Attributed to Wall Street Legend Bob Farrell

Update

Can you believe we are already wrapping up the first quarter of 2025? Time is flying by! I wanted to share a quick update on the Incrementum 2025 Year-End Competition. Let’s dive in!

Silver

So Hans went all in with the highest bet, USD 47.80. On the other hand, Mark, a former silver coin winner, placed the lowest bet, USD 35.77.

Shanghai Composite     

For now, Hans’s highest bet on the Shanghai Composite Index is recorded at 3,980 points, marginally higher, by approximately five points, than Mark’s corresponding one. In contrast, Niklas’s lowest bet is documented at 2,950 points.

10-Year U.S. Treasury

In the 10-Year U.S. Treasury securities market, Mike has the highest recorded bet at 5.55%, while Hans maintains the lowest at 3.8%. This disparity highlights a significant divergence in the gentlemen’s expectations regarding future interest rates and thus economic conditions. It is interesting and certainly something to discuss when they see each other in Hamburg in a few weeks.

Open Competition

For those who have not yet placed their bets, the competition remains open, and it is both entertaining and free to participate. Place your bets, and this year, I plan to add another silver coin if Dario emerges victorious again. Dario appears to be in a league of his own; therefore, if he wins, I will also send a silver coin to the runner-up. This will also apply if a partner of Incrementum takes the prize. The data will be sourced from https://marktdaten.fuw.ch/.

Ladies and Gentlemen

I keep my fingers crossed! As always, please share your opinion with me. 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

” It remains seen how these developments affect future spending and investment.”

Fed Chair Jerome Powell

In his post-meeting press conference, Federal Reserve Chair Jerome Powell recognised the significant level of uncertainty prevailing among American consumers and businesses. He attributed much of this apprehension to the “turmoil” associated with the Trump administration. This choice of language is particularly noteworthy.

Incrementum Year-End Competition 2025-Edition / Your Input

Ladies and Gentlemen, I sincerely appreciate all the feedback I have received from you. Thank you very much! In addition to the classics like gold, silver, the S&P, and Bitcoin, there were many innovative suggestions. The time has come to update two of our previous favourites and do justice to all the ideas you contributed.

Let’s Go, Pick Number One!

For the Incrementum Year-End Competition 2025, we have chosen to examine the price of silver. I have maintained a bullish stance on silver for over 20 years, although I have felt frustrated for the past 14 years. However, given the economic circumstances unfolding before us, 2025 may be an intriguing year for silver, often regarded as gold’s smaller brother. Thus, our first selection will be silver, currently trading at USD 33.12.

Let’s Go, Pick Number Two!

In examining the potential outcomes of global fiscal stimuli, we find that various Chinese indices present compelling investment opportunities. So, we have identified the Shanghai Composite Index, currently trading at 3’426.43, as our second choice for you to consider.

Let’s Go, Pick Number Three!

Ultimately, interest rates may become an intriguing factor to monitor. Should inflation in the U.S. continue to rise, we can expect a significant impact on interest rates. For this reason, we have selected the 10-year U.S. Treasury note, currently trading at 4.3%, as our third pick.

Your Bets

Ladies and Gentlemen, please send in your bets. As is tradition, the individual whose estimate is nearest to the year-end prices will be awarded a one-ounce silver coin.
The definitive price data will be sourced from https://marktdaten.fuw.ch/.

I extend my best wishes for your endeavours and hope that a new victor will emerge this year (with all due respect to Dario) to claim the prized coin.

Ladies and Gentlemen

As always, please share your opinion with me. 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

”It’s such a momentous change going on. If it continues like this, capital allocators will wonder: ‘Do I want to stay allocated to the U.S.?”

Mansoor Mohi-uddin, chief economist at Bank of Singapore

I believe that Europe is undergoing an awakening process, which is a positive development! However, significant changes do not always occur because wise individuals have strategically planned far into the future; they often arise from a mix of favorable and unfavorable decisions and circumstances and their ensuing consequences, which means nothing other than that they may come about somewhat by chance. Respect and goodwill usually help to achieve a positive result.

Incrementum Year-End Competition 2025-Edition

Yes, Ladies and Gentlemen, it is again that time of the year. I have decided to launch another Incrementum Year-End Competition.

However

Today, I would like to know which three asset classes you want to bid for. What are three exciting bets worth following? We have previously considered gold, silver, crude oil, Bitcoin, Nvidia, and the S&P 100. Is there anything I’ve overlooked?

Your Input is Required

Please respond to today’s “Stefan’s Weekly” within the coming days. This will enable me to identify and propose three suitable candidates for our Incrementum Year-End Competition 2025-Edition. Thank you for participating.

Price

As always, the winner’s compensation will consist of a one-ounce silver coin delivered directly to the recipient’s residential address by January 2026.

Ladies and Gentlemen

As always, please share your opinion with me. 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

”Don’t criticise what you can’t understand.”

Bob Dylan

In my previous weekly update, I discussed the possibility of stagflation in the U.S., and I received a few messages asking how considerable that risk was. Obviously, I do not know, and usually, stagflation is rare. However, household consumption and government investment have been the primary drivers of economic growth over the past few years. Currently, the U.S. economy is not growing anymore, while inflation is sticky, and tariffs usually do not help bring inflation down. To stay cool with Mr. Bob Dylan, I do not want to criticise what I do not understand, but looking at what is happening in the U.S. right now, the reasoning behind a potential slowdown in both sectors (see below) with sticky or higher inflation seems quite compelling to me.

Last Week’s GDPNow

The nowcast for the first quarter of 2025, provided by the Atlanta Fed’s GDPNow, indicates a projected real growth rate of -1.5 %. This marks a significant decline from the previous week’s estimate of +2.3 %; a shift of such magnitude is rare. Even if some of this downturn can be alleviated in the coming weeks, it nevertheless signals a clear step toward a slowdown in the US economy. Recent US retail sales figures have been disappointing, and exports have also shown weakness. Additionally, applications for US unemployment benefits have risen to 240’000, suggesting that consumers are losing momentum. These trends are concerning because consumption constitutes approximately two-thirds of the U.S. GDP.

Surprisingly

The U.S. economy is facing a setback at a critical moment for President Trump, who aims to deliver on his political and economic promises following a period of robust growth and declining inflation under the previous administration right after the difficulties of the COVID-19 pandemic. Should weak growth persist into the coming months, market participants and media discussions will likely center on slowing or negative growth. In such scenarios, a U.S. President typically encounters significant challenges. Consumer sentiment in the U.S. is already declining, which is likely to adversely affect the President’s approval ratings in the medium term. The economy performed exceptionally well during the previous administration, leading many in the market to underestimate the possibility of a slowdown.

What Are Market Participants Afraid Of?

Well, Ladies and Gentlemen, market participants are concerned that the tariffs set to take effect whenever, including an increase in the China tariff from 10% to 20%, a 25% tariff on goods from Mexico and Canada, and an unspecified 25% tariff an-nouncement for Europe, will have a recessionary impact, coupled with inflationary pressures on the products subject to these tariffs and retaliatory measures. This situation arises when GDPNow indicates a significant downturn, driven by weak U.S. exports and sluggish consumer spending. There are growing indications that the first quarter of 2025 may see negative growth.

Conclusion

Diminished consumer confidence, heightened inflation expectations, sluggish consumer spending, increasing initial jobless claims in the U.S., reduced incoming orders in the manufacturing sector, and the U.S. stock market’s preference for defensive sectors all suggest a troubling trend. Like the Trump administration, those who disrupt the delicate balance of the ‘Goldilocks’ economy through significant intervention should not be surprised by a negative shift in the business investment cycle. If you were a business owner, would you invest in personnel, facilities, machinery, or IT at this moment, given the uncertainty about where this journey will lead? There is considerable ambiguity surrounding redundancies, tariffs, global alliances, and more, which could impact investments, job growth, and consumer spending. Therefore, the question remains: Where is growth expected to originate from?

Mr. Bob Dylan Once More

But then again, to stay cool with Mr. Bob Dylan, I do not want to criticise what I (maybe) do not understand.

Ladies and Gentlemen

As always, please share your opinion with me. 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

”It’s never stupid to be afraid of shit that can kill you.”

Anna Windsor, from Bound by Light (a book I have not read)

Stagflation is a challenging economic phenomenon characterised by high inflation, low growth, and elevated unemployment rates. In this week’s edition of “Stefan’s Weekly,” I wish to focus on this topic. As I observe the events unfolding in the world’s largest economy, I struggle to identify any sensible processes or coherent implementation of effective strategies to address the current situation. While it may still be early in the unfolding events, it seems prudent to prepare for the worst while hoping for the best, rather than the inverse.

Stagflation a Definition

Stagflation is a difficult economic situation characterised by high inflation, low growth, and high unemployment. It can result from a negative supply shock that reduces an economy’s production capacity and increases costs or a mismatch between aggregate demand and supply.

Why Is Stagflation Challanging

Stagflation poses several challenges for policymakers, businesses, and consumers. It can lead to lower living standards and higher poverty rates for consumers, lower profits and uncertainty for businesses, lower tax revenues and deficits for governments, and higher interest rates and lower bond prices for investors.

How To Overcome Stagflation

Overcoming stagflation is problematic because it requires a delicate balance between monetary and fiscal policy, both of which can have unintended consequences. Monetary policy can curb inflation by raising interest rates and reducing the money supply, exacerbating the economic downturn and increasing unemployment. Fiscal policy can boost growth by increasing government spending and lowering taxes, but it can also fuel inflation and increase government debt.

Stagfaltion Protection

Defensive stocks deliver stable earnings and reliable dividends. These stocks are generally less affected by economic cycles, making them solid investments during challenging economic times due to their consistent demand. Real estate represents another valuable asset class. It offers protection against inflation and economic downturns while generating rental income. Investing in commodities, including energy, metals, and agricultural products, can be rewarding during stagflation, as they may benefit from rising prices due to inflation and supply shortages. However, this approach carries risks, including price volatility and potential regulatory changes. Gold is another dependable asset that safeguards against inflation and currency devaluation, maintaining its value over time. Its scarcity and durability make it less susceptible to fluctuations in supply and demand, usually providing solid performance during periods of stagflation. Last, Treasury Inflation-Protected Securities (TIPS) are government bonds that hedge against inflation by adjusting their principal value by the Consumer Price Index (CPI). They provide fixed interest payments every six months, making them an attractive investment choice during stagflation.

Conclusion

While stagflation presents a significant economic challenge, it doesn’t necessarily mean disaster for your investments. You can effectively navigate these turbulent times by grasping the intricacies of this rare economic phenomenon and adopting appropriate investment strategies. The resilience of defensive stocks and the lasting appeal of real estate, gold, TIPS, and commodities can partially safeguard your wealth and potentially even flourish in a stagflationary environment.

Finally

Ladies and Gentlemen, my last week’s “Stefan’s Weekly” led to some very positive feedback. Many thanks! Some of you asked for my opinion regarding a perceived change in the political landscape. Let me share the following with you. I firmly believe that any political landscape is, by definition, dynamic, and thus stability, even if perceived, is not guaranteed at all. Furthermore, I feel that humans often suffer from cognitive dissonance, which can create confusion regarding beliefs, ideologies, and worldviews. Consequently, many find it challenging to think abstractly and prefer to seek guidance from a rigid ideological framework. The drawback of this tendency is that many individuals lean towards one of the simplified dichotomies, as concepts such as good and evil and binary distinctions provide readily accessible answers and a sense of emotional certainty. This, of course, allows one to avoid grappling with the complexities and contradictions inherent in a complex reality. But is this really the right approach? Please think about it!

Ladies and Gentlemen

As always, please share your opinion with me. 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

”That most delicious of all privileges – spending other people’s money.”

John Randolph of Roanoke

In my view, the political ramifications of money printing manifest in an escalating dependency on the state for various forms of support. Events such as the Great Financial Crisis, the pandemic, and the Ukraine crisis have undeniably contributed to uncertainty and diminished confidence in individuals’ capacities to lead self-determined lives. Although the state policies aimed at providing substantial financial assistance during crises are well-intentioned, they have inadvertently cultivated a growing sense of entitlement toward state support, which appears to be putting pressure on democratic systems.

Distributing OPM

More and more groups are focusing on advocating for support or rescue, leading to a situation where less action is taken, and more is expected. However, it is essential to remember that every distribution of resources must first be collected. As the culture of achievement, crucial for a thriving, inclusive society, transforms into a mindset of entitlement, the risk of democratic failure grows. The more diverse the demands placed on the state, the more money is distributed, yet the more challenging it becomes to meet all expectations, which leads to some disappointment. Consequently, because of increasing government spending, taxes are likely to increase as well, resulting in ever greater dissatisfaction among the population. While short-term ruthless politicians may gather votes by distributing other people’s money (OPM), the long-term effect of such action is devastating.

The Crux of Modern Democracy

In a recent correspondence, my partner Hans Schiefen articulated an exceptionally well-constructed statement that I believe is highly relevant to the current discourse presented in today’s “Stefan’s Weekly”. Thus, I would like to take the liberty of sharing his insights with you for consideration. “The crux of modern democracy is that politicians often mutate into power- and career-conscious opportunists, while citizens limit their political engagement to the occasional trip to the ballot box at best, where they hope like children at Christmas that their wishes will be fulfilled, regardless of their realistically possible realisation potential”.

Finally

I believe that politicians should strive for greater honesty and treat citizens as mature individuals. While addressing unpleasant topics with transparency may result in fewer votes in the short term, it ultimately reinforces citizens’ trust in the political system over time. Furthermore, it’s essential for citizens to be more aware of the significance of their vote and to consider whom they choose to empower with that vote carefully. This weekend, the third-largest economy on the planet will elect a new government. Who knows, perhaps the newly elected government in Germany will adopt a more honest approach in addressing the nation’s challenges. Instead of relying increasingly on borrowed money to maintain social order, they may choose to confront uncom-fortable truths. This could pave the way for genuine solutions and help steer the country away from the negative consequences of money printing.

Ladies and Gentlemen
As always, please share your opinion with me. 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

”I wasn’t worth a cent two years ago, and now I owe two million dollars.”

Mark Twain

I have long been interested in debt and have observed a prevalent misperception of its nature among the general populace. I would like to clarify that not all forms of debt are equivalent; rather, debt encompasses a spectrum of financial obligations that can vary significantly in terms of their implications, costs, and benefits.

Debt and Productivity

In principle, taking on debt is not inherently harmful; it can stimulate an economy. However, the underlying reasons for incurring debt are crucial, particularly for many countries around the world that are facing increased borrowing. When the borrowed funds are invested in infrastructure or projects designed to enhance productivity and stimulate future economic growth, such borrowing can be reasonably justified. A similar rationale applies when private households take a mortgage to finance their homes. Conversely, suppose the purpose of lending is merely to cover the ongoing operational costs of a government, as is often the case in countries like the USA, France, and Germany. In that case, it cannot be assumed that such expenditures will contribute to future productivity. Instead, this approach tends to exacerbate the existing debt burden, ultimately reducing productivity and potentially leading to increased government spending, higher taxes and increasing inflation.

Debt and Debt Servicing

Yes, Ladies and Gentlemen, the persistent accumulation of government debt is associated with increased government expenditure, primarily driven by the necessity of debt servicing. Over time, this dynamic exerts upward inflation pressure, resulting in a higher government spending-to-GDP ratio. While low interest rates may temporarily relieve these fiscal pressures, an eventual adjustment of interest rates is imperative in response to the prevailing levels of debt and inflation. Failure to do so may lead to difficulties in attracting creditors in the open market who are willing to accommodate such debts in exchange for interest payments. However, it is essential to note that the imposition of higher interest rates can dampen economic growth, which would be critically needed to address the rising burden of public debt.

Debt and GDP

In any sensible family, maintaining a household budget is essential. While, for example, it may be reasonable to invest in a home through a mortgage, the family’s primary objective is typically to reduce or ultimately pay off that debt over time. This approach makes perfect sense to me. Unlike in political systems, where leaders must be elected by their constituents every four or five years, parents do not face such pressures. They can make financially prudent decisions that might be unpopular with their children at times yet are crucial for the family’s long-term budget and well-being. Moreover, parents are responsible for generating the family’s household income.
In politics, however, leaders who introduce unpopular spending cuts, despite their rationale, often face the likelihood of not being reelected. Voters avoid confronting unwelcome truths; instead, they frequently cast their ballots for enticing promises, regardless of the financial implications. Since politicians do not directly earn the money they spend, they feel little pressure to avoid making unrealistic commitments that may seem appealing to secure their re-election.

I know

I’m generalising and simplifying things. However, my perspective is not entirely inaccurate. Genuinely, we need to re-claim certain responsibilities or absorb the costs for tasks that we have outsourced to the government over the past few years or even decades. This is primarily because we, as a collective society, can no longer manage these rising costs.

Ladies and Gentlemen

As always, please share your opinion with me. 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

 ”Just the facts, Ma’am.”
Joe Friday, Dragnet

Last Week’s “Stefan’s Weekly

Thank you for the feedback on last week’s edition of “Stefan’s Weekly”. Before getting into today’s topic, let me add another comment to last week’s discussion.
Politicians need to prioritise their service to the state, which encompasses the needs and interests of the citizens, rather than merely focusing on the task of educating the public. In my view, such educational responsibilities should predominantly be managed within families and schools, as they play a crucial role in shaping individual values and ethical perspectives.
I see the challenges faced by numerous politicians lie in their failure or reluctance to differentiate between moral-ethical and responsible-ethical frameworks. What do I mean by that? I believe that a well-intentioned action does not inherently translate into a beneficial outcome for the majority of the population. Even worse, when political actions lack genuine intent and are primarily motivated by the pursuit of electoral gains, in that case, they are likely to be unsustainable in the long term.

Central Bank Action

On Wednesday evening, the Federal Reserve announced its decision to keep the key monetary policy rate within the range of 4.25% to 4.5%. Market participants expected this decision, as traders had foreseen that the primary interest rates in the United States would remain stable at this level. As I noted in a recent edition of “Stefan’s Weekly,” due to base effects, inflation in the U.S. is likely to decrease significantly in the coming months, paving the way for potential interest rate cuts.
Yesterday, it was the turn of the European Central Bank (ECB). European monetary authorities are steadily proceeding with interest rate cuts. In light of the economic slowdown and reduced inflation concerns at the beginning of the year, the ECB has decided to further lower its key interest rate. Thus, the ECB Governing Council resolved to decrease the deposit rate, which significantly influences the financial market, from 3.00% to 2.75%. Again, this was widely expected by market participants.

U.S. Economic Growth

In the United States, possible mass unemployment resulting from recently announced layoffs in the public sector, prompted by actions from the newly appointed government, may hinder economic growth prospects. The service sector has become the primary engine of the U.S. economy in recent years. If the ISM services index reflects a sluggish trend in the coming months, the U.S. services sector could begin to lose momentum, which would subsequently affect overall economic growth.

German Economic Indicators

In Germany, both the ZEW Index (ZEW | Latest news from ZEW – Home | ZEW) and the Ifo Index reflect a modest improvement. Notably, the ZEW Index, which previously indicated a dire economic situation, showed a slight uptick in January from -93.1 to -90.4 points compared to December. The assessment in December had fallen to a level typical of situations from which recoveries usually begin or at least stabilise. January could signify a positive first step. The ifo (ifo Business Climate Index for Germany | Survey Series | ifo Institute) business climate index for Germany also experienced a modest increase, rising to 85.1 points. Notably, the current situation component recorded an advance of one point, reaching its highest level since August 2024. The lowest value for the current situation was observed in November. Despite the prevailing pessimism in expectations, these developments suggest a potential stabilisation of the business climate. I would not be surprised to see that these initial signs of hope will further emerge in Germany during the early months of 2025, as I believe the situation is unlikely to deteriorate further.

To Sum IT Up

The European Central Bank and the United States Federal Reserve have acted in accordance with prevailing expectations within the financial community. Furthermore, there appears to be a potential sign of optimism regarding the economic outlook for Germany. However, the prospect of layoffs within the public sector in the United States may adversely affect short-term growth trajectories.

I think 2025 promises to be another interesting year for financial market participants.

Ladies and Gentlemen

As always, please share your opinion with me. 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

”Put on some lipstick and pull yourself together.”

Elizabeth Taylor

In our increasingly complex world, many individuals seek simple explanations for a wide range of issues. It’s all too easy to assign blame to a single person or group for problems such as unemployment, inflation, pandemics, and other crises. However, this tendency has fueled the spread of fake news and conspiracy theories among not only the general public but also government officials. As is often the case, there are no limits; the more outlandish a conspiracy theory, the more likely it is to gain traction.

European Equities

According to the latest survey by Bank of America among global fund managers, allocations to commodities and bonds remain notably low. In January, there was a significant shift from U.S. equities to European markets, with the equity allocation for Europe experiencing the second-largest increase in the past 25 years. A net 41% of asset managers surveyed report being overweight in equities. The most commonly executed trades include long positions in the “Glorious Seven” (53%), long U.S. dollar (27%), and long crypto (13%). The primary event risks identified are abnormally rising yields (36%), potential Fed rate hikes (31%), and the possibility of a trade war (30%). Investors perceive the most promising opportunities for a risk-on scenario in China’s growth (38%), anticipated Fed rate cuts (17%), and advances in AI productivity (16%).

Interest Rates

In the bond markets, investors are closely monitoring the first significant economic data for January, as well as key central bank meetings scheduled for next week. Following a sell-off that concluded mid-last week, yields have continued to ease. This trend reversal was prompted by encouraging inflation figures from both the UK and the United States. Additionally, the absence of surprises from U.S. political developments is contributing to this stability. Moreover, sustained pressure on oil prices since last week is further reducing inflation premiums in the interest rate markets.

Common Sense and No Surprise

I find it perplexing that some individuals, particularly journalists, label the actions of CEOs in relation to President Trump as capitulation. Four years ago, many of these same CEOs supported the Democrats, and now they are aligning with Republicans. It is noteworthy that President Trump also backed Democrats in the past before transitioning to become a Republican President. While this shift can certainly be viewed as opportunism, it could equally be interpreted as a matter of common sense. CEOs have a responsibility to their shareholders, as well as to the many employees and millions of customers they serve. As Richard Quest from CNN recently highlighted, voting trends indicate that the public, most probably including employees and customers of the companies whose CEOs just engaged with President Trump and his administration, has made their views known. Therefore, it would be both presumptuous and unwise to disregard the need to adapt to the evolving political landscape in the United States.

Journalists, Please Get Over It

Finally, Ladies and Gentlemen, I believe journalists must set aside their indignation and return to the fundamentals of reporting. This means focusing on the story at hand without being swayed by its disturbing nature. For instance, the American people have made a decision, and journalists should start exploring its consequences, like who will bear which costs, risks, etc. Ultimately, that is the essence of reporting. I believe it is crucial to steer as clear as possible of hidden biases in reporting and journalism. Something, I think, that is particularly prevalent in European media, where many journalists tend to (over-) inject personal opinions into their work, leading to an increasingly narrow corridor of opinion. Enlighted readers and viewers are most probably not concerned with those journalistic opinions. All they want is straightforward reporting. The American people have chosen a new President and government. Whether one agrees with the decision or not, it has been made. It is time to move forward. As Elizabeth Taylor gracefully advised, “put on some lipstick and pull yourself together.” And if lipstick isn’t your preference, perhaps a drink will do the trick instead.

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 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