Category: Stefan’s Weekly

Good Morning Ladies and Gentlemen

“It is the duty of the human mind to understand that there are things it cannot understand.“

Soren Kierkegaard

Ideology – general aspects

Liberal, democratic structures based on capitalism no longer seem to be desired by a considerable number of voters. Ideological views are advocated with a vehemence that leaves almost no room for other views. Black or white, no shades of grey or even colours seem acceptable. Yet, we humans are so incredibly individual by nature and definition that it never ceases to amaze me how we willingly allow ourselves to be pressed into a mould. I am aware that the psychological element of belonging consciously or unconsciously exerts a great influence on our behaviour, and yet this ideological groupthink frustrates me; in this way, I believe individual narcissism has taken on an unhealthy dimension and tolerant and broadly diversified community-building appears to become ever more difficult.

What is in it?

I sort of see what is in it for ideological leaders and why they want to push their ideology. For them, it is a question of fame, money, and power. However, what on earth is in it for the followers? Belonging to the “good” guys (because their opponents are always the bad guys), or maybe it is the feeling of grasping the “real” idea? It amazes me that even reasonably well-educated contemporaries seem to develop difficulties abstracting and, therefore, simply do not have the mental capacity to avoid being taken in by ideologies. Quite frankly, ideological leaders are not trying to convince you, me, us because they like you, me, us; they do not even know you, me, us. They just want you, me, us because every follower gives them more fame, more money, and more power.

Ideology in asset management

Yes, Ladies and Gentlemen, these thoughts of mine were, of course, just an introduction to the topic. I am primarily concerned with the influence of ideologies on your and our asset management efforts. The same structure as mentioned above applies to asset management. If the tendency to be ideologically blinded and the will to have seen it coming at some point is weighted higher than the need for regular and reasonably evenly distributed returns from a diversified approach, then in my opinion, the awareness to abstract and thus the capacity to pursue a sensible investment approach is lacking. This is where our responsibility as educated individuals in asset management comes in. We need to exercise critical thinking and not be swayed by the allure of ideologies. It is also true in asset management that ideological leaders primarily seek fame, money, power and probably even much more money just because more is more.

Are we fit enough?

Hmhhh, Ladies and Gentlemen, if ideologies become more important to us than the big picture, then we should not be surprised if the happiness of the moment takes precedence over the happiness of our personal “long-term balance sheet”. This, Ladies and Gentlemen, at least to me, would mean we are probably not fit enough to prosper in life in general or as in this working hypothesis in asset management.

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!

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’m afraid the masquerade is over…”

From the song “The Masquerade is Over” by Allie Wrubel & Herb Magidson

What if China

What if China, as suggested in a recent article in a biweekly Swiss financial newspaper, exports goods at subsidised prices to markets outside China due to sluggish domestic market activity just to keep Chinese GDP growth up?

Inflationary trends

While, as I did write in my “Stefan’s Weekly” for the last few months on several occasions, I was very cautious about the overconfidence in the markets about forecasted, or should I write hoped for, multiple interest rate cuts by Western central banks, today I feel the opposite. I now believe there is too much pessimism in the market. When I now read the first news coverage mentioning that the U.S. Fed will not reduce its base rates in 2024, I feel confident they will.

Chinese impact on global trade

One sign of the unloading of overcapacity is the marked increase in China’s export share of the global market. Compared to 2019, the eurozone recorded a significant decline in industrial exports in relation to global industrial production, while China achieved a considerable increase. U.S. Treasury Secretary Janet Yellen explained in an interview after her visit to China last week that new tariffs against China are possible because: “we are concerned about a possible increase in Chinese exports in sectors with large overcapacity.” Western consumers may welcome the low prices of Chinese products, but domestic companies and concerns about economic growth will pressure governments in industrialized nations. Tensions in global trade are, therefore, likely to escalate further. What would that mean for Western (and other) economies?

One simple conclusion

While inflation in many Western countries still exceeds central banks’ targets, China is currently threatened by deflation. A straightforward conclusion could, therefore, be that deflation will turn on stage again in Europe and the U.S.. If subsidised inexpensive products of relatively good quality from China enter global markets, they will displace more expensive products from Western manufacturers. The US and Western countries are criticizing “unfair trade practices” by the People’s Republic. It seems no measure is ruled out to combat the Chinese government’s “unfair practices” in international trade.

Second simple conclusion

And yet, I would not rule out economic growth in Western economies may stall, which could rein in inflation and lead to a reduction in base interest rates. We will see soon enough, Ladies and Gentlemen.

Sarah Vaughan

And now let’s listen to “I’m afraid the masquerade is over” interpreted by wonderful Sarah Vaughan: Sarah Vaughan – (I’m Afraid) The Masquerade Is Over (youtube.com).

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 stock market is a device for transferring money from the impatient to the patient”
by Warren Buffett

Inflationary trends

Inflationary trends are usually never just a monetary problem but an expression of long-term structural transformation processes. US central banker John Williams, head of the New York Fed, believes the Fed has made considerable progress in lowering inflation in the US. However, the uncertain outlook means that the central bank must monitor incoming data to determine its interest rate policy. I believe over the next ten years, we will see immense demand for investments in some very particular areas:

Investing in tangible assets

Well, Ladies and Gentlemen, this is nothing new to my “older” readers, of course. I still firmly believe in investing in tangible assets as they remain the best protection against inflationary trends. So, quite frankly, I remain optimistic about investing in equities in the long term. The question remains: What sectors should you invest in? Where can we find value?

Pharmaceutical, Biocare and more

Everything relating to longer and healthier lives will be essential, i.e., areas of biotechnology, life science, medicine, and pharmacy. I believe safety and security will also boom, from cyber security to security of supply with, for example, new storage technologies. Another major topic will most probably remain the data economy and digitalization, with artificial intelligence in, for example, so-called “clean” energy and mobility.

Challenges to the “old economy”

Therefore, ongoing changes seem imminent. They will continue challenging almost all “old” business models and simultaneously help many new ideas break through.

Very long trends

Trends are usually lasting deceades. When looking back over the last 200 years, we can see decade-long trends for sectors like finance and real estate, transportation, energy, natural resources and materials, information technology and communication and maybe soon enough, biotechnology, life science, medicine, and pharmacy. Looking at current demographic trends and at valuations, I would not be surprised to see such a shift.

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

“Hedonistic societies do not endure.”
by George Orwell

Extract from the quarterly reporting for our private customers

Today, I want to share some extracts from our quarterly report to Incrementum’s private clients.

Comparison of returns

What return would you have generated if you had invested in standard asset classes from 1900 onwards, i.e. in the S&P 500, in 10-year US government bonds and in gold? Interesting question, no? Well, there is no magic, Ladies and Gentlemen, just stats. Let us dig in:

S&P 500

The S&P 500 Total Return Index has generated an average annual return of 9.8% since 1900. This comprises price gains (5.5%) and dividends (4.3%).

US government bonds

With an average total return of 4.6%, 10-year US government bonds remain well below the S&P 500 mark. The best period for US government bonds was from 1980 to 2010. Falling yields in a disinflationary environment ensured high bond yields, averaging 8.9% annually during that time.

Gold

The price of gold only marginally changed until the end of the Bretton Woods system in 1971. As a result, gold is on the books, with an annual increase of only 3.8%. After the end of Bretton Woods (dissolution of the USD gold price peg), the performance was significantly stronger; since then, it has been 5.4% per year. Gold’s average total return has, therefore, also remained well below that of the S&P 500.

Dividends

For a few of our investments, I have compiled the number of years for which the respective companies have not lowered their dividends. For Nestlé, this has been the case for 38 years, for Novartis for 27 years and for Roche for 32 years. Rubis has also not lowered its dividends for over 20 years and, on the contrary, has increased its payout yearly for the past 13 years. Enel has been paying regular dividends for over 25 years and has increased them continuously since 2013. BMW has paid regular dividends for over 25 years but has adjusted them to fit its business performance. BASF has been paying regular dividends for over 25 years and, despite all the crises, has never reduced them since 2008 but has increased them a total of 12 times since then.

Hand on heart

I like companies that provide employment for their employees even during challenging economic, political and social periods (9/11, Asian crisis, financial crisis, bank collapse, Covid crisis, Russian invasion of Crimea and a few years later of other areas of Ukraine, energy crisis, elections of increasingly ideological political representatives, etc.), remain profitable and thus fulfil an essential economic task. If such companies are then able to generate positive cash flows with their intrinsic business and are also willing to share these positive cash flows with their investors, we tend to use them as part of our investment strategy for private clients in their portfolios.

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

“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

Good Morning Ladies and Gentlemen

“You can’t always get what you want, but if you try sometimes, you might find you get what you need.”

by Sir Michael Philip “Mick” Jagger

Best Guesses

You know, Ladies and Gentlemen, traditionally, during Q1, when I am involved in the yearly “year-end competition”, I always wonder what guesses my readers come up with. I find it particularly interesting to see how the ones who participate see markets evolve over the coming months. While I am fully aware that all statements that anyone participating can ever make are best guesses based on currently available data, it is still intriguing to see how close some of you get towards the end of the year when we call the winner. I am always wondering why the participants come up with the guesses they come up with. I, for example, always use the same methodology.

No science

Predicting the price of anything is no science to me; it is guessing. Now, having said (written) that, is it not the case that even science itself is best guesses based on currently available data? Since new data is constantly being brought to light, i.e. reality is continually changing, the conclusion must be that science is a dynamic process. Thus, findings and results may change according to newly available data.

Interpretation

Most of us are looking more or less at the same data, yet the interpretation of that data may vary hugely. We are steeped in our experience, leading to different conclusions. This is so fascinating, and because of how it is, we have to be particularly careful when adopting the ideas and findings of others because they function the same way and are also guessing on currently available data (hopefully solid data).

Signs of positive macroeconomic data

The relevant purchasing managers’ indices for the USA, the N.Y. Empire State Index and the Philadelphia Fed Index, recovered in February. Both indicators relate to the manufacturing sector. The eurozone is also showing signs of bottoming out. The service sector was able to reach the 50-point mark. The manufacturing sector reached its lowest point in the fall of 2023.

What does this mean for interest rates?

Yes, Ladies and Gentlemen, this is a valid question because futures traders on U.S. fixed interest rate products are now expecting the first key interest rate cut for June 2024. Some weeks/months ago, it was still March 2024, i.e., there was a shift in currently available data, which led to a change in consensus among market participants from a more recessionary trend in economic performance to a lessening one.

Economic growth and interest rate decrease?

Again, it is a valid question if you ask me. I currently believe market participants are almost a little complacent. The forecasted economic growth and hope for interest cuts simultaneously do not go well together. On the contrary, increasing economic growth may spark further persistent inflation. I am cautious about a rapid interest rate cut and prefer to be surprised positively rather than negatively. We will see!

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

“Art is making something out of nothing and selling it.”

by Frank Zappa

First-timers

For those who have joined our readers recently, every year, I organise a year-end competition in guess, for example, the price of gold, silver, crude oil, the SMI, a cryptocurrency or the S&P 500 Index.

Predictions

Regularly, I receive emails from readers asking me where I think the price of gold would be at the end of the year, the SMI, interest rates, or the price of silver. Those who follow my weekly emails frequently will know that I would not say I like making predictions.

Invitation

However, occasionally, I am happy to tell you what I think may happen just for fun, and since we are at the end of February already, it is time for our traditional year-end competition. As I did in the past, I invite you to compete with all the other readers, my partners Christian, Mark, Hans, Ronni and myself, and as always, the winner will receive one ounce of silver in the form of a silver coin. Suppose the winner stems from within Incrementum or my family, I am also happy to send a one-ounce silver coin to the official winner, i.e., ex Incrementum and/or my family. As your bets will be coming in, I will publish ours.

Former Winners       

The list of former winners includes an old friend from university, two clients, a former fund manager and value specialist from London and some regular readers. So far, none of my family members were close enough to be called a winner. However, my partner Ronni won the competition last year, right before Dario, the official winner (who received an extraordinary silver coin), followed by my partner Mark and me. Three out of five Incrementum partners among the first four. This was quite something and exceptional.

Obviously

Obviously, Ladies and Gentlemen, it is impossible to guess the future, yet I look forward to receiving your bets! Please do not forget that it is all about fun!

Gold, Silver, NVIDIA           

Now, Ladies and Gentlemen, I suppose we try to guess the year-end price for one ounce of Gold in USD, the S&P 500 and the NVIDIA share price. The closest one wins the silver coin. The year-end prices will be taken from this page: https://marktdaten.fuw.ch/.

Ladies and Gentlemen, what do you think? What are your best guesses? 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

“It is frightful that people who are so ignorant should have so much influence.”
by George Orwell

Last week

Many thanks for all the messages and comments I received for last week’s «Stefan’s Weekly». I want to share some excerpts from my email conversations with Shauna and with John, a former winner of the year-end competition.

«Countries have interests, not friends. Eventually, Germany’s high energy costs can cause a shift in the political landscape. It is the Wild West in terms of countries interacting with one another. Rules are thrown aside or rewritten if they benefit the more powerful entity. The concept of rules or freedom is irrelevant at a high political level. It is who is more powerful.» 

Wow, what a comment; I agree, and it reminds me of a quote by Henry Kissinger.

«Is it power? Is it greed? Is it insanity to kill fellow humans and sleep well after those decisions?»

I do not know and am as puzzled.

«People will give up their freedom for security when times get tough (citizens are more open to authoritarianism). However, yearn for more freedom when times are more prosperous (less regulation).»

Yes, at least to me, understandable everyday human behaviour.

«Another point is accountability. Some people do not make good decisions. What happens when their choices lead to poor outcomes? Is there a push for a rule that allows for a bailout?» 

Accountability

The general population pays the price for the risks politicians and authorities take. Yes, Ladies and Gentlemen, citizens pay the price for all the risks and incompetent decisions made by politicians and authorities. Under normal circumstances, politicians and authorities are not held accountable for their mistakes. In some instances and only in reasonably functioning democracies, politicians risk not being reelected. That is it.

Serve the people

The primary goal of politicians and authorities should be to serve their people. I am not sure if this is fully understood by politicians and authorities, and quite frankly, I am not sure if voters fully understand this either.

Germany, IFO Institute in January

On January 17, the IFO Institute estimated that Germany’s GDP would fall by 0.3 % in 2023. Due to persistently high inflation and falling purchasing power, it anticipated a mild economic recession. However, according to the Economic Institute, GDP is expected to grow slightly again in 2024.

Germany, ZEW Centre in February

This week, ZEW (LEIBNIZ CENTRE FOR EUROPEAN ECONOMIC RESEARCH) President Professor Achim Wambach commented on the latest survey results: «The German economy is in a bad place. The respondents’ assessment of the current economic situation has decreased since June 2020. In contrast, economic expectations for Germany have improved again. Accordingly, more than two-thirds of the respondents expect the ECB to make interest rate cuts over the next six months in light of falling inflation rates. Almost three-quarters of respondents expect imminent interest rate cuts by the American central bank.»

Interest rates expectations

Once more, it seems to all come down to interest rate expectations. Better economic outlook thanks to falling interest rates. If most market participants expect lower interest rates, the effect will be priced in by market participants well before the final announcement, which bears a certain risk of disappointment, no?

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