Category: Stefan’s Weekly

Good Morning Ladies and Gentlemen

”History is often characterised not by deterministic power relations, but by tragic mistakes arising from the belief in enticing yet harmful narratives.”

Yuval Noah Harari (translated from German into English by myself)

Who won?

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

S&P 500

According to the source mentioned, the S&P 500 closed the year at 5’881.63. Each year, I notice that my readers tend to be overly pessimistic about equity markets, which makes me wonder why this is the case. Statistically, investing in equities has proven to be one of the best strategies. For the 2024 year-end competition, the lowest bid was 4’000. The closest prediction came from Dario, who estimated the index at 5’651 points. This was also the highest bid and just one point ahead of Barbara. Congratulations to Dario and Barbara, and thank you to everyone who participated!

Gold

According to the source mentioned, gold closed the year at USD 2’625.27, finishing in clearly positive territory. Some of my readers had predictions around USD 2’400.00. However, the highest bid and the closest prediction came from my partner, Hans Schiefen, who estimated that gold would close the year 2024 at USD 2’500, just USD 5 ahead of Adrian’s prediction. Well done, Hans and Adrian, and thank you all for participating!

Nvidia

That was an interesting experience! According to the source mentioned, Nvidia closed the year at USD 134.29 following a 10:1 stock split. However, many participants were quite bearish on Nvidia, with some estimates dropping as low as USD 19.50. The closest prediction for Nvidia came from Barbara, who guessed USD 125, just USD 2.20 ahead of Dario. Well done, Barbara and Dario, and thank you to everyone for participating!

The Winner

Ladies and gentlemen, this year’s competition was once again very close, particularly between Barbara and Dario. It was a real photo finish!
And the winner is… Dario! Yes, this marks his victory for the second consecutive year. Dario’s bet of USD 2’371 on gold was closer than Barbara’s bet of 2’050, making him this year’s champion.
Last year, my partner Ronni won, but since he is from Incrementum, Dario takes the official title as the winner for the second time in a row.
Congratulations, Dario! Another one-ounce silver coin will be sent to you next week. Well done!

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 into 2025; stay healthy, fresh, fit and happy!

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 is ideas, not vested interests, which are dangerous for good or evil.”

John Maynard Keynes

Non-Intrinsic

It is in the nature of things and a well-documented phenomenon that individuals tend to overestimate the validity of their personal analyses and perspectives and underestimate those of others. I am aware of this cognitive bias, and yet I remain convinced that my observation regarding the perception of a growing dominance of the non-intrinsic gaining influences in various domains, including investment decisions, the announcement of political initiatives, and interpersonal interactions, cannot be entirely unfounded.
Why am I discussing this topic? Perhaps it’s due to frustration, a lack of understanding, or a combination of both. Let me clarify my thoughts further and, hopefully, by doing so, uncover the things that seem incomprehensible to me.

Non-intrinsic in Asset Management

What are the underlying factors that contribute to momentum-driven investments in equities associated with companies trading at price-to-earnings multiples exceeding 100? This phenomenon appears perplexing.
How is it feasible to obtain SEC approval for financial products based on unknown issuers with little to no established reputation? Additionally, how do so-called “meme stocks” (Meme stock – Wikipedia) attract investors, while companies that have consistently produced cashflows and distributed dividends for years or even decades are largely neglected?

Reality?

I believe that excessive valuations in certain asset classes are largely due to narratives that create shared perceptions, even when those narratives may not be entirely grounded in reality. I sometimes have the feeling that many investors these days are unaware of what key valuation figures are all about and, therefore, get carried away in intersubjective realities of non or little intrinsic value.
So-called intersubjective realities refer to the shared understanding and mutual experiences that are constructed through social interactions among individuals. This concept highlights the significance of collective perception and the ways in which individuals co-create meaning within their social contexts. It emphasises that realities are not solely individual constructs but are significantly influenced by the interpersonal dynamics and cultural frameworks that shape human experience. The exploration of intersubjective realities is vital for understanding how knowledge, beliefs, and social norms are established and perpetuated within different communities.
For example, a well-known saying attributed to political figures like Lenin, Goebbels, and Hitler suggests that if something is repeated often enough, people will come to believe it is true. There exists scientific evidence to substantiate this thesis, which underscores the importance of critically evaluating sources of investment advice. Accordingly, I frequently highlight that banks, brokers, analysts, investment advisors, local shamans, religious leaders, and participants in online forums may not always provide the most reliable guidance. Without a comprehensive understanding of the rationale underlying their recommendations, often driven by financial motivations, individuals are ill-equipped to assess whether such advice is appropriate for their specific circumstances.

Above the Law

Historically, the principle of equality before the law has not been universally upheld. This disparity can, I believe,  be traced back to our Christian heritage, in which, for over two millennia, common individuals have generally been treated with relative equality among themselves; however, aristocrats and ecclesiastical authorities have often been granted exemptions from legal accountability. In the contexts of entrepreneurship and politics, this unequal treatment tends to be more nuanced and less overt, complicating the discourse surrounding the application of justice. However, today, we face a new dimension in this regard. But so pronounced and unrestrained is somewhat difficult to understand, isn’t it? Some political and/or economic leaders can seemingly post whatever they want on social media platforms without having to fear any consequences.

Aftermath of Euphoria  

The excitement surrounding the U.S. Presidential election has already faded quickly in the utilities and transportation sectors of the Dow. Stocks in utilities, oil, chemicals, and telecommunications have fallen below their pre-election lows. On a positive note, enthusiasm for technology and cryptocurrencies remains strong despite questions regarding valuation. Will eventually intrinsic value prevail?

Merry Christmas

Ladies and Gentlemen, thank you all for your inspiring feedback and comments throughout the year. I have been writing “Stefan’s Weekly” for many years now, and I always appreciate receiving your messages. On certain topics, I may occasionally feel a bit overwhelmed, which can lead to delays in my responses. However, I strive to reply to every message I receive and will continue to do so in the future.
Merry Christmas to you and your loved ones, and a happy and prosperous 2025.

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”What exactly is your ‘fair share’ of what ‘someone else’ has worked for?”

Thomas Sowell

The ECB Base Rate Cut Expectation

The European Central Bank’s (ECB) monetary policy meeting scheduled for yesterday, December 12, 2024, brought no surprises. Expectations were for a rate cut of 25 basis points, reducing the rate from 3.25% to 3.00%.

Current: The ECB Base Rate Cut Reasoning

The European Central Bank (ECB) is continuing its strategy and staying the course to combat a decreasing threat of inflation by implementing its fourth key interest rate cut since this summer. The deposit rate, which significantly impacts financial markets, has been lowered by a quarter of a point to 3.00%. Under the leadership of central bank president Christine Lagarde, the monetary authorities began the trend of rate cuts in June 2024 and have maintained this approach consistently. It marks the first time in over a decade that the ECB has reduced interest rates in four consecutive meetings.
However, despite these reductions, significant economic risks remain for the eurozone, as indicated by key leading economic indicators. Additionally, the labour market shows signs of weakness, with layoffs and plant closures reported among major European car manufacturers. These developments add pressure on the ECB to take further action. The recent measures by the ECB should be viewed in the context of balancing interests, especially as the monetary watchdogs are currently facing a renewed rise in inflation rates.

Future: The ECB Base Rate Path

However, it is not surprising that we are seeing some effects from energy prices as the year comes to a close. At the beginning of the year, it was already evident that base effects related to energy prices would impact the current situation. Consequently, the European monetary authorities are likely to feel relatively relaxed about the slight increase in price pressure in the short term. The key factor remains that the medium-term inflation outlook is expected to remain stable. For this reason, I anticipate that the monetary guardians will continue to lower interest rates in the coming year. In the first half of the year, we will experience significant base effects, which should contribute to a decline in the core inflation rate, and it is the core inflation rate, which excludes energy and food prices, that has been a particular concern for the central bank recently.
Nevertheless and as usual, the European Central Bank left open whether and how the interest rate staccato will continue in 2025.

The Swiss National Bank

The Swiss National Bank’s (SNB) decision to lower the interest rate by 50 basis points to 0.5% instead of the expected 25 basis points caught me by surprise for two main reasons. First, I didn’t observe sufficient pressure for such a significant cut due to economic factors. Second, I feel that this action may unnecessarily restrict the potential for future rate reductions.
It seems the SNB is heavily relying on the stimulating effect of this largest interest rate cut by Swiss monetary authorities in nearly a decade, aiming to preemptively address any signs of deflation or recession. As a wanted result, the Swiss franc weakened against the Euro, making Swiss exports cheaper and more competitive. However, historically, these effects have only been successful in the short term.

Last But Not Least

The next U.S. Federal Reserve meeting is scheduled for Wednesday, December 18. Will we see another rate cut before Christmas?

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”I love Christmas. I receive a lot of wonderful presents I can’t wait to exchange.”

Henny Youngman

The year-end is approaching, and I thought this would be a good time to look at current prices and where we are with our year-end competition.

S&P

So far, the highest bet on the S&P comes from Dario and stands at 5’651; Barbara’s bet is only one point behind 5’650 and the lowest at 4’000 and comes from Attila. While I am writing this edition of “Stefan’s Weekly”, the S&P stands at 6’084.9, well above even the highest bets.

Gold

So far, the highest bet on gold stands stems from Hans at 2’500 and the lowest at 2’050 from Barbara, and again, while I am writing this, gold trades at 2’638.45, well above the highest bet.

Nvidia

Okay, Ladies and Gentlemen. Barbara’s highest bet on Nvidia is 1’250, and Adrien’s lowest is 195. What is true for the S&P and gold is certainly also true for Nvidia, which is currently trading at 144.95 after a 1:10 split. It seems Barbara is everywhere this year…

My bets

I like to be transparent every year. However, I am not sure if I already let you know, so my bets are Gold 2’250, Nvidia 999, and the S&P 5’220. Oh boy, it looks as if I am going to be way off this year!

Fingers Crossed
I keep my fingers crossed for all of you and look forward to sending this one-ounce silver coin to the winner at the end of the year.    

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”Politics is the art of looking for trouble, finding it everywhere, diagnosing it incorrectly and applying the wrong remedies.”

Groucho Marx

Last Week’s “Stefan’s Weekly”

Last week, I wrote: “Statistics show a clear correlation: as a country’s GDP per capita increases, so does its energy demand. In other words, prosperity is closely tied to energy availability. Electric vehicles, KI, still growing population, etc., demand high and continuous levels of (electric) energy.” Furthermore, I asked: “Where should this come from?”

Your Answers I

Thank you very much, Ladies and Gentlemen, for the numerous responses I have received. I was truly overwhelmed by your feedback. There is significant concern among my readers. While a constant source of energy is essential for any society aiming for prosperity, I was surprised to see how many of you also care about environmental issues. The consensus from your feedback is clear: life without energy would be challenging, so it should be available without restriction at an affordable cost, and its production should prioritise cleanliness and sustainability. It was fascinating to see the energy mix that my readers prefer. While cost and environmental concerns were key factors, the need for energy to be consistently available 24/7 contributed to the unsurprising conclusion that many of you believe we need more nuclear power plants.

Your Answers II

The issue, of course, is that nuclear power plants cannot be built in the short term, which means there needs to be a transitional source of energy. Most of my readers are aware of this fact and, where possible, would prefer to utilise hydropower, solar energy (primarily for home use), and small-scale but efficient liquid gas power plants. Only a few have mentioned coal, as its energy density, along with its CO2 and soot emissions, makes it an unattractive option.

My Question

Well, Ladies and Gentlemen, even if we simplify the discussion in my “Stefan’s Weekly,” we can all agree that our society needs reliable sources of energy that are affordable, accessible at all times, and environmentally friendly. In this context, nuclear power plants represent a promising alternative. So, why do the politicians we elected not seem to recognise this?

Politics

I have always believed that politics should revolve around a competition of ideas, where the best and most transparent proposals for the majority prevail. Unfortunately, significant structural reforms, and this is not only true in politics, frequently generate a considerable number of losers, many of whom are voters. This dynamic leads politicians to be cautious about undertaking essential, extensive reforms. Consequently, they often engage in discussions of ambitious initiatives while implementing only marginal changes. It has become evident that their evaluation hinges not on tangible achievements but rather on the promises and declarations they make.

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”The best obtainable version of the truth.”

Bob Woodward

U.S. Inflation Data

This week’s U.S. inflation data for October showed an increase from 2.4% in September to 2.6% in October. This result is owed to a base effect that was generally in line with expectations and provided the US dollar with an additional boost. While the data does not rule out further interest rate cuts by the U.S. Federal Reserve, it could support those advocating for a slower pace of rate reductions. Currently, nearly 80% of economists anticipate a 25 basis point cut in U.S. interest rates on December 18, while around 20% expect rates to remain unchanged. Broader market participants seem to share a slightly different view, reflected in recent weeks; the yield on 10-year US government bonds has risen sharply. Following President-Elect Trump’s vic-tory in the presidential race, U.S. bond yields rose to their highest level since the Federal Reserve cut interest rates in July, approaching 4.5%. In Germany, long-term bond yields have likewise increased, though to a lesser degree. Ten-year Bunds, which had a low yield of 2.04% at the start of October, are now yielding 2.38%. In contrast, Swiss Confederation bonds have remained relatively stable, with their yield only increasing slightly from a low of 0.34% in early August to 0.37% as of Wednesday.

U.S. Interest Rate Cycle

Already prior to the final election results, the U.S. central bank announced further interest rate cuts, although it did not clarify the rationale behind this decision. Futures traders are anticipating an additional rate cut of 25 basis points on December 18, followed by a pause in January, with another cut expected in March. However, given Donald Trump’s tariff policy, I believe that futures traders’ expectations may be over-ly optimistic. The rate cut cycle is unlikely to go on and on and should conclude even-tually unless a recession occurs, which is not currently projected.

Goldman’s View

However, economists at Goldman Sachs remain unconcerned. Despite the recent US inflation figures, they maintain their yield target of 3.85% for 10-year US govern-ment bonds by the end of December. Observers note that this would effectively rep-resent a real decline in interest rates over the upcoming weeks. However, the situa-tion does not appear to be trending that way at the moment. The legendary Franz Beckenbauer once said, ” Let’s take a look, and then we’ll see” (freely translated).

Energy and Prosperity and a Question for the Weekend

With a newly appointed government in the U.S. and an expected change in govern-ment in Germany, early elections will be held in February 2025; I wonder what the impact on energy production and consumption will be. This change may bring a new perspective on the issues of energy production and consumption. Statistics show a clear correlation: as a country’s GDP per capita increases, so does its energy de-mand. In other words, prosperity is closely tied to energy availability. Electric vehi-cles, KI, still growing population, etc., demand high and continuous levels of (electric) energy. Where should this come from? Let me know your views.

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”Power without abuse loses its charm.”

Paul Valéry

Finally

The US election campaign seems to have lasted forever, but it finally ended this week. On Tuesday, November 5, voters decided that former President Donald Trump would succeed President Joe Biden in the White House. They also determined the future composition of the Senate and, to a large extent, the House of Representatives.

Interest rate cuts in the U.S.

On Thursday, Federal Reserve Chairman Jerome Powell and his team lowered the interest rate by a quarter point, bringing it to a new range of 4.5% to 4.75%. This marked the second step in the interest rate change that began in September of this year and occurred just two days after the presidential election. Most analysts had anticipated this 25 basis point cut, so it was no surprise.

…and in the UK.

The Bank of England’s Monetary Policy Committee also voted to reduce interest rates from 5% to 4.75%, marking the second reduction this year. Bank of England Governor Andrew Bailey reaffirmed his stance on gradual interest rate cuts, stating that borrowing costs should continue to decline as long as the economy develops in line with expectations.

Lower interest rates are good for risk assets

As I mentioned in one of my previous “Stefan’s Weekly” updates, rate cuts, i.e. lower interest rates, are generally favourable for financial markets, particularly for risk assets.

Chaos and order / Paul Valéry

Society fluctuates between chaos and order, and both extremes threaten its existence. Paul Valéry’s unique perspective is that he does not view the “disorder of modernity” as a problem to be fixed. Instead, he sees it as a captivating phenomenon that should be preserved. This appreciation for and celebration of modern disorder was uncommon during Valéry’s time (1871 – 1945), and it remains unusual today, especially in an era with a strong desire for order and stability.

Another last thought before the weekend

With Paul Valéry’s thoughts in mind and confidence that while short-term noise can significantly impact stock market activity, global financial markets ultimately adhere to economic principles over time, I look forward to the exciting times ahead.

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”Art is like oxygen.”

Marina Abramović

Rising yields?

I was asked why yields are rising in the U.S., and I am happy to share my view. It seems many market participants are selling some of their bond holdings before the elections (= yields are rising) as a hedge against a Trump election victory. Although Donald Trump wants to stimulate the US economy, he also wants to significantly expand and increase tariffs on imported goods. This would consequently increase the US inflation rate, which would cause yields to rise.

Does the economic data support rising yields?

The latest data for the third quarter, published on Wednesday, shows that the net investment ratio of US companies was on the verge of falling in the spring but is now turning around again. The U.S.’s gross domestic product (GDP) grew by 0.7% compared to the previous quarter (2.8% annualised). Therefore, the soft landing of the economy that so many observers had been waiting and even hoping for could materialise, and if it does, it will probably happen shortly after the elections. Meanwhile, the rise in government bond yields will likely end in anticipation of the US elections. However, this week’s solid economic data also suggests that the US Federal Reserve will be in no hurry to increase the pace of interest rate cuts.

What about the EU?

Yes, Ladies and Gentlemen, that is a valid question. Spain is driving the economic bloc in the EU, while Germany is slowing down. Wednesday’s numbers for Q3 show that the differences between the major economies have widened. The eurozone’s GDP increased by 0.4%, with French GDP growing at the same rate. On the other hand, Italy only managed a red zero, and although Germany’s GDP increased by 0.2%, this was not enough to compensate for the more substantial decline in spring, which was revised downwards from -0.1% to -0.3%. Germany’s economic output is currently 0.1% lower than in Q1 2024 and just 0.15% higher than at the end of 2019. This marks the third consecutive year of stagnation following Russia’s invasion of Ukraine and the resulting energy crisis in Germany. I found some interesting comparative figures highlighting the challenges Germany’s economy faced over the past five years, i.e., before Russia’s invasion of Ukraine and the current government’s tenure. Since the end of 2019, France’s GDP growth has outperformed Germany’s by 3.9%, Italy’s by 5.4%, Spain’s by 6.5%, and the United States GDP growth was a hefty 11.3% higher than Germany’s.

The positive twitch

Lack of growth in the European Union may increase the chances that the European Central Bank will lower its key interest rates by 0.5% in December. I would not be surprised to see the Swiss National Bank act accordingly.

Elections’ Impact on Financial Markets

Over four billion people, about half the world’s population, are being called to vote this year. One of the significant events in this super-election year is the U.S. Presidential Election. However, elections in Brazil, India, Indonesia, and the European Union have not significantly impacted their respective stock markets. It can be assumed that the same will hold for the U.S. Economic growth remains the critical factor influencing stock market performance. However, in the short term, I would not exclude a rumble in the jungle after another dirty U.S. election campaign.

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”Maturing hurts.”

Richard David Precht

Entitlement Society: last week’s topic

Thank you all for the emails I have received. Many people shared their thoughts in response to my views on an entitlement society, and I genuinely appreciate it. I was especially pleased that I am not the only Supertramp fan out there.
Now, please allow me to add one more personal thought before getting into today’s topic. I believe one major issue is the “share and like buttons” on social media, which have likely been the most significant revolution in social dynamics in the past decade. This has resulted in competition in areas older generations did not have to contend with as much. Ladies and Gentlemen, I realise I am generalising, but consider this: if your happiness is at least partially dependent on being liked by your online followers or if your posts are shared or liked, life can become quite frustrating if you or your posts do not receive the attention you seek or believe to merit. If likes become the new currency and represent a means to self-realisation, humanity is up for some tough years. If people focus more and more on self-realisation and neglect meritocracy, we should anticipate reduced prosperity in the future. Simplified? Yes, most probably, but there is a point, no?

Beige Book

As usual, the U.S. Federal Reserve is preparing for its upcoming meeting by reviewing the “Beige Book,” which summarises feedback from the twelve regional central banks nationwide. This report outlines the current economic conditions in their respective areas. According to the latest survey released by the Federal Reserve two days ago, economic activity in the U.S. has seen little change across almost all districts since early September. While two districts reported slight growth, most reported a minor decline in manufacturing activity. Overall, employment has increased slightly, with more than half of the districts noting slight or moderate growth, while others experienced little to no change. Many districts also indicated low labour market turnover rates. Inflation has remained mild, with sales prices rising slightly in most areas. The next U.S. Federal Reserve meeting will occur on November 6 and 7.

Uncertainty

Empirical evidence suggests that the stock market tends to perform more favourably during the tenure of a Democratic President. However, this observation is not widely regarded as conventional wisdom within public discourse and is still a statistical fact. For the time being, there is uncertainty. Who will be elected, and what will be the impact on the economy? This uncertainty prevails until we have solid polls or first election results. Because market participants do not like uncertainty, financial markets may still be a little rocky for the next 10 days.

Strong period ahead

However, it’s important to note that the historically best six-month period for the Dow Jones Industrial Average (DJIA) is approaching. This period runs from November 1 to April 30. Since 1980, there have only been six instances where this timeframe ended with a loss. The most significant decline recorded during this stretch was -12% from November 2008 to April 2009. Statistically, one should not be short of the DJIA during that period.

Year-end rally?

Do I think there can be a year-end rally? Yes, why not? With the statistically robust period ahead, the uncertainty about the U.S. elections disappearing in 10 days, and potential further interest rate cuts due to low inflation in a still favourable economic environment (Beige Book), a year-end rally seems possible to me.

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”Anyone can make it, but not everyone.”

Gerd Ziegler

ECB

Before we dig into today’s somewhat philosophical topic, let us quickly look at what happened on the interest rate front. Yesterday’s European Central Bank (ECB) meeting resulted in the widely anticipated 25 basis point interest rate cut. Another 25 basis point cut is also expected for the December meeting. Based on Futures prices, four additional interest rate cuts of 25 basis points each are awaited in 2025. The ECB’s target range by autumn 2025 is 2%. However, that remains to be seen. I am not sure if, at the end of next year, we will see rates below 2%. Anyway, some weeks ago, I wrote that interest rate cuts are positive for stock markets under normal circumstances. This is still the case! And now, Ladies and Gentlemen, enjoy today’s topic.

Today’s Topic: my very personal view!

I perceive a shift from a meritocracy to an entitlement society. Nowadays, it seems, people believe in being entitled to a successful career, a good life, good health, an attractive, intelligent partner, and everything else others may have or may not have. This was different in the past. In the feudal system, only the nobility had the privilege of a good life. Everyone else knew they couldn’t demand much in this life, but if they were decent and submissive, they believed in a good afterlife or heaven. Regardless of desire or merit, having noble blood was the only chance to succeed.

Capitalism

Capitalism has brought significant changes to society. In theory, there are no glass ceilings anymore, and everyone now has the opportunity to succeed, at least in Western and some other more or less capitalistic societies. However, as a result, people now feel entitled to success, whether they deserve it or not. Capitalism has led to widespread prosperity for large global populations. Yet, it is not evenly distributed and not even present everywhere. Despite this, many more people have a better life today than 20, 50, or 100 years ago. Nevertheless, because not everyone succeeds despite the opportunity, frustration builds, leading to envy, anger, fear, and the desire to find someone to blame for one’s failures and maybe even to seek retribution against them.

Frustration

When ruthless politicians, ruthless gurus, ruthless people in general and criminals manipulate the frustration, envy, and fear of those who have not succeeded by, for example, blaming immigrants, warning of inflation, predicting bank failures, and forecasting a collapse of the financial and political system, managing such fears, they can offer themselves as saviours to those who cannot see beyond the claims. To me, this is nothing more than a fear-based agenda for power, leading to a loss of prosperity for those who need it most. I see repeatedly that even quite sensible people hold views and beliefs that are neither scientifically proven nor would have been morally/ethically justifiable until a few years ago. I think they are prone to disappointment, and I wonder what life has done to those people and where their inner compass has gone.

“I said dreamer, you’re nothing but a dreamer.”

Supertramp

Quote and conclusion

Looking for the culprits does not make sense, but I hope humanity will realise the potential for positive action. Naïve? Yes, probably. Do I care? Nope, not at all!
”Anyone can make it, but not everyone.” This, Ladies and Gentlemen, is probably and, unfortunately, true, and I cannot think of a way to change it. To me, the best, however not flawless, system is an open and liberal democracy where the people can elect politicians and vote on substantive issues. In my opinion, the promise that everyone can make it in an open, reasonably democratic society of capitalist characterisation still stands, but everyone has to do it for themselves; the government cannot do it for its citizens, no matter what frivolous politicians will promise in exchange for some votes. Those who believe the state can do it for them are nothing but dreamers, and by the way, never forget that the flow of people follows the flow of capital because everybody seeks a share of that capital.

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 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li