Kategorie: Stefan’s Weekly

Good Morning Ladies and Gentlemen

”Middle powers must act together because if you are not at the table, you are on the menu.”

Mark Carney

Last week, I indicated that I would be sharing my thoughts on “The Price of Influence: Consequences of Corporate Giving to Politicians” in this week’s edition of „Stefan’s Weekly.“
To summarise this rather fascinating topic: Politicians often exhibit loyalty towards corporations, which can lead to rewards or penalties influenced by political cycles. A close association with a particular politician may invite regulatory scrutiny or retaliation as the political landscape evolves.

Corporate Contributions with Individual Politicians

Corporate contributions that align with specific politicians but diverge from genuine corporate values or consumer preferences can lead to revenue losses, stock volatility, and diminished competitiveness. High-profile cases illustrate how political stances or donations can incite public backlash, legal challenges, or government pushback, all of which can adversely affect financial performance.

Reputational Damage and Consumer Backlash

Research indicates that the dynamics of political connections can shift from beneficial to detrimental when political power changes or a corporation becomes associated with controversial politicians or policies. In contexts characterised by heightened polarisation, firms with political affiliations may experience reputational harm, leading to potential misallocation of capital.

Mismatch between Corporate Values and Political Behaviour

Contemporary consumers and employees increasingly expect corporate political actions to align with prevailing public values. When an organisation publicly espouses a particular stance while simultaneously endorsing political figures who advocate contradictory policies, the brand’s credibility may be significantly undermined, potentially leading to severe repercussions.

Regulatory Retaliation

Political loyalty can influence the relationship between politicians and corporations, leading to differential treatment based on the prevailing political climate. Corporations that align with specific politicians may be subject to favourable or adverse regulatory scrutiny, depending on the dynamics of the political cycle. This association can invite either rewards or punitive measures as political fortunes shift, highlighting the complex interplay between political affiliation and corporate regulation.

Increased Vulnerability to Corruption Scandals

Political loyalty can increase corporations‘ susceptibility to investigations, legal liabilities, and corruption-related repercussions, as exemplified by the FirstEnergy scandal.

From Boycotts to Potential Brand Erosion

Research indicates that political contributions represent the primary catalyst for consumer boycotts targeting corporations. The endorsement of polarising political figures inflicts lasting reputational damage on these companies, ultimately prompting consumers to redirect their spending to rival entities.

Conclusion

In conclusion, I believe the costs of influence and the consequences of corporate giving to politicians will ultimately be borne by consumers.
In regard to today’s quote, I believe that many global political leaders should take to heart the words of Canada’s Prime Minister Mark Carney: “Middle powers must act together because if you are not at the table, you are on the menu.” As we all know, a fundamental principle of physics states that when particles come together, their combined mass is greater than the sum of their individual parts.

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

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

Albert Einstein

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

The Carry Trade: A Definition

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

The Carry Trade: A Classic

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

The Carry Trade: A Danger

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

The Carry Trade: A Reversal

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

The Carry Trade: Additional Noise

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

White House Reaction

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

Ladies and Gentlemen

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

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

Yours truly,

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

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

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

Young woman at the funeral service in Crans-Montana

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

Multiple Existential Crises

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

Bullish on Crude

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

Will this Lead to Inflation

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

Higher Prices vs Lower Prices

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

Today’s Quote

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

Ladies & Gentlemen

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

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

Yours truly,

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

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

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

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

Who won?

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

Shanghai Composite

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

10-Year U.S. Treasury

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

Silver

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

The Winner

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

Thank you!

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

Ladies and Gentlemen

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

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

Yours truly,

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

Tel.: +423 237 26 60
Cell: +41 79 303 48 39
Im alten Riet 153
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li

Good Morning Ladies and Gentlemen

”Scratch an altruist, and watch a hypocrite bleed.”

Michael Ghiselin

Lower U.S. Base Rates

The US Federal Reserve has reduced its key interest rate to a range of 3.50% to 3.75%. This decision comes in response to indications of weakness in the labour market. Following the 43-day government shutdown in October and November, essential official data regarding the labour market and inflation have not been available. Consequently, central bankers have had to rely more heavily than usual on estimates from private institutions and their own surveys.

Persistent Inflation and a Surprise

Federal Reserve Chairman Jerome Powell attributed the overshoot in inflation to tariffs. A notable surprise from the recent meeting was the announcement of plans to purchase short-term government bonds totalling USD 40 billion over the coming months. These purchases may extend over several months and represent a form of „mini QE“ that injects additional liquidity into the market and is likely to enhance investors‘ risk appetite.

What About the Yield Curve?

The yield curve is likely to steepen if short-term interest rates decline, provided that inflation remains stable. One thing is evident: the Federal Reserve can exert direct influence on the short end of the yield curve, while managing the long end is far more challenging. For mortgage borrowers and consumers relying on credit, the long end is crucial. Consequently, I do not anticipate a significant easing of interest rates, even if short-term rates may decline further following Wednesday’s reduction. Additionally, the U.S. president’s comments about the central bank and its governors are contributing to uncertainty among bond investors, which does not bode well for long-term interest rates.

And the Winner is?

Well, Ladies and Gentlemen, the banking sector will not complain. Because the banking sector primarily functions by capitalising on the difference between short-term borrowing rates and long-term lending rates. This structural dynamic benefits financial institutions, allowing them to profit by borrowing at lower rates while extending credit over longer maturities. Such practices not only enhance liquidity but also contribute to overall financial stability, provided interest rates do not rise significantly and swiftly.

What About Investors?

The market reaction exhibited a distinctly bullish sentiment. Traders are increasingly anticipating economic growth and a favourable environment for generating profits. The Federal Reserve’s unexpected provision of additional liquidity has typically engendered positive responses among investors, contributing to a climate of optimism.

Swiss National Bank

Key interest rates in Switzerland remain unchanged at 0.0%, as determined by the Swiss National Bank (SNB) during its monetary policy assessment on Thursday morning. This decision aligns with market expectations. In September, following six consecutive interest rate cuts, the SNB opted against further monetary easing and has maintained its key interest rate at 0% ever since. SNB President Martin Schlegel recently emphasised that the threshold for an interest rate cut below zero is high due to potential undesirable side effects.

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

”Thinking is hard, so most people judge.”

C.G. Jung

The incident that occurred last week at the Chicago Mercantile Exchange (CME Group) presents a significant case study in data centre operational resilience. The facility that underpins the CME, a leading global derivatives exchange, has reported enhancements to its backup cooling systems following an overheating event. This incident resulted in a substantial 10-hour outage that adversely affected global financial markets on Friday. This occurrence underscores the critical importance of infrastructure reliability and effective cooling solutions in data management systems, particularly in environments with high transaction volumes. Something to keep in mind and examine closely as more AI-backed business solutions are introduced.

What a December Start!

Wow, what an eventful and volatile start to December! Global stocks and bonds began the month under pressure, amid a renewed selloff in cryptocurrencies and hawkish statements from the Bank of Japan, which weighed on sentiment. S&P 500 futures decreased by 0.5%. Meanwhile, Bitcoin plummeted by more than 5%, dropping below USD 86,000, only to rebound the day after to USD 90’000. Key commodity prices also experienced significant movements. Copper surged to a record high on the London Metal Exchange amid concerns that the global market may be facing a supply crunch. Silver reached a new high amid ongoing supply constraints. Additionally, crude oil prices rose, with Brent crude trading above USD 63, following the suspension of loading at a key pipeline connecting Kazakh fields to Russia’s Black Sea coast after an attack over the weekend. OPEC+ has also reaffirmed its three-month plan to halt output increases. The economy also provided little support, as U.S. industry continued to contract in November. The closely monitored ISM Purchasing Managers‘ Index dipped again, reaching 48.2 points. This figure remains below the 50-point growth threshold for the ninth consecutive month.

European Inflation and Interest Rates

Recent data indicate a modest increase in inflation rates within the European Union. In the eurozone, inflation increased slightly more in the fourth quarter than the European Central Bank had anticipated in September. This information came from preliminary data released by the European statistics office, Eurostat, on Tuesday. The annual rate of consumer price inflation rose from 2.1% to 2.16%. Meanwhile, core inflation, which excludes energy and food, increased from 2.37% to 2.41%. In the short term, there are indications of easing. However, the implementation of tariffs, along with the cessation of benefits from reduced fossil fuel costs, could result in modest inflationary pressures in the latter half of 2026. For the time being, no change to European interest rates is expected.

U.S. Inflation and Interest Rates

Inflation is indeed a significant concern in the U.S. According to the most recent detailed Consumer Price Index (CPI) data for the twelve months from September 2024 to September 2025, prices for various goods and services have risen considerably. Specifically, meat prices increased by 14.7%, car maintenance and repairs by 7.7%, home insurance by 7.5%, tobacco products by 6.9%, and sugar and sweets by 6.7%. Additionally, hospital services rose by 5.8%, water and trash collection by 4.8%, health insurance by 4.2%, and rent by 3.4%. Many of these price hikes significantly exceed the Federal Reserve’s inflation target of 2%. Although current inflation rates remain below short-term interest rates, the Federal Reserve is lagging in its monetary policy response. Consequently, a degree of easing is expected at the Federal Open Market Committee (FOMC) meeting next week.

Souped-Up Ideologies Are Harmful

One last thought for the weekend. A prominent structural risk within democratic systems is their heightened susceptibility to blackmail. This vulnerability stems from the system’s inherent inclination to maintain social peace, often through a readiness to compromise, even in less-than-ideal circumstances. The eagerness to resolve conflicts through consensus-driven approaches can leave democratic institutions exposed to pressure from both internal and external threats. In tense situations, when internal disputes, fueled by ideology or mere envy, hinder the ability to reach an agreement, there is a significant risk of complete paralysis. Such stagnation not only undermines decision-making processes but also threatens the stability of a country’s entire political organisation.

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

”All ideologies are inaccurate to varying degrees. More subtly, all are incomplete in various ways; in particular, they fail to anticipate some crucial events.”

Social Philosophy and Policy, Volume 41, Special Issue 1: Ideology

Thank you very much for the generous feedback on my last “Stefan’s Weekly.” I was particularly pleased by the many, many positive messages about my daughter’s song that was included. Thank you very much!

Thanksgiving

The shortened Thanksgiving week lived up to its reputation as a statistically positive week. There was significant upward momentum, with the trend pointing higher. We continue to expect follow-up buying for the time being. However, it would not be unusual for a corrective movement to take place in the week after Thanksgiving.

Today’s Stefan’s Weekly

Today, I would like to address a topic that is frequently overlooked in analysing the factors influencing fluctuations in equity prices over time. To begin, however, let us first examine the landscape of Japanese interest rates.

Japanese Interest Rates

In the weeks before Thanksgiving, a wave of selling has swept across global markets, with the leading stock exchange in New York experiencing significant declines. Interest-rate-sensitive stocks, particularly those of major tech companies, have been especially affected. Contrary to popular belief, the recent price declines cannot be attributed solely to concerns over the AI boom. Instead, the sharp increase in interest rates in Japan has been a source of anxiety. Many large investors previously borrowed money at low rates in Japan, which on April 7, 2025, stood at 1.07% to invest profitably in other regions. However, this favourable scenario may be nearing its end, as the yield on ten-year Japanese government bonds has risen to over 1.8%, the highest level since just before the 2007/08 financial crisis. Furthermore, 20-year government bonds are now yielding 2.82, up from 1.89% in April of this year. It will be interesting to see if this rise in Japanese interest rates quietly undermines the ongoing stock market boom.

The Predictive Power of Forward-Looking Earnings Revisions

Systematic analysis of earnings forecast adjustments plays a catalyst for stock price movements. Trading systems that utilise computer-driven AI models systematically analyse both positive and negative earnings revisions, meaning changes in analysts’ or management’s forecasts of a company’s future profits. These models generally employ natural language processing (NLP) to examine earnings reports and guidance, alongside quantitative methods to assess the magnitude and frequency of revisions.

Positive Surprise

Empirical evidence indicates that upward adjustments to forward-looking earnings estimates (such as next quarter’s or next year’s EPS) are statistically linked to abnormal positive returns, particularly when these revisions are unexpected and accompanied by a modest consensus among analysts. This phenomenon occurs because positive earnings surprises often signal improved fundamentals, attracting institutional investors and, very importantly, stimulating algorithmic buying. The resultant order flow generates price momentum, reinforcing the initial price movement and elevating valuations.

Negative Surprise

Conversely, companies that consistently lower their earnings forecasts over multiple quarters tend to experience a negative price drift. AI-driven trading systems may identify such stocks for short-selling or portfolio underweighting, as ongoing negative revisions often precede deteriorating fundamentals or sector underperformance.

Conclusion

In summary, the direction, magnitude, and persistence of earnings revisions serve as crucial inputs for AI-based trading systems, which leverage these factors to forecast price trends and optimise portfolio allocations, thereby driving trading volumes on the upside or downside, creating a sort of self-fulfilling prophecy.

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

”Minds, like parachutes, only function when they are open.”

Thomas Dewar

At the conclusion of today’s “Stefan’s Weekly,” you will have the opportunity to click on buttons leading to a song produced by my daughter. I hope you understand my desire to share this with you, even though it may not align perfectly with the theme and concept of “Stefan’s Weekly.”

Argentina

Last week, I mentioned the Argentinian President, Javier Milei, as a leader willing to step outside of traditional political comfort zones to fulfil the commitments made during his election campaign. Today, he is implementing these proposals with notable rigour. While one can certainly debate his style and economic policy agenda, it is evident that President Milei is sticking to what he promised during his election campaign: doing the job he was elected to do. Eventually, he will need to facilitate the social reintegration of disadvantaged groups, not just for ideological reasons, but primarily for pragmatic economic ones. Neglecting this issue could lead to the further collapse of the domestic market, which is essential to achieving a sustainable economic recovery in Argentina. Diane Swonk (Diane Swonk – Wikipedia) highlighted in a recent report that such situations can lead to dissatisfaction and social unrest, ultimately proving more detrimental than beneficial to economic growth.

Germany

Germany, on the other hand, has enjoyed remarkable growth for many decades but is now finding it increasingly challenging to step out of its comfort zone and implement necessary structural changes. Politicians seem reluctant to confront the issues at hand, fearing they might jeopardise their comfortable, well-compensated positions and the privileges that accompany them. The reality is that without substantial adjustments to regulations, particularly in labour-market laws, significant job cuts in the public sector, and painful pension reforms, Germany risks a prolonged decline in prosperity, similar to Argentina’s. The German populace may be too comfortable and may need to face greater hardships before drawing the correct economic conclusions. Notably, more individuals in Germany receive welfare payments than work in the automotive industry. Production in Germany becomes increasingly unprofitable. German companies are drastically reducing jobs in the country while relocating them to more favourable locations. Over the past year, over 100,000 jobs in the industrial sector have been lost as conditions have deteriorated significantly. It raises the question of why German politicians and trade unionists fail to see that this trend is not an attack on employees but rather an indication that Germany is becoming less attractive as a production hub due to excessive political regulations and their resulting costs.

Ambiguity Tolerance

The apparent tolerance for ambiguity is astonishing. Both voters and politicians appear to manoeuvre through the current situation without any signs of stress or discomfort. As I mentioned recently, we often make grave errors when circumstances are favourable. However, at this moment, conditions are not even particularly advantageous, and yet we continue to engage in excessive spending, the most significant mistake of all.

U.S. September Nonfarm Payrolls Release

The U.S. September nonfarm payrolls report, released nearly seven weeks late, indicated a strengthening job market following several months of decline. Nonfarm payrolls increased by 119,000, surpassing all forecasts in Bloomberg’s survey and marking the most significant rise since April. The three-month average payroll gain improved to 62,000, up from just 18,000 for the preceding three months through August. However, the unemployment rate unexpectedly rose to 4.4%. Growth in payroll numbers for September was primarily driven by the leisure, education, and health services sectors, while manufacturing jobs, a focal point of the Trump administration, fell for the fifth consecutive month. The overall payroll level in manufacturing has now reached its lowest point since 2022. In the upcoming weeks, further economic data releases are expected following the recent government shutdown.

Market Outlook and Thanksgiving

Next week marks Thanksgiving, and historically, there is a noticeable seasonal uptrend during this period. The increase in nonfarm payrolls should help as well. Besides that, thanks to this week’s optimistic numbers from Nvidia, many market participants may feel comfortable in building up risk assets. In this respect, I enjoy observing the evolution of Bitcoin because, in my view, it has provided a clear picture of market liquidity over time. This observation suggests that in constrained liquidity environments, Bitcoin frequently depreciates as market participants liquidate positions to raise cash. I think it is advisable to examine Bitcoin’s trajectory over the coming days and weeks to assess its continued role as a reliable indicator of market trends.

Conclusion

We require political conditions in Europe that allow local businesses to thrive once more. This includes reducing the regulatory burden. An increase in trust towards citizens and businesses would be entirely appropriate. Politicians should prioritise serving citizens‘ interests rather than focusing primarily on restrictions, monitoring, and control.

Song

I hope you will forgive my sentimentality, but as a proud father, I cannot resist sharing a new song my daughter, Lucie, has produced. It is an emotional, beautiful, and lyrical piece that you will appreciate. There are three different ways to enjoy the song, and I hope you find it as delightful as I do. Thank you for understanding my desire to share this with you.

Enjoy the song on Spotify.

Enjoy the song on Apple Music.

Enjoy the song on YouTube.

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 ideological positioning of the individual holds significant importance, as it fundamentally shapes the foundational basis of their perspective.”

me, when I talk to our children about education, politics

If the political pendulum in the US swings back due to widespread dissatisfaction among diverse segments of the population regarding unmet promises about living standards, America could shift to a more left-leaning stance in the future than during the Democratic administrations of Obama and Biden. The election of the charismatic and youthful immigrant Zohran Mamdani could catalyse such a change. This scenario could emerge as an unintended consequence of excessive austerity measures and erratic tariff policies implemented by the current US government, leading to job losses and increased consumer prices. During election campaigns, politicians often engage in vigorous debates; however, once they are elected or re-elected, many tend to revert to familiar patterns that restrict them to their political comfort zones, frequently failing to deliver on the promises made during their campaigns. In this context, the American president, to some extent, and especially the Argentine president, stand out as notable exceptions, regardless of one’s opinion on their actions. In contrast, the newly elected German chancellor has thus far implemented few, if any, of his election commitments.

Warren Buffett

You know, Ladies and Gentlemen, Warren Buffett reportedly proposed that nations could effectively mitigate their budget deficits by implementing a legislative framework whereby elected officials whose policy decisions result in a deficit exceeding three per cent of Gross Domestic Product (GDP) would face immediate dismissal from office. This assertion underscores the potential for accountability mechanisms within political systems to enhance fiscal responsibility.

Tesla

Tesla shareholders have approved a $1 trillion compensation package for CEO Elon Musk, the highest compensation package ever granted. The vote paves the way for Musk to become the first trillionaire and increase his stake in Tesla to 25% or more over the next decade. Elon Musk is offered the prospect of a trillion-dollar stock package because Tesla shareholders have voted in favour of this unprecedented compensation plan for him. However, he must achieve ambitious goals to receive it. This enormous bonus is inappropriate for several reasons.

Why might it be seen as Inappropriate?

I suppose this is a matter of perspective, yet the excessive size of the CEO pay package, the most extensive ever, far surpasses typical executive compensation.
While Tesla’s board has been criticised for lacking independence and failing to scrutinise the deal adequately, it has exhibited somewhat weak oversight, as the package could significantly dilute the stakes of existing shareholders. Then, some performance goals are seen as either unattainable or encouraging risky, short-term behaviour by Tesla insiders. I cannot judge them, as I lack that specific knowledge. Whether the targets are realistic or not remains to be seen; in any sense, the package increases Tesla’s reliance on Elon Musk, raising concerns about “key person” risk and leading to overdependence. Finally, the scale of the award has drawn criticism amid broader concerns about income inequality and corporate governance and could trigger public backlash, eventually leading to stricter regulation.

Stats

A week ago, the Challenger Report unveiled a notable decline in the labour market. October witnessed the highest number of layoffs in 21 years, while hiring reached its lowest level in 14 years. Consumer confidence, as measured by the University of Michigan, is now at the second-lowest point since 1980. Following the release of the Challenger Report, a risk-off sentiment spread through the capital markets last Thursday. However, markets rebounded on Friday as buying activity resumed. The pressing question remains: when, if ever, will this downward trend gain further momentum? With the U.S. government shutdown now resolved, at least until the end of January 2026, employees at statistical offices will soon return to work, meaning official statistical data will start flowing into the financial markets once again.

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

”Observe calmly; secure our position; cope with affairs calmly; hide our capacities and bide our time; be good at maintaining a low profile; and never claim leadership.”

Deng Xiaoping

Entrepreneurs, organisations, and politicians often make significant errors during periods of notable success. Such advantageous phases can lead to complacency and overconfidence, which may obscure potential risks and foster an environment where critical decision-making processes are compromised. This phenomenon suggests that a heightened sense of achievement may inadvertently trigger detrimental decision-making practices, ultimately affecting the sustainability of any organisation’s success.

Capital Returns

The core theory of capital returns suggests that capital tends to flow toward businesses that generate high returns and retreat when returns fall below the cost of capital. This process is not static but cyclical and marked by continuous fluctuations. The influx of capital encourages new investments, which, over time, expand capacity within the sector and eventually cause a decline in returns. Conversely, when returns are low, capital exits, leading to a decrease in capacity. This reduction eventually paves the way for a rebound in profitability, which in turn attracts capital once again, restarting the cycle.

Periods of Pronounced Success

Reflecting on the introductory text and evaluating which companies are presently thriving and how they are likely to utilise the funds they receive, I cannot help but feel that, given the massive investments in AI, a few companies might be overstepping their bounds. Additionally, recalling our discussion on capital returns theory from the previous section, I conclude that we may wish to avoid companies that currently seem invincible and are at the height of their success. Conversely, there may be promising opportunities among companies undergoing challenging phases, experiencing declining margins, and in need of restructuring or streamlining their business operations, i.e., entities that may not yet be on the radar of analysts and asset managers. What is your point of view?

Food for Thought

With today’s quote, Deng Xiaoping once advised: to observe calmly; secure one’s position; manage affairs with composure; conceal one’s abilities and bide one’s time; excel at maintaining a low profile; and never to seek leadership. This philosophy wasn’t just rhetoric; it was the blueprint for China’s remarkable transformation. Under Deng’s steady hand, China shifted toward capitalism and, in doing so, lifted an astonishing 500 million people out of poverty.

Yet, this long-term, strategic vision stands in stark contrast to the short-term, reactive tactics often seen in countries that have already reached their peak. Where some leaders chase quick wins and make frequent course corrections, Deng’s approach was characterised by patience, discipline, and a relentless focus on the bigger picture.

But such a strategy is not without its price. The Chinese model’s success came at the cost of limited political participation; a reminder that every path to prosperity involves trade-offs. As always, there is no free lunch, Ladies and Gentlemen.

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