Ambiguity Tolerance, Market Outlook, Thanksgiving and a New Song

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