Self-Realisation / Strong Period Ahead / Beige Book / Uncertainty

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