Goldilocks?

Good Morning Ladies and Gentlemen

“A certain lack of solutions characterises many current political leaders.”
 From a discussion I had with one of our clients.

Latin in German

For the ten years of Incrementum, we received many truly unique presents. One of our clients came up with a remarkable book on the influence of Latin on the German language by Karl Wilhelm Weeber. Totally unnoticed, we use words and expressions with Latin roots in everyday language. That book I casually read through during our summer vacation made me think last week of one or two of the Greek or Roman historians I read over thirty years ago.

Ancient historians

Why on earth would I think last week about ancient historians? Ladies and Gentlemen, I received feedback on my last “Stefan’s Weekly” on “A Whole Bouquet of Fears”. In there, I mentioned that people (rather ruthless ones, if I may say) are happy to make money with other people’s fears. And now, what is interesting about reading ancient historians at least once in a while is that they show that humans have known the need to consult oracles ever since the time of the Greek and Roman historians and most probably even well before that. People have felt comfort in listening to some higher power for thousands of years. Interesting, no? Needless to say, the signs those oracles saw served primarily them personally, i.e. those who knew how to interpret them or at least pretended to know how to interpret them. Until today, especially in the financial industry, “oracles” still create hope without promise, without having to take responsibility; what a clever business concept.

U.S. inflation

Back to the real world, the U.S. inflation rate stood at +4.0% in May (with a high in June 2022 at 9.1%). I would not be surprised to see the U.S. inflation rate decline below 4% within the next two or three months. An inflation range between 2% and 4 %, with real growth of 2%, implies a pretty strong nominal growth of between 4% and 6%, which could be described as a so-called goldilocks situation. Financial markets would certainly appreciate this. Perhaps the current favourable market performance can be partially explained by anticipating such a goldilocks environment. However, the Federal Reserve raised the key interest rate by 25 basis points yesterday, and for the moment, financial markets are no longer pricing in any further rate hikes in the U.S.; the next Fed meeting will take place on September 20, 2023.

Never boring

What I like about my industry is that it is never dull. The decisions we have to make daily are based on research, experience and always on several unknowns. To me, not being able to foresee the future remains a feature. Think about it.
Ladies and Gentlemen, please share your opinion with me, but please remember (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 a wonderful 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