Monat: Juli 2024

Good Morning Ladies and Gentlemen

„In the end, it’s not the years in your life that count; it’s the life in your years.„

Edward J. Stieglitz (commonly misattributed to Abraham Lincoln)

U.S. GDP versus German Consumer Confidence

This week’s US gross domestic product (GDP) numbers surprised to the upside, increasing by an annualised 2.8% between April and June. Experts surveyed by Reuters had only expected an increase of 2.0%. Those surprisingly strong figures for US economic growth contrast with the consumer sentiment in Germany, which has undergone an “interesting” development in recent months. According to the GfK Consumer Confidence Index, it stood at -21 points in June 2024. For July 2024, GfK forecasts a deterioration of -21.8 points. However, for August, “only” -18.4 points are expected. Germany has the third largest economy behind the USA and China, ahead of Japan.

September Interest Rate Cut

The ECB will cut in September; anything else would surprise me. The Fed, who knows? Maybe they will make a surprise move next week during the upcoming Federal Open Market Committee (FOMC) meeting scheduled for July 30-31, 2024. Else, a September cut is widely expected.

Inflation down the Road

However, in the long term and with an escalation of global trade conflicts, I expect a freshening breeze on the inflation front over the coming years. China is reaching the limits of its previous investment-driven growth strategy, but the government, just like the governments in Europe or the US, is avoiding painful adjustments. This will lead to tougher competition, and if Western countries push for higher tariffs at the same time, this will probably have an inflationary effect.  Perhaps this behaviour brings some industrial jobs back to America or Europe. Still, for most American and European consumers, life will become more expensive, as domestically produced goods in the U.S. or Europe will cost much more than comparable ones on the global market.

Spicy

Ladies and Gentlemen, we finally see some action in the American presidential elections. One old candidate is gone; perhaps the second old candidate will also hand over his baton to his nominated deputy. I think that would be a good thing for America. A breath of fresh air and fresh, younger people for an office that is probably one of the most demanding in the world seems to make sense to me.

The Paris 2024 Olympics

Ladies and Gentlemen, I expect the Paris 2024 Olympics to have a similar effect on the media than the European Football Championship. This means a welcome break from all the negative headlines we are usually inundated with.  Let’s hope for fair and conflict-free games in a spectacular setting.

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

„Learning and enjoyment are the secrets to a fulfilled life. Learning without enjoyment hardens. Enjoyment without learning stultifies.“

Richard David Precht

U.S. Inflation Expectation

Inflation in the USA is easing noticeably, fuelling the financial markets‘ hopes of an interest rate turnaround in September. Last Friday, weak labour market figures reinforced the conviction in the US markets that the Federal Reserve will begin to cut key interest rates in September. The Atlanta Fed’s nowcast (GDPNow) describes the US GDP trend for the second quarter of 2024. The latest estimate fell to just 1.5%. This is the lowest estimate for Q2 2024 to date. Real US GDP growth in Q1 2024 was 1.4%. A 1.5% in the second quarter would mean that US growth for the first half of 2024 is below expectations of 2.0%. The 5-year break-even inflation rate currently stands at 2.22%. It is close to the level of the previous week. There are no signs of inflation flaring up again.

Department of Labour in Washington

Yesterday’s inflation numbers by the Department of Labour in Washington showed that the June inflation rate fell surprisingly significantly to 3% from 3.3% in the previous month. This represents the lowest reading in the current year. Economists polled by Reuters had expected a slightly higher figure of 3.1%. Even more noteworthy is the fact that June prices fell by 0.1%, while experts expected an increase of 0.1%.

September Interest Rate Cut

These numbers had an immediate impact on future markets. Following the surprisingly good data, the probability of a September interest rate cut by the US Federal Reserve is now estimated at 85%, up from around 70% just before the publication of the inflation numbers.

U.S. Interest Rates Development

The 10-year US yield already ended trading last week at 4.28%, thus below the 1-year moving average and the 200-day line. It not only closed the price gap but fell below it, which is a negative sign. (The weaker the US economy and US inflation, the more yields are likely to fall). However, Mr Powell did not indicate any immediate interest rate cut during his recent performance before Congress members. I suppose this will change in the near-term future.

UEFA EURO 2024

Ladies and Gentlemen, the European Football Championship is over for Germany and Switzerland. Hans and I will support Spain or England. Despite the elimination, I am happy about the Swiss team’s performance. For the last few weeks, the media over here concentrated on issues other than immigration and war thanks to EURO 2024, Switzerland’s good performance, and, again, at least here in Switzerland, Taylor Swift, who gave two apparently remarkable concerts. This was a fantastic and more than welcome break.

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 never won a fight in the ring; I always won in preparation.“

Muhammad Ali

Symbolic Politics in Asset Management

There are more styles in asset management than most investors anticipate. In principle, this is fantastic as it allows investors to choose the style of their preference or even to mix styles. The problem is that not all asset managers are equally loud when selling their case, and some asset managers act as if they have found the holy grail of asset management, which, of course, is absolute BS. Pardon my French! As I mentioned before, it almost seems that some asset managers are in a kind of religious war over the only true doctrine and insist that their view of the world and their investment approach is the only correct one; obviously, others claim the opposite. This leads to systemic entrepreneurial rivalry among banks, asset managers, analysts, etc., and I am not convinced this is only good for investors, as they may get carried away by hidden marketing in colourful brochures without really understanding the underlying concept. Unfortunately, the media plays along, especially if they get paid for it. This, Ladies and Gentlemen, is a genuinely aberrant development if you ask me.

Our Private Clients

At Incrementum AG, we are unwavering in our commitment to our clients‘ understanding and satisfaction. We offer only one mandate style for private clients: equity-based and cashflow-producing. In every quarterly report to our clients, we reiterate the basics of our approach, ensuring that every single one of our private clients fully comprehends the concept. If our approach is not suitable for a client, we are dedicated to helping them find a more suitable solution at another bank and/or asset manager. Our clients‘ understanding and satisfaction are at the core of our operations, and we value their trust in us.

Why are we doing this

Our approach at Incrementum AG is designed to avoid short-term tactical decisions. We believe that if our investors understand the concept, we are not forced to adopt such tactics to please clients in the short term. Instead, we can adhere to our well-founded and clearly defined investment approach without fear of short-term dissatisfaction. This approach not only makes sense for our clients but also for us, as it allows us to focus on the long-term strategy and the best long-term interests of our clients.

UEFA EURO 2024

Again, the European Football Championship seems to have succeeded. It still feels like a holiday from life and the daily flood of negative news that the media landscape of the past few years has produced. I am even happier than last week because Switzerland made it to the quarterfinals and will play England on Saturday. Hans is also super happy because Germany will play Spain this evening. Ronni, on the other hand, is disappointed because Austria was eliminated by Turkey despite having had much more ball possession and many more chances to score.

What we can learn from football

We have our own WhatsApp chat group among Incrementum AG’s partners. When Switzerland and Germany made it into the next round, we followed the matches and sent messages to support our respective partner’s teams. We cheered on our partners‘ teams, were happy for them to win, and congratulated each other or, as was the case for Austria after the bitter elimination, tried to console Ronni. Emotions are important!

Muhammad Ali

What can we learn from Muhammad Ali’s “I never won a fight in the ring; I always won in preparation”? When choosing an asset manager, try to prepare yourself. Why not with the help of a decision-making matrix? (My kids would laugh because I always tell them to use a decision-making matrix for complex decisions, especially when choosing their partners). But I am convinced it helps Ladies and Gentlemen; if you think about your requirements, write them down and compare them to the offerings in the market. Like this, you may win thanks to preparation.

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