Crisis? / Milei / Rate Cuts / Elections

Good Morning Ladies and Gentlemen

„If printing money would end poverty, printing diplomas would end stupidity.„

Javier Gerardo Milei

Your E-Mails

I receive more and more e-mails from readers asking where markets are heading. I personally believe markets are reasonably stable. I am not too afraid of an imminent market crash; inflation seems to be under control. Surprisingly, most companies we invest in for our clients report even better numbers than we expected, leading to a much-appreciated side effect of increasing dividends. So far, so good.

ECB

The first interest rate cut in years was much expected, and still, it was a cut. Some market participants will always see the glass half empty. The fact is that the ECB cut its base rates today by 0.25%.

Crisis

In financial markets, there is always more not-crisis than crisis. Why some investors gear their portfolios continuously versus “more crisis” is a mystery to me. We see constant political crises seemingly all over the place. I do not think this is going to disappear all too soon. But even in such political crises, many companies deliver positive cashflows, which investors can harvest.

War?

Currently, I am less afraid of a global war than I am of the effects of tariffs and sanctions. Tariffs and sanctions have a terrible impact on the global economy and global wealth and usually hurt large parts of a population rather than the people they are directed at.

Crash?

Do I see an imminent crash looming around the corner? No, I do not. Do I exclude a crash? No, of course not. Crashes are part of the game.

Political influence

Yes, Ladies and Gentlemen, politics may influence financial markets. However, this is primarily short-term for global markets. Politics usually have a very limited long-term impact on global markets as such, while local markets, i.e. like the U.K. ever since Brexit, may be hurt for quite some time. Furthermore, international companies as actors in a global marketplace prove to be relatively resilient as they can shift their businesses from region to region, perhaps losing market share for some time, operating on negative cash flow for a quarter or two, but surviving and prospering after a while in a new setting.

The U.S.

Am I afraid of the outcome of the U.S. presidential elections in Q4 2024 in regard to financial markets? No, I am not particularly afraid; I am fascinated and surprised to see that these are the best candidates the U.S. can produce and offer to its voters in 2024. Nevertheless, the U.S. is still a constitutional state with checks and balances, and therefore, I suppose there is no need to be exceptionally afraid.

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 102
9494 Schaan/Liechtenstein
Mail: smk@incrementum.li