A very busy Donald Trump on his first day of being president, signing a high number of executive actions in different subjects.

Markets: China’s stock market up last night as tariffs not (yet) on agenda. Cryptos down as no acts on this topic (yet). Interest rates down as tariffs seem delayed and maybe less high as feared. US dollar with some reversal today after the strong drop yesterday.

My View: Markets showed a big wave of euphoria after Donald Trump was elected as the 47th president of the United States of America back in November. A lot of optimism got priced in. Today, there seems so far no second wave of euphoria to establish after the inauguration of Donald Trump.

A high level of uncertainty keeps investors on a cautious wait-and-see approach before making the next bets. As I already mentioned several times before, from now on, there can be any day during the coming 1’460 days ahead, when financial markets suddenly see a big reaction on news coming from the White House. This potential of rollercoaster has to be kept in mind as short-term market fluctuations driven by political news can be dramatic. However, it is important to keep the focus on long-term fundamentals, such as corporate earnings, economic growth, and industry trends as sharp market moves driven by political developments are often only temporary. Strong (over-)reactions always bear chances to benefit.

Donald Trump returns to the White House today, promising the high number of 200 executive orders right after his inauguration. Already a lot of speculation came up during weekend and the last hours on potential topics in his wave of first-day orders, ranging from TikTok, crypto regulation, and expanded oil drilling initiatives etc.

Markets: Asset classes reacting on the speculative news, like cryptos saw a jump, now giving back some of the gains. The US dollar shows weakness as tariffs should not be on the agenda on the first day.
US markets see scheduled closure for Martin Luther King Jr. Day.

My View: A lot of speculation dominates the news flow about the first steps Donald Trump will take after his inauguration.
All eyes are now on the first papers. This could lead to a rise in volatility. A situation which could appear any day from now on going forward.
I do not add new bets till a clear picture about Donald Trump’s first steps arises.

China reported important economic data this morning. China’s economy achieved a 5% growth rate in 2024, marking a slowdown versus previous year’s 5.2% growth rate. This was inline with the official target set.In the fourth quarter, gross domestic product expanded 5.4%, higher than the estimated 5.0% by analysts. This growth was primarily driven by a 6.2% increase in manufacturing output (estimated 5.4%) while retail sales rose 3.7%, higher than the forecasted 3.5%.

Markets: Chinese stock markets showed only modest reaction. The Shanghai Composite Index experience slight gains while the Hang Seng Index rose 0.31%.

My View: The data set looks strong on first sight. The growth was bolstered by strong manufacturing and export activities. Government stimulus efforts kicked in. Economic data came in above estimates.
However, the question is, how investors look at the China, seeing the glass half empty or full.
Concerns persist regarding weak consumer sentiment, deflationary risks, and skepticism about the reliability of official data. Additionally, potential US tariff increases under US president Donald Trump could pose some more uncertainties for China's economic outlook.
I am in minority with my view, seeing the glass half full, sharing an optimistic perspective. China’s stock markets have the potential to rise and the downside is rather limited. With retail sales picking up, there is a potential for the consumer and internet stocks which show attractive valuations compared to global and US peers. I expect more stimulus to come, latest presented at the 14th National People's Congress (NPC) in beginning of March.
Bear in mind, the stock indices might show higher volatility during the coming weeks with all the politics. Any dip can be seen as an attractive entry point for a long-term allocation.

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Wednesday, a day packed with crucial economic data and the kickoff of earnings season.
UK: inflation lower than expected. Inflation rate 2.5% YoY vs. 2.6% consensus estimate.
Germany: economy continues to shrink, as expected, for second year in a row. German GDP -0.2% YoY (2024) vs. -0.3% YoY (2023).
US: inflation data inline: CPI 0.4% MoM and 2.9% YoY, both as expected.
Corporate earnings: reporting season started with US banks. JPMorgan, Goldman Sachs, BlackRock, WellsFargo, Citigroup, all banks reported sales and earnings above estimates.

Markets: Inflation prints are taken positive for risk assets.
UK: interest rates decline based on latest inflation figures, pound rises following recent slump through market turmoil.
Germany/Europe: Stock indices rise with some regained confidence.
US: Stock Futures jump after inflation report and strong bank earnings, US yields and US dollar decline.
Sentiment: No sharp reaction, only little move from “extreme fear” to fear level.

My View: As I mentioned few days ago, I did not share the common view that inflation would skyrocket. Therefore, today’s release is not much of a surprise to me.
I am happy with the latest tactical calls mirroring this view: buying US longterm Treasuries (leveraged ETF, 07.01.25), longterm UK Gilts (leveraged ETF, 14.01.25), hedging the US dollar (14.01.25), buying some pounds (14.01.25), adding long volatility (leveraged ETF, 16.12.24) and shorten the semiconductor sector (leveraged ETF, 07.01.25).
I continue to believe that interest rates will stabilize and show a tendency to decline, returning to levels observed a few weeks and months ago.
It is fair to say that increasing equity exposure as a tactical move could also be considered an investment opportunity. However, given my current equity allocation and significant volatility currently affecting equities, I opted not to add more risk to this asset class. Additionally, I am not yet convinced that today’s equity rally will prove to be sustainable.

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The producer price index (PPI) rose 0.2% in December, less than the 0.4% increase in November and below the consensus estimate for 0.3%. Producer prices are a leading indicator of consumer prices. The release is the first of two key inflation readings published this week.

Markets: Markets and risk assets seem to stabilize since the latter part of yesterday’s trading session. Asian indices showed a strong rebound, European and US markets try to follow however rather shy. Interest rates are moving sideways.

My View: Markets are attempting to stabilize, but in my view, the rebound appears too modest following the recent drop in stock prices. Before increasing my equity exposure - whether by closing my short positions or buying additional stocks - I want to see a more decisive upward movement and a clearer indication of investor confidence.

As investors seem to overreact on the inflation topic, I expect interest rates to normalize and return to lower levels on some point. At the same time, the US dollar could lose some ground following its recent rally. I have started hedging a portion of my USD exposure against the Swiss franc at the price of 0.91702.
As the same story is cooked in the UK, I decided to gain some exposure to longterm UK Gilts (UK government bonds) to my portfolio today, implementing this strategy through an ETF.

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China’s exports surged in December by 10.7% from a year earlier, higher than the expected 7.3%, while imports were up 1% (expected -1.5%). Ahead of Donald Trump’s return to the White House, China’s trade surplus hits a record high.

Markets: Chinese indices managed to recover some of the losses after the release, but ended the session in the red. Downward pressure in equity markets across the globe amid rising U.S. interest rates and risk aversion.

My View: somehow the upbeat in exports does only surprise on first sight. It seems companies rushed to deliver goods out of the country before Donald Trump returns to the White House. More evidence about China’s economy with data on GDP growth, retail sales, or industrial production will follow on coming Friday. This has room to sway market sentiment. I remain optimistic that Chinese stocks have an upside potential, favoring the internet sector, implemented via an ETF.

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During the coming week, an important set of economic data will be released, alongside the kickoff of earnings season. Wednesday could become a hot day. The big banks like JPMorgan, Citigroup, BlackRock, Goldman Sachs and Wells Fargo are set to report their fourth quarter results. On the same day, new inflation data will be released.
Already on Monday morning, investors will closely watching economic data out of China, including the latest import/export figures followed by a substantial data release on Friday, featuring GDP growth and other critical indicators.

Markets: - (only cryptos are trading over the weekend, sideways in a wide range)

My View: a crucial week for financial markets could be ahead of us. After the hot job report on Friday, the fear of inflation is definitely back and could shake up markets further in the short-term, in case higher inflation should be confirmed and interest rates continue to rise.
Regarding China, the next data set could also give the market a new direction. Chinese stock markets have been underperforming global indices for several years, especially since pandemics. In my view, today, the glass is half full, while investors have rather a pessimistic stance, also with the threat of potential tariffs, several time announced by Trump. A lot of this is already priced in. Therefore, any positive surprise could lift stock prices in that region. At latest during the National People’s Congress in beginning of March, the government will come up with more stimulus package to support the Chinese economy.

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As revealed by this afternoon's data, job growth in the US during December was significantly stronger than anticipated. Non-farm payrolls surged by 256’000 for the month, up from 212’000 in November and way above of the 155’000 forecasted. As a consequence, the unemployment rate came down to 4.1% (4.2% expected). The latest US job data released this afternoon came much better . The 10-year Treasury yield spiked to highest level since late 2023.

Markets: as a first reaction, interest rates and US dollar up. Stocks, cryptos, gold all down with tech and small & mid cap stocks suffering the most while energy and material sectors outperform with rising commodity prices.

My View: The year begins on a tense note, mirroring the last days on financial markets in 2024. As a consequence of rising uncertainties, investors eye on any hint by any economic release. Elevated volatility is likely to persist in the near term, keeping markets on a knife's edge until a clearer trend emerges and the pendulum begins to calm.
I continue to wait on the side-line adding more risks to my portfolio. However, I am ready for buying opportunities which could be around the corner. Better job data should actually be taken as good news regarding the overall US economy. However, investors ‘fear’ less rate cuts by the Fed than anticipated before.

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