COn the weekend, German election will take place. Based on the latest performance on the stock market, investors expect a positive outcome for future economic reforms needed.
Economic leading indicators in Europe are rather on the weak side without sign of a fast recovery.
In addition, the political tension is played with the US playing a dominant role and almost no day without announcement which are rising questions about the way and role of each region in the future.

Markets: stock markets hold up quite well. China outperforming. Cryptos, first day of stronger upmove, interest rates lower, US dollar up while euro weakens.

My View: In my view, the overall risk stance is too euphoric. The downside risks should not be ignored at the moment. Election, political uncertainty and instability in France and Germany, with the new role of US dominance and Europe in the back seat. There is also room for negative economic surprises, higher inflation and less interest rate cuts as estimated.
It seems China did its homework and is now the time to benefit.

Even there is a chance of a melt-up in such a euphoric environment, I do not run the portfolio with too high risk allocation and I am positioned for certain pull-backs. Should the momentum turn, it could quickly go in the other direction.

I continue to analyze market patterns, observing that over the past two years, market movements have become faster and at the same time more intense compared to historical trends. This shift may be driven by the growing influence of AI-driven trading tools and financial influencers.

China tech stocks surge significantly, driven by strong earnings results from Alibaba released today. The sector had already been experiencing an upward trend in recent trading sessions and weeks, reflecting growing investor confidence on China’s economy with signs of recovery.

Markets: at time of publishing, US Tech Nasdaq is down more than 1%, China Tech stocks jump with Alibaba (+10%) - US interest rates down, US dollar down, gold unchanged while cryptos lost part of their intraday gains.

My View: Moving markets are challenging, however offer also opportunities.
The timing proved to be quite farovable. The opened and increased short positions, mainly on US Tech stocks, implemented during the last trading sessions are yielding solid returns. At the same time my larger allocation in Chinese stocks, particularly in the tech sector, is also paying off. Today, I have already taken partial profit on equities in both Europe and China’s tech sector, executing this through raised levels in stop orders.

Pure euphoria drives indicators to new all-time highs and in the meanwhile to some flashing red lights. Some of the indicators are:
- technically overbought levels in Europe.
- According to latest report from Bank of America, cash levels of global fund managers are at 15-year lows, down to 3.5% which usually indicates a good sell signal.
- Leveraged ETFs have USD 104 billion assets under management, the highest level ever.
- Insider transactions show higher number of selling deals, means the manager are reducing their stock exposure.
- Bloomberg stock sentiment index shows ‘manic level’
- US private households, 3 out of 5 expect higher stock prices within the next 12 months, while only 20% expect higher income in the next 12 months, highest level since the survey was initiated back in 1987
- volatility on equity and bond side are on low levels despite high number of uncertainties
- Credit spreads reached a very low level: in the US, the premium for corporate bonds payed over US Treasuries are around the lowest level since 1998.
- Exceptional single stock moves: e.g. Meta stock had 20-day winning streak

Markets: seem to be losing some steam with momentum fading.

My View: Market patterns definitely demonstrate pure euphoria with bad news and uncertainties largely ignored.
From an economic standpoint, inflation remains elevated, suggesting that interest rate cuts will come at a slower pace than previously anticipated. Consumer spending is weakening, as seen in January’s retail sales figures, and leading indicators show no signs of a rapid recovery.
On the geopolitical front, a swift resolution to the war in Ukraine seems unlikely, and peace talks may take longer than the market currently expects. Additionally, the threat of further tariffs looms, which could weigh on economies. As long as these uncertainties persist, corporations are likely to hold off on major investments.

How long market euphoria will last is always difficult to predict. It largely depends on the liquidity available and how much capital can still be funneled into the market. As long as excess money continues to flow in, the rally may persist—but once liquidity dries up, sentiment can shift quickly.
While I do not foresee a major market crash, as there are no signs of a deep recession yet, a pullback could happen at any time.

To manage my portfolio and lock in some of the recent gains, I have set stop levels on some positions to secure profits if the market turns negative and increased my short positions, which reduces my overall net equity and risk exposure.

Hardly a day passes without news of yet another all-time high in stock indices across Europe and the US. In Europe, Germany’s benchmark DAX Index, Euro Stoxx 50 as well as the pan-European Stoxx 600, have notched record after record this year.
The rally is driven by optimism that Germany’s election will yield a market friendly outcome, enabling the new government to implement much-needed economic reforms. Additionally by hopes that the war between Russia and Ukraine could soon come to an end following talks on the agenda, initiated by US president Donald Trump.

Markets: Stock markets are rising across the globe with US and European indices hitting new all-time highs.

My View: This sharp rise in stock prices comes rather as a surprise. Typically, with so many economic and political uncertainties, markets do not exhibit such euphoria.

In the US, egg prices reached an all-time high, up 15.2% month over month in January, the highest jump in nearly a decade. The prices almost doubled in one year, particularly affected by a spike in bird flu infections, which has led to egg shortages. Prices continue to soar, in case shoppers can even find them in grocery stores. Retailers started to limit egg purchases per customer.

Markets: -

My View: According to the data, food prices are not the primary driver of the current persistently high inflation anymore. However, eggs are a widely consumed product, and their rising prices are noticeable to consumers. In addition, media coverage has amplified public awareness, reinforcing the perception of high inflation. As a result, this psychological effect can negatively influence overall consumer sentiment, potentially impacting spending behavior and economic confidence.

In the US, the Consumer Price Index (CPI) increased by 0.5% in January, leading to an annual raise of 3.0%, up from 2.9% in December. Core inflation also rose by 3.3% on an annual basis while a data point of 3.1% was expected.
This marks the fourth consecutive month of rising inflation. Investors have now reduced the number of rate cuts from to 2 to 1 this year and pushed their expectations from September to December while US President Trump is calling for lowering the interest rates.

Markets: Overall stock markets took a hit right after the data release and are now on the way to recover some of the losses. Same for cryptos while interest rates jumped with the 10-year US Treasury yield above 4.6%. On the back of higher interest rates the US dollar saw some gains, giving some of it back already.

My View: This inflation snapshot is the last before Trump’s tariffs hit. Therefore inflation could remain elevated or even reaccelerate which could prompt an even more cautious stance by the Fed going forward. Looser monetary policy will not be the supporting factor for stock markets in the US for the timing being.
With a continuing higher level of uncertainty, volatility and fast moving asset fluctuations as seen the recent weeks, will not disappear that quickly.
Fluctuations mostly offer selective opportunities. I am happy to share these investment opportunities identified soon with all the subscribers of the Premium Newsletter. The feature is going to be activated soon.

The key focus and potential key market driver over the next two days will be US monetary policy, particularly interest rates. Federal Reserve Chairman Jerome Powell is set to testify before Congress tonight and tomorrow, addressing economic conditions amid near-full employment and expectations of easing inflation. His comments will be closely watched for insights on uncertainties surrounding tariffs, immigration, and the broader impact of trade and other policies under the Trump administration, which continue to evolve.
We will get new insights into inflation tomorrow afternoon, with the release of January’s data. Analysts anticipate that price levels will remain stable or ease slightly.

Markets: US interest rates have begun to rise slightly since yesterday. The 10-year Treasury yield has climbed back above 4.5% after briefly approaching 4.4% just a few days ago. In comparison, yields stood at 4.8% back in January.

My View: Jerome Powell is likely to reaffirm the Fed’s rather cautious and go-slow approach, which could keep yields from making significant moves. However, with markets still pricing in some rate cuts this year, there may be further room for yields to decline, unless the inflation data tomorrow shows a different pattern.

Meanwhile, market sentiment remains on edge as indices approach technically overbought levels combined with a very bullish stance, adding to the potential for volatility.

On Sunday evening US president Donald Trump announced additional 25% tariffs on all steel and aluminium imports into the US.

Markets: Strong gains in China, solid gains in Europe and US futures in plus after selloff on Friday. Only some bigger price moves in the metal sector. Gold with new all-time high above USD 2’900.

My View: While markets reacted heavily on the first tariffs announcement back in January, now they seem to ignore latest news regarding tariffs and the potential risk of a trade war. The question remains the same, what is next?

Almost no day without shifts in short-term sentiment between fear and greed. In such situations, it is crucial to maintain a steady stance and only make significant strategic adjustments if the market and overall risk sentiment undergo a fundamental shift. During such market swings, short-term opportunities may also arise. For this, markets have to be closely monitored.

The coming days, in the event of an announcement or development perceived as unfavorable by investors, overbought markets could face a correction as sentiment shifts and speculative positions would get unwinded.

The topic inflation has once again become a key market driver, fueled by the latest policy plan on tariffs, which has caught the attention of US consumers.
On Friday, the latest consumer sentiment survey revealed that one-year inflation expectations surged to 4.3%, up from 3.3% last month.⁠ This marks the highest inflation expectation reading since November 2023 and the second consecutive month of "unusually large" increases.
Notably, this is just the fifth time in 14 years that the survey has recorded such a significant one-month rise - defined as increase of at least one percentage point in year-ahead inflation expectations.⁠

Markets: Immediate reaction with profit taking and some sharp drops in stock prices and risky assets after the data release. Interest rates saw an increase together with the USD. Gold, again the winner.

My View: Markets are reacting nervously to any data that deviates from expectations, likely due to the high volume of speculative bets influencing market sentiment in the short-term. The markets might remain vulnerable the coming days and weeks, so far always with a fast comeback.

European equities are experiencing a strong upward move today, with the German stock index DAX reaching a new record high. The rally comes after the latest tariff shock on Monday and has been further supported by solid quarterly earnings reports.

Markets: DAX up more than 1% on new record high. European stock indices follow this up-move. Cryptos trading more sideways.

My View: Since the beginning of the year European equities see strong momentum, driven by unexpected inflows. The rally is supported by anticipated lower interest rates, despite persistently weak economic data and inflation remaining on elevated level. It appears that investors are beginning to reallocate a portion of their substantial US investments, potentially diversifying into other markets amid shifting economic and policy dynamics. Therefore, the uptrend could have more way to go in the short-term. For once, cryptos are not joining the euphoria, trading sideways amid the broader risk-on sentiment.
The market continues to ignore negative news and the potential risks posed by political shifts and newly announced tariffs. Given the current optimism, any unexpected event could serve as a catalyst for profit-taking.

Bank of England (BoE) restarts the monetary easing, reducing the key rate by 25bps as expected and signaled further rate cuts to come this year as it downgraded the UK’s growth outlook for 2025. The key interest rate is now at 4.5%.

Markets: London’s stock index FTSE 100 index jumped more than 1% while interest rates decreased and British pound lost some ground.

My View: Lower interest rates are working in my favor with my tactical position in long-term Gilts via an ETF, purchased on January 14th when inflation fears were at their peak. The position has gained over 15% since then. With the potential for rates to decline further, I am maintaining both this position and my tactical allocation in GBP, which was implemented at the same time and is showing a modest gain. Meanwhile, most of my UK single-stock investments are also experiencing a strong upward move today. In the event of a potential trade war between the US and Europe, the UK could emerge as a beneficiary.

Today, China implemented tariffs an US products, mostly on commodities. In addition, the country started an antitrust probe into Google in response to Donald Trump’s tariffs.

Markets: Stock markets ignored the latest news and could stabilize. Chinese stocks soared also during US trading hours. Cryptos saw negative prices while commodities climbed with gold to new record highs. USD declines.

My View: I expect that markets remain news driven creating sudden moves in either direction on unexpected policy shifts.
With uncertainties, it is not the time to be fully invested until markets find a clear direction. Any big shift may offer opportunities to buy or take some profit.

First with Mexico, later tonight with Canada. Tariffs are put on hold for 30 days after the countries were able to find a short-term deal.

Markets: Stock markets were able to pare some of their big losses. Cryptos back in the green. The US dollar lost some ground after the currency had some gains intraday.

My View: As markets showed a way of stabilization on lower levels during the sharp sell-off, I did close the second half of the short-bet on semiconductors, realizing gains of 24% on average. The tactical position was implemented also in two steps during January with a leveraged ETF (s. Market Insights).
The question remains, what’s next? Markets remain news driven

US President Donald Trump imposed a 25% tariff on Canada and Mexico and 10% tariff on imported goods from China with immediate effect.
Canada hits back putting a 25% tariff on imported goods from the US. Mexico announced to follow. China so far, will challenge Trump’s tariff at the World Trade Organization (WTO).

Markets: cryptos with major losses. Equity futures in US and China point to a decline.

My View: After last Monday with the DeepSeek event, another bumpy start on financial markets is expected. Hard to predict yet if the market is going to stabilize quickly. It depends on the conflict is shaking up and if investors see the potential that this is going to escalate.
The next event this year which will challenge the portfolio. As I highlighted in my recent comments, a bumpy way can be expected and a higher market volatility. Therefore, I did keep my position on long volatility (ETF), which should offer again some stabilization to my portfolio.
Depending on the market reaction, I will take action on short notice tomorrow early morning.

The European Central Bank (ECB) lowered interest rates as expected by 25bps, the fifth consecutive time since it started to lower rates. This happens one day after the Fed decided to leave US rates unchanged.
The ECB tries to support the sluggish economy with lower rates. There was unexpected stagnation in the fourth quarter in 2024, as reported this morning.

Markets: no major impact - waiting for the press conference to see further guidance.

My View: The ECB faces a persistent dilemma, whether to lower rates to support the economy while inflation remains elevated and above the 2% target.
Investors sentiment toward European markets has been subdued for an extended period already. Now, only modest inflows are able to lift markets. Should economic indicators continue to show weakness, further upside potential looks rather limited.

Neither corporate earnings nor the latest Fed decision have provided a clear direction for the market.
Yesterday, the Fed left interest rates unchanged as widely expected. With the press release, Fed Chairman Jerome Powell sent the message that the US central bank intends to keep the interest rates unchanged for the foreseeable future.
Meanwhile, reactions to earnings releases from big tech companies are mixed. While Meta and Tesla are trading higher, Microsoft takes a dip in pre-market trading session.

Markets: China’s market closed for the week (Chinese New Year). The German index DAX is on new record high,
Interest rates decline,

My View: Fed Chairman Jerome Powell’s recent comments did not significantly impact the equity markets. However, interest rates started to decline as investors had concerns on higher inflation and higher interest rates. The market is now pricing in two rate cuts in 2025 in the US, a notable shift from expectations some days earlier in January, when there were discussions about a potential rate hike among investors.

The decline in interest rates is a positive development for my tactical position in long-term Treasuries, as lower rates enhance their value.

A turbulent start into the week, marked by Nvidia's largest single-day market cap drop of nearly USD 600 billion following the DeepSeek story. This sets the stage for a pivotal week ahead, with the Fed's decision on Wednesday and a wave of key earnings reports, including those from major tech companies.

Markets: Tech sector tries to stabilize with Nasdaq Futures marginally in plus.

My View: Buy the dip? Lately it has always been a successful strategy. You can always find arguments why this time is different. However, it is not about what a single analyst or even I believe, it is about gauging the sentiment and conclusions of the broader market. Following the rebound move this morning, which looks so far rather shy, the market participants did not make their decision yet. This can change any hour though. Looking at cryptos, some speculation is already back, as I see a partial offset of yesterday’s losses.
I am following the current situation closely. Such a scenario I do not challenge, yet. Instead, I prefer to wait for clarity or an indicator showing me a clear buy signal before making a significant move back into the tech sector, especially since I am investing my own money and running a portfolio with good risk appetite already.
This week has definitely the potential for further volatility as Fed decision and earnings releases are on the agenda. And we keep president Trump in mind who also tries to take bigger influence on the interest rate decision.

Amid today’s market turmoil, momentum strategists appear to be unwinding their positions which triggers a substantial reversal in performance trends. Recent laggards (like Nestlé) are emerging as today’s winners, while former high-flyers like Nvidia and similar stocks are now among the biggest losers.

Momentum investing is a strategy of buying stocks or other securities that have had high returns over the past days and weeks, and selling those that have had poor returns over the same period.

Markets: Tech sector with semiconductors heavily down as well as the utilities sector. Cryptos tried to rebound without success yet.

My View: So far it is not a market correction as there is no broad sell-off. The focus remains on the unwinding of momentum trades, and it will be interesting to see how long this trend persists.
This unexpected sharp correction on the tech side plays into my cards. I have taken advantage of the significant drop by closing my short positions in Constellation Energy, Vistra, Nvidia and half of my semiconductor short position (ETF).
While I am not personally invested in cryptocurrencies, I closely monitor their movements as a gauge for overall market sentiment.

A Chinese startup, Deepseek, is shaking up the AI industry and is challenging the US dominance. Deepseek has launched a new AI model which industry experts claim to be as good or even better than those developed from tech giants like Google or OpenAI. While Silicon Valley firms have invested billions in developing their models, Deepseek achieved this milestone with a remarkably modest investment of just USD 5.6 million.

Markets: Nasdaq Futures down more than 3% (time of writing), cryptos sell-off, China’s stock markets stable with solid gains. Defensive stocks in the green, interest rates down, Swiss Franc stronger with safe haven demand arising, volatility jumps

My View: Is there an AI disrupter around the horizon? The recent news has definitely the potential to challenge the entire valuation of the AI industry and could burst the AI bubble.
For nearly a year now, I have maintained the view that the AI sector appears to be an overly crowded space. While speculators are now retreating from the markets in fear, I remain calm, with my well-diversified and stable portfolio. My short positions on some crowded stocks in that sector and the long volatility trade are kicking in. My latest addition to this list of short positions, as of last Friday, include Vistra and Constellation Energy, among the top losers in pre-market today.