05.03.25 - Information overload

Market patterns are shifting almost on an hourly basis:
The battle on tariffs and trade war kicked-in. Tariffs are being implemented, put on hold, selectively applied to certain sectors, or merely announced as potential measures.
Adding to the uncertainty, geopolitical instability remains a major global concern, with the unpredictable situation in Ukraine.
Meanwhile, Germany is pushing for fiscal reforms to enable increased defense and infrastructure spending.

Markets: strong rebound on a global basis catching up some of the recent losses, interest rates in Europe and US are rising while the Euro saw a strong increase.

My view: To benefit from this short-term and fast moving market swings based on the news flow is almost impossible. As the German saying goes “hin und her macht Taschen leer”, frequent trading and fast changing the tactical investment view can quickly deplete your funds. The risk of losses is high since market reactions are often swift, reversing direction before a trade can be executed with a positive payoff.

I also do not expect Trump to easily strike deals or lift tariffs in the coming days or weeks. His strategy seems more focused on demonstrating power and using tariffs as a threat to future trade partners. Europe is likely to be the next target.

What does such an environment mean for corporations? Strategic planning becomes extremely difficult, if not impossible. In times of uncertainty, management tends to put investments and projects on hold rather than commit capital. If this chaotic situation persists, the risk of a recession will undoubtedly increase.

The key takeaway: do not chase the news. Maintain a steady investment stance and act selectively. As I have mentioned several times before already, I expect volatility to remain elevated. Therefore, my portfolio is structured accordingly to manage downside risks, especially as valuations appear stretched, and investors put a lot of optimisms in the tariff topic.
While German reforms could provide a boost to the economy, much of the optimism already seems priced in following the recent surge in stock prices.

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