Yesterday evening, the first Federal Reserve meeting under new Fed Chair Kevin Warsh took place.

As expected, the Fed left its benchmark rate unchanged at 4.25%.

Warsh, recently selected by President Donald Trump to replace Jerome Powell, struck a more hawkish tone than markets had anticipated, emphasizing the importance of maintaining price stability.

While the central bank predictably kept rates unchanged, policymakers appeared divided on the outlook. Their latest projections showed that nine officials expect at least one rate hike this year, with six of them anticipating two or more increases. Another nine members expect no change or even a rate cut.

Markets:

• Equities: US futures are higher after yesterday's decline.

• Bonds: Short-term yields moved higher. The US 2-year Treasury yield climbed from 4.07% to 4.22% before easing back to 4.18%, while long-term yields remained relatively stable, with the US 10-year Treasury yield at 4.45% and the Japanese 10-year yield at 2.62%.

• Commodities: Oil prices continue to decline - WTI: USD 74/barrel, Brent: USD 78; Precious metals initially weakened but recovered today, with gold trading at USD 4290 - silver USD 68

• Currencies: USD strengthened against major currencies

• Cryptos: falling with Bitcoin at USD 66k

• Volatility: After a modest reaction to the Fed decision, the VIX fell back to around 17

My View: I have consistently questioned market expectations and repeatedly warned that investors could be moving in the wrong direction. For months, I have highlighted the possibility that rate hikes, rather than rate cuts, could become the dominant theme in 2026.

Markets are not always rational. The crowd often follows momentum, and periods of excessive optimism tend to push investors in the same direction.

Looking back and see what markets did, I obviously turned cautious too early.

Falling oil prices over recent days are providing some relief from inflationary pressures. However, the situation in the Middle East remains unresolved. Even if the so called deal with Iran is signed and the Strait of Hormuz reopens this Friday, it will take days, if not weeks, before supply chains and oil deliveries normalize.

Moreover, during the 60-day negotiation period, anything can happen. Markets could once again be confronted with geopolitical headlines capable of rapidly changing sentiment.

As I have stated previously, much of the economic damage has already been done. Yet markets continue to ignore this reality and are focusing on, in their view, tremendous potential in AI.

A repricing of risk assets is still necessary, in my view.

The main argument against such a repricing is that a considerable number of institutional investors are still sitting on the sidelines, waiting for precisely such an event. This could limit the downside, as fresh capital may eventually step in.

So far, however, the market rally continues to be driven largely by retail investors. That is rarely a healthy sign and should not be ignored.

Last night, Japan's central bank raised its policy rate to 1.0%, in line with economists' expectations. It marks the highest level since 1995 and represents another step in the policy normalization process that began in 2024.

Meanwhile, the Reserve Bank of Australia (RBA) left its benchmark rate unchanged at 4.35%.

Markets:

• Equities: broadly green

• Bonds: yields lower - US 10y 4.45%, Japan 10y 2.65%

• Commodities: Oil prices continue to decline - WTI: USD 78/barrel, Brent: USD 81; Precious metals stable with gold USD 4340 - silver USD 70

• Currencies: no major moves

• Cryptos: higher with Bitcoin reaching USD 67k

• Volatility: falls to 16

My View: Following last week's ECB rate hike, we are now seeing another major central bank moving further along the tightening path. Besides addressing inflation concerns, the Bank of Japan is also seeking to provide support for the yen, which has remained under pressure.

The 25-basis-point hike itself is not the real game changer. What matters much more is the future path of interest rates. In the short term, lower oil prices are providing some relief and easing inflation concerns. It remains to be seen whether this trend will continue.

I also remain skeptical about the prospects for a lasting agreement with Iran. In my view, President Trump has mainly gained another 60 days, but the underlying issues remain unresolved and a comprehensive deal is still far from certain.

The key event this week will be tomorrow's Federal Reserve decision and the first press conference by the new Fed Chair, Kevin Warsh.

In line with market expectations, I do not expect a rate hike. However, the tone set by the new Fed Chair will be closely watched. Markets will be looking for clues on the future path of monetary policy and whether the Fed remains primarily focused on fighting inflation or becomes increasingly concerned about slowing economic growth.

Historically, markets have often tested incoming Fed Chairs, while midterm election years have tended to be more challenging for equities. At the same time, investors have become accustomed to policy support and increasingly aggressive attempts by politicians and policymakers to calm markets and sustain confidence.

This creates a dangerous environment. The stronger and faster markets are pushed higher, the greater the risk that any reversal could be equally rapid. History shows that highly concentrated and policy-supported rallies can unwind much faster than they were built, with declines extending far beyond what most investors initially anticipate.

As announced by US President Donald Trump since mid-March, the United States and Iran appear finally to be moving toward a peace agreement aimed at ending the conflict and restoring stability to the region.

According to multiple reports, Washington and Tehran have agreed on a memorandum with a framework that includes:

• A permanent ceasefire.

• The reopening of the Strait of Hormuz.

• A 60-day negotiation period to work out a comprehensive agreement.

• A commitment by the US not to impose additional sanctions during the talks.

• Discussions on sanctions relief and the release of frozen Iranian assets.

The deal is expected to be formally signed later this week.

Earlier in the week, President Trump stated that an agreement had already been approved, while Tehran denied that a final deal had been reached. Since then, negotiators have narrowed the remaining differences, although many details are still missing.

Markets: cheer like the final deal got already signed

• Equities: Higher, as investors cheer what they perceive to be a lasting solution.

• Bonds: Government bond yields moved lower.

• Commodities: Oil prices declined sharply as fears of supply disruptions eased. Precious metals traded higher.

• Currencies: USD weaker, CHF stronger

My View: It appears that my assessment over recent months was correct: President Trump is doing everything possible to support financial markets and avoid a negative backdrop heading into the midterm elections. Markets are clearly one of his top priorities, and rising asset prices ultimately benefit him personally as well.

He needs a positive outcome from the Iran conflict without losing face. That explains the strong push to reach an agreement and remove some of the pressure. However, many details are still missing, and it is far too early to draw final conclusions.

Investors should therefore not confuse a diplomatic breakthrough with a final solution. Major issues remain unresolved, including:

• Iran's uranium enrichment activities.

• The future of its highly enriched uranium stockpiles.

• Ballistic missile programs.

• Iran's regional proxies.

• Long-term sanctions relief.

In other words, this is not yet a final nuclear agreement. What has been achieved so far is essentially a ceasefire and a roadmap for further negotiations. Iran has not yet agreed to all terms.

The next 60 days will determine whether both sides can turn this framework into a lasting accord.

From a market perspective, the immediate consequence is clear: the risk of a prolonged disruption in the Strait of Hormuz has somewhat declined. However, the waterway will only fully reopen once the memorandum is formally signed. Until then, markets are likely to remain vulnerable to every new headline.

Yet investors already seem to be celebrating as if a comprehensive solution has been reached. Given the many unresolved issues, that may prove premature.

Do not forget that the economic damage has already been done. Inflation remains elevated, central banks are turning more hawkish, and more than ten central banks are set to announce interest-rate decisions this week.

Looking at financial markets, everything appears perfect. In reality, we are far from a perfect environment. It is simply another round in which asset prices are being pushed even further away from economic fundamentals.

Today marks a historic day for financial markets as the largest IPO ever is set to take place.

SpaceX is expected to make its stock market debut at an offering price of USD 135 per share, raising USD 75 billion and valuing the company at approximately USD 1.77 trillion. The deal is almost twice the size of the last record-breaking IPO, Saudi Aramco, and would immediately make SpaceX the seventh most valuable company in the United States. It also looks set to propel Elon Musk to become the world's first trillionaire.

Demand appears extraordinary. According to reports, the offering is more than four times oversubscribed, while retail investors alone are said to have submitted orders exceeding USD 100 billion.

Markets: Markets remain on a bumpy road. However, once again, investor sentiment has been supported by another deal announcement from President Trump, encouraging investors to focus on optimism rather than underlying risks. The sheer scale of investor enthusiasm underlines the enormous appetite for one of the most anticipated stock market debuts in history.

My View: SpaceX to Mars!
This IPO has been hyped for weeks across social media channels among traders, or, let's face it, gamblers.

In my view, a company that burns billions of cash has never deserved such a sky-high valuation. Investors are paying almost entirely for future hopes and potential cash flows that may or may not materialize. Nobody seems to care. The atmosphere increasingly resembles the dot-com bubble. Yet, as always, many argue that "this time is different."

The biggest winners are the current shareholders and especially Elon Musk, who are now able to sell shares to private and retail investors at moon, or rather Mars, prices.

Oversubscription itself fuels the hype. Investors who hope to receive USD 10’000 worth of shares may have to place orders exceeding USD 40’000. The illusion of scarcity creates even more excitement and pushes demand to extreme levels.

I would not be surprised to see the shares surge initially. But I would be equally unsurprised if a sharp sell-off follows soon afterwards or days after. From the past, I have the Facebook IPO well in mind.

Bookrunners have every incentive to support the stock in the early stages. They know that two more mega IPOs, Anthropic and OpenAI, are waiting in the pipeline. A successful SpaceX listing would help pave the way for those offerings and generate another wave of lucrative fees. A disappointing performance, however, could jeopardize or delay future listings if market conditions deteriorate.

To sum up, this is simply another gambling story. Keep your hands off.

Today, as widely expected, the European Central Bank (ECB) raised interest rates by 25 basis points to 2.25%. It marks the first rate hike in three years, as policymakers step up efforts to contain renewed inflation pressures, particularly those stemming from higher energy prices linked to the ongoing Iran conflict.

According to ECB President Christine Lagarde, there was broad consensus within the Governing Council to take this step.

During the press conference, Lagarde acknowledged that inflation is likely to remain above the central bank's 2% target even in 2027, underlining the persistence of price pressures across the euro area.

Markets:

• Equities: European equities fell after the announcement

• Bonds: Government bond yields across the euro area remained elevated and continued to trend higher.

• Commodities: Precious metals lower with gold at USD 4’075, silver USD 63

• Currencies: The euro weakened slightly against major currencies.

My View: The ECB's decision comes at a time when the European economy appears increasingly fragile. Growth remains weak, while higher borrowing costs are likely to add further pressure on businesses and consumers.

I therefore remain cautious on European equities. Germany, traditionally regarded as the economic engine of Europe, continues to struggle with numerous structural challenges, including excessive regulation, weak competitiveness, and sluggish growth. At the same time, the German economy remains highly dependent on energy prices.

Raising interest rates in an environment of already weak economic growth increases the risk that Europe could face a prolonged period of economic stagnation while inflation remains elevated, a combination that would represent a difficult backdrop for investors.

As the Iran conflict is likely to continue, Europe is going to face persistently higher energy prices, adding further upside risks to inflation.

In my view, investors continue to underestimate inflation risks and remain far too relaxed on the subject. Markets are still pricing in a relatively benign inflation outlook, despite mounting evidence that price pressures may prove much more persistent than many expect.

US consumer prices continued to accelerate in May, driven largely by surging energy costs. Headline inflation climbed to 4.2% year-on-year, up from 3.8% previously, marking the hottest annual reading since April 2023.

The May Inflation Data:

• CPI YoY: +4.2% (est. +4.2%) – up from 3.8%

• CPI MoM: +0.5% (est. +0.5%)

• Core CPI YoY: +2.9% (est. +2.9%) – up from 2.8%

• Core CPI MoM: +0.2% (est. +0.3%)

(Core CPI excludes food and energy prices)

Markets: investors cheer rising inflation - Markets welcomed the report, with investors focusing on the softer-than-expected monthly core inflation figure. The fear had been that inflation would come in even hotter.

• Equities: US Futures turned positive following the release

• Bonds: Government bond yields moved lower after the data - US 10-year Treasury yield 4.53%, Japanese 10-year yield at 2.68%

• Commodities: Oil prices continued to rise amid renewed tensions with Iran - WTI USD 89, Brent USD 93. Precious metals down with gold at USD 4’160, silver USD 64

• Cryptos: traded lower on the day but recovered after the inflation report - Bitcoin USD 62k.

• Currencies: USD weakened after data - remains in narrow trading range

• Volatility: VIX elevated above 20 but tending lower after data

My View: Markets continue to read the signals the wrong way. Investors seem to celebrate the lower-than-expected monthly core inflation figure. However, the broader picture tells a different story: inflation is accelerating again.

In my view, markets are once again drawing the wrong conclusions from the data. It is just another example of investors ignoring where economic trends are heading.

At the same time, the conflict with Iran remains far from resolved. Only yesterday, President Trump suggested that a deal with Iran was close. Today, however, a deal suddenly appears almost impossible. Following the downing of a US helicopter, both Washington and Tehran retaliated last night, increasing the risk of further escalation.

Meanwhile, price swings in crowded trades are becoming increasingly violent. Yesterday alone, the Nasdaq surged 1.4%, then plunged more than 5.4% within just three hours, before rebounding 3.3% into the close.

As highlighted in my Weekend Mail after last Friday's sharp moves, these are warning signs that should not be ignored. The more frequently these violent swings occur, the greater the risk that future drawdowns become faster and more severe.

So far, this does not resemble a wave of panic. Instead, it looks more like a rotation of capital between sectors. But history shows that periods of extreme volatility and increasingly unstable price action in different asset classes often emerge before investor sentiment changes more broadly.

Investors should pay attention.

Markets quickly stabilized after last Friday's shock, when investors got caught by a surprisingly strong US labor market report.

Since then, markets have received exactly the messages they wanted: easing tensions in the Middle East compared with yesterday, lower oil prices, and a fresh rebound in semiconductor stocks.

A sign that sentiment had become fragile was the renewed effort by US President Donald Trump to calm investors through a series of posts on Truth Social and interviews, highlighting new investments and once again expressing confidence that an agreement with Iran could be reached soon. His comments also helped put downward pressure on oil prices.

The VIX Index, which measures implied volatility in the S&P 500, jumped from 16 to above 21 on Friday before quickly retreating below 19, allowing investors to regain confidence.

Markets:

• Equities: Global equity markets higher, led once again by technology and semiconductor stocks

• Bonds: Yields little changed as investors await tomorrow's US inflation data - US 10-year Treasury yield 4.54%, Japanese 10-year yield at 2.67%

• Commodities: Oil prices lower on hopes of easing Middle East tensions - WTI USD 88, Brent USD 91. Precious metals down with gold at USD 4’310, silver USD 67

• Cryptos: sideways after sell-off - Bitcoin USD 62k.

• Currencies: USD lower today - remains in narrow trading range

• Volatility: VIX back below 19 after briefly surging above 21 on Friday

My View: In my weekend newsletter, I highlighted the VIX as the key indicator to monitor this week. The rapid stabilization in volatility made it relatively obvious that investors would once again return to buying the dip.

Supported, of course, by a certain person posting at exactly the right moments. How many times have we heard that an Iran deal is only hours or days away by Donald Trump? Who still believes these statements? I can no longer hold back: this is market manipulation at its finest.

As long as the AI trade keeps working, investors remain willing to step back into risk. The question is: for how much longer?
Beneath the surface, conditions are becoming increasingly unstable. Friday's sell-off was a clear warning sign. Anyone who failed to recognize how quickly sentiment can change is taking the risk of substantial losses that could materialize starting within days or weeks.

No one can predict the exact timing of a major correction or the beginning of a bear market. However, more and more indicators are flashing warning signals. When even major US financial institution, Bank of America, begins advising clients to take profits because their own indicators are showing elevated risks, the situation deserves attention.

I started highlighting these warning signs at a much earlier stage. Since then, conditions have only become more extreme. Things are becoming increasingly irrational.

Tomorrow's US inflation report adds another important piece to an already fragile market environment.

The cryptocurrency market has entered a significant correction phase.

Since reaching an interim high of around USD 82k in mid-May, Bitcoin and most major cryptocurrencies have experienced substantial selling pressure. The decline has accelerated over recent days, with Bitcoin falling towards USD 62k today and approaching a technically important support level around USD 60k.

The latest wave of selling intensified after it became public that Strategy, the original Bitcoin treasury company founded by Michael Saylor, sold 32 Bitcoin worth approximately USD 2.5 million.

While the transaction itself is relatively small compared to the company's total Bitcoin holdings, investors focused on the message behind the sale. It was the first Bitcoin sale by the company since 2022. Previously, Strategy CEO Phong Le had indicated that selling Bitcoin would only be considered as a "last resort" to fund dividend payments. The announcement therefore raised questions about liquidity needs and confidence within one of the most prominent corporate Bitcoin holders.

Strategy's average acquisition cost for its Bitcoin holdings stands at approximately USD 75’700 per coin. With Bitcoin currently trading near USD 63k, the company's entire Bitcoin treasury is now underwater on an unrealized basis.

Markets: remain calm with Tech stocks lower

• Equities: for once Europe higher while US Futures trading lower and Nasdaq Futures down more than 1%

• Bonds: yields sideways - US 10-year Treasury yield 4.45%, Japanese 10-year yield at 2.67%

• Commodities: Oil prices weakened on renewed hopes for an Iran deal - WTI USD 92, Brent USD 94. Precious metals re-gain with gold at USD 4’500, silver USD 74

• Cryptos: with downside pressure - Bitcoin USD 63k.

• Currencies: USD lower today - remains in narrow trading range

• Volatility: The VIX remains low moving towards17

My View: why follow Cryptocurrencies even if I am not invested? I have highlighted this point several times here on ETFMandate.

The importance of cryptocurrencies extends far beyond the crypto market itself. A sharp decline in crypto prices can create a spill-over effect into highly valued technology and AI-related stocks. Many market participants active in cryptocurrencies are also heavily invested in AI and technology companies. In many cases, these investors are using leverage.

As crypto prices fall, investors may face margin calls and are forced to raise cash. Often, this means selling other assets such as technology stocks. What starts as a crypto correction can therefore evolve into a broader de-risking event across financial markets.
If enough investors are forced to unwind leveraged positions simultaneously, a self-reinforcing deleveraging cycle can emerge.

Whether the current decline is already the beginning of such a process remains too early to determine. However, it is a development worth monitoring very closely.

The overlap between the crypto community and the AI investment community is significant. Both groups tend to exhibit a higher tolerance for risk, often run concentrated portfolios, and frequently employ leverage to maximize returns.

As long as prices move higher, this creates powerful momentum. When prices start moving lower, the same mechanism can amplify downside risks.

For now, the message is simple: even investors with no direct exposure to cryptocurrencies should pay attention to what is happening in the crypto market. It may provide an early warning signal for broader risk appetite across financial markets.

The tariff story is back.

The US administration is proposing new import levies of at least 10% on goods from major trading partners, including the European Union, United Kingdom, Canada and Mexico, following an investigation into products allegedly linked to forced labor.

Imports from countries such as China, Switzerland and Japan would face even higher tariffs of 12.5%.

The move represents another major step by President Donald Trump to rebuild the tariff wall that was previously struck down by the US Supreme Court.

Markets: Nobody Cares - almost no market reaction. Only a handful of companies with direct exposure to the affected trade flows experienced modest declines in their share prices today. Beyond that, investors largely ignored the announcement.

My View: What is the current tariff status? Guess your honest answer is that it has become increasingly difficult to keep track — you don’t even know!

Over the past year alone, tariffs have been announced, postponed, challenged in court, overturned, refunded, reintroduced under different legal frameworks, and now proposed once again under a new justification.

But at the moment, it hardly matters. Markets simply do not care!
Investors are chasing AI-related assets with little regard for rising geopolitical risks, trade tensions, inflation pressures, or deteriorating global supply chains.

The tariff topic highlights a much bigger issue. The United States desperately needs additional sources of revenue as government debt continues to grow rapidly.

Tariffs are one way to generate additional income. However, even under optimistic assumptions, tariff revenues are nowhere near sufficient to cover the government's financing needs, let alone its growing interest expenses.

This is one reason why the Trump administration is putting significant emphasis on lower Treasury yields.

Every basis point increase in refinancing costs makes servicing the enormous stock of US government debt substantially more expensive. As existing debt matures and needs to be refinanced, higher yields quickly translate into significantly higher interest payments.

If bond yields were to remain elevated for a prolonged period, debt servicing costs could eventually enter a self-reinforcing debt spiral.

To be clear, this is not my base case scenario, nor do I currently expect a US default. However, it illustrates how critical the fiscal situation has become.

For now, markets remain focused on AI. But beneath the surface, tariff uncertainty, rising debt levels, fiscal challenges and energy risks continue to build.

History has shown that markets can ignore risks for surprisingly long periods of time. They cannot ignore them forever.

The AI investment boom is no longer limited to public markets. A growing number of the world's most valuable private technology companies are now preparing for stock market listings, potentially creating one of the largest IPO waves in financial history.

This week, AI developer Anthropic officially took its first step toward becoming a publicly traded company. The company announced that it has confidentially filed a draft registration statement (Form S-1) with the U.S. Securities and Exchange Commission (SEC). Anthropic is currently valued at approximately USD 965 billion, making it one of the most valuable private companies in the world. If market conditions remain supportive, the company could potentially go public as early as this autumn.

Anthropic is not alone.

SpaceX is reportedly targeting an IPO on June 12 and is expected to seek a valuation of at least USD 1.8 trillion. While earlier reports suggested a valuation exceeding USD 2 trillion, the company appears to have slightly lowered expectations following discussions with investors and advisors.

Meanwhile, OpenAI is also widely expected to pursue a public listing later this year, potentially adding another mega-sized IPO to an already crowded pipeline.

The timing is remarkable.

At the same time that private companies are seeking fresh capital, established technology giants continue to raise unprecedented amounts of money to finance the AI arms race. Alphabet shares traded lower after the company announced plans to raise USD 80 billion to fund its expanding AI investments. The transaction ranks among the largest capital raises ever undertaken by a public company.

Markets:

• Equities: Nothing currently appears able to derail the AI rally. Technology shares higher across global markets

My View: Taken together, these developments highlight the enormous capital requirements of the AI revolution. Building AI infrastructure requires massive investments in data centers, semiconductors, energy supply, networking equipment, software development, and highly specialized talent. The industry is consuming capital at a pace rarely seen before.

Markets currently interpret this spending boom as proof of virtually unlimited future growth opportunities. Investors continue to allocate capital aggressively to AI-related companies, pushing valuations across the sector to increasingly extreme levels.

However, history suggests that periods characterized by record IPO activity, aggressive capital raising, and widespread investor enthusiasm often occur during the later stages of investment booms. Companies naturally seek to raise capital when investor appetite is strongest and valuations are most attractive.

The current IPO wave may therefore be another sign that the AI boom is entering a much more mature, and potentially more dangerous phase.

The situation increasingly resembles the final stages of previous technology bubbles. In 1999 and 2000, investors were willing to fund virtually any company associated with the internet revolution. Today, a similar pattern can be observed across the AI ecosystem. Capital continues to flow into companies with limited regard for valuation, profitability, execution risk, or future competition. The narrative has increasingly become more important than the fundamentals.

What concerns me most is the growing disconnect between valuations and economic reality.

Companies are being valued at hundreds of billions, and in some cases nearly trillions, of dollars despite generating little or no profits relative to their market capitalizations. At the same time, the costs associated with the AI buildout continue to rise. Data centers, semiconductors, energy infrastructure, cooling systems, networking equipment, and financing costs are all becoming increasingly expensive.

The key question remains unanswered: who will ultimately earn an attractive return on these enormous investments?

History shows that transformative technologies often create tremendous benefits for society while delivering disappointing returns for investors. Railroads, airlines, telecommunications, and even the internet itself experienced periods of massive overinvestment. Investors became convinced that demand would justify virtually unlimited spending. Eventually, reality caught up with expectations.

Another aspect investors frequently overlook is the impact that large IPOs can have on broader equity markets.

New listings do not create fresh investment capital. Instead, they absorb liquidity from existing investments. As companies such as Anthropic, SpaceX, or OpenAI eventually become part of major equity indices, passive funds and institutional investors will be forced to allocate capital accordingly. In practice, this means selling existing index constituents to make room for the new entrants.

The larger the IPO, the larger this redistribution effect becomes. This process could create additional pressure on today's hyperscalers and market leaders, which currently account for a significant portion of major index performance.

Furthermore, IPOs rarely occur when valuations are depressed. They are typically launched when optimism is abundant and companies can maximize proceeds. Existing shareholders understand this dynamic very well. Founders, venture capital firms, private equity investors, and early employees often seek liquidity after years of paper gains. Once lock-up periods expire, another wave of selling pressure frequently follows as insiders monetize their holdings.

For me, the increasing number of mega-sized AI IPOs is not a bullish signal—quite the opposite.

It suggests that insiders increasingly view current market conditions as an attractive opportunity to cash in. History repeatedly shows that when investors become convinced that a theme can only move higher, risks are often significantly greater than the market is willing to acknowledge.

My view remains unchanged. I continue to question whether artificial intelligence will ultimately prove to be the revolutionary economic transformation that markets currently expect. In many cases, what was previously referred to as "digital transformation" has simply been rebranded as "AI transformation."

AI will undoubtedly remain part of our future and will improve efficiency across many industries and business processes. However, that does not automatically justify today's valuations or guarantee attractive investment returns.

At current price levels, markets are increasingly pricing in a near-perfect future. Any disappointment in growth, profitability, adoption rates, financing conditions, regulation, or competitive dynamics could trigger a significant repricing across the sector.

Whether the upcoming IPO wave marks the beginning of another speculative leg higher or ultimately becomes remembered as a sign of peak optimism remains one of the most important questions investors should monitor over the coming months.

To me, the valuations increasingly look speculative.

Yesterday, the Fed’s preferred inflation gauge, the PCE Price Index, was released largely in line with expectations. However, the details were less encouraging.

Core PCE Inflation (excluding food and energy) accelerated to 3.3% YoY, up from 3.2% in March. On a monthly basis, Core PCE rose 0.2%, slightly below expectations of 0.3%.

Headline PCE Inflation came in at 3.8% YoY, matching expectations but increasing from 3.5% the previous month.

Today, several European inflation releases also mostly pointed toward renewed price pressures:

May CPI Inflation (YoY)

• France: +2.4% (est. +2.3%) vs. 2.2% in April

• Italy: +3.2% (est. +3.2%) vs. 2.7% in April

• Spain: +3.2% (est. +3.4%) vs. 3.2% in April

• Germany: +2.6% (est. +2.9%) vs. 2.9% in April

Markets: nothing stops the US Tech rally

• Equities: mostly higher globally

• Bonds: yields continue to decline - US 10-year Treasury yields 4.45%, while Japanese 10-year yields also continued to rise to 2.66%

• Commodities: Oil prices weakened on renewed hopes for an Iran deal - WTI USD 87, Brent USD 91. Precious metals gain with gold at USD 4’500, silver USD 75

• Cryptos: with downside pressure - Bitcoin USD 73k.

• Currencies: USD trading sideways

• Volatility: The VIX fell below 16

My View: Despite the inflation backdrop, markets remain focused on one theme only: AI and technology. Markets continue to ignore what is happening beneath the surface.

If the Iran conflict persists and the Strait of Hormuz remains disrupted, I see oil prices biased to the upside. Global oil inventories are falling rapidly and could soon reach critical levels if supply disruptions continue.

Higher energy prices ultimately feed through the entire economy. Transportation, manufacturing, and consumer goods all become more expensive, creating additional inflationary pressure. This increases the likelihood that interest rates remain higher for longer and could even force further rate hikes by central banks such as the Bank of Japan, the ECB, or potentially others later this year.

Yet investors appear completely unconcerned. Falling bond yields, record-high equity valuations, compressed volatility, and aggressive risk-taking suggest that markets are pricing in a more than perfect scenario.

The current environment increasingly reminds me of the late stages of previous market manias, where investors stop paying attention to risks and focus only on what is moving higher.

The madness can continue for longer than many expect. The only question is: On which day does the music stop playing?

Markets once again face renewed geopolitical escalation after recent optimism around a possible US-Iran deal faded quickly.

Only lately, US officials stated that an agreement with Iran appeared very close, with reports suggesting that only final signatures were missing. However, the conflict reflamed after the US started new attacks against Iran, while Iran responded accordingly.

The latest statement from Iran further increased tensions:

“No peace in Middle East until Israel is ‘destroyed’.”

Markets:

• Equities: Slightly lower after recent strong gains as investors previously priced in a fast de-escalation scenario.

• Bonds: Bond yields moved higher again as oil prices rebounded on renewed supply concerns. US 10-year Treasury yields moved back above 4.5%, while Japanese 10-year yields also continued to rise to 2.7%

• Commodities: Oil prices gained sharply again amid fears around energy supply disruptions - WTI USD 91, Brent USD 96. Precious metals traded lower short-term despite the geopolitical escalation - gold USD 4400, silver USD 73

• Cryptos: lower - Bitcoin fell back towards USD 73k.

• Currencies: USD unchanged

• Volatility: The VIX moved back above 17 as uncertainty increased again.

My View: I maintained the view that I do not believe in a fast end to the conflict. Hearing all the recent statements and observing the geopolitical developments, I decided not to follow the current mainstream positioning of investors.

Personally, I saw many of the recent optimistic US statements more as attempts to stabilize and ‘manipulate’ markets and sentiment rather than reflecting a sustainable solution.

Therefore, I remained positioned in oil, did not add further equity exposure, and in contrary reduced exposure by adding short positions. At the same time, I remained invested in precious metals, where I continue to see attractive mid- to longer-term upside potential.

The current market environment still appears highly headline-driven, while many investors continue to underestimate the longer-term risks for inflation, energy markets, and global economic stability.

The AI-fueled rally continues to push global equity markets to fresh record highs as more companies enter the exclusive USD1 trillion market capitalization club.

South Korean chipmaker SK Hynix surged above the $1 trillion valuation mark for the first time after a massive rally of around 250% since the beginning of the year. The move reflects the ongoing enthusiasm around AI infrastructure and soaring demand for memory chips.

At the same time, US semiconductor company Micron also crossed the $1 trillion threshold after UBS sharply raised its price target, sending the stock almost 20% higher in a single session.

Markets:

• Equities: Semiconductor and AI-related stocks continue to lead global equity markets higher.

• Bonds: Bond yields fell back from recent highs - US 10y yield 4.48% - Japan 10y yield 2.70%.

• Commodities: with Iran hopes commodity prices fall - oil: WTI USD 89 and Brent USD 96 - gold: USD 4405 and silver USD 74

• Currencies: USD broadly stable.

• Cryptos: with downside tilt - Bitcoin USD 75K

• Volatility: Volatility falls to lower levels around 17

My View: The semiconductor sector remains at the center of the current market euphoria. To me, it increasingly feels as if investors view chips as the “new gold” of the AI revolution. The race to scale AI infrastructure continues at full speed, supporting tech-heavy equity indices around the world.

At the same time, market breadth is deteriorating noticeably, as only a smaller group of companies continues to drive the rally higher. Historically, this is usually not a healthy sign for the broader market. More and more capital is flowing into just a handful of names, creating increasingly parabolic price movements.

The narrative currently seems simple: chip shortages, exploding AI demand, and enormous pricing power create the impression that semiconductor companies can only continue moving higher.

However, there is another side to this story.

The higher chip prices rise, the more expensive the entire AI infrastructure buildout becomes. Data centers, AI hardware, energy supply, and financing costs are all increasing simultaneously. Rising capital costs simply add another layer of pressure to future profitability.

I do not believe this development is sustainable across the entire AI industry.

Technology cycles move extremely fast. What appears to be cutting-edge infrastructure today can become obsolete surprisingly quickly. This increases the risk of future write-downs, falling margins, and eventually weaker earnings.

At current valuation levels, markets are increasingly pricing in perfection, or perhaps even over-perfection.

I cannot predict the exact timing of when this cycle will reverse. But history shows that parabolic moves in financial markets rarely end gradually. Once momentum shifts, stock prices often fall at the same speed they previously moved higher, or even faster.

Therefore: fasten your seatbelts.

Disclosure: Short position in Semiconductors, Micron, KOSPI Index

onight after the market close, Nvidia will report its Q1 earnings results. The world’s largest company, now valued at almost USD 6 trillion, is once again expected to deliver another very strong quarter.

Just a few hours earlier, the Federal Reserve will release the FOMC Meeting Minutes from Jerome Powell’s last meeting, where rates were left unchanged. Since Friday, new Fed Chair Kevin Warsh officially took over leadership of the US central bank.

Markets:

• Equities: Nvidia is up over 1% pre-market - Tech Futures trading positive as market participants wait for the numbers

My View: Nvidia alone has become one of the biggest drivers of the entire US equity market. A very small number of mega-cap technology companies have generated the majority of the S&P 500’s gains this year, highlighting how concentrated the current rally has become. Nvidia’s Year-To-Date (YTD) contribution to the S&P 500's performance is approximately 20% of the index's total gain. The stock has delivered a YTD total return of roughly 19%. The S&P 500 Index is up almost 9% YTD.

At current valuation levels, simply beating estimates may no longer be enough. Expectations are extremely high and the market likely needs numbers that significantly exceed forecasts alongside another very optimistic outlook for the stock to react positively.

At the same time, Nvidia CEO Jensen Huang will almost certainly continue to present a highly optimistic long-term vision for AI and future demand growth, something investors have become used to over recent quarters.

Personally, I do not want to place a directional bet ahead of tonight’s release. The AI sector remains heavily crowded and, in my view, clearly overpriced overall. While upside potential appears increasingly limited after the massive rally, downside risks continue to grow if expectations are no longer met perfectly.

The Fed Minutes could also reveal how divided the Federal Reserve currently is — normally not a particularly positive sign for markets, as the interest rate outlook becomes increasingly difficult to anticipate.

Rising uncertainty around monetary policy is usually not a supportive driver for financial markets, especially at a time when valuations already remain stretched across parts of the equity market, inflation seems to get out of control in combination with rising yields.

Japan reported surprisingly strong economic growth for the first quarter. Q1 GDP growth QoQ came in at +0.5% (est. +0.4%), while annualized GDP growth reached +2.1% (est. +1.7%).

The stronger economic data reinforces expectations that the Bank of Japan could continue its gradual tightening cycle after decades of ultra-loose monetary policy.

Markets:

• Equities: Japan’s Nikkei225 closed lower by -0.44%.

• Bonds: Japanese government bond yields continue to rise sharply. The 10-year yield reached 2.81% (!), marking levels not seen in decades.

• Currencies: The Japanese Yen weakened further

My View: It is becoming increasingly important to closely monitor developments in Japan.

After decades of zero interest rate policy, the Bank of Japan is now being forced to tighten monetary policy due to rising inflation pressures. Stronger economic data increases the probability of another rate hike already in mid-June.

The reason why this matters globally is the enormous size of the so-called Yen carry trade.

For years, global investors borrowed cheaply in Yen and invested the money into higher-yielding assets such as US Treasuries, US equities, or higher-yielding emerging market currencies like the Mexican Peso or Brazilian Real.

If Japanese interest rates continue to rise, funding costs for these positions increase significantly. Investors may then be forced to reduce leverage and unwind positions, potentially leading to forced selling pressure across global markets.

At the same time, rising US Treasury yields already mean falling bond prices, increasing stress within leveraged positions even further. This combination could quickly create a broader deleveraging spiral.

For the moment, the situation remains relatively stable because the Japanese Yen continues to weaken despite rising yields. However, should the Yen suddenly reverse and strengthen, pressure on carry trades would intensify dramatically.

The Bank of Japan is also not interested in a substantially weaker Yen. With lower Yen leading to higher import prices, this would further fuel inflation inside Japan. USD/JPY around 160 is widely seen as a critical level. The pair is currently trading close to 159, while the Japanese authorities already intervened twice in the currency market only two weeks ago to stabilize the Yen.

The amount of global carry trade exposure is enormous, running into hundreds of billions. The potential impact of a larger unwind should not be underestimated.

If Japanese yields continue to rise, this risk could materialize very quickly. That is why Japan may become one of the most important markets to watch right now.

Globally, bond yields continue to rise as investors increasingly dump government bonds on growing inflation concerns.

The UK 30-year government bond yield climbed to its highest level since 1998. Japan’s 10-year bond yield moved toward 2.6%, levels last seen in 1999. In the US, the 10-year Treasury yield is approaching 4.5% — the same level where Donald Trump last year stepped back from his “Liberation Day” tariff escalation shortly after announcing it. Meanwhile, the US 30-year yield has clearly moved above the 5% threshold.

Following yesterday’s hot CPI inflation print, today’s wholesale inflation data surprised significantly to the upside as well.

April PPI Inflation Data:

• PPI MoM: +1.4% (est. +0.5%)

• PPI YoY: +6.0% (est. +4.9%)

• Core PPI YoY: +5.2% (est. +4.3%)

Markets: Volatile following the inflation data release

• Equities: US futures remain slightly positive but lost some ground pre-market. Asian markets traded mostly higher this morning, while Europe trades mixed

• Bonds: Yields continue to rise globally. US 10Y at 4.48%, US 30Y at 5.04%, Japan 10Y at 2.59%

• Commodities: il prices continue to climb with WTI above USD 102/barrel and Brent around USD 107/barrel. Precious metals are mixed, with silver rising toward USD 86/oz while gold trades slightly lower near USD 4’685/oz.

• Currencies: USD stronger

• Cryptos: slight pullback - Bitcoin USD 80k

• Volatility: The VIX remains around the 18 level

My View: If investors continue to ignore the inflation shock unfolding right in front of them, then I honestly struggle to understand current market pricing.

Inflation is becoming very real again. And I would not be surprised if the Federal Reserve soon starts discussing rate hikes again rather than remaining calm.

Rising yields are a major issue. Higher mortgage rates, higher refinancing costs for companies, sharply elevated credit card rates in the US, averaging around 21%, and significantly higher funding costs for governments themselves.

Bond investors increasingly seem to understand the situation correctly, while equity investors still blindly trust that the AI boom will overpower every macroeconomic problem.

Historically, bond markets tend to move ahead of the curve. Why should it be different this time?

What was previously only “cooking below the surface” is now becoming increasingly obvious.

And one critical factor remains largely ignored: the Strait of Hormuz is still effectively closed. Energy flows are far from normal, and a quick normalization scenario still appears unrealistic.

I do not want to call the exact timing of a crash. But in my view, markets have rarely been closer to a larger repricing than they are today.

And I am positioned accordingly.

Inflation in the US surged to its highest level since May 2023 as the Iran conflict and elevated energy prices continue to feed through the economy.

April CPI inflation data came in higher than expected:

• CPI YoY: +3.8% (est. 3.7%)

• Core CPI YoY: +2.8% (est. 2.7%)

Markets:

• Equities: US Futures initially traded lower, but saw a modest rebound after the data release.

• Bonds: Yields initially moved higher before easing slightly after the release. US 10Y at 4.43%, US 30Y at 5.0%, Japan 10Y at 2.55%. UK yields also moved higher amid political noise.

• Commodities: il prices continue to rise with WTI around USD 101/barrel and Brent at USD 107/barrel. Precious metals slightly weaker with silver at USD 84/oz and gold around USD 4’705/oz.

• Currencies: USD stronger

• Cryptos: slight pullback - Bitcoin USD 81k

• Volatility: The VIX tickt slightly towards 19

My View: I struggle to understand how markets interpret these inflation numbers in a constructive way. Inflation now appears on track to move closer toward the 4% level again.

The situation for the Federal Reserve is becoming increasingly complicated. The labor market still looks relatively resilient, while inflation remains the much bigger issue. In my view, markets still underestimate the possibility that the Fed may need to stay restrictive for longer, or potentially even consider another rate hike if higher energy prices continue to spread deeper into the economy through transportation, production, and consumer prices.

Higher interest rates also translate directly into higher mortgage costs for homeowners. Financial stress among consumers continues to build. Google searches for “help with mortgages” have reached levels last seen before the 2008 financial crisis. US foreclosures surged to a six-year high last quarter, while 55% of Americans say their financial situation is worsening. At the same time, the US savings rate dropped to its lowest level in 3.5 years.

The average American consumer is increasingly under pressure. High credit card balances and rising auto lease delinquencies are additional warning signs that should not be ignored.

Also, the argument of a “roaring economy” does not fully hold up anymore. Consumer finances are increasingly deteriorating beneath the surface. Rising living costs, expensive financing conditions, weakening savings rates, and growing debt burdens suggest that many households are already under significant pressure despite headline economic data still appearing resilient.

At the same time, the debt situation of the US government itself should not be ignored. The US remains heavily dependent on investors continuing to absorb massive Treasury issuance. With inflation staying elevated and interest rates remaining high, financing costs continue to rise. This increases pressure on the fiscal situation and leaves markets increasingly sensitive to any weakening in demand for US Treasuries.

US markets continue to trade around record levels despite the recent strong performance.

Warren Buffett recently stated in an interview that the stock market has increasingly become a casino, adding that speculative behavior and gambling activity among investors may be at the highest levels ever observed: “We’ve never had people in a more gambling mood than now”.

At the same time, Donald Trump described the current ceasefire with Iran as being “on life support”, highlighting how fragile the geopolitical situation remains.

India called for emergency energy measures, while authorities are increasingly encouraging people to work from home in order to reduce pressure on energy consumption and transportation systems

Markets: euphoria

• Equities: similar picture to last days - US strong, rest of the world sideways to weaker; Indian stocks fall

• Bonds: yields move clearly higher - US 10y at 4.41%, US 30y at 4.98%, Japan 10y at 2.53%

• Commodities: oiI prices moved higher fall - USD 98/barrel and Brent at USD 104/barrel.
  Precious metals: silver with strong rally to USD 86/oz while gold moved 0.5% up to USD 4’740/oz

• Currencies: USD unchanged, Indian Rupee under pressure

• Cryptos: moved higher - Bitcoin towards USD 82k

• Volatility: The VIX light uptick above 18

My View: Current market behavior increasingly reminds me of patterns seen during the dot-com bubble. Investors continue to chase momentum aggressively, while speculative positioning appears extremely stretched.

Following my Market Insights over recent months, I repeatedly shared my impression that a large number of market participants are no longer investing rationally, but rather gambling on ever-higher prices.

At the same time, geopolitical escalation risks may be closer again than at any point since the ceasefire started. Several Asian countries have already begun evaluating contingency measures to address potential energy shortages, yet financial markets continue to largely ignore these developments.

The semiconductor sector, which has seen an extraordinary rally, up more than 60% in the last 30 days, could also become vulnerable if the Strait of Hormuz disruption persists. Helium supply chains are increasingly under pressure, an important factor for global chip production. Any prolonged shortages could eventually force production disruptions within the semiconductor industry.

With investor positioning reaching increasingly extreme levels, offering opportunities, I implemented several transactions today, both on the short side and into selected long-term investment opportunities. More to be mentioned in my next Weekly Market Snapshot.

Financial markets are increasingly betting on a resolution to the Middle East crisis. Several European equity indices gained more than 2% yesterday, marking one of the strongest sessions of the year. Meanwhile, Wall Street continues to push higher, driven by strong enthusiasm around AI, solid first-quarter earnings, and growing optimism that tensions with Iran may ease.

Markets: euphoria

• Equities: higher

• Bonds: yields slightly lower - Japan 10y at 2.48%, US 10y at 4.34%, US 30y at 4.92%

• Commodities: oiI prices continued to fall - USD 92/barrel and Brent at USD 98/barrel.
  Precious metals higher again- silver above USD 80/oz and gold above USD 4’700/oz

• Currencies: USD softer

• Cryptos: sideways - Bitcoin at USD 80k

• Volatility: The VIX light uptick above 17

My View: Markets are once again trading on hope. Investors appear willing to look through geopolitical risks, rising long-term bond yields, and still elevated inflation pressures. Instead, the focus remains on growth expectations, liquidity, and the belief that central banks will eventually support markets again if conditions deteriorate.

I experienced the Dot-com Bubble, when almost any stock linked to e-commerce surged 10–20% in a single day, only to repeat the same move again the next day. I see very similar patterns now in stocks that merely have a potential future connection to AI.

The market increasingly prices possibilities instead of realistic future cash flows. Billions continue to flow into companies where the long-term monetization path remains highly uncertain.

The question is how long this blind investment cycle, what I would call a phase of market madness, can continue before investors start focusing again on valuations, profitability, and economic reality.

At the same time, markets appear extremely relaxed regarding geopolitical risks. The Middle East conflict is far from solved. There is one person in the WH desperately looking for such an end. However, Iran regime does not seem to be willing to give up and accept the rules set.
Energy supply disruptions remain a major unresolved issue. It is given, that this will have an impact on the economy with a certain delay. Yet investors continue to behave as if the next positive headline will permanently remove all downside risks.

History shows that periods of euphoria often last longer than expected, but they also tend to end very abruptly.

US President Donald Trump announced last night the end of “Project Freedom”, stating that the US should be close to reaching a deal with Iran.

Starting the day, Trump warned that if Iran does not accept a peace agreement, “the bombs are back”.

At the time of writing and publishing this, Iran has not yet officially responded.

Markets: already celebrate the announcement

• Equities: jump globally

• Bonds: yields slightly lower - Japan 10y at 2.50%, US 10y at 4.34%, US 30y at 4.94%

• Commodities: oiI prices falling sharply - USD 93/barrel and Brent at USD 102/barrel.
  Precious metals jump - silver above USD 77/oz and gold around USD 4’675/oz

• Currencies: USD falls

• Cryptos: higher - Bitcoin at USD 81k

• Volatility: The VIX falls below 17

My View: The news came out last night. My immediate Instagram post already carried the hashtag #TACOTuesday, because for me this announcement had very similar characteristics to previous Trump headlines and policy reversals.

The key question remains: why would the US stop such a naval operation before an actual deal is reached?

“Project Freedom” already looks questionable from an operational perspective. The US Navy reportedly guided only two vessels through the Strait during two days of operations. That hardly changes the broader situation around global energy flows.

We are now waiting for Iran’s reaction. At the same time, the question remains what incentive the Iranian regime would have to suddenly accept a deal under pressure.

Markets are already trading as if the conflict is effectively over, the Strait of Hormuz fully normalized again, and global oil flows secured.

In my view, investors continue to underestimate broader structural risks building beneath the surface: rising debt levels, persistent inflation pressures, elevated bond yields, high leverage across markets, geopolitical uncertainty, and growing political instability.

Despite all these unresolved risks, markets continue to price in ‘over perfection’

The Middle East situation continues to dominate global markets. The Strait of Hormuz remains effectively closed, with shipping activity still close to a standstill, despite political statements suggesting stabilization.

Donald Trump announced the launch of “Project Freedom”, under which the US will begin guiding neutral ships through the Strait starting today. The move comes after he signaled that Iran’s latest peace proposal may not be sufficient.

Iran immediately warned that such actions would breach the ceasefire.

Markets remain highly headline-driven. Oil prices spiked after unverified reports of missile strikes on a US patrol boat. Claims later denied by the US. Meanwhile, the United Arab Emirates condemned renewed Iranian missile and drone attacks.

On the supply side, major OPEC+ nations agreed on a symbolic production increase. However, actual supply remains dependent on the reopening of Hormuz, which has not happened.

Oil continues to move higher under these conditions. At the same time, the US 30-year Treasury yield crossed 5% for the first time in a year, reflecting rising inflation expectations and growing pressure on long-duration assets.

Markets: remain headline driven

• Equities: mainly lower

• Bonds: yields sideways to slightly higher - Japan 10y at 2.50%, US 10y at 4.4%, US 30y at 5.02%

• Commodities: oiI prices continue to rise - USD 105/barrel and Brent at USD 114/barrel.
  Precious metals lost some ground - silver around USD 73/oz and gold around USD 4’5250/oz

• Currencies: USD rises slightly

• Cryptos: higher - Bitcoin at USD 79k

• Volatility: The VIX back above 18

My View: Investors remain in denial mode. Despite a constant flow of negative headlines, markets are holding up surprisingly well. Risk assets continue to be supported, not by fundamentals, but by liquidity.

This is the key driver: The Federal Reserve’s balance sheet expansion since January is supporting markets in the short term. But it is also laying the foundation for persistent inflation.

The energy shock is real and unresolved. The war is clearly not over. The fragile ceasefire is already being tested, with both sides engaging again in the Strait of Hormuz. This remains the critical point: No flow, no normalization.

At the same time, political messaging remains disconnected from reality. Announcements of “progress” or even an “end of the war” have had no impact on actual oil flows. The physical constraints remain fully in place.

All this leads to the next phase: Higher rates for longer.

With that, it is not the question if, but when the pressure on equities will increase.The upcoming transition from Jerome Powell to Kevin Warsh adds another layer of uncertainty. Leadership changes at the Fed are typically accompanied by volatility and often weaker equity markets.

My base case remains unchanged: Markets are still underpricing the downside.

What we see right now is a market driven by headlines and liquidity, not by reality.

The Federal Reserve delivered its most divided decision since 1992, holding rates steady at 3.5%–3.75% in an 8–4 split. A clear sign that internal disagreement is rising at a time when macro visibility remains low.

While this may mark one of the final meetings under Jerome Powell as chair, he signaled his intention to remain on the Board of Governors.

Away from central banks, earnings season painted a more constructive picture, at least on the first sight.

Alphabet delivered strong results with 20% revenue growth and lifted its capex outlook to as much as USD 190 billion for 2026. Microsoft also beat expectations but flagged sharply rising memory costs as AI-related spending accelerates.

Across Big Tech, including Amazon and Meta Platforms, the message is consistent: the AI arms race is intensifying. Combined hyperscaler capex is now expected to reach roughly USD 725 billion in 2026.

In Asia, Samsung Electronics reported an over eightfold increase in quarterly operating profit, highlighting how deeply the semiconductor cycle is tied to this spending boom.

Markets: Iran developments continue to weigh on sentiment

• Equities: mostly down in Asia and Europe - only Nasdaq Futures with a light plus

• Bonds: yields keep rising - Japan 10y at 2.52%, US 10y at 4.41%

• Commodities: oiI prices jump - USD 108/barrel and Brent at USD 121/barrel.
  Precious metals regain - silver around USD 73/oz and gold around USD 4’620/oz

• Currencies: USD slightly falls

• Cryptos: lower - Bitcoin down to USD 76k

• Volatility: The VIX sideways around 19

My View: Reading between the lines, the picture is no longer as clean as markets would like to believe.

I see the AI narrative clearly shifting from excitement to escalation.

Anthropic is reportedly seeking funding at a USD 900 billion valuation, above OpenAI, which was valued at USD 852 billion just weeks ago. Backed by massive capital injections from players like Amazon, Nvidia, and SoftBank, the scale of investment is unprecedented.

This is exactly the point. Competition in AI is no longer about innovation. It is about financial firepower. Hundreds of billions are being deployed, with trillions potentially to follow. However, one key question remains unanswered: Where are the sustainable business models and future cash flows?

At current trajectories, this risks evolving into a classic capital destruction cycle, a race where multiple players spend aggressively, compress margins, and struggle to monetize at scale. A potential lose-lose scenario.

At the same time, markets are facing rising yields, elevated energy prices driven by geopolitical tensions, and increasingly stretched positioning.

The combination matters. We have:

• Expensive equity markets

• Rising cost of capital

• Massive upfront investment cycles

• And unresolved geopolitical risks

• Rising prices for goods

• Depressed consumer sentiment

• Greedy investors sentiment

That is not a stable equilibrium. The market continues to trade on pure optimism. But the margin for error is almost zero.

This week stands out as one of the most important macro and market inflection points in recent months. A rare combination of Big Tech earnings and a global cluster of central bank decisions will set the tone across asset classes.

Big Tech Earnings:
On the corporate side, the spotlight is clearly on the US mega caps. Results from Alphabet, Microsoft, Meta Platforms, Apple and Eli Lilly are expected to drive index direction, particularly given their heavy weight and ongoing AI-driven narrative.

In Europe, key updates from Airbus, Air Liquide, AstraZeneca, TotalEnergies, UBS and Schneider Electric will provide further insight into industrial demand, energy dynamics and financial sector resilience.

Central bank decisions:
At the same time, monetary policy takes center stage. A rare alignment of decisions from the Federal Reserve (Fed), European Central Bank (ECB), Bank of England (BoE), Bank of Canada and Reserve Bank of Australia adds another layer of uncertainty.

The Bank of Japan already set the tone this morning. As widely expected, it kept its policy rate unchanged at 0.75% (6–3 vote), but delivered a clearly hawkish message. The central bank reiterated its intention to continue tightening gradually, supported by rising inflation expectations and ongoing geopolitical uncertainties, particularly linked to the Middle East conflict.

Markets reacted accordingly. The Nikkei 225 slipped following the announcement while the Japan 10-year yield moved closer to 2.5%. Precious metals such as gold and silver saw some weakness on the back of the more hawkish tone.

Markets:

• Equities: mixed in Asia and Europe while Futures are negative in the US

• Bonds: yields remain elevated - Japan 10y at 2.48%, US 10y at 4.37%

• Commodities: oil prices supported by supply concerns with WTI USD 100/barrel and Brent at USD 111/barrel.
  Precious metals fall - silver around USD 73/oz and gold around USD 4’600/oz

• Currencies: USD rising while CHF weakens

• Cryptos: fall - Bitcoin down to USD 76k

• Volatility: The VIX rises from lower levels towards 19

My View: The market is becoming extremely stretched to one side. This is clearly reflected in the historic 17-day winning streak of the Philadelphia Semiconductor Index. A move never seen, driven by the latest earnings momentum from Texas Instruments and Intel. This record run eclipsed the previous 15-day record from 2014.

Valuations in parts of the market have now moved beyond levels seen during the dot-com bubble. That alone should raise attention.

The setup is simple: the bow is under extreme tension. When positioning, sentiment, and price action all align in one direction, it only takes a small trigger to unwind the move. The coming days offer plenty of potential catalysts: earnings, central banks, geopolitics.

At the same time, the situation around Iran remains unresolved. The market continues to largely ignore this risk. Current political positioning by Trump suggests more of a wait-and-see approach rather than a clear path toward resolution. The probability of renewed escalation remains elevated.

And this is where I see investors underestimating the bigger picture: the global economy is increasingly exposed to an energy shock scenario. Supply disruptions, fragile logistics, and geopolitical uncertainty are not reflected in current in prices of risk assets.

In such an environment, the downside reaction can be significantly faster than the upside build-up.

Is this the time of a turning point? At least, the current setup leaves very little margin for error. I expect at least bumpy markets ahead with more downside, why I increased my bets on falling stock markets by adding more short positions in the portfolio during the last days.

The US has extended its ceasefire with Iran for an undefined period. Meanwhile, Iran has reportedly targeted three vessels transiting the Strait without authorization.

Planned talks in Pakistan have been called off, as Iran indicated it would not send a delegation.

The situation remains fragile and highly unpredictable.

Markets: US equities continue to reach new all-time highs, with investors seemingly brushing aside geopolitical tensions and rising risks. At the same time, oil has climbed back above USD 100 per barrel, reflecting growing concerns in energy markets.

My View: Current investor behavior, particularly the persistence of systematic and momentum-driven strategies, feels increasingly detached from underlying realities. Markets are priced for pure optimism, yet the risk backdrop has not improved. If anything, uncertainties are compounding almost daily.

I remain highly attentive to headlines, as any sudden development, or even a single tweet, has the potential to shift market direction abruptly.

At this stage, I see no compelling reason to adjust my allocation. The current risk-reward profile does not justify increasing exposure, especially given the potential for sharp downside moves driven by escalating uncertainty or negative economic news.

That said, I acknowledge the possibility that this risk-on environment may persist longer than expected, and I am willing to accept that risk.

The core issue remains unchanged: uncertainties are not decreasing, they are accumulating.

We are now in the final hours of the temporary ceasefire. The situation is once again shifting toward escalation. A US delegation has travelled to Pakistan in an attempt to keep diplomatic channels alive. However, Iran signaled it will not participate in any talks, putting negotiations effectively at risk before they even begin.

At the same time, both sides are already accusing each other of violating the ceasefire terms, a typical pattern seen ahead of renewed conflict phases. The window for de-escalation is narrowing quickly.

Markets: US markets are holding up quite well for now, supported by hope rather than clarity. While European markets moved lower into the closing.

My View: Markets remain optimistically positioned, arguably too optimistic given the underlying reality. Investors are still conditioned to expect the next supportive headline, whether it’s another statement published by Donald Trump or a last-minute “TACO-style” announcement that delays escalation once again.

Sentiment indicators continue to hover in “greed” territory, close to “extreme greed.” That is typically not the environment where risks are properly priced.

The clock is ticking. The situation is once again at the critical point.

If the ceasefire officially expires without a credible path forward, the probability of a renewed escalation increases materially. This is not just about headlines, it directly ties into the unresolved issue of energy flows and the structural risk around the Strait of Hormuz.

A re-acceleration of the conflict would likely trigger:

• Downside pressure on equities

• A sharp move higher in oil prices

• A delayed reaction in volatility, followed by a potential spike

This remains a headline-driven market, but one where the gap between positioning and reality is widening again.

The Middle East conflict is back at the center of market attention, with the Strait of Hormuz remaining the critical pressure point.

Tensions are rising again. Both sides reportedly fired on vessels attempting to transit the strait, while the US intervened directly, taking control of tankers and cargo ships trying to pass through. What was framed as a temporary stabilization phase is clearly starting to unravel.

The ceasefire agreement is set to expire in just two days. At this stage, there are no clear signals that an extension or sustainable resolution is in place.

Markets: oil prices move higher on renewed supply fears, equities broadly lower

My View: Markets are once again trading on hope, as equities should trade much lower. But the underlying reality is shifting.

The focus should not be on whether a ceasefire headline gets extended for a few more days. The real issue is the functionality of the Strait of Hormuz. As long as transit remains disrupted or controlled, the global energy supply is effectively constrained.

We are now seeing the first signs of what I have been highlighting: escalation risk was never off the table, it was just temporarily paused. Both sides are still too far apart to reach a meaningful deal, and that is exactly what markets continue to underestimate.

If the ceasefire expires without a credible framework, the situation can deteriorate quickly. Oil becomes the key transmission channel into inflation expectations, central bank policy, and ultimately equity valuations.

Markets still appear complacent relative to the magnitude of this risk.

This remains a highly headline-driven environment, but with increasingly asymmetric downside if the situation escalates further.

The market momentum continues to accelerate. The Nasdaq has now posted 10 consecutive days of gains — the longest winning streak in years — highlighting the strength of the current risk-on environment.

Equities are increasingly pricing in a near-perfect scenario: progress in peace talks, a lasting ceasefire, declining oil prices, and cooling inflation. The combination of these factors fuels the perception that the macro backdrop is turning decisively supportive again.

At the same time, volatility has faded, and fear has largely disappeared from the market. Positioning reflects confidence. Markets are not trading current reality, but a forward-looking, highly optimistic outcome.

The Warren Buffett Indicator shows its highest point ever, marking with today’s value of 221% an overvaluation. Regarding Buffett, an overvaluation starts at 150%, a level above 200%, he calls it “playing with fire”.

Markets: overall sideways move after latest rally

My View: This is a classic “mania phase” — where markets extrapolate best-case scenarios and price them in as the base case.

The key driver right now is the expectation that upcoming talks will lead to a lasting resolution. But this also defines the risk.

If negotiations next week fail and the ceasefire expires, this entire setup can reverse very quickly. The current positioning leaves little room for disappointment. This is a situation to monitor closely as it unfolds.

At the same time, AI mania is back on the trading floor.

Those following my work know my stance: the biggest bottleneck remains energy. The scale of power required for data centers is massive, and often underestimated. This alone challenges the sustainability of the current investment wave.

Beyond that, the key question remains unanswered: how will the hundreds of billions being invested today translate into future free cash flows?

At this stage, I do not see a clear, scalable business model that justifies these valuations. AI will undoubtedly continue to develop and improve productivity, but in my view, it will remain a supportive tool, not a full economic replacement engine.

Markets, however, are once again pricing a much bigger story. And that gap between narrative and reality is where risk builds.

Markets have staged a strong rally over the past days, pushing indices back above pre-war levels. The move appears largely sentiment-driven, with investors leaning on optimism rather than fundamentals.

On the macro side, US PPI, with 0.5% MoM (est. 1.1%) surprised to the downside, offering short-term relief on the inflation front. In contrast, inflation data across Europe showed upside pressure.

Markets: risk-on

• Equities: moved higher, with major indices trading above levels seen before the escalation in the Middle East.

• Bonds: yields fell back from recent highs - Japan 10y at 2.41%, US 10y at 4.26%

• Commodities: oil prices fell based on hopes war ends - WTI USD 91/barrel and Brent at USD 95/barrel. Precious metals rallied - silver above USD 79/oz and gold above at USD 4’800/oz

• Currencies: USD fell from recent highs -

• Cryptos: falling back from yesterday’s highs - Bitcoin down to USD 74k

• Volatility: The VIX fell back to 18

My View: This rally is built on one key assumption: that the ceasefire will hold and the war will end soon which rather looks like a dream to me.

Nevertheless, markets are focusing on the wrong variable. It is not about if or when the war ends, it is about energy flows.

Roughly 20% of global oil supply moves through the Strait of Hormuz. Since early March, flows have been severely disrupted following the attacks of US and Israel on Iran when the Strait of Hormuz got closed. We are now 43 days into this shock. A timeframe that historically would have already triggered a much stronger repricing across assets.

Assuming that the Strait opens today again, it would take weeks to get the energy market and supply back into balance. And shortages are seen across Asian countries while Europe and US just see higher prices at the petrol stations, however also thanks to oil stocks built up in case of crisis.

This disconnect of the markets with the reality is striking. The reason, why I do not put my money on this bet as I do not see equity markets rallying further. Or in case they do, it could end in a disaster.

At the same time, monetary policy expectations remain overly optimistic. In Europe, rising inflation increases the probability that the ECB may be forced into a more hawkish stance, potentially even considering rate hikes. In the US, despite similar underlying inflation pressures, markets continue to price a “best case” scenario, the Fed staying on hold or even leaning dovish.

This reflects a broader belief: that loose monetary policy will continue to support markets. However, liquidity is already elevated. Money supply remains high and is itself a contributor to persistent inflation, making the 2% target increasingly difficult to achieve.

As long as liquidity expectations dominate, risk assets may continue to ignore the oil shock. But, in my view, this comes at a cost.

Valuations may look more attractive after recent volatility. But they do not reflect a sustained high oil price environment. If oil remains at current levels or moves even higher due to prolonged disruption, the repricing could be abrupt.

Markets are once again priced for perfection, in a world that is anything but perfect.

In my main scenario remains unchanged, I see a potential for higher oil prices from here, lower equities, higher bond yields and precious metals with wider swings also higher.

A cautious stance remains warranted.

Talks in Islamabad between the US and Iran ended after 21hours negotiations without reaching a deal.
Donald Trump issued a new threat to block the Strait of Hormuz for any type of shipments. Iran responded with a stark warning: if its ports are threatened, no port in the Gulf will be safe.

At the same time, geopolitical risks broadened. Trump signaled potential 50% tariffs on China, following reports that Beijing may deliver new air defense systems to Iran.

Markets: back and forth - today: back again

• Equities: globally down again

• Bonds: broadly tick higher - Japan 10y at 2.47% (!) highest since decades, US 10y at 4.35%

• Commodities: oil prices jumped higher: WTI USD 104/barrel and Brent at USD 102/barrel. Precious metals fall - silver above USD 74/oz and gold above at USD 4’700/oz

• Currencies: up again - USD unchanged

• Cryptos: under pressure - Bitcoin down to USD 70k

• Volatility: The VIX back above 20 at level 21

My View: What started as a regional conflict is increasingly turning into a multi-front geopolitical escalation.

Talks failed. Strategy failed. The key question now: what is the exit strategy?

For the US administration, stepping back would implicitly mean admitting a major miscalculation. That makes a quick resolution politically difficult and increases the risk of further escalation.

At the same time, markets remain surprisingly resilient, especially equities.

This is where the disconnect becomes critical:

• Energy shock → inflation pressure rising again

• Yields moving higher → tightening financial conditions

• Consumer sentiment risk → with rising costs for goods and transportation

• Geopolitical risk expanding → tail risks increasing

Yet equities are still trading as if this is a quick and only temporary disturbance.

To me, current valuations do not reflect this reality. Positioning, liquidity, and still-present “buy-the-dip” behavior seem to dominate, for now. But this setup looks increasingly fragile.

I remain cautious. Risk/reward at current levels is unattractive.
I continue to run limited exposure and stay positioned for a market stress scenario. Because if this “double blockage” of the global oil artery persists, the repricing across assets is not a question of if — but when.

This weekend, the first talks between the US and Iran are set to take place —

In the meantime, the Strait of Hormuz, a vital artery for global oil shipments, remains effectively blocked. Despite the announced ceasefire, tanker traffic is still near a standstill. According to Reuters, flows are running at well below 10% of normal volumes, an extraordinary disruption for global energy markets.

At the same time, Saudi Arabia reports additional supply constraints after damages:
– Pipeline flows reduced by ~700,000 barrels per day following pump station damage
– Output capacity down by ~600,000 barrels per day

This afternoon, markets will focus on the US March CPI release — the first major inflation print since the Iran conflict triggered a severe energy shock. This data point will be critical for rate expectations and overall market direction.
Markets: mixed

• Equities: Asia, Europe higher, US flat

• Bonds: broadly tick higher - Japan 10y at 2.44% (!) highest since decades

• Commodities: oil prices moved higher with WTI above USD 98/barrel and Brent at USD 96/barrel. Precious metals rise further - silver above USD 76/oz and gold above at USD 4’775/oz

• Currencies: no big moves - USD unchanged

• Cryptos: up - Bitcoin above USD 72k

• Volatility: The VIX little changed - remains below 20

My View: Fragile oil flow. Fragile economy. Fragile consumers.

Despite clear signs of ongoing supply disruption and rising cost pressure, equity markets continue to show a surprising level of optimism.

My view remains unchanged: investors are broadly too complacent.

At least, investors continue to weigh the persistent supply risks, with oil prices edging higher again.

US-Iran talks this weekend, investors believe to be a potential turning point. However, it will be far from a resolution. The way the ceasefire was announced and Irans 10-points plan published right after let me believe that the talks will not end successfully after the weekend, leaving investors to be rather disappointed.

Today’s inflation data could act as a key catalyst. A stronger-than-expected CPI print would reinforce the reality of the energy shock and likely push rate expectations higher, a combination that markets are not fully pricing in.

The disconnect between macro risk and market pricing remains elevated.

A cautious stance remains key. After this weeks strong rally, a near-term dip cannot be ruled out this moment.