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.

Another politically driven day. Today, president Trump joined the World Economic Forum (WEF) in Davos via video. During his speech, he outlined several key points regarding his political strategy:
- lower interest rates
- lower oil price
- lower tax for corporates as an incentives to produce in the US - else countries would face tariffs
- Stopping the war through increased sanctions on Russia - lower oil prices should force Russia to join discussions
- Europe: A warning of tariffs if the EU continues to treat the US and its institutions 'unfairly' in terms of trade and regulations
- US, to be the capital for cryptos

Markets: Oil prices reacted promptly with a correction. Cryptos down for the day in a volatile trading. Stocks indices gaining across the globe, tech stocks lagging for once. Interest rates with some increase, US dollar trading sideways in a broad range.

My View: At the moment, it is crucial to closely monitor the news and the impacts on all financial market indicators. President Trump's speech was particularly interesting to follow, as it provided to me greater clarity on his strategy and political game plan.
The possibility of tariffs fuels fears of inflation among investors. However, lower oil prices could offset some of the upward pressure on prices. Meanwhile, lower interest rates would decrease borrowing costs, potentially boosting investment and consumption.
It will be interesting to see if market participants interpret this similarly - that inflation concerns may be overstated if tariffs are implemented. If not, this could have major impact on markets.

Following the speech, I took immediate action to avoid downside, closed today my long position in WTI crude oil at a price of USD 75 a barrel, entered at USD 67, implemented via a leveraged ETF, see my blog article: “Once called the «Black Gold» - did oil lose its shine?, 1 October 2024.

I gained a clearer understanding of the political game plan after analyzing the speeches and recent news flow. As a result, my concerns and uncertainties have diminished, leading me to identify an opportunity to increase the risk exposure in my portfolio.
I reinvested the proceeds directly into US Small Caps (ETF) and the defensive Food & Beverages sector (ETF) which has declined overproportionally since mid December due to tariff concerns, rising interest rates and strengthening US dollar.
In case risk on sentiment persists, I plan to further increase my equity exposure.

What a spark in the tech sector. The mix of news from White House and Netflix with the release of its fourth quarter results gave the tech sector a big boost, starting during yesterday’s late trading session already.
President Trump announced a joint venture, Stargate, to invest billions in the artificial intelligence (AI) infrastructure over the next years. Furthermore he is considering a 10% tariff on all Chinese imports, could be in place by beginning of February. Mexico and Canada are braced for tariffs of 25%. Fresh tariff threads against the European Union also on the agenda.

Markets: Today’s market saw sharp contrasts. China’s stock markets down while European markets follow the US strength.
Crypto investors continue to wait on the sideline, hoping for a push from politics. In the US only tech and AI related sectors with strong gains, other industries in the red. Interest rates with an increase.

My View: News-driven markets, often triggering strong reactions - a trend likely to become more common. The topic of tariffs has a significant short-term impact on the markets, leaving investors on edge. So far, the actual numbers have been somewhat modest. However, during his campaign, Trump had threatened to impose global tariffs of 10%-20% and an extraordinary 60% tariff on China.
Today’s rally is not broad based as most US sectors, except tech, are trading in the red. I avoid chasing such market fluctuations driven by speculative investors. This rally could be short-lived. Instead, I maintain a steady approach, focusing on capitalizing on opportunities as they arise, e.g. volatility and semiconductors, long respectively short (ETF).

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

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

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

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

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

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

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

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

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

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

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