A rare political signal emerged from Washington as the Republican-led US House of Representatives passed a resolution rejecting President Donald Trump’s tariffs against Canada, a core element of his economic and trade policy agenda. Several Republicans crossed party lines to support the move, highlighting growing internal resistance to the administration’s trade stance.

The resolution now heads to the Senate, which approved similar measures in the past.

Markets: in wait and see mode while European stocks moved higher with hope that tariffs could be called off.

My View: The legislative effort remains largely symbolic. The President retains veto power, making a policy reversal unlikely at this stage.

The rejection of the Canada tariffs highlights how fragile and politicized US trade policy has become. Even if the resolution is ultimately vetoed, the episode underlines the elevated uncertainty surrounding future tariff decisions, compounded by pending court rulings that could still reshape the legal framework for existing measures.

Uncertainty remains elevated. The tariff topic is far from resolved. Whether tariffs are enforced, delayed, challenged in court, or suddenly rolled back, each outcome carries market implications. Volatility around trade headlines continue.

Retail sales disappointed yesterday, reinforcing concerns that the US consumer is finally starting to feel the pressure from high interest rates and sticky inflation.

Today’s January employment report, delayed by the partial government shutdown, surprised on the upside:

• Non-farm payrolls: +130k (vs. +70k expected)

• Unemployment rate: down to 4.3% from 4.4%

Markets:

• Equities: mixed without clear trend

• Currencies: USD stabilized after recent decline while the strength of Swiss franc took a pause

• Bonds: US yields dropped sharply with negative retail sails to 4.15%% - while Japanese yields moved higher again, close to 2.3%

• Commodities: Silver, gold continue to rise

• Cryptos: broadly drop with Bitcoin down to USD 66k

My View: This combination underlines the current macro dilemma: economic momentum is slowing in parts of the economy, while the labor market remains relatively resilient. For markets, this is an uncomfortable mix – not weak enough to justify rapid rate cuts, but no longer strong enough to support aggressive risk-taking.

In such an environment, markets tend to swing quickly between optimism and risk aversion – driven more by headlines and short-term data surprises than by a clear, stable trend. This increases the probability of false breakouts and short-lived rallies.

Therefore, I continue to favor a defensive and selective positioning.

China has reportedly instructed domestic banks to reduce exposure to US Treasuries and limit new purchases, citing concerns over volatility and US debt risks.
After Japan (USD 1.2tn) and the UK (USD 888bn), China – with almost USD 700bn – remains the third-largest foreign holder of US government bonds. Even marginal shifts in China’s allocation policy therefore carry outsized signaling effects for global markets, both psychologically and structurally.

Markets:

• USD under pressure

• Bonds: US yields broadly ungchanged - US 10-year yield at ~4.20% - while Japanese yields moved higher again, close to 2.3%

• Commodities: strong safe-haven rally with gold +2% and silver +7%

My View: his should be seen as a strategic move within the broader trade-war and geopolitical framework. Tariff threats, technology restrictions, strategic resource dependencies, and geopolitical posturing continue to point toward a persistent risk of renewed trade conflict.

This is not an imminent collapse scenario, but another step highlighting that the de-dollarization trend still has room to run. A reduced structural demand for US assets implies a structurally weaker USD as a relevant medium-term theme.

At the same time, a weaker dollar raises import prices for the US, potentially adding to inflationary pressure.

In this environment, precious metals remain a strategic hedge against geopolitical risk, currency debasement, and rising systemic uncertainty. Demand for safe-haven assets such as gold, silver, and the Swiss franc is therefore likely to remain supported.

The ETFMandate is therefore fully hedged against the USD and has substantial exposure in gold and silver, even increased last week.

Big Tech earnings took center stage this week. After Google on Wednesday, Amazon reported solid results after market close yesterday. However, the real flashpoint came during Amazon’s earnings call, when management announced a dramatic step-up in AI-related capital expenditures of around USD 200bn for 2026 – more than 60% higher than last year.

Google, in parallel, signaled AI-related capex of around USD 180bn (+97% YoY). Taken together, Microsoft, Google, Amazon, and Meta are now guiding toward roughly USD 650bn of AI-related investments for 2026 alone.

Investors did not applaud. Google and Amazon shares sold off sharply after the announcements. Skepticism spilled across the broader tech complex, amplifying an already fragile sentiment backdrop driven by recent crypto turmoil.

Markets:

• Equities: tentative rebound after recent sell-off, tech leading

• Bonds: yields moved higher again after a brief dip - US 10-year yield back at ~4.21%

• Commodities: broad-based rebound

• Cryptos: stabilization after heavy selling - Bitcoin around USD 68k after dipping close to USD 60k

• Volatility: VIX slipped back below 20 after the recent spike

• Currencies: USD moving lower again

My View: After weeks of markets rewarding anything linked to “AI,” investors are finally starting to ask the uncomfortable but necessary question:
How does all this investment actually turn into profits?

For a long time, the market rewarded sheer ambition and the scale of spending, especially when wrapped in the AI narrative. That tolerance is now wearing thin. Capital expenditures are exploding, while the path to sustainable returns and monetization remains blurry. The market reaction to Amazon shows that even strong operational results are no longer enough when the future growth bill keeps rising faster than confidence in future cash flows.

This dynamic raises the risk of a broader rerating of AI-related valuations. The current rebound in tech stocks therefore looks more technical in nature than fundamentally driven — and may prove limited in scope.

A large share of the announced spending will flow into AI infrastructure and the broader supply chain. In theory, this should support selected beneficiaries. However, two risks dominate at current levels:

1. Valuations are already stretched, with much of the AI capex story priced in.

2. Should doubts about the commercial success of AI intensify, these investment plans can be scaledback quickly, removing an important pillar of the bull case.

In both scenarios, the asymmetry looks unfavorable: downside risks appear larger than the remaining upside potential from here.

Therefore, I keep my allocation unchanged and maintain the existing short positions. At the same time, I continue to favor precious metals. I expect investor focus to shift back toward safe-haven assets as uncertainties remain elevated and confidence in high-valuation growth stories is increasingly challenged.

Markets are showing clear signs of a hiccup. Crowded positions are coming under heavy pressure, with previously “untouchable” trades — which seemed to move endlessly higher — starting to unwind. This includes parts of the AI sector, defense stocks, and other high-momentum segments that had attracted significant speculative flows.

Pressure is currently led by cryptocurrencies. Bitcoin has fallen to around USD 72k, levels last seen in 2024. This move is particularly uncomfortable for late entrants. The portfolio of Strategy (formerly MicroStrategy), for example, has an average entry price around USD 76k – meaning the company’s billion crypto exposure has moved into negative territory. The same applies to many other players who added exposure late in the cycle during 2025.

Markets: Unwinding in crowded positions

• Equities: broad-based weakness led by technology, with the Nasdaq down almost 2%

• Bonds: Yields remain elevated, with the US 10-year yield around 4.28%

• Commodities: Precious metals show wide intraday swings – gold spiked to USD 5’100, fell to USD 4’900 and is now back near USD 5’000/oz; silver jumped to USD 92, dropped below USD 85 and rebounded above USD 87/oz

• Currencies: The US dollar further stabilized after recent volatility, while safe-haven demand is fading

• Cryptos: Continued de-risking pressure, with Bitcoin now below USD 74k

My View: So far, there are still no clear signs of panic. Not all stocks are falling, and correlations have not fully converged into a broad-based risk-off move. However, the environment has become noticeably more fragile, and price action suggests that momentum could turn.

As mentioned yesterday, I remain unconvinced about the near-term outlook for risky asset classes such as equities. Commodities, particularly precious metals, remain the exception for now, but even here speculative positioning needs to be monitored closely.

This is a typical pattern in speculative market phases. In short and to repeat, once momentum turns, highly leveraged positions are forced to unwind. Margin calls accelerate selling pressure, and what initially looks like “healthy consolidation” can quickly turn into a negative and heavy market sell-off in combination with fear. This market pattern would be my favorite to regain substantial weight in equities.

At the same time, cash levels among fund managers remain close to record lows. This is a crucial vulnerability. With little dry powder left, any further deterioration in sentiment forces managers to reduce exposure to risky assets rather than rotate within portfolios. De-risking becomes mechanical, not strategic.

The recent moves underline a key point: the “buy the dip” strategy finally seems to fail, the first time since a longer period with market dips. A good reminder for investors: There is no free lunch.
The strategy has now already failed in parts of the crypto market. If equity markets come under more sustained pressure, the same pattern is likely to play out there as well. In leveraged and crowded markets, dips can quickly turn into trend breaks.

I remain in a defensive wait-and-see stance. Most of my short positions are delivering high positive absolute returns today. With limited upside potential from here, caution is currently the more robust positioning.

After last Friday’s violent sell-off, markets are showing signs of stabilization. Metal prices have started to recover part of their heavy losses, while volatility has eased.

Additional news and positioning data are emerging, helping to explain the magnitude of the move and why the pressure may now be fading.

Reports and market talk suggest that the market was hit by an unusually large sell order on the last trading day of the month — a moment when liquidity is often thinner and positioning adjustments are common.

While this cannot be fully verified, rumors indicate that some large institutional players with open short positions had moved deeply into negative territory earlier in the month. As prices surged, pressure on these positions increased. In such situations, aggressive selling can be used to push prices lower, stabilizing short exposure and triggering technical reactions.

Once prices started to fall rapidly, mechanical forces took over:

• Speculative and leveraged long positions were forced to sell as margin calls were triggered

• Stop-loss levels were hit across futures and derivative markets

• ETFs and structured products experienced outflows, adding further supply

This created a self-reinforcing downward spiral: falling prices led to forced selling, which pushed prices even lower — largely independent of fundamentals.

Markets:

• Commodities: Precious metals rebound from deeply oversold levels

• Equities: Broader equity markets are calmer, though sentiment remains fragile and highly headline-driven.

• Bonds: Yields continue to move higher

• Currencies: The US dollar stabilized after recent volatility, while safe-haven flows continues

• Cryptos: continued pressure from derisking with Bitcoin below USD 78k

My View:

Was I surprised by the correction? No.
Was I surprised by the magnitude of the correction? To some extent, yes.

As stated in my earlier publications, I was no longer recommending to jump onto the fast-moving train, as speculative positioning had reached unusually elevated levels. In such an environment, both the timing and the size of market moves become highly unpredictable.

That is exactly what we experienced.

While the trigger and the scale of the sell-off could not be forecast, the underlying risk was clearly visible. In hindsight, the recommendation to stay patient and wait for a better entry point proved to be the right approach.

Speculative markets rarely end in a smooth adjustment — they tend to correct fast, deep, and emotionally.

The latest move has many characteristics of a positioning-driven flush rather than a structural trend reversal.

• Large speculative positions were likely washed out during the sell-off.

• Short-term traders and leveraged players appear to have reduced exposure aggressively.

• With this positioning reset, short covering may now add support to metal prices.

This is why I shared a buying opportunity for metals yesterday. The underlying narrative has not fundamentally changed. Most of the arguments supporting higher metal prices remain intact: structural demand, geopolitical uncertainty, and diversification needs in portfolios, supported also by a weakening US dollar and re-positioning from cryptos into precious metals.

That said, the broader environment for other asset classes remains fragile.

Uncertainty is still elevated:

• Geopolitical tensions remain unresolved.

• Bond yields are high and sensitive to inflation surprises.

• Signs of re-inflation are reappearing.

This morning’s rate hike by the RBA (Royal Bank of Australia) underlines that the global fight against inflation is not over and re-inflation could emerge. Other central banks could follow if price pressures persist — with one notable exception: the SNB, where a very strong Swiss franc continues to act as a tightening force on its own.

inancial markets are currently dominated by headlines around new record highs in precious metals.

Gold briefly surged above USD 5’100 per ounce before trading slightly below that level, while silver jumped to USD 115 per ounce, gaining more than 10% in a single session.

At the same time US dollar continues to weaken. Signs of big shifts from the US dollar cash into metals.

Markets:

• Commodities:
  Precious metals in a sharp momentum-driven rally
  Gold and silver at extreme levels, fueled by speculative demand

• Currencies:
  US dollar under pressure, supporting hard assets - Swiss franc strong

• Bond yiels: US 10-year yield stable above 4.2%

• Equities: Asia and Europe slightly negative while US markets trading in the green

• Cryptos: Bitcoin below USD 87k, no participation in the current momentum trade

My View: The key questions are how far this rally can go and why investors are increasingly shifting US-dollar cash positions into real assets.

The answer lies in uncertainty and maybe too much of political noise lately.
In an environment marked by geopolitical tensions, elevated asset prices, and declining confidence in fiat purchasing power, capital tends to rotate toward tangible stores of value. Precious metals are currently the primary beneficiary of this shift.

Speculative moves like the current one in metals are extremely difficult to time. From a technical perspective, gold and silver are clearly overbought. However, momentum can persist longer than fundamentals alone would suggest.

History shows:

• Strong momentum phases often extend further than expected

• But once the move turns, corrections tend to be sharp and fast

As steep moves go up, they can also fall just as steeply.

As long as this momentum phase continues, I stay the course. I have not taken profits yet, but I remain highly attentive to early signs of exhaustion or reversal.

The World Economic Forum WEF in Davos once again became the center of global attention today as US President Donald Trump delivered a closely watched speech.

Against the backdrop of rising geopolitical tensions, trade frictions, and fragile market sentiment, investors worldwide were looking for clarity, reassurance, or new signals.

Markets: Markets reacted positively during Trump’s remarks.

My View: This conflict is not solved. As a result, the positive market reaction may prove short-lived.. While the speech avoided fresh shock announcements, it also failed to provide concrete solutions. At least a military intervention is not on the table for the Greenland takeover bid.
However, core issues, trade policy uncertainty, geopolitical flashpoints, and strategic rivalries, remain unresolved. The tone may have been stabilizing at the first sight, but substance regarding the raising concerns was limited.

Therefore, the underlying drivers of uncertainty remain firmly in place. Temporary market rebounds driven by speeches or headlines should not be mistaken for a structural improvement in the outlook.

In a market where headlines change quickly and often drive prices, but investors should avoid constant shifts in positioning and stay the course. Short-term moves can create tactical opportunities, but mid- to longer-term positioning should still reflect high geopolitical risks, stretched valuations, and the risk of sharper downside moves.

Overall, no change in my view and any new investment calls done today.

Davos, the Swiss Alpine town, is once again at the center of global attention. This week, political leaders, central bankers, and business executives gather for the World Economic Forum (WEF). But this year’s meeting takes place against a notably more fragile geopolitical backdrop.

The dominant theme is rising geopolitical tension, triggered by renewed rhetoric around Greenland and the re-escalation of tariff threats over the weekend. Markets entered the week on the defensive, with investors reacting swiftly to headline risk.

Today, French President Emmanuel Macron delivered a closely watched speech, calling for cooperation, multilateral dialogue, and economic stability. His remarks come at a sensitive moment, as trade tensions between Europe and the United States have intensified following the Greenland-related dispute.

Later this week, US President Donald Trump is expected to join the WEF on Wednesday, a moment markets will watch closely for any signals on trade, tariffs, and geopolitical direction.

Markets:

• US equities declined sharply led by Nasdaq ~2% lower

• Europe: broad-based selling continued, down another 1%

• Asia: - however Japan 10-year yield continues to rise, now already above 2.34%

• Commodities: rally in metals remains intact

  • Gold up, above USD 4’750/oz

  • Silver up, around USD 95/oz

• Cryptos: Risk appetite fading further, Bitcoin below USD 90k

• Volatility: VIX Future jumps towards 21

• Currencies: strong safe-haven demand

  • CHF and JPY clearly strengthened

  • USD sharply weaker

My View: I do observe, that markets are increasingly flirting with a “sell America” narrative, driven by policy uncertainty, trade friction, and rising geopolitical risk premia.

The environment remains headline-driven, volatile, and fragile. At current levels, I continue to see more downside risk than upside opportunity, particularly as valuations remain elevated while macro and geopolitical risks rise.

Only a clear and constructive statement between Europe and the United States, signaling cooperation rather than confrontation, could provide markets with a temporary breather.
Until then, caution remains warranted.

However, Netflix reports earnings after today’s market close. The stock is also in focus following reports around a potential takeover bid involving Warner Bros, adding another layer.

Disclosure: short position in Netflix

Fresh tariff headlines emerged over the weekend, with US President Donald Trump announcing plans to impose 10% tariffson NATO nations involved with Greenland, escalating to 25% as of 1 February. Affected countries include Denmark, Norway, Sweden, Finland, France, Germany, the UK, and the Netherlands.

Should no agreement be reached by 1 June, additional tariffs of up to 25% were flagged.

In response, the European Union is reportedly preparing retaliation measures of up to USD 100 billion, including tariffs and market restrictions on US companies.

Markets:

• US markets closed today; futures trading ~1.5% lower
  Europe

• Europe: equities down more than 1%

• Asia: only minor losses - however with Japan 10-year yield jumping to 2.27%

• Commodities: strong rally continues:

  • Gold +1.7%, close to USD 4’700/oz

  • Silver +4%, above USD 93/oz

• Cryptos: losing ground, giving up most gains since the start of the year amid de-risking

• Volatility: VIX Future jumps from below 16 above 19

• Currencies: clear safe-haven demand

  • CHF and JPY both stronger

  • USD and EUR both weaker

My View: As mentioned in my last comment, these headlines once again hit over the weekend, when markets are closed. This time, US markets are even closed on Monday — a familiar pattern that often buys time for negotiations, limits immediate reactions, and hopes investors remain calm.

However, the outcome is far from clear.

Is this another strategic escalation by President Trump to force concessions? Possibly. But the determination to push the Greenland issue appears real, not just rhetorical.

Europe’s tools remain limited. The region is structurally deeply dependent on the US and other major trading partners and lacksa unified voice, strategic autonomy, technological leadership, and military strength. This episode once again highlights the fragility and fragmentation of the European Union in a world increasingly driven by power politics.

President Trump’s approach is consistent: demonstrate strength, leadership, and dominance on the global stage.

Attention now turns to the World Economic Forum (WEF) in Davos, where world leaders meet this week. If any venue can deliver temporary clarity or a political off-ramp, it is likely there — though expectations should remain realistic.

Positioning – as an investor

Is this another TACO trade moment?
The “TACO trade” (Trump always chickens out) refers to markets buying risk assets on political or policy threats, assuming they will ultimately be softened, delayed, or reversed.

I am not playing this card. The risk-reward is clearly skewed to the downside:

• Limited upside from current levels if adding fresh exposure

• Significant downside if negotiations fail or rhetoric turns into action

From a portfolio perspective, capital preservation matters more than chasing rebounds at this stage.

ETFMandate Portfolio positioning:

The ETFMandate portfolio is already positioned for market stress:

• Long volatility exposure

• Short positions in crowded trades and high-beta stocks

• Significant allocation to commodities

• Fully hedged in EUR and USD against the Swiss franc

• Zero allocation in bonds

• High cash quota

The year starts with a sharp rise in geopolitical uncertainty.
Multiple new flashpoints are in focus: Venezuela, Iran, Greenland, the Middle East (Gaza), the ongoing Russia–Ukraine war, and China’s stance toward Taiwan.

Today, US President Donald Trump hinted at imposing tariffs on countries that “don’t go along with Greenland,” reiterating that Greenland is “needed for national security.”
At the same time, the US Supreme Court is expected to rule on the legality of Trump’s reciprocal and fentanyl-related tariffs — a decision already postponed twice.

Meanwhile, Canada’s Prime Minister Mark Carney has reset relations with China, calling it a “strategic partnership,” marking a clear break from the diplomatic chill of recent years, turning away from the close partnership with the US.

Markets: Despite rising geopolitical stress, markets remain strikingly calm. Equities are supported as the AI trade received fresh fuel from strong earnings reported by TSMC (Taiwan Semiconductor Manufacturing Company). Volatility remains compressed, and risk premia for any potential geopolitical escalation are largely absent.

My View: We are seeing real actions, not just words. Geopolitics in early 2026 is no longer background noise — it is actively shaping the framework for trade, security, and economic decision-making.

The US move against Venezuela in the first days of the year, combined with renewed and very real pressure around Greenland, highlights a more assertive and unpredictable geopolitical environment. Venezuela alone could be dismissed as an isolated event. But taken together, global tensions are mounting and intensifying. And Europe? Largely sidelined, reactive, and without strategic weight.

Meanwhile, markets are trading at or near all-time highs across Europe, the US, and Asia. Markets appear increasingly decoupled from reality. First, the AI narrative pushed valuations to clearly stretched levels. Now, geopolitical escalation risk is being almost entirely ignored. Volatility remains low, even as economic momentum shows early signs of fatigue.

This uncertainty is already weighing on the real economy. Companies delay investment decisions, capex plans are postponed, and confidence erodes quietly beneath the surface.

And to remember, the key court ruling on tariffs is still pending — and already postponed twice.

While markets are currently calm, the growing disconnect between risk fundamentals and asset pricing is turning into a certain red flag for investors. Navigating this environment requires readiness for action, scenario planning, and disciplined portfolio protection.
The ETFMandate portfolio therefore maintains an elevated cash position. I am waiting for better entry points, with a meaningful dip that could arrive sooner than many expect.

Lately, major announcements have increasingly been released after Friday’s market close or over the weekend. Headline risk remains elevated.

Let’s see what this weekend brings. At these elevated market levels, headlines can trigger outsized moves.

The fourth-quarter earnings season has started with the major US banks, delivering solid headline results. JPMorgan and Bank of New York Mellon reported yesterday, both posting earnings above expectations. Today, Wells Fargo, Bank of America, and Citigroup followed with broadly stronger results, while Goldman Sachs, BlackRock, and Morgan Stanley will report tomorrow.

Markets: US bank stocks declined

My View: Banks often provide the first meaningful signal on both corporate earnings momentum and the underlying state of the economy, giving investors another look at credit quality and consumer health. While reported earnings were mostly stronger than expected, forward guidance matters far more than backward-looking numbers at this stage of the cycle.

Several financial institutions flagged rising risks — including geopolitical tensions, sticky inflation, and elevated asset prices.

US bank stocks had already seen a strong rally in recent weeks, leaving limited upside and increasing the likelihood of consolidation or a shift in momentum. President Trump’s announcement to cap credit card interest rates also weighed on sentiment, raising concerns about potential margin pressure.

I left the financials party earlier. With clouds gathering on the horizon, the risk-reward balance had already turned less attractive. When banks themselves highlight that asset prices are elevated, this should clearly not be ignored.

Looking ahead, technology earnings will be decisive for broader market direction. Taiwan Semiconductor Manufacturing Company (TSMC) is among the first to report tomorrow, with the major US tech names following in the coming weeks.

The widely followed December US inflation data delivered a mixed but important message for markets.

• Headline CPI rose 0.3% month-on-month and 2.7% year-on-year, exactly in line with expectations.

• Core CPI (ex food & energy) increased only 0.2% MoM and 2.6% YoY, undershooting the consensus forecast of 2.8%.

At first glance, investors interpreted the data as confirmation that inflation pressures are easing. A closer look suggests the picture remains incomplete.

Markets:

• Equities: US equity Futures, flat overnight, briefly moved into positive territory after the release before slipping into the red shortly after the opening bell.

• Bonds: Yields declined across the curve, both at the short and long end, after the US 10-year yield had briefly exceeded 4.2%ahead of the data.

• USD: strengthened

• Commodities: Gold, silver, and other metals continued their rally.

My View: Prices are cooling—but not enough to justify another rate cut anytime soon as job market does not seem to deteriorate.

Nothing new, the White House sees room for interest-rate cuts. The Federal Reserve may not, at least not yet. Today’s data strengthens the Fed’s position: inflation is easing, but not decisively enough to warrant policy action, especially with the 2% inflation target still clearly out of reach.

The Fed will remain in focus—not only because of rate decisions, but also due to renewed debate around its independence and the expected announcement of a new Fed chair in the coming days or weeks.

Central-bank independence is a cornerstone of market stability. As such, it should not, by itself, trigger major market disruptions.

That said, political pressure is rising. Donald Trump has increasingly sought to influence monetary policy and push for lower rates. Yesterday’s developments marked another chapter in this ongoing tension. The session opened under a cloud following reports that the Department of Justice was considering actions involving Jerome Powell, linked to developments at the Fed’s headquarters.

This should be interpreted less as a narrow legal matter and more as part of the broader tug-of-war between central-bank independence and political impatience.

For investors, the takeaway is clear: inflation is moving in the right direction, but the path toward easier monetary policy remains uncertain— and more rate cuts could be seen rather later than sooner. Which could lead to some disappointments followed by investors repositioning their assets, reducing risk assets in case they adapt to this scenario.

Today, Bank of Japan (BoJ) raises interest rates. The central bank expectedly hiked its benchmark rate by 25 basis points to 0.75%, the highest level since 1995.

Fresh inflation data underpins the move: a key consumer price gauge rose 3% year-on-year in November, extending the run of inflation at or above the BOJ’s 2% target to 44 consecutive months.

Markets:

• Equities: The Nikkei 225 held most of its earlier gains, indicating no immediate shock to risk sentiment.

• Bonds: Japanese government bond yields moved higher, with the 10-year yield climbing above 2%, a level not seen since 2006.

• JPY: The yen weakened by more than 1% to 157.10 versus the US dollar

My View: Japan is no longer the anchor of global zero-interest-rate liquidity it once was. While markets appear calm for now, the shift in Japanese monetary policy has the potential to ripple across currencies, bond markets, and leveraged risk positions globally.

This policy shift matters less for today’s market reaction and more for what comes next.

• Rising borrowing costs in yen terms change the global funding landscape. For years, Japan has been a key source of cheap leverage. As rates rise, that assumption starts to break.

• The yen remains structurally weak, which is a growing risk for Japan itself. A falling yen keeps import prices elevated and sustains inflation — potentially forcing the BOJ into a more aggressive tightening path than markets currently expect.

• Deleveraging risk: Many global investors have borrowed in yen to fund positions elsewhere. Higher Japanese rates increase funding costs and raise the risk of sudden, disorderly deleveraging, similar to episodes already seen earlier this year.

• Swiss franc back in focus: In a world where yen funding is no longer “free,” currencies associated with stability and low rates, such as the Swiss franc, could regain importance as alternative funding or safe-haven currencies.

The long-awaited US CPI (Consumer Price Index) report delivered a clear upside surprise for markets.
Headline inflation eased to 2.7%, while core inflation fell to 2.6%, both well below expectations of 3.1% and 3.0%, respectively.

This release was the first consumer price report from the Bureau of Labor Statistics since the U.S. government shutdown ended. October’s CPI figures were never published, as the agency was “unable to retroactively collect these data.”

Importantly, the shutdown appears to have impaired the calculation of key housing components, particularly rents. As a result, rental inflation came in surprisingly and abnormally low, raising questions about data quality rather than signalling a sudden structural disinflation in housing costs.

On the labour side, weekly jobless claims were in line with expectations, steady and uneventful — neither flashing warning signs nor signalling renewed strength.

Markets: US equities rebounded, led by the Tech sector, with investors welcoming the softer inflation print and reading it as supportive for a more dovish Federal Reserve.
US yields moved slightly lower with the 10-year yield down to 4.13%.

My View: November’s data suggests that the widely feared tariff-driven inflation shock has not yet arrived. That said, caution is warranted. Tariff inflation is the most awkward kind of inflation. Historically, it tends to build slowly — then arrive all at once. The fact that it has not yet shown up meaningfully does not mean it will not.

The labour market tells a similar story. Employment is cooling, but not collapsing. This matters because the Fed has made its priorities clear. With inflation easing and jobs still holding up, policymakers can afford to wait, rather than rush into aggressive easing. However, the data set off excitement, hope and spreadsheets full of rate-cut fantasies.

Crucially, November CPI should not be over-celebrated. Missing October data and distortions in housing calculations mean this print may not fully reflect underlying inflation dynamics. In other words, this report likely paints a cleaner picture than reality currently deserves.

In short: the direction of travel is encouraging, but the data quality is questionable. One soft CPI print — especially a distorted one — does not make a trend.

Yesterday, the latest released Bank of America Fund Manager Survey (FMS) shows cash allocations dropping to 3.3% in December, the lowest level on record. This signals extremely high risk appetite and heavy positioning in equities.

Markets: Markets appear largely unbothered by this data point. Equity indices continue to trade near record highs, volatility remains compressed, and risk assets are priced for near-perfect conditions. Positioning suggests investors are already fully invested, leaving little room for incremental buying power.

My View: This is a data point markets should not ignore:

• Such low reported cash levels are usually a good selling signal (contrarian)

• With cash levels at record lows, there is very little fresh money left to chase equities.

• Any disappointment, unexpected macro data, or exogenous shock could trigger a sharp and disorderly sell-off, as positioning is stretched and crowded.

• Incoming data does not point to a booming economy. Growth signals are mixed, and the Fed remains in a “wait-and-see” mode, notably lacking the dovish tone that would normally justify such aggressive risk allocation.

In short: valuations and positioning are running far ahead of fundamentals.

ETFMandate Portfolio Positioning

ETFMandate continues to run a contrarian stance, focused on capital preservation and optionality:

• Equity exposure steadily reduced during recent months

• Cash levels increased to maintain flexibility

• Short positions added or increased in some of the most crowded trades, particularly:

  • AI-related stocks

  • The broader technology sector

  • The defense sector

  where expectations have become increasingly one-sided

• Long volatility exposure added, as volatility remains artificially suppressed and is likely to rise sharply in the event of a macro, policy, or geopolitical shock.

I am waiting for better entry points, which could arrive sooner than expected. History shows that when cash levels are depleted and positioning is stretched, corrections often come out of the blue — and tend to be faster and deeper than anticipated.

ETFMandate remains focused on asymmetric risk-reward setups, prioritizing protection and optionality over chasing late-cycle momentum.

US economic data released do not show a picture of an economy running at full speed, more showing some signs of fatigue:

• US Nonfarm Payrolls:
  US job growth modestly beat expectations in November. Nonfarm payrolls rose by 64,000, above the 45,000 consensus forecast, but followed a sharp –105’000 decline in October.

• Unemployment Rate:
  The unemployment rate unexpectedly climbed to 4.6%, the highest level since September 2021, highlighting a continued deterioration in the labor market despite the headline payroll beat.

• Public Sector Distortion:
  October’s steep payroll decline was largely driven by a plunge in federal employment, as workers who accepted deferred resignation offers under the Trump administration officially dropped off payrolls.

• Consumption Signals:
  A separate report showed US retail sales were broadly flat in October, with weaker auto sales and lower gasoline receipts offsetting gains elsewhere.

• Business Activity & Inflation Pressure:
  According to S&P Global, US business activity in December expanded at its slowest pace in six months, while input prices jumped to the highest level in over three years, signaling renewed cost pressures.

Markets: no big market reaction

• Equities: slightly lower

• Bonds: yields remain in a slow upward trend

• Gold: up close to record highs - silver with new record level above USD 66/oz

• USD: losing ground

• Cryptos: sings of fatigue with Bitcoin remaining clearly below USD 90k

• Volatility: VIX sideways on lower levels

My View: This report reinforces a late-cycle labor market narrative rather than a healthy reacceleration. While payroll growth modestly exceeded expectations, the trend is clearly weakening, and the rise in unemployment to 4.6% is a meaningful signal that cracks are forming beneath the surface.

At the same time, inflation pressures are not disappearing, as shown by rising input costs. This combination, slowing growth with sticky inflation, leaves the Federal Reserve in a difficult position and increases the risk of policy missteps.
Odds of a Fed rate cut next month didn’t change following the latest jobs figures. Fed funds futures traders are currently pricing in a 24% chance of a rate cut next month, the same as the day before.

In short, headline data may look “better than expected,” but the underlying picture continues to slowly darken. The labor market is no longer a reliable pillar of strength. Markets will increasingly have to price that in.

China’s economic data for November confirmed a further loss of momentum. Overall, consumption, investment and industrial output all undershot expectations:

• Retail sales rose just 1.3% year-on-year, easing sharply from October and missing market expectations of 2.9%. This marks the slowest annual increase since December 2022, despite ongoing consumer subsidy programs from Beijing.

• Industrial production increased 4.8% YoY, below expectations for a 5.0% rise and the weakest growth since August 2024.

• Fixed-asset investment contracted 2.6% over the January–November period, highlighting continued weakness in private investment and confidence.

Markets: Lately, the rally in China and Hong Kong struggled to gain traction amid disappointing macro data.

My View: China has significant policy capacity if stimulus becomes necessary, and Beijing clearly understands the need to rebalance growth, strengthen household consumption and lift productivity. Structurally, China remains the second-largest economy globally and a leader across multiple sectors, including technology and industrial manufacturing.

In a broader global market correction, China is unlikely to decouple and would probably act as a drag rather than a safe haven.

Against this backdrop, I have trimmed exposure to China-related equities, particularly taking profit in larger positions such as Alibaba, Baidu, PDD and Prosus. For now, I prefer to hold a higher cash level and wait for more attractive entry points and clearer policy signals before reallocating capital into this region.

Doubts around the AI trade intensified this week after earnings from two key players.

Oracle shares plunged nearly 11% after reporting weaker-than-expected quarterly revenue, weighing on the broader AI complex and dragging down names such as Nvidia and Micron.
Yesterday, in extended trading, Broadcom fell around 4.5%. While results beat expectations, investors focused on CEO Hock Tan’s failure to convincingly address concerns that Google, its largest customer, could increasingly design chips in-house.
Additional pressure stems from rising memory prices, which may squeeze margins, and uncertainty around whether Broadcom’s reported chip deal with OpenAI is binding.

Markets: AI related stocks under pressure

• Equities: mixed with tech stocks sharply lower

• Bonds: Reflation trade moves yields higher, US 10-year substantially higher back close to 4.20%

• Gold: keeps rising touching with mounting uncertainties, touching briefly USD 4’350/oz

• USD: without big moves today

• Cryptos: slip broadly with Bitcoin falling back below 90k after a short intraday recovery rally

• Volatility: VIX edges higher

My View: The AI narrative is shifting from unlimited growth expectations toward more scrutiny on revenues, margins and customer concentration. Valuations in parts of the AI space remain more than stretched, leaving almost no room for disappointment.
As a result, I maintain short positions in selected AI stocks with high valuations and crowded allocation, viewing current developments as a confirmation that the AI trade is entering a more volatile and differentiated phase.

Disclosure: no allocation in Broadcom and Oracle

The US Federal Reserve (Fed) eased its monetary policy once again, lowering the federal funds rate by 25 basis points to a target range of 3.50–3.75%, the lowest level in three years. In addition, the Fed resumed purchasing government bonds, marking a notable shift toward renewed liquidity support.

However, despite this easing step, the central bank signaled little appetite for further rate cuts in the near term. The vote within the FOMC underscored a divergence of the committee members to continue.
Fed Chair Jerome Powell consistently framed the policy stance as one of strategic patience, repeating variations of “we are well-positioned to wait and see how the economy evolves.”

Markets: mixed picture

• Bonds: yields turning lower, US 10-year substantial lower at 4.12%

• Equities: mixed with tech leading to the downside after disappointing Oracle earnings

• Gold: back in focus with monetary policy uncertainties, above USD 4’250/oz

• USD: substantial lower

• Cryptos: slip with Bitcoin falling towards 89k

• Volatility: VIX edges higher for a fourth consecutive day

My View: Investors were hoping for a clearer signal that the rate-cut cycle would continue. Powell refused to offer it, therefore disappointed the short-term traders

The consensus narrative now leans heavily on the idea that the incoming Fed Chair will be more dovish, in line with political expectations from the new administration. But this raises a deeper, more uncomfortable question: How independent is the Federal Reserve? A scenario where markets assume political influence over monetary policy is fundamentally dangerous. Expectations can shift quickly and sharply if credibility becomes part of the debate.

On the positive side, the US economy continues to show resilience. Beneath the noise, activity appears firmer than many assume at first glance.

But the risk landscape is far from empty.
Tariffs could re-emerge as a major market driver at any moment in case the courts will announce their decision.