I’m not going to repeat how long I’ve been doing this job, because it sounds a bit like the old trader who repeats himself and tells the same story over and over. But one thing is certain, when I take my eyes off my MAC and go on vacation for a few days, something spectacular always happens. It wasn’t a surprise to hear Trump ranting again about tariffs or getting into a spat with some foreign leader, but let’s just say we felt a quick gust of doubt sweep across the markets. The rescue might come from employment or from Greed and Fear. Anyway, we’re going to have a good laugh. And it all started last night.
Putting the church back in the middle of the village
When you’ve disconnected for a week, it’s never easy to get back behind the wheel and find things to talk about on Monday morning. Especially when you’ve spent the week in the fog and the whiteout, trying to avoid unknown skiers passing you on their skis, popping up out of nowhere. But still, with the current news, it’s not difficult to find things to say from the first hour of Monday. In fact, I even started writing my column on Sunday evening to make sure I didn’t miss anything.
First off, one thing seems very clear to me – for the moment, we are in “geopolitics and that’s it” mode. We really don’t care much about what’s happening on the fundamental side. The only thing that interests us is knowing who Trump and Vance are going to get into a fight with in the next 24 hours, and which country will get hit with tariffs.
Then, of course, there’s the crisis between the US and Europe, which is triggering a shopping spree in the armament sector for the past two weeks. The shopping spree was once again pushed forward this weekend after European leaders decided to spend an unimaginable amount of money on weapons, while half of that sum could have solved world hunger and addressed the needs of the most disadvantaged in Europe. But apparently, according to the warmongers who govern us, it’s way more fun to buy tanks and missiles to kill anything that dares cross the border west of Ukraine. What’s particularly interesting to note is that these weapons are mainly being bought from the Americans. It’s the shepherd’s answer to the shepherdess: “You’re being nasty with Volodimir, so as punishment, we’re going to buy lots of missiles to protect ourselves from your buddy Vlad the Impaler.” I don’t know about you, but I have the feeling they’re treating us like fools, and in the meantime, we’re distracted, and we’re not looking at the mess some of the big countries in the Union are in – especially regarding their domestic policies.
But in the end, we don’t care.
So, geopolitics is our friend and keeps us busy. Then, of course, there’s the economy, which sometimes takes the spotlight again. Last week, on the last trading day of February, we even got an economic number that really saved our backs. If we remember the CPI figures published two weeks ago, we had good reasons to fear that the PCE numbers, which were to be released on Friday, wouldn’t be good – maybe even worse: worrying. But here’s where the beauty of global markets lies: according to the US Department of Commerce, inflation slowed down in January in the US to 2.5% year-over-year, down from 2.6% the previous month, in line with expectations after several consecutive accelerations. Yes, the PCE is less bad than the CPI. Turns out, inflation is a fake problem; you just have to look at it from the right angle. If you eat nails or screws instead of eggs, meat, and regular food, you won’t even feel the inflation. If you live under a bridge, you won’t pay rent, and you won’t feel the real estate prices hitting your wallet. And to top it off, since you’re living under a bridge, you don’t have a car, so no worries about gas prices.
All that to say, when we were worried about the CPI two weeks ago, there was really no reason for that, since the PCE fixed everything last Friday. Again, I sometimes feel like we’re being treated like fools, but since I’m the only one, I’m going to start believing that it’s the one who speaks who is… Aside from that, these EXCELLENT PCE NUMBERS that fully reassure us about inflation will need to be confirmed by the job numbers, to see if the economy is fully aligned in the right direction so that the FED can FINALLY do its job and lower rates as it should, so the bull market can get back on track. And that’s perfect because, as for the employment numbers, the upcoming week is going to be packed: JOLTS, ADP, and NFP – we won’t be spared. But at least, by the end of the week, we’ll know whether Friday’s rebound was a “fake bounce” or if it was something more important and that the contrary indicators, “GREED AND FEAR,” were right to show us that people were way too scared of a downturn.
Yes, because for the past few years, CNN has developed an index that shows us that THE MORE WE FEAR, the more it rebounds, and THE MORE WE’RE TOUGH GUYS who fear nothing, the more we get destroyed. And right now, this index is telling us that we have super, mega, crazy fear. So, it can only go up. Normally. And then, I was thinking: the economy and finance are truly magical! No, because if I remember correctly—two weeks ago, we were saying:
“BUT, BUT, if inflation is high and growth is sluggish, we’re heading toward STAGFLATION!!! OH MY GOD!!!”
Whereas since the PCE on Friday, if the employment numbers show strong engagement, we’re going to say:
“BUT, BUT, if inflation calms down AS THE PCE SHOWS and employment shows that growth is at our door; we’re in the PERFECT economy (thanks to Trump), and the FED will be able to lower rates, then it’s a BULL MARKET, Tesla at $2,000 and Nvidia at $10,000 billion market cap!!! Yippee!!!”
Yeah. Actually, when you go on vacation for a week, you really should take notes to remember what you thought about 10 days ago, especially when you have the memory of a goldfish.
A great week for some and a horrible week for others
The stock market week showed us just about every facet. In five days, we went from laughter to tears and from tears to laughter. In the end, tech took a monumental hit, Nvidia was good, but more is needed to motivate the troops—especially in terms of growth—and elsewhere, people were very afraid of geopolitics, but with the right-wing’s arrival in Germany (with a little extreme spice to the recipe), as well as the fact that Macron is a genius internationally but a disaster internally, and the fact that Germany is going to relaunch (thanks to the right-wing magic) and the ECB is going to lower rates again on Thursday, we can’t imagine it could go wrong. Unless Putin uses nuclear deterrence before France gets its first submarine in the water. All this to say that if I had known all this would happen, I wouldn’t have gone to the mountains, I wouldn’t have had a day off, and it wouldn’t have cost me the GDP of Bhutan in restaurant and nightclub expenses. But it’s okay. It’s okay because the week ahead looks pretty good too!!!
Let’s start with Asia This morning
on the Far East side, we’re already in rebound mode. After the sell-off induced by Nvidia at the end of the month, here we are starting March in great shape because the PCE wasn’t too bad on Friday—I think I mentioned it earlier—and also because the Chinese manufacturing PMI came out at 50.8—which is not only a sign of “growth,” but also above the expectations of Chinese economic experts. Hong Kong is up by 1.21%, Japan is up by 1.59%—even though the Nikkei chart looks more like Joe Biden’s electroencephalogram than anything else—and China is timidly up by 0.34%, as if it were ashamed that things are starting to improve. As for the rest, oil is battling its support at $68.50 and is trading at $70.11 right now, and gold—after its correction last week—is around $2,876, ready to go after $3,000. And then there’s Bitcoin…
So Bitcoin is pure joy. We just witnessed the biggest Bear-Trap in the last 8 months… The crypto star got massacred last week. Loss of risk appetite, falling out of love with tech, no news from the White House, hacking, etc., etc… There were plenty of reasons. On Friday, Bitcoin hit a low in the region of $78,200. And it’s around there that all the media that never talk about it suddenly started talking about it. And we immediately saw how professional it was; crash here, crash there, and we’re all going to die, and I told you it was garbage, and as the boss of the Swiss National Bank, I would NEVER buy Bitcoin. Anyway, the end of the world was near, and those who didn’t believe it were rubbing their hands. And then, on Sunday evening, Papa Trump arrived and unveiled his cryptocurrency reserve plan. It should include Bitcoin and Ether, along with smaller tokens like XRP, Solana, and Cardano. It was the first time the President named names, and everything exploded. In a minute, the crypto ecosystem gained $300 billion in valuation. With Trump, we know there’s ALWAYS a good reason not to just sleep on Sundays and that it’s always worth going to the office on Monday.
Other News and Tesla Soon on Top of the World
In the news that we should remember this Monday morning, there’s one that is absolutely amazing—it’s the target for Tesla announced yesterday. We think that if “everything goes well at Tesla” and if “everything is executed properly,” Tesla’s profits could increase by 1,000% over the next five years. And considering this growth and the price that “shareholders” are willing to pay to be part of the adventure, the stock price could be around $1,200. And the most magical part of all this is that this projection of a perfect world at Tesla comes directly from the opinion of a guy named Elon Musk. So, we live in a world where the head of a company, who is also the head of a dozen other companies and is dismantling the U.S. government with his left hand, can also come and give “investment recommendations” about his own company while having his fourteenth child. I think that if, one day—200 million years from now—aliens discover our archives from 2024-2025, they’ll think we were mentally ill and that it was probably better that we disappeared.
So, Musk is super-bullish on Tesla, and meanwhile, Tesla sales are collapsing in France because everyone is ashamed to drive one. But we don’t care, because Musk’s theatrics will be forgotten as soon as Tesla’s other businesses explode, and then it will be like the arms and defense sector: “Who cares if it’s not ESG and that Musk is crazy, as long as there’s money to be made, we’re not going to hold back!!!” In other things to note this morning, on the geopolitical side, British Prime Minister Keir Starmer told leaders gathered on Sunday for a summit on the war in Ukraine that they must commit to continuing to support Kiev and face a “unique moment” for Europe’s security. They’ve already found another 20 billion to send to Volodimir. Apparently, he’s taken up cigars and thinks he’s Churchill, while Macron is texting the French to tell them he understands them! And the French are replying that it would be nice if he could NOT come home, especially since for his first rating of French debt since the adoption of the 2025 budget, Standard and Poor’s has kept France at AA-, but with a negative outlook. Bayrou has no choice but to perform a miracle to get the country out of the rut, and given how much they’ll spend on buying functioning tanks, it’s not going to be easy.
Story of the Day
We’ll end this column with the story of the day. You all remember that Trump’s announcement last night caused Bitcoin to explode by nearly 12%. Well, you’ll be happy to know that on Saturday, while no one knew that Trump would talk about cryptos on Sunday evening—at least not you or me—someone took long positions on Ethereum and Bitcoin worth $200 million with a leverage of 50. YES, YOU READ THAT RIGHT, the guy put down $200 million on Ether and Bitcoin WITHOUT KNOWING ANYTHING!!! And worse, this meant that if Bitcoin dropped by 2% between Saturday and Sunday, the $200 million would be immediately liquidated and the loss would be total. Yet the guy still took the risk while he was playing golf on Saturday morning and then went shopping and saw a play in the evening, without a care in the world. So this morning, he’s buying a private jet. Cash. And he’ll still have enough money for a yacht or two. AND ALL THIS WITHOUT KNOWING ANYTHING. Do you remember when I told you earlier that they think we’re fools??? Well, here you go…
Let’s now return to our reality and focus on today’s figures.
Today is the first trading day of March, so we’ll have quite a few PMIs in Switzerland and elsewhere. There will also be the CPI in Europe and some quarterly figures, but they no longer interest anyone. Then, the week will pick up pace with employment figures, but we’ll save that for later, so as not to spoil the fun.
I wish you all an excellent day, a great start to the week, and a fantastic beginning of the month. And for those who think that when I go on vacation, something really happens, get ready, because I’m leaving again in ten days! Stay strong, happy to reconnect, and see you tomorrow!
