If at the beginning of the year we sensed that 2026 “promised…” we have fallen short… the year can be very long and intense in terms of events… today it was published on CNN how in the US some officials are beginning to fear a very intense post-election period in case the elections are negative for the interests of the current administration. Let’s remember the events at the Capitol when Trump lost re-election.
Let’s not get ahead of ourselves, the mid term will be in November, but starting today it is an appointment that the current administration will have in its sights given its importance. Venezuela and Greenland have their new score. If we were to narrate a soccer match, it seems that this match is going to be a lot of goals. Now the geopolitical news focuses on Iran, which has caused some specific storms due to strong increases in the price of oil and what is to come.
This month has been marked by the strong rise of gold and silver and the sudden drop on the last business day of the month, a last day where all risk assets plummeted. A mixture of interactions caused this collapse, markets at maximum, strong leverage, doubts again about the real profitability of investments in AI following the published results of Microsoft and breaking psychological levels in the S&P500 of 7000, 5000 for Gold, 100 for silver and 1.20 for the dollar against the euro all at the same time and on a day with strong options expirations caused a perfect storm, the icing on which was put on the the nomination of Kevin Warsh as the next chairman of the Federal Reserve at the proposal of the current Trump administration. Mr. Warsh has a reputation for being a person opposed to the monetary policies of balance sheet expansion and unlimited liquidity, the fear of a liquidity drain put the final nail in the coffin and together with the rest of the factors caused the flash metal crash of January 30. Our opinion, we do not believe that Mr. Trump has nominated a person without ensuring that he or she supports his interests and furthermore, this appointment must follow a long procedure and taking into account that Mr. Powell’s term ends in May, it will still take him several months to take office…if in the end he overcomes the long appointment process.
We see an apparently stable environment at an economic level, but we see global fragility in the labor market and although we believe that the period of disinflation has ended, we still see many latent risks and who knows if in the US we may see inflation spikes. Geopolitical risks; the midterm elections; sovereign debt levels; failure/success of investment plans in Europe; lack of profitability of CAPEX, these are the main risks, but investments cannot be managed thinking that this risk or another is going to materialize, lest it be that looking at the tree that is a kilometer away we trip over the stone that we have below, they are possible obstacles that may, or may not, materialize. Our mantra is boring, business profits and trying to isolate yourself from the noise, which has been very high lately.
Jordi Martret
Investment Director of Norz Patrimonia