• An exuberant start into the New Year with strong emerging markets and small caps

• Announcement of Kevin Warsh as designated new chairman of the FED is a very credible appointment

• The following sharp correction in gold and silver can be seen as a vote of confidence by investors in terms of independence of the FED and Warsh’s suitability for the role

• If you want to hear what he thinks (from last October), I highly recommend: https://youtu.be/qVFEcg-RIAk?si=E4XHHt7Q1-Zhq0lV

• In the month of January developed large cap equities advanced 2.2%, global small caps gained 5.7% and emerging markets were up 8.9%.

• The large US and global debt levels are a potential source for instability and ultimately a collapse of the financial system

• Ray Dalio and others see the US already in a “debt death spiral”

• The only way out is sustained economic growth paired with above-average inflation rates to reduce the total debt per GDP

• So, the race is on whether AI-driven productivity gains will boost economic growth enough to reduce the real debt burden or whether the point of no return has already been reached

• Warsh is likely to lower interest rates and try to reduce the FED balance sheet at the same time

• Bond markets will not like such a liquidity contraction at the longer end and the yield curve is likely to steepen

• What should investors do to navigate through such turbulent times?

• Strong company growth and profitability (see page 2) as well as lower interest rates will continue to provide support to equity markets

• A financial collapse would of course temporarily hit equities, but over the longer term, equities provide for the best real wealth protection

• In any case, the upcoming Chinese “Year of the Fire Horse” will bring a high intensity and lots of dynamism

• We recommend investing in robust investment strategies considering multiple factors and not overly dependent on a particular scenario.

• The Artico Sustainable Emerging Market Fund has outperformed its benchmark in 5 consecutive years (2021-2025) every year and has reached an important milestone of 100m USD in AuM