The long-awaited IPO finally place: SpaceX is now a listed company. The buzz surrounding the listing was well orchestrated, the ‘storytelling’ euphoric. During the first two days of trading, SpaceX’s market capitalization soared, rising by as much as 50%, a figure to be put into context of an already quite generous IPO multiple (SpaceX is valued at circa 80 times its revenues!). The volatility of recent IPOs and likely valuation excesses are an integral part of how the US market operates; the adjustments made to fast-track SPACE X’s inclusion in indices and give it a higher weighting than permitted by its limited free-float are not. If the first cracks appearing towards month-end are a sign, the euphoria is unlikely to last… June also marked Kevin Warsh’s first meeting as the new FED Chairman and he surprised his audience – and possibly the White House – with quite a “hawkish” tone. This is not without any effects on financial markets. To some extent, it is also reminding us of the cryptic communication of Alan Greenspan who passed away. He was amongst the first in 1996 to speak of the “irrational exuberance” of financial markets. He cried wolf far too early, but today’s investors will be well advised not to forget Greenspan’s warning : With shorter cycles and a less accommodative FED Chairman, the exuberance of recent weeks could last a little less longer. We are discussing these topics in this newsletter.

One month after the start of the war in Iran, as the prospect of a lightning operation fades, the markets are beginning to envisage a protracted conflict, the consequence of which for the markets boils down to one inescapable implication: high oil prices = high interest rates and falling share values. All asset prices now depend on shipping conditions in the Strait of Hormuz and oil price levels. As one US fund manager put it so well: ‘whether we’re talking about Apple or the US 10-year bond, in the end we’ve all become oil traders’. The recent developments have served as a reminder that it is often harder to extricate oneself from a conflict than to enter one in the first place. The pain thresholds of the belligerents are often underestimated; Trump, elected on a platform of non-interventionism, is now embroiling his country in a major conflict… In short, it seems impossible to predict a date for a resolution of this crisis. However, a few viewpoints are becoming more obvious every day. The first concerns the US president’s pain threshold; and the fact that this threshold is (cynically speaking) more closely correlated with the price of oil and the 10-year US Treasury yield than with anything else, so the 1970s scenario should be avoidable. That such a scenario might be ‘priced in’ by the markets cannot however be ruled out entirely, and there would undoubtedly as such be entry points created. As for our second viewpoint and a longer-standing conviction, the current situation (sadly) confirms that the sharp rise in commodity prices observed more than a year ago is surely set to be a long-term trend. We are discussing these topics in the newsletter.

Lots of winners and very few losers: that is the first thought that comes to mind when reviewing the market’s annual performance. Admittedly, there were a few casualties in 2025: on the currency side, the dollar lost more than 10% against the euro and the Swiss franc, while the yen also lost nearly 9% against the euro. Bitcoin has been struggling since Autumn, and on the commodities side, the WT lost 20% over the year...  But compared to this handful of losers, there were so many winners! Gold (up 65% over the year), transition metals (up 37% for copper) and, above all, almost all the major stock markets (in local currency).  From South Korea (75% over one year) to Spain (49%), Chinese stocks listed in Hong Kong (27%) and the Nasdaq (21%), all these markets showed remarkable strength and, each with differing dynamics, ended the year with strong gains. European markets were buoyed by banks and the Defense sector, while the United States once again benefited from the Technology sector: different drivers, therefore, but ultimately performances that are all the more remarkable given that they were achieved against a backdrop of continued geopolitical uncertainties, trade wars and rising tariffs. As such, investors can legitimately question themselves on the crowdedness of some themes and what to do next. Identifying the moment when a theme becomes too consensual is indeed a difficult if not impossible exercise. Taking profit and rebalancing elsewhere on other, less popular and more contrarian investments may be an interesting option. There are not that many contrarian choices at the end of 2025, as it has been a good year for most assets. Nevertheless, Oil, Asian currencies (we are thinking in particular of the extremely undervalued Yen and Renminbi), some Asian markets and some stock market sectors under pressure (such as consumer ones) are a few examples. Taking a longer view than just 2025, certain asset classes such as emerging markets and commodities can also fit the description as they materially underperformed in the previous years. We discuss these points in our investment newsletter.

"The difference between God and Larry Ellison? God doesn't think he's Larry Ellison." This quip about the founder of Oracle was used as the title of a famous biography published in 1997. Almost 30 years later, Larry Ellison, the "old-timer" of the technology sector, has shown that the octogenarian is still sprightly and capable of setting records. In mid-September, during a memorable trading session, Oracle's management announced that it had signed a USD310 billion contract with Open AI. Once the initial shock had passed, it became clear that the markets were being rather generous: this spectacular contract is not expected to generate any profit before 2030 and will require colossal investments. By adding more than $300 billion to Oracle's market capitalization, it seems to us that investors are jumping the gun a little.  Warren Buffett liked to point out that during the gold rush, sellers of shovels and pickaxes often made their fortunes faster than many of the gold prospectors. The same may be true today with AI. The champions of AI are currently highly valued, while the players who will make tomorrow's AI possible (particularly those capable of transforming electrical infrastructure and producing more electricity) are valued much lower.  We are discussing these topics and their investment implications in more detail in this newsletter.

Investors love anniversaries and the spectacular figures that go with them, so we couldn't ignore this double anniversary:  1- Exactly 25 years ago, the internet bubble burst and the Nasdaq lost more than 75% of its value in the two years that followed! 2- Five years ago, on 12 March 2020, at the start of the pandemic, the S&P500 index reached a low of 2192 (by the summer of 2021 it had already doubled!) This is a good opportunity to remember the adage “Stock investors always underestimate trends!” And the funeral? It's that of the Trump-trades, which had a very short life. The US President election was expected to benefit the US dollar, US assets and US small mid-caps, and conversely to penalise the European and Chinese markets. The Chinese and European markets in particular are now outperforming the US market. In the Europe-US comparison over some 50 years, we can see that European markets have fallen very sharply since 2008, reflecting the growth differential between the two zones and the US supremacy in Tech. However, we can also see that the recent European market catch-up is derisory if we put it into long-term perspective.  The stock market adage surely deserves a 2nd reminder: Investors always underestimate trends... We are discussing these topics as well as threats linked to trade wars.

Once the turkey has been digested, the disillusioned European investor will note that - as usual (16 times out of 17 since 2008!) - US markets are out-performing other markets, the European one in particular. This is routine, although the scale of the S&P500 out-performance in 2024 is quite exceptional: +23% Stateside compared with a meager +6% over on this side of the Atlantic for the STOXX600. There is no shortage of structural explanations for the US out-performance and we are detailing them in this newsletter… In light of the 2024 sequence,  Of the two alternatives available to investors: Remain invested with the winners (the technology sector) among the winners (the US market) or invest in more troubled areas, we have chosen to do both. On one hand, it might be too late to increase already sizeable  allocations to US “best in class” yet very expensive business models. On the other hand, expectations are so low for the 2nd group that the slightest upturn could produce outstanding returns.  Diversification is the only “free lunch”, and we believe that this adage is particularly relevant for a good start to 2025. We are discussing these various topics in our newsletter.

Fifty basis points and an anniversary

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