Moshe Strugano & CO

Moshe Strugano & CO Founded based on the concept of boutique firm, our office offers outstanding personalized service in the fieldsof: Finance, Banking, Cyber, Crypto & Yachting.

Moshe Strugano & Co is an international law firm, providing companies, institutions and individuals with comprehensive and multi-disciplinarian legal counsel in establishing and broadening their activities to new global forums. The firm is one of Israel’s leading law firms in this unique practice area, and serves as the go-to firm for companies interested in transferring their business into the in

ternational arena. The firm specializes in registering and establishing companies around the world, and provides a multitude of legal, financial and business-related services pertinent both to the early establishment process, as well as the company's regular course of business abroad afterwards. The firm's services include, among others, opening overseas bank accounts, consulting regarding banking services and online payments, provision of trustee services abroad, clearing, licensing, issuance of commercial operating permits for companies in the fields of Forex, Gaming, Binary Options, and Online Trading as well as providing the company with ongoing counsel in its overseas business activities. Moshe Strugano & Co setting up offshore companies in seven days including: Marshall Island, Dominica, Seychelles, Bulgaria, Dominican Republic, Georgia, St. Vincent among others. In today’s age of globalization, registering and establishing companies abroad – when performed aptly and in the right destination – may significantly ease the company’s ability to manage its business, and allow it to create more efficient tax planning, decrease expenses and form invaluable business connections that will aid to its further expansion. The firm's team is highly experienced and knowledgeable in international legislation and regulation, as well as tax arrangements and rules of registration across the globe. This allows them to fully customize the firm's array of services to every customer's specific business objectives. Moshe Strugano & Co advocates a client-based policy, according to which every client receives the utmost attention, meticulously keeping with the client's schedule and vigorously maintaining high professional standards. The firm counsels its clients throughout all stages of the process in a courteous, personal and professional manner. Throughout the years, the firm has gained extensive experience in business activities with a variety of foreign entities, forming a widespread network of business connections, allowing its clients to enjoy quick, efficient and precise service. The firm’s global activities cross continents, spreading across more than 30 key global financial centers, including: England, United States, Cyprus, Singapore, Hong Kong, The Virgin Islands and more.

14/07/2025

Recently, there has been an increasing number of obituaries for the greenback. Economists are competing with each other to make the most pessimistic forecasts. For example, the head of research at a major European bank now concludes that the USD could lose another 35%.
Let's take a look at some points of the doom-mongers. The U.S. dollar index DXY, which tracks the dollar against a basket of major currencies, has indeed lost about 10% since Trump’s inauguration. But is this really a fundamental turning point? In the stock markets, which lost 15% after the “liberation day” (and then recovered), this was considered an increase of volatility. Over a period of five years, the DXY remained unchanged, with the Swiss franc being the only currency to strengthen against the USD on balance, while the Chinese renminbi, for example, weakened against it. Dollar bears argue that the US currency is significantly overvalued against major currencies in terms of purchasing power parity (PPP). This is essentially correct. However, depending on the chosen comparison, the situation is not so clear-cut. For example, based on the popular Big Mac Index, it is fairly priced against the euro. Moreover, it is anyway not possible to fully exploit PPP imbalances and thus harmonize prices. In Switzerland, a gallon of gas costs CHF 6.58 (USD 8.27), whereas in the US it costs an average of USD 3.15. However, this does not benefit any Swiss car driver.
Incidentally, the dollar has been overvalued ever since the DXY was created in 1972. As American economist and Trump advisor Stephen Miran said, “The dollar is permanently overvalued because dollar assets act as the world's reserve currency.” This will not change soon. 60% of all central banks' reserves are held in USD, with few alternatives. The recent summit in Rio clearly showed that the BRICS countries' plan to create an alternative to the dollar is wishful thinking.
The dollar is weighed down by uncertainty and seemingly erratic actions. However, these may be viewed too pessimistically. The “Big Beautiful Bill”, for example, will greatly increase the deficit and debt (isn't the same thing happening in other countries?). On the other hand, it will probably trigger a massively underestimated growth spurt. And the currency of a strong economy tends to be stronger in the long run than that of a weak one.
What is really worrying is Trump's seemingly spontaneous tariff policy. This is damaging the economy and undermining the capitalist system. However, announcements do not yet constitute implementation. Trump often backtracks when he realizes that the consequences of his actions could be devastating. This coined the term TACO (Trump Always Chickens Out). But Donald Trump's smartness might be underestimated. Perhaps he acts very purposefully. He demands the maximum and shocks the other side so that they move at all – in the direction he sets. Maybe TACY is more accurate: Trump Annoys the Chicken Yard.
We are not dollar bulls. However, we believe that many of the negatives have been factored in, while the potential positives have been completely ignored. The US dollar remains the world's only currency.
Strugano & Co Law Firm

01/07/2025

The first half of the year was marked by heightened geopolitical risks, disruptive economic policies in the US, tariff wars, recession fears, and record levels of uncertainty. The Economic Policy Uncertainty Index tripled from January to April, reaching its highest level since inception.
This did not leave the stock markets unaffected. Following “Liberation Day”, when Donald Trump announced his punitive tariffs on April 2, they dipped by up to 15% within days, only to recover again over the following weeks. The MSCI World Index (USD) is now 7% above its level at the start of the year. Some may be surprised by the market's resilience. Even more so, as short-term interest rates have only been lowered in Euroland and Switzerland, but not in the US, and the yields of 10-year government bonds remain stubbornly high in most countries or even rise (Japan). Which means, ceteris paribus, that stock market valuations are looking quite demanding.
Be that as it may. The stock market is a unique animal driven not so much by actual pain and inconvenience but by future goodies, by hope, and sometimes hype. And in this respect, there are some bright spots. One of these is certainly the now well-data-supported assumption that a global recession is not imminent. Furthermore, Trump's policy, which is, in sum, clearly positive for a prospering economy, is gaining acceptance. Consider, for example, the recent decisions of the Supreme Court. Or the "Big Beautiful Bill” which is currently being debated in the Senate and could pass Congress despite all its imponderables, ready to be signed by the president on July 4. This bill will, of course, boost deficits and the already high national debt. Even worse off in this respect is Europe, where on top of infrastructure spending and now, as agreed on Friday, the increase of defense spending to 5% of GDP ditches the debt brake (Germany) and raises the level of debt to dramatic heights (France). A big, long-term negative for sure. In the short term, however, markets tend to view it as a welcome support for the economy.
Another important date is July 9, when the period of the reduced punitive tariffs set by Trump at a merciful 10% expires. The market is not expecting a major reversal to reasonableness. There is, however, a lot of tactics involved, and relief or positive surprises are more likely than a Liberation Day-2, as evidenced by the talks with Canada. Canada canceled its tax on U.S. technology yesterday, just hours before trade negotiations with the US were set to stall.
One factor driving and set to continue driving the stock markets, particularly in the US, is the AI-revolution with all its associated value chains, from the massive expansion of data centers to applications in medicine, robotics, business, and everyday life. This is quite comparable to the Internet revolution of the late 1990s. We think that this powerful market driver is still a long way from flagging. Naturally, the risks rise in tandem with the stock prices. But remember that the Nasdaq-100 index rose by 400% in the five years before the dot-com bubble burst in 2000. In the same timeframe, up to now, it has risen by "only" 130%.
As Mark Twain said: "History does not repeat itself, but it often rhymes."
Strugano&Co Law Firm

16/06/2025

April 4th, China – producer of almost 90% of rare earths – announced export controls on seven rare earth elements, including monazite, samarium, gadolinium, and terbium. Carmakers in the US have immediately warned of serious consequences if these elements became scarce. Rare earths are needed in alloys, magnets, high-quality steel, electric motors, photovoltaic systems, etc. One might now be tempted to invest in rare earths or in beneficiaries of scarcity. Scarcity drives the price, of course. But basically, rare earths are not rare at all. Deposits of rare earths can be found all over the world, but they are not found in pure form or in concentrated quantities. However, China undercut world prices for rare earths in the 1990s and now essentially has a monopoly. Therefore, rarity could become abundance overnight if Donald Trump reaches an agreement with Xi Jinping, as he claims he has done.
We prefer to invest in assets whose supply isn’t affected by presidential mood swings. Two such assets are gold and Bitcoin (supply limited to 21 million coins). Demand for both is set to rise further due to the uncertainties created, among others, by Trump, the heavy debt loads of countries with fiat currencies, and the escalating geopolitical risks in the Near East. These assets, however, lack intrinsic value, i.e., they do not generate earnings or pay dividends. We hold substantial positions, but therefore only as a supplement.
Our core investments are in stocks of companies that are active in attractive and growing segments. The scarcity of their products relative to demand is, of course, always a key factor in a positive evaluation. Electric power is one example. The world urgently needs huge additional amounts of it. This is due to two factors: the pursuit of decarbonization and the boom of digitalization.
An interesting stock in the first sense is NKT Holding. The Danish company is a global provider of AC/DC cable solutions with a leading product portfolio in the high-voltage segment. Thirty percent of its revenues come from Germany, where expanding the high-voltage grid is an urgent requirement and a part of the huge infrastructure fund. The stock of this strongly growing but lesser-known company is reasonably priced and fulfills our value criteria.
Schneider Electric is another beneficiary of electrification, especially digitalization. The French group is a global industrial technology leader specializing in energy management and automation solutions, like Siemens or ABB. A quarter of its revenues come from data center construction, currently one of the world’s fastest-growing business segments. Data centers are the hardware core of AI. Global investments in data centers surged 51% in 2024 to USD 455 bn and are expected to grow an additional 35% p.a. for the foreseeable future.
Strugano & Co Law Firm

27/05/2025

In recent years, there have been a few events that resemble tectonic shifts. Geopolitically and economically. Russia's attack on Ukraine has brought an abrupt end to the “peace dividend”-period that followed the collapse of the Soviet Union, waking Europe in particular from a pleasant slumber and fundamentally changing the geopolitical landscape. Another major disruption to the prevailing complacency was the election of Donald Trump. This turned almost everything that had previously been established on its head, both globally and, above all, in the USA itself. Dramatic fundamental changes like these cause tensions, just like shifts in the Earth's crust. These can be reduced over time through successive adaptation. However, there is also a risk of eruptions and earthquakes.
Quite often, massacres not only affect others but ultimately the originators themselves, too. This is clearly the case in Russia, where Putin has squandered the opportunity to develop the country into a prosperous economy after it opened up. However, it is also the case in the USA, albeit less obviously.
The situation in the US is shaky. While it is debatable whether the tariff chaos will cause a recession any time soon, it certainly isn’t stimulating growth. The uncertainty alone has paralyzed investments, and also the large foreign investments promised under pressure from Trump are merely announcements, not actual capital flows, and can still be reversed, as Roche shows. The company publicly stated it would need to reconsider planned US investments if prescription drug prices were to be cut. The business of US companies is directly affected as well. For example, due to stricter export restrictions, Nvidia wrote off USD 5.5bn of its H20 graphics chips, which were specially developed for the Chinese market but can no longer be sold there. Or look at Apple. Last Friday, Trump threatened to impose tariffs on all foreign-made iPhones, whether in Vietnam or India.
The business implications of Trump’s policy shift are one thing. The other, even more serious issue is its impact on the extremely important Treasury market. The budget bill, which was narrowly approved by the House of Representatives last week, may stimulate the economy through tax cuts, but the markets are seriously concerned about the sharply rising budget deficit (already an enormous 6% of GDP) and the ballooning government debt. Last week’s auction of new 20-year US government bonds was sluggish. The interest rate was significantly higher than the average of the previous six auctions. On top of that, the USA lost its last remaining top rating as Moody’s lowered its rating to Aa1.
There is a growing disparity between the stock market, which has made a V-shaped recovery from the post-“Liberation Day” slump, and the bond market, where the yield on 10-year treasuries is now 4.5% - five times higher than five years ago. The S&P 500 index, however, doubled within the same timeframe. An imbalance we have very rarely seen on this scale.
Always hold alternative investments: gold, Bitcoin, Swiss equities.

Strugano & Co Law Firm

10/05/2025

Trump’s actions and executive orders are a bunch of erratic ideas and measures, often short-lived as he himself tends to overrule them the next day. There are only a few recognizable constants. One is his mantra to combat the alleged strength of the US Dollar.
Let’s share a few thoughts on this: Excluding short-term disruptions such as carry-trade unwinds the market value of a currency is determined by differences in inflation, interest rates, and money supply compared to other nations. And – as can be seen in the case of the Swiss franc – predominantly by relative political stability and economic prosperity. Donald Trump cannot directly influence the first determinants. But he can cause havoc and uncertainty and economic damage and herewith undermine the credibility of the U.S. – and his own one as evidenced by his approval ratings after his 100 days in office. The trade-weighted USD (DXY) measured against six foreign currencies showed some weakness accordingly: it lost 10% year-to-date and about 4% since the “Liberation Day”. If Trump continues in this vein, he could really cause lasting cracks in the USD. And if it came to the worst and Trump eliminated the Fed's independence or closed international investors out of the treasury market, the USD would collapse, as would the glory of the once world's No. 1 nation. Examples in this respect are manifold right down to the junk currencies of Venezuela or Zimbabwe.
However, we are not that pessimistic. Several factors will prevent this from happening. First, MAGA and desperately seeking a weak USD are not really compatible. Moreover, a weak USD would not only be positive for the country; it would also drive import prices higher. Together with the crazy tariffs, this would lead to serious inflation. A weakening USD could also stop or significantly slow the inflow of foreign capital which is urgently needed to finance the huge debt and the much desired “reindustrialization”. The administration is aware of this and clearly opposes interventions in the forex market as the treasury secretary Scott Bessent made clear in his discussion with his Japanese counterpart two weeks ago.
In fact, the TXY-index recently moved in tandem with the US stock market and does not really reveal any structural weaknesses. Despite all the uncertainties, the USD will remain the world's no. 1 currency by far. This is mainly because there is no viable alternative in sight. The euro is the only currency with the economic prerequisites for this role. It represents a large economy, and it has a liquid money and capital market. However, it lacks political coherence and the background of an economic powerhouse. The USD is the global standard currency in which goods are traded and 60% of the forex reserves of all central banks are held in USD (only 20% in EUR, the next largest is the Yen with 6%).
Strugano & Co Law Firm

22/04/2025

📉 Markets in Flux | Policy in Question
Trump’s recent tariff moves have reignited global uncertainty—impacting trade, inflation, and investor confidence. In our latest House View, we break down the consequences and share how we’re navigating the volatility.


Trade, Tariffs & Turmoil: Trump's Policies and the Market Fallout

Since April 2—dubbed “Liberation Day” by Donald Trump—financial markets have been rattled by a whirlwind of contradictory announcements, exemptions, and policy reversals. Amid the ongoing fog, it’s worth taking a step back to assess the situation.

Trump's policy agenda includes some pro-business elements: deregulation, tax reform, and bureaucratic cuts. But his abrupt tariff offensive—launched with sweeping and economically unsound measures—has inflicted notable damage on the global economy, and especially the U.S. economy.

Rather than targeting specific unfair trade practices, Trump imposed broad tariffs using a flawed formula, guided by economic advisor Peter Navarro’s mercantilist worldview. The assumption: every import harms the U.S. economy. The reality: many foreign products are simply more efficient or better made. A telling example is the Japanese auto market—where no protectionist barriers exist, yet U.S. automakers fail due to lack of competitiveness.

Free trade, as Ricardo argued centuries ago, creates prosperity. Blanket protectionism does not. The hope that tariffs will spark a new wave of U.S. industrialization is optimistic at best. Even the few investments being made (e.g. Nvidia, TSMC) are long-term projects—mostly reshoring responses to Biden’s Inflation Reduction Act—not direct results of Trump’s actions.

Tariffs are, undeniably, taxes on consumers. While the CPI has been moderated by falling gas prices, higher import costs combined with a cooling economy could spell stagflation—a nightmare scenario for the Federal Reserve, as Jay Powell recently acknowledged. Interest rate cuts are now increasingly unlikely.

Markets hate uncertainty, and Trump’s erratic policy signals have left companies in the dark. It’s earnings season, yet many firms are declining to issue forward guidance—reflecting unprecedented unpredictability.

Still, Trump may surprise us. He could reverse tariffs at any time. He even hinted at progress with China and struck a surprisingly cooperative tone toward the EU following talks with Italy’s Meloni. But the damage is done. Investor trust has eroded. The economic environment now feels too unstable for meaningful new investment.

As we stated in our previous House View: this is less a golden age for markets, and more an age for gold. We’re reducing exposure during rallies, maintaining a disciplined focus on diversification and quality assets—while waiting for clarity to return, perhaps in a post-Trump era.

Strugano & Co Law Firm

03/04/2025

In this world of eclectic array of narratives, the question is not what is being talked about, but what is relevant for real return going forward.
Equity valuation has converged strongly year to date, with US valuations contracting and European large companies’ valuations expanding significantly, especially in Germany.
From a valuation perspective, midterm forward returns look most promising in US and European small and medium sized companies.
While US economic growth has slowed down, we do not believe the recent escalation in trade tensions will halt growth or lead to contraction. The U.S. administration is likely to be guided primarily by pragmatism, given it has roughly two years to implement and demonstrate the effectiveness of its economic policies before the next election cycle begins in earnest.
In conclusion, we believe that as both the US and Europe shift their economic policies towards pro-growth strategies — and if, as indicated by the US administration, there is a focus on deregulation, and fostering easier business conditions — this could establish a highly business-friendly environment in some of the world's largest economic regions for the years ahead.
Have a great weekend
Strugano&Co Law Firm

25/03/2025

On Thursday, the Bank of England (BOE) and the Swiss National Bank (SNB) completed the series of recent central bank decisions that began with the European Central Bank’s (ECB) decision on March 6. Here is the overview of the actual key rates:
ECB 2.5%, -0.25%
BOJ 0.5%, no change
Fed 4.25% – 4.5%, no change
BOE 4.5%, no change
SNB 0.25%, -0.25%
The central banks' interest rate decisions were in line with market expectations. After a surprise cut of 0.5% in December, the SNB is now pursuing the most expansionary monetary policy. In contrast to the other institutions, however, currency considerations, i.e. avoiding a stronger franc, play a significant role here. In the case of the ECB the economic weakness in the eurozone, especially in Germany, is most likely the reason for the sixth rate cut in a row. For all others, the trade-off between a resurgence of inflation and a possible slowdown of the economy is the key consideration. This is especially true given the tariff and trade uncertainties created by the new US administration. The Bank of Japan (BOJ) e.g. warned of heightened global economic uncertainty, suggesting that further policy will depend largely on the fallout from potentially higher US tariffs. The Fed also highlights the challenges of the political disruption which could both reignite inflation (import tariffs are a price increase) and lead to reduced economic activity, as trade wars often do. Powell explicitly said that a “good part” of the central bank’s higher inflation expectation comes from tariffs and that the central bank’s forecasts for less economic growth and higher inflation in 2025 somewhat offset each other. The setting of key interest rates is, however, only one element of the central bank’s policy mix. Remember the good old days of quantitative easing (QE) before the liquidity-driven price explosion in 2020 began. Last Wednesday the Fed announced a further tapering of its “quantitative tightening” program in which it is reducing the bonds it holds on its balance sheet (from USD 25bn to now only USD 5bn per month).

Central banks can set short interest rates and provide liquidity more or less at will. However long-term interest rates are determined by the market. And they are crucial for economic viability (the average life of a mortgage in the US e.g. is 30 years) and for the valuation of stocks (especially for growth stocks with earnings far in the future). Central banks can try to influence investor expectations and thus bond yields by pursuing hawkish or dovish policies. But lowering bond yields by simply lowering short-term rates doesn’t work. In addition, high budget deficits and growing government debt are, of course, key determinants of bond yields as well. It’s supply and demand as in any market.

President Trump who urged the Fed again to reduce interest rates might not be fully aware of these mechanics. But his administration does. Treasury Secretary Scott Bessent, a former hedge fund manager, said Wednesday that the new administration seeks to bring down long-term interest rates and that Fed rate cuts are not necessarily the way to achieve it.

The interest rate framework of any economy is a combination of short-term rates in the money market and bond yields at the long end.

Strugano&Co Law Firm

10/03/2025

Donald Trump said in his inaugural address in January: “The golden age of America begins right now.” Maybe – but the mess he has created since his inception could well be also the beginning of the age of gold.
The gold price is basically driven by four factors: jewelry demand, use as an industrial metal, central bank purchases, and investment/speculative demand.
Jewelry demand has stabilized after years of decline (note: the gold price rose at the same time). Demand from booming India alone could, however, quickly revitalize this market segment.
The use of gold as an industrial metal is in a secular uptrend as e.g. electric vehicles, smartphones, and semiconductors need it.
Central banks are overall in a constant buying mode. Their aggregate purchases reached new records last year mainly driven by the central banks of India, China, Turkey, Poland, etc. This trend will persist as they intend to diversify their reserve holdings.
The big swing factor is investment demand. This could, of course, also suppress the price of the precious metal if people see somehow safe and promising investment alternatives elsewhere. But with the current mess created by Trump in the biggest market, gold as an asset class is gaining relative attractiveness. We have said here repeatedly that political bourses have short legs. This obviously was so far correct regarding the Ukraine war and the trouble spot Middle East. But when it comes to a potentially disastrous impact of politics on the economic situation this will at least cause concern. Here we refer especially to the erratic tariff policy of Trump. Last Tuesday, imports from Canada and Mexico faced 25% tariffs. A day after Trump granted US automakers a temporary exemption. On Thursday he then paused most of the new tariffs until April. This is playing with fire. The involved volume is substantial. The US imported a combined USD 918bn from Canada and Mexico last year. Oil, electronics, the machinery of all types, commodities, etc. The 25% tariffs on this volume alone could lead to substantial price increases in the US and a noticeably negative impact on consumer confidence and the labor market. We don’t want to paint the devil on the wall and hope that the tariffs are just one element in a tactical game and that the administration will finally refrain from igniting a worldwide trading war.
We are still confident that the positive key elements of the new disruptive policy like e.g. deregulation will support the market and finally push it higher. But the current uncertainty is poison for it and leads to increased money flows into safe haven assets like gold which ultimately had always the character of insurance as well. Inflows in gold as an asset class are mainly channeled into ETFs nowadays. Global physically-backed gold ETFs saw a very strong inflow of USD 9.4bn in February. Total assets in gold ETFs stand now at USD 306bn. Sounds like a lot. But bear in mind that the market-cap of e.g. Nvidia alone is eight times that. So, if flows move only a bit the price of gold could further rise significantly.
Strugano&Co Law Firm

24/02/2025

1975 the legendary John Bogle founded the Vanguard Group which initiated index investing. It launched its first money market fund opening a new asset class for investors and then it pioneered the concept of mutual fund indexing with the introduction of the First Index Investment Trust (now Vanguard 500 Index Fund). That was the birth of ETFs or "exchange-traded funds": funds that trade on exchanges, tracking a specific index at a low cost. This revolutionized the investment world. The volume of ETFs grew rapidly and even exploded since the beginning of this millennium. Today, it is possible to track almost any market, industry sector, and, since a year ago also, e.g., Bitcoin, by investing in an ETF. The sheer volume is breathtaking. In the US alone, more than 4’000 ETFs are traded, and they saw last year a record inflow of USD 1.1 trillion, reaching net assets of USD 10.4tn. This corresponds to 37% of the market cap of the world’s largest stock exchange, NYSE. 78% of the total ETF volume in the US is invested in equity index funds, 17% in fixed-income vehicles, and only about 5% in commodities and miscellaneous. By far, the largest providers of ETFs are BlackRock (31% market share), Vanguard (29%), and State Street (14%).
ETF investing is also considered a form of “passive investing” and many people have the misconception that active and informed investment decisions are no longer necessary. It is true that you can cover an index cheaply and easily with an ETF without e.g. the tedious analysis of individual stocks. But the decision as to which index to invest in is not trivial. Should you choose e.g. the Japanese Topix, the European EuroStoxx 50, or the Swiss Performance Index SPI? Even if you made up your mind to invest e.g. in the US stock market only, you must choose between e.g. the S&P500, the Nasdaq100, or the Wilshire 5000. In any case, you also should be aware of what exactly you are invested in. If you think you are well diversified in a broad selection of US tech stocks by buying a Nasdaq100 index ETF you somewhat naively disregard the fact that 45% of your money is just invested in only 7 stocks. This would be even worse in case you invest in the Swiss SMI: here only 3 stocks make up 45%. The easy way out of these dilemmas could be a simple investment in a world index. Then you have it all. But far from it. Because the most prominent and largest one, the MSCI World Index, is weighted by the market capitalization of the individual markets and further requires minimum liquidity and market accessibility. This means that you are invested 75% in the US stock market. Maybe you don’t mind, but you should consciously accept that you are e.g. not invested in the equity market of the world's second-largest economy (China).
ETFs are a great way to invest in markets and segments with cheap and very liquid instruments. They will, however, not spare a careful analysis and a well-founded investment decision.
Strugano&Co Law Firm

11/02/2025

DeepSeek, the Chinese open-source AI app caused havoc in tech stocks, as it seems to offer similar functionalities as the US counterparts but at a much lower cost. President Trump imposed steep punitive tariffs on Canada and Mexico, a move which would set the North American economic area upside down and would also hurt many US industries. Even if the tariffs were finally not imposed yet, they are hanging over the economies like the sword of Damocles. Here we are not assessing the impact of the two events on US technological leadership and e.g. on the inflation outlook. But we see in the market reaction one of the pillars for our positive view:

Market Resilience
The markets have immediately recouped all the losses arising from the risk of a North American trade war and the DeepSeek shock evaporated on the rosy horizon of the golden age. This is a real market strength. As long as the new administration's power and its positive impact on the world’s largest economy are not seriously questioned, resilience will prevail. When the markets in the US rose 60% in Biden’s not very economy-favorable tenure, why shouldn’t they make much more under the MAGA dynamic of a Trump.

FOMO
Which leads to another phenomenon we see in the US markets. The “Fear of Missing out”. If investors see the tremendous opportunities created by the disruptive move now unfolding at high speed they are willing to disregard annoying obstacles in the short term. The markets enter now a more psychologically driven phase where they detach themselves somewhat from reality and the classic parameters that normally determine them. Valuation and the fact that the risk premium of stocks vs bonds is as low as in the late nineties of the last century no longer matters. Of course, this creates risks but the potential created by FOMO and the self-fulfilling momentum can be still very substantial. “La hausse amène la hausse” as the French say.

Seasonality
We don't think much of the theories of seasonal patterns in the stock markets. If you invest accordingly, you often exactly hit one of the exceptions. So, they definitively have to be taken with a grain of salt. But one of the patterns is quite striking: If January was a positive month, 84% of the years since 1930 showed a positive performance for the S&P500 in the respective year and frequently quite a substantial one. And January 2025 was a positive month.
Strugano&Co Law Firm

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