February tenth, two thousand twenty-five

I. Foundation 

resistance to change and hence greater dependability for the results shown in the past.

II. Insights 

Our Viewpoints and ideas on market.

Lagarde and von der Leyen

“We can no longer waste our advantages by imposing limits on ourselves.”—Lagarde and von der Leyen (Ursula von der Leyen), writing in an opinion article in the Financial Times titled “Europe has got the message on change» (Europe has got the message on change), they wrote.

The article concludes by emphasizing:“The stakes are too high for us to fail.” “We are ready to do whatever it takes to put Europe back on track.” The wording directly echoes Draghi’s famous speech in 2012 to save the euro—“whatever it takes.”

The fact that one is the president of the ECB and the other the president of the European Commission further validates our next Wall Street bet in 250121:In the view of Europe’s revival, the growth narrative is being put forward for the first time as Europe’s top-down priority. It is the most certain trend, with a trading cycle that could last as little as several quarters or as long as several years.

“As the global artificial intelligence (AI) revolution accelerates, the EU risks being marginalized. Our traditional manufacturing giants are losing global market share. Geopolitical shifts have turned dependencies into vulnerabilities, while high energy costs are weighing on European businesses.”

Remember: when policymakers and politicians panic, the market rallies.

[Further reading]

250121 Wall Street’s next bet: Europe’s revival

250130 The European trade continues

250106 The early-year selloff in European government bonds and the market’s pricing of ECB rate cuts

250107 Diverging views on Europe: The Gravitational Effect

241204 A potential long position in Germany is taking shape

250120 Interest-rate pricing, safe assets, and behavioral mechanisms

Von der Leyen and Lagarde believe that Europe has the necessary conditions to catch up in the technology race. At the same time, “We have an opportunity to bring down energy prices in a lasting way.”The ultimate point is also to bring energy prices down, just as the Trump administration seeks to do.

“Firms still face long permitting procedures, onerous reporting requirements and diverging enforcement of digital rules.” Easing complex regulation would free up corporate resources and vitality. This is one of the easiest parts of the broader European market valuation uplift to trade, The valuations that have risen are pricing in this factor, and the results can be seen in the differing performance of various market sectors.

In 250120 Interest-rate pricing, safe assets, and behavioral mechanisms In it, we noted that when facing existential threats (for the governing party), leaders around the world will inevitably compete to promote development in areas such as output, productivity, prosperity, employment, safety, and security to meet the demands of increasingly anxious populations, Those who fail to meet these demands will ultimately be ousted and replaced by someone else.

Ultimately, all these goals require funding, and the most effective means are often stimulus policies, deregulation, and the market’s “animal spirits.” Fiscal austerity does not help achieve these goals.

Therefore, regardless of what is said or how the documents are written, what is certain is that any one of the governments currently in power around the world will ultimately choose higher fiscal spending and lower taxes out of panic; there will be no exceptions.

Add to this the practical deployment of technological applications, and the result is the macroeconomic regime of an Inflation Boom.

2025.02.10

III. Market Pulse 

Our latest Comments on the economic and market environment

Japan and the yen currency pair

We can see that some people sometimes read only the trading-day notes and skip the weekend material, but please be sure to read yesterday’s weekend file, especially the sections on Japan and the yen, The yen is strengthening in line with the broader trend of currency appreciation, but this trend has not yet attracted much attention. More capital will definitely line up to enter later.

A few additional points:

Chart: The currency pair mentioned in the weekend file: EURJPY

Chart: Going long the short end of the Japanese curve remains a robust and persistent trading strategy 

 Chart: Wage growth in Japan

2025.02.10

Note: All content in this article is for reference only and does not constitute investment advice, nor does it serve as a basis for any laws, regulations, or regulatory policies. Investors should not use or rely on this information as a basis for their decisions.