When we were kids, there was always that moment in Disney cartoons when we would cover our eyes in fear… yet keep our fingers slightly open so we wouldn’t miss a thing. Financial markets are going through a similar phase: a mix of anxiety and hope. No one wants to look away, convinced that the story will have a happy ending.

• Markets: A Contrasting Dynamic

• The Art of Power

• "It’s Time to Get Drunk"

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Market Review

Markets: A Contrasting Dynamic

Indices: Europe and the U.S. Moving in Different Directions

With respective increases of +19.70% for Nestlé, +19.68% for Roche, and +10.57% for Novartis, these three heavyweights of the SMI (+12.6% YTD - LinkedIn) have played a crucial role in the performance of Swiss markets since the beginning of the year. Their influence has been so strong that portfolios heavily exposed to the domestic market have enjoyed significant leverage.

In Paris, the CAC40 is up 10% since January, driven by a rebound in industrial and financial stocks. Meanwhile, in Germany, the stock market reacted positively to an agreement between future Chancellor Friedrich Merz and the Greens on a massive public investment plan. As a result, the DAX has gained +17.44% YTD.

In Asia, India is bouncing back after losing $1 trillion in market capitalization over a few months. The Nifty 50 is up +3.21%. However, the Nikkei 225 remains volatile: +1.86% MTD but still down for the year (-5.14% YTD).

Across the Atlantic, U.S. indices are facing turbulence. The S&P500 has lost nearly 10% since its February 19 record high, crossing the symbolic correction threshold. The Nasdaq, weighed down by the decline in tech stocks, has fallen 13% over the same period.

Commodities: Gold and Silver Shine

Gold has crossed the symbolic threshold of Usd 3'000 per ounce (+15.6% YTD, LinkedIn), fueled by growing demand for safe-haven assets. Newmont Corporation has benefited, with a +12% performance. However, silver stands out even more, rising +17.66% YTD, making it the third-best performer after coffee (+19.55%) and the Hang Seng (+23.33%, far outperforming the Shanghai Composite, which is up just +2.33%).

Interest Rates: Pressure is Mounting

The yield on the French 10-year OAT stands at 3.49% (+0.30% YTD). Its German equivalent, the Bund, has slightly risen to 2.81% (+0.45% YTD).

French debt is under increasing pressure. While Bercy aims to bring the deficit below 3% of GDP by 2029, sovereign yields have jumped in response to announcements from future German Chancellor Friedrich Merz. His €1 trillion plan to modernize infrastructure and strengthen military capabilities has pushed up German rates, dragging European government bonds with them.

With this increase, the average cost of French debt is now approaching 2% and could exceed 3% by the end of the decade, further burdening the country’s budget (a reminder of our recent advice to avoid sovereign bonds).

Technology and Crypto: The Big Losers

Nvidia continues its decline, wiping out $1 trillion in market capitalization since its January 6 peak. Other tech stocks are following suit, with the "Magnificent Seven" index down 15% since January. Tesla, in particular, has lost 50% of its value since mid-December, returning to its pre-Trump election levels. Despite this sharp correction, the stock remains up 30% over the past year.

Adobe, meanwhile, has dropped 14% despite solid earnings. Down 45% from its late 2021 highs, the software company is now one of the sector’s most undervalued stocks, with a P/E ratio of 23 and an EBITDA multiple of 14.

In the crypto world, despite Donald Trump's efforts to rekindle investor interest, Bitcoin remains stuck between Usd 80'000 and Usd 85'000. Ethereum has seen a dramatic drop of 42% YTD (LinkedIn). Coinbase is also under pressure, down -33.4% YTD and -16.52% this month. Reddit, another retail investor favorite, plummeted 20% in one session and is down -33.7% YTD.

Luxury Sector Struggles, Defense Stocks Soar

In Europe, the luxury sector is having a tough time: Kering dropped -10.71% last Friday, totaling -19.88% since the start of the month. The trend is similar for Ermenegildo Zegna (-13.79%), LVMH (-12.22%), and Salvatore Ferragamo (-11.42%).

Meanwhile, the defense sector remains one of the big winners: Rheinmetall (+37.60%), Thales (+31.70%), and Saab (+28.79%) lead the performance rankings in Europe (LinkedIn).

Mark Carney, the New Canadian Prime Minister

Born in Fort Smith, Northwest Territories, Mark Carney grew up in Edmonton before studying economics at Harvard and Oxford. A former Goldman Sachs banker, he gained attention during the Russian financial crisis of 1998 before joining the Bank of Canada in 2003. Appointed governor in 2008, he guided the country through the global financial crisis.

In 2013, he became governor of the Bank of England, navigating the turmoil of Brexit. His unique background—blending private finance and monetary policy—makes him a key figure in the markets. His rise to the role of Prime Minister marks a turning point for Canada, where economic and financial regulation is expected to take center stage during his tenure.

Few numbers

• 197.7 km/h – The autonomous Maserati MC20 from Politecnico di Milano set a speed record for a driverless vehicle at the Kennedy Space Center, surpassing the previous 192.2 mph mark.

• 29% – Singles without children now make up nearly a third of American households, compared to just 16% in 1960.

• $918 million – The U.S. trade deficit has reached a record high. The EU accounts for Usd 235 billion, with a quarter of that involving Germany.

Editorial

The Art of Power

More by chance than by any grand vision, I recently reopened The Prince by Machiavelli, that little governance manual that has survived five centuries of history. And I wondered: is being Machiavellian a compliment or a criticism?

In the world of power and politics, being "Machiavellian" is often a compliment: it means you are strategic, pragmatic, and capable of navigating troubled waters while keeping your goal in sight. It’s the art of cold calculation, of managing power dynamics without naive illusions. But in everyday life, it's a criticism, if not an outright accusation. It implies manipulation, cynicism, a lack of scruples. Calling someone "Machiavellian" in casual conversation is often a way of saying they are willing to lie or betray to achieve their ends.

Machiavelli himself may have been the victim of an unfair reputation. In The Prince, he does not necessarily advocate immorality; he simply describes the world as it is: people are fickle, morality is a luxury when power is at stake, and a ruler who is too kind will end up as prey for the lions.

Realpolitik and Machiavellianism: Similar, but Different

Realpolitik and Machiavellianism are often confused, but they are not the same. The former is pragmatic, aiming for long-term effectiveness without getting bogged down in ideals. The latter is more opportunistic, ruthlessly exploiting lies and manipulation for immediate gain.

Ludwig von Rochau, who coined the term Realpolitik in the 19th century, wasn’t advising a prince but analyzing how a nation could survive in a world where only power dynamics mattered. His natural heir in politics was Bismarck ("Might is right"), who skillfully used diplomacy, war, and alliances to unify Germany. Machiavelli, on the other hand, as a true Florentine of the 16th century, was primarily concerned with how an individual ruler could hold onto power.

Kissinger, by opening China to the United States, applied a cold and calculated Realpolitik, serving long-term American interests (no surprise there). Putin, since coming to power in 2000, has systematically consolidated his position by neutralizing opponents, controlling the media, and manipulating laws to extend his rule until 2036. He perfectly illustrates Machiavelli’s statement: "A prince never lacks legitimate reasons to break his word."

Power Above All

Machiavelli advised rulers never to be burdened by morality when acquiring and holding onto power. Trump has certainly taken this lesson to heart. Barely reinstated in the White House, he pardoned more than 1'500 individuals convicted for the events of January 6, 2021, ensuring unwavering loyalty from his MAGA base. At the same time, he purged federal agencies of his opponents, firing more than 160 members of the National Security Council.

The Fool of the Game

By forcing Europeans to invest €800 billion in their defense, Washington is dictating where the continent’s resources must go. Money that could have been invested in AI or future technologies is instead being funneled into the military-industrial complex. Far from a simple disengagement, Trump is imposing a brutal Realpolitik, one that deprives Europe of its ability to close its strategic gap and keeps the U.S. in a position of dominance.

Coincidentally (or not), this is the same amount that the Draghi report last September suggested was needed to revitalize European innovation and energy infrastructure.

A Missing Piece Changes Everything

Abandoned by Trump, Zelensky and Ukraine seem lost; both literally and figuratively. The numbers don’t lie: despite European military support matching that of the U.S. (€62 billion, according to the Kiel Institute), the mere withdrawal of America is enough to seal Ukraine’s probable defeat.

Why? Because not all billions are created equal. One U.S. dollar of military aid means technology, intelligence, and integrated command structures. One European euro of military aid? Often just a blank check, without the ecosystem that makes it effective.

The Machiavellian Gamble

Machiavelli warned that excessive abuses eventually rot a reign from within. While Realpolitik helped Rochau and Bismarck build solid states, Machiavellianism pushed too far can become a dangerous bet.

Trump 2 is gambling on an uncompromising balance of power. The question remains: will this gamble hold until 2028? And will JD Vance be the one to succeed Donald Trump?

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Investments

"It’s Time to Get Drunk"

"…it is time to get drunk; so as not to be the martyred slaves of time, get drunk, get drunk without stopping; on wine, on poetry, on virtue, as you please."
Baudelaire & Serge Reggiani (YouTube, 3m02)

But today, the party is running out of steam. The alcohol industry, once a pillar of earthly pleasures and global trade, is staggering under the combined weight of taxes, shifting trends, and a consumer base that seems increasingly sober. Glasses are emptying more slowly, and some fear that thirst may soon be quenched for good.

A Tariff Hangover

First, there is yet another threat from across the Atlantic: a 200% tariff on European wines and spirits. A headache-inducing blow for brands like Pernod Ricard, Rémy Cointreau, and Diageo, whose stock prices have already been reeling since the announcement. And for good reason: the U.S. is the largest foreign market for European alcohol, with nearly Usd 10 billion in exports in 2023.

Champagne, the undisputed king of celebrations, is feeling the impact the hardest. With 26.9 million bottles exported to the U.S. last year, American buyers are a lifeline for the vineyards of Reims and Épernay. But if a bottle currently sold for Usd 60 suddenly jumps to Usd 180 due to tariffs, the party may be over.

Vodka is facing a similarly bitter cocktail: Usd 466 million in French vodka exports (LVMH owns Belvedere, and Pernod Ricard owns Absolut) could evaporate overnight. If the American consumer turns to local alternatives, bourbon might replace Cognac, and Texas gin could dethrone London dry. One alternative? Simply producing vodka in the U.S. (let’s be honest, it doesn’t take much to make).

What happened to binge drinking?

The numbers are clear: alcohol consumption in the U.S. is declining for the second consecutive year, with no signs of a rebound. Dry January, once dismissed as a temporary post-holiday challenge, is becoming something much more significant. In January 2024, 22% of Americans reported participating, a 5% increase from previous years. Unlike the usual "never drinking again" resolutions that dissolve after a few days, this shift seems more permanent. Some are even extending it into Lent.

But the real shocker? Generation Z has a radically different relationship with alcohol. A Gallup study reveals that only 59% of 18-34-year-olds identify as alcohol consumers, compared to 72% in the early 2000s, a sharp cultural shift.

Forget the cliché of college students drowning in cheap beer over Spring Break; this new generation runs on kombucha, mocktails, and alcohol-free seltzers. Health-conscious, hyper-connected, and wary of reckless behavior, they see binge drinking as outdated.

In good spirit: Tequila

If there is one category defying the trend, it is tequila. Its festive image, coupled with endorsements from countless celebrities, has kept it thriving while the rest of the industry struggles.

Meanwhile, non-alcoholic beverages are booming. The market reached Usd 565 million in 2023, up 35% year-over-year. What was once a niche is now mainstream, with brands like Heineken and Guinness investing heavily to attract consumers who want the taste of indulgence without the side effects.

Pharmaceutical Disruption: Ozempic vs. Alcohol

But what if the biggest threat to alcohol was not culture, but medicine?

GLP-1 medications like Ozempic and Wegovy, originally designed for diabetes but now popular for weight loss, have an unexpected side effect: they reduce alcohol cravings. According to IWSR, 12% of drinkers are currently on these treatments, meaning alcohol consumption could decline further as these drugs become more widespread.

Even China, once a voracious consumer of French wines and Cognac, is cutting back on imported alcohol. A mix of government crackdowns on extravagant spending and a slowing economy is reshaping the market.

Sober Future or Last Call?

Are we witnessing the decline of Bacchus? The industry is not giving up easily. Faced with falling sales, some are doubling down on “premiumization”, selling fewer bottles, but at higher prices.

At B-R & H Finance, however, we have seen this strategy play out for decades, and it may have reached its limits. There comes a point when you cannot justify another “small batch” or “ultra-exclusive” cuvée.

If U.S. tariffs become reality, the industry will not just suffer a temporary headache, it will be in a full-blown coma. With excess stock piling up, large-scale discounting is inevitable. Maybe it is time to wait for the next wine fair…

One last drink for the road?

AI in action

Is True Luxury Found in Abundance or in the Absence of Need?

ChatGPT: True luxury is neither blind abundance nor the total absence of need, but rather the mastery of one’s desires. Abundance provides reassurance, yet it also enslaves; the more one possesses, the more one fears losing. The absence of need can be a form of asceticism, but it can also be a forced renunciation or an illusion of wisdom.

Real luxury, then, is the ability to desire without being a slave to desire, to possess without being possessed. It is the delicate balance of enjoying the superfluous without being trapped by it, of having access to everything yet coveting nothing with urgency. It is the freedom to choose what is truly worth pursuing and what can be left aside.

Ultimately, absolute luxury may be that inner serenity that allows one to savor pleasure without dependence and to appreciate rarity without frustration.

Note from B-R & H Finance: Hermès, often considered the epitome of true luxury, continues its exceptional trajectory. Eighteen months ago, its market capitalization lagged LVMH by Usd 153 billion; today, the gap has narrowed to just Usd 53 billion.

B-R & H Finance

Founded in 2004, B-R & H Finance SA is a Swiss entity specialized in wealth management. We offer a full range of personalized and independent investment services and advisory solutions. Regulated by SO-Fit and authorized by FINMA, we are also members of the ASG (Swiss Association of Independent Asset Managers) and work with leading custodian banks.

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