Han Dieperink

The world was already electrifying at a rapid pace. But two developments are now pushing this process into an acceleration that would have seemed unthinkable just a few years ago.

The war against Iran has now lasted a month, and the consequences are becoming visible at a rapid pace. The conflict began as an American-Israeli operation targeting Iran’s nuclear program and the regime in Tehran. But while the United States and Israel are dropping bombs, Europe is absorbing the heaviest economic blows. The result of decades of failed European energy policy, strategic dependency, and a lack of geopolitical power.

Necessity breaks laws, but it also breaks existing patterns, paradigms, and drives innovation. Necessity is, after all, the mother of invention. Not abundance or curiosity, but circumstances in which delay is not an option.

An unprecedented wealth transfer is underway. Over the next two decades, an estimated 124,000 billion dollar in assets will shift globally from the baby boomer generation to younger generations.

Within one hundred hours, American and Israeli forces struck nearly 2.000 targets in Iran. Ayatollah Khamenei and dozens of senior officials were killed. It is the largest American military operation in the Middle East since 2003. The initial market reaction was remarkably muted, but the oil price tells a different story.

Stocks follow earnings per share. Over the long term, the correlation between earnings growth and share price performance is as high as 98 percent. Everything else is noise. Macro fears, geopolitical tensions, quarterly results that fall short by a fraction — in the long run, they hardly matter. What counts is how much a company earns and how those earnings develop over time.

The S&P500 is virtually unchanged this year, but beneath the surface the US equity market is moving more than it has in years. More than one fifth of all stocks in the index have already risen or fallen by more than 20 percent this year. The gainers are clearly in the majority: about two out of three. Yet you do not see that reflected in the index itself. How is that possible?

The election result in Japan was historic. For the first time since World War II, one party secured a two-thirds majority in parliament. Prime Minister Takaichi can now implement her plans without the compromises that have so often paralyzed Japanese politics. The stock markets responded positively: prices rose and records were broken. This is the first effect of the coming reflation on Japan’s financial markets.

America has the most crypto-friendly president ever. Donald Trump has created a bitcoin reserve for the government. He has released crypto criminals. Americans can now include crypto in their pensions. And he halted Biden’s strict crypto policy. If bitcoin cannot rise now, when can it?

Jerome Powell is stepping down as chair of the Federal Reserve. Kevin Warsh will succeed him. For investors, the big question is whether US central bank policy will really change. The short answer: yes, possibly. And the reason is AI.