Opinion

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.

AI is not a bubble by definition. But the investment wave surrounding it is. The first hairline cracks are now clearly visible, and comparisons with the run-up to the global financial crisis are becoming hard to dismiss.

On the eve of the recent meeting of EU leaders on how to make the European economy more innovative, more competitive, and less dependent on foreign countries, participants were sent a note from the European Central Bank (ECB). In it, the bank outlined what it considers desirable policy to achieve those goals.

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?

Since Trump’s reelection as president of the United States, the world has been on edge. Geopolitical tensions are dominating the markets, and the role of the dollar is once again under discussion. Still, I find it difficult to translate that into the idea that this is the moment for the euro to step out of the greenback’s shadow. There are simply too many loose ends.

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.

Here in Milan, during the Olympic Games, only one thing matters: winning. In geopolitics, the battle for victory has now been pushed to an unprecedented level. But whether we in rustic Europe are truly aware of that, I wonder.

Robo advisory platforms have quietly moved from novelty to infrastructure. What began as simple ETF portfolios is evolving into something far more powerful: discreet, algorithm-driven portfolios built at the individual investor level, often embedded inside universal banks that already control distribution, data, and trust.

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?

With a new Fed chair on the way, subject to approval by the U.S. Senate, it seemed like a good moment to take another look at “inflation.” And especially at inflation expectations, because they largely determine the behavior of consumers and investors alike. What I see is far from reassuring.