With a remarkable 29% return in 2024, we didn't just beat the market—we outperformed it!

Last week delivered one of those split-screen moments for investors: political relief on one side, rising anxiety about inflated tech valuations on the other. The end of a government shutdown briefly calmed nerves, but attention quickly shifted back to stretched prices in the most crowded corners of the market. While some high-flyers look ready for a pause, a different part of the market is quietly drifting lower from already modest levels. There, a temporary pullback can actually improve the long-term risk-reward. With a fresh batch of macro data due and a major chip company about to report results that could sway sentiment far beyond its own sector, the coming days may offer a clearer view of where genuine opportunity is emerging.

Last week, a sudden price shock in one of our holdings reminded everyone how quickly sentiment can turn, especially when market moves appear to be driven by more than just fundamentals. At the same time, voices calling for a broad correction are getting louder, often from those who sat out the rally and now feel every uptick as an accusation. In the background, politics continues to interfere. A partial resolution to a prolonged budget standoff in the United States has reduced immediate risk, but new tensions are already on the horizon. In the UK, upcoming labour market figures and monthly growth data could influence the timing of the next rate moves. Together, these factors create a market where noise levels are high, but value still hides in places that attract little attention.

So much for predictable policymaking. The Federal Reserve surprised markets by cutting interest rates, even though inflation has not yet convincingly moved toward target. Some voices within the central bank itself have questioned whether the step came too soon, especially given a labour market that is softening rather than collapsing. New import tariffs add another layer of uncertainty to the inflation outlook. Investors, however, chose to focus on the comfort of cheaper money. This week, purchasing managers’ indices will offer a more up-to-date snapshot of economic momentum, while several other central banks prepare their own decisions. At the same time, companies across sectors such as energy, technology and staffing will present fresh results. Their guidance may tell us more about underlying demand than any speech or policy statement.

The new trading week arrives with a packed agenda. Earnings season is in full swing, central banks on both sides of the Atlantic are preparing key interest rate decisions, and a lingering political standoff continues to disrupt the normal flow of economic data. Many investors expect another modest rate cut from the US central bank, encouraged by softer business surveys and signs that the labour market is losing momentum. In Europe, policymakers appear more inclined to wait and observe. At the end of the week, inflation figures from the United States could either validate the recent policy shift or raise questions about timing. Meanwhile, trade tensions and tariff threats are creeping back into the headlines. In such an environment, short-term volatility is almost guaranteed; sustainable opportunity is not.

What began as a seemingly calm period ended with a familiar pattern: sharp political rhetoric, renewed trade tensions and an abrupt sell-off in major equity indices. A fresh round of threats aimed at a key trading partner rattled markets already unsettled by an unresolved budget deadlock. Yet it took just a few reassuring social media posts to reverse much of the damage as futures turned higher and talk of compromise resurfaced. With the flow of official economic data restricted, the start of a new earnings season takes on added importance. Company results and outlooks may provide the clearest clues about demand, pricing power and investment plans. For now, investors are forced to navigate a landscape where sentiment can flip in hours, while fundamentals move at a slower, more stubborn pace.

The coming days revolve around a single unresolved question: how long will the partial shutdown of the US government continue, and how much damage will it do? Official statistics are already being delayed, leaving markets dependent on private surveys and incomplete signals. One major jobs indicator has hinted at weakening momentum, fuelling speculation that the central bank could cut rates sooner if conditions deteriorate further. Equity markets, however, appear strangely relaxed, with key indices recently touching record highs. Our portfolio remains skewed toward Europe, where data is more readily available and policy signals clearer. A newly added industrial name is preparing a move to a more prominent stock exchange listing, while another holding in the renewable energy space continues to strengthen its fundamentals despite a flat share price. In both cases, time may be the most important catalyst.