Strategy Update: October 2025
Stay the Boss of Your Thinking – How AI is Literally Changing Our Brain
REVIEW
THE FINANCIAL MARKETS IN SEPTEMBER
At the beginning of the month, the ECB kept its deposit rate constant at 2 percent after eight rate cuts since summer 2024 – a level considered neutral. Inflation has returned to the target of 2 percent. For the first time, experts consider rate hikes instead of further cuts realistic. ECB Director Isabel Schnabel warns that new rate increases could „come sooner than many believe.“ This is also due to several inflationary drivers:
• US tariffs on EU imports have price-driving effects
• Germany‘s debt-financed investment program stimulates the economy
• Robust labor market and demographic change
• Rising prices for food and services.
The first rate cut this year, however, was made by the American central bank. The Fed lowered rates by 0.25 percentage points to 4-4.25%. The decision was unanimous (11 of 12 votes), with one Trump ally favoring a larger rate step. Economic projections show that most Fed leaders expect at least two more quarter-point cuts by year-end. Fed Chair Powell called it a „risk management cut,“ partly because the labor market is creating fewer new jobs (around 22,000 in August) and the labor market is thus considered a higher risk than inflation – the Fed is one of the few central banks with a dual mandate. Unsurprisingly, the incumbent US President reacted by demanding further rate cuts after this decision.
The upcoming earnings season for the third quarter of 2025 is characterized by optimism. Analysts expect earnings growth of 7.9% year-over-year for the S&P 500 – already the ninth quarter of positive growth. Particularly noteworthy: earnings estimates were revised upward during the quarter, from 7.3% at the end of June to the current 7.9%. This represents an exception, as analysts normally revise their forecasts downward by 1.4 to 3.2% during the quarter.
The optimism is also reflected in corporate management. An unusually high 50% of S&P 500 companies issued positive guidance for the quarter – significantly above the five-year average of 43%. Technology stocks lead expectations with projected earnings growth of 20.9%, driven by heavyweights like NVIDIA, Apple, and Microsoft.
Meanwhile, gold continues to rise from one all-time high to the next. Experts see the gold price as a warning signal of an escalating global debt crisis. Both central banks and ETF investors are acting as aggressive buyers. Gold ETFs recorded inflows for four consecutive weeks, with almost 100 tons flowing in September alone – the fastest growth since April. Hedge funds hold record long positions of $73 billion. However, the real driver lies deeper: Since the pandemic, major economies have dramatically accumulated debt, and their government bonds are no longer considered a safe haven. Trump‘s dispute with the Fed and the looming US government shutdown intensify uncertainty. Even independent central banks like the ECB are coming under criticism. Their bond purchase programs are seen as indirect government financing that merely postpones problems rather than solving them.
OUTLOOK
THE RATE CUT PARADOX: WHY AMERICAN MONETARY POLICY COULD BACKFIRE
The interest rate cycles of central banks could not be more different at present. While the American central bank cut rates for the first time this year this month, key rates in Switzerland and Europe have remained unchanged for some time. In Japan, rates have even been raised once since the beginning of the year. This divergence is expected to persist according to market participants. Forward contracts (swaps and futures) show that markets expect no rate adjustments in Switzerland and Europe for the next 12 months. The situation is different in the US: there, market participants expect more than five rate cuts.
An aggressive expectation, considering that even the American central bank is as divided as rarely before. Of the 19 members – of which 12 have voting rights – seven members expect no rate changes until year-end, eleven expect two more rate cuts, and one member even expects five rate cuts. The latter is Steve Miran, Trump‘s closest ally within the Fed.
More and more investors are questioning the Fed‘s independence. Powell is regularly attacked by President Trump on social media. The Trump administration is also trying to push other members like Lisa Cook out of the Board of Governors. This consists of seven members and must confirm the twelve regional Fed presidents, whose terms must be extended in February 2026. Of these twelve presidents, five have voting rights in the FOMC, which makes interest rate decisions. If Powell is considered independent, Republicans and Democrats currently have an equal number of members on the Board of Governors. Another Trump supporter on the Board could lead to the Trump administration attempting to influence the selection of local Fed presidents in their favor.
Another risk is the persistently stubborn inflation in the US. For 54 months now, the inflation rate has been above the monetary guardians‘ target of around 2%. The latest rate decision is intended to support the labor market and thus stimulate the economy. Should further rate cuts follow, the risks of economic overheating and thus long-term inflation expectations increase. This could trigger a series of negative effects: long-term interest rates would rise instead of fall. Since mortgages in the US are largely fixed to 30-year rates, mortgage costs would rise for many. This could further weaken fragile consumer sentiment. In short: the economy could face problems even though the Fed actually wanted to stimulate it.
Safe assets like the Swiss franc serve as a refuge. Since the beginning of the year, the USD has had to record a significant depreciation against the franc. The uncertainty persists: investments in currency-hedged American equity and bond ETFs exceeded those in non-currency- hedged holdings for the first time since 2021. Talk of a USD collapse or de-dollarization, as often read in the media, seems premature. This is also because the market capacity of safe assets such as gold, Swiss bonds, Bunds, Gilts, Bitcoin, etc. is far from sufficient to replace the USD.
FOCUS
STAY THE BOSS OF YOUR THINKING – HOW AI IS LITERALLY CHANGING OUR BRAIN
ChatGPT dominates the AI boom with 46.59 billion queries and nearly 50% market share – but new brain studies reveal a shocking price. 83% of ChatGPT users cannot remember sentences they wrote themselves just minutes earlier, while their brain connectivity decreases by 47%. What begins as an efficient work tool becomes „cognitive debt“ with dramatic consequences for our thinking capacity.
CHATBOTS
In the last 3 years, artificial intelligence applications have become increasingly popular. More and more people are using AI or chatbots in their daily lives. Chatbots help with completing tasks at work as well as in private life.
According to the latest figures from onelittleweb, which were collected over the period from August 2024 to July 2025, ChatGPT is by far the most widely used chatbot. ChatGPT has a market share of around 48.4% and recorded 46.59 billion queries over this period. The average user spent around 15:25 minutes on the chatbot platform. Behind ChatGPT, the market shares are more or less similarly distributed. With a market share of 1.74%, the chatbot Grok follows ChatGPT, followed by Gemini, Claude, Deepseek, Perplexity, and Microsoft Copilot. To be fair, it should be noted that the major tech giants like Alphabet or Microsoft have only intensively integrated their chatbots into their main products in recent months. Therefore, it can be assumed that market shares could change again in the following year.
CONTRAST
A major international study by the University of Toronto with over 23,000 participants from 21 countries reveals dramatic regional differences in attitudes toward artificial intelligence. While China, India, Indonesia, and Kenya consistently show high AI usage and trust, Western countries like the USA, Canada, Germany, and the UK consistently rank at the bottom. For ChatGPT, 70% of Kenyans use the technology, but only 25% of Japanese do.
Ironically, the greatest job loss concerns prevail in AI-optimistic countries. 75% of Indians expect to be replaced by machines in the next ten years – despite their fundamentally positive AI attitude. Globally, more than half fear for their jobs.
While AI is accepted for medical diagnoses (59% approval) or vacation planning, there is deep mistrust regarding personal decisions. Only 25% would trust AI for finding a partner, and 77% insist on human judges for parole decisions. Tech companies are considered the best AI regulators, yet only one in five trusts them with self-regulation. Half of respondents even fear that AI could cause „catastrophic events.“ The study shows: AI acceptance is less a technical than a cultural question.
EFFECTS ON OUR BRAIN
Besides usage and acceptance regarding AI, another important question is whether AI influences our brain and thus changes our way of thinking. Meanwhile, there are several studies on this question, such as one from MIT with 54 participants („Your Brain on ChatGPT: Accumulation of Cognitive Debt when Using an AI Assistant for Essay Writing Task“) or a British study with 666 participants („AI Tools in Society: Impacts on Cognitive Offloading and the Future of Critical Thinking“). Before we examine the results, it should be noted that the long-term effects of AI on our brain cannot yet be fully visible and the studies did not have enough participants to be considered statistically relevant.
The study by SBS Swiss Business School found a strong negative correlation between frequent AI use and critical thinking skills (r = -0.68). Particularly affected are young people between 17-25 years, who show both the highest AI dependency and the lowest values in critical thinking. The crucial mechanism is so-called „Cognitive Offloading“ – the outsourcing of thinking processes to AI systems. The study shows: the more people delegate cognitive tasks to AI, the weaker their own analytical abilities become. This „cognitive debt“ leads to a vicious cycle: less independent thinking makes one even more dependent on AI tools. These findings align with the EEG study „Your Brain on ChatGPT,“ which demonstrated weaker brain connectivity in ChatGPT users over four months. Participants showed not only poorer neural networking but could also remember less of their own recently composed texts.
A glimmer of hope: higher education acts as a buffer against these effects. People with university degrees show better critical thinking skills despite AI use and are more likely to question AI recommendations. The British study revealed significant differences between education groups – participants with higher degrees engaged significantly more in deep thinking activities. Qualitative interviews with 50 participants revealed concerning patterns. One participant reported: „I use AI tools for almost everything – whether I‘m looking for a restaurant or making quick decisions at work. It saves time, but I wonder if I‘m losing my ability to think things through as thoroughly as before.“
Participants with lower education levels were particularly concerned about their dependency: „I use AI because it simplifies everything, but sometimes I feel like I‘m losing my own problem-solving abilities.“
CHALLENGES
The researchers warn against thoughtless AI integration in schools and universities. Instead of banning AI, they call for balance: AI tools should increase efficiency but not replace independent thinking. Educational institutions must increasingly promote activities that require deep, analytical thinking.
A Random Forest regression analysis of the British study confirmed that AI usage is the strongest negative predictor of critical thinking, followed by cognitive offloading. The model explained 37% of the variance in critical thinking abilities. Both studies reach the same conclusion: while AI tools make us more productive, they can undermine human intelligence in the long term. Mediation through cognitive offloading is the key mechanism. The challenge lies in harnessing the benefits of AI without sacrificing the fundamental cognitive abilities that make us critically thinking humans.
CONCLUSION
Three studies paint a disturbing picture: AI tools like ChatGPT are quietly changing our brain – and not for the better. But there is hope. MIT researchers found a way out: Use AI as an editor, not as a replacement. Those who first think for themselves and only later use AI for improvement maintain strong brain activity and better memory. The key lies in the sequence: develop your own thoughts, then bring in AI for support.
Our brain already knows this phenomenon: We remember less well when we type instead of handwrite, take photos instead of consciously looking, or blindly follow GPS. Every time we outsource a cognitive task, we lose a piece of our mental fitness.
The three studies deliver a clear message: AI can make us more productive, but the price is high. When we give up our thinking too early, we literally change our brain. The challenge of the AI era is not to become more efficient – but to remain intelligent while doing so.
The solution is simple but difficult to implement: Stay the boss of your thinking. Use AI as a powerful tool, but never let it take the wheel. Because in the end, it‘s not AI that decides our future – but how consciously we deal with it.