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OIL Crash

Short squeeze in the oil market

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03.04.2020 – Special Report. Fasten your seat belts: After hopeful signals from Donald Trump and from Texas, oil prices are through the roof. Oil stocks are also rising sharply. Allegedly, OPEC+ production is soon to be reduced by 10 to 15 million barrels of oil per day. Moscow waves them off, the Saudis sail. But the supposed news is enough to force shorties to close their position and catapult them out of the market.

Largest daily profit ever

Yesterday, Brent was up 47 per cent and WTI posted a gain of almost 25 per cent. According to Oilprice.com, Brent posted the biggest daily gain ever yesterday. The reason was a news story that was too good to be true for the battered oil bulls.

Hope to cap 15 million barrels

Trump reported yesterday on Twitter that he had spoken with Crown Prince Mohammad bin Salman in Saudi Arabia and the Saudis in turn with Russia’s President Vladimir Putin – Trump hopes and expects that production will soon be capped at ten million barrels a day. In front of journalists Trump concretised that it could even be 15 million barrels. Bloomberg reported, citing insiders, that the statement was based on a telephone call from Trump to bin Salman, who hoped to win other countries over to the cut. A second source said Trump’s statement was purely “aspirational” – based only on hope.

Texas pours gasoline on the fire

But Ryan Sitton, the head of the Texas Railroad Commission (TCR), also shot up prices. He reported on Twitter that he had talked to Russian Energy Minister Alexander Novak about “10 MBPD out of global supply”. He said he would shortly be talking about this with Saudi oil minister Prince Abdulaziz bin Salman. The TCR is the regulatory authority for the suffering oil industry in Texas. In fact, there are considerations in Texas for a cut in production, which the Saudis would like to hear.

Money for US oil industry

The White House also provided relaxation. Treasury Secretary Steven Mnukhin said yesterday that the US oil industry, which is on the verge of collapse, could receive loans from the Federal Reserve. The Fed may grant loans of 4 trillion dollars as part of the aid program recently passed by Congress. The US administration also discussed import duties for foreign oil. China also supported the prices: Beijing wants to use the low oil prices to build up its reserves.

Moscow denies

However, Moscow immediately killed yesterday’s news: Kremlin spokesman Dmitry Peskov announced that Putin had not spoken with Mohammad bin Salman, there was no agreement to cut subsidies to support prices. He further told the news agency TASS that the situation in the oil market was unsatisfactory for all sides, but nobody had started to talk about any deals. Russia’s oil minister Novak said he hoped global demand would pick up in a few months.

Saudis want to force others to cut

Meanwhile, according to Oilprice.com, the Saudis called for an emergency meeting of OPEC+, which could lead to an agreement “with another group of countries” outside the expanded cartel. That means the USA, Norway, Brazil. Which also means that there is ultimately no agreement at all. Most recently, the Dow Jones news agency reported that the Saudis would only cut about 2 million of their production – but only if other countries follow. The rest of the 15 million barrels would have to be contributed by others.

Bears released for shooting

Oilprice.com analyzed that the Saudis had scored points by calling an emergency meeting in Washington. However, a massive cut in production by the Saudis on their own or a joint big step with Russia was highly unlikely. Ole Hansen of Saxo Bank commented on Twitter that yesterday’s news had sucked a lot of fresh money from the retail business into the market. And then he commented quite drastically: “Trump just created a show in the oil market which many will lose from.”

It’s on the Kremlin

The ball in the oil price is now in Moscow – Texas and the Saudis have signalled their agility with yesterday’s action. So far, however, there has been no sign of Igor Sechin, head of Rosneft, giving in – he wants to destroy US oil producers by keeping oil prices low.
However, the group of pragmatic economic liberals in the Kremlin could possibly change President Vladimir Putin’s mind. Russia is at a standstill; Putin has just extended the paid break until the end of April. According to the “Moscow Times”, former finance minister Alexei Kudrin, currently economic advisor in the Kremlin, warned the president that even with moderate setbacks from Corona, the Russian economy will shrink between 3 and 5 percent this year. This means that millions of Russians are likely to lose their jobs – the unemployment rate could skyrocket from the current 4.6 percent to 15 percent, according to Igor Nikolayev, an analyst at management consultant Grant Thornton.

It is quite possible that this is why Putin is putting the nationalist Siloviki – the hardliners from the secret service, the military and the energy industry – out of action under Sechin and still manages to get a deal with the Saudis. So you see: politics is swirling the markets around. The only thing that is clear is that nothing is clear – only that volatility will remain with us.
The Bernstein Bank wishes successful trades despite all this!


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Morning Stock News

The markets are in shock, but they’re trying to recover

By | News | No Comments

Gold   1612,68
(+0,02%)

EURUSD   1,0841
( -0,10%)

DJIA  20962
(-1,44%)

OIL.WTI  23,955
(-3,09%)

DAX   9615,25
(+ 0,02%)

Markets are not recovering from the growing pandemic in the world, and are under great pressure. Due to the growing number of diseases, the forecast of mortality is growing, in turn, investors are abandoning risky assets and prefer calmer products such as gold. The coming couple of weeks will be very difficult for the whole world, because the epidemic is raging and there is no prediction when the disease will go down.


WTI

WTI

American markets have mixed reactions to the current situation. On the one hand we see a huge unemployment problem that has been going on in the last few months, on the other hand we see an Fed that wants to keep any, even the smallest, business in the US. It is not yet clear how this struggle will end. The S&P on Thursday is practically standing still. DAX is up 0.3% to 9570.


Euro

The European currency is going through a difficult time. In the Eurozone, no decisions have yet been made to stabilize the economy. Complicated situation with the pandemic, lack of coordinated decisions between the leaders of European countries lead to problems in the European currency. The Euro has been falling for the fourth consecutive day and until we see some serious action from the EU, the decline will continue.


Oil

How important it is when world leaders announce certain arrangements for oil production. On Thursday, negotiations between the leaders of the USA, Russia and Saudi Arabia to reduce oil production added optimism to investors. The price of WTI oil rose by 20% in a very short time. Reduced supplies are a very good sign for the markets in the current situation. If the leaders keep their promises, we will see a correlation between supply and demand, which will have a positive impact on the oil price.


Gold

Gold continues to move to its highs, and there is no reason to stop. Maybe today we will see a certain correction in price due to weekly profit taking. If that happens, the price decline will be a good level for buying gold for the next few weeks. This metal is in the favorites and will add to the price.


What’s waiting for us today?

10.30 UK Service Business Index
14.30 US Change in Non-farm Payrolls
14.30 US unemployment rate


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Morning Stock News

April will be a tough month for everyone

By | News | No Comments

Gold   1585,83
(-0,39%)

EURUSD   1,0948
( +0%)

DJIA  20920,50
(+0,90%)

OIL.WTI  21,415
(+1,11%)

DAX   9362,25
(+ 0,02%)

A new quarter begins and a new turmoil in the markets is likely. Huge losses among the population of Europe and the U.S. are gradually beginning to erase the positive of investors, as well as all the growth in the U.S. markets last week. Investors are likely to be obsessed with the COVID-19 pandemic data at this difficult time, because almost all the statistics that will be released soon will be very poor and unlikely to contribute to market growth.


DAX

DAX

European markets closed at minus on Wednesday. DAX lost almost 4% and closed at 9544. However, investors are not ready to take any risks in the middle of the epidemic. Indexes of business activity in Spain and Germany came out below expectations, while in Italy the index fell to a record low of 40.3 points. In spite of negative news from all sides, we do not see such sharp movements as in early March. Apparently, the market has come to terms with the current situation and is waiting. The next two weeks will be key for assessing the global economy, whether we have reached the bottom and whether the recovery will begin.


US Dollar

For several weeks now, the US dollar has been bought on all fronts of the market. Investors believe that in the current situation the U.S. economy will still recover the fastest, as it has always been a driver for other markets. Today’s data on primary US unemployment claims will be indicative. With these values it will be possible to see how bad the situation in the US is. In the nearest future the Fed is obliged to take actions to weaken the dollar and limit the possibility to buy it. We wait for the beginning of the bearish trend for the dollar in the next week.


Japanese Yen

The yen is the only currency other than the US dollar that has resisted the pandemic and is in great demand among investors. USD/JPY has been fluctuating at the average level of 106 for several weeks. In general, there are all chances that the Yen will strengthen to 105 and then 104. Investors are buying this currency more and more to save their funds.


Gold

Our projections are beginning to come true. Already on Tuesday gold finished its downward correction and on Wednesday it was restoring its positions. In the coming days, gold will try to go above $1600 per ounce again. There are all the prerequisites for that. In the current situation with the pandemic, investors are ready to buy the shelter assets.


What’s waiting for us today?

09.00 Change in the number of unemployed in Spain
10.30 UK Construction Business Index
14.30 USD Initial Jobless Claims for March


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Financial chart

Negative oil price in the USA

By | News | No Comments

01.04.2020 – Special Report. From the bulls’ point of view, the oil market has had its worst quarter ever. But the downward slide could continue. Because of the global deflation shock in the corona crash and the price war between Saudi Arabia and Russia. And above all because of Igor Sechin, head of Rosneft – he wants to destroy the American oil industry. Now the incredible has happened: The first US trader pays money to have his oil taken away.

A horrible quarter

Brent futures have just fallen to their lowest level in 18 years. In the first three months of this year, the price for the North Sea variety fell by around 65 percent – the worst quarter since 1990 according to CNBC. WTI lost 67 percent in value, the worst performance since contract trading began in 1983. The situation is unlikely to improve any time soon.

Full warehouses everywhere

Fatih Birol, head of the International Energy Agency, warned at an Atlantic Council event: “The effects of the glut will be felt for years to come”. Demand for oil is dropping by 20 million barrels a day. The trading house Vitol Group also quoted this figure. This would mean that both Russia and Saudi Arabia would have to stop production completely in order to bring the market back into balance. The Eurasia Group saw the limit in the world’s tanks reached in the middle of the year. Standard Chartered sees even less time: the oil tanks on the globe would be full in six weeks.

The industry is cutting capacity in the refineries. Exxon has just announced a reduction in processing at its Baton Rouge refinery, the second largest in the US. Royal Dutch Shell announced expense cuts of 20 percent or $5 billion, according to Oilprice.com. This means that the flood of oil is back to the producers.

Brent at $10

Goldman Sachs judged that Brent was more likely to be hedged against the fall in prices and could keep at 20 dollars because the supply chain was short – tankers could always drop anchor on the high seas. We think: If there are enough empty tankers. The research house JBC Energy was more skeptical about Brent: “In such an environment, it is as possible for Brent prices to briefly go to $10 per barrel as it was back in 1986 or 1998”.

Goldman saw negative US prices

Goldman Sachs painted the devil on the wall for the US sponsors because of the logistics costs. Chief commodity strategist Jeffrey Currie saw negative prices coming. A rural producer would pay customers to buy oil. The entire logistics chain has a relatively small storage capacity – pipelines, terminals, oil tanks, refineries, etc. can hardly take up any crude. In view of the cost of closing a borehole, however, producers would prefer to pay a premium for the offtake.

19 cents donated for a barrel of heavy oil

And that’s exactly how it happened. According to Bloomberg, the large trading house Mercuria offered 19 cents to buy the Wyoming Asphalt Sour, a dense heavy oil used for the production of tar. Prices in other niche markets are also sliding rapidly towards zero: Oklahoma Sour was offered for 5.75 dollars, Nebraska Intermediate for 8, and Wyoming Sweet slid to 3 dollars a barrel. And Texas Midland WTI recently traded at just $10 a barrel, according to Goldman. Oil from Canada, represented in the Canada Western Selected Index, even traded at just over $4 a barrel.

KO of the US oil industry

The industry is therefore well prepared for this. The investment bank Raymond James judged that the US oil industry will collapse at prices well below 30 dollars for WTI. Oilprice.com reported with reference to Reuters that the break-even for the US oil industry is between 39 and 48 dollars per barrel.

And this is the plan of Igor Sechin, head of the Russian oil company Rosneft. The manager with the charming nickname “Darth Vader” is the grey eminence in the Kremlin and the strongest “silovik” – a representative of the nationalist power apparatus. He is also the driving force in the price war between Russia and Saudi Arabia. About two weeks ago, Sechin said on Russian state television, according to Radio Liberty, that as soon as the American oil industry was knocked out, the price of oil would rise sharply again. He predicted 50 to 60 dollars per barrel by the end of the year. The USA had previously ousted Russia from many traditional markets in Europe and Asia.

Rosneft and Russia with staying power

Sechin added that Rosneft could keep its production at the current level for another 22 years without tapping new sources. The American sanctions had hit the US banks harder than Russia, as they were now no longer collecting interest from Russian oil producers. By the way, according to Statista, Russia is sitting on gigantic gold and currency reserves of 570 billion dollars, so the Kremlin can cope with lower energy prices for quite some time. We add: Of course, even in the gigantic Russia the oil has to be transported over long distances via pipelines or trains to the ports. But if Sechin decides to do so, then it will be done for free for a short time.

Communist trauma

Setschin’s thinking thus revolves around America – a typical trauma in Russia’s elite. Together with the Saudis, the USA caused oil prices to collapse during the Cold War, leading to the national bankruptcy of the USSR. From 1988 onwards, Sechin experienced this as an employee in the foreign department of the State University of Leningrad, a cadre forge of the KGB. From 1991 to 1996 he was Vladimir Putin’s chief of staff in the city administration of the now renamed Saint-Petersburg. Chaos raged there: the economy had collapsed, the Tambovskaya mafia was spreading. An unprecedented humiliation for the communist cadres.

The revenge of the siloviki

In 1996, Sechin moved to Moscow together with Putin in the presidential administration under Boris Yeltsin. Under Putin, the mafia went to the dogs, Moscow drastically increased its arms expenditure, oligarchs were eliminated, the oil company Yukos was destroyed and sold to Rosneft. The siloviki stabilized Russia – at the same time the oil price rose because China became a world power. And today the siloviki are paying it back to the Americans. So you should consider putting shorts on oil for a while longer – but also on the ruble. The Bernstein Bank wishes successful investments!


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Morning Stock News

Markets have found the bottom. Is the recovery close?

By | News | No Comments

Gold   1585,97
(+0,59%)

EURUSD   1,1022
( -0,05%)

DJIA  21338,50
(-1,58%)

OIL.WTI  20,515
(+2,06%)

DAX   9825,75
(+ 0,02%)

Finally, Tuesday has become a positive day in the markets. Investors have not seen the end of the bearish trend for a long time. For several days now we have been witnessing the stabilization of markets and this is very good. The released macroeconomic data on China’s business activity index turned out to be higher than predicted, which is a good sign for a possible start of growth.


Chart of the day S&P500

Chart of the Day S&P500

The struggle against the coronavirus continues. Therefore it is worth paying attention to some important assets. Demand for U.S. bonds remains. The interest rate on 10-year US-Treasury remains below 0.7%. Oil is trying to recover from phone talks between US and Russian leaders about the situation on the energy market. Gold trades without any pronounced dynamics. It follows that there is still an appetite for risk. One can expect an attempt to consolidate the S&P500 index above 2600 points.


Euro

The pressure on the Euro is increasing. After the release of the EU Consumer Price Index data, we saw the inflation rate drop to 0.7% compared to 1.2% in February. We can assume that if the current dynamics are maintained, the inflation rate may move into the negative zone at all, which will force the ECB to apply even greater measures to stimulate consumer demand. It is also possible to assume that in the second quarter due to quarantine the economy of Eurozone will slide by 12% of GDP, which looks very bad for Euro against the background of strengthening dollar. In the current situation we should consider only sales of EUR/USD pair.


Pound Sterling

The British pound behaves well in the current situation and gives great hope to investors. According to some reports, the epidemic in the UK is slowing down and, perhaps, due to the measures introduced by the government, the economy will be able to recover earlier. The second plus is that the government can print pounds as much as it really needs to stimulate. This has a positive effect, too. So far, the GBP/USD pair is trading above the SMA 50 and 100 and keeping the bullish trend. The key support level is 1.2340 and the resistance is 1.2460.


Gold

On Tuesday, there was a slight downward correction in gold from Monday’s highs. One of the reasons is profit taking due to the end of the 1st quarter. In the coming days we should expect the end of this correction and resumption of the uptrend to the level of 1690 – February highs. Still, gold has much more room for maneuvers. Any tightening of quarantine measures or another injection from the US Federal Reserve will only increase the value of the precious metal.


What’s waiting for us today?

01.50 Large Producer Activity Index in Japan
09.55 Business activity index for the German manufacturing sector
14.15 Change in the number of non-agricultural employment in the United States


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Morning Stock News

Economic aid is on its way. Will the markets be saved?

By | News | No Comments

Gold   1614,28
(-0,40%)

EURUSD   1,1013
( -0,26%)

DJIA  22008
(-0,74%)

OIL.WTI  21,045
(+3,87%)

DAX   9873,25
(+ 0,02%)

Monday ends on an optimistic note for the markets. We can see that there is a certain decline in volatility in all sectors of the economy. Investors have calmed down a bit after Donald Trump’s performance on Sunday. From the speech we heard a radical change in tone on the pandemic and the economic situation.


Chart of the Day Brent

Chart of the Day Brent

Of course, everyone asks the question, what happens next? Probably many companies, from airlines to hotels, will be on the verge of bankruptcy, and the next month will only begin to bring depressing news. The good news is that volatility in the markets is falling. Investors understand that the virus will sooner or later be defeated, and the euro and dollar will not go anywhere. On Monday, the DAX index rose by 2% and the DOW index by almost 3%.


Euro

Yesterday’s comments on the European currency were correct. The Euro did not have enough strength to move higher. In the USA the statements and actions of the government are much more decisive than in the EU. From now on, we will observe the situation both in Europe and the USA. Due to the lack of concrete measures to stimulate the economy by the EU, the Euro is unlikely to grow. In the meantime, the U.S. is very slowly spinning the machine to stimulate the economy, which is also causing irreparable damage to many companies. The one who copes with the problems faster will win.


Bitcoin

While all countries are at war with the epidemic, it seems that investors are not at all concerned with cryptocurrencies. However, we can see that Bitcoin is holding up well above $6000, and at least not falling. There is a suspicion that because Bitcoin is generally not very dependent on some real sector of the economy, as well as because of the weakening of strict regulation, investors will want to take a chance and buy the cryptocurrency for certain amounts.


Oil

The price of Brent oil fell to $22 per barrel for the first time since March 2002. All our previous concerns are confirmed. There is little hope for any stabilization, as the prices for long-term contracts are beginning to level off. So far, oil has very little chance of recovery. Very much now depends on the concerted action of importers and exporters. Only new agreements between countries can stabilize the current oil situation.


What’s waiting for us today?

03.00 Manufacturing activity index in China for March
08.00 UK GDP
09.55 Change in the number of unemployed in Germany


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Trade index graph

The DAX fights back

By | News | No Comments

30.03.2020 – Daily Report. New losses at the beginning of the week – and a moderate countermovement on the German stock exchange until Monday noon. Of course, Corona is in charge. And oil is being squandered.

Prices in Frankfurt crumble at first

An exciting start to the week on the German stock exchange: Share prices in Frankfurt initially plunged, but then worked their way back up. Most recently, the DAX remained unchanged at 9,633 points. The daily low on Monday was 9,456 points. Golden times for traders. On Friday, the price indicator had still lost more than 3 percent – but the weekly gain was still 8 percent. In a special report on Monday, the economic experts warned of the worst recession since 2009, with German gross domestic product expected to shrink by up to 5.4 percent this year.
The US futures on the S&P 500 are shimmying back up to 0.4 percent. They had slipped after the announcement of the extension of the lockdown guidelines in the USA until 30 April. Fears of a prolonged slowdown in the US and European economies continued to dominate equity trading. And China was also an issue. “The Daily Mail” reported that scientists had warned the British government: China was tricking with its corona numbers – the actual cases could be 15 to 40 times higher than reported.

Moderate losses in Asia

On the stock exchange in China, the CSI-300 fell 1 percent to 3,647 points. The prices were supported by the news that the central bank is supporting the domestic economy with lower short-term interest rates for banks. The Nikkei in Tokyo initially slipped 800 points, but then fought its way back up. At the end of the year, the index recorded a minus of 300 points or 1.6 percent at 19,085 digits.

US stock markets plummet

On Wall Street, investors had played it safe before the weekend. After all, the House of Representatives had waved through the US government’s mega aid program. The Dow Jones closed 4.1 percent lower at 21,636 points. The S&P 500 lost 3.4 percent to 2541 points. Nevertheless, the S&P 500 recorded its strongest weekly gain since 2009 with a weekly gain of 10.3 per cent, while the Dow rose by 12.8 per cent, the strongest increase since 1938. The Nasdaq 100 lost 3.9 percent to 7,588 positions on Friday.

Beware of premature hope

Meanwhile, according to CNBC, analysts warned against chasing a rally in the bear market. Eric Robertsen, Head of Global Macro Strategy at Standard Chartered, said the risk rally lacked substance. Next month, he said, first quarter results from investment brokers and global economic data would show the scale of the economic collapse. Both will exacerbate the weakness in consumer confidence, along with the widespread health crisis and fear of unemployment. Those who believe that the drop in share prices of around 25 percent already prices in these variables could be acting prematurely. Robertsen looked back on 2008: After announcing the aid measures, prices jumped in November 2008 to hit their lows in March 2009. Only then did the real recovery begin.
Daniel Gerard, Senior Multi-Asset Strategist at State Street, also argued that more information from corporations was needed to announce a final low. No one has an accurate picture of the impact of the Corona crisis on profits, he said in an interview with CNBC’s “Street Signs Asia”. Vishnu Varathan, Head of Economics and Strategy at Mizuho Bank, doubted that the various stimuli already had an impact on stock prices. Sales shocks from the quarantine and the disruption of supply chains would continue for a while.

Oil sell-off

Meanwhile, oil prices continued to slide. On Monday, Brent lost almost 8 per cent at its low point, and at 23.03 dollars per barrel was as cheap as it had last been in 2002, with the most recent drop of 4.5 per cent and a price of 26.69 dollars. WTI fell by 3.4 percent to 20.79 dollars. Apart from the current deflationary shock in global demand, there are no signs that Saudi Arabia and Russia are settling their price war.

What the day brings

On Monday, the diary contains only a few interesting events, as always you will find an overview here: Market Mover

In the USA, for example, the pending house sales for February are due at 4:00pm.

The Bernstein-Bank wishes successful trades!


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Morning Stock News

There are growing problems in Europe. Will the ECB manage them?

By | News | No Comments

Gold   1618,32
(-0,26%)

EURUSD   1,1079
( -0,54%)

DJIA  21455
(+0,03%)

OIL.WTI  20,415
(-6,52%)

DAX   9547,75
(+ 0,02%)

The previous week was very nervous for all sectors of the economy. Thanks to the rapid actions of central banks it was possible to avoid a catastrophic fall of stock markets. In just a few weeks, huge amounts of money were injected into the world economy, indicating that central banks are on alert. They will fight the downturn in consumption and production.


Chart of the Day GBP/USD

All attention this week will be focused on coronavirus distribution in the US and Europe. The next few months will be key to the US presidential election. The launch of the Fed’s fourth phase of quantitative stimulus as well as the healthcare system will show how strong the current government is. Markets are reacting very sharply to any negative information, and on Friday investors decided to take profits. S&P500 index fell by 3.3%, DAX fell by 3.6%.


US Dollar and Euro

The two major world currencies are closely monitored by investors. The dollar has weakened because of the Fed’s money volley. It has to remain weak in order to maintain liquidity and economic recovery. If the dollar gets stronger, it is likely that the US Treasury will take additional stimulus measures. So far the dollar shows that the US government is doing the right thing.
But the Euro is in big trouble. After the failed EU summit, where they could not agree on the release of “coronobonds”, Europe risks losing a lot as long as the government takes action. Economic growth is collapsing, production is stopping, only the ECB is able to cope with the situation and support the economy. Probably, the Euro will not grow anymore in the current situation until some kind of action plan from the government appears. On Friday the Euro closed at 1.1140 .


Pound Sterling

The pound has shown very good dynamics over the past week. From Monday to Friday, the currency grew by almost 7%. The British government is taking enhanced measures to combat the epidemic. They also have a great opportunity to print their money, which will positively affect the economic stabilization. Great Britain now looks the best in Europe.


Oil

The drop in demand for oil has put Saudi Arabia in an unpleasant position. The Kingdom was wondering where it would sell what it was currently producing. The oil market has almost dropped by 50% and countries are not in a hurry to resume buying. If production does not fall soon, the market will go even lower. We may see oil below $20 or even $15 per barrel.


What’s waiting for us today?

08.00 Consumer price index in Spain for the year
13.00 Consumer price index in Germany for the year
15.00 US Real Estate Underperforming Index


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Stick graph

Resistance at 10.000

By | News | No Comments

27.03.2020 – Daily Report. Yesterday, the DAX made it just above the magic mark. Recently it has been lurking a good deal below it again. The question remains whether investors will take on new risks before the weekend.

Losses in Frankfurt

On Friday afternoon, the German stock market first took a breather: the DAX was 2.1 percent weaker at 9,791 points. Yesterday, the leading index had regained the 10,000 and ended Xetra trading at 10,000.96 points. The gold price dropped 0.7 percent to 1,618 dollars.
The US futures fell by about 2 percent. The US House of Representatives tried to collect its members of parliament to finally pass the gigantic aid package of around 2 trillion dollars. In view of the incoming reports, some brokers became queasy.

Corona costs us 1.5 trillion euros

According to David Folkerts-Landau, Chief Economist at Deutsche Bank, the Corona pandemic is likely to cost the Federal Republic of Germany up to 1.5 trillion euros. The expert also told the “Focus” that this year, the German GDP will decrease by about 7 to 8 percent. At least he encouraged investors: “But from the fourth quarter onwards things will start to pick up again, and we expect a noticeable increase in economic growth in 2021”.
Meanwhile, the EU has been unable to agree on which financial instruments to use to help countries such as Italy or Spain that are particularly hard hit.

USA reports the most infections

Furthermore, the USA has reported more known corona infections than any other country. By Friday morning there were almost 86,000 known cases, about 81,800 in China and about 80,600 in Italy, according to the Johns Hopkins University in Baltimore. There are now more than half a million confirmed infections with the Sars-CoV-2 virus worldwide.
Meanwhile, the G-20 spread optimism. After a teleconference, the group of states announced that a total of more than 5 trillion dollars would be pumped into the global economy.

Profits in Asia

TThe CSI-300 in China rose 0.3 percent in the morning to 3,710 digits. In Tokyo, the Nikkei gained 3.9 percent to 19,389 jobs.

New York recaptures ground

Brokers in the USA again took bold action yesterday. The indices closed at their daily high. The Dow Jones Industrials gained 6.4 percent to 22,552 points. Since Monday’s low on the lowest level since November 2016, the index has gained 4,000 points again. In the past three days the plus was 21.3 percent, the best run since 1931, and the S&P 500 gained 6.2 percent yesterday to 2,630 points. And the Nasdaq Composite gained 5.6 percent to 7,797 jobs.

Whales on the hunt

Incidentally, speculation on Wall Street that large “whales” are on the move and stocking up on stocks has been going on for days. which are huge pension funds and sovereign wealth funds. This in order to replenish the share of total assets in equities, which fell in the course of the sell-off, by the end of the month, according to JPMorgan.
It is fitting to point out that the Norwegian sovereign wealth fund has lost a whopping 124 billion dollars in the sell-off from its previous total of 1.1 trillion dollars. The petrodollar-fuelled Government Pension Fund Global is considered the largest investment vehicle of its kind in the world. Outgoing CEO Yngve Slyngstad announced that the fund will increase its equity weighting in the portfolio from 65.3 to 70 percent.

Horrendous rise in unemployment in the USA

Interestingly enough, the VIX does not really reset. The panic indicator remains at 61 points despite all the aid programmes in the USA and Europe.
No wonder, yesterday’s figures from the American job market were gloomy: Last week, the number of first-time applications for US unemployment assistance increased tenfold to just under 3.3 million. The previous high was 695,000 weekly applications in 1982, and in view of this development, Fed Chairman Jerome Powell took the floor. On US television he said that the USA was probably already in a recession. At the same time, he did not rule out further emergency measures in the fight against the consequences of the virus crisis.

Stock market legend warns of new corona crash

Meanwhile, an investment legend warned of a violent return of the crisis on the stock market. Paul Tudor Jones, who had his greatest times in 1987, told CNBC that his flagship fund had achieved a return of 1.5 percent in the past two months. After all, he has thus avoided the big sell-off. Jones said he expects a peak in the outbreak in early April – and then the market will test the lows again. The man knows what he is talking about: According to Boerse.de, the nearly 4 billion dollar fund Tudor BVI Global has gained an average of 26 percent per year since its inception. PTJ’s private assets are estimated at just under 4 billion dollars – making the self-made billionaire one of the 400 richest people in the world.

What the day brings

At the end of the week, the diary only lists a few interesting events. As always, you can find an overview here: Market Mover

For example, consumer spending in the USA is scheduled for February at 1:30 pm.
At 3:00pm the consumer confidence of the University of Michigan begins.

The Bernstein-Bank wishes successful trades – don’t let the quarantine get you down!


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

Morning Stock News

The world is starting to get pumped with money

By | News | No Comments

Gold   1626,16
(-0,21%)

EURUSD   1,1068
( +0,31%)

DJIA  22171
(-0,40%)

OIL.WTI  23,095
(-0,02%)

DAX   10078,50
(+ 0,01%)

On Thursday, serious data on the state of the economy in the U.S. and other countries were released. We received 3.28m of initial jobless claims in the US, compared to 282k last month, with the current month forecast of 1.6mn. This is the number of people in the US who have been unemployed and are in search.


Chart of the Day EUR/USD
Chart of the day EURUSD

What’s going to happen next. All countries start printing money. In the U.S., companies will receive this money within the next three weeks. Many experts say that all current activities of the central banks are very much like those during the World War. When the printed currency is spent on its own needs and also will be redirected to individual countries in exchange for goods or other services. In this situation, the issuer country is on the plus side, as their money walks around the world and they benefit from acquired technologies, goods, etc.


Euro

The Euro currency has been very optimistic in recent days. Of course, when major central banks of developed countries start pumping their economies with money, a certain balance appears. Therefore, the situation with the Eurocurrency will be similar. The average price of the Euro against the U.S. dollar fluctuated at 1.15-1.20. Therefore, in the current situation the price will tend to the balance level and will soon reach serious resistance levels. On Thursday the Euro is rising and trades at the level above 1.1030.


Gold

Gold keeps trying to go even higher than on Wednesday. Metal is always a priority. Especially if it happens in a situation where all countries start printing a lot of money. During World War II, gold was the main means of settlement between countries because there was so much money that no one took it into account. If the countries decided to use the tactics of issuing money as during the war, gold will become more expensive. Because only hard metal will cost real money. It will be carried, exchanged, traded and only gold will have real value.


Oil

If oil supplies do not decrease, very soon the whole world will face an oversupply of this raw material, and as a result, the price will drop drastically. Due to the low oil prices, shale oil production in the USA may drop to a minimum, which will lead to further cuts in the workers in this field. Many countries are beginning to realize that excessive oil production is only harming the global economy and are thinking about reducing revenues. Brent oil is traded at $28.5 per barrel.


What’s waiting for us today?

08.00 UK Housing Price Index
13.30 Price index of expenses for consumption index in USA
18.00 Total number of rigs in USA


Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 78% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

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