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Crisis trading

Bear Market

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Crisis trading

23.05.2022 – It’s official: the stock market has entered a bear market. The broad Wall Street has corrected by 20 percent since the all-time high in January. Even Friday’s late recovery does little to change that. But the night is darkest just before sunrise. Already the first experts have spoken with hope signals for all bulls.

Those were hard days for all long-invested Trader and investors: The Dow Jones submitted according to the financial blog ZeroHedge full eight loss weeks in a row – the longest negative series since 1923! In the SPX the thing becomes even more drastic on short term: On 01 April the S&P 500 stood with 4,546, on Friday it went down up to 3,901 – a pretty loss of 14.2 per cent in only one and a half months. In addition, the index had broken through the “Maginot line” at 3,855 in the meantime and was at the level of March 2021. The SPX had thus joined the Russell 2000 and the Nasdaq (both nearly minus 30 percent). Only the energy sector bucked the trend, down about 5 percent. Super-techs like AAPL, AMZN, GOOG, NFLX, and TSLA saw the biggest losses.

Apple as trend barometer

It is interesting to note how stringent Apple’s recent move has been. First, after digesting the Ukraine shock, it consistently went up – all white candles in the daily chart from the first week of March. And in the correction since the end of March, the bear market was quite reliable.

 

Source: Bernstein Bank GmbH

 

JPMorgan sees rebalancing

And with that, we’ll let the bulls have their say. A statement from investment bank JP Morgan just made us sit up and take notice. On the one hand, analyst Nick Panigirtzoglou considered at least a short term bounce possible. The reason: by the end of May, JPM sees $34 billion to $56 billion in stock purchases on the horizon. The reason, he said, is rebalancing at large mutual funds. In other words, customer funds need to be invested, and with the lower prices for equities, there is too much cash to match.

And Norges Bank has also sounded the same horn: According to this, by the end of the quarter, around 40 additional billion dollars are likely to flow into shares from investment funds in the USA – and a further 136 billion dollars from pension funds. So there is an investment backlog that needs to be cleared.

US economy not quite so weak

In addition to the quants, trader Andrew Tyler, also from JPMorgan, also expressed a bullish opinion. According to him, the US economy is doing better than many believed – there is a divergence between the economy and the financial markets. It will take a while before the two are in harmony. Further downward pressure is to be expected, but equities and commodity-related assets are the best investments for any time horizon. In addition, tech will move the market down or up, he said; these stocks are challenging, but offer trading opportunities for short-term traders.
Translation: in the meantime, sentiment is worse than the situation, which means the downtrend is overdone. Which should eventually show up in corporate earnings. We are curious – Bernstein Bank wishes successful trades and 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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

Trade Up

The wheat crisis

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Trade Up

20.05.2022 – As predicted, the war in Ukraine has led to a price explosion. But there are other factors behind the rise in prices. We shed light on the facts.

The price of wheat has just reached an all-time high – 442 euros per ton in Europe. In the U.S., the increase was smaller because of high domestic production – the daily chart shows the price in dollars, although we ask you to research the ancient unit bushel, which defies all logic, for yourself. Be that as it may: The recent small setback is unlikely to have been a real trend reversal.

 

Source: Bernstein Bank GmbH

 

This brings us to the reasons for the price development. In the long term, above all global overpopulation, which is seldom or never discussed in the truth media in this country – politically correct taboo and all that – it’s always our fault. But if in some so-called cultures women have no rights to sexual self-determination, then six, eight or ten children are the norm. With the usual consequences: Forest clearing, overfishing, overgrazing, lowering of the water table, salinization of arable land, hunger, flight to golden Europe. Where a certain German Minister of the Interior, who sometimes writes for DKP leaflets and allows herself to be photographed with antifas, is already waiting to receive them all, all.

Harvest endangered worldwide

In addition, there are some medium-term weather phenomena. About a week ago, the U.S. Department of Agriculture released a report titled “World Agricultural Supply and Demand Estimates” (WASDE). It said output was lower in Australia, Morocco, Argentina, China and the European Union (dry early summer). Bloomberg added that in the U.S., the crop was extremely poor due to drought, and in Canada, cold and wet weather also delayed sowing. India is suffering from a heat wave – incidentally, the country is the second largest exporter. The subcontinent has now imposed an export ban. Number one is China; but here floods destroyed large parts of the harvest. The number three exporter is Russia. But Moscow is denying exports to some countries because of sanctions on parts of its economy.

Blockade of Ukraine

But the current reason for the dearth is the blockade of Ukrainian Black Sea ports by the Russian Navy. According to WASDE, Ukraine’s harvest will slump by about a third this year. In addition, according to an estimate by the German Ministry of Agriculture, 25 million tons are currently stored in Ukraine – but they cannot be removed due to the war. The short-term situation could change if the U.S. delivers modern anti-ship missiles, as announced. This is to be expected, as the Americans are acting decisively – while Germany’s chancellor is ranting about a “turning point in time” and apparently backstabbing the delivery of Marder and Gepard tanks. As Reuters reports, citing White House and congressional sources, Harpoon missiles with a range of up to 300 kilometers and the Naval Strike Missile (NSM) with a range of 250 kilometers are under discussion.

Annexation and nuclear strike

Which leaves us with one more particularly ominous potential development to report in this sick war. The always well-informed Institute for the Study of War (www.understandingwar.org) recently warned that the war is now entering its decisive phase. The Kremlin is still trying to occupy as much Ukrainian territory as possible for annexation. But if the regime realizes that it is not making much headway in the face of fierce Ukrainian resistance, the Russians could dig in. And then annex the territories they already occupy in order to attack again later. These would then be Russian territories – and Moscow would regard every combat action as an attack on Russia. This would probably result in the use of nuclear weapons. Let us hope that this case does not occur. Bernstein Bank keeps an eye on the situation for you!

 

 

 


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 are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

Inflation crash

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19.05.2022 – So this is what it looks like when inflation hits the stock market: retailers Walmart and Target cut their forecasts. Which triggered a selling frenzy. And if Jerome Powell adds to that with an extremely hawkish statement, then we have a mess.

What a feast for the bears: down 5 percent for the Nasdaq 100. Down 3.6 percent for the Dow Jones, a loss of 4 percent for the S&P 500. Both indexes posted their worst daily percentage loss since June 11, 2020. Is it time for a countermovement now? It doesn’t look like it yet, as evidenced by a look at the hourly chart of the SPX 500.

 

Source: Bernstein Bank GmbH

 

First Walmart, then Target – two giants from the U.S. retail sector had triggered the price avalanche, other retailers also came under pressure. The supermarkets felt the significant increase in costs in the first quarter – higher prices for gasoline, rising prices for products, rising wages, reluctance to buy among customers when everything becomes too expensive. Target lost a whopping 25 percent in the meantime – hefty, hefty. The biggest one-day loss since 1987.

Aggressive Fed

And then there was Jerome Powell. Somewhat surprisingly, the stock market took a while to process his clear statement: Already on Tuesday, the Fed chief said the U.S. central bank would tighten the monetary reins until inflation was under control. First, there would have to be clear and convincing signs that upward pressure on prices was easing, he stressed at an event hosted by the Wall Street Journal. A more aggressive approach is certainly possible, he added.

50 steps ahead

He added that if necessary, the Fed would also move beyond the neutral level without hesitation. That neutral level is 25 basis points – then the Fed chief reiterated that further 50-step moves were likely as long as the state of the economy did not fundamentally change. Literally, “If that involves moving past broadly understood levels of neutral we won’t hesitate to do that.” In any case, he said, inflation needs to be brought down much closer to the 2 percent target. There is work to be done: Currently, inflation is at 8.3 percent, the highest level in four decades.
JPMorgan commented, Don’t fight the Fed – it wants weaker growth. A strong dollar, lower stock prices, higher mortgage rates are likely to weaken demand. Gradually, it said, this will lead to falling demand for labor. Nothing to add – Bernstein Bank wishes successful trades and 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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

Terra drags Bitcoin into the abyss

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12.05.2022 – Things are getting dicey for Bitcoin now: the largest cryptocurrency has breached the important $30,000 mark. Much of this bearish situation is the fault of its hunchback kin: the culprit is the stablecoin Terra. We explain the background.

This does not look good for the bulls. The long-term support at around $30,000, which has been built since January 2021, has been torn, as you can see from the upper red line in the daily chart. Although in this oversold situation, a countermovement would be called for once. Especially since the recent downward trend has torn two price gaps that want to be closed again – see gap 2 and gap 3. But this can take half an eternity, as you can see from gap 1.

 

Source: Bernstein Bank GmbH

 

We recently explained the factors behind this. Above all, the general risk aversion that is spilling over from Wall Street is causing sales. In addition, inflation was somewhat weaker, but higher than feared. In April, consumer prices climbed 8.3 percent compared to the same month last year. In March, the inflation rate had been 8.5 percent. Thus, inflation in the U.S. has moderated for the first time since August 2021. Actually, such high inflation should drive investors into assets that cannot be eroded by the Federal Reserve via an increase in the money supply.

Reserves are being liquidated

On the other hand, it’s only a matter of time before the economy suffers and many people end up unemployed – living off reserves. According to data from digital asset manager Coinshares, investors have pulled about $300 million out of cryptos since mid-March, including $250 million from Bitcoin alone. In addition, as the Fed tightens the interest rate screw, other assets such as government bonds become more attractive, as coupons yield interest.

Terra crashes

But there is another reason for the Bitcoin debacle: The third-largest stablecoin TerraUSD just ran into severe turbulence. Such stablecoins are supposed to fluctuate closely around the dollar equivalent. However, this peg was of no use – on Tuesday, Terra dipped down to 60 cents. Its sibling currency Luna, which floats freely, reported a loss of more than 90 percent in a week.
Singapore-based cover consortium Luna Foundation had initially tried to raise fresh money. Terra creator Do Kwon wanted to raise more than $1 billion in fresh money, according to CNBC. Further, he tried to prop up Terra’s price by selling his bitcoin token reserve worth about $2 billion. However, yesterday Terra collapsed to less than 30 cents. Things have since calmed down a bit here, so as you read these lines, everything may have turned around. The whole thing could also have been a concerted short attack on Terra and thus BTC: according to the financial blog “ZeroHedge”, however, major investors BlackRock and Citadel denied any attack on Terra’s dollar peg.

Analyst sees BTC at 17,000

Our conclusion: the mixed situation is confusing, and what is happening behind the scenes is difficult to grasp. The only fact is that Bitcoin has dipped into a precarious chart region. On a technical basis, analyst Jeffrey Halley of forex broker Oanda expects the bitcoin price to slide as low as $17,000. We are curious to see what happens next and will keep you updated!

 

 


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 are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

Bitcoin

Countermovement in BTC

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Bitcoin

10.05.2022 – Sell-off on the stock market, slaughter on Bitcoin. And not only here – in the entire crypto market assets were liquidated in recent days. But now the countermovement is underway – an extremely important chart mark has been defended for now. We shed light on the background.

A feast for traders: In the past few days, Bitcoin and co. have been going strong. BTC has just dipped to its low for the year. Most recently, however, the bulls had the reins in their hands again. The support at around $30,000 was and is important – this is the low from July 2021. Moreover, such large round marks are always seen as decisive milestones anyway. In the four-hour chart, you can also see a price gap – which will probably be closed at some point.

 

Source: Bernstein Bank GmbH

 

But let’s take a look at the background to find out what might happen next. One factor in the recent bear market was, of course, the downward slide on Wall Street. Most recently, it was risk off – everyone silvered what they could.

Everything must go

The sell-off extended to all cyber currencies, as “CoinMarketCap” reported – even the exotic orchids like Solana, Terra Luna, Cardano, Shiba Inu saw their garden thinned vigorously with losses of up to a fifth. According to “CoinGlass”, some $725 million in assets were liquidated across the crypto market in the 24 hours ending yesterday, May 09.

Retail sold

Philip Gradwell, chief economist at “Chainalysis” pointed out an interesting fact in the BTC market: according to this, large amounts of assets from retail investors flowed into the crypto exchanges: ”Private wallets are now accounting for 40% of exchange bitcoin inflows rather than the typical 10%, which means there is a lot of extra sell pressure – and it is a similar story for ETH…”.

Big buyer may have to liquidate

BitcoinMagazine discovered another bearish factor: because of the recent wave of selling, one of the biggest BTC buyers may now become a seller. The nonprofit organization Luna Foundation Guard (LFG) in Singapore had accumulated 42,530 Bitcoin at a price of $30,000 and would probably have to liquidate them. According to the report, the reserves will be used to support the price of Terra Stablecoin (UST).

Escape from Russia

Our conclusion: All of the above-mentioned arguments of the experts seem valid to us. But in addition, there is a special factor that is difficult to support with numbers and could last longer. We suspect that many Russians are currently leaving the country and building a new future in the West. We hear from thousands of IT professionals and well-educated young managers who are fed up with living in a neo-Stalinist regime that is burning its youth in a senseless fratricidal war, attracting sanctions from the West and thus endangering the middle class. Therefore, savings are being sold off, which are stored in cryptos by web-savvy investors. In short, the best are leaving. It was like that under the czars, the communists and again now.

Important US data

In the short term, the bulls remain hopeful that the countermovement will continue. Thus, the inflation data from the U.S. for April could at least temporarily become a “turning point” for Bitcoin, judged Yuya Hasegawa, crypto market analyst at Japanese broker Bitbank. Volatility will continue, in his opinion – Hasegawa expects a trading range between $30,000 and $38,000 this week. Bernstein Bank keeps an eye on the situation for you!

 

 


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 are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

Gold Stock Graph

Bleeding and rebounding

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Gold Stock Graph

09.05.2022 – Not good news for the bulls: According to Goldman Sachs, the stock market will literally bleed out in the near future. However, the stock market will repeatedly resist the decline with violent, short rallies and short squeezes. At least that’s what one expert says, who has already been right twice recently.

Tony Pasquariello, head of hedge fund sales at Goldman Sachs, commented that in the meantime the negative momentum had been curbed for the time being because of the latest, not really frightening meeting of the Federal Reserve. Nevertheless, the S&P had returned to the end of the trading range that had already defined the past three months. And we add: In the four-hour chart of the S&P 500, the downtrend of the SPX is clearly visible – in which there were countermoves to the upside again and again. Most recently, this was the case at the latest Fed meeting. Which brings us back to Pasquariello’s thesis.

 

Source: Bernstein Bank GmbH

 

Once again, the Golmann sent a warning to the bulls in the financial world. Yesterday he wrote: “the more time we spend near the lower goal post, the more I question whether the state of the market is a genuine range trade … or a steady bleed to lower lows that’s interrupted, on occasion, by vicious short squeezes.” The expert did not give a clear time frame, but in previous speaking engagements he spoke of several bearish weeks. As is often the case, it depends on the state of the economy.

Buy the dips – sell the rips

For the bulls, Pasquariello now warned that the Fed would have to tighten aggressively because of inflation, which would slow down the economy. He also told the bears that the strength of the labor market is strong enough to prevent a recession. And for now, here’s the specific recommended action for all traders: “buy dips below 4200, sell rips over 4500 (and, if I’m going to be wrong, it’s more likely to the downside than to the upside).” We translate: This mentioned lower limit is likely to be broken more easily than the upper limit. And thus there seems to be more opportunities on the short side.

He was right

Pasquariello had already been right at the end of March. Against the prevailing trend, he had predicted that the party would come to an end. And he still warned of a bear market squeeze. A few days later, he wrote of recession signals that were out in the open for all to see. And in mid-April, Pasquariello stated that the best days were behind us. Again, he was right. And this time?
Our conclusion: This assessment actually has some merit. Inflation is raging, central banks have to withdraw capital from the market. But they have to be careful not to unleash a deflationary recession all of a sudden. And even fiscal policy is powerless against price increases in the supply chain triggered by Covid or the Ukraine war. In this clash of hopes and fears, the stock market will remain volatile. Bernstein Bank wishes successful trades and 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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

Daily trading chart

Tamer than feared

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Daily trading chart

05.05.2022 – So it has done it: the Federal Reserve has raised interest rates by 50 basis points for the first time since 2000. And the stock markets are celebrating – apparently that’s a paradox. But it fits together very well, because many investors had feared even more drastic steps. The question is whether this has finally eliminated interest rate fears.

The market is likely to ponder the new situation for a while yet. Although the indices reacted yesterday with a large plus. Today, Thursday, however, U.S. futures trended weaker for the time being. Nevertheless: Yesterday, the in the S&5 500 marked the largest daily gain on an interest rate hike date since November 1978, according to “ZeroHedge”. You can see the reaction here very nicely in the hourly chart of the SPX.

 

Source: Bernstein Bank GmbH

The reasons for the positive development: Fed Chairman Jerome Powell rejected speculation about a 75 basis point rate hike in one step in the near future. He said, “A 75 basis point increases is not something the committee is actively considering” and added, “next couple of meetings”, would bring 50-point hikes.

Tightening as expected

In addition, the tightening turns out to be about as expected. Its balance sheet, which has grown nearly $9 trillion in the wake of the Corona prop, the Fed now wants to shrink rapidly. Starting in June, a total of $47.5 billion worth of maturing bonds each month will not be renewed, the central bank announced. By September, the monthly total is expected to pick up to $95 billion. Rumors of deeper and faster cuts had been circulating on the trading floor. Powell also made it clear that he sees the risk of a recession – which hopefully eliminates the danger of an overreaction.

Excessive pessimism

Steve Englander of Standard Chartered commented thus: Many investors would have feared a switch to 75 points and a tightening well above neutral. “So it is fair to say that positioning and excess pessimism reflect a big part of the market reaction. (…) we also saw a few tentative indications that the Fed sees a little more risk of a slowdown (or at least a moderation in activity), and that it did not want to endorse the most hawkish views under discussion at this point. (…) Overall, the tone was much more balanced than at the January and March FOMC meetings.”

Too much optimism?

However, this is by no means an all-clear signal for the bulls. In May 2000, at the last 50-point step, the interest rate had risen to 6.5 percent – shortly before the bursting of the dot-com bubble. Now, however, the U.S. key interest rate is only 0.75 to 1.00 percent. But the inflation rate in the USA reached 8.5 percent in March, the highest level in over 40 years. It is quite possible that inflation will jump even higher because of the Ukraine war and new Corona supply chain issues. At the same time, the Fed’s tightening will for the time being withdraw a lot of liquidity from the markets.
The conclusion from all this is that the Fed has calmed the nerves for now. Whether it will stay that way remains to be seen. The Bernstein Bank wishes successful trades and 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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

Trading graph chart

The next attempt

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Trading graph chart

03.05.2022 – Desperate act against the currency’s decline: According to a media report, Istanbul wants to attract foreign investors with high interest rates. Will this stop the decline of the lira? A similar attempt had worked before – but only for a short time. Traders should take a closer look at the matter.

Once again, we have to deal with the Turkish lira. An interesting development is brewing here – a new intervention. At the end of last year, Turkey had already intervened once drastically. The tax office guaranteed to take over losses on lira investments. For example, if investors received 15 percent interest on a one-year investment, but the inflation rate was 20 percent, the government would cover the difference. The term applied to bonds between three and twelve months. The plan led to a short squeeze, but could not prevent the subsequent renewed erosion of the currency, as the daily chart of USDTRY shows.

 

Source: Bernstein Bank GmbH

De facto, the initial effect has almost evaporated again. Unfortunately, the compensation for the losses was apparently achieved by cranking up the printing press. And with the sale of private investors’ dollar reserves – the financial blog “ZeroHedge” spoke of a clandestine confiscation. Now, it seems, the next round in the game is about to begin. Turkey is in desperate need of foreign exchange reserves. Goldman Sachs sees a hefty shortfall: if swaps with banks and central banks were deducted, the foreign currency reserves position would be minus $57.4 billion as of April 27. Within just one week to that date, Ankara had burned through $1.3 billion.

The new master plan

So the situation is ominous. As a result, Ankara is working on a new plan to attract foreign currency, according to Bloomberg. Investors who leave their greenbacks in the country for at least two years are to receive a 4 percent return in dollars. The central bank also wants to give free lira liquidity to interested foreign investors to invest in local bonds, he said. The translation of this action: Ankara will probably use the firmly invested foreign dollars to support the lira for two years. And then – hopefully – pay them back.

A question of trust

The upshot of all this is that the government’s attempt to lure foreign money could open up long opportunities in the short term. In the long term, however, the lira will only stabilize if investors have confidence in the country. Here, things look bleak – anyone who lowers interest rates in the face of high inflation must be considered not quite in his right mind, to say the least. In March, the inflation rate had climbed by 61.14 percent compared with the same month a year earlier. In February, inflation had already reached 54.44 percent. The situation is unlikely to be much different in April, when the figures will be published.
The approach on the Bosporus is also interesting for other currencies of crisis states. For the Russian ruble, for example. State support, secret intervention, magical price rallies, short squeeze, heavy vola. In other words: exchange rate opportunities for all who anticipate the next steps of politics. Bernstein Bank keeps you up to date.

 

 

 


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 are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

Dax analyse

Game Changer

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Dax analyse

29.04.2022 – The time has come: For Russia, the beginning of the end of the Ukraine war has begun. Because just like in the Second World War, the USA has now passed the Lend-Lease Act. Only for the second time in its history. Thus, the victory of Ukraine is only a matter of time. And all stock market players have to ask themselves whether this will lead to a celebration of joy. Or to an escalation by Russia and a crash.

Pure coincidence or the first shock reaction? Russia stopped its attacks in eastern Ukraine during the night. In the days before, Moscow’s threats of nuclear war had piled up. Either way, the U.S. House of Representatives passed the Ukraine Democracy Lend-Lease Act of 2022 after the Senate. A real game changer, also for the stock market. Up or down? The only thing that is clear is that the nervousness will persist. You can see, for example, in the daily chart of the Dow Jones that investors have been looking for a clear direction for weeks.

 

Source: Bernstein Bank GmbH

Since the quality media here have hardly registered the political event so far, here is a brief historical background that investors and traders need to know. Britain had long been at war alone with the Soviets on the European continent during World War II. The foreign exchange reserves had been depleted, the kingdom had had to buy weapons on the principle of cash and carry. So just like everywhere else in the economy: put money on the table, take tanks.

The turning point in the Second World War

On February 18, 1941, however, the U.S. Congress passed the Lend Lease Act, officially called An Act to Promote the Defense of the United States. With it, the British – and the Soviets, too – could take weapons on credit. Fight now, pay later. Moscow, for example, paid in raw materials after victory. From February 1941 onward, at any rate, the flow of U.S. weapons for the anti-Hitler coalition swelled ceaselessly.

War on credit

So it could be again. For the Ukraine Democracy Lend-Lease Act of 2022 (S. 3522), now passed by the House, frees the White House from some bureaucratic and funding shackles on arms exports. Now there is no longer a need to debate budgets and the purpose and value of weapons forever. Depending on the situation on the front lines, deliveries can be made. Whether and how Kiev pays for vast amounts of material will be clarified sometime later. This could also involve the free transfer of bases for the Americans in Ukraine, who knows.

The warthogs are lurking

In any case, things are now getting tricky for the Kremlin. For the U.S. has some weapons up its sleeve that could soon blow the Russian army to smithereens. For example, the Fairchild Republic A-10 Thunderbolt II aircraft designed for ground combat. Better known as the “Wart Hog.” The National Review pointed out that the U.S. Air Force has more than 350 Wart Hogs in its inventory that it wants to get rid of anyway because of obsolescence, hard-to-get spare parts and the supposedly modern air defenses of China and Russia.

Brrrrrrrt

The jet is a The Hog is a hell of a machine, built especially to fight the Soviet tank masses. The main weapon of the Hog is the GAU-8/A Avenger 30×173 mm machine gun. Its typical brrrrrt buzz has made GI’s all over the world cheer in dicey situations. The jet had long been seen as obsolete because of the end of the Cold War and the conversion of many armies to helicopters. Now, however, it could make a comeback against the sometimes nicely lined up Russian tank columns.

Kreml under pressure

Which brings us back to the stock market. For the siloviki – i.e. the representatives of a powerful state – around Vladimir Putin, the Ukraine law is the beginning of the end of the invasion. The question is whether Russia will now pull back. Or whether Moscow will escalate. The Kremlin has certainly realized that the country is now seen by the West on a par with Nazi Germany – negotiations pointless. Russia has always reserved the option of using nuclear weapons not only in the event of an attack against its own country. But also if its own military goals are not achieved. So: keep an eye on the real-time news right now. We have reached a strategic fork in the road that also affects the financial market. Bernstein Bank wishes you successful trades and 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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

Trading Background

Dirty on the precipice

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Trading Background

27.04.2022 – Now prices are again in line with the situation: the stock markets have corrected sharply. And thus the current negative factors have been priced in again. The S&P 500 is now at three interesting technical milestones. According to an investment house, there is one chart signal in particular, after which the SPX has previously always corrected by around 20 percent.

On the Nasdaq, things just got really rough, with Tesla’s crash dragging the index down in its worst day since September 2020. In fact, high-tech prices hit the intermediate lows of the Ukraine invasion. So all the bears were right, talking about an interim bear market rally that was fundamentally unjustified. In contrast, the greenback – fueled by the Federal Reserve’s rate hike rhetoric – has reached its highest level since May 2020 as measured by the dollar index.

Shoulder-to-shoulder?

Things are really interesting in the S&P 500, though. We see that the index has now actually formed a somewhat squeezed shoulder-head-shoulder formation in the weekly chart. Perhaps you also recognize this – although this is of course always a matter of interpretation. In any case, a crash below the neckline, which is currently reached exactly at around 4,200 points, threatens.

 

Source: Bernstein Bank GmbH

But that is not all. Graham Summers, analyst at Phoenix Capital Research recently sounded the alarm: “The technical damage of the last few weeks has been severe. As I write this, the S&P 500 is hovering around its 50-week/10-month moving average. If it breaks lower here… it’s going to at least 4,200 if not 3,600.” The monthly MACD has also sent out a sell signal that has been fatal in the past: “This has preceded declines of 20+% every time it registered in the last four years. Put simply, another bloodbath is coming… and smart investors are already taking steps to profit from it.”

The world is back on track

With this, the stock market has more or less returned to normal – and it is thus at an important crossroads. The bull market since mid-March has also been amazing given the Corona damage to the economy, the Ukraine crisis, supply chain disruptions, rising inflation and a hawkish Fed. But why had prices risen in the first place?

The cleanest of the dirty shirts

Phoenix Capital Research, provided the answer: according to the report, investors had been pulling money out of U.S. bonds in a big way and putting it into stocks. The reason for this was the fact that bond prices always fall in inflation and yields rise. In March, investors pulled $40 billion out of bonds and pumped $45 billion into stocks, according to the report. Of that, $41 billion closed in U.S. equity funds alone, he said. Because the USA is still the cleanest of all dirty shirts: “Because the U.S. is the “cleanest dirty shirt”. (…) It’s not that stocks are a great investment at current prices… it’s that bonds are so much worse.”

Acute crash danger

Our conclusion: According to this picture, the SPX is more or less like an exhausted hiker standing at the precipice in a dirty T-shirt. One little push and it crashes into the canyon. The reasons that suggest themselves for the collapse would be the resurgence of the Corona crisis in China or an escalation in the Ukraine war. Even though the above chart signals are more interesting for long-term investors, traders should also take it to heart. Because if the warnings are true, we will soon see violent price movements. Mostly downwards, with counter-reactions upwards. A real vola party. The Bernstein Bank wishes successful trades and 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. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 81% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 81% 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.