News

18.06.2019 – Daily report. Godlike Mario Draghi intervenes in stock trading: The head of the European Central Bank (ECB) has promised a relaxation of monetary policy if necessary. The stock market applauds. Meanwhile, there are growing signs that China is about to prepare a counterstrike in the customs dispute with the US.

Loose monetary policy ahead

When the Lord of the Money speaks, charting becomes pointless. The DAX just wanted to slip below the 50-day moving average of 12,086 points, on which the index had recently made such good progress. Draghi then provided for a moderate plus of 0.8 percent.
Should the economic outlook not improve, an additional easing would be necessary, Draghi announced at the ECB central bank conference in Sintra, Portugal. He added: “Additional interest rate cuts and further bond purchases are conceivable, they are part of the ECB’s instrument box.
As a reaction, the yield on ten-year German government bonds slipped to a new record low in Germany. We always say: Keep an eye on your regular market updates. Events on the floor are constantly changing. The negative ZEW Indicator of Economic Sentiment receded into the background in the face of the ECB.

Asia without a clear trend

Monetary policy had also previously been the dominant topic in Asia. Many brokers were waiting for the Fed meeting on Wednesday. Few players currently expect interest rates to be lowered, but many investors are hoping that Fed Chairman Jerome Powell will make some indications in this direction. The Chinese CSI-300 climbed 0.4 percent to 3,668 points. Japan’s leading index, the Nikkei 225, closed 0.7 percent lower at 20,973 points.

Wall Street listless

In New York, too, most investors had held out sideways before the Fed meeting. The Dow Jones index rose by a minimal 0.1 percent to 26,112 points. The market-wide S&P 500 also rose by 0.1 percent to 2,889 points. And the composite index of the technology exchange Nasdaq climbed by 0.6 percent to 7,845 points.

Focus on oil and rare earths

Meanwhile, the Wall Street Journal reported an interesting development from the oil market. Saudi Arabia was advocating a cut in production within OPEC in the second half of the year, the paper reported, citing insiders. And China is currently arming itself in the looming trade war with the USA. The National Development and Reform Commission (NDRC) is preparing cuts in the export of rare earths. This is the result of talks with those responsible in the Chinese Rare Earth industry, the press said yesterday.

This is what the day brings

The calendar for today’s Tuesday is otherwise thinly filled. The US construction starts and approvals at 2:30pm are likely to cause a sensation.
The Bernstein Bank wishes you 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.

17.06.2019 – Daily report. The German stock market is making slow progress. The stock market remains under cover before the Fed meeting in the middle of the week. Deutsche Bank is also causing eyebrows to rise. And even in the customs dispute between China and the USA, there were no arguments for brokers to buy.

Wait and see because of Fed and customs dispute

The beginning of the week has provided an interesting bouquet of information for worldwide trade. The news first had to be processed – the DAX worked its way up by a moderate 0.2 percent until Monday midday. The Deutsche Lufthansa share plummeted by double digits – the reason being a harsh profit warning.
In addition, US Secretary of Commerce Wilbur Ross dampened hopes for a large trade agreement between the USA and China before the G-20 summit in Japan at the end of the month. He told CNBC that the question of enforcing an agreement was the most important element of a possible deal. The most important outcome of the summit could be that both sides renegotiate at all.
In addition, many investors were in a sideways stance ahead of the Federal Reserve’s press conference on Wednesday. Most analysts expect the Fed to verbally prepare investors for a rate cut in July at its press conference after the Open Market Committee meeting.
It was precisely for these reasons that Asia was on the spot: In Tokyo, the Nikkei 225 bid farewell almost unchanged at 21,124 points. In China, the CSI-300 closed unchanged at 3,655 points.

Deutsche Bank disposes of toxic assets

The only thing that remains is a look at Deutsche Bank – it reminded investors that the financial crisis is apparently far from over. According to a report in the “Financial Times”, the bank, which is possibly on the verge of nationalisation, is planning to set up a bad bank worth billions. Assets with a volume of up to 50 billion euros are likely to be included in this bank, the paper reports with reference to insiders.
The outsourced assets will be mainly long-term derivatives. And it goes even further: outside Europe, the bank wants to significantly shrink or even completely close its stock and interest trading business. We ask ourselves: Who will bear the costs of the bank if this toxic waste dump is closed down without a sound? Could it be the German taxpayer? The stock market was pleased with the news – the share price has risen recently.

No tailwind from New York

Wall Street did not send out any impulses for the DAX on Friday. The Dow Jones closed 0.1 percent lower at 26,090 points. The market-wide S&P 500 fell by 0.2 percent to 2887 positions. And the Nasdaq 100 lost 0.4 percent to 7,479 points. Data from retail and industry were good. On the other hand, the consumer sentiment survey conducted by the University of Michigan had deteriorated somewhat more than analysts had forecast.

Bitcoin in demand again

There is still a look at the crypto currencies. The virtual parallel currency Bitcoin has just climbed above the 9,000 dollar mark for the first time in 13 months. The reason for this is speculation that Facebook wants to introduce its own currency.

This is what the day brings

Monday brings otherwise only few important dates. The Empire State Manufacturing Index is due for June at 2.30pm. And the European Central Bank announces at 3.45 pm the change in the Eurosystem central banks’ holdings of government bonds, covered bonds, corporate bonds and asset-backed securities.
Bernstein-Bank wishes you 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.

14.06.2019 – Daily report. Wait and see is the motto at the end of the week. The DAX is crumbling a little. Brokers are suspiciously watching the escalation in the Persian Gulf. Especially as radio silence continues to prevail in the customs dispute between China and the USA. New impulses could come from America in the afternoon. Initially, however, German government bonds and gold were in demand.

Gold on the Rise – Record Low in Federal Yield

Small escape to a safe haven: The price of gold rose to 1,357 dollars per troy ounce. This marked a new annual high for the precious metal. At the same time, ten-year German government bonds were in high demand: the yield fell to minus 0.26 percent and thus to a new record low.
No wonder, given the tensions before Oman. The US military presented a video showing the removal of a dud mine from a tanker by an Iranian speedboat. Apparently traces were to be covered up. This would in fact make Iran responsible for yesterday’s attack on two ships. The situation in the Persian Gulf can escalate at any time by a retaliation strike, CFD traders should not only keep an eye on the news because of the energy prices.

Investors avoid stocks

On the other hand, there was hardly any news on the stock market, and even a look at regular market updates did not provide the stock market in Frankfurt with any new arguments to buy. Until Friday midday, the DAX recorded a minus of 0.7 percent. Infineon maintained its position at the end of the index. Investors blamed competitor Broadcom for the losses. On Thursday evening, the US company lowered its revenue forecast for 2019 from 24.5 billion dollars to 22.5 billion dollars. The main reason was the threat of a trade war between the USA and China, which depressed demand.

Uprising of cheap suppliers

China and the USA at all. The bulls among investors hope for a breakthrough in the tariff dispute at the G20 summit in Japan at the end of the month, but don’t really believe so themselves.
Meanwhile, an open letter from more than 500 American companies to the White House caused a bit of a stir on the floor. The Tariffs hurt the Heartland merger warned of “negative consequences for the economy as a whole” because of the threat of a trade war. The initiative includes wholesalers and retailers Walmart, Costco and Target, as well as textile companies Gap, Levi Strauss and Foot Locker. Why these companies cannot switch to other suppliers from Asia, Central America or Europe is a mystery. The Chinese products on offer are not space technology and can therefore be replaced quickly and easily.
Especially since the U.S. labor market would be happy about new jobs – America is currently experiencing an explosion of homelessness, especially in the so-called Sanctuary Citys, cities that do not deport illegal migrants. With the open-door policy, traditionally left-wing ticking states like California have scored an own goal. Los Angeles is now showing slum tendencies in some parts of the city.

Asia uneven

Whatever. As the Japanese stock market picked up, Chinese brokers ducked away – new major demonstrations are expected in Hong Kong over the weekend. The Nikkei gained 0.4 percent to 21,117 points. The Chinese CSI 300, on the other hand, lost 0.8 percent to 3,655 points.
Wall Street performs well
Wall Street was more robust the night before and was supported by the hope of a rate cut. The Dow Jones Industrial gained 0.4 percent to 26,107 points. The S&P 500 also rose by 0.4 percent to 2,892 points. The Nasdaq 100 rose by 0.5 percent to 7,511 points.

That’s what the day brings

At the end of the week, investors expect another round of potentially price moving data. First, at 2:30pm U.S. retail sales in May will run through the tickers.
At 3:15pm is followed by US industrial production and capacity utilization for May and US inventories for April at 4:00pm. At the same time the index of consumer sentiment of the University of Michigan in June (1st survey) should cause a stir.
Bernstein Bank wishes you 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.

13.06.2019 – Special report. The speculations about an Italian parallel currency simply do not cease. Is the Mini-BOT the preparer of a default and Italexit? Only in this way could Rome quickly and completely clear its debt. Italy owes the European Central Bank around half a trillion euros, i.e. 500 billion euros, via the indirect route of the Target2 balances. The temptation is great to let the euro bomb burst. That would be enormously dangerous for Germany, the entire euro zone and therefore the euro. We are analysing the background.

Expect the unthinkable

Italy has gone on a collision course with the European Union in two respects. Although the country has now given in to the deficit dispute with the EU in order to avoid a billion-euro criminal case, it has not yet done so. The Italian government insists that it can meet the deficit target of 2.04 percent, while the EU Commission expects 2.5 percent. But how will Rome get rid of its debts? In the middle of a recession, an austerity policy would be suicide for any government. The unemployment rate is 10.7 percent, Italy’s debt more than 130 percent of gross domestic product. As always, experienced CFD traders should also think through the unthinkable.

Time and again the parallel currency is tempting

Perhaps the only way to eliminate debt in euros is to switch to another currency. The second move towards the euro zone is therefore interesting – a unanimous decision by the Roman Chamber of Deputies at the beginning of June. The parliamentarians approved a motion that was not yet a draft law or a government decree. But certainly an interesting test balloon. In concrete terms: the government wants to issue short-term government bonds in denominations of 5 to 500 euros. Such small denominations are fatal reminders of real money.

Mini-BOT instead of Euro?

The bonds should be called Mini-BOTs – BOT is the abbreviation of “buoni ordinari del Tesoro”, i.e. treasury bonds. The maturities should be between three and twelve months in order to settle bills within Italy. In addition, Italians are to pay their tax debts to the tax authorities with mini-BOTs. And again we have important functions of a currency.
Italian government representatives recently emphasized that it was not a question of a parallel currency or the withdrawal from the euro. But perhaps this is just appeasing propaganda to lull the financial world. It is true that the Mini-BOT de iure is not an official currency – since Rome does not force anyone to accept the promissory notes. But de facto a second currency market would emerge alongside the euro if the critical mass of Italians using Mini-BOTs were large enough. Incidentally, second currencies are illegal under EU law. By the way, Mini-BOTs also further increase Italy’s indebtedness. So why take this step anyway? Maybe because the Italexit is to come after all and the investors simply don’t believe it yet.

Shock waves race through Europe

So what could happen? Since the process is almost unprecedented so far, only an attempt to analyze the history remains. On the one hand, Italy could simply explain a default for all international debts denominated in euros. The example of this: at the end of the 1990s Russia declared default on its bonds. In the case of Italy, the shock waves are likely to hit Germany in particular, the largest guarantor of the European Central Bank. German government bonds are likely to go down on their knees.

Italian government bonds in euros would also be a feast for the bears because of the default. A wave of collapses would also be expected among European banks in crisis – for they in particular would have to invest in bonds from risk countries because of higher yields. In addition, a mega-crash on the stock market and a bear market in the euro are likely to sweep over investors.

Example of hyperinflation in the Weimar Republic

Furthermore, Italy would probably immediately declare the Mini-BOT the new, only currency, albeit with a new name – which would immediately make the country interesting for investors, as it would be completely excused from external debt. There is a similar historical example: the Weimar Republic, crushed by gigantic debts, destroyed the loans of its creditors after the First World War. Germany unscrupulously apologized for the hyperinflation by paying off its debts in freshly printed and ultimately worthless marks in the course of the Ruhr War of 1923. Neutral states and above all the domestic middle class, which had subscribed to war bonds, were suddenly left empty-handed. When the new currency Rentenmark was introduced, the state was from now on almost debt-free and again an attractive investment location. The default risk for foreign investors had dropped to almost zero.
Immediately huge dollar flows flowed from the USA to Germany. Because America was swimming in money and looking for investment opportunities. It had supplied its allies, who had switched to war production – above all France and England – with a large proportion of its consumer goods during the First World War. This had led to a gigantic bull market on Wall Street in the “Roaring Twenties”. With the dollar influx, the Weimar Republic experienced a brief blossoming in the Golden Twenties. The parallel in the recent past: after the Russian crisis – and supported by the rising oil price – about 2000 billion Western funds flowed into Russia. The country boomed, the ruble recovered strongly.

Bull market in Italy and gold

The Italian stock market would therefore benefit enormously from the euro exit if new capital were to flow into the country. And of course the new currency would be worth a close look for traders, including government bonds. Since an escape from the euro would also set in – the example of Italy could set a precedent – many investors would probably invest their money in the safe haven of gold. Besides, a drastic fall in the value of the euro would only leave those who own tangible assets largely cold. Because home builders could pay off their mortgages more easily prematurely; and the bill would probably be presented shortly afterwards: In the Weimar Republic, real estate owners were asked to pay a house interest tax from 1924 onwards.
Our conclusion: Italy is growing into a trouble spot for the euro, which could make the Greek crisis look like child’s play. CFD traders should definitely take the matter on their radar screens. But if Rome has only shown its donors the tools of torture to obtain new loans via the ECB with the Mini-BOT, the muddling through will continue. New debts, little repayment, permanent crisis. Until the situation escalates as once in Greece. Let us wait and see.

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.

13.06.2019 – Daily report. The stock exchange in Frankfurt is surprisingly resilient. Although there is still no agreement in sight in the customs dispute between China and the USA. And despite the meagre performance of Wall Street the evening before. But the latest US economic data is encouraging for many investors.

Moderate growth in Frankfurt

Investors on the German stock exchange recently took a cautious stance, with most prices on the trading platform being presented in green. By midday, the DAX had risen by 0.6 percent.
Investors focused above all on the telecommunications industry. The evening before, the longest auction of German mobile radio frequencies had ended. The four providers – Deutsche Telekom, Vodafone, Telefónica and Drillisch – are paying a total of around 6.6 billion euros for the 5G frequency blocks. That is more than analysts had expected. Deutsche Telekom and Drillisch shares increased.

Waiting in the customs dispute continues

Investors in global trading remained sceptical about the China-US tariff dispute. Few brokers expect an agreement for the G20 summit in Japan at the end of the month. Because there are no concrete plans for a meeting between the American and Chinese presidents. Meetings at ministerial level have still at least been agreed. The customs dispute could therefore continue.
The Chinese CSI-300 closed Thursday 0.2 percent weaker at 3,685 points. And the Nikkei index lost half a percent to 21,032 points.

New York in minus despite good data

Wall Street had suffered slight losses on Wednesday. The Dow Jones Industrial fell by 0.2 percent to 26,005 points. The same applies to the S&P 500, which also fell by 0.2 percent to 2,880 points. And the Nasdaq Composite lost 0.4 percent to 7,793 points.
US consumer prices for May had fallen more sharply than expected. At the same time, optimism among small US companies is at an all-time high, as the NFIB index shows. As always, all economic data can be found here: Market Mover
Inflation is thus sending out two positive signals for the stock market at the same time: First, the current somewhat weaker inflation of the US Federal Reserve does not put any obstacles in the way of a loosening of monetary policy. Secondly, as critics of US President Donald Trump repeatedly claim, America has not yet imported any higher prices as a result of the punitive tariffs against China. Let us wait and see whether development continues.
If inflation remains low, an interesting goldilocks scenario could develop on Wall Street for CFD traders, i.e. the best of all worlds: The Fed could cut interest rates; China’s billions in fines could fill the US coffers; the US economy continues to boom, partly because Chinese goods are being replaced by agile American or international competitors; production returning home to the US supports the US labour market.

Is the war with Iran coming?

The price of oil could put a stop to this calculation. In the Persian Gulf off Oman just two oil tankers were damaged, whether by torpedoes or mines is still unclear. A war against Iran, which of course the USA and Saudi Arabia suspect to be behind the attacks, would sweep away the price pressure that is currently also emanating from the high oil stocks in the United States. Yesterday the situation came to a head when Yemeni Huthi rebels fired a rocket at a Saudi airport and injured over two dozen people.

Todays agenda

In the afternoon we have two important reports to make. First, the American import and export prices for May will be announced at 2.30pm. At the same time the weekly first US applications for unemployment assistance are supposed to arrive.
The Bernstein Bank wishes you 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.

12.06.2019 – Daily report. German shares reset. Wall Street did not make any headway either. No wonder: In the customs dispute between China and the USA, scepticism is once again spreading. But the People’s Republic has a problem with inflation. And also with industrial production.

The DAX is crumbling

The bulls on Wall Street hadn’t really gotten their act together on Tuesday night. Meanwhile, US Secretary of Commerce Wilbur Ross has dampened hopes that the trade conflict between the US and China will soon ease. Now the Frankfurt stock market is heading south. The DAX has recently posted a minus of around half a percentage point.

Beijing has two problems

Meanwhile, new data from China signal a rise in inflation – in addition to special factors also a logical consequence of the still moderate but noticeable depreciation of the yuan, with which Beijing wants to keep exports going. Consumer prices rose to 2.7 percent in May within a year, as the National Statistics Office announced on Wednesday. The level of consumer inflation is thus the highest in 15 months. In April, the plus was still 2.5 percent. Particularly alarming: year-on-year, food prices for May climbed by 7.7 percent. Fruit prices rose by 14.8 per cent due to weather conditions during this period, pork prices by 18.2 per cent due to African swine fever. And it is precisely in this situation that the purchasing power of the middle class is declining.
In addition, the weak 0.6 percent increase in Chinese producer prices caused scepticism. In the middle of the customs dispute, this was a new signal that the Chinese economic engine is stuttering. All important data can be found here: Market Mover
The Chinese blue chip index CSI 300 responded with a minus of 0.8 percent to 3,691 points. The Nikkei in Tokyo slipped by 0.4 percent to 21,130 points.

Winning streak in New York snaps

The night before, the scepticism was felt on the New York floor. The Dow Jones Industrial returned from early gains and closed the day at 26,049 points, down 0.1 percent. Prior to this, the Dow had closed six consecutive trading days higher. The market-wide S&P 500 fell by hardly noticeable 0.03 percent to 2,886 points. In contrast, the Nasdaq 100 rose moderately by 0.2 percent to 7,514 points. Those who rely on CFD for these minimal changes are lucky – because while online stock trading hardly brings any profit, you can make good profits with Germany’s best CFD brokers thanks to the leverage over trades.
The reason for US investors’ shyness: President Donald Trump poured oil into the smoldering tariff dispute on Tuesday. He said: “We had a deal with China and they retreated. If they don’t come back to this deal, then I have no interest.” China need an agreement. Which the economic data mentioned above seems to confirm.

This is what the day brings

Last but not least, we have a look at the diary. It gets exciting at 2.30 pm, then the US consumer prices for May arrive. At the same time, real incomes are reported for May. And at 4.30 pm the crude oil inventory data will follow from the state Energy Information Administration.
The Bernstein Bank wishes you 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.

11.06.2019 – Daily report. The trading floor is firmly in the hands of the optimists. After the Whitsun break, the DAX rises, Asia rises, Wall Street tightens its grip. The bulls refer to the agreement in the border agreement between the USA and Mexico. And they overlook new warning signals in the customs dispute between China and America.

Mexico and China support the DAX

The German benchmark index rose by more than 1 percent to 12,200 points on Tuesday afternoon. Brokers blamed the positive Wall Street figures for this development. Mexico now wants to curb the influx of people into the USA. On Friday evening President Donald Trump had suspended the punitive tariffs he had threatened on all Mexican imports indefinitely. Otherwise they would have entered into force yesterday.
German steel stocks posted partly significant price gains, with prices supported by hopes of increased Chinese demand. Beijing has increased the scope for regional governments to invest, and they can call up special bonds to finance infrastructure projects.

Asia ignores Trump’s threat

In China, this announcement mainly boosted the prices of construction stocks. The CSI 300 in China rose by a whopping 3 percent to 3,719 points. The Nikkei index gained 0.3 percent to 21,204 points.
Meanwhile, US President Donald Trump has threatened China’s President Xi Jinping with further tariffs on Chinese imports worth 300 billion dollars. These would take effect if Xi was not ready for a meeting at the G-20 summit in Osaka, Japan, on 28 and 29 June, Trump told US television station CNBC. Beijing has not yet confirmed a meeting. This means that all Chinese imports worth around 600 billion dollars into the USA would be subject to punitive tariffs.

China’s red line

Interesting footnote for Forex traders: Goldman Sachs expects China to depreciate the yuan sharply. The investment bank has just raised its three-month target for the USD/CNY from 6.95 to 7.05. The USD/CNY is expected to strengthen from 6.95 to 7.05. This would be the lowest level since March 2008, when Bear Stearns collapsed. With the break of the mark of 7, a massive capital flight from China could set in.

Wall Street wants to go up

Still without any reaction from Wall Street, Trump’s covert threat against a possible social media cartel remained. In an interview with CNBC just mentioned, Trump hinted at tougher action in the direction of Google and Facebook. Referring to the European Union, Trump said: “We should do what they do”. And continues: “Something is going on about monopoly.” The EU Commission has imposed competition fines of 9.5 billion dollars on Google. So keep an eye on your trading platform – something could soon move here.
Yesterday, at any rate, the Nasdaq 100 gained 1.1 percent to 7502 points. The Dow Jones rose by 0.3 percent to 26,063 points, but returned from its daily high of around 26,211 points. The S&P 500 recorded a plus of 0.5 percent to 2887 positions at the end of trading.

Focus on Italian bonds

There remains another political issue that CFD traders should keep in mind. Italian government bonds could soon be exciting. Because the government in Rome is standing up to the EU. The threatened deficit procedure because of the escalating national debt could frighten off some investors. And then perhaps, perhaps again, focus on the issue of the break-up of the euro zone. With corresponding consequences for the euro.

This is what the day brings

There are a few important dates for today, Tuesday. At 2.30pm the American producer prices will arrive. And at 10.30pm the private American Petroleum Institute reports the weekly crude oil inventory data.
The Bernstein Bank wishes you 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.

07.06.2019 – Daily report. Everything is so rosy on the German stock market: pushed by a firm Wall Street, the DAX remained in the profit zone on Friday morning. The leading index defied negative data from the German economy. Now a possible agreement between Mexico and the USA is supporting prices. In addition, US interest rate fantasies continue to have an effect.

DAX defies poor economic data

Buying mood among German shareholders – the DAX has recently remained above the 12,000 mark, posting an increase of 0.8 percent.
Not even poor economic data from Germany clouded the positive mood: German exports in April fell by 3.7 percent compared to the previous month, according to the Federal Statistical Office. This is the sharpest decline since August 2015. Imports shrank by 1.3 percent. Companies also reduced their production in April as sharply as they last did in August 2015, as the Federal Ministry of Economics added. As always, you can find all economic data here:Market Mover

Profits in Asia

Investors also took action in Asia. The Chinese stock exchanges remained closed due to the dragon boat festival. But the Chinese central bank stressed that it could support the economy with monetary policy interventions if necessary. The Nikkei 225 in Tokyo took its leave into the weekend with a plus of 0.5 percent at 20,885 points.
New York closes in positive territory
Prices on Wall Street also climbed on Thursday. The Dow Jones index closed with a gain of 0.7 percent at 25,723 points. The S&P 500 rose by 0.6 percent to 2,843 points. And the Nasdaq Composite rose by 0.5 percent to 7,615 points.

Mexico now supports prices

Mexico was in a good mood. Washington is apparently considering postponing the imposition of customs duties in the trade and border dispute with Mexico. Mexico wants more time for negotiations, the news agency Bloomberg reported, citing insiders. Actually, the special duties are supposed to take effect on Monday. But now Mexico wants to move 6,000 national guardsmen to the border in order to contain the influx of illegal immigrants into the USA. In addition, Mexico froze the bank accounts of 26 human traffickers.
By the way, politics could offer CFD traders interesting opportunities in the Mexican peso. The secondary war in Mexico is also proof that the clear edge of the USA in politics and the swinging of the punitive tariff whip to enforce national interests can work. Many investors, of course, are making a connection to China.

This is what the day brings

The view remains on a quite tidy appointment calendar. At 2.30 p.m. the focus is on the official US labour market report. Will the Federal Reserve intervene with an interest rate cut in the event of bad job data or not? The reactions of the market will provide information on this – so keep an eye on the regular market updates and keep direct market access open.
Bernstein-Bank wishes you successful trades and a sunny weekend!

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.

05.06.2019 – Daily report. Nice rebound in global trading: Wall Street has risen sharply, the DAX initially wants to continue to rise moderately. The new hope in the customs dispute between China and the USA was not the only push factor. The Federal Reserve indicated that it could intervene to support economic collateral damage caused by a possible trade war.

The DAX is working its way up

After the strong gain on Tuesday, German equities recently wanted to continue rising at a slower pace. On Wednesday morning, the DAX initially rose to 12,052 points before weakening somewhat.
The Federal Reserve was the main source of the buying mood: as always, Fed Chairman Jerome Powell indicated that the central bank could rather open the money supply in the USA further than turn it off in the coming months. At a conference in Chicago on Tuesday, he said the trade conflict between the United States and China would be closely monitored. And “as always” the Fed will react accordingly to maintain growth.
The EU also wants to negotiate with the US. At the G20 finance ministers’ meeting on Saturday, the most important goal is to contain customs disputes, according to the EU’s key issues paper.

Must China give in?

China may soon also be willing to negotiate. No wonder, because the Chinese economy is suffering from the conflict with the USA. The Caixin/Markit Purchasing Managers’ Index for the month of May reached 52.7 points, its lowest level since February. As always, all economic data can be found here: Market Mover
The Chinese CSI 300 closed almost unchanged at 3,597 positions. In Japan, the Nikkei left with a gain of 1.8 percent at 20,776 points.

Battle of the red factions

Meanwhile, a power struggle within the leadership seems to have broken out in China. US futures shot up yesterday as the Chinese Department of Commerce struck an exceptionally conciliatory note. According to this, the differences with the USA should be settled through a dialogue.
Meanwhile, investors on the world’s stock markets ignored the reaction in the English-language Chinese Global Times, which is regarded as the mouthpiece of the Communist Party’s inner circle. “China is softening its stance? Senseless speculation. Beijing is willing to negotiate, but is very convinced that fair talks are impossible without struggle,” twittered editor-in-chief Hu Xijin. Let’s wait and see whether the pragmatic trade faction prevails or the concrete heads in the CP. In any case, there doesn’t seem to be a single front, which strengthens the US position.

Interest rate fantasy in New York

With signals from China and Fed-helped interest rate fantasies, Wall Street had rallied strongly yesterday. Some tech stocks saw a short squeeze and the Nasdaq 100 rose 2.7% to 7167 pips. The Dow Jones Industrial closed with a plus of 2.1 percent at 25,332 points. The S&P 500 also rose by 2.1 percent to 2,803 positions.

Mexico slumps

The fact that the clear edge of US President Donald Trump is showing success is demonstrated by the example of Mexico. Yesterday Mexican President Andrés Manuel López Obrador said in the port of Veracruz that Mexico could curb illegal immigration to the US if there was a deal in return. A Mexican delegation wants to negotiate the punitive tariffs announced by Trump for Mexico today in Washington. For CFD traders it is therefore worth taking a look at the peso.

This is what the day brings

The calendar is full to bursting today, Wednesday.
First, the ADP Labour Market Report for the US job market will arrive at 2.15pm German time in May.
At 3.45pm the purchasing manager index Service Markit Mai follows (2nd publication).
Thereafter at 4.00pm the ISM United States Non-Manufacturing Purchasing Managers Index will be reported.
The crude oil inventory data of the state Energy Information Administration (EIA) are scheduled for 4.30 pm.
From 8:00pm, investors will analyze the Fed’s Beige Book.
And at 10.15 pm the decision about possible changes in the indices of the DAX family of Deutsche Börse will be made.
What a volatility! Everyone who can now react quickly can be happy, but please only with a CFD broker with a Bafin license!

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.

05.06.2019 – Special report. Do the USA and China still settle their customs dispute? The financial market has recently been optimistic again. But at this point we have been before – a trade war is still possible. Who wins, who loses? Let’s wait and see. What is clear is that both sides are already looking for alternatives. We are analysing the first signals in this direction for farsighted investors. And answer the asset question of who could benefit from the dispute.

The Kremlin rubs its hands

Probably the biggest winner of any conflict is Russia. The Russian Federation has maintained close economic relations with China for years. Siberia, for example, exports large quantities of wood to the People’s Republic, and oil and gas are export hits anyway. Hundreds of thousands of Chinese live in the Russian Far East. The Chinese community at the universities and in the economy in Saint Petersburg or Moscow cannot be overlooked. It may not yet be as strong as in the USA, but it is mainly those who fled the communist dictatorship who can be found there. In Russia, on the other hand, those who are loyal to the line are linked to the Chinese leadership. Business is booming.

Already, according to President Vladimir Putin, China is Russia’s number one trading partner – last year bilateral trade increased by 25 percent to 108 billion dollars, beating all expectations. Just one example of the increasingly close ties of recent years is the huge “Baltic Pearl” real estate project in St. Petersburg.
A Chinese trade official has just suggested that domestic companies relocate production from China to Russia. According to the financial blog ZeroHedge, He Zhenwei, Secretary General of the China Overseas Development Association (CODA), said many small and medium-sized export-oriented Chinese companies were now facing problems. They should go to Russia – and export their goods produced there to the USA or Europe.

So take a closer look at the Moscow Stock Exchange. If Beijing invests billions of Yuan/Renminbi in Russia, the stock market there will win. Above all, consumer goods manufacturers and food companies should benefit from the influx of skilled Chinese workers with purchasing power; the same applies to construction companies, since the Chinese are likely to be accommodated in specially built suburbs and remain among themselves. The rouble is also worth a long consideration for long-term CFD traders. This is how Moscow could proceed: Sell yuan, which China wants anyway to weaken its own currency; collect rubles to give the Russian middle class more purchasing power.

Gold ravenous hunger

Russia and China have one thing in common: they want to break the dollar and torture the USA financially. While Moscow has already sold a large part of its portfolio of US government bonds, Beijing is still sitting on a mountain of treasuries – more than 1,000 billion dollars last year. US government bonds might therefore be a short investment. China could also plunge the US economy into turbulence by selling the bonds in a trade war. Such semi-official proposals have been circulating in recent weeks. But what to do with the redeemed greenbacks? A possible profiteer would be gold. In the People’s Republic, the yellow metal is a popular reserve currency, and there are huge shops where worried families stock up with statues made of gold or bars.

Chinese concrete gold on special offer

Furthermore, long-term investors should take a closer look at the stocks of battered Chinese property developers. The People’s Republic will probably have to save them. With the dollars from the US Treasuries, the Chinese state could buy cheap real estate projects from the developers and rent them out later or sell them again when the market relaxes. China has a vacancy problem: there are huge ghost towns, new residential projects and shopping malls have been built everywhere that are empty. China wants to gain farmland and relocate around 300 million people to the cities. Unfortunately, the new buildings are too expensive for the farmers. But a real estate crash would ruin many middle-class Chinese who had invested in real estate because of inflation. This would become politically dangerous and must not happen.

Battlefield Rare Earths

The view of metals and minerals such as yttrium, tantalum, etc. remains. The 17 raw materials in this group are used, for example, in the manufacture of computer screens, rocket systems and smartphones. In the Chinese battlefield rhetoric of recent weeks, the possibility of a US boycott of rare earths has also emerged as a nuclear option.
The USA is reacting: US Secretary of Commerce Wilbur Ross has just declared that his country will do everything in its power not to be cut off from the offer. His ministry yesterday published a report that US President Donald Trump had already commissioned in December 2017 – apparently he had foreseen the Chinese reaction, but there had already been a boycott in 2010. China currently accounts for around 78 percent of American imports. Irony of history: Until the 1980s, the USA was the world’s leading manufacturer. According to the news agency Bloomberg, the Commerce Department recommended a series of steps, including the increased allocation of mining rights. In addition, mothballed mines are likely to be reactivated: According to U.S. Geological Service data, reserves are 93 times higher than domestic production.
For investors, this means the following: If the USA succeeds in boosting domestic production, then a boycott will be a dead letter – and Chinese Rare Earth stocks are likely to crash. The same applies to the fact that foreign suppliers are quickly jumping into the gap. Conversely, companies allowed to reactivate US mines would win. So keep an eye on this market!
Conclusion: Nobody knows yet whether a trade war will break out or not. Be prepared in any case. The Bernstein Bank wishes you 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.