News

 

09.05.2023 – Turkey votes, many traders are now looking at the lira. Whether the decline continues is mainly a question of monetary policy. If the unspeakable Erdoganomics ends, then there is hope for a resurgence. If not, the only option at some point will probably be monetary reform.

A weekly chart like a mountain: Steadily, USDTRY is going uphill, which means that the Turkish lira is falling further and further. But things are anything but boring: the election on May 14 could bring momentum back into the forex market. Especially since now and then the state has intervened via the Turkish central bank. And by drastically ramping up interest rates for overnight lending killed a few shorts. For example, at year-end 2021, you can see that well from the jag. At such times, savvy traders rub their hands.

Source: Bernstein Bank GmbH

Should the old President Recep Tayyip Erdogan also be the new one, such blows to the lira pessimists are always possible. Only if the autocrat is replaced, there is hope for the lira bulls. That’s because Erdogan is the only person in the world convinced that lower key interest rates will help if the currency falls. Economists derisively call these views “Erdoganomics.”
Erdoganomics and Galloping Inflation
The pay and wages of the bureaucracy are paid for by cranking up the printing press. Companies are expected to borrow and invest at low interest rates. Ergo, inflation is galloping: According to Statista, the average inflation rate in Turkey in 2022 was a staggering 72 percent. For the current year, the statisticians forecast around 50 percent. In contrast, the key interest rate is downright measly: It was lowered by 0.5 percentage points to 8.5 percent in February. Low interest rates are also supposed to signal that everything is fine in the country.

Grandstanding on the Bosphorus
What is not the case: saber rattling in the Mediterranean against Greece; the attempt to shift the maritime borders unilaterally, thereby a threatening war for natural gas with Hellas, Cyprus, perhaps Israel. Hence naval rearmament – Turkey has just commissioned a helicopter carrier. And military adventures in Syria. Then there is the devastating earthquake damage, which is partly the result of botched construction due to rampant corruption on the Bosporus. All of this is not necessarily conducive to attracting tourists and foreign investors.
Whether opposition leader Kemal Kilicdaroglu will take power in the near future, despite the permanent economic crisis, remains to be seen. Kilicdaroglu may have a bachelor’s degree in economics and management, but he is rather uncharismatic, to put it diplomatically. Many Turks find the nationalistic ostentation of the current ruler much preferable.
Our conclusion: Perhaps economic sanity will return with an opposition election victory. Those who assume this will happen should go long and bet on a turnaround in the currency. But if Erdogan remains in power, the question is how and whether he will strengthen the Turkish lira again. Thus, it could be a fallacy to believe that the destruction of the foreign exchange will be stopped at some point. We are curious to see what happens next – and will keep you posted!

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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. 68% 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

08.05.2023 – Ukraine’s counteroffensive against the Russian invaders is probably imminent. When and where it will run depends primarily on the hoped-for early summer and the end of the “Rasputitsa” mud and rain season. If Ukraine is successful, it is likely to have a huge impact on Russian politics. And on the economy of the Russian Federation – as well as on the ruble.

Probably no asset is as politically driven as the ruble. The weekly chart is erratic – after the invasion began, traders had to put down nearly 150 rubles for a dollar in a selling panic and flight of capital from Russia. Shortly after, it was barely 30 rubles. With a lot of imagination – apart from the breakout in May 2022 – the formation of a cup-with-handle formation can be read out. That is, first a round bottom is formed before USDRUB pulls up to the edge of the cup. That would be again at just under 150. After that, according to the teachings of chart analysis, a sideways formation would be announced for a while, that is the handle. Before the ruble then finally collapses, that is, before the chart takes off to the top.

Source: Bernstein Bank GmbH

Whether this observation is correct, whether it comes so far and whether this happens in the indicated time frame, is completely open. There is, of course, a lot of interpretation involved here. And of course, everything can also turn out completely differently. But we don’t want you to say afterwards that we should have warned you after all.
However, if the ruble really does slide, it will be due to politics. Just like on the front, we may currently be experiencing the calm before the storm in the forex market. The most likely reason for a collapse of the Russian currency would be a regime change. Probably accompanied by turmoil, possibly a coup and an economic shock, just like in the nineties when inflation galloped. If it all comes back, it is most likely to be triggered by a Ukraine victory.

Astonishing strength
First, let’s look back. According to Capital.com, the ruble had been one of the strongest foreign currencies in the world last year. The almost unbelievable resistance right after the start of the invasion was due to five factors: First, there were capital controls. Second, the central bank sold foreign exchange reserves and intervened. Third, Western sanctions took hold – exports to Russia collapsed, so Russians could no longer sell rubles and buy dollars and euros. Fourth, Russia still exported a lot of oil and gas, although not to the West, but mainly to India and China. Fifth, the Russian Central Bank raised the key interest rate from 9.5 to 20 percent immediately after the invasion.

The ruble paradox
In the meantime, the Russian central bank has even had to cut interest rates to 7.5 percent and loosen capital controls because, paradoxically, the ruble had become too strong despite the sanctions, as analysts at Trading Economics recently noted. However, revenues from energy exports have recently been below budget targets and the Finance Ministry has sold foreign exchange reserves for the fourth month in a row, according to the experts.
Our conclusion: If we experience a political worst-case scenario, a new massive capital flight is likely to be in the offing. When the situation eventually calms down and the senseless war ends, the Western economy will return. Then the ruble should be in strong demand again, because euros and dollars will then be invested in the country and exchanged for rubles. Just like in the early 2000s, when a dollar cost only 20 to 20 rubles. So keep an eye on the realtime news – Bernstein Bank wishes successful trades and investments!

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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. 68% 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

05.05.2023 – The European Central Bank has done it again: It has raised key interest rates in Euroland. Only moderately. But unlike the Federal Reserve in the U.S., the monetary guardians in Frankfurt made it clear that they would continue with the interest rate steps.

The Council of the European Central Bank announced an increase of 0.25 percentage points. The key interest rate in the euro zone thus climbed to 3.75 percent. This was the seventh increase in a row, there had previously been three increases of 0.50 points. The euro has gained slowly but steadily against the dollar in recent weeks, here is the daily chart. And there are good reasons for that: There is some pent-up demand for tightening in this country.

Source: Bernstein Bank GmbH

In America, even higher interest rates are tempting, because there the Federal Reserve has just raised the Fed Funds Rate to 5.00 to 5.25 percent. But ECB chief Christine Lagarde yesterday assured that, unlike the Federal Reserve in Washington, the ECB is not thinking of sticking with the interest rate steps.

Inflation in Euroland
So the era of rising interest rates is likely to continue, because the target rate of inflation of 2 percent is still a long way off. For example, inflation in the eurozone was 6.9 percent in March 2023. More interest rate hikes in Euroland are expected to follow, and the balance sheet is expected to shrink faster.
Michael Heise, chief economist at HQ Trust expressed, “Unlike its sister central bank in the U.S., however, it does not have a time-out for further rate hikes. Another rate hike is likely as early as June, as increased wage cost pressures and the given scope for companies to raise prices mean that significant price increases can still be expected, especially in the service sector.” And Jörg Krämer, chief economist at Commerzbank, also told Reuters, “Even after seven interest rate hikes in a row, there is still a lot of work ahead of the ECB. (…) The ECB will have to step up more than once to bring inflation back to two percent permanently.”

The ECB and the banks
We suspect that long positions in EURUSD will now continue to be diligently built up. In other words, money from existing U.S. bonds could flow into new European government bonds. Because the latter yield higher than the former. It is true that new US bonds would also offer themselves to investors. But the Fed could be forced to put the brakes on tightening because of the bank turmoil in the USA. Or even do a backward roll and cut interest rates. Moreover, greater trouble in the banking sector could lead to emergency sales of government and corporate bonds and thus to losses.
In Europe, on the other hand, the situation seems more stable recently after the Credit Suisse exit. Not for nothing do we see an uptrend in EURUSD since the beginning of March. The difference in the banking sector is that in the USA – to put it exaggeratedly – in the course of cheap money, every pseudo-cool hipster with a strange business idea without sales or profit received a loan. Which also resulted in a bubble in the commercial real estate market. In Europe, on the other hand, lending traditionally runs more conservatively anyway, and startup business is often in the hands of large corporations. In other words, a bubble is unlikely to burst in this country, but it will in Silicon Valley. We are curious to see what will happen in the forex market and wish you successful trades and investments!

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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. 68% 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

04.05.2023 – No sooner did the banking crisis seem to be over, than there are new worries. Or was the recent setback on Wall Street due to today’s decision by the Federal Reserve? In fact, one has to do with the other.

As expected, the Federal Reserve has once again raised interest rates slightly. And hinted at a pause in tightening, but at the same time ruled out interest rate cuts. Furthermore, Fed Chairman Jerome Powell tried to ignore as best he could in front of the press the raging elephant that is currently trampling the china store: the crisis of small and medium-sized banks.
First, the facts: The Fed Funds Rate is up 0.25 percentage points and is now in a range of 5.0 to 5.25 percent. The rate hike was the tenth in a row. Quite a rapid pace: In March 2022, the key interest rate had still been in a range of 0.0 to 0.25 percent.

Possible pause of the hawks
Powell signaled a “hawkish pause.” According to press reports, the monetary guardians deleted a passage from their text according to which some additional monetary policy tightening might be appropriate. Instead, wording was chosen that leaves a door open for further tightening, but does not signal it. Powell emphasized that inflation is well above the 2 percent target and that lowering inflation will take time. Further decisions would depend on incoming data.
The market now sees the moderate possibility of another rate hike in June, commented financial blog ZeroHedge. At the same time, according to the yield curve, there is a 94 percent possibility of a recession.

Source: Bernstein Bank GmbH

Powell initially managed to contain the nervousness after the sell-off of regional banks from the beginning of the week. The stock market marked its high yesterday right after Powell’s speech before prices crumbled. Pictured here is the hourly chart of the VIX fear indicator. In what caused fresh worry lines, Powell acknowledged that the Senior Loan Officer Opinion Survey (SLOOS) confirmed that banks are tightening their lending standards – and that lending is slowing. Incidentally, the survey is due for release on May 08.

Healthy and resilient
Speaking to the press, Powell had called the banking system “sound and resilient.” Not everyone sees it that way: “ZeroHedge” commented sarcastically: “Small banks can’t stop deposit outflows at 4.75% Fed funds. But at 5.00% all those deposits will come rushing back.” As it looks, the Fed now has to devote more attention to the big problem it has created itself with years of cheap money: The possible collapse of many companies with questionable business models, propped up and kept alive by banks that could loosely distribute loans.

New Short Attack
Shortly after Powell’s press conference, the next short attack was launched on American regional banks. They are groaning under the rapidly rising interest rates and have many customers in their portfolios who are feeling a decline in business and might no longer be able to service the lending rates. Interestingly, once again, it was primarily institutions from the western United States that came into the focus of the short-sellers – i.e., those that are likely to be primarily invested in the Internet, tech and crypto bubble, and especially in the formerly golden California. For example, the shares of PacWest were beaten down by a staggering 60 percent in the meantime. Western Allliance lost another third.
Our conclusion: The clean-up in the regional banking sector is likely to continue. As long as this crisis remains contained and no systemically important bank topples over, the stock market will be little disturbed. However, if it is not just a healthy market shakeout, the overall market could soon be affected again. We are curious to see what will happen next – Bernstein Bank wishes successful trades and investments!

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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. 68% 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

03.05.2023 – No sooner did the banking crisis seem to be over, than there are new worries. Or was the recent setback on Wall Street due to today’s decision by the Federal Reserve? In fact, one has to do with the other.

Following JPMorgan’s purchase of First Republic, the share prices of some regional banks dipped yesterday. The next candidates for collapse from an investor’s point of view were, first, PacWest Bancorp, down 28 percent. Next were First Foundation Inc. and Western Alliance, with a selloff of about 15 percent. The SPDR S&P Regional Banking, which is the exchange-traded fund on regional banks (symbol: KRE), lost 6.3 percent yesterday. In contrast, JPMorgan is doing quite well in all the turmoil, here is the four-hour chart.

Source: Bernstein Bank GmbH

Either some of the small institutions are teetering because they are having trouble finding new customers in the wake of the rate hike – or borrowers are in crisis. Perhaps some bank runs are already underway again. Or, after the purchase of First Republic, investors are finding that the big sharks like JPMorgan are making fat pickings and collecting the scared customers of other banks – and that the small institutions are being left for the taking.

Bad loans
In any case, the distrust persists. One of the triggers for the sell-off was an interview by Charlie Munger with the Financial Times. The legendary investor is Vice Chairman of the investment company Berkshire Hathaway, which is headed by the major U.S. investor Warren Buffett. Munger judged that many banks are full of bad commercial mortgage loans. Pain awaits the market, he said, but it will likely be nowhere near as bad as 2008.
Which brings us to the Fed. Because when regionally rooted financial institutions falter in rows, there are consequences for state economies. Which could lead to stagnation and layoffs. And in this environment, it’s hard for the Fed to raise interest rates much. Or else the central bank wants a shakeout.

The Fed is watching the banks
In any case, Nick Timiraos of the Wall Street Journal wrote that the Fed is watching very closely the market reaction to JP Morgan’s acquisition of First Republic. The journalist is considered the Fed’s mouthpiece in the media landscape.

Because of the recent turmoil at lending institutions, the doves on the Federal Open Market Committee may have pushed to spin Fed Chairman Jerome Powell’s statement in the press conference to mean that the Fed was approaching a pause in rate hikes, according to the financial blog Newsquawk. According to the blog, 85 percent of the market is assuming a 25 basis point rate hike.
Meanwhile, the JOLTS (Job Openings and Labor Turnover Survey) data on the labor market came in cooler than expected. According to JOLTS, job openings fell to 9.59 million from 9.97 million. The consensus had been 9.775 million. That means a cooling labor market gives the Fed arguments for a more lenient stance on tightening – because fewer jobs means a brake on the wage spiral.

Waiting for the Oracle
Which brings us to a look into the crystal ball: If the Fed raises interest rates only moderately, as expected, and announces in the statement that tightening will end soon, this should strengthen the bulls. There should be a jump to the upside if the interest rate hike fails completely – because more money will then flow into the stock market. However, the market could also take this as a signal that there is more going on at the banks than previously suspected. A surprise interest rate move of 0.5 percent is likely to send the market diving, because money is then likely to flow out of equities and into newly issued Treasuries, and because new worries about the banks are emerging. However, the press conference will be the most important event: We can expect another big one-sidedness with sharp price jumps in one direction or the other. Which will boost the vola. Whether long or short – we wish you good luck with your trades!

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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. 68% 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

02.05.2023 – History does not repeat itself: unlike 2008, this time the banking crisis appears to have been contained. JPMorgan Chase has taken over the reeling First Republic. The market can now focus on the reporting season – and here, too, things are looking far better than feared so far.

This could have been a fatal conflagration: Had First Republic not found a buyer, a new panic might have broken out. But that’s how the S&P 500 has been working through the banking crisis lately, here the daily chart.

Source: Bernstein Bank GmbH

News just in from the Federal Deposit Insurance Corporation (FDIC): the agency said it had approved the sale to JP Morgan. A half-dozen banks had participated in the bidding process for First Republic, including Citizens Financial and PNC Financial Services, according to insiders.

FDIC steps in after bank run
The purchase may have come at the last second: Earlier last week, First Republic reported a withdrawal of more than $100 billion in customer funds in the first quarter. As a result, the stock crashed on the stock market. The previously planned bailout of the industry had not prevented the bank run: Other banks had pumped some $30 billion into the reeling First Republic. The plunge in the share price was probably the signal for the FDIC to now quickly put its money where its mouth is – the FDIC set a new bailout in motion.
Obviously, the authorities have learned from the disaster in 2008, when two heavyweights, Bear Stearns and Lehman Brothers, toppled over. First Republic is the third U.S. bank to topple in recent weeks as customers pulled their deposits en masse. In March, Silicon Valley Bank and Signature Bank collapsed because of it.

Goldilocks
In any case, the calming of the situation in the banking industry could give the bulls another shove of strength. After all, without disruptive factors from the financial sector, the reporting season could unfold. In any case, the blog “The Market Ear” recently stated that there is a real Goldilocks market. That is to say: everyone is happy and in the best of moods. In any case, the maximum weekly loss in the SPX in the past seven weeks was just minus 0.1 percent.

Furthermore, more than half of the companies in the S&P 500 have reported their first quarter results – and the earnings per share beat rate is 79 percent. We translate: Nearly four-fifths of all companies beat expectations. The earnings surprises were substantial, up 7 percent, he said – and they were in every sector. The beat rate for sales was 73 percent, “The Market Ear” further stated.

Wir meinen: Damit ist also bislang die befürchtete Rezession ausgeblieben. Oder aber die Schätzungen der Analysten waren so pessimistisch, dass es ein Leichtes war, sie zu übertreffen. Das bedeutet nicht, dass es von nun an immer nur bergauf geht. Schon der Budgetstreit in den USA mit der erreichten Verschuldungsgrenze könnte einige Anleger zum Kassemachen einladen. Außerdem weiß man nie, was hinter den Kulissen so alles läuft. Und welche Bank wegen der steigenden Zinsen in Problemen mit dem Neugeschäft steckt. Wir sind gespannt, wie die es an der Wall Street weitergeht – und wünschen erfolgreiche Trades und Investments!

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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. 68% 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

28.04.2023 – The price of cocoa has recently staged an impressive rally. Just like other soft commodities. The threat of a continuing undersupply could give further impetus to the bull market. We analyze the background.

Joy for the bulls: Currently, the price per ton is at its highest level since autumn 2016, the weekly chart also shows a rather steep upward channel that started in the previous September.

Source: Bernstein Bank GmbH

According to the International Cocoa Organiszation’s previous quarterly report from late February, the world is facing a slight demand overhang. For the 2022/23 season, the organization noted a global supply of 5.017 million metric tons. Meanwhile, demand is expected to climb 1 percent to 5.027 million tons. The ICCO’s next quarterly report is due at the end of May, so traders should watch for that.

Little rain and a virus
Let’s turn to supply first. Côte d’Ivoire is by far the top producer, accounting for just under half of global production, with Ghana and Indonesia following behind. The biggest factors affecting price are weather, possible disease in the crop, and government regulation.
Trade is currently determined by the product that reached the market at the end of the main season in March – and things did not look good there. As early as mid-February, the Ivorian regulatory authority Cocoa and Coffee Council (CCC) warned that many local exporters would not be able to meet their export quotas. This was because there were too few beans, as there had been too little rain in recent months. As a result, Ivory Coast had banned twenty major buyers from increasing their quotas, including Cargill and Barry Callebaut.
Hopes now rest on the mid-season from April to September after light rains. However, some sources recently called weather conditions erratic. And there is another bullish factor: Côte d’Ivoire in particular has been plagued by the so-called Cocoa Swollen Shoot Virus Disease (CSSVD) in recent months, which is having a negative impact on both the current crop and new sowings, and is therefore likely to have an impact in the future.

Inflation and consumption
With that, let’s look briefly at the demand side. The USA, the Netherlands and the UK are the biggest buyers of the beans. Cocoa is used, on the one hand, in chocolate, that is clear. But it is also used in cosmetics, because cocoa butter is the only butter that melts at body temperature.

And that brings us to the two factors in the retail sector: If inflation in the West remains annoyingly high or even rises, there is a risk of demand being choked off. After all, unlike a staple food like bread, customers may well do without chocolates or a new skin cream for a while. However, when inflation cools down, demand is likely to pick up.
Our conclusion from all this: keep an eye on real-time news, focus on Ivorian agriculture. Bernstein Bank wishes successful trades and investments!

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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. 68% 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

26.04.2023 – The red metal is the clinical thermometer of the global economy. That’s because copper is used in cables of all kinds in electronics. That’s why it’s particularly important in the Western world’s green transformation plan: more electric cars and solar panels are supporting demand. However, there are definitely factors for a bear market: for example, a sluggish global economy or higher interest rates. It is not yet clear where the journey is heading.

A clear trend can hardly be discerned in the weekly chart at the moment. If you are looking for bullish or bearish facts, you currently have a rich choice on every page – please help yourself.

Source: Bernstein Bank GmbH

The website “Tradingeconomics.com” recently judged that concerns about weaker offtake are overriding fears of falling supply. Thus, investors are far from impressed with Chinese demand after the reopening of the economy post Corona.
Pros and cons
Meanwhile, the apparent return of stability at U.S. banks provided a template for the Federal Reserve to raise interest rates further, “Tradingeconomics.com” further explained. However, the market is receiving support from London Metal Exchange inventories – at 56,000 tons, they are as low as they were last in 2005. Chile’s state-owned mining group Codelco has also announced that production in 2023 will fall by around 7 percent year-on-year. Whereas there had already been a decline of around 11 percent in 2022. We add: A special factor is the unstable situation in Peru, which provides about 10 percent of global supply.

Wave of mergers due to looming shortage
Some industry representatives, meanwhile, are warning of a looming severe shortage of the metal, as industry service Fastmarkets reported from the annual Cesco Week in Chile (Centro de Estudios des Cobre y la Mineria). In any case, the website referred to the boom in company acquisitions, with which large corporations tried to compensate for the presumably declining supply. As an example, “Fastmarkets” cited the purchase of Oz Minerals by BHP and the acquisition of Copper Mountain by Hudbay Mineral. In addition, Glencore is currently bidding for Canada’s Teck Resources.
The motivation behind this: Few mining groups are prepared to invest billions in the development of new mines and wait around a decade for the first output – buying up competitors is easier. However, according to Fastmarkets, this does not address the real problem, which is the shortage of metal. Ragnar Udd, president of BHP Minerals Americas, also warned that the world needs nine or ten giant mines on the scale of Escondida to manage the energy transition in a decade. Escondida is Chile’s largest copper mine, with output of about one million tons per year.

Energy turnaround versus a sluggish economy
Roland Harings, CEO of Aurubis, painted a more differentiated picture. In an interview with “Fastmarkets”, he said that the copper market was currently well supplied from the perspective of a European smelter, and that there was a large supply of concentrates and recycling products. In fact, he said, demand is high, which is also due to the energy transition. In any case, the move away from fossil fuels outweighs the effect from a somewhat weaker global economy. However, global inflation is causing wages to pick up, he added. We add: Which should ultimately be added to prices.
Our conclusion from all this is that there is no clear trend for copper at present. We will continue to keep an eye on the situation for you – and wish you good luck with your trades and investments!

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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. 68% 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

21.04.2023 –For a good two weeks now, Wall Street has been moving almost steadily upwards. Investors seem to have ticked off the various crises, as a glance at the VIX shows. The fear indicator is approaching carefree territory. Reason enough to hedge your bets.

US banking crisis, Ukraine war, possible invasion of Taiwan – was there anything? All apparently already forgotten. The VIX – here the daily chart, more precisely: this is the mini future on the VIX – has returned to the level of before the bank turbulences. And also almost to the level before the Russian invasion. Which is surprising, given the growing signs of a major Ukrainian offensive – with possible nuclear escalation or regime change in Moscow

Source: Bernstein Bank GmbH

The VIX is the volatility index of the Chicago Board Options Exchange. The indicator measures the expected range of fluctuation of the S&P 500. Now it is approaching the territory where traders and investors might want to think about a favorable protective put. After all, you buy the hedge when you don’t need it. Because the next run up is sure to come. The only question is when.

Looking at the Fed
Apart from the potential trouble spots just mentioned, the question of monetary policy naturally continues to hover in the air. If the Federal Reserve does continue with a spirited tightening, it should surprise all those who believe that the end of rate hikes is now almost here. Even higher rates are quite possible if the Fed sees no danger of a recession, but continues to view inflation as its main enemy number one. An unexpected rate hike should send stocks down and the VIX up. So in the relative calm before the Weekend, let’s turn our attention to the latest Fed Speak from voting members of the central bank.

Focus inflation remains
Governor Michelle W. Bowman just emphasized that the Fed remains focused on fighting inflation. A strong labor market, she said, is making it enormously difficult to find new hires. We think: So she fears a wage-price spiral. However, Bowman says there could be a small downturn in the coming year as banks issue less credit. Christopher J. Waller, also from the Board of Governors, noted, however, with regard to the collapsed Silicon Valley Bank, that the situation at the banks has largely calmed down.
Further, Patrick Timothy Harker, president of the Federal Reserve Bank of Philadelphia, explained that the tightening must continue for a bit. And if it ends, he said, the interest rate will have to stay at the higher level for a while. And Lorie K. Logan, head of the Dallas Fed, judged that inflation is simply too high and that the central bank must examine whether it is really declining.

Our conclusion from all this is that the turmoil at the financial institutions seems to have been averted, and a severe economic crisis is not in sight. But inflation is holding up. This gives the Fed some arguments to raise interest rates further and then keep them up. We are curious when this will be reflected in the figures of the companies. So always keep an eye on the real-time news. When there are too many optimists on the trading floor, a small scare is often enough to cause prices to dive. Whether long or short – Bernstein Bank wishes you successful trades and investments!

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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. 68% 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

18.04.2023 –The energy market and consumers have responded to the Ukraine war. The Gazprom gap appears to be closed. Globally, there is currently an oversupply of liquefied natural gas.

The U.S. in particular has stepped in as a major exporter for Russia. Pictured here is the daily chart of Natural Gas. According to Bloomberg, the global market is currently virtually flooded with natural gas.

Source: Bernstein Bank GmbH

This is because demand is subdued. Due to the predominantly mild winter and the reduction of consumption in the West, inventories filled up from South Korea to Spain. As a result, tankers carrying LNG often have trouble finding a port, according to Bloomberg, and are at sea for weeks. LNG means Liquefied Natural Gas, which is natural gas that is liquefied by pressure and cooling, loses volume and can thus be transported on special tankers.

Global oversupply
This threatens a glut of gas that could keep pressure on LNG prices in the coming weeks, Bloomberg Intelligence further judged. Meanwhile, global LNG exports climbed toward an all-time high in March, partly due to an increase in U.S. production, it said. In addition, China reported record LNG exports again, according to Corona. Japan, actually a large buyer of LNG, was offering supplies to prevent oversupply at home, RBC Capital Markets also explained.

Fuel and fertilizer
Others are nevertheless bullish on the matter because of the indispensability of gas. Natural gas is used to produce chemicals, fertilizer and hydrogen; as well as fuel for power plants in energy generation. About 20 percent of Europe’s electricity came from gas-fired power plants last year, according to S&P. With Russia gone, the market no longer has a buffer, James Henderson, head of gas research at the Oxford Institute for Energy Studies told “S&P Global Commodity Insights.” Tsvetana Paraskova of Oilprice.com, meanwhile, warned that more than a dozen LNG export projects in the U.S. are at risk. That’s because increased costs and tougher competition for financing could torpedo the terminals.
We look forward to seeing how the natural gas situation develops. Bernstein Bank wishes successful trades and investments!

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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. 68% 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