News

17.04.2023 – Is it coming or not, the new record? In recent days, the yellow metal has set its sights on the all-time high. Most recently, however, it has retreated somewhat. Now the new attempt to storm the summit is interesting from a chart-technical point of view.

Will gold make the breakthrough? Or is the resistance – see the red line – from the previous highs too strong and the price resets sustainably? Gold recently traded just below the all-time high from the summer of 2020. In the course of the Corona crisis, an ounce had cost $2,069 on the spot market at that time. Should gold form a triple top here and fail to make the run to the top, a setback would be likely from a chart perspective. We show the monthly chart, but the situation is also interesting for short-term traders.

Source: Bernstein Bank GmbH

The gold price was recently pulled up by two factors: on the one hand, the yellow metal became a safe haven again. The US banking crisis with the fear of many investors of a global bank run created new demand. Many people preferred to withdraw their savings from their accounts in order to buy coins or bars. Otherwise, there are enough crises: In addition to the war in Ukraine, there is the threat of an invasion of Taiwan. This could have severe consequences for world trade, as the Strait of Formosa and the entire maritime region around Taiwan would become impassable. And, incidentally, could mean World War III.

Come to stay
And then there would be inflation. Gold is traditionally a store of value – when the purchasing power of cash decays, the yellow metal promises stability. Apparently, some investors assume that high inflation will persist in the West. In China and Russia anyway, rising prices are part of monetary policy there. The Chinese know this and like to buy gold – anyone who has ever been to the Middle Kingdom will be amazed at the large jewelers selling all kinds of more or less kitschy figurines made of gold. For example, the withdrawal of material from the Shanghai Gold Exchange in February was 169 tons, up 76 tons year-on-year – mainly wholesalers had ordered. This was the strongest sale for the wholesale market since 2014. Overall, China imported about 1,343 tons of gold in 2022, the highest level since 2018.

But governments in the West also appreciate the benefits of inflation. As there are: higher tax revenues and the elegant repayment of government debt. In other words: collecting loans with hard currency today and paying them back with soft currency in a few years. So it’s no wonder that central banks around the world were among the big buyers last year. And so, according to the World Gold Council, total gold demand in 2022 rose 18 percent to 4,741 metric tons from the previous year.

Our conclusion from all this: If crises and inflation remain with us, there is a lot to be said for gold on the long side. If, of course, a major central bank thinks that the gold rally is over and just throws a few tons on the market, it will quickly go down again. Also keep an eye on the chart technique. Bernstein Bank keeps an eye on the matter for you!

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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

14.04.2023 – White sugar is soaring: The price has just reached its highest level since November 2011. The situation in India in particular is spurring the bulls. We take a look at the background.

Ahead of today’s expiration of the May contract, the price of sugar has risen to its highest level in more than a decade. John Stansfield, an analyst at DNEXT Intelligence, recently told Bloomberg news agency that the number of contracts expiring – that is, open interest – suggests 880,000 metric tons of supply and shorts “don’t have the physical sugar to tender.” Looking at the four-hour chart, the price is cents per pound. The recent setback is explained by speculation that Brazil may increase exports. More on this below.

Source: Bernstein Bank GmbH

The reasons for the long-term bull run: first, production in Thailand, Europe, China and Mexico is rather subdued. But the main reason for the bull run is in India.

Export rate in India
In India, for example, output is falling in the state of Maharashtra, Ashok Jain, president of the Bombay Sugar Merchants Association, told Reuters news agency. Maharashtra is likely to produce only 10.5 million metric tons in the 2022/23 season, which ends Sept. 30. Forecasts were previously at 13.7 million tons.
Because of the declining crop, India has imposed quotas that have largely been met and are not expected to be increased. India has allowed sugar mills to export only 6.1 million tons in the current season, down from 11 million tons previously. Meanwhile, the Indian Sugar Mills Association (ISMA) has already reported a decline in processing of around 3.3 percent for the October-March period.Refineries in India could therefore soon be dependent on imports – especially from Brazil. But: in Brazil, the real has recently appreciated against the dollar, which should boost domestic demand – and cap exports. Brazil is the world’s largest sugar exporter, ahead of India.
Competition with soy
Meanwhile, Karim Salamon, an analyst at Wilmar International, is skeptical about global output this season: “The cane and beet acreage is likely to fall in most areas due to the effects of crop competition.” Sugar has recently been competing more intensively with increased cultivation of soybeans, which has reduced arable land on the one hand. On the other hand, it has had an impact on transport capacity by rail and ship. Recently, “S&P Global Commodity Insights” also capped its estimate for global sugar oversupply in the 2022/23 season at 600,000 metric tons – in November, the publication had still assumed an increase of 5 million tons.

Our conclusion: Unless Brazil closes the Indian gap, the sugar price could continue to rise. Especially as summer is just around the corner and global demand for ice cream and soft drinks is rising. That’s because people want to party outside again after the Corona lockdowns – festivals are packed everywhere. In addition, the wedding season is upon us in India. However, a rainy summer in the West could spoil demand. Or higher export quotas from India could push prices down – so keep an eye on the real-time news! We are curious to see what happens next 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

13.04.2023 – The price of Bitcoin is picking up. The e-currency has just marked a new ten-month high – and conquered the $30,000 mark. The reasons: On the one hand, the flight from inflation. On the other hand, BTC is suddenly considered a safe haven in the banking crisis.

The day after, the market digests two important pieces of news: First, the inflation rate in the US has risen slightly less than feared. Second, according to the minutes of its March meeting, the Federal Reserve could pause its rate hikes. Or it could continue tightening – if the banking sector is robust enough. The stock market still has no answer as to what exactly will happen next.

This is what yesterday’s data brought: Consumer prices rose 5.0 per cent in March compared to the same month last year. That’s the smallest gain in the Consumer Price Index (CPI) since May 2021, and analysts on average had expected inflation to fall to 5.1 per cent. In February, inflation had stood at 6.0 per cent. But the core inflation rate climbed to 5.6 per cent, as expected. In February, it had still stood at 5.5 per cent. In this core inflation, the statisticians exclude energy and food prices. In other words, they make the situation look good – because energy and food are precisely the goods that people cannot do without.

Guesswork everywhere
And so the great coffee-rate reading has begun: The inflation rate is cooling down. But it is still far from the Fed’s target of 2.0 per cent. However, the question arises again whether the banks do not urgently need a lower interest rate so that their business does not collapse. Most of the financial market had recently expected a rate hike of 0.25 percentage points in May. However, it is still unclear how much the recent banking crisis will affect lending and inflation. In other words: potentially less credit, less economic activity, fewer jobs.

Here are a few voices. Richard Flynn of Charles Schwab UK said: “The fall in the rate of inflation is being welcomed by investors, who may speculate that the Fed could soon pause its cycle of monetary tightening. That being said, whilst the rate of inflation has fallen, it remains far above the Fed’s 2% target. Officials have been laser-focused on fighting inflation and may decide that additional tightening is required to achieve its target when the FOMC meets later this month.” Karyne Charbonneau of CIBC Capital Markets said: “The pace of core inflation maintains the case for a follow-up rate hike by the Fed in May, provided banking system issues look sufficiently stable.”

“Done Hiking”
Adam Crisafuli of Knowledge Vital leaned the furthest out of the window, stating an end to tightening: “The huge 100bp dip in the Y/Y pace of inflation is a big, positive development, and probably means the Fed is done hiking. However, the Y/Y pace of core inflation rose M/M for the first time since Sept 2022, and this is what the Fed cares most about (which means Powell and his colleagues will be stubborn in pushing back against any talk of rate cuts). While this CPI is bullish for stocks, we think the Q1 earnings season will matter much more for the S&P.”

Or not
In view of the CPI data, the March Fed minutes took a back seat. Moreover, they contained little that was concrete anyway – only the currently particularly pronounced on the one hand/on the other. Several participants in the Federal Open Market Committee (FOMC) said that it might be appropriate to leave interest rates unchanged for the time being. The steps taken so far had certainly helped to reduce short-term risks. If necessary, tightening could be continued. The panel agreed, however, that the demand for labour exceeded the supply. This raises the danger of a wage-price spiral.
Our conclusion: What is clear is that nothing is clear. The bullish factors seem to prevail. Traders should ride the wave, but in view of the great brooding, always be prepared for setbacks. Which opens up opportunities on the short side. With this in mind: 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

12.04.2023 – The price of Bitcoin is picking up. The e-currency has just marked a new ten-month high – and conquered the $30,000 mark. The reasons: On the one hand, the flight from inflation. On the other hand, BTC is suddenly considered a safe haven in the banking crisis.No scandals, no insolvencies – and the bulls are already buying again. This year, BTC has already achieved a whopping return of around 80 percent. The last time the cyber currency was quoted at this level was in June 2022. Here is the daily chart.

Source: Bernstein Bank GmbH

This is an interesting development, which indicates that the distrust of banks persists: Before an institution keels over, many investors apparently prefer to bring their dollars and euros to safety and buy BTC, which they store on a server.

Suddenly BTC stands for safety

Which brings us to a remarkable change in attitude towards e-currencies: they were once considered unpredictable and risky. But suddenly BTC and co. are apparently the safe haven. “BTC is now properly starting to be perceived as a risk-off asset,” said Richard Mico, head of Banxa, a payment and infrastructure service provider in the crypto world. He added: “BTC is also being seen as a reliable store of value that lacks the issues that come with storing your money by way of a third-party intermediary, or a bank.”

Big investor MicroStrategy

Another push factor was the announcement by the company MicroStrategy just over a week ago: according to this, the software group has now amassed around 140,000 BTC coins. At an average purchase price of 29,803 dollars per unit, the company is currently making a profit. So the company did not pull out of the downward slide from the all-time high. Which I’m sure many traders took positively.

Protection against inflation

In addition, the regulatory authority for the financial sector in Argentina has just sent out a positive signal: The Comisión Nacional de Valores de Argentina has approved a series of index futures for the Matba Rofex exchange that are based on Bitcoin. The vote of confidence is the first of its kind in Latin America and could improve acceptance for the e-device. Especially as Argentina is plagued by hyper-inflation and many investors want to preserve their purchasing power outside the peso. In February, inflation stood at a whopping 102.5 per cent year-on-year.
Which brings us elegantly to the topic of inflation: Today’s Consumer Price Index in the US will set the direction for the financial market in the short term. And this also applies to Bitcoin. Consumer prices should provide information on how the Federal Reserve will continue to fight inflation. By the time you read these lines, you will certainly know more. With this in mind: 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

06.04.2023 – The situation on the financial markets is currently very opaque. On the one hand, the major central banks are not supposed to raise interest rates further because of the threat of recession. On the other hand, inflation is being kept in check. This argues for high interest rates. More clarity for the US should come from the non-farm payrolls, which will be released tomorrow, Good Friday. Until then, there is an international back and forth.

Brokers have been looking overseas for clarity lately. But there have been mixed signals there, too: New Zealand’s central bank surprised by raising interest rates by half a percentage point – twice as much as expected. Governor Adrian Orr argued that inflation was too high and that inflation expectations remained stable despite the weaker economy.

Interest rate pause in Australia
The Reserve Bank of Australia also struck hawkish tones. Governor Philip Lowe warned that the interest rate tightening cycle was not over yet. This is all very contradictory: Australia paused shortly before and left the policy rate unchanged at 3.6%. Meanwhile, the Bank of England continues its upward trajectory: it recently raised rates for the eleventh time in a row to 4.25%. Analysts expect another quarter percentage point hike at the May meeting. Here is a four-hour chart of the GBPAUD to keep you up to date with this news.

Source: Bernstein Bank GmbH

A look at the US employment data.
This brings us back to the US. Goldman Sachs just warned of a shocking rise in tomorrow’s jobless claims. But Danni Hewson, head of financial analysis at AJ Bell, sees little chance of an end to tightening even with strong recession signals: “On the positive side, the rate rise could pause, which would normally be positive for equities.” But: “The worry is that the Fed may have to blow the bugle before it actually ends its war on inflation. That could lead to the worst of all worlds – the dreaded stagflation, where the economy shrinks but prices continue to rise sharply.” That would mean high interest rates and a tendency towards a hard dollar.

Probably not the end of tightening yet
“The battle against inflation seems far from won,” says Ivailo Vesselinov, chief strategist at Emso Asset Management in London. Notwithstanding recent signs of slowing economic activity, central banks may be forced to keep raising interest rates: “If disinflation hits a wall later this year, major central banks will struggle to confirm current market prices for rate cuts.”
Our conclusion: most experts believe that the world’s central banks – led by the Fed – cannot yet stop tightening monetary policy, let alone cut interest rates again. As seen with the Australian dollar, currencies that pause will take profits on the short side. So keep an eye on the real-time economic data – 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

04.04.2023 – The stock market has recovered nicely after the recent banking panic. But is the danger really over? Today we leave the stage to a warner. He sees a gigantic capital destruction going on behind the scenes – and expects a credit crunch.

Everything seems to be back to normal. This is shown, for example, by the four-hour chart of the Dow Jones. But it is possible that this is only an illusion. At least that is the opinion of Daniel Lacalle Fernández, chief economist at the Spanish private bank Tressis.

Source: Bernstein Bank GmbH

According to Federal Reserve data, about $98 billion was withdrawn from banks’ accounts in the week after the Silicon Valley bank collapse. Most of the money went into money-market funds, it said. Money-market funds invest mainly in money-market paper and liquid securities with a short remaining term. The problem is that the money is no longer available for long-term corporate loans, which stimulate the economy. But the flight of capital from banks is not the only problem.

Write-offs everywhere

What will lead to the credit crunch, according to Lacalle, is the destruction of capital in the assets of other lenders. Specifically, he says, the upcoming revaluation of assets is dangerous. Lacalle estimates that the destruction of value in private equity and venture capital is 15 to 25 per cent. In addition, the real estate industry in the US and Europe is also facing a significant revaluation. The destruction of capital is taking place pretty much everywhere in the asset base of lenders, “from the allegedly low-risk part, sovereign bond portfolios, to the aggressively priced investments in volatile businesses and bull-market valuations of corporate and venture capital investments.” Lacalle says: “The slump in mark-to-market valuations of all asset classes from loans to investments is what will ultimately drive an inevitable credit contraction.”

Less money for everyone

The Tressis expert went on to say that the tech bubble was bursting and that start-ups would soon be left high and dry as private investors and venture capitalists kept their money together. But they shy away from revaluing their assets. This is because writing off losses will lead to higher borrowing costs and thus more difficult investment conditions.

We add: For example, the value of long-dated government bonds issued several years ago must now be corrected. This is because old bonds have suffered a severe loss in value in the course of the interest rate turnaround – investors withdrew money in order to invest the capital in newly issued bonds that yield more interest when they are issued. So those who have held long-dated bonds have to accept heavy write-downs and losses when they are sold – this was precisely the problem at Silicon Valley Bank. When it realised the losses on bonds, the bank run began.

Provisions ahead

Lacalle went on to say that the profitable part of the banks would probably have to make provisions for non-performing – ergo: bad – loans. Both the Federal Reserve and the European Central Bank had recognised this danger months ago. Governments are also likely to create new regulations requiring higher provisions after the recent bank collapses. For these reasons, money would also be withdrawn from the market.

The Spanish expert concludes: “Capital destruction tends to be forgotten in a world used to constant central bank easing, but it is likely to be the main source of strangling of credit to families and businesses as banks and private equity firms deal with the loss of value and weakening earnings and cash flow of investments made at elevated valuations and unreasonable prices.” We add: The whole thing would lead to a downward spiral on the stock markets and perhaps to a bitter banking crash. We are curious to see whether this scenario will come to pass – Bernstein Bank is keeping an eye on the matter for you!

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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

013.04.2023 – Surprise in the oil market: OPEC wants to cut production. From May onwards, around one million barrels less are to gush out of the ground. We shed light on the background.

The driving force behind the action is Saudi Arabia. The country wants to cap output by 500,000 barrels per day. Other members like Kuwait, the United Arab Emirates and Algeria also want to cut. Russia wants to continue its curbs until the end of 2023. This means that from May onwards, about one million barrels of crude oil per day will be less available on the market than before. In total, nine countries from OPEC+ want to commit to a cut of around 1.7 million barrels by the end of 2023. The reaction in Brent: a nice gap, here the hourly chart.

Source: Bernstein Bank GmbH

OPEC comes in at about 40 per cent of the global market. In February, global production was 102 million barrels a day, according to the cartel. The move caught some analysts on the wrong foot. Goldman Sachs, for example, capped its target price for Brent next year from $100 to $94 less than a fortnight ago – and has now moved it back up to $100. For 2023, the price target has now risen again from 90 to 95 dollars.

Hesitation at the SPR
This puts Washington in an awkward position. For the USA does not want to replenish its Strategic Petroleum Reserve (SPR) until prices fall below 72 dollars. According to the Financial Times, the hesitation in flooding the salt domes in the Gulf of Mexico is also the straw that broke the camel’s back. After Energy Secretary Jennifer Granholm said it could take years to refill the SPR, the Saudis are said to have lost patience.

Signal to the USA
Helima Croft, head of commodity strategy at RBC Capital Markets, said Saudi Arabia was now pursuing an economic strategy independent of the US after relations between Riyadh and Washington deteriorated under the Biden administration. It said: “It’s a Saudi-first policy. They’re making new friends, as we saw with China.” The sheikdom is sending a message to the USA: “it’s no longer a unipolar world”. But there are also economic reasons: Amrita Sen, Director of Research at Energy Aspects judged, “Opec+ have made a pre-emptive cut to get ahead of any possible demand weakness from the banking crisis that has emerged.”
The conclusion from all this is that it is always worthwhile for traders to keep an eye on the real-time news. From a fundamental point of view, the question arises whether the lift-off in prices was not somewhat exaggerated. Especially since the fear of a global recession has by no means been banished. Which could put pressure on oil prices again. We are curious to see what happens next and wish you successful trades and investments!

______________________________________________________________________________________________________________

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

28.03.2023 – Despite the recent banking crisis, the Nasdaq 100 has officially entered a bull market. Surprising, because higher interest rates and possible new problems at more banks could leave many high-tech companies stranded financially.

A closer look reveals the real reasons for the paradox: in the Nasdaq 100, it is mainly the mega-caps that have gained. But never mind. Let’s look at the Nasdaq 100, here the daily chart. Since its December low, the index has risen by 20 per cent, which is precisely the indicator of a bull market. However, Ron Adler, trader at JPMorgan, can imagine a consolidation in the coming days due to profit-taking in the mega-caps, especially Google and Meta.

Source: Bernstein Bank GmbH

But is the banking crisis really over? Who knows. Tony Pasquariello, Head of Hedge Fund Coverage at Goldman Sachs, who had warned of a credit crunch just a few days ago, now noted an interesting change in market sentiment. He commented: “Either the regional banking story subsides and the Fed needs to keep chopping wood, or the regional banking story doesn’t subside and we lurch from issue to issue. Whereby “chopping wood” probably means capping interest rates.
The big ones should pay
Meanwhile, the Federal Deposit Insurance Corp. apparently wants to ask the big banks to pay 23 billion dollars. This is reported by Bloomberg with reference to insiders. After the collapse of the Silicon Valley Bank and the Signature Bank, the fund for account protection in the amount of 128 billion dollars is to be replenished. Many investors now assume that this could mitigate a shakeout at small banks – which would prevent a major panic. In any case, pressure on the FDIC from politicians is growing in this direction.
Powell gives hope
In addition to the banking crisis seemingly abating, there is another factor for optimism in high-tech stocks, which are particularly sensitive to interest rates. Apparently, hopes are rising for an end to interest rate hikes. For example, Jerome Powell, head of the Federal Reserve, had said in a private meeting with Republicans from the House of Representatives that inflation in the supply chain is largely contained. This is also reported by the news agency Bloomberg, citing Congressman Kevin Hern.
Our conclusion: we are sceptical that the market shakeout is over for banks and for many start-ups. However, should the Federal Reserve officially signal the end of tightening or even cut rates again, the case for the bulls outweighs the case for the shorts. 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

28.03.2023 – Bitcoin and co. had just recovered nicely, there are new setbacks. The US supervisory authority CFTC has sued the world’s largest crypto exchange Binance and its founder Changpeng Zhao. Previously, the SEC had already taken aim at Coinbase. The question is whether these are the last attacks.

It can happen that quickly: Cryptos had moulted as an escape currency in the current banking crisis. Just like the shares of banks considered to be healthy, which are now allowed to grab the remnants of the victims on the cheap. And like the shares of e-exchanges. But with the US regulator’s attack on Binance, the bullish phase is already gone. In addition to Ether and BTC, the prices of major cyber stocks also fell sharply, including Coinbase and Microstrategy, Marathon Digital, Hut 8 or Riot Platforms. Today, we take a look at Coinbase’s daily chart for a change.

Source: Bernstein Bank GmbH

It’s interesting that the share price started to pick up in January – presumably at that time savers fled wavering banks en masse to shift their money into e-currencies. Which promised new turnover and did not go unnoticed by attentive insiders. But last week, Coinbase’s stock took a dive after the Securities and Exchange Commission served the exchange with a so-called Wells Notice. That’s a warning that the Securities and Exchange Commission will investigate possible misconduct. The letter is named after John A. Wells, who served as Advisory Committee Chair of the SEC about half a century ago.

They are looking very closely
But back to the current case. The Commodity Futures and Trading Commission – which was fast asleep when the regional U.S. banks just flipped – is accusing the e-currency marketplace of violating U.S. financial market rules. For example, Binance founder Zhao allegedly instructed employees and customers to circumvent controls “in order to maximize corporate profits.” Among other things, the platform had not required its customers to provide information to verify their
identity, the CFTC said. It also said Binance had failed to implement “basic compliance procedures” against terrorist financing and money laundering.

Message to the industry
There is, of course, a system behind this. As mass murderer Mao Zetung used to say, punish one, educate hundreds. So the CTFC linked the move with a message to the entire industry. The action was a “warning to everyone in the world of digital stocks that the CFTC will not tolerate willful circumvention of U.S. law,” explained agency chief Rostin Behnam. His agency’s mission, he said, is to “find and stop misconduct in the volatile and risky digital securities market.” We wonder why the U.S. authorities are not taking decisive action against misconduct and incompetence at various regional banks, and why everyone is looking the other way when it comes to the Biden clan’s rather sleazy China dealings.

Our conclusion: Traders must be aware that politicians want to eliminate Bitcoin as a reserve currency. This is because cyber currencies cannot be controlled. Monetary policy with interest rate hikes or quantitative easing do not work here. Which means that economies can no longer be steered in one direction or the other. Moreover, it is simply dangerous for the banking industry if people can withdraw their money from accounts and park it on servers without any major problems. So presumably the attacks won’t stop – we had already warned months ago about the attack of politics on the unloved rivals. Then, if the banking crisis is still solved at some point, another reason to invest one’s money in Bitcoin, Ether or other e-alternatives will fall away as interest rates rise. We are curious to see what will happen next and will keep an eye on the situation for you!

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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

27.03.2023 – The situation on the international banking market has apparently calmed down for the time being. Apparently. We wouldn’t be surprised if this is the calm before the really big storm.

A look at the S&P 500 shows that investors are vacillating between hope and trepidation. The index – here the daily chart – has apparently stabilized.

Source: Bernstein Bank GmbH

However, it is quite possible that we will run into a wave of bankruptcies in which many more small, woke blinder banks will topple over. And along with them, many incredibly great startups from the high-tech as well as biotech sector. In other words, things may get really uncomfortable before they get better. We could be looking at a major purge in the market. Which will bring tremendous opportunities to savvy traders. Our advice is to look at companies very closely and especially analyze management to pick out short candidates.
Because in the wake of years of low interest rates, money was flowing out of the venture capital sector in torrents and no one was looking that closely. That’s changing right now. To understand more clearly what we mean, you should check out the article “Habeck and the Charlatans of Big Promise” on the blog “Publico.” The piece deals with the arrogant posturing of the academic elite, who, loosely based on sociologist Helmut Schelsky, secrete unfulfillable promises of salvation but leave the work to the ordinary people they look down upon.

Get woke – go broke
Brilliant at “Publico” is the analysis on the failed Silicon Valley Bank, which you won’t read like this in our mainstream media. It is well known that SVB had invested a lot of money in bonds that had been outstanding for a long time. The price of these fell because investors preferred to buy newly issued bonds with higher yields during the interest rate turnaround. Since, stupidly, borrowing from high-tech companies declined at the same time as interest rates were higher, SVB slipped into difficulties. And that brings us to the charlatans: According to “Publico”, Silicon Valley Bank had hired a savior named Jay Ersapah as risk manager. But she didn’t do her job, preferring to take care of LGBTQ+ initiatives, such as “Lesbian Visibility Days” or a “Trans Awareness Week”. This went down very well with the woken clientele. But unfortunately, the manager didn’t see the real financial risks.

Impending energy collapse
Just by the way and to understand the reference to our environment minister in the title: The article in “Publico” also points to an impending energy gap – according to the management consultancy McKinsey, the Federal Republic of Germany faces an electricity gap of 30 gigawatts by 2030. Specifically: “If electricity consumption rises steeply, the last nuclear power plants have to be taken off the grid soon and all coal-fired piles by 2030, and storage facilities are largely lacking, there will thus be a shortage of electricity in times of low wind and low sun equivalent to the output of 30 smaller or 15 large power plants.” Which, according to “Publico,” apparently doesn’t interest the priesthood in the Ministry of the Environment. And what will lead us to the DAX at some point, but not today.
Our conclusion: the market shakeout is probably not over yet. It may well be that problems at small and medium-sized banks and companies in the U.S. and Europe will plunge the overall market into a crisis. That could extend to a freeze in lending. Or to put it in the words of Tony Pasquariello, Head of Hedge Funds Sales at Goldman Sachs, “Nothing has gone as planned: more things will beak and a credit crunch is coming.” And his specific advice regarding the S&P 500: “I now worry a lot more about the downside tail than the upside tail — don’t mess with the flow of credit — so I’d be a seller of strength on a move back above 4000.” In this spirit: 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