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22.03.2023 – It did it again, but only a little. The Federal Reserve has raised key interest rates by 25 basis points. And it did so despite the smoldering banking crisis. The market initially took it positively. But then U.S. Treasury Secretary Janet Yellen stepped up to the microphone in Congress. And gave the shares of small U.S. banks virtually free for the shooting.

Yesterday, the Fed raised the federal funds rate by 25 basis points to 4.75 to 5.00 percent. So far, so expected. In addition, the earlier statement was cashed, according to which “ongoing increases in the target range will be appropriate.” However, the central bank said that “some additional policy firming may be appropriate. The market initially took it calmly, then it went south. You can see the reaction very nicely in the 30-minute chart of the S&P 500.

Source: Bernstein Bank GmbH

But this time it was not Jerome Powell who scared investors. It was Janet Yellen.

U.S. Treasury Secretary Cuts Rates
Mark Cudmore of the Bloomberg news agency commented that Yellen was “to blame for the stock slump”. He said stock prices dipped a minute after the policymaker began speaking. Specifically, the S&P 500 was up about 1 percent in the first 47 minutes after the Fed decision, he said. And the index was still up 0.6 percent in the first 17 minutes of Jerome Powell’s press conference, he said. But exactly from 2:47 p.m. Eastern time, Yellen had spoken before the U.S. Senate. And in the following 72 minutes, the SPX had slipped by about 2.5 percent.

No guarantee on bank accounts
Bloomberg colleague Mark Cranfield toed the same horn, saying Yellen had refused to provide a guarantee for savers’ deposits without working with parliamentarians. And that, he said, was an invitation to short bank stocks. Specifically, Cranfield judged, “to an aggressive trader this sounds like an invitation to keep shorting bank stocks — at least until the tone changes into broader support and is less focused on specific bank situations.” Cranfield warned that U.S. financial stocks are probably the most vulnerable assets right now.

Starting gun for the new bank run?
US star investor Bill Ackman was even more outspoken, saying that Yellen had de facto fired the starting gun for a new bank run in the small and mid-sized bank sector. Specifically, the head of hedge fund Pershing Square Capital Management tweeted: “This afternoon, @SecYellen walked back yesterday’s implicit support for small banks and depositors, while making it explicit that systemwide deposit guarantees were not being considered. (…) I would be surprised if deposit outflows don’t accelerate effectively immediately.” We add warningly: It is possible that Ackman has long been committed to the short side and now wants to conjure up a crisis.

But the financial blog ZeroHedge also put it bitterly: “the Treasury Secretary, with all the grace of a senile 76-year-old elephant in a China market, uttered the phrase ‘not considering broad increase in deposit insurance.'” Here’s an interesting footnote: JPMorgan estimates that $1.1 trillion in assets have already been withdrawn from customers of vulnerable banks. We’ll be curious to see if the new Big Short kicks in now. And whether the next bank will soon keel over. How good that you can also make money on the short side with CFD. Bernstein Bank wishes traders and investors good luck!

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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

22.03.2023 – Of all things, the cyber currency Bitcoin has recently made a name for itself as a safe haven. The reason: if one’s own bank wobbles or if there is only a suspicion of it, then investors need a place to park their capital. For example, servers on the web. It remains to be seen whether these are really safe. But no matter: just get away from your own bank. Before the Federal Reserve’s upcoming interest rate decision, we wonder whether this trend will continue.

Nice catch-up for Bitcoin, here the four-hour chart. It is a bit surprising, as it was the crypto bank Silvergate Capital that was the first stone to fall in the banking domino. We saw a similar small bull market in gold last time, although the gold price has just reset again. We wonder if BTCUSD is also due for a reset once the crisis is cleared. If it is cleared up

Source: Bernstein Bank GmbH

Meanwhile, things seem to be calming down for US banks – in fact, we saw a small rally in their European counterparts recently as well. Which is because the central banks and also the industry itself have intervened, we have reported on this here.

Interest rate decision by the Fed
Now all eyes are on the Federal Reserve again. The blog Newsquawk commented that the market still sees a 25 basis point rate hike. However, there is another problem case with First Republic Bank, major US banks are probably working on a takeover at the moment. Bloomberg commented that the Fed should actually stick to its rate hike of 50 basis points. But that would be a real surprise for the market – and that is exactly what nobody needs at the moment.

Impending death spiral
It looks like the Federal Reserve is trapped ahead of the upcoming interest rate decision. The financial blog “Substack” has just declared an “economic death spiral”. Either the Federal Reserve raises interest rates to curb inflation and ease the burden on consumers. Or it saves the financial market with cheap money.
“Substack”: “The current banking crisis is triggering more stock buybacks, and a return to Quantitative Easing with the bank bailouts, including plans to inject another $2 trillion into the banking system, on top of the $300 billion increase in the Fed’s balance sheet, in just the last week. Unfortunately, this makes for high inflation – but the economy is dependent on the “cocaine” of cheap money. Substack continues: “Now the Fed is trapped with two bad options, raise rates or pivot, both of which will lead to inevitable economic doom.” Whereby the “pivot” means the turning point in the rise in interest rates.

In this sense, it is clear that nothing is clear. If the Fed sticks to its tightening, this could be seen as stupidity on the one hand; or as a signal that it has everything sovereignly under control and that the crisis is passé. But if the Fed pauses on interest rates, this new liquidity could be celebrated. Or it could trigger a panic because things in the banking sector are perhaps much worse than previously known. And then safe havens are likely to be in demand again. The only thing that is certain is that volatility increases in turbulent times. Which brings opportunities for traders. Whether long or short – we 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

20.03.2023 – Are these now the firebreaks that will stop the spread of the wildfire? The Federal Reserve, the European Central Bank and four other major central banks are stepping up the supply of liquidity to banks. We are curious to see if investors will take this as reassurance, or if they will take the action as a sign of panic. In addition, UBS will buy Credit Suisse.

Recent events have not yet had a positive impact on PKO Bank Polski, for example, here is the four-hour chart. The sell-off is surprising, because on the one hand the bank is actually a savings bank with hundreds of branches and many solid workers as customers. That is also the name: Powszechna Kasa Oszczędności Bank Państwowy (“General Savings Bank – State Bank”). So probably only a few risky loans. Note: The flipped regional banks in the US were heavily involved in crypto business and biotech or high-tech startups. Moreover, Poland’s largest bank is about one-third state-owned. And savers could hardly ask for greater security.

Source: Bernstein Bank GmbH

But in these times, facts tend to be ignored. And in a crisis, the water level falls for everyone. Ergo, monetary guardians must act quickly. As predicted last week, the masters of money have now decided to intervene. Six major central banks are stepping up the supply of greenbacks: From now on, there will be daily dollar swaps instead of weekly ones as before. The transactions have a term of seven days each and are to take place until at least the end of April. This was announced yesterday evening, in addition to the Fed and the ECB, the central banks of Canada, Great Britain, Japan and Switzerland.

The whole program of the financial cavalry
The financial blog “ZeroHedge” commented that the Fed was panicking. Now that the swap lines have been reopened, the rest of the cavalry will follow: Rate cuts, quantitative easing, and an increase in the inflation target from 2 to 3 percent. The market is back in liquidity injection mode – the Fed has decided to restore confidence in the banks, he said. However, confidence in the fight against inflation has been destroyed, he said.

UBS swallows Credit Suisse
Meanwhile, major Swiss bank UBS will acquire failed rival Credit Suisse for 3 billion francs. The Swiss National Bank is backing the takeover with up to 100 billion francs. This is the most significant bank merger in Europe since the 2008 financial crisis, and we think: We will probably see more buyouts in the sector.
Our conclusion: We are not sure if investors are convinced of all these moves yet. Probably swap lines are too abstract for many. Perhaps the bulls won’t pick up until the last of the weak banks are gone. Presumably, only an official break from the cycle of tightening in the U.S. and Europe will remove the fear. We can also well imagine a government entry into wobbling commercial banks. And then many stable institutions, whose share price has been beaten down in the clan, will suddenly be insanely attractive buying opportunities again. Whether long or short – we wish you good nerves and successful trades in these interesting times!

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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

17.03.2023 – The European Central Bank (ECB) has raised its key interest rate once again. But the market currently cares rather little. Because even among forex traders, the back and forth in the banking crisis is currently the number one topic.

Yesterday was the day: The ECB raised the key interest rate for the euro area again by 50 basis points to 3.5 percent. Since last July, the central bank has thus increased by 350 basis points in six steps. The reason is rampant inflation: According to an estimate by the European statistics authority Eurostat, inflation was 8.5 percent in February. Yet monetary policy is currently just the accompaniment in Financial Crisis 2.0. The ECB stressed, “The euro area banking sector is resilient: capital and liquidity positions are sound.” Well then….

Source: Bernstein Bank GmbH

You can see how much nervousness in the banking market affects the exchange rate in the four-hour chart of EURUSD. Silicon Valley Bank, Signature Bank and especially Credit Suisse caused wild ups and downs. Flight into safe US government bonds versus new risk appetite and short recovery in European stock markets. You can take your pick after which headline the forex pros switched positions. In any case, the vola brings some opportunities for savvy traders.

Tension at the banks
It looks like the situation in the US has eased recently. Or has it? Yesterday, the largest U.S. banks decided to bail out the next teetering regional institution, First Republic Bank. Bank of America, Citigroup, JPMorgan Chase, Wells Fargo, Goldman Sachs, Morgan Stanley, BNY-Mellon, PNC Bank, State Street, Truist and U.S. Bank want to raise a total of 30 billion dollars. The question now is whether, with an easing in the current U.S. banking crisis, the Fed will not continue its tightening, which would strengthen the dollar.

Bigger credit crunch than in 2008
However, there seems to have been quite a bank run recently at many U.S. banks, the institutions need fresh money; which speaks against higher interest rates. The “Frankfurter Allgemeine Zeitung” took a look at the Fed’s emergency measures: “Data published by the U.S. Federal Reserve showed borrowing of $152.85 billion through the discount window, the traditional liquidity reserve for banks, for the week ending March 15. The record figure compares with a volume of $4.58 billion in the previous week. The previous all-time high from the 2008 financial crisis was $111 billion.”
So does the Fed need to take a pause in tightening? The dilemma here is that if the Fed admits this, the market could interpret it as a panic signal – how bad is the situation really

Our conclusion: The most important question for forex traders at the moment is whether more commercial banks will wobble. If larger, systemically important addresses topple, investors around the world are likely to move their money to safety in U.S. bonds. Which should strengthen the dollar. However, it would then be difficult for the Fed to raise interest rates; it would probably even have to respond with a new quantitative easing. If things settle down, money will flow out of U.S. bonds back into equities around the world, which should tend to weaken the greenback. So keep an eye on the real-time news – 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

16.03.2023 – These are truly interesting times for traders: Credit Suisse is teetering and the world’s stock markets are trembling. Is this now a natural market shakeout or a systemic crisis? The danger of a global bank run is growing. Which in turn increases the long chances for a major bailout.

Investors invested in the major Swiss bank are wavering between hope and trepidation. Don’t say you didn’t know about this: we already covered the matter in this space last October under the title “Omens from Switzerland.” In any case, the looming collapse of Credit Suisse has also hurt its German rivals. Here is the four-hour chart of Commerzbank.

Source: Bernstein Bank GmbH

The recent shockwaves were triggered by a careless statement by Ammar Abdul Wahed Al Khudairym, that is the Chairman of Saudi National Bank. He categorically ruled out additional financial support in an interview with Bloomberg TV. The Arab bank is a major shareholder of Credit Suisse. And unfortunately, last year the major Swiss bank reported a loss of 7.3 billion francs and massive withdrawals of client assets amounting to 123 billion.
Lifeline from the SNB
Crisis of confidence plus bungling PR – the crash is preprogrammed. The disaster was foreshadowed on Tuesday, when Credit Suisse published its annual report for the year 2022 and admitted mistakes in it. But maybe the house will still be saved: According to reports from the news agencies Reuters and AFP, Credit Suisse will borrow up to 50 billion Swiss francs from the Swiss National Bank.

The looming conflagration
Going long or short on Credit Suisse is one side of the coin. The big danger is a conflagration in the banking system. First the collapse of American regional banks. Now the crisis in Europe, which looks a lot like 2008. After all, Credit Suisse is the first global systemically important bank since the financial crisis to receive state money in order to survive. We are curious to see what happens next. If investors all over the world now play it safe and clear out their accounts, no matter how healthy banks are – it will end badly. If cash is king, the bank run is imminent. Then the stock markets will continue to crash. Until the world’s major central banks intervene in a concerted effort.

It all depends on the central banks
In fact, what matters now is the interest rate policy going forward. The deeper problem is the cold turkey at the commercial banks: After about a decade of cheap money with zero interest rates even for the worst houses, interest rates have risen rapidly. And with that, skill in management is needed to generate returns. Which means that only the best will survive. In other words, until now, even small startups with no revenue or profit went to banks for cheap financing. Now they stay away and the institutions have to look for new sources of money. Which brings us to the opportunities for traders: Volatility is likely to increase sharply in the coming days. Whether long or short – Bernstein Bank wishes good luck!

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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

13.03.2023 – Silicon Valley Bank is history – the biggest banking collapse since Lehman Brothers in 2008 could have devastating consequences for the global financial market. Because like the shock wave after an explosion, the crisis is now working its way forward. However, policymakers appear to be taking decisive countermeasures.

At the banks, the fear of contagion was palpable. As a representative of many other institutions, we show you here the hourly chart of Deutsche Bank. If panic breaks out, banks – and not only them – are short candidates. If the situation calms down, we should see a strong recovery. Because gaps are just waiting to be closed. Especially if the Federal Reserve backs away from its tightening to prop up the banks. Already, Goldman Sachs expects the Fed to call off what was supposed to be a March rate hike. So keep an eye on the real-time news!

Source: Bernstein Bank GmbH

SVB collapsed in a flash last week, with clients pulling out $42 billion in just one day. The bank still ranked 16th in the U.S. industry. Presumably, SVB was a victim of the Fed’s interest rate hikes and could no longer service liabilities. The Federal Deposit Insurance Corporation (FDIC), the financial regulator, closed the institution on Friday. The Bank of England said Friday they will place SVB’s U.K. arm into insolvency proceedings. In Germany, SVB has no subsidiary and only a small branch. Bafin reported Friday that it was keeping an eye on current developments.
The next bank closes
Analysts quickly hastened to assure that SVB had pursued a very specific business model with startups after all. There was no risk of contagion, they said. However, Signature Bank in New York was also shut down by the state regulatory agency on Sunday. The bank was also exotic and heavily involved in the cryptocurrency business. Now customers there have also withdrawn their funds in a big way. Previously, Silvergate Capital, which was active in the same business, had already collapsed.
Only 48 hours
Star investor Bill Ackman, head of hedge fund Pershing Square Capital Management, judged on Saturday that the authorities had only 48 hours to avert a panic. If not, he predicted a bank run at small, non-systemic banks. Specifically, “By allowing @SVB_Financial to fail without protecting all depositors, the world has woken up to what an uninsured deposit is – an unsecured illiquid claim on a failed bank.”
Here comes the cavalry
Clearly, policymakers have recognized the danger. U.S. Treasury Secretary Janet Yellen, Fed Chairman Jerome Powell and the FDIC said Sunday night that all depositors would be fully protected and could access all their money. Actually, deposits are only insured up to $250,000 through the FDIC deposit insurance fund. But a new tool called the Bank Term Funding Program (BTFB), unveiled Sunday night, is now expected to kick in. It’s based at the Fed and provides the funds for SVB and Signature customers to withdraw their money today, Monday. And customers of banks that could potentially wobble further are also to be protected. The FDIC also hopes to find a buyer for SVB.
Our bottom line: hedge your bets, expect the impossible. We’ll know more soon: the Federal Reserve announced a special meeting of its Board of Governors for today, Monday. The situation brings tremendous opportunities for traders because of the expected large swings in the market. Bernstein Bank wishes good luck and good nerves!

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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

10.03.2023 – SVB Financial Group is in urgent need of money. The planned capital increase sent the share price down by around 60 percent. Now there is a risk of contagion: SVB is heavily involved in business with small and medium-sized tech and biotech companies in Silicon Valley. Is there a major crisis going on behind the scenes in these industries? And what about the other banks? The fear is growing. After all, Silvergate Capital, which specializes in cyber currencies, just died.

Goldman Sachs commented that hedge funds have launched a short attack on the financial sector. The sector slid the most in about three years yesterday, with the KBW Bank Index losing 7.7 percent, its biggest loss since June 2020. The indicator from investment bank Keefe, Bruyette and Woods measures the performance of 24 bank stocks. Bank of America, Wells Fargo or JPMorgan Chase, for example, lost heavily. You can see JPM’s stock here in the four-hour chart.

This was the trigger for the share price slide: SVB Financial reported a billion-dollar loss for the first quarter. The institution had to sell its $21.5 billion bond portfolio at a loss of $1.8 billion and now needs fresh money. SVB therefore wants a capital injection of $2.25 billion to survive the current cash burn. Group CEO Gregory Becker had to calm customers’ nerves on the phone. But industry giants from the venture capital scene, such as Peter Thiel’s Founders Fund, called for the company to withdraw its own money because of the risk of insolvency. Hedge fund manager Bill Ackman tweeted that Washington needed to think about a bailout to save investors’ money. That sounded a lot like the 2008 financial crisis….

Higher interest rates stop startups
As it stands, higher interest rates are having a drastic impact on the business of growth companies. The tech and biotech companies mentioned above, for example, are often not yet making a profit and are living on credit – as they tighten, they are facing higher borrowing costs, so they are apparently scaling back new borrowing. Which spoils business for banks, but also threatens the existence of high-tech companies; as well as a shakeout in the industries should entail plus layoffs – and for traders short opportunities on the Nasdaq.
And yet another piece of bad news from the financial sector caused jitters: the crisis in the market for digital currencies such as Bitcoin and Ether has finally wiped out Silvergate Capital. The crypto bank announced it would cease operations and initiate its own liquidation. Silvergate Capital’s securities slumped by about a fifth outside the major indices.

What is the Fed doing?
Bullish investors are hoping for easing on the interest rate front: figures just came in for weekly initial jobless claims, a short-term indicator of the jobs market; these had risen surprisingly sharply. This had triggered speculation that the Federal Reserve might not be quite so merciless in its fight against high inflation. Because higher interest rates stifle the economy.
Today is the labor market report for February, if you read these lines, then you may already know more. Analysts are again expecting significant job growth and an unemployment rate at its lowest level in more than 50 years. Wage trends are also likely to be closely watched. If the numbers come in as strong as forecast, the central bank should see no reason to hold back on further rate hikes. However, the Fed will take a close look at developments at the banks. We are curious and will keep you up to date – Bernstein Bank wishes good luck!

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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

09.03.2023 – Most of the time, the reasons for a price movement only become clear afterwards. Especially in relatively small markets like gold. A fact has just become known that has largely been lost in the mainstream media: Singapore was busy buying gold in January. This special factor supporting the price has now fizzled out for the time being. In addition, higher interest rates are slowing down the gold price.

Let’s first look at the daily chart. The analysts of “FXStreet” commented, bearish traders must wait for a sustained break of the round mark of 1,800 dollars. We add: Below that, the 100-day moving average is support – that’s the line below. According to “FXStreet”, a short-covering rally can take gold to the one-month high at 1,858. However, the 50-day moving average at 1,869 could stop the upward movement.

Source: Bernstein Bank GmbH

And so back to the fundamental facts. The gold blog “BullionStar” has been paying attention: The Monetary Authority of Singapore (MAS) has returned to the market as a buyer – purchasing 44.6 tons of gold in January alone. Holdings rose from 153.8 to 198.4 tons. A nice plus of about one third. The purchase was the second largest monthly deal ever, only in 1968 Singapore had bought more yellow metal from South Africa with 100 tons. The purchase took place quietly, only on the website of the MAS the figures were updated, according to “BullionStar”.
Monetary guardians rely on gold
This fact is interesting because it means that another central bank is betting on precious metal. As we have already reported here, China, Russia and Turkey also bought diligently in the past year. This is another indication that the world’s central banks either believe in sustained inflation and want to hedge against the decline in the value of paper money with precious metals. Or the monetary guardians expect a deflationary crash, in which case gold would also be a safe haven. In any case, the buying shows us that gold is a long-term bet for central banks.
Higher interest rates put the brakes on
Of course, there is also another bearish factor that is slowing gold down: interest rates are rising everywhere. The Federal Reserve, in particular, is rushing ahead. Precious metal doesn’t yield interest, and it costs too – fees to store it at the bank or to install a safe at home. We are curious to see which factor will prevail in the market. Whether long or short – 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

08.03.2023 – Jerome Powell has spoken again. And before the U.S. Congress, he again announced higher interest rates in his usual oracular manner. The Wall Street Journal interpreted it this way: The Fed is ready to accelerate the pace of rate hikes, he said. Powell had opened the door for a larger interest rate step of half a percentage point still this month. Other analysts were also increasingly bearish again.

In fact, the Federal Reserve chief gave some hints that rates will continue to rise higher because recent economic data was stronger than previously expected. The S&P 500 – here the hourly chart – reacted with a setback to around 4,000 points; further down, the zone at 3,900 becomes interesting, more on that in a moment. The financial blog “ZeroHedge” commented that the reason for the market development was a repricing in the terminal rate – investors now expected a final interest rate of 5.63 percent, which is 16 basis points higher than now.

Source: Bernstein Bank GmbH

John Flood, trader at Goldman Sachs wrote this, “Powell said the U.S. central bank is prepared to increase the pace of hikes if data warrant, and sees the ultimate peak Fed rate likely to be higher than expected. In prepared testimony before the Senate Banking Committee, he said the process of getting inflation back to 2% “has a long way to go and is likely to be bumpy.”
Chief economist Michael Feroli of JPMorgan commented that Powell’s words had jeopardized the Fed’s credibility. Specifically, “whereas the plan prior to that data round was to hike by 25bps until there was more evidence of disinflation, Chair Powell indicated today that they are prepared to throw out that playbook if the February data don’t reverse some of the January strength.” A small turnaround, which irritates investors.

Important data and the Fed is silent
But that’s not all – the confusion is likely to increase. Colleague Andrew Tyler, the Head of Market Research at JPM, judged that the Fed “will heavily depend on near-term data for upcoming rates decisions. With January’s macro data mostly printing on the hawkish side, NFP Friday and CPI next Tuesday are the most critical catalysts for Fed’s decision between 25bp and 50bp. Keep in mind that the Fed will start its blackout period this Saturday so CPI will be released during the blackout period, so data itself will be more impactful in absence of guidance from Fedspeeches.” In other words, the coming days could be interesting because some important data is coming in and Fed officials cannot comment during the blackout period. So the market will have to find its own way without guidance.

SPX before the crucial zone
Meanwhile, ultra-bearish market technician Jason Hunter also spoke out, also from JPMorgan. He believes Powell’s speech could push the market lower. Specifically, “The S&P 500 Index slides to retest the key confluence of levels near 3900 after rejecting 4060-4089 tactical pattern resistance. We believe a break through the 3900 inflection can lead to accelerated selling pressure, as that area has acted as a bifurcation for the index from May 2022. It also currently aligns with several trend-following trigger levels for momentum-based strategies. We see the 3760-3764 area as an initial target for a breakdown.”
So that’s the bottom line: Powell could send the SPX through the key support of 3,900 and into the important zone of around 3,760 points. So traders should keep an eye on these marks. Whether long or short – 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

03.03.2023 – The cleansing process in the e-currency market continues. Now, new rumors surrounding the crypto bank Silvergate Capital are causing unrest. This is depressing the prices of Bitcoin, Ethereum and co. Until the big cleanup in the market is completed, traders must expect setbacks. Which ultimately also brings short opportunities.

Rude awakening for the bulls: Ether has torn a small price gap because of the news, in the picture the hourly chart. According to “Finanzen.net”, the market value of all Internet currencies slid by about four percent to around $1.03 trillion.

Source: Bernstein Bank GmbH

Silvergate provides financial services for many crypto exchanges, such as a payment network for real-time transfers. That could now be coming to an end. The company had warned that a continuation of the business was questionable. In addition, Silvergate postponed its financial statement presentation. The share of Silvergate capital had slumped thereupon on the New York Stock Exchange on yesterday’s Thursday by scarcely 60 per cent.

Collateral damage from FTX
With this, we see another casualty from the collapse of the FTX exchange – many of Silvergate’s customers had subsequently withdrawn their money. Crypto trading sites like Coinbase reacted according to “Wirtschaftswoche” and froze the business – Coinbase does not accept deposits and withdrawals via Silvergate anymore. We think: When the bank run in the realm of e-currencies will end is completely open.
It gets worse: The bank from La Jolla in California reported according to the “Frankfurter Allgemeine Zeitung” that the legal authorities are investigating the business conduct. This confirmed allegations by short sellers that auditors and U.S. regulators had warned in detail of misconduct by Silvergate, including money laundering allegations. Bloomberg had already reported last month, citing insiders, that the Justice Department’s fraud division was investigating Silvergate over its dealings with FTX and hedge fund Alameda Research.

Interest rate turnaround and taxes
That leaves two other reasons for the current headwinds in the cyber market: The turnaround in interest rates is making saving more attractive again. Moreover, government bonds or fixed-term deposits do not carry the risks that Bitcoin, Ether and co. do. What’s more, the tax authorities are actually intervening in this country. According to “Wirtschaftswoche,” the Federal Fiscal Court in Munich ruled that anyone who makes profits when trading in e-currencies must also pay tax on them (IX R 3/22). This means that a plaintiff from Cologne failed before Germany’s highest fiscal court, who had made a profit of 3.4 million euros in 2018.
Our conclusion: the mistrust in e-currencies persists, FTX has not yet been worked off. Whether long or short – Bernstein Bank wishes 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