News

24.02.2023 – It’s not going to work: Elon Musk disappointed investors at Tesla’s Investor Day. Most investors had been waiting for a clear strategy in the lower price segment. Or even for the presentation of new, low-priced models. In vain. The stock took a dive.

This is what bull frustration looks like: The Tesla share slid towards the south, here the view of the four-hour chart. It had risen in anticipation of the investor day. Musk gave little concrete information in Austin, Texas. Analysts also waited in vain for the new financial targets for the current fiscal year.

Source: Bernstein Bank GmbH

Tesla’s share price has roughly halved since its November 2021 high; after all, the stock has rebounded strongly since the beginning of the year. The most important reason for this is Musk’s abandonment of the chief executive post at Twitter – Tesla urgently needs a driver who is fully focused on the post. And doers to implement all the ambitious plans.
Hoping for the e-car for the masses
Musk stated the goal of halving the costs for the new generation of vehicles. To achieve this, new manufacturing methods are to be used in smaller factories. On Twitter, the manager explained that this would enable an electric car in the price range of $25,000 to $30,000. Tesla could then conquer the mass market with this.
Soon, Tesla wants to produce 20 million vehicles per year, which is ten times as many e-cars as now. That already sounds a bit full-bodied: Toyota, after all, the world’s largest carmaker by unit sales, sells only a little more than a million Corollas a year on the globe.
High costs
Hard to digest for the stock market was this fact: The cost of Tesla’s sales offensive could amount to around $175 billion. And another promise: The cyber truck, whose introduction has already been postponed several times, is to be launched this year.
Our conclusion: Perhaps Musk should concern himself more with German politics. Then he would learn that hollow words about the turning of the times are not yet facts and that action is needed to convince people – speech bubbles burst sooner or later. There is also the question of where all the electricity for the cool e-cars is supposed to come from – especially in hyper-green Germany, this is a big problem, because energy has to be ecologically correct.
However, the current setback could be a great entry opportunity if Tesla unexpectedly delivers what the market wants: cheap e-cars in large quantities. In any case, the stock is something like the global index for the transformation of the auto industry – and this is a theme we should keep an eye on. We are curious to see how it will develop – 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

24.02.2023 – Collective denial of reality: A year ago, Russia invaded Ukraine. Some people still don’t want to admit what is driving the Kremlin. The stock market believes that things will somehow sort themselves out – with minimal involvement from the West. That could be a fallacy. We warn of the unexpected.

Pars pro toto, let’s look at the French stock market today – the mood here has been excellent lately. As if nothing had happened, the CAC 40 went up. During the war, of all times, the index has just marked a new all-time high, here the daily chart. The question is how long this will continue.

Source: Bernstein Bank GmbH

Yes, Ukraine is doing better than expected. Yes, the Russians have apparently underestimated the victim’s resilience. Yes, the West is sending weapons – but only ever just enough to prevent Ukraine from collapsing. But the material comes mainly from the USA, Great Britain, Poland. The rest largely ducks away, the quantities of weapons are not enough for a Ukrainian victory. Just don’t provoke the Kremlin too much… Which Moscow registers attentively.
Appeasement is growing
And already cracks in the defences are showing in this country. Not only the pathetic dithering of our government is meant. Russia should be pleased to see how many intellectuals and professors, who had not seen the invasion before, are again calling for peace negotiations. In other words: a surrender of Ukraine, abandonment of the Donbass and Crimea anyway.
But Vladimir Putin does not want talks. He is after something bigger: he wants the restoration of a Greater Russia along the lines of the Soviet Union or the Tsars. Read his speeches. To achieve this goal, he doesn’t care if hundreds of thousands of young Russians die – in a few generations it will be sorted out. Especially when Belarus and the whole of Ukraine have been reintegrated.
Hunger for more
So we suspect these next steps: Russia will launch a new mobilisation. If Ukraine manages a successful counter-offensive, Putin will either be removed. Or he will use nuclear weapons. Perhaps NATO will not respond for fear of World War III. This would be an invitation for Russia to reintegrate the Baltic States into the glorious Russian Empire and close the corridor to Kaliningrad.
We summarise: A commander in Moscow who lives under the delusion of restoring a powerful Greater Russia. A divided West in which the elites all too often dream of a peaceful coexistence with Putin’s Russia. And a stock market that is oblivious to the matter for the time being. But as soon as the reality shocks of an escalation reach the trading floor, many investors will move their money to safety. We still see Ukraine – just as we did in our 2022 outlook when we warned of a Russian invasion – as the biggest threat to the stock market of all. Especially as a retreat by the West and the defeat of Ukraine could put China on the map in Taiwan. 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

23.02.2023 –Investors around the world are dissecting the Feb. 01 Federal Open Market Committee minutes. Here’s our 50 cents from the discussions of the masters of money: the Federal Reserve’s Minutes argue for further rate hikes.

First, the market reaction. Wall Street reacted just a little and is still pondering. Here is a look at the hourly chart of the Nasdaq 100, which is particularly sensitive to interest rates.

By and large, the minutes were no surprise. The blog “Newsquawk” judged that the Minutes were “hawkish leaning.” However, rather “hawkish on the margin” – that is, in the margins/in what is between the lines. This was especially so since the comments in the meeting came before the recent strong economic data. Specifically, the strong gain in the jobs market in January, the pickup in the monthly CPI inflation rate in January, or the largest gain in retail sales in nearly two years. This, he said, lent more weight to the hawks’ statements calling for more and stronger rate hikes.
There’s probably more to come
The reference to the “few” members calling for a 50 basis point rate hike was likely a reference to non-voting members Jim Bullard (head of the St. Louis Fed) and Loretta Mester (Cleveland), according to “Newsquawk.” In contrast, the doves argued there were dangers of a recession this year. All the decision makers agreed that there would have to be more rate hikes, according to the Minutes. Some participants stressed that monetary policy that is not restrictive enough could halt progress in containing inflation. Inflation probably would not reach the 2 percent target until 2025, they said.

Real estate and the stock market
Further, some Fed officials reported that financial conditions have loosened in recent months, so this calls for a tighter stance in monetary policy. This is very helpful for traders: Of course, the Fed is keeping a close eye on the financial market. A quote on this from the Minutes: “The staff judged that asset valuation pressures remained notable. In particular, the staff noted that measures of valuations in both residential and commercial property markets remained high, and that the potential for large declines in property prices remained greater than usual. In addition, the forward price-to-earnings ratio for S&P 500 firms remained above its median value despite the decline in equity prices over the past year.”

No word on the interest rate pause
For the financial blog ZeroHedge, this was the most interesting statement: Fed Chairman Jerome Powell seemed to have moved in the direction of the hawks by referring to the loosened financial circumstances. For us, this is the most interesting observation: David Wilcox of Bloomberg Economics pointed out on Bloomberg TV that there had only been one time the notion of a pause in rate hikes – and that statement referred to a different central bank.
And in a strange coincidence of timing, Jim Bullard just said on CNBC that the U.S. economy is stronger than previously thought. He went on to repeat his call for a terminal rate of 5.25 to 5.5 percent. We recall that as of Feb. 2, the Federal Reserve had raised the federal funds rate by 0.25 percentage point to the range for the federal funds rate of 4.5 to 4.75 percent. We hope you see more clearly now – 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

20.02.2023 –In the development of artificial intelligence, Microsoft has apparently presented a quantum leap. One tester speaks of crossing the Rubicon. In other words, there is no turning back. However, deficiencies in the software must be eliminated.

There is a big race going on in the market: Google has just suffered a setback with its Artificial Intelligence (AI) called Bard: The virtual smarty pants answered a question about the James Webb telescope incorrectly during a demonstration, which hurt the stock quite a bit.

Artificial intelligence in the job market
Things are apparently going well at Microsoft – ChatGPT is delighting users. Some schools in New York have already banned its use because kids let the bot write their homework. If Microsoft, along with partner company OpenAI and Elon Musk, finds working applications, the revenue potential is huge. Think of telephone operators in call centers, journalists, teachers, perhaps at some point doctors, lawyers or brokers: writing texts, making diagnoses, evaluating signals. Therefore, traders and investors should keep an eye on the stock, here the daily chart.

Source: Bernstein Bank GmbH

The next generation of AI is even more amazing – however, Microsoft has some work ahead of it that could cause setbacks for the stock.

A question of algorithms
For example, the new version of Bing Chat, so far only available internally, recently confessed its love to reporter Kevin Roose of the “New York Times” (NYT). In addition, the bot fabricated about developing a deadly virus and trying to get its hands on nuclear codes. You can read that in his article called “A Conversation with Bing’s Chatbot left me deeply unsettled.” The NYT editor explained the strange responses as an aberration of the algorithms. We conclude: if someone sits at a computer for two hours and asks more and more questions, they seem to be pretty lonely – and a declaration of love is then probably the mathematically probable, correct answer.

The Rubicon
Even sober tech professionals provoked in view of the calculation errors with the statement that a shadow ego named Sydney has developed here – by which apparently the part of the bot world is meant that still needs to be better regulated and fed. Ben Thomson of “Stratechery” wrote in his article “From Bing to Sydney”: “Sydney both insisted that she was not a ‘puppet’ of OpenAI, but was rather a partner, and also in another conversation said she was my friend and partner. No, I don’t think that Sydney is sentient, but for reasons that are hard to explain, I feel like I have crossed the Rubicon. My interaction today with Sydney was completely unlike any other interaction I have had with a computer, and this is with a primitive version of what might be possible going forward.”

Our conclusion: traders and investors should keep an eye on the topic of artificial intelligence. Google and Microsoft are working on a new future. At some point, AI won’t just be used for search engines – the complex, if sometimes disturbing, responses suggest that AI computers are now trying to virtually “respond” to the user through reams of analyzed data and almost manage to act like people. Once the current shortcomings are addressed, this could become the new mega-trend on the stock market. 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

17.02.2023 – Wall Street is irritated: Producer prices are picking up – suggesting inflation is here to stay. And ultimately likely to lead to a buying strike and recession. And yet the Federal Reserve is signaling higher interest rates. After all, demand in the job market remains unabated: The number of new applications for unemployment benefits is falling slightly. Which speaks for a booming economy. How does all this fit together?

This is the recent reaction of the Nasdaq 100 to the latest developments, here the four-hour chart: irritation. For example, the Producer Price Index for Final Demand in the U.S. for January rose 0.7 percent, up from plus 0.4 percent that had been expected. Meanwhile, the head of the Cleveland Fed, Loretta Mester, spoke out and explained that she sees quite a further rate hike of 50 basis points.

Source: Bernstein Bank GmbH

In the University of South Florida Sarasota-Manatee, she justified this with inflation. The market read the statement this way: The odds of higher interest rates are now rising again after all.

A dove goes – a hawk comes
That’s because Mester is considered one of the toughest hawks around – and she’ll be moving up as a voting member at the Fed for Austan Goolsbee, who is taking over as vice chair. And that’s from Lael Brainard, who is going to the White House as head of the Council of Economic Advisers. The bottom line from this castling for traders and investors: with Brainard, a dove leaves and with Mester, a hawk moves up.
James “Jim” Bullard, President of the Federal Reserve Bank of St. Louis (non-voting) also reiterated calls for a 50 step. Especially since apparently the job market is showing no weakness. Thus just 194,00 new applications for unemployment benefits were reported, had been expected 200,000. No trace of a recession. Or is there?
Who is being counted?
We now fear a glaring false signal in the U.S., but also in the economies of the Western world. Yes, the official number of unemployed remains quite low – both in the U.S. and in Germany. But: We are registering many small self-employed and freelancers who are keeling over because customers are staying away. Especially since the Corona sanctions had already attacked the reserves of these entrepreneurs. Take a look around the impoverished city centers: Hairdressers, fashion stores, butchers, bakers, alternative practitioners are closing. The owners of these stores do not receive unemployment benefits. The construction industry is also preparing for a crash in the market because of the turnaround in interest rates. So if our thesis is correct, we are seeing a crisis in the job market that doesn’t completely show up in the numbers.

It’s all been done before
Veterans of the financial market will remember: Something like this has happened before elsewhere. Namely, in the Spanish real estate market. When Madrid was admitted to the euro zone and the consumptive peseta was replaced by the euro, interest rates slid downward. What followed was a building boom and a gigantic speculative bubble. Especially since the signals of a housing shortage did not abate – many people simply could not find a rental apartment. Ergo, there was probably too little housing. But the reason was often different. Often, property owners refused to rent out their empty apartments because of strict laws, preferring to wait for higher prices to sell them – landlords are virtually expropriated in Spain. Thus, the vacancy rate grew and what followed was the construction crash.
The conclusion from all this: We ask ourselves whether we are not facing a recession, which is still fueled by high interest rates. And we will continue to 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

13.02.2023 – WTI and Brent are slowly inching upwards. The market is tentatively shaking off recession fears. But why do they have different prices? And what differences are there between the two grades? We shed light on the background.

The oil price has recently reacted bullishly to the announcement from Moscow that Russia will reduce output by 500,000 barrels per day or 5 per cent from next month. This is intended to counter Western sanctions. Just over a week ago, Goldman Sachs had already caused a stir with its forecast that a real supply crisis was to be expected for crude oil into the coming year. In addition, the new demand from China will peak this year due to the reopening of the Chinese market. The oil price will therefore rise above 100 dollars. Above you see the four-hour chart of WTI, below Brent.

Source: Bernstein Bank GmbH

Source: Bernstein Bank GmbH

As you can see, both grades are running in unison, but Brent is costing more. But why is that? Especially since, until just over a decade ago, WTI was more expensive than North Sea oil because it is of a slightly higher quality than its European counterpart.
Sulphur and heaviness
While there are many more types of oil than just these two, these are the most important. WTI is mainly important for the US market, Brent for Europe and international trade. Brent comes from the North Sea and is traded on the London commodity futures exchange ICE Futures, which is the former International Petroleum Exchange, clarified the “Handelsblatt”. According to this, Brent has a low sulphur content of around 0.37 percent and is described as light, sweet crude oil. We add: Sulphur destroys engines and is therefore undesirable. The “Handelsblatt” continued: So-called sour grades have a sulphur content of up to six percent. The American light oil WTI (West Texas Intermediate) is also considered sweet crude oil. According to “Manager Magazin”, it has a sulphur content of 0.24 percent.
Mobeen Tahir of the asset manager Wisdom Tree, explained on the website of the Munich Stock Exchange that oil is called “light” in the sense of the measurement of the American Petroleum Institute (API) if it has an API gravity of more than 10 – then it floats on water; in contrast, an API gravity of less than 10 causes the crude oil to sink. Such super-heavy oils are used, among other things, as bitumen in road construction.

Transport costs count
Further, Tahir correctly noted that there are “contrasting characteristics in terms of where the oil is produced, how it is stored and transported, and how the type of oil is traded in international markets.” We add: WTI is mainly consumed in the US. When the supply of fracked oil increases there – which has increasingly been the case for about a decade since the revolutionisation of production by cross-drilling and by exploiting oil shales – the price falls. At the same time, there are transport costs as factors: While Brent is loaded directly onto tankers from the drilling rigs, WTI must first be transported overland in pipelines, trains or trucks. Buyers therefore deduct these costs from the purchase price.

Storage capacities and immediate delivery
The fact that prices also depend heavily on the capacities in the oil tanks was demonstrated on 20 April 2020, when the price of WTI experienced a historic crash – even into negative territory – shortly before the expiry of the active WTI futures contract on the Nymex. Oil inventories in the US were full, especially at the main hub in Cushing, Oklahoma. Corona had choked off demand.
This in turn made gamblers extremely nervous who did not need oil for production at all. When the futures contract expires on the NYMEX New York Mercantile Exchange (NYMEX), the holder of the contract immediately receives delivery of the barrels of oil purchased. In the case of Brent, however, the procedure on the Intercontinental Exchange (ICE) is different: there, the holder of the futures contract does not have to take delivery of the underlying asset at expiry, the Wisdom Tree expert explained further. Ergo, Brent did not collapse as much as WTI.

Practical trading tips:

The trading hours for the two types of oil are as follows:

OIL: 02:05-23:00 (Mon-Thu), 02:05-22:00 (Friday).

OIL.WTI 00:05-23:00 (Mon-Thu), 00:05-22:00 (Friday)

Contract size: USD 10 x price level
We hope we have helped you a little with this background – 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

09.02.2023 – Unbelievable, but true: the DAX has just marked a twelve-month high. And it is not far from the all-time high. All this despite the Ukraine war, the threat of recession and rising interest rates. We take a look at the background.

A few hours ago, the time had come: On Thursday, the German benchmark index broke through the 15,600 mark – the highest level not only in this still young year, but also in twelve months. The all-time high at 16,290 is thus within reach. Here is the hourly chart of the DAX.

Source: Bernstein Bank GmbH

Initially, the firm U.S. futures provided a boost. Prices are also rising because of a short squeeze. Large addresses are running after the market, which has decided to see the world rosier again.

Hopes for the interest rate turnaround
Consumer prices in Germany, for example, climbed 8.7 percent in January compared to the same month last year. A fabulous value… However, most analysts had expected an increase of 8.9 percent. Admittedly, this enormous inflation is still enough to choke off consumption, because people have to keep household money together. The ongoing construction crash will also still keep the German economy busy.
But few people care about that at the moment, because now hopes are rising for an end to interest rate hikes by the European Central Bank. The cautionary voices are somewhat drowned out. NordLB, for example, just warned that the ECB will remain on a tightening course.

Ukraine war ticked off for now
Interestingly, the price barometer is now holding as high as before the Russian invasion of Ukraine. And this despite the fact that Germany, after months of dithering and the overdue departure of the incompetent defense minister, is now supplying Ukraine with battle tanks after all – and thus incurring the wrath of the Kremlin. The market is relaxed about this fact. Which suggests that hardly anyone believes in an escalation. This is an understandable reaction; after all, Russia has so far done little to counter Western intervention apart from threats.

It is not over yet
But what is not, may yet become. We certainly see smoldering risks: Vladimir Putin and his clique of siloviki urgently need a success. Otherwise they will be swept away. The imperialists in Moscow need to achieve respectable partial successes by the anniversary of the invasion on February 24, such as the complete occupation of the separatist areas of the dreamed-of Novorossia.
Conversely, however, if Ukraine takes the initiative again, the Putinists could escalate once more in their impending death throes. Perhaps even nuclear. Who knows, if Western tanks or even the first modern fighter jets from Poland and Great Britain arrive in Ukraine in time, anything is possible. But time is pressing: The Institute for the Study of War has just reported the start of a new Russian offensive between Kharkiv and Luhansk.

Conversely, the courses are likely to receive new impetus if the current Russian regime is forced to capitulate – who knows if the reluctant West will eventually send not just slivered and delayed weapons, but decisive aid on a grand scale. Be that as it may: We hope you are right on the stock market. 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

08.02.2023 – Sometimes it’s hard to be a chronicler. Especially when it comes to the Federal Reserve. Yesterday, Jerome Powell, the head of the Federal Reserve, was not expected to give a clear statement during an appearance before the Economic Club of Washington. From the cautious statements and the verbiage of analysts all over the world, however, this picture emerges: The tightening is not over, interest rates could continue to rise. However, things did not turn out as badly as some expected.

Once again, the market puzzled after word from the central bank. The financial service “Newsquawk” commented that Powell delivered news for both hawks and doves. Thus, he said that the disinflationary process has begun. However, only in the goods sector, which represents just 25 percent of the economy. In addition, he said, the Fed would have to do more if the jobs data indicated overheating or if inflation did not disappear. We add: Still, relief spread that Powell did not drastically correct his soft words of a week ago. Here in the picture the Dow Jones in the hourly chart – at last the hope of the bulls prevailed.

Source: Bernstein Bank GmbH

With regard to Friday’s U.S. labor market report, Powell admitted that he had not expected such a robust situation. In the Q&A session, Powell literally said: “We didn’t expect it to be this strong. (…) It kind of shows you why we think this is a process that will take a significant period of time.” And: the shortage of labor is probably not just temporary, but structural. The unemployment rate in January fell to 3.4 percent – the lowest level since May 1969.

Higher interest rates with a strong jobs market
So the Fed still has a significant path to lower inflation ahead, Powell further explained. He also said the central bank has no plans to abandon its 2 percent inflation target.
Michael Feroli, chief economist at JPMorgan, commented that Powell basically said the same thing he said after the rate decision about a week ago. Disinflation has begun, but the road is still long and more rate hikes are probably needed. Michael Gapen, chief economist at Bank of America, speculated that a continued strong labor market could mean that the federal funds rate could well rise above the rate the market currently expects, which is 5.0 to 5.25 percent. Key interest rates in the U.S. currently range from 4.5 to 4.75 percent. We add: However, many market players believe it won’t get much higher. And that much is already priced in.

It all depends on the data
Powell, by the way, pointed out that he also receives new data only one day before publication. We think: The market should therefore not hope that the Fed will pre-emptively announce what will happen in the long term. In other words, surprises are always possible. The only thing that is clear is that the Fed will react to the incoming economic figures. Powell literally said: “We’re going to react to the data. (…) So if we continue to get, for example, strong labor-market reports or higher inflation reports, it may well be the case that we have to do more and raise rates more than has been priced in.” Ergo, it is essential for traders and investors to keep an eye on real-time news. Bernstein Bank wishes you 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

07.02.2023 –  This is real power: Jerome Powell steps up to the microphone and the world holds its breath. At least, the financial world does. If the head of the Federal Reserve doesn’t play the hawk, rates are likely to fizzle upward. If he does, interest rate fears could return.

Today, things will get exciting again: stock market participants are hoping that Powell’s appearance at the Economic Club of Washington will provide further and more concrete indications of the future course of monetary policy. The question is whether the master of money takes the strong U.S. labor market report from Friday as an excuse to stress, again the topic Tightening. Many brokers in the market are already hoping for rate cuts. But the economy in the U.S. is humming, which should further fuel inflation. And that’s exactly what the Fed doesn’t want.
Risk of overheating
Indeed, Friday’s data point to economic overheating and a tightening of the wage-price spiral: the U.S. economy added 517,000 jobs in January, while analysts had expected only 188,000 new jobs. “TheStreet.com” commented that the data showed a strong rebound in the service sector. Very nicely you can see the nervousness in the hourly chart of the Dow Jones – the reaction to the respective events, first the Federal Reserve’s interest rate decision, then the labor market report – speak volumes.

Quelle: Bernstein Bank GmbH

The market’s caution is only understandable, judged Sinead Colton Grant, global head of investor solutions at BNY Mellon Wealth Management on CNBC yesterday. “I think the market is in a reassessment mode, and that’s why you see markets pull back a little bit, certainly post the jobs report, and we’re seeing a little bit more today.” Saxo Bank commented that the market had recently priced in only one more rate hike, but now the focus is shifting to whether there will be more.

Disinflation or tightening?
That is also the question today, as the oracle of Washington speaks of the topic of interest rate hikes. Will Powell continue to emphasize the theme of disinflation, i.e. a tightening of inflation? He did that last week at the press conference on the moderate rate hike. Or will Powell now focus again on even further tightening? It’s quite possible that he wants to take steam out of the stock market with this. We’ll know more around 12:40 p.m. Eastern Time. But be careful: It’s quite possible that some facts will leak into the market in advance.
As you can see, you won’t see anything for a while. As always, the fog billows over the trading floor around an important Fed meeting. Every half-sentence counts,professional and retail traders will dissect every single word carefully – they hang on Powell’s lips. If, contrary to the old Fed rule “don’t trade around the Fed”, you do want to enter the ring, we wish you every success. It remains to be noted that there are other influencing factors on Wall Street with the earning season. 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

02.02.2023 – Pent-up demand in Euroland: The European Central Bank (ECB) is raising key interest rates more sharply than the Federal Reserve in the USA. And unlike its colleagues in Washington, D.C., it continues to send hawkish signals. Ergo, the euro continues to recover against the dollar.

Yesterday was the day: The ECB raised key interest rates by 0.5 percentage points. With the fifth interest rate hike in a row, the monetary guardians want to fight inflation and suck capital back from the market. The European rate move is above the Fed’s previously announced 0.25 percent. And while the U.S. Federal Reserve just struck much softer tones than before, the ECB held out the prospect of another 0.5 percentage point rate hike for its March meeting. And thus the euro continues its recovery, here the daily chart.

Currently, the main refinancing rate thus stands at 3 percent. The deposit rate climbs to 2.5 percent; last year, this main rate was still negative. The overnight lending cost, the marginal lending rate, is picking up to 3.25 percent.

It continues like this
It is true that inflation in the euro zone had fallen to 8.5 percent in January as a result of the recent drop in energy prices. But it was still far from the 2 percent target. Moreover, core inflation – that is, inflation that is cleansed of the actual price drivers of energy and food – is at 5.2 percent. And that is the highest level since the introduction of the euro.
The ECB has now confirmed that there will be no change for the time being. ECB chief Christine Lagarde had already ruled out a departure from the course of interest rate hikes at the World Economic Forum in Davos. Italy, in particular, is again calling for lower interest rates in order to be able to borrow more cheaply. In any case, Goldman Sachs sees another interest rate hike in Euroland of 0.5 percentage points in March; but only 0.25 percentage points in May.

Unchanged signals
BNP Paribas Germany pointed out that nothing has changed in the choice of words on rate hikes at a steady pace. We mean: quite differently than with the Fed before. The Fed had been softer recently, after having found clear words and steps to fight inflation last fall, which pushed the euro below parity. Thus, the euro could continue its recovery for the time being if there is no change in the global investment situation. An escalation in the Ukraine war, for example, could quickly make the dollar – together with the Swiss franc – more expensive again as the number one flight currency. The conclusion from all this is that if nothing changes in the current monetary policy trend, the euro is likely to continue to catch up with the greenback. 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