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06.01.2023 – Sometimes things turn out quite differently than expected. Perhaps also this year on the financial market. Two professionals at the investment firm Blackstone have their thoughts on the matter.

We looked at the predictions of Byron R. Wien, who is the Vice Chairman and Chief Investment Strategist in Private Wealth Solutions at Blackstone. If he’s right, we think the Nasdaq 100 will be in focus again this year, here’s the daily chart.

Source: Bernstein Bank GmbH

Wien started the forecasting tradition in 1986 at Morgan Stanley, when he was chief U.S. investment strategist there. He joined Blackstone in 2009 and has been joined by Joe Zidle on Ten Surprises since 2018. To the extent that Blackstone experts did not comment on the market implications, we said.

1. Several candidates are running for president in both U.S. parties. We think: no impact on the stock market. Unless an extremely radical candidate wins, which is unlikely.

2. the Federal Reserve says goodbye to a “pivot”. In other words: the expected turnaround in interest rates does not come. Real interest rates turn positive again. Impact on the stock market according to our opinion: Bearish. This would be a nasty surprise, especially for high-tech stocks.

The Fed overdoes the tightening and pulls the economy into a mild recession. Result: See point 2).

4. despite all this, the market gets used to the surprise and puts aside the fear. Turning point in the middle of the year – comparable to 2009, says Vienna. We see this as a consequence for investors: Catch-up in beaten-down stocks, especially growth stocks.

5 Modern Monetary Theory is discredited. Our verdict: Too unspecific for a market assessment. What is probably meant is that there is no new government money in crises.

6 The Fed remains more hawkish than other central banks, the dollar holds firmer than other currencies, such as the yen and the euro. As a result, according to Vienna, opportunity for investors with dollar holdings to invest in Japanese and European assets.

7. China is working hard to reach its growth target of 5.5 percent and even harder to repair trade relations with the West. With positive consequences for assets and commodities.

8. the USA becomes not only the largest oil producer, but also the most benevolent supplier. Result according to Blackstone: oil prices fall first in response to a global recession. But also because of increased fracking and higher production in Middle East and Venezuela. West Texas Intermediate slips to $50 a barrel – but could recover to $100 after 2023 as global economy picks up.

9. war in Ukraine rages on through first half of 2023 until attrition forces both sides to negotiate and divide territories. Our 50 Cents: Bullish, breathing a sigh of relief on the stock markets.

10. Elon Musk cleans up Twitter and turns it around by the end of the year. We think: Possible relisting with a potential stock market superstar.

The look back
In fact, their hit rate last year was rather positive. The pros were correct in announcing that rising interest rates were slowing down the S&P 500. And that inflation was stubbornly hanging on. As a result, the U.S. bond market would react with rising yields. Likewise, the augurs had correctly predicted that the world would shrug off the Corona panic. And that most countries would return to nuclear power. 5 correct.
Both were wrong in predicting that China would clean up its broken real estate market. The same applies to the prediction of a 20 percent gold rally. Nor did the radical, top-down turnaround in the USA toward ecologically and ethically correct business practices materialize. 3 Misguided forecasts.
Vienna was partly right in predicting that oil would rise above 100 dollars. Global demand concerns torpedoed this development. The prediction that China would establish itself as an aggressive power in the lithium market was also only partly correct – the People’s Republic is the dominant producer, but so far it has not used its market power for boycotts. 2 times undecided.
So you see, even highly paid professionals are not always right. But often – which you should keep in mind for your trades and investments. Whether long or short – 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

03.01.2023 – It’s all been done before: The world is threatened with recession. Nevertheless, the most important central banks are raising interest rates. The probable result: economic standstill, insolvencies, bad loans, tottering banks. Especially in Southern Europe.

As you will read in a moment, it is worthwhile for pessimists to take a look at the gold price. Because if our experts are right, the precious metal could soon be in demand again as a safe haven in a new financial crisis. Here is the weekly chart. It is indeed astonishing that gold recently became more expensive despite higher interest rates.

Source: Bernstein Bank GmbH

Alasdair Macleod of GoldMoney.com, has already spotted signs of a global banking crisis. Which is nothing out of the ordinary for a gold bull and enemy of paper money, but may be true nonetheless.

Banking crisis ahead
Macleod recently wrote this about his basic assumption: “there can only be one conclusion about the future course of interest rates. The trend has turned and after an initial rise have paused. This softening of the interest rate outlook will turn out to be temporary, to be followed by a continuing trend of yet higher rates, reflecting more aggressive currency debasement, awkwardly coinciding with a deepening slump in economic activity.”
And further: “Bank balance sheets are as overleveraged as they have ever been particularly in Europe and Japan. And with rising interest rates ensuring a bear market in financial assets and widespread exposure to malinvestments leading to non-performing loans, banker sentiment is swinging firmly toward risk containment.”

Liquidity drying up
The expert sees liquidity drying up, especially in the foreign exchange market, with derivatives such as swaps and forwards not realistically showing up on bank balance sheets. We add: If true, an extremely dangerous crisis is building under the radar. Further, Macleod judged, “As with all credit contractions, when and where the system will break is virtually impossible to predict. But when it happens, the crisis will be sudden. We must hope that the year-end financial window-dressing season passes without incident.”

Target2 again and again
And another interesting fact on the subject of the imminent implosion of the banks. Like a cork that a fool tries to push under water, one topic keeps popping up: The European Central Bank’s Target2 balances. The damning verdict from Mike Shedlock of MishTalk.com: capital flight is a key building block in this system. And further: “The ECB’s imbalance is related to its bond manipulation schemes to keep interest rates down in Italy, Spain, Greece, and the peripheral Eurozone countries in general.”
The background: solvent countries are buying bonds of their cash-strapped neighbors that can’t get their economies under control. For example, according to MishTalk, Germany’s most recent surplus was 1.2 trillion euros, and Luxembourg is also a big spender, with 303 billion. According to the report, the big deficits are in Italy (670 billion euros), Spain (484), the ECB itself (339) and Greece with 106 billion euros.
Shedlock further commented, “It’s increasing likely that corporations and wealthy individuals do not trust Italian banks, nor should they.” Which brings us to one of the likely flashpoints in a possible coming crisis: Italy. Our conclusion: The argumentation of the bears is quite stringent. So keep an eye on real-time news from the banking sector. And of course the gold chart.

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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

01.01.2023 – One of the most important events in the financial market in the new year is likely to be the end of the tightening. Of course, the world is primarily looking at the Federal Reserve. However, it has recently made it clear that interest rates will remain “higher for longer”. Nevertheless, the investment community is waiting for the “pivot” – the turning point in monetary policy.

Everything remains unclear. Those betting on an early end to tightening could be disappointed. After all, at around 7 percent, the U.S. inflation rate is still miles away from the Fed’s target of 2 percent. High-tech stocks are particularly dependent on interest rate developments; here is a look at the weekly chart of the Nasdaq 100.

Source: Bernstein Bank GmbH

Presumably, the Fed will verbally prepare its pivot if it really comes. So if statements from Fed officials pile up announcing the end of rate hikes, prices should rally strongly. The same applies if the Fed sets its target for inflation upward, for example to 3 percent.

The R-word
On the bear side, one factor has not yet been properly priced in. Namely, the fact that there could well be a hard landing in the economy, i.e. a recession. “It’s rare to impossible for the Fed to navigate a soft landing. So, preparing for the worst regarding your emotional response to market volatility is best,” judged Richard Rosso of RealInvestmentAdvice.com. He recommended swimming against the tide: “Next year, we may find our emotions in the basement of capitulation and then discouragement. At these times, we should commit capital to stocks (just when we don’t want to).”

By the way, even a pivot could become a bull trap. For example, James Steven Chanos, founder of investment advisor Kynikos Associates in New York City, recently pointed out this factlet on Twitter, “…the Fed ‘pivoted’ a full year before Lehman…”. Our verdict: Of course the Fed will move the market again. And high-tech stocks are likely to react particularly strongly – because these stocks are often still quite young startups that live off loans. Ergo, the interest rate issue has a particularly strong impact here. So pay attention to the real-time news: In the back and forth between statements from the central bank and the Consumer Price Index, a trend should be discernible. Bernstein Bank wishes you successful trades and investments!

__________________________________________________________________________________________

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

20.12.2022 – Big surprise from the Bank of Japan: Tokyo has made an unexpected change in strategy. The central bank wants to loosen the range in which long-term bond yields move. The market sees this as a first step towards tightening the monetary reins. The yen is gaining significantly.

We could pick USDJPY as the chart for you, but have chosen AUDJPY – because the reaction looks similarly drastic. Here is the hourly chart.

Source: Bernstein Bank GmbH

This is what happened: Until then, the BoJ had always emphasised that it was the only major central bank in the world to maintain its strategy of extremely loose monetary policy to support domestic demand.
Yield cap rises to 0.5 per cent
And now the turnaround. The central bank is sticking to its programme of keeping borrowing costs down. But then the sticking point: the yields of ten-year Japanese government bonds are to be allowed to fluctuate between minus 0.5 percent and plus 0.5 percent in future. The previous range was minus 0.25 per cent and plus 0.25 per cent.
This translates as: The Japanese central bank will now allow a stronger increase in long-term interest rates. The financial blog ZeroHedge commented, “Thus, realistically this is a tightening policy move allowing long-rates to rise from 25bps (the prior YCC limit) to 50bps (the current YCC limit).”
Premature turnaround
Bank of Japan Governor Haruhiko Kuroda caught the financial markets on the wrong foot. Most forex experts had expected a correction of the enormously expansive monetary policy only in spring, because Kuroda’s successor, who has not yet been appointed, will take office then. We are curious to see whether and how the BoJ can contain the interest rate rise at 0.5 per cent. In addition, the question arises whether the currency market will not quickly correct the current violent reaction. 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

19.12.2022 – Great cinema on Twitter: Group CEO Elon Musk puts his departure to the vote. The drama could also have consequences for Tesla shares. It’s pretty bombed out, and the company could use a little leadership again.

It’s a topsy-turvy world at Tesla: In the new green age, the market for e-cars is seen as the business of the future. And yet the stock has literally bled dry. There is nothing left of the former peak storm, and the stock has corrected by around 60 percent. Since its all-time high in November 2021, the group has lost around 700 billion dollars in value. For the first time since November 2020, the market cap recently slipped below 500 billion dollars. Here is the daily chart.

Source: Bernstein Bank GmbH

At the same time, quite renowned analysts believe in the title. RBC Capital, for example, has the stock at “Outperform” and Goldman Sachs at “Buy”.

A burden on the leg

The reason for the bear market also lies in the takeover battle for Twitter: Elon Musk needs money, he has repeatedly sold Tesla shares. Most recently, between November 12 and 14, around 22 million shares worth 3.6 billion dollars. In addition, concerns that rising interest rates will choke off consumer demand for credit and thus Tesla sales are weighing heavily. There is also the question of how the market in China will develop and whether it will emerge from the Corona dip.

And so now a new act at Twitter: Elon Musk is letting users vote on whether he should continue to lead the company. “Should I step down as head of Twitter? I will abide by the results of this poll,” he wrote on Twitter on Monday night. Users can vote “yes” or “no”; the tendency last was to leave. By the time you read these lines, you may know more.

Culture war

Musk is waging a defensive battle on Twitter against his own woke management, most of whom he fired. For the moral warriors, allowing Islamists to rant on Twitter was not a problem; Donald Trump, on the other hand, was problematic. And then Musk spoke out in favor of Republicans in the midterms – an unheard of occurrence in Silicon Valley. Most recently, Musk blocked the Twitter accounts of left-wing journalists who had reported on the location of his private jet – he saw this doxxing as an invitation to attack.

We think: Maybe an exit from Twitter wouldn’t be so bad for Tesla’s stock – then Musk could leave the fight against the culture chic to someone else and fully concentrate on the car business. In any case, an exit would perhaps be the signal that stock market players are waiting for to get back into Tesla. We are curious to see how the matter continues – 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

16.12.2022 – Feeding frenzy for the bears: Several central banks have raised interest rates. And they did so in the midst of a recession that can no longer be averted. Signals of an end to the tightening were nowhere to be seen. Then there is the issue of option expiration dates. We take a look at the background.

It’s all downhill – especially the interest rate-sensitive high-tech stocks got a big nose-dive. Here the Nasdaq 100 in the hourly chart. The pretty peak three days ago on the inflation figures turned out to be a bull trap.

Source: Bernstein Bank GmbH

The conclusion of the past few days: disappointed hopes among the bulls. Not only the Federal Reserve has raised interest rates. But also the European Central Bank (ECB), the Bank of England and the Swiss National Bank. So there’s a lot of capital being sucked out of the market.

Misled
A special factor in the sell-off is the disappointment with the Fed: After the lower November inflation rate in the U.S. of 7.1 percent (after 9.1 percent in June), many stock market players had expected that the central bank might send out a signal as to when its interest rate hikes would come to an end. Particularly as commodity prices have recently fallen sharply again. But nothing came. After Fed Chairman Jerome Powell’s statement, dejection prevailed. As expected, the Fed also raised interest rates by 50 basis points. However, there was no indication of an end to the tightening.

Contradictions of the Fed
U.S. Chief Economist Ellen Zentner of Morgan Stanley judged that the Fed’s message was “inconsistent.” After all, “The December FOMC decision included the delivery of a 50bp hike to a range of 4.25-4.50%, and a decidedly hawkish Summary of Economic Projections (SEP). The Committee has been frustrated by the lack of progress toward its goals and now sees the need for even more restrictive policy in order to sufficiently weaken the economy, labor market, and inflation.”
Further, the Fed had refrained from retracting the “ongoing increases” statement from earlier meetings. And suddenly the situation had become enormously “hawkish” again. The expert said: “The Committee still sees “ongoing increases” as appropriate, though comments from Chair Powell appeared open to another step down in pace to 25bp at the February meeting – in line with our expectation.” Fund company DWS judged that this would indicate a normalization of monetary policy only for 2024 and beyond.

QT in Euroland and options
The ECB’s announcement that it would reduce its bond holdings from March also caused prices to fall on the bond market. This means that maturing bonds will no longer be replaced, so the ECB is withdrawing liquidity from the market. ECB President Christine Lagarde also raised eyebrows. According to her, interest rates would have to continue to rise “significantly” in order to bring inflation rates back close to the targeted 2 percent. The Landesbank Baden-Württemberg (LBBW) commented that this would probably mean at least two percent.

Landesbank Baden-Württemberg (LBBW) commented that this would probably mean at least two more interest rate steps of 50 basis points each.
Our conclusion: Anyone expecting signals of a looser monetary policy was disappointed. And then there is the options market. According to Bloomberg, options worth about $4 trillion expire this Friday. That could exacerbate turbulence in the stock 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

14.12.2022 – Pre-Christmas presents for the bulls on the stock market. Part one is behind us: US inflation turned out a little cooler than expected. Part two may follow shortly: The Federal Reserve is in session and, as always, much, if not all, depends on Fed Chairman Jerome Powell’s wording.

As always, the following also applies: Don’t trade around the Fed. Those who do not want to be stopped out in wild swings should hold back today. A small foretaste of the market reaction to important events was provided by the Nasdaq 100, which reacted to the Consumer Price Index. The picture shows the hourly chart. The shares went up at first, then they went down. On the trading floor it could be heard that many brokers preferred to take profits before today’s Fed event.

Source: Bernstein Bank GmbH

In view of the current economic situation, with the risk of a recession still smouldering, many also see valuations as being pretty much exhausted. And we are still at an inflation rate of 7.1 per cent – the consensus was 7.3 per cent, the previous figure was 7.7 per cent. That’s a long way from the Fed’s target of 2.0 per cent.
Waiting for normalisation
Oxford Economics stated: “it will take time for price trends to normalise, but 2023 is expected to bring healthier inflation readings, and as such look for goods inflation to retreat as goods demand eases and supply-chain conditions normalise.” Services inflation will be more stubborn, but it too will diminish – especially as rental inflation cools. More encouraging inflation dynamics will allow the Fed to end its rate hikes early next year.”
The market sees 50 basis points
So it’s the Fed today. Most forecasters believe in a rate hike of 50 basis points today, at least that is the result of a Reuters poll of 84 analysts. Oxford Eco also sees a 50bps rate move now, then another 25bps in February 2023. Expectations for another 50bps move after that are melting away. JPMorgan expects the rate hike cycle to end in the second quarter of 2023.
The majority of the stock market now expects a Fed funds rate of 4.75 to 5.00 per cent as the terminal rate – i.e. the end of the line for interest rates. So there is still a little room for improvement, as the US key interest rate is currently quoted at 3.75 to 4.00 per cent. Bernstein Bank is looking forward to the Fed’s statements – we wish you successful trades and investments!

__________________________________________________________________________________________

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice. CFDs are complex instruments and are associated with the high risk of losing money quickly because of the leverage effect. 68% of retail investor accounts lose money trading CFD with this provider. You should consider whether you understand how CFD work and whether you can afford to take the high risk of losing your money.7

13.12.2022 – Gradually, the stock market is turning towards Christmas. And hardly anyone can still recognize market-moving news. The prices are bobbing along – but fortunately, leveraged traders can earn good money even on the smallest moves. But wait: The CPI is coming up. And then there are the central banks.

Currently not much happening on the trading floor. Jim Reid of Deutsche Bank summed it up like this: If he were to return to the Christmas spirit of years past, the week would go like this: “this week would be about a client Xmas lunch Monday, client Xmas lunch Tuesday, team Xmas drinks Wednesday, firmwide office party on Thursday and mince pies on the trading floor on Friday.” Mince pies are small Christmas cakes in the United Kingdom.

View of the CPI
But far from calm, consumer prices in the U.S. are due exactly today and several key interest rate decisions around the world starting tomorrow. A flattening of U.S. inflation could fuel hopes for an end to tightening by the Federal Reserve. For the Consumer Price Index, the consensus of most analysts is now 7.3 percent. JPMorgan’s trading desk even sees a 10 percent jump in the big SPX if inflation cools particularly sharply. We look forward to seeing how the S&P 500 moves, pictured on the daily chart.

Quelle: Bernstein Bank GmbH

The Fed meets again on Wednesday. And on Thursday follow The European Central Bank and the Bank of England. Most traders now assume, both in the U.S. and in Europe, interest rates will be raised only 50 basis points. Meanwhile, the first even expect for February only a rate step of 25 basis points.
As always, the tone of the central banks will be important. If they confirm hopes of a “pivot” – i.e. a turnaround in interest rate policy, or rather: a gradual exit from the hike, then the stock market could celebrate.

Waiting for the Fed’s reaction
Then there’s U.S. Treasury Secretary Janet Yellen. She just said in an interview with 60 Minutes that there is definitely a risk of recession, but that the banking sector is robust. She also said that inflation would fall sharply in the coming year, as can already be seen in the cost of gasoline and transportation, according to CBS. Presumably she already knows more. We are curious how the data will turn out – 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

09.12.2022 – From a 12-month perspective, the oil price has slipped into negative territory. The oil price has been hitting new lows for the year non-stop anyway. The reason: the world is probably falling into recession after all.

The experts at Citigroup, at any rate, definitely see a global recession. WTI could therefore plunge to around 65 dollars by the end of this year and even to 45 dollars by the end of 2023. This is because oil consumption in the major economies in the USA, China and Europe could fall significantly over many months. Historically, oil prices have always fallen to about the level of production costs during global recessions, the statement added. Here is the daily chart of WTI.

Source: Bernstein Bank GmbH

Vishnu Varathan, head of Asia Economics and Strategy at Mizuho Bank, also told Bloomberg, “Oil has been dragged lower by broader recession fears that accompany global monetary policy tightening.”

Keystone Pipeline
That leaves one actually bullish factor that has been briefly supportive in the market so far. The loss of about 600,000 barrels per day from the Keystone pipeline should actually pull the market up. At least that stopped the downtrend, judged Ed Moya, senior market analyst at Oanda Corp. We interject: you can imagine what will happen once the news comes in on the realtime news that the pipeline is pumping at full capacity again. Operator TC Energy Corp. shut down the pipeline after a leak in Nebraska.

China’s opening
Another factor that is actually bullish is China opening up and moving away from drastic Corona measures. Meanwhile, the White House left open whether or not the Strategic Petroleum Reserve will now be replenished soon. Meanwhile, the price cap on Russian oil has no immediate effect, according to oilprice.com – hopes of a bullish impact have faded. Traders had therefore begun to sell.
Congestion on the Bosphorus
In addition, the oil market is watching developments on the Bosphorus, where 19 oil tankers were recently jammed. According to oilprice.com, Turkey has changed its insurance rules, traders are confused. And so now 20 million barrels from Kazakhstan were cruising around in Turkish waters. We are curious whether the oil price turns and keep you up to date!

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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

07.12.2022 – An outrageous thesis from Switzerland: Star analyst Zoltan Pozsar from Credit Suisse believes that a gold price of 3,600 dollars is possible. And that, in his opinion, has to do with petroleum.

The expert, who believes that commodities will dictate the new world order in the future, draws a wide arc from oil to gold, which you can see here in the daily chart.

Source: Bernstein Bank GmbH

For example, Pozsar wonders what will happen once the U.S. has siphoned off its Strategic Petroleum Reserve (SPR). Specifically, “Now that SPR releases are over, production cuts by OPEC+, re-routing [of Russian crude oil from Europe to Asia], and price caps (not to mention the risk of China re-opening due to protests), the question for the U.S., becomes what to do with the SPR?” he says. Release more? Refill?”

U.S. oil reserve depleted
In fact, the SPR has reached its lowest level since 1984. The U.S. government had tapped the reserves to fight inflation. In September, U.S. President Joe Biden had announced that the reserve would be replenished once oil prices fell below $80. In October, the White House lowered the advised purchase price – now it said it would be replenished at a price of $67 to $72 per barrel of WTI. Pozsar considers this target unrealistic, as OPEC+ has not expanded its capacity.
Then the expert pointed to the factor of Russia – the country already sells its oil at a discount of 30 dollars to Brent. Russia, he said, was thus selling at $60 – about the price of a gram of gold.

Russia’s possible gold move
Since Moscow has no interest in India, for example, buying oil cheaply in Russia and then selling it on to the U.S. at a high price in order to fill the SPR salt domes on the U.S. Gulf Coast, Russia could come up with the idea of having its oil paid for in gold in the future.
If Russia then countered the West’s price cap with a loss-leader offer, it would become interesting for gold. Specifically: “But if the West is looking for a bargain, Russia can give one the West can’t refuse: ‘a gram for more’. If Russia countered the price peg of $60 with offering two barrels of oil at the peg for a gram of gold, gold prices double.”
A win-win situation for Russia: “And most important, gold going from $1,800 to close to $3,600 would increase the value of Russia’s gold reserves and its gold output at home and in a range of countries in Africa. Crazy? Yes. Improbable? No.”
The analyst’s conclusion from all this is that a link of oil and gold would bring back the precious metal as a settlement medium and dramatically increase its intrinsic value. We are curious to see if this price link will actually happen – and wish 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