News

02.12.2022 – Has Wall Street shifted up a gear? The ongoing bull market almost looks like it. Or is the year-end rally simply already underway? And a lot of capital is flowing into the market as many expect things to normalise. As always, a lot depends for traders and investors on the US economy and the Federal Reserve’s possible reaction. Today, Friday, important jobs data arrive in this regard.

In view of the current general weather situation, one can already feel queasy when looking at the Dow Jones. The daily chart clearly shows the euphoria of the past few days – the gap speaks volumes. And the index has easily left behind both the 50-day and the 200-day moving average (above).

Source: Bernstein Bank GmbH

Yet the situation is not all that rosy. Corona seems to be over, but as the example of China shows, the issue has by no means disappeared. A recession is still possible. So the old economy is taking a big leap of faith from investors.

Soft tones from the Fed
Above all, the nice interim rally on Wednesday stands out. It was triggered by Jerome Powell. Let’s let an expert from an investment boutique have his say again: Kenny Polcari, Managing Partner at Kace Capital Advisors and Chief Market Strategist at SlateStone Wealth, judged that Powell had communicated that the speed of the rate hike would slow down and that there would only be a 50 basis point increase in the key interest rate in December.
Especially important: Powell and his colleagues did not want to tighten the screw too much. The danger of this “overtightening” had repeatedly put the brakes on the buying mood in recent months. Now the brake seems to have been removed. Moreover, Powell said that some sectors of the economy were already reacting to the past six interest rate hikes – especially the real estate market and rents. The Fed chief’s appearance before the Hutchins Center on Fiscal and Monetary Policy has attracted special attention because it was the last public speaking engagement before the blackout period to the December 13-14 Fed meeting.

New jobs data

The bulls could get new fodder from today’s jobs data. By the time you read this, you may already know more about the Nonfarm Payrolls for November. If the labour market continues to boom, the Fed would have to counteract a wage-price spiral with higher interest rates. However, Powell’s recent words tend to suggest that employment is flagging and that wages are not overheating. We are intrigued.
John Flood, trader at Goldman Sachs, judged that the market is still stuck in a “bad is good” mood. He summed up the possible reaction to the November numbers for the SPX like this – where we assume a similar reaction in the Dow:

– >261k (aka higher than last print) S&P down at least 2%.
– 175k – 261k: S&P down 1 – 2%
– 125k – 175k: S&P up 50bps – 1%
– 0 – 125k: S&P up 1 – 2%
– <0: S&P down 1 – 2% on R word fears
Our conclusion: On the one hand, the market is wavering between hopes of an easing of inflation – ergo a scaling back of tightening by the Fed. And on the other hand, fears of a recession. 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

30.11.2022 – Wall Street and the world’s stock markets have not yet reacted well to the events in China. But that could soon be over. Apple, at least, is already feeling the consequences of the drastic zero-covid policy.

A small harbinger for possible upheavals due to the unrest in China was recently the Apple share. It has not followed the rise in the SPX since October, as you can see in the daily chart.

Source: Bernstein Bank GmbH

In the past few days, Apple has had to watch a real riot at its factory in Zhengzhou. Newly hired workers complained that management had not kept promises. The campus has been plagued for weeks by repeated lockdowns and unrest among workers. Thousands left the factory in October because food became scarce. They were replaced by new employees who were now rebelling against wage and quarantine practices.

Turmoil at Foxconn
Meanwhile, protests at Apple supplier Foxconn are having a massive impact on Apple’s iPhone business: Apparently, six million fewer iPhone Pro models will be produced in 2022 than planned. For Apple, a lot now depends on how quickly the Taiwanese factory operator Foxconn gets the employees back into production after the violent protests. And on the other hand, there is the question of when Apple will be able to outsource production, for example to India.

Daniel Ives, managing director at Wedbush Securities, told CNN Business, “Every week of this shutdown and unrest we estimate is costing Apple roughly $1 billion a week in lost iPhone sales. Now roughly 5% of iPhone 14 sales are likely off the table due to these brutal shutdowns in China.” Maybe Apple is just the first to catch the Chinese disease.

Kryptonite from China

Meanwhile, unrest in the People’s Republic has spread – many Chinese are fed up with the zero-covid policy. Even President Xi Jinping has been openly criticized in recent days. As usual, the Communists are reacting with draconian measures.

The first critical voices can be heard outside the mainstream. Thus, the rather unknown warned against the burgeoning uncertainty – it is kryptonite for the bull market, which was recently so seemingly invincible. Chinese authorities could enforce their covid measures with drastic new lockdowns, which could threaten production and global trade. Specifically, they said, “Covid lockdowns have the potential to topple various supply-chain dominoes, and by weakening economic activity, they also have the potential to topple dominoes in the populace’s understanding of the social contract between citizens and the state.” In other words, breaking the silent Chinese social contract – prosperity in exchange for keeping still – could have nasty political and economic consequences.

Our conclusion: a new Corona wave from China plus an uprising in the Middle Kingdom could trigger a small sell-off wave for world stock markets. So keep an eye on the real-time news – Bernstein Bank wishes successful trades and investments!

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

28.11.2022 – After the FTX debacle, the entire crypto industry is being shaken up. But will we soon see a resurgence after the crash? We let experts have their say.

The daily chart of BTCUSD currently looks rather depressing from the bulls’ point of view. But what will happen next?

Source: Bernstein Bank GmbH

Kenneth Rogoff, former chief economist at the International Monetary Fund and now a professor at Harvard, just judged that the collapse of Sam Bankman-Fried’s $32 billion crypto empire FTX will go down in history as one of the greatest financial debacles.

Not the last scandal
The loss of confidence will, of course, result in a continued plunge in the price of the underlying, especially if regulators now turn their attention to the various exchanges in a more stringent manner. However, a price adjustment is not the end of the world. The most likely case would be better regulation of centralized trading venues. Which, in turn, could restore confidence and result in higher crypto prices. Still, the bottom line for Rogoff is that FTX won’t be the last scandal.

“Bitcoin is not going away”
Star investor Mike Novogratz spread hope on CNBC: “We certainly do have a crisis of confidence in the industry and we’re not out of the woods yet. FTX was a major player so it’s going to take a few weeks for people to even get their balance back. Bitcoin’s not going away.” However, he predicted a long, rocky road ahead for the market, saying, “I don’t think it’s going to be a ‘V’ recovery, it’s going to be a grind out of gaining trust.”

“There will be pain”
Meanwhile, Binance CEO Changpeng “CZ” Zhao gave details of his planned crypto rescue fund. He said he wants to raise at least $1 billion, and the fund could also grow to $2 billion; its mission: “to help projects who are otherwise strong, but in a liquidity crisis.” And further, he explained recently on the sidelines of Abu Dhabi Finance Week, “There are still players with very strong financials and we should band together to try to help the projects in need, especially if it’s only financial need.” And to Bloomberg, CZ said, “There will be pain whenever one player goes down.”
Our conclusion from all this: apparently, key industry figures see a possible learning effect and a restoration of confidence if workable regulation is put in place. But the way out of the deep valley is likely to take time. We are curious to see what happens next – and wish you successful trades and investments!

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

25.11.2022 – The round has to go into the square and before the game is after the game. Every four years, the country is buzzing with platitudes about the World Cup. And there is also the question of whether the soccer match has an impact on the stock market. In fact, there are one or two experts who claim that it does. Especially in the case of disappointments. Which brings the DAX into focus for us.

If what you read below is true, then the DAX is facing a major short opportunity. Because after the 0:12 against Spain on Sunday, the frustration should be discharged quite violently. Which would then perhaps end the upward trend in the daily chart. But joking aside: In fact, according to experts, there are good reasons for traders to keep an eye on the World Cup.

Source: Bernstein Bank GmbH

For example, Professor Alex Edmans, once of the Wharton School, University of Pennsylvania, now of the London Business School, concluded in his paper “Sport Sentiment and Stock Returns” after researching 39 states that there is indeed a correlation between asset prices and soccer.

World Cup exit sinks prices
While the paper dates from 2007, Mr. Edmans teaches at top addresses, so we shouldn’t ignore him. Specifically, it says: “elimination from a major international soccer tournament is associated with a next-day return on the national stock market index that is 38 basis points lower than average.” In other words, the frustration continues on the stock market. To be sure, his research doesn’t give anything for the bulls: “We find no evidence of a corresponding effect after wins for any of the sports that we study.”
Small exchanges with local stocks suffer
But for the bears, he does have fodder: “we are able to reject the hypothesis that the loss effect after soccer games is driven by economic factors such as reduced productivity or lost revenues.” And then he gets even more specific: “the effect is stronger in small stocks, which other studies find are disproportionately held by local investors and more strongly affected by sentiment. Overall, our interpretation of the evidence is that the loss effect is caused by a change in investor mood.”

Radio silence on games
The Straits Times, unfortunately without citing sources, adds that in the first month after a World Cup final, seven of nine loser’s stock markets performed 1.4 percent below the global average. Over the next two months, the bear market continued, with a relative loss of 5.6 percent. What’s more, he said, vola is falling: in one case, the number of trades on the Chilean stock market fell 83 percent during a World Cup match. In fact, Latin American stock markets in particular reacted to the games. The plunge in trades starts before the match and lasts up to 45 minutes after the match, he said. Further, there would be a dip in trades of 5 percent on a goal. In general, relevant news for the stock market during soccer would be processed much later than normal.

Even a minus in the SPX
Even for the U.S., Israeli researchers Guy Kaplanski and Haim Levy found a correlation in 2008. In their study “Exploitable Predictable Irrationality: The FIFA World Cup Effect on the U.S. Stock Market,” they analyzed data from 1950 to 2006. According to the study, the S&P 500 Composite Index recorded a return of minus 2 percent during the tournament. We think this is astonishing, given that the disinterest in soccer is traditionally even greater in the U.S. than it is here in Germany.
Our conclusion: Psychology is at work on the trading floor during the World Cup. And in the event of disappointment, selling pressure is on the cards. Brokers are probably not mentally in a position to deal with shares for the time being. And that’s why the inclination to buy dries up, especially in small stock markets with strong national investment. Now that’s a truly concrete tip for traders and investors: Keep an eye on equity markets where teams are disappointing in the World Cup. However, the big factors remain: Liquidity and investment pressure in funds, monetary policy and inflation/recession. 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

24.11.2022 – A small gift for Thanksgiving: the Federal Reserve shows itself to be tame. Although nothing is usually given away on this feast. The bulls gratefully accept the gift. But one expert fears that the end of the party is approaching. And that it is better to dance at the exit.

If we look at the weekly chart in the S&P 500, we can see that the moment of truth is coming soon. Namely, when the index reaches the red trend line. Rebound or breakthrough? We will see.

Source: Bernstein Bank GmbH

The blog “The Market Ear” advised its readers to “Keep dancing…but closer to the exit”. Meaning: let the profits run, but be prepared for a setback. And if necessary, quickly leave the room if it gets queasy. Specifically, the experts just wrote that the current setup is very much like the “Summer Squeeze”.

Trend reversal at 4,100?
Now the people of “The Market Ear” are waiting for the SPX to reach the 200-day average and then the “classical overshoot that forced people in” would set in. And the blog also called the signal to exit very specific: “If we are to “replicate” the squeeze move from summer lows to highs, then the overshoot would play out perfectly (3500*17% = around 4100).”
The authors further referred to an analysis by Binky Chadha of Deutsche Bank. The team was already bullish for a bear market rally because of money flows on Wall Street and stock buybacks in early October, they said. It’s not yet time to ditch the buying bias, he said: “Positioning returning to neutral should see the S&P 500 up by 6 to 7%.”

Pleased with the Fed
Meanwhile, there was boost from the Federal Reserve. The market took the Federal Open Market Committee (FOMC) minutes as mostly bullish. According to the FOMC Minutes, a majority of decision-makers at the central bank believe a slower pace of rate hikes is appropriate soon. This would allow the Fed to better monitor the effect of its actions. Chris Low of FHN Financial commented, “The two big headlines are most Fed officials favor slower tightening pace soon and various Fed officials see higher peak rates. Both of these confirm post-meeting press conference guidance from Powell.” And Steve Sosnick, chief strategist at Interactive Brokers, explained, “With pivot off the table, and with no pause coming yet, slower pacing seems to be enough for stock traders now.” Where the “pivot” refers to the turnaround.

Our conclusion: We are curious whether and how long the party will continue. 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

22.11.2022 – Unusual activity in the oil market: according to a press report, Saudi Arabia is trying to patch up its relationship with the United States. And an increase in production is allegedly imminent. The sheikhs are waving it off. But we are curious to see what happens next.

Violent ups and downs in WTI. The blog “The Market Ear” commented on the chart analysis: “Oil is putting in one of the biggest hammer candles we have seen in a long time. As we wrote earlier today: ‘$75 is the must hold level…’ And also, “Last time we had a similar hammer candle (July), although it was less impressive, crude rallied 8 bucks from the candle closing day.” When switching to the four-hour chart, the situation becomes particularly clear. There is thus due movement in the oil market.

What had happened: Initially, the stronger dollar and new Corona concerns about China had pulled oil prices down.

Allegedly higher oil production
The market saw a real sell-off when the “Wall Street Journal”, citing unnamed sources, reported that Saudi Arabia and other OPEC members were planning to increase production. According to the report, an increase in production of up to 500,000 barrels per day will be discussed at the cartel’s next meeting on December 04. The paper speculated that the move could ease tensions between the Biden administration and Riyadh.

Immediate denials
Saudi officials immediately denied this. They said it would remain at the current OPEC+ cut of 2 million barrels per day until the end of 2023, adding that Saudi Arabia always stands ready to intervene if there is a need. There was also immediate opposition from the UAE Energy Ministry, which said there were no discussions between the UAE and other OPEC+ countries about a quota cut.

Moscow threatens
Elsewhere, Bloomberg reported that Ukraine would have to raise transit fees for oil because of Russian attacks. Meanwhile, Moscow reiterated that Russia will not sell oil to countries that have agreed to a price cap. This could lead to lower supply, it said. But this is rather background music in the concert of the Saudis.
Our conclusion: traders and investors need to keep an eye on the real-time news because of a possible Saudi U-turn. Riyadh is moving the market. If the report of an increase in oil production does turn out to be true, the bears will have their work cut out for them. Bernstein Bank wishes good luck!

__________________________________________________________________________________________

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

17.11.2022 – Just now the crypto market seemed to stabilize a bit after the FTX disaster. Then a new piece of bad news hits the ticker: The broker Genesis has banned all withdrawals from their lending business. With this, the next domino stone seems to be teetering.

Bitcoin bulls truly need strong nerves at the moment. The four-hour chart of BTCUSD has formed a falling triangle that better not be broken to the downside. The image is known in chart analysis as a continuation formation and signals continued reluctance among buyers.

Source: Bernstein Bank GmbH

This is the background: On Oct. 10, according to the financial blog ZeroHedge, Genesis had disclosed that its derivatives business had about $175 million stuck in a trading account at FTX, which has since fallen into disarray. In turn, on Nov. 10, Genesis said it was receiving $140 million from its parent company, Digital Currency Group, to bolster its balance sheet; the goal was to maintain its “position as a global leader in crypto capital markets.”
Genesis halts withdrawals
However, Bloomberg reported that Genesis is halting all withdrawals and new lending, as there is currently an enormous amount of withdrawals. Chief Executive Officer Derar Islim admitted that the wave of withdrawals exceeds the current liquidity situation at the lending firm Genesis Global Capital. At the same time, he reiterated, spot and derivatives trading at Genesis “remain fully operational.” Genesis further assured its clients that there is currently no “ongoing lending relationship with FTX or Alameda.”
As Bloomberg notes, Genesis is one of the most widely recognized cryptocurrency brokers, providing trading and custody services to professional investors engaged in digital assets. For example, he said, the firm has established itself as one of the largest crypto lenders, offering dollars or virtual currencies so that funds or other market makers can leverage their trades.
Gemini Trust also hit
That’s not all. Now Gemini Trust is also feeling the Genesis problems and has stopped withdrawals in its Earn program for now. Gemini is owned by the Winklevoss brothers and announced, “We are aware that Genesis Global Capital, LLC (Genesis) – the lending partner of the Earn program – has paused withdrawals and will not be able to meet customer redemptions within the service-level agreement (SLA) of 5 business days.”
We think: This looks like ongoing problems in the industry. We can’t see any factors that will bring stability back at the moment. But who knows: Maybe the situation will turn around faster than expected and large investors will take advantage of the lower prices to enter the market. This can happen very quickly. In any case, Bernstein Bank wishes traders and investors successful decisions!

__________________________________________________________________________________________

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

15.11.2022 – After the takeover disaster around FTX, the nerves in the crypto market have calmed down again somewhat. This is because Binance wants to set up a kind of super bailout fund for the industry. We are curious to see whether this will finally remove the doubts. The industry now wants strict supervision.

Ether was also hit hard in the recent crypto crash – here is the four-hour chart. The question is whether a bottom will now form to support a turnaround.

Source: Bernstein Bank GmbH

Yesterday, Monday, Binance CEO Changpeng Zhao, or “CZ” for short, first calmed tempers.
He announced that he would launch a fund to rescue the industry. On the one hand, this was to prevent a domino effect from the FTX bankruptcy; on the other hand, “strong projects” that ran into liquidity bottlenecks were to be supported.

Lender of Last Resort

The silly thing about the matter: unfortunately, CZ did not provide any detailed information about the fund, such as its size and where all the money would come from. Zhao only invited other crypto companies to participate. Interestingly, at the G-20 meeting in Bali, the entrepreneur also called for clear regulations for the industry – usually he himself is rather at loggerheads with regulators. Whether the super fund will remove doubts in the industry is questionable. As already predicted here, confidence is gone for the time being.

Farewell of the institutionals

Pinebridge Investments’ Hani Redha, for example, told Bloomberg news agency that the question of whether cryptos are a potential asset class that every investor should have in their strategic asset allocation is now “completely off the table.” Salman Ahmed, chief investment strategist at fund company Fidelity International, also explained in an interview with the news agency that the collapse of FTX raises questions about the viability of the crypto ecosystem. After all, he said, it has always been difficult to make a case for it, but now the system has come under even more pressure.

Or not

Despite all of this, professionals are also speaking out, and they see good things in the matter. Marion Laboure of Deutsche Bank, for example, said that this second crypto winter also had a positive effect because it brought the whole ecosystem closer to the established financial sector. The FTX crash has dragged long known structural deficiencies to the forefront – insufficient reserves, conflicts of interest, lack of regulation, lack of transparency and unreliable data. Firms in the crypto market must now quickly be brought under the same regulation as the traditional financial sector, he said. JP Morgan’s Steven Alexopoulos echoed similar sentiments, saying, “In fact, we see the establishment of a regulatory framework as the needed catalyst to massively ramp the institutional adoption of crypto.”

With that in mind, so the important thing in the long run will be the fact, know, whether confidence-building regulation of the crypto market is really coming. So keep an eye on the political real-time news as well. 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

11.11.2022 – It can happen that fast: A less than feared horrendous inflation report pushes up prices on Wall Street. The Federal Reserve also adds fuel to the fire. What a coincidence… And already one stop-loss mark of the bears falls after the other. The question is: How sustainable is the short squeeze?

The high-tech Nasdaq stock market just had its third best day since October 2008 from the perspective of long traders. Here is the hourly chart of the Nasdaq 100.

Source: Bernstein Bank GmbH

The catalyst for this: the Consumer Price Index (CPI) for October came in at 7.7 percent, slightly below the expectations of most analysts, who had predicted 8.0 percent on the whole. After all, this was the lowest inflation since January. Ergo, many investors assumed that the Federal Reserve would now put the brakes on tightening. And indeed, some doves immediately spoke up: a whole handful of Fed officials drove prices higher.

The Fed encourages the bulls
For example, Kansas City Federal Reserve President Esther George judged that the central bank could now take a more measured approach to assessing the economy. However, she added, a continued path in rate hikes is appropriate.
Patrick Harker, head of the Federal Reserve Bank of Philadelphia, said the Fed could slow the pace of rate hikes in the coming months. And in the coming year, he said, the Fed might even tighten. He favored a pause in rate hikes at a rate of 4.5 percent.
Federal Reserve Bank of Cleveland President Loretta Mester added, however, that the biggest risk in inflation is that the Fed doesn’t raise rates enough. While the October CPI is showing signs of easing, the Fed should continue to raise rates to contain inflation.

Hit the brakes
Lorie Logan, head of the Federal Reserve Bank of Dallas, explained the CPI is a welcome easing – but there is still a long way to go. However, she added, it may be appropriate to slow the pace of rate hikes to reassess the situation.
Mary Daly, head of the San Francisco Federal Reserve, called the CPI “good news.” However, she said, one month of positive data is not enough to declare a definitive victory. In addition, service inflation continued to rise. However, the time has come to slow the pace of rate hikes, he said.
The Dallas Fed’s Lorie Logan also signaled a step on the brakes in a cloistered way: “While I believe it may soon be appropriate to slow the pace of rate increases so we can better assess how financial and economic conditions are evolving, I also believe a slower pace should not be taken to represent easier policy.”
The Wall Street Journal commented, “The October inflation report is likely to keep the Fed on track to approve a (50bps rate hike) next month.” It said the Fed has already signaled a slower pace. The paper is considered the unofficial mouthpiece of the Fed.

Fodder for the bulls
Our conclusion: the bull run may indeed not be over yet. For it is a strange coincidence that almost at the same time as the CPI, several grandees of the Federal Reserve are pushing themselves into the foreground with predominantly dovish word messages. This looks very much like a signal from the monetary guardians that the interest rate screw is not being tightened as much as feared. And that the cycle of rate hikes will soon be over. 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

10.11.2022 – There is a drama going on right now for the bulls in the crypto market: the bounced acquisition of FTX by Binance is causing distrust. Bitcoin slid to a two-year low.

Tough times for long-orientated traders and investors: Because of the botched takeover battle, Bitcoin has dived, as you can see very impressively here in the four-hour chart of BTCUSD. Congratulations to all short-oriented traders. Things are hardly different for the second most important e-currency, Ether.

Source : Bernstein Bank GmbH

Yesterday, Wednesday evening, there was a big bang. Binance announced via Twitter that it had reviewed FTX’s books and subsequently refrained from a potential buyout. Binance also referred to media reports that FTX had misappropriated customer funds. Binance wrote on Twitter, “The problems are beyond our control and beyond our ability to help.”

How reputable is FTX?
The background: a few days ago, the website “Coindesk” had criticized massive weaknesses in the business model of FTX and its sister company Alameda. As a result, the head of Binance, Changpeng Zhao, reported that he would part with his FTT tokens. FTT is the cyber currency issued by FTX. The background is that Binance had invested in FTX in 2019, however, last year FTX bought out Binance’s shares and paid for them in FTT tokens worth $530 million.

Bankrun
After CZ’s announcement, a real crypto bankrun broke out. This is because FTX and Alameda’s books hold large amounts of FTX’s in-house token FTT and Solana, according to media reports. One FTT was worth just under $3 on Thursday – it was worth over $25 a week ago. And Solana, part of the blockchain of the same name, also weakened: Most recently, the price was around $14, compared with $36 just a week ago. In addition to FTX, the hedge fund Alameda is now also sailing in dangerous waters. He had so far brought buyers and sellers together as a market maker on FTX. If he is gone, that could mean new pressure for the cryptos, Fundstrat analysts warned.

Apparent threat of insolvency
FTX must now prepare for insolvency proceedings, according to insiders. Media are reporting a shortfall of up to $8 billion; to remain solvent in the short term, FTX will need to raise $4 billion. And all this from one of the previous heavyweights among the traders for e-currencies. FTX was considered one of the most respected players in the crypto world ever. After all, the company had always sought proximity to regulators and repeatedly bought up troubled firms.

Distrust everywhere
This leaves many crypto disciples asking the question of all questions: how rotten must the situation be at many other, far smaller exchanges? Already in May, Project Terra had gone belly up – investors lost funds amounting to $50 billion. And in July, the Celsius Network platform also had to file for bankruptcy. Unfortunately, it doesn’t look like the selling pressure is out of the market. After all, investors don’t like uncertainty and have to fear that their wallets are no longer safe with the various crypto exchanges. A toxic fog of distrust is wafting over the entire market. As the “Handelsblatt” has calculated, the market cap of all cryptos has slipped since the weekend from 1.05 trillion dollars to about 844 billion dollars – a whopping minus of almost 20 percent. Counter-movements are always possible, of course. So keep an eye on the real-time news – Bernstein Bank wishes you successful trades and investments!

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