News

22.08.2022 – On August 24, Ukraine will be 31 years old. In addition to Independence Day, the date has another significance: exactly six months ago, the Russian invasion of Ukraine began. It is hardly foreseeable that normality will soon return to Eastern Europe. This can be measured above all by the price of gas.

Nerves on the natural gas market and in industry are already on edge again: Moscow announced on Friday that it would stop gas deliveries via the Nord Stream 1 pipeline for three days from the end of August. Gazprom reported that no gas would flow from August 31 to September 2 due to maintenance work. Just in time for Ukrainian Independence Day. And after that, only 20 percent of the daily maximum output will be delivered. You can see the reaction very nicely in the weekly chart.

Source: Bernstein Bank GmbH

Russia is putting the thumbscrews on the West for natural gas in revenge for supporting Ukraine. We expect that sooner or later the gas supply will be cut off completely. After all, why shouldn’t Moscow use its energy weapon? Germany, in particular, has put itself at the Russians’ mercy with its mendacious energy transition. The result: modern German nuclear power plants stand around switched off, more coal, all eco, nuclear power from France and coal-fired power from Poland keep the German economy going. The Kremlin knows this, too: Ergo, we currently see no arguments that the gas price boom could end.

Hardly any LNG
The arguments for gas bulls are currently overwhelming. On the one hand, it will take a while until Germany and Europe have built enough terminals for liquefied natural gas from the USA. For another, the war is likely to continue. For the neo-Stalinist Russian political doctrine has an unpleasant folk factor: Russians abroad are protected, territories incorporated. And since the Communists in the 1930s sent settlers to areas such as the Donetsk Basin, as well as the Baltics, and since these Russians rarely integrated into the new, later independent host countries, nationalist conflicts continue to simmer.

Too little of everything
Ukraine, in turn, is starving at the outstretched arm of the West: Europe and the United States have put Kiev on a diet of arms and ammunition, supplying just enough to prevent the Russians from making a convincing run. On the other hand, Ukraine cannot kick the invaders out of the country. Yet there are dozens of Leopard tanks sitting around in Germany, and an aircraft fleet of a good 200 “Wharthogs” tank busters waiting to be decommissioned in the United States. If we had courageous politicians who would deliver these weapons to Ukraine, the fight would soon be over. But like this: appeasement everywhere.

The conclusion from all this: we cannot imagine a return to normality at the moment. And we suspect that the real gas crisis is yet to come. In a cold winter, gas prices will explode – and so will electricity prices, as consumers switch from gas heating to fan heaters. A blackout would also have severe consequences for the stock markets. An end to the energy crisis could come, however, if Russia annexes the occupied territories and the courageous friends of peace in Paris, Berlin or Rome force Ukraine to accept this. Then the weapons would probably be silent and the market could calm down. Bernstein Bank keeps an eye on the matter for you!

Important Notes on This Publication:

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

19.08.2022 – The crypto community is eagerly anticipating a major technical upgrade. Ether is to be switched from Proof of Work to Proof of Stake. Which would drastically reduce energy consumption. And would thus be more interesting for ecologically correct investors. Plus, in times of rapidly rising energy prices, more attractive for miners as well as buyers. The real hope behind all this: Ether is to replace Bitcoin as the number one cyber currency.

Because of all the newly sparked fantasies, the Ether price has risen sharply in recent weeks. However, at noon on Friday, Ether suddenly crashed and even broke through the 50 line, as you can see in the four-hour chart. To date, we have not yet found out the specific reason for this and strongly advise keeping an eye on the real-time news. This is because all cryptos collapsed across the board: Bitcoin, Litecoin, Cardano, Monero, you name it. Trading house Genesis initially blamed a drop in buying activity among long-term investors.

Source: Bernstein Bank GmbH

With that, let’s get to the background of Ether. The Ether merge event is a switch – achieved by merging (to merge, merge) the Beacon Chain with the Mainnet. On Beacon, the proof-of-stake (PoS) consensus mechanism was established. The Ethereum network’s crucial transition away from proof-of-work mining consensus (PoW) now appears nearly complete.

99 percent less energy
Roughly simplified, the issue is about streamlining the blockchain process – i.e., no more elaborate computational processes and data management. Instead, technically only the ownership of a token is to be proven. The total energy consumption of the second largest blockchain network is to fall by over 99 percent after the merge. Ethereum transactions are expected to become faster and cheaper as a result of the upgrade, commented “BTC Echo.” So these falling gas fees make investing more attractive.
A big deal: “The upcoming Ethereum Merge is the biggest narrative in crypto right now and explains why Ether has left Bitcoin in its wake in the past month,” commented Antoni Trenchev, co-founder of trading platform Nexo via email when asked by CNBC.

Things get exciting in mid-September
The Ethereum developers working on “The Merge” have also already given a concrete date for the transition to PoS, the website “Coincierge” recently reported. According to the report, Ethereum core developer Tim Beiko had mentioned September 19 as a realistic date for The Merge during a conference call. According to the U.S. television station CNBC, September 15 is the day of the switch.

Sell the News?
The possible dangers in all the euphoria: Sell the News, for one thing. Who knows if investors won’t bail out and take profits as soon as the big event is over. In addition, no one knows whether everything will really run smoothly on the technical side – the transition has already been delayed several times. Furthermore, it might be possible to tap into new customer groups who really care about the eco-factor. But outside the woken bubble, the rest of humanity might be more concerned about investigators cracking down on cyber gangsters worldwide and drying up darknet accounts that mostly hold cryptos – and such investors might prefer to look for investments that yield interest. On the other hand, cyber assets could attract new buyers, provided the issues of interest rate hikes and recession fears are through. Perhaps we really are witnessing the birth of a financial world without banks and government control.
So we’re curious to see if the tech event really does push the price higher, and we’ll keep an eye on things. Whether long or short – Bernstein Bank wishes successful trades and investments!

Important Notes on This Publication:

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

18.08.2022 – One word is in high season in the English-language financial and trade media: megadrought. The mega-drought is driving up the prices of soft commodities. Especially that of cotton.

Water level down, cotton price up: Not only in Germany are the levels of rivers and groundwater dropping. But also in the USA. Ergo, the price of cotton recently moved upwards, see here in the four-hour chart. The question is whether a return to the 50 moving average is not now gradually in the offing. And whether the gap torn by the U.S. Department of Agriculture is not just closed again.

Source: Bernstein Bank GmbH

What had happened: Last Friday, USDA lowered its U.S. crop estimate by about a third to 12.57 million bales – the lowest in a decade – because of sweltering heat in Texas. The United States slipped from the world’s third-largest producer to fourth.
US yield collapses
Specifically, USDA said for the U.S., “Production in 2022/23 is forecast to fall roughly 5.0 million bales to 12.6 million because of drought, particularly in Texas which normally accounts for more than one-half of U.S. plantings.” And, about two-thirds of U.S. cotton acres are currently affected by drought. According to the U.S. Drought Monitor, half the nation is suffering from drought.

Wasteland in Texas
The cotton bull market could continue, as the crop appears irreparably damaged. “I don’t think you can put a top on prices right now,” Louis Barbera of VLM Commodities told Bloomberg. He continued, “I have been going to Texas for more than ten years, and this is by far the absolute worst I have ever seen.” In the South Plains of West Texas, large areas of plantations have now withered. The region around Lubbock, Lamesa and Amarillo resembles an absolute wasteland.

Sharp drop in exports
And could a recession choke off demand? That’s not an issue – yet. According to the USDA report called “Cotton: World Markets and Trade,” the drop in exports currently far outweighs the drop in imports for processing worldwide. Literally, it says, “Global trade is down with a 342,000-bale drop in imports and 642,000-bale drop in exports.” But, China, Bangladesh and Pakistan are importing less and less according to the 2021/2022 Trade Outlook. An indicator of a dent in textile production.

Recession versus rain

The conclusion from all this is that prices are not likely to turn south again until there is heavy rainfall. And also as soon as there are signs of a recession in the important consumer countries of clothing and furniture. The tipping point could be reached soon, because inflation will sooner or later lead to a buying strike – people will save on everything that is not essential, i.e. everything except food and energy. Especially if there is a threat of job loss on top of inflation.

Finally, it should be noted that, conversely, things could get much worse. Because what the green-left climate church rarely if ever mentions is the fact that even more catastrophic droughts have always existed – and long before industrialization. Do some googling under the dates 1302 to 1307, 1540, 1718, just to name a few. For us, Bernstein Bank is keeping an eye on the situation for you!

Important Notes on This Publication:

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

17.08.2022 – Wall Street has recovered nicely in recent weeks. But the next downturn is bound to come. At least that’s what one of the most precise analysts on the stock market says: clear the stage for Michael Wilson from Morgan Stanley.

If our expert is right, then US stocks are facing a new downturn. At the same time, the SPX in the daily chart has just reached the 200-day line and has already left the 50-line far behind.

Source: Bernstein Bank GmbH

And with that, we look at the details from Morgan Stanley. Wilson just warned that the rally that has been going on since June is just a pause in the bear market. Soon it is likely to go downhill again. The reasons: rising costs, falling profits, rising interest rates, a slowdown in the economy.

Q2 surprise
Incidentally, the recent rally also surprised Wilson, who explained it with better-than-expected second-quarter results. We add: Walmart just provided an example – the retail giant raised its downwardly revised full-year earnings expectations from minus 11 to 13 percent to minus 9 to 11 percent.
The expert went on to explain that the market had been betting on a pause in the interest rate hike cycle by the Federal Reserve and had priced in a brake on tightening in advance. The problem is that the Fed may not pause at all. In addition, valuations on the stock market are disconnected from economic reality. The ISM Report On Business Manufacturing and Services points to a sharp downturn in the economy. We add: In fact, the market is currently reinterpreting bad news to mean that it will keep the Fed from raising rates further. This is what happened with the sharp downturn in New York’s manufacturing sector – where the worst data since 2001 just came in.

Too much false Fed hope
Wilson went on to say, however, that inflation is not declining fast enough to prompt the Fed to pause its tightening cycle. The strong labor market report in July supported that thesis, he said. The expert concluded: “the equity market has already discounted a durable Fed pause, the likelihood of which is low to begin with. That development leaves equity multiples significantly disconnected from fundamentals, which continue to suggest we’re in a late cycle, slowing growth environment.”

1,000 points downside potential
All told, he said, the S&P 500 is overvalued by 750 to 1,000 points. And what could cause the market to turn lower again? According to Wilson, it is likely to be disappointments in earnings. He said cost pressures remain high, wage spirals are rising and demand is weakening. It won’t be long before a wave of corrections in earnings expectations sets in. However, the market still has some room for improvement.
Our Bottom Line: We are curious to see whether these forecasts come true. And we point out that a whole series of crises are still smoldering, which could affect the stock market: Taiwan, Ukraine, oil and gas prices. But if the Fed does put tightening on hold and calm prevails in the conflict hotspots, the bulls could recharge their batteries. Whether long or short – Bernstein Bank wishes you good luck with your trades and investments!

Important Notes on This Publication:

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

12.08.2022 – Suddenly, it’s a bull market again: A weak consumer price index has swept aside interest rate fears. And already many are afraid of missing out: Fear Of Missing Out (FOMO) has lifted high-tech stocks in particular.

New hope everywhere: Many investors believe that the weaker than expected inflation rate will now slow down the Federal Reserve in its rate hikes. The market is again leaning toward a 50-point move in September instead of the 75 basis points previously expected. Accordingly, the Nasdaq 100 has just entered a bull market with a 20 percent gain since the June low, see our daily chart. This means Nasdaq stocks have gained about $2.8 trillion since the interim low, according to the financial blog ZeroHedge.

And who is buying all this? If Goldman Sachs is right, it’s mainly the big players: The trading desk of the gold men suspects that hedge funds are chasing the trend and have to buy assets to the tune of a staggering 13 billion dollars – PER DAY.

Inflation rate declines

This is what happened: The Consumer Price Index for July came in below expectations at 8.5 percent – most analysts had predicted 8.7 percent. In June, consumer prices had still risen by 9.1 percent, the highest rate in four decades. After all, there are some incredible coincidences: Just before the midterms in November, inflation turns downward, which tends to benefit the Democrats as the presidential party.

Fed confirms its course

Interestingly, the Federal Reserve has recently repeatedly announced that it will continue to raise interest rates despite everything. At the Aspen Ideas Conference, Neel Kashkari, head of the Minneapolis Federal Reserve Bank, just said the Fed will not change course – even if a recession threatens. He expects the federal funds rate to be 3.9 percent by the end of the year and 4.4 percent by the end of next year. Currently, the federal funds rate is 2.25 to 2.5 percent.

Stock market investors hope
But some don’t quite believe it: “From now onwards, the Fed should start worrying about growth risks much more than inflation,” commented Ashish Marwah, Chief Investment Officer at ADS Investment Solutions Ltd. And Lewis Grant, Head of Global Equities at Federated Hermes, added: “Despite the Fed’s unwavering rhetoric, this release has given investors hope that the pace of rate rises in the US will slow and that the fabled soft landing may be less elusive than feared.”
Our conclusion from all of this is that Wall Street is once again seeing great cinema. All of a sudden, the inflation rate is dropping and stock market players are shaking off their interest rate fears. World War III has not broken out in Taiwan. The Corona situation seems to remain relaxed. The war in Ukraine is not escalating for the time being. As long as this big weather situation continues, the bulls have upper water. Until the Fed or one of the major crises again gives the spoilsport. The Bernstein Bank keeps you up to date!

Important Notes on This Publication:

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

04.08.2022 – The Federal Reserve has let it be known that the cycle of interest rate hikes is far from over. The chances of the euro recovering against the dollar are slim. Unless the market has now priced in all the news.

Is the bottom in now? EURUSD – here in the weekly chart – continues to trade near parity, but has recovered somewhat in recent days. After all, the 50 line beckons from above.

Source: Bernstein Bank GmbH

There has been enough bullish news for the dollar from the Federal Reserve recently: no less than four presidents of regional Fed banks have emphasized that there are still no signs of a decline in inflation. Thus, the tightening continues.

Inflation target 2 percent
Thus, the head of the San Francisco Fed, Mary Daly, said that the monetary guardians “remain determined and fully united” regarding the goal of pushing inflation close to the inflation target of 2 percent. Our take: That’s going to take higher interest rates sucking money out of the market for quite a while.

Chicago Fed President Charles Evans said it’s reasonable to assume a 3.5 percent interest rate will be reached by year’s end. Regarding individual rate steps, he commented, “I think there’s enough time to play out that 50 is a reasonable assessment, but 75 could also be okay,” he said. So: 75 basis points increase is in. And even more: “if we don’t see improvement before too long, we might have to rethink the path a little bit higher.”

Fed sees no recession
The head of the Cleveland Fed, Loretta Mester, judged that there are “no signs of a recession.” Moreover, “we have to get inflation under control.” She further said she “hasn’t seen anything suggesting inflation is leveling off.” She further added, in an interview with The Washington Post, that she wants to see “very convincing evidence” that monthly price increases are moderating. Only then would she be able to say that the Fed’s tightening cycle had achieved its goal of fighting inflation.
In addition, St. Louis Fed President James Bullard reiterated that the central bank should probably raise its benchmark interest rate to a range of 3.75 to 4.00 percent by the end of the year. At the same time, he calmed stock market nerves before the Money Marketeers of New York University when he spoke of a high probability of a soft landing.

Support for the Greenback
Our conclusion: As long as the Fed continues to see no recession, interest rates will rise in the medium term. So, despite assurances to the contrary, the central bank has issued guidance. And who knows: If the stock markets boom too strongly and inflation gallops, the Fed could follow up with the interest rate target. When will the market price in the turning point and an end to tightening? Who knows. In any case, the Federal Reserve is running ahead of the European Central Bank. And therefore, the dollar has a tailwind from that side. The same applies to high energy prices – oil and gas are paid for in dollars on the world market. Whether long or short – Bernstein Bank wishes successful trades and investments!

Important Notes on This Publication:

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

03.08.2022 – China has not attacked Taiwan. But what is not, can still become. Our urgent advice: Keep an eye on the crisis. And prepare for the unthinkable.

The Speaker of the U.S. House of Representatives, Nancy Pelosi, has shown backbone and actually visited Taipei. In doing so, she reaffirmed U.S. resolve to support a free China. Thus, the situation remains tense. Investors are still cool and assume that this time, too, threats will remain. Perhaps a good opportunity to buy the fear indicator VIX – here in the weekly chart – to hedge.

Source: Bernstein Bank Ltd.

Beijing again threatened the U.S. that it will pay a price for its policies and responded by launching large-scale maritime maneuvers. You remember Ukraine: this could quickly turn into an invasion. Some two dozen Red Chinese jets meanwhile penetrated Taiwan airspace.

A floating fortress
If Red China really attacks, it will have to put a massive armada in motion, because the losses are likely to be enormous. Taiwan is about three-quarters mountainous, with some 200 peaks over 3,000 meters. There are only 14 sandy beaches suitable for an amphibious invasion, judged Taiwan expert Ian Easton of the think tank “Project 2049” in an interview with Fox News. The terrain behind is hilly, Red Chinese troops would have to expect drumfire from above from well-fortified positions.

Taiwan is ready
There is no surprise factor at sea; Taiwan has been preparing for an invasion since the 1950s. Moreover, the two Taiwanese islands of Matsu and Kinmen are two strongholds just off the Red Chinese coast that would have to be eliminated first. Kitsch Liao, an analyst at Taiwanese analysis firm Doublethink Lab, added on Fox News Digital that there are always only short windows of time when the Formosa Strait is calm enough for an attack at sea. In addition, he said, logistics are difficult: ships can typically only carry three days’ worth of material – meaning they would have to commute back to the mainland in the event of an invasion, making them an easy target.

Chip industry in focus
Because of the presumed high casualties, the U.S. called off Operation Causeway as early as 1944 in an attempt to capture Formosa from the Japanese. Perhaps Red China could destroy Taiwan with a hail of missiles – but presumably the Communists in Beijing want to conquer the island with a functioning infrastructure, first and foremost semiconductor factories. Taiwan dominates that market, according to analysis firm TrendForce, with a 61 percent global market share in high-performance chips of 16 nanometers and above. In addition, Taiwan also has missiles that could hit Beijing, for example.

Threat of war with the USA
An attack on Taiwan at sea would also likely draw U.S. carrier forces into the fray – triggering a war with the United States. Because of all these obstacles, a blockade of Taiwan could also be in the offing. You can imagine the impact on the semiconductor industry.
But who knows: Possibly Xi Jinping suffers from a God complex and attacks despite all obstacles, analyst Ian Easton further stated. We think: Beijing must do something. Already the mass murderer Mao did not care that millions died in the “Great Leap Forward” and the Cultural Revolution. If Xi backs down now, he will lose face. But the Great Chairman wants to be revered as much as Mao Tse Tung. It is possible that the current naval maneuvers are the overture to a new, major crisis – with consequences for the stock market. If Beijing backs down, the situation is likely to ease. Bernstein Bank keeps an eye on the situation for you!

Important Notes on This Publication:

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

01.08.2022 – Disruptive fire from the Far East for the world’s stock markets: China is likely to tug at investors’ nerves in the coming days. That’s because Beijing has announced a military response if Nancy Pelosi, the speaker of the U.S. House of Representatives, actually visits Taiwan. Maybe this is just saber rattling. Perhaps the fuse for the next war is smoldering in the Strait of Formosa.

There is no sign of war in the DAX yet, but that could change soon. Here is the four-hour chart.

Source: Bernstein Bank GmbH

By the time you read these lines, the U.S. politician will already be in the region. Whether she will actually end up in Taipei is unclear. Of course, it is hard to believe that Pelosi’s visit is the real trigger for a military confrontation. True, the U.S. politician is number three in the United States. And the move could also be interpreted as recognition of Taiwan. In any case, China’s President Xi Jinping recently told the sick old man in the White House that whoever plays with fire will perish in it.

The opportunity is favorable
But China was probably planning an invasion of Taiwan anyway. And with a senile U.S. president whose son-man has also done good business in China – which you read little about in this country in the truth media – the opportunity is favorable.
In any case, the publication “1945,” run by security experts, analyzed that China has seen the U.S. on the road to decline for about a decade. And just like us, the website assumes that Joe Biden confirms this Chinese assumption – especially with the disaster of the withdrawal from Afghanistan and the tame response to the invasion of Ukraine. Thus, the Chinese leadership now believes it can do what it wants with Taiwan. Especially since there is a huge real estate and debt crisis raging in China, which Xi Jinping wants to distract from with a foreign policy adventure. The sales of the top 100 project developers in China, for example, were cut in half in the first half of the year.

China is becoming more aggressive
“1945” further reported that China does not need “provocation” by Pelosi – Beijing has been acting increasingly aggressively for some time anyway. For example, he said, China has already advanced into Ladakh in the Himalayas and is on the verge of occupying more Indian territory. China has also repeatedly blocked supplies to the Philippine atoll Second Thomas Shoal. Further, on July 29, four Chinese warships had entered the area off the Japanese Senkaku Islands claimed by China. Further, on May 26, a Chinese jet had fired tracer rounds at an Australian Boeing P-8 reconnaissance aircraft and also dumped chaff that was sucked in by the Australian’s turbines and set on fire.

The dragon lurks
Our conclusion: it would be no wonder if China strikes now. As the West weakens, the risk of war increases. And the risks for long-orientated traders and investors. Beijing could be right in assuming that America might offer a little resistance in Taiwan; but that is likely to quickly turn into appeasement.
In any case, Europe can be relied upon from the Chinese perspective. “Politico” in the U.S., at any rate, just reported that behind the scenes diplomatic activities in Europe are in full swing. Presumably, apart from the USA and Great Britain, no one will stand by the free part of China. But an occupation of Taiwan would have devastating effects on world trade. And an invasion would be a new shock to the stock markets. As always, we advise keeping an eye on the real-time news – even if the current Pelosi crisis ends smoothly, it is only a matter of time before the red dragon strikes. Bernstein Bank wishes you successful trades and investments!

Important Notes on This Publication:

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

27.07.2022 – The Federal Reserve is already moving prices again – by the time you read these lines, the hubbub has probably already broken out. As always, our advice is: Don’t trade around the Fed. Because the monetary guardians are rarely unambiguous. Both currency and stock markets will probably swing wildly back and forth for a while until the herd decides on a direction.

raders are lurking and waiting – you can see this very nicely in the hourly chart of the S&P 500 at noon German time on Wednesday. Shortly, the picture will have changed violently into a wild up and down.

Source: Bernstein Bank GmbH

These are the crucial questions: how high will the Fed raise interest rates? How much will it follow through with quantitative tightening? Will the central bank adjust its course because of a looming recession? It is not just the press release that is important, but above all the press conference: Fed Chairman Jerome Powell tends to wrap previously strong statements in absorbent cotton and tone them down. But who knows – maybe a clear positioning will slip out. And then there are the analysts’ reactions to the oracle’s statement.

High to 3.75 percent
You should compare the current news with the previously expressed expectations: This Wednesday, it’s expected to move up 75 basis points to 2.25 to 2.5 percent. A higher move is likely to push stocks lower; a lower rate hike is likely to lift prices higher. Expectations for the September meeting are: Interest rate step of 50 basis points; for November and December, the market expects another 25 basis points each. This would put the interest rate at 3.25 to 3.5 percent at the end of the year. According to current estimates by most analysts, the peak will be reached in February at 3.5 to 3.75 percent.

Question about new interest rate cuts
And new rate cuts are expected to begin in the first quarter of 2023. Or will this turnaround happen sooner after all? Let’s let the pros with their crystal balls have their say: Michael Harnett of Bank of America sees the “pivot” as early as November. Super-bear Michael Wilson of Morgan Stanley, on the other hand, just wrote that it would be premature to expect the Fed to stop tightening, even if there is speculation about a recession. The S&P 500 could therefore still slip to around 3,000 points.

Nothing is known for sure
Presumably, the Fed will point primarily to inflation for further action. And to the strength of the economy, especially the labor market. How clear this outlook is will set the course for the market. However, there’s one problem that doesn’t make things any easier: Nick Timiraos of the “Wall Street Journal” is considered an unofficial Fed spokesman. And the journalist just wrote that the Fed could do away with forward guidance without further ado. More confusion, then. We hope you are correct in the fog that lies over the market. Bernstein Bank wished you successful trades and investments!

Important Notes on This Publication:

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

26.07.2022 – Just now, cryptos seemed to be recovering so nicely. But then there were two neck blows. Bitcoin, Ether and co. just can’t get out of the vale of tears. Not yet or not ever? We shed light on the background.

The 50-day moving average currently presents itself as an almost insurmountable hurdle for Bitcoin in the daily chart. While the major indices on the stock market have already easily jumped above it again, BTC is struggling. It had looked so good in the past few days and a gap still beckons. But recently it went down again. And at just under $19,000, there is a support level that had better not fall. Perhaps BTC will soon follow Ether: its little brother has already made the leap above the 50 mark.

Source: Bernstein Bank GmbH

What happened. A new indication just hit the market that the government wants to put a stop to cryptos.

SEC vs. Coinbase
Specifically: according to insider information and a report from Bloomberg, the US Securities and Exchange Commission (SEC) wants to open an investigation against the largest crypto exchange Coinbase. The accusation: the sale of assets that are not registered. There is a certain irony to this, as the entire industry has repeatedly asked the SEC what exactly constitutes securities that should be registered. De facto, there is no regulatory framework.

Disappointment from Tesla
Earlier, Tesla caused uncertainty. The group sold most of its tokens in the first quarter. A big blow for crypto disciples, as the e-car maker was considered the biggest supporter of digital currencies. Specifically, 75 percent of its BTC holdings were sold for $936 billion. Tesla has thus roughly reached breakeven on its investment.

Cyber Crime
There is, unfortunately, another mega-bearish fact that is barely highlighted in the mainstream media and not at all in the many crypto blogs. It is the increased hunt by investigators for cyber gangsters. FBI, BKA and co. have focused on the money trail in recent months. And, for example, offered a million-dollar bounty on Conti after the Costa Rica attack. The Russian gang has since disbanded and probably reorganized into smaller cells along the lines of Al Qaeda. A new, sharp wind is blowing in the face of cyber gangsters worldwide. The West must crack down as the largest syndicates are supported by Russia, China and North Korea in their fight against the Western economy. What must also interest traders and investors: Cryptos are the ransom of choice for criminals. We’ll be interested to see how this develops.
But who knows – maybe all the negative news is now slowly priced into the price, and buyers are making a spirited grab. Bernstein Bank keeps an eye on the situation for you!

Important Notes on This Publication:

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