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22.07.2022 – A potential disaster for the stock market world is smoldering in China. If the real estate market collapses there and rows of banks topple over, the crisis will virtually eat its way through the globe to us. Unfortunately, there have been some dangerous signals from the Middle Kingdom recently, which have hardly found any echo in the mainstream media so far.

Hard to believe, but true: the world’s stock markets are facing enormous danger and no one is noticing. If you follow our comments below, then it’s time to stock up with some long positions on the fear indicator VIX to be on the safe side, which you can see here in the weekly chart with the 50 moving average. If the crisis escalates, it will easily reach the old highs from the Corona crisis.

Source: Bernstein Bank GmbH

De facto, the Chinese real estate market is like a nuclear reactor about to explode. We chose this image based on the 1979 U.S. disaster movie “The China Syndrome.” The strip anticipated the accident in Harrisburg. At the time, experts assumed that a meltdown would actually eat into the earth’s mantle – unstoppable, all the way to China on the other side of the globe.

Craftsmen fail to service loans
Now it could go in the opposite direction. As Bloomberg reports, citing “Caixin,” hundreds of suppliers to Chinese project developers are currently refusing to service their loans. They pointed out that large developers such as China Evergrande still owe them money. Thus, the strike by real estate buyers has eaten into the system.

Mortgage strike
Earlier, the financial blog ZeroHedge reported that millions of angry property buyers are refusing to service their loans – though legally they are in the right because most of the apartments in the huge prefabricated buildings have not been completed. It was common practice in China for years to sell apartments before they were built. That practice has turned around with the collapse of Evergrande. Apparently, the mortgage strike has already spread to about 300 projects in 90 cities; there had been demonstrations in about 50 cities recently. Presumably, millions of loans are currently at risk. According to a statement from the Chinese banks, only mortgages amounting to 2.1 billion yuan or $312 million are currently at risk. GF Securities Co., however, sees ten times that amount in the fire, at 2 trillion yuan. All told, Chinese banks hold mortgages worth 38 trillion yuan.

The world’s largest asset class
What can’t leave us cold: According to Goldman Sachs, Chinese real estate is the largest asset class in the world, with an estimated $62 trillion. Craig Singleton of the analytics firm Foundation for Def

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

21.07.2022 – The European Central Bank (ECB) has raised interest rates for the first time in eleven years. Contrary to expectations, it did so quite sharply, by 0.5 percent. However, this is not – yet – a real turnaround for the euro: The increase is too weak to stop inflation. And it is a dangerous signal for the highly indebted euro countries and for the economy.

Most analysts had expected only plus 0.25 percent – ergo, they were caught on the wrong foot. Especially since the negative interest rate of minus 0.50 percent for parked money from commercial banks has also been dropped. Moreover, the ECB has already held out the prospect of another interest rate step for its meeting on September 8. And so EURUSD managed a small jump, as you can see in the four-hour chart.

Source: Bernstein Bank GmbH

Many economists suspect that the interest rate will rise to 1.5 percent next spring. How this hesitant pace will contain inflation is a mystery. After all, inflation is currently at 8.6 percent in the euro zone, with 7.6 percent forecast for the year as a whole. That would be an all-time high. Whether the interest rate turnaround will help the euro in the medium term is anyone’s guess.

Determined Fed
Ultimately, the ECB is lagging behind: as the International Monetary Fund has determined, 75 central banks around the world have already raised their key interest rates since July 2021. Above all, its major counterpart in the U.S. is benefiting from the Federal Reserve’s comparatively spirited intervention: since the spring, the Fed has raised its key interest rate to between 1.5 and 1.75 percent. The rate hike in June alone amounted to 0.75 percent – the biggest since 1974. There is likely to be more to come. Ergo, investors have invested vast sums in the U.S., where the yield is higher. Moreover, since energy is paid for in dollars, this supports the greenback and further fuels inflation in Euroland.

Acute risk of recession

Even the current interest rate hike is poison for the economy and “actually comes at an inopportune time,” M.M.Warburg commented in advance. Because the energy crisis could throw the euro zone into a severe recession. Companies don’t need more expensive loans and home builders don’t need higher mortgage rates. The problem for the ECB is the debt situation in the crisis countries – first and foremost Italy, where, in addition, the government has to resign once again. Drastically higher interest rates could severely shake up the national budgets on the southern fringes.

The upshot of all this is that the euro has not received any real boost. The question of all questions has not been answered: How does the ECB plan to stop inflation while ensuring that debt countries can continue to borrow money at low interest rates? Whether the new anti-crisis program, the so-called Transmission Protection Instrument (TPI), will be effective remains to be seen. To this end, the monetary guardians will buy bonds from crisis countries, which will ultimately increase the money supply and weaken the euro. But perhaps the crisis countries will manage the miracle and build up a robust economy. 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

20.07.2022 – It’s over – an end to the stock market slump: if Wall Street’s biggest bear so far has his way, we’re in for a bull market. According to Bank of America, pessimism among fund managers has rarely been greater. Yesterday’s price jump in the stock indices supports this thesis.

Finally, another day of joy for the bulls – Wall Street set the pace yesterday, the DAX followed. Particularly impressive was the jump in the Dow Jones, which you can see in the daily chart. The US leading index has broken through the 50-day line, the next stop could be the 200-day line.

Source: Bernstein Bank GmbH

So are we witnessing a reversal right now? Who knows. Already last Thursday, Bloomberg commented that speculators in the futures market are extremely short positioned. For the financial blog ZeroHedge a clear contra-indicator; the blog further judged that both retail investors and institutional investors would soon throw in the towel because they were frustrated by the constant “buy the dip”. And then yesterday was the big day on Wall Street.

Complete capitulation
Yesterday, Bank of America Chief Investment Strategist Michael Hartnett also released his latest survey of fund managers for the month of July. The startling result: “full capitulation” and a “dire level of investor pessimism.” Although Hartnett sees poor fundamentals for the second half of 2022, he judged “sentiment says stocks/credit rally in coming weeks.” And here’s some more investment-speak so you can see for yourself: “H2’22 fundamentals poor but sentiment says stocks/credit rally in coming weeks.” And further: “contrarian Q3 trade is risk-on if no Lehman, CPI down, Fed pause by Xmas…short cash-long stocks, short US$-long Eurozone, short defensives-long stocks banks & consumer.”

Fund managers extremely pessimistic
Here are some details from the Fund Manager Survey (FMS). The survey ran between July 08 and July 15, surveying 293 professionals with $800 billion in assets under management. According to the survey, fund managers have reached an all-time low in expectations for global growth: according to the survey, global growth expectations have fallen to minus 79 percent; expectations of a new recession are at their highest level since May 2020. Earnings expectations have also reached a new all-time low. At the same time, cash levels compared to assets under management would be at 6.1 percent, the highest level since September 11, 2001, and equity allocation at the lowest level since the Lehman crash.

Dollar and commodities in focus
The BofA Bull & Bear Indicator is at its lowest all-time low of 0.0, and 76 percent of respondents see inflation collapsing in the coming year. The expectation now, they say, is for stagflation – the Federal Reserve will still have to raise interest rates by 150 basis points and change policy when the core inflation rate is below 4 percent. The most crowded trade currently is long dollar – so the greenback should dip soon; the most crowded trade after that is long commodities/energy.
The Bottom Line: The biggest bear on Wall Street so far has turned into a bull. We are curious to see if the excessive pessimism observed by Bank of America is now actually turning into a bull market. And whether yesterday was the starting signal for it. 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

19.07.2022 – The streaming service is a nice example of how important it is to follow real-time news very closely. And to draw cross-connections between the national economy as well as the skills of the management. Maybe Netflix will become a phoenix rising from the ashes. Maybe the stock will burn again. So let’s put the stock under the microscope.

Source: Bernstein Bank GmbH

Doubts about the sense of the lockdowns
In America, where there are no significant TV and radio channels supported by the state, and where there are strong publishing houses that are not bought, pardon: propped up, by the government with advertising campaigns, negative vaccination consequences have been discussed for quite some time. Just like the sense of lockdowns. Ergo, many investors may have come to the conclusion that a quarantine is useless. And with that, the big sales boost for Netflix has broken away. In any case, the stock’s high was right in the big Corona frenzy at the end of 2021, when overnight entry restrictions were declared and wellness rooms were closed. Perhaps the last big subscription wave ran here.

Recession fear
In addition, the fear of an economic crisis is currently causing investors to divest themselves of all assets whose products are not absolutely necessary. Streaming services are certainly not, if inflation eats up household budgets. Food and energy, on the other hand, do. So Netflix is one of the top recession losers.

Get woke, go broke
Another major reason for the decline may, perhaps, be the prevailing top management thinking at Netflix. For example, the investment blog “Portfolio Armor” sees a direct link between the start of the broadcast of “Cuties/Mignonnes” in the summer of 2020 and the crash of the stock – the accusation: pedophilia. The sexualization of children caused outrage, especially among U.S. Republicans, but in intellectual circles here at home and on the East and West coasts, rather blasé indifference. To be fair, we should note that the share price continued to rise for a while after the cuties.

It’s the customers that count
But perhaps such works really are factors in viewer frustration that take time to impact new business. The company had already had to report a surprising decline in its customer base of 200,000 for the first quarter – the forecast had been 2.5 million new customers. The first decline in years! For the second quarter, the Group had announced a further decline in paying subscribers of around two million. The shrinkage is also due to price increases. Reason enough for UBS to lower the price target from 355 to 198 dollars.

The question now is whether Netflix will manage to reverse the downward trend. The means to do so is supposed to be the offer of an advertising-based subscription, which is cheaper than the normal subscription. We are curious. If Netflix surprises positively with its figures, the stock is definitely a catch-up candidate. Especially since the strong subscription figures will not come until the end of the year, when people get cozy in front of the TV at home again during the cold season. 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

14.07.2022 – An air of panic is sweeping Wall Street: a tsunami of downgrades is building up. The fear of recession is spreading. No wonder: Just in time for the start of the reporting season, new horror figures have arrived from the US economy. The inflation rate has risen again and now stands at 9.1 percent.

Source: Bernstein Bank GmbH

Reassessment ahead: Inflation in the USA rose once again – from 8.6 percent in May. The current 9.1 percent is the highest level since December 1981. Most analysts had expected only 8.8 percent. A bad omen for the earning season now beginning. The outlooks of the companies will be particularly interesting this time – they could put a bitter damper on the share prices. The market is obviously preparing for a downturn – you can tell how bad the mood is by the fact that the SPX in the daily chart is below the 50 level and far away from the 200 line.

Goldman Sachs, by the way, sees the S&P 500 plummeting to 3,150 points in the event of a recession. In any case, according to Goldman trader John Flood, high inflation will ensure that money from large institutional investors remains frozen in bank accounts.

500 downgrades in five days
The expert further commented that fear dominates the conversations with clients – the market is therefore worried about a wave of corrections in profit expectations. And, of course, accompanied by a reduction in price targets across the board. It looks like this recession wave of analysts has already started: “Sell-side analysts are scrambling to get ahead of Q2 earnings; over the last 5 days they’ve downgraded more than 500 names (on a net basis). Since the Financial Crisis, there’s only been 4 other weeks when that many names have been downgraded that quickly.” As far as Goldman trader Flood.

Possible crash ahead
A few days ago, Goldman Sachs analysts took a look at 77 recessions around the globe since 1961. The conclusion of Goldman expert Chris Hussey: The world could currently be on the threshold of a serious, severe recession. According to the report, the risk of this happening next year is 30 percent in the United States, 40 percent in the euro zone and 45 percent in the United Kingdom.

Threat of 100 interest rate hike
Of little help to the bulls, therefore, is the whispering around about a 100 basis point rate hike by the Federal Reserve. Indeed, Atlanta Fed chief Raphael Bostic signaled that was possible: “Everything is in play.” Shortly before, investment bank Nomura had speculated about a 100 rate move. Previously, the market had assumed 75. Whether raising interest rates will stop the recession is questionable, because inflation currently comes mainly from energy and food. Rather, pumping money out could add fuel to the recession’s fire.

Our conclusion: the big weather for the stock market looks like a storm. In between, however, there will always be tradable recoveries for traders as expectations about big interest rate moves or the threat of recession turn. 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

13.07.2022 – Applause, applause: In a dramatic about-face, Elon Musk has called off his purchase of Twitter. The share has lost a lot of value. Perhaps the group will manage to force the purchase through the courts. But Twitter is now damaged goods – perhaps some of the accusations are true, there are many fake accounts. But possibly the bombed-out stock is a buy if management takes the company’s flaws to heart.

Source: Bernstein Bank GmbH

Musk claims that Twitter underreported the number of so-called spam bots. So Twitter is said to have cheated – in fact, the short message service has far fewer real human users than claimed. Twitter counters that Elon Musk admitted he had not even read a detailed explanation from Twitter on the method of estimating fake bots.

Crucial design flaw
Wait a minute: why does Twitter have to estimate this crucial number – does the corporation know exactly how many real users it has, or not? Or is Twitter trying to hide something? In any case, Musk thinks the company’s claim that less than five percent of user accounts are artificial is a massive understatement. Twitter has not provided any clear information about this. We think: The number of fake accounts should be zero.
The second design flaw is Twitter’s blatant left-wing spin. In addition, too many Islamists have free speech. Only conservatives and right-wingers have to stay out.

The cultural chic is always right
So will Twitter fix its web flaws? Probably not. Because the woke avant-garde of the Silicon Valley cultural revolution is not interested in free speech. It wants the leftist seizure of power and has always supported the Democrats. What’s more, as long as Twitter is a virtual monopolist, its management will stick with the pseudo-accounts.
Our conclusion from all this: the stock is likely to retain some unsightly stains from the public washing of dirty laundry in court. We wonder if a savvy businessman like Elon Musk would have really dared to take the difficult step of backing away from a sealed purchase, unless there really is something fishy about Twitter. Only if the allegations are disproven to be absolutely false, or the business is incredibly strong, should things start to look up again. And, of course, if a recession is avoided. But who knows – maybe another prospective buyer will show up soon. We look forward to the next act – 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

12.07.2022 – It’s done: the euro has just slipped to parity with the dollar. For the first time in two decades. We, too, pay homage to the event. And shed light on pros and cons for a further slide.

Bad news for all those who want to go on vacation to the USA: One euro buys only about one dollar. This means that the pan-European lira, sorry: the transcontinental soft currency, sorry: the European common currency is once again as weak as it has been since October 2002, shortly after the introduction of the euro. A rapid descent, as you can see in the weekly chart.

Source: Bernstein Bank GmbH

So where do we go from here? Brad Bechtel, Foreign-Exchange Strategist at Jefferies LLC can now envision a counter-movement: “it feels like EUR/USD is oversold on many technical measures and parity was such a target for so many people in the market that it wouldn’t surprise if we see a lot of profit taking down here and a short term bounce.” Indeed, the euro has already dipped well below the 50 moving average, crying out for a rebound.

Energy crisis and risk of recession
However, there are also hefty drags. The majority of analysts blame the gas crisis in particular for the development. Fears of a recession in Europe persist among investors, so one analyst sees further opportunities for the bears: “The worst case (total stop of gas flows) brings recession and probably another 10% fall by the euro from here,” judged Chief Forex Strategist Kit Juckes of Société Générale.

If energy prices continue to rise, it will also support the dollar for another reason – the U.S. produces oil and gas, which fills the treasury; this tends not to be the case in eurozone countries. We’ll see what happens next: yesterday, Monday, the Nord Stream 1 gas pipeline was shut down, with an initial ten days for maintenance. Whether Russia will supply gas again after that remains to be seen.

USA quicker to turn around interest rates
And then, of course, there is the Federal Reserve’s faster pace in turning around interest rates. The U.S. key interest rate is at 1.5 to 1.75 percent, and the Fed has hinted at further steps. The key rate in Euroland is zero, and analysts expect at least a 0.25 percent increase at the next Governing Council meeting.
Moreover, there is a related factor that tends to be swept under the rug in this country: The fact that the European Central Bank continues to blithely buy bonds from crisis states. And in return it prints cheap money, in other words, creates digital money out of thin air. This is the only way Portugal, Italy, Greece and Spain can survive. And that’s precisely why the ECB can’t raise interest rates as quickly and as sharply as the Fed – otherwise the national budgets of the crisis countries will blow up in their faces because the debts can no longer be serviced. And how wonderful: Croatia is soon to join the euro zone. The next prop is guaranteed!

The conclusion to be drawn from all this: risk-averse, long-term investors are looking for their salvation in U.S. government bonds – the yield there is better. And by buying the bonds, the dollar rises. As always in a crisis, the greenback is king. We are curious to see how the EURUSD develops further – and wish 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

08.07.2022 – No clear trend in coffee prices. Just as with other soft commodities, there is currently a clash between crop yields, rising inflation, the threat of recession, and demand picking up again after the Corona lockdowns. We shed light on the background.

The weekly chart illustrates the indecision in the market. Roughly speaking, the price oscillates between 260 and 200 US cents per pound. The interim bull market, which began after the Corona crisis, seems to have come to a halt for the time being.

Source: Bernstein Bank GmbH

Overall, the macroeconomic environment has recently been rather bearish again. This is because the outlook for the global harvest has improved. For example, in its outlook for the 2022/23 season at the end of June, the U.S. Department of Agriculture (USDA) cited an increase in production of 7.8 million bags year-on-year to around 175 million bags. At the same time, however, global demand would only pick up by 1.8 million 60-kilogram bags to 167 million. So we have a supply overhang.

Brazil decides
As recently as January, the coffee price had been trading at its highest level since 2011 as producers suffered from drought and frost. Brazil in particular, as the largest Arabica producer, was causing concern in the market – fears were rife that crops would be damaged on a large scale, which could influence prices upward for years to come. Arabica beans account for around 60 percent of global coffee production, and the price-determining market is the New York Mercantile Exchange. No wonder, since the world’s dominant coffee-drinking market is the USA.

Easing in Asia
In parallel, exports of the other major variety, Robusta, have eased again – more product is coming onto the market. Weeks ago, high freight rates and faltering trade in the wake of the Corona fallout had caused problems for Vietnam, the largest Robusta exporter. The same was true for India and Indonesia. Robusta is mainly traded on the Intercontinental Exchange in London.
Arabica beans tend to taste fruity, aromatic and less bitter. Robusta are more earthy or nutty. Both varieties influence each other. When the supply of one bean is too low, coffee roasters switch to the other variety.

Tug of war between bulls and bears
So is the coffee price breaking out downward or upward? Or will it stay with the sideways trend? You decide for yourself. In coffee, we find exactly the same price factors at work in all other soft commodities. The market is finding support in the economies that have reopened after Corona – but a new lockdown in the fall could put a damper on demand again. Furthermore, the rapid rise in inflation is bearish on the one hand. Families will save wherever they can – coffee is not a necessary good. Two cups instead of three in the morning are also enough.

At the same time, inflation is also bullish in the short term: farmers pass on the higher costs of fertilizer and transport to the product. The price rises – until demand is stifled. Supporting in the long term is the population explosion. So keep an eye on the real-time news – 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

07.07.2022 – In the middle of summer, a winter looms for Bitcoin and co. The market will freeze, wasteland, no light anywhere. So is the extinction of cryptos imminent? There are some arguments for it. But those who are dead live longer. We shed some light on the background.

First of all, the recent sideways movement is striking – traders are looking for orientation. It is also noticeable that BTC has torn a fierce gap downwards in the four-hour chart, which should be closed at some point according to technical analysis. According to Craig Johnson, Chief Market Technician at Piper Sandler Companies, the key levels of the current trend channel are $18,910 and $21,557, for one. We tried to roughly draw that in. Literally, the analyst explained: “We’re just short-term consolidating in the context of a longer-term downtrend. (…) A close above $26,000 or $28,000 could finally put a stop to the downward slide the token has been on since April.”

Source: Bernstein Bank GmbH

So where do we go from here? Bloomberg commented that investors in Bitcoin have now gone into hibernation. The bears would have taken command again in this crypto winter.

Private investors as the last bastion
The analyst firm Glassnode explained that private investors have withdrawn their tokens from the crypto exchanges and prefer to stash them in private wallets. Literally, Glassnode said earlier this week, “Bitcoin has seen a near complete expulsion of market tourists, leaving the resolve of HODLers as the last line standing.” HODL means Hold on Dear for Life. So crypto fans who refuse to sell.

Loss of confidence
The account emptings, in our opinion, are due to the fear that after Celsius, other exchanges will collapse; or that Exchanges will be shut down by the state as well as cracked by hackers. The 30-year-old crypto billionaire Sam Bankman-Fried, founder of the FTX exchange, recently warned in an interview with “Forbes” that some Exchanges are already virtually insolvent, only no one knows it yet. Institutional investors are also fleeing BTC: according to Coinshare, professionals from Canada in particular have withdrawn from the bitcoin market.

Attack on criminals
And so to the dark part of the market. Hackers are also likely to slowly leave, as they feel the pressure to search. FBI, BKA, Europol and co. follow the spurt of money – and Bitcoin, Ethereum or Tether have become enormously attractive in recent years as ransom for hackers or as transfer currency for money launderers. Last week, therefore, the European Parliament rubber-stamped a provisional recast of the Money Transfer Regulation. This lays down rules for transfers for the first time: in the future, crypto platforms must determine information about the sender and recipient when they process transactions – no matter how high the amount transferred. If necessary, the authorities will have to be called in.
Our conclusion from all this: We currently see few bullish factors that speak for the cryptos. However, all bearish news could now be priced in. Who knows if a few billionaires will not invest a little play money. 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

06.07.2022 – Is this the end of the buying frenzy for natural gas? The market seems to have become accustomed to the tense situation – it almost looks as if all the negative factors have been priced in. Yet the risks of a new gas panic have by no means been eliminated.

Traders and investors are surprisingly hardened when it comes to natural gas. First the Ukraine invasion. Then, about a month ago, an explosion at the Freeport Quintana liquefied natural gas terminal in Texas. And for weeks now, the price has been falling sharply again. The picture shows the daily chart with the 50 moving average. Obviously, the market is betting on the replacement of Russian gas, for example from Arabia, or on a normalization of the geopolitical situation.

Source: Bernstein Bank GmbH

In addition, just news from Norway contributed to the cooling. As recently as Sunday, the industry had warned that a strike by oil and gas workers could reduce production by 292,000 barrels of oil equivalent per day, or about 13 percent of total output. However, the Norwegian government has now ended the walkout after a few hours. But the issue could flare up again. Norway, by the way, will not be able to supply more gas until 2024 at the earliest.

Gazprom punishes the West
This brings us to Russia. Moscow is already using gas as a weapon: Since mid-June, only about 40 percent has been flowing to us via Nord Stream 1, allegedly due to a lack of Siemens components for a compressor station. It’s quite possible that the full volume won’t be reached at all for a while. Deliveries will be stopped for the time being on July 11, when annual maintenance work begins. This normally takes ten days. If no new gas flows after that, the next price shock is likely to rage in the market.

Ukraine is the key
Which brings us to the subject of Ukraine. It is quite possible that the conflict will freeze in the near future. After all, Russia has apparently suffered heavy losses and could be content to annex only the breakaway “People’s Republics” of Lugansk and Donetsk. Which would give Ukraine time to arm itself to the teeth to prevent a later invasion of the rest of the country.

Appeasement for gas
Politics could provide a new push down the road. Watch our media: the public broadcasters, at the behest of Berlin, will schedule talk shows full of Russia appeasers in the event of a near cease-fire. The phrases will sound like this: Now we must finally look ahead; we must bring Moscow back into the European house; Kiev must also make concessions; Ukraine must receive precisely no new, heavy weapons, otherwise it could retake the occupied territories. And so on and so forth. And at some point, we will then turn towards normality in terms of natural gas supplies.
Or else, everything will turn out quite differently and Ukraine will turn the tables and block the supply from its pipelines, thus extorting new weapons from the West.
Our conclusion: The market for ergdas is far from being out of the turmoil. This is precisely why utilities like Uniper are running into problems. Perhaps the situation will normalize by the cold season. If not, the price will shoot up again – in which case politicians are likely to restrict consumption. 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