News

07.02.2022 –  Gloomy clouds are gathering over Wall Street: Influential analysts warn of a true “endgame” that has now begun. According to them, the storm is brewing over the bond market. And it could also drag the stock market down with it in a true “doom loop”. Counter-indicator or realistic assessment? Make up your own mind.

Morgan Stanley: Here we go

Yesterday Andrew Sheets, chief cross-asset strategist at Morgan Stanley, spoke out. At first it looked as if the market had coped well with the new challenges – surprisingly high inflation, weak economic data, hawkish central banks.

But then came the warning: a lot of money would soon be withdrawn from the market. “From May 2022 to May 2023, Morgan Stanley economists expect G4 central bank balance sheets to shrink by US$2 trillion, four times the largest 12-month decline ever, from 2018-19.” Now, they say, it’s just getting started, as the stock market faces a double, historic shift in monetary policy: “reversing the lowest policy rates in history, and reversing the largest central bank bond purchases in history.” Ergo: “This is just the start of the game. A record amount of stimulus is about to be withdrawn from the global economy. It begins.”

“Credit anticipates, equities confirm”

Which brings us to the topic of bonds. The brilliant blog ZeroHedge pointed out an unhealthy development: one of the largest corporate bond index funds – the HY Corporate Bond Price ETF – has decoupled from the equity market and has been heading south for some time. This does not bode well. Because: “Credit anticipates, equities confirm” – the credit market anticipates things, equities confirm everything. This decoupling happened in the same way during the normalisation of monetary policy in the third quarter of 2014. And again in the fourth quarter of 2017.

Outflows from the bond market

Viktor Hjort, Global Head of Credit Strategy at BNP Paribas, also spoke out in the Financial Times with a similar warning. According to him, the cycle has turned and the economy will no longer support bond investors. “The market is a lot more nervous than it was at the start of the year. Another alarming signal: funds buying high-yield US bonds have been experiencing strong outflows for about a month, with about $11 billion withdrawn so far. The FT pointed out that Ion Analytic had called off a bond deal in January because nervousness and volatility were too high.

Doom loop and inflation dilemma

Some experts believe that if the bond market crashes, we could see a real “doom loop” – investors are likely to offset losses in bonds by cashing in on equities. Which would mean an intensified sell-off across the board. This would require the Federal Reserve to intervene, as in the Corona Crash of 2020 – but this will be difficult given high inflation. Our conclusion: We currently see more opportunities on the short side. On the one hand, because the important US indices are battered from a chart perspective and have not managed a convincing jump above the 200-day line. Secondly, because of the adjustment of US monetary policy. And then there are geopolitical risks such as an invasion of Ukraine or the annexation of Taiwan. Of course, the whole scenario could turn around immediately if the sabre-rattling continues and the Federal Reserve postpones tapering because of an impending recession. So keep an eye on the real-time news – 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.

04.02.2022 – The bulls lack strength: After a few days of gains, a sharp setback follows. High-tech stocks in particular have been hit hard. From a chart point of view, something has to happen now, otherwise prices will plunge into the abyss. Especially if something completely unexpected happens. We have an idea.

Chaos on the labour market numbers

What a bloodbath for tech stocks: Facebook parent Meta lost around 250 billion dollars market cap in the meantime. After the market closed, however, Amazon presented figures that were enthusiastically received. This is exactly what the market has a problem with, believes Charlie McElligott: first, all stop marks were torn as the sell-off spread to the broad market. Then Amazon reversed the trend. Which leaves everyone to reposition themselves. We add: The Nasdaq Composite has moved back south away from the 200-day line. A new potential hammer is due today in the form of the US jobs figures. We’ll know more after 2.30pm on the short-term outlook.

Threat of trucker revolt

In the medium term, the anger of US truckers could soon land a veritable black swan on the trading floor. The mainstream media, of course, dismiss the big demonstration in Ottawa that sent posh Canadian Prime Minister Justin Trudeau running for the hills as an outrageous uprising by a stupid, uninoculated fringe group. Can be ignored. Only one paper is breaking from the green-left mainstream: “The Hill” predicts a similar show of force in Washington D.C. in the coming weeks, as well as a veritable tightening of the supply situation. Which brings us to the subject of inflation – which will have consequences for the stock market.

“The Hill, like us, sees a deeper problem with the protests: “People are also tired of being told not to question the authorities. They are fed up with officials who say immodestly that they represent science even as many of their pronouncements turn out to be worthless.” Especially since a study by Johns Hopkins University just proved the uselessness of the lockdowns – only destroyed livelihoods, of course not in the fine circles. Unfortunately, the cultural chic doesn’t understand the seriousness of the situation: Facebook has just locked down a trucker group with 130,000 members. The arrogant censorship is likely to further fuel the anger.

Destroyed livelihoods

Author Liz Peek predicts: “The trucker rally will draw support from people who are angry that governments have shown indifference to the plight of restauranteurs, hairdressers and countless other small business owners whose livelihoods were callously destroyed by officious bureaucrats. People who are angry that their children have lost immeasurable learning because schools were closed and have suffered emotional impairment as they wear pointless masks day in and day out. They are angry at the stupidity of it all.”

We add: Who says that angry truckers in Europe don’t revolt against the arbitrariness of politics and bring everything to a standstill for a moment? A single transverse truck brings a motorway to a standstill for hours. Perhaps you have noticed, outside of published opinion, how anger has boiled up since politicians loosely shortened the convalescent status from six to three months, while the Bundestag continues to indulge itself with half the year. “All animals are equal, but some are more equal” – George Orwell would have seen his sceptical predictions confirmed not only because of this statement from “Animal Farm”. And what anger has built up in the meantime because politicians believe they can undermine the fundamental right and cap the freedom to demonstrate. Therefore our advice: Keep an eye on the real-time news. Bernstein Bank also keeps an eye on the issue 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.

03.02.2022 – The Bank of England has once again raised interest rates. And above all, it exceeded the expectations circulating in the market about a new, hawkish line. With which London is likely to lead the way for other central banks. The pound has risen sharply in the meantime. We shed light on the background.

January was a wonderful month for bears. And a horror for bulls. The S&P 500 – down 5.3 percent – and Nasdaq – down 9 percent – posted their worst stock market month since March 2020. Even the recent countermovement isn’t helping much. We hope that you were right with your trades in the wild back and forth. But where do we go from here?

That was close

All buckle up for the liftoff: The British monetary guardians have raised the key interest rate by 25 basis points to 0.5 percent. The rate hike is the first double rate increase since 2004 and was expected by the market. However, the details were a surprise: Four out of nine central bankers on the Monetary Banking Committee (MPC) wanted the rate to rise by as much as 0.5 percent. So only a slim majority was in favor of the smaller move – this majority could quickly topple, leaving room for surprises in the future. GBPUSD jumped from 1.3540 to 1.3630 before traders cashed out.

There is more to come

In addition, the BoE will shrink the balance sheet, here are about 895 billion pounds in government bonds, accumulated over a decade under quantitative easing. The tapering is scheduled to begin in March. All monetary watchdogs agreed that further moderate tightening was needed in the coming months. The BoE pointed to rising inflation: “the remit is clear the inflation target applies at all times, reflecting the primacy of price stability in the U.K. monetary policy framework.”

Severe inflation

Monetary policymakers believe inflation will reach 6 percent in February and March and 7.25 percent in April. That’s more than triple the 2 percent target. The MPC pointed to price risks in the energy sector and wages. This fits with a report from Ofgem, the U.K.’s energy watchdog: according to the report, the energy bill for a typical household will rise by 54 percent in April.

Literally, the Bank of England said: “The MPC judges that, if the economy develops broadly in line with the February Report central projections, some further modest tightening in monetary policy is likely to be appropriate in the coming months. The Committee continues to judge that there are two-sided risks around the medium-term inflation outlook, primarily from wage developments on the upside and from energy and global tradable goods prices on the downside.”

Our conclusion: The British are probably just the first to have to react to the inflation risks. If London raises rates faster and more than expected than the rest of the world, the pound should enter a bullish phase. In the case of the dollar and the euro, similar interest rate steps and corresponding swings in the currency market could follow belatedly. This is especially true for the U.S., where midterms are due in November – sentiment in the country is poor, mainly because of inflation. 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.

01.02.2022 – Wall Street brokers are plumbing the depths of the stock market: Is this it for the sell-off? Have we seen a viable bottom with the recent countermovement? Or were the gains of the past two days just an overdue bear market rally? We take a look at analysts’ echo sounder.

January was a wonderful month for bears. And a horror for bulls. The S&P 500 – down 5.3 percent – and Nasdaq – down 9 percent – posted their worst stock market month since March 2020. Even the recent countermovement isn’t helping much. We hope that you were right with your trades in the wild back and forth. But where do we go from here?

Sell the rally

Scott Rubner, actually always bullish trader at Goldman Sachs, judged that the “sell the rally trading mode is still in place”. The reason is a double whammy of a throttled money supply and a slowed economy: the investment bank now expects five interest rate hikes by the Federal Reserve, previously it saw four. The gold men also cut the outlook for U.S. gross domestic product in the first quarter from 2.0 to 0.5 percent. For the full year, they lowered the forecast by 0.2 to 3.2 percent.

Sell quickly

For Morgan Stanley, too, the only question is how quickly to sell again. Chief Equity Strategist Michael Wilson just judged, “the safety net of forward guidance from the Fed is gone just as earnings revisions and PMIs appear set to decelerate – an unattractive risk/reward set up. We remain sellers of rallies and of the view that S&P 500 fair value remains closer to 4,000 tactically. Stick with defensives under the hood.”
All things considered, he said, the Federal Reserve is hell-bent on stopping inflation; it would take a much bigger sell-off in the stock market to keep the Fed from hitting the brakes sharply. And not all indexes had made it back above the 200-day line to the upside. The wild swings to the upside are just typical bear market rallies, he said.

“A bottom is in”

Andrew Tyler of JPMorgan, however, expressed a counter opinion. He stated, “Friday’s moves were primarily related to month-end rebalancing which tends to occur about 3 days before month-end.” However, he thinks that in the short term it will continue to go up. Specifically, “we’ll continue to see earnings support from MegaCap Tech and the chatter surrounding Citrix being bought may also help form a near-term bottom.” Investors should go long on “MegaCap Tech, Energy, Metals/Miners, Consumer Recovery stocks, and Transports … hedged using a market-neutral approach, with a combination of SPX, IG Credit (LQD), and Staples.” However, the recovery will not be sustainable until the VIX remains below 20 points on a sustained basis, he added.

Pay attention to the news

Our conclusion: Some bombed-out stocks could still go up a bit. As a ring leader among the indicators, we see the Nasdaq Composite, which should attempt a recovery to the 200-day line, which runs at 14,278. Then things will get exciting. Remains, moreover, the look at fundamental news – keep an eye on the real-time ticker. An invasion of Ukraine, for example, with pressure from the energy market and accompanied by a possible cyber war could cause a little panic. Or how about a revolution? A funny harbinger of the only seemingly unthinkable was just Canadian Prime Minister Justin Trudeau’s cowardly flight from wild-eyed truckers in Ottawa. The World Economic Forum’s distinguished protégé made a hasty retreat from the packers and taxpayers, who are fed up with the whole Corona stranglehold and the paternalism of the out-of-touch elites. The Bernstein Bank wishes good luck – we will keep an eye on all important issues 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.

31.01.2022 – Since the beginning of November, Bitcoin’s price has easily halved since its all-time high. Unfortunately, there is no fundamental reversal of the trend in sight. On the contrary. Exactly the scenario is emerging that we have repeatedly warned about in this space – politics is tightening the screw.

Cryptos in the sights of tax investigators

Ryan Korner, chief of IRS Criminal Investigation in Los Angeles, recently gave an interesting talk at the USC Gould School of Law, according to Bloomberg. According to the talk, concerns are growing about NFTs – non-fungible tokens, or virtual artifacts – as well as cryptocurrencies. “We’re just seeing mountains and mountains of fraud in this area,” Korner judged. DappRadar added the market for NFT has grown from $100 million in 2020 to $22 billion in 2021. The IRS Criminal Investigation Unit seized $3.5 billion in cryptos last year, according to its annual report. You can imagine what happens to them – the tokens are sold to fill the government coffers.
We mean: What used to be the purchase of alleged Chinese antiquities at Christie’s and Sotheby’s for corrupt Chinese apparatchiks to get money out of the country is now the art trade. Presidential son Hunter Biden, for example, sells highly valued paintings to unknown collectors. Now if you think that this might be patrons bribing daddy, you’re just a nasty conspiracy theorist.

Upcoming Crypto Regulation in the U.S.

Regardless, the White House just announced the regulation of Bitcoin and co. An executive order to this effect is expected to be issued shortly, reported “Barron’s”. State Department, Treasury Department, National Economic Council, the Council of Economic Advisers as well as the White House National Security Council are to cooperate, because for the administration cryptos have “economic implications for national security.”

Conflicting signals from Russia

We wonder if the offensive is also related to the fact that Russia could circumvent any sanctions in the banking sector with e-currencies. Moscow, of all countries, has reportedly eliminated REvil/Sodinokibi, arguably the most brazen, successful extortion crew, the FSB domestic intelligence agency announced. However, we can imagine the talented hackers working for the Kremlin soon. If Russia unleashes a cyber war over Ukraine with the support of China and North Korea, you can expect a mega wave of ransomware attacks against Western industry. Corporations that have been crippled by cyber gangsters will then invest billions of dollars and euros to stock up on BTC and co. and buy their way out.
It is true that a few days ago the Russian central bank called for a ban on trading and mining cryptos in the country. It said these were nothing more than a volatile Ponzi scheme and a risk to financial sovereignty. However, President Vladimir Putin stood in the way of such a crypto ban and praised e-currencies.
Our conclusion from all this is that with the threat of regulation in the U.S., we would have a major reason for the recent bloodbath in digital currencies, along with the Federal Reserve. After all, if the Fed raises interest rates, fewer people will flee into alternative assets. But: dead birds live longer. Cyber crime and cyber war could turn things around. 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.

25.01.2022 – What a wild ride: in one of the sharpest reversals ever, Wall Street made the bulls happy. After the days of horror, the rebound was also overdue. Was that it now with the correction? We shed light on the pros and cons.

Violent rebound

What a historic day: yesterday’s Monday was only the sixth time since 1988 that the Nasdaq made up a 4 percent intraday loss to close firmer, according to financial blog ZeroHedge. For the S&P 500, it was the biggest intraday comeback since 2008, when the U.S. was mired in the biggest financial crisis of modern times. Until yesterday’s dramatic reversal, the S&P 500 had never had such a bad start to the year since 1920, down about 11 percent, ZeroHedge recalls. The SPX had slumped about 4 percent during the day, to end the day with a slight gain of half a percentage point. On Wall Street, the index fund SPY – also known as Spider, it follows the S&P 500 – saw shares worth about $100 billion. Only in the Corona Panic of 2020 were there more. The VIX fear indicator also made its biggest reversal since the spring of 2020.

Push from the options market

Analysts at SpotGamma attributed the rarely seen volatility to the options market – massive activity emanated from there after the close in Europe. According to the report, a large put seller suddenly appeared, causing a turnaround in the S&P 500 – all of a sudden, long investors jumped in. Which led to a violent short squeeze. Our 50 cents: we wouldn’t be surprised if a major investment bank took advantage of the shallower market with the departure of the Europeans to launch a major attack. In a matter of hours, the VIX collapsed from 39 to 29.

Bearing factors

What remains is the question of whether this was now a major fundamental reversal or just a flash in the pan. As it stands, the Federal Reserve will go through with the interest rate turnaround. And with the tapering that has now been announced several times, it will suck money out of the financial market. The world’s major central banks – above all the European Central Bank – are likely to follow suit. This is because inflation is threatening people’s savings in both the USA and Europe. Moreover, the danger of a large-scale confrontation in Ukraine with Russia remains. If Moscow makes a show of the West, China could try to attack Taiwan.

Bullish arguments

However, many investors believe that the Fed could trigger a recession by braking too hard. Therefore, new quantitative easing may well be a possibility. Morgan Stanley, for example, recently stated that it won’t be long before weaker growth overtakes Fed tigthening as the biggest concern on the trading floor. Further, Russia might only growl, not attack. Or, in a limited operation, annex the territories where mainly Russian-born Ukrainians live. This would lead to increased appeasement in the West and acceptance of the fact.
So: was that it now? Maybe. ZeroHedge sees the Fed’s Plunge Protection Team behind yesterday’s about-face. It may also have just been the result of a brilliant attack by an investment bank. Which speaks for a short-term effect. We note that the S&P 500 continues to trade below the 200-day line, which was last at 4,430 points. And point out that nothing has actually changed in the fundamental situation. This is indicated by the situation in cryptos: Bitcoin barely moved. The situation is likely to brighten only in the long term, when governments declare the end of the Corona pandemic. Anyway – 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.

24.01.2022 – Sleepy Joe has given Russia a free hand in Ukraine: In a disastrous press conference, the U.S. president said he saw no reason to intervene in a minor incursion. JPMorgan immediately studied the potential consequences of a Russian attack.

Walk in

Last Wednesday, Joe Biden indicated the U.S., would not help Ukraine in the event of a Russian attack if it was a “minor incursion.” What a “minor incursion” should be, he did not explain. Only in the case of a large-scale invasion would the United States intervene. Biden predicted that Russia would invade the neighboring country and could also colonize it – but not without significant losses; moreover, Moscow would have to answer for it. Later, Biden backtracked and explained that there would be a U.S. reaction in the event of a “minor incursion,” but that it would not be as strong as in the event of a large-scale invasion. Ukrainian President Volodimir Selensky responded on Twitter that there would be no “minor incursions.”

Separation of the Donbass

The way things could play out has been mapped out by the Russian Duma. Deputy Alexander Borodai said separatists in Ukraine should declare independence for the Donbass region. Then Russia should recognize the mini-state and invade. Kremlin spokesman Dmitry Peskov confirmed that this plan was indeed being discussed. Ergo: a separation of the region, which is predominantly inhabited by ethnic Russians, along the lines of Crimea. We had already predicted this in our annual outlook. Just like the fact that the U.S., the U.K. and the Baltic states are supplying weapons to Ukraine and that Germany is holding back on appeasement – natural gas and so on, you have to differentiate.

Oil shock and global recession

On Friday, JPMorgan immediately turned its attention to the consequences of a new source of war. The U.S., along with its allies, would impose sanctions on Russia, which would worsen global financial conditions. JPM also sees a shortfall of 2.3 million barrels of oil per day on the world market, which should quickly catapult prices to $150 per barrel. This would reduce the gain in global GDP in the first half of the year from 4.1 to 0.9 percent. Inflation would rise from an assumed 4 percent per year to 7.2 percent.
We add: Many Wall Street brokers believe a local conflict could trigger a third world war. After all, U.S. trainers are in Ukraine; Poland, Estonia, Latvia, Lithuania, and Britain could rush to Ukraine’s aid with troops, arguably attacking them themselves. Which raises the question of a NATO mission. You can imagine the panic on Wall Street.

Government of failures

Besides, when if not now should Russia strike? The weakest president since Jimmy Carter rules Washington. Despite penetrating pro-Democrats sound bites in the leftist media, Biden is down to -10.8 in the “Real Clear Politics” poll generator. Donald Trump is at -9.9, with incompetent Vice President Kamala Harris scoring a whopping -15.4. And Nancy Pelosy, the Democratic Speaker of the House of Representatives who likes to use insider knowledge to make stock deals and was the first to retreat to a safe panic room a year ago when Congress was in turmoil, leaving colleagues on the floor alone, manages a negative score of 24.6.
So, keep your eye on the real-time news and your powder dry. Because when the guns are thundering, you should buy. Especially since the world’s central banks are likely to launch new aid programs again soon in the event of a global oil and economic shock. The 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.

21.01.2022 – Fasten your seat belts: If stock market guru Jeremy Grantham is right, Wall Street is in for a nasty crash. The interesting thing is that the perma-bear has often correctly predicted a crash. We don’t want to deprive you of his new word message with the title “Let The Wild Rumpus Begin” – see in German in the title of this analysis.

Super Bubble

Grantham is the co-founder of GMO, an investment manager in Boston. He just wrote that U.S. stocks are in a “Super Bubble,” the fourth of its kind after 1929, 2000 and 2008, and now the S&P 500 will dive to 2500 points. The Nasdaq Composite will drop even more, he said. “I wasn’t quite as certain about this bubble a year ago as I had been about the tech bubble of 2000, or as I had been in Japan, or as I had been in the housing bubble of 2007,” Grantham added in an interview with Bloomberg. “I felt highly likely, but perhaps not nearly certain. Today, I feel it is just about nearly certain.”

Checklist of insanity

The evidence is overwhelming, the investor wrote in his new analysis: the first warning sign was the crash of speculative stocks last February. One example, he said, was the Ark Innovation index fund of well-known investor Cathy Woods, which halved in value. Further, the Russell 2000 mid-size index has lagged the S&P 500, normally outperforming in a bull market, he said. Grantham went on to point to “crazy investor behavior” typical of the late stages of a bubble: meme stocks, buying frenzy in e-car stocks, the rise of meaningless cryptocurrencies like Dog-E-Coin, and million-dollar prices for non-fungible tokens, or virtual works of art.
Literally, the 83-year-old Grantham wrote, “This checklist for a super bubble running through its phases is now complete and the wild rumpus can begin at any time.” He continued, “When pessimism returns to markets, we face the largest potential markdown of perceived wealth in U.S. history.”

Helpless Fed

Grantham explained the fact that stock prices rose spectacularly last year by the strength of a few blue chips. The veteran primarily blames central bank policy over the past 25 years. Now the Fed can no longer intervene because of rising inflation, he said. Not only stocks are in a super bubble, but also bonds and the global real estate market, as well as commodities.

The antidotes

Grantham recommended selling U.S. stocks and getting into cheaper stocks in Japan and emerging markets. Further, gold and silver and cash to get back in after the correction. Our conclusion: Of course, it is easy for the bulls to ignore Grantham. Because he sent alarmist warnings into the world already at the beginning of 2021. For example, this one: “Bursting Of This “Great, Epic Bubble” Will Be The “Most Important Investing Event Of Your Lives,” Followed By “Spectacular” Crash In “The Next Few Months.” And in the end, prophets of doom are rarely right.
Now, however, things have changed. After all, the Federal Reserve is just pulling the rug out from under the stock market with its tapering. Maybe, maybe a protective put isn’t so wrong. The 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.

19.01.2022 – In Germany, the yield on the main German bonds is trading in positive territory for the first time in around three years. In the USA, the yield climbed to pre-Corona levels. If this is not a short-term outlier – and there are currently few indications that it is – the interest rate turnaround has thus begun.

Yields pick up

In Germany, the yield on the ten-year Bund struggled back above zero for the first time since 2019 – the Bunds reached around 0.02 percent. In the U.S., the 10-year government bond yield just rose to 1.865 percent, the highest level since January 2020. Investors should not ignore these signs: Investors are getting out of bonds because they expect governments to have to pay them much higher interest rates soon.

Six or seven rate hikes?

Most U.S. brokers now expect the Federal Reserve to take four interest rate steps. Jamie Dimon, head of the major bank JPMorgan, however, expects even six or seven rate hikes. Over the weekend, star investor Bill Ackman of hedge fund Pershing Square Capital Management had also spoken out, judging that the Fed was losing the inflation battle and would have to raise a drastic 50 points in March to restore its credibility.

Looking at the Fed balance sheet

Morgan Stanley predicted a huge impact on the financial market from the upcoming shrinkage of the Fed’s balance sheet, especially with regard to U.S. government bonds and mortgage-backed securities: “Do not underestimate the effects of liquidity withdrawal. The mammoth balance sheet the Fed has built up was a key determinant of liquidity across markets. As balance sheet runoff is put into motion, the withdrawal of liquidity will have profound impacts. Determining how it plays out is far from straightforward and will be determined by a variety of factors. Understanding the details matters. So hold on tight – there’s volatility ahead.”

Stocks in sell-off

As a result, Wall Street is off to its worst start to a year since 2016. And a few more chart analysis basics: the S&P 500 and Dow Jones are heading south to their 100-day line, and the Nasdaq Composite has even broken lower. The VIX fear indicator moved higher. Investors fled more expensive, interest-sensitive high-tech stocks for cheaper value stocks.
Now much will depend on the reporting season; but the defining issue remains interest rates. “With rates biased higher over the coming months, investors should be prepared for parts of the tech sector to be challenged again,” judged investment firm Principal Global Investors. It added: “Although rising bond yields are challenging the entire tech sector, investors must distinguish between profitless names that are a long way from demonstrating healthy earning power and mega-cap tech firms that can defend their margins.” So we’ll be interested to see how much monetary policy turns the tide. 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.

17.01.2022 – Is this the end of the crypto selloff? Some experts believe just that. In fact, BTC has dipped down to around $40,000 to stage a recovery. The fact is that the largest cryptocurrency is trading below both the 50-day and 100-day lines. Let’s shed light on the arguments of BTC bulls today. One of them sees current purchases as “failsafe” – fail-safe, absolutely reliable.

Oversold terrain

The market explains the sharp drop in Bitcoin prices since November mainly with the Federal Reserve’s plans to tighten. After the biggest crash since May 2021, with losses of around 40 percent, the price is as oversold as it was last in the Covid crash – “traditionally a failsafe bullish indicator,” judged the blog ZeroHedge. Some traders saw the 40,000 as a floor. According to Noelle Acheson of Genesis Global Trading, there is some upside potential now. For example, she said, demand for put options in BTC has plummeted, while demand for call options is on the rise. Mega bull Mike McGlone of Bloomberg Intelligence sees a price target of $100,000.

Pay faster

Marcel Kasumovich, Head of Research at One River Asset Management believes in a fundamental re-rating in cryptos. One River states that we are in an early phase of the digitization of finance, marked by uncertainty. And it is precisely now that it pays to add cryptos to the portfolio. After all, “Investors focused on macro narratives have mattered more than leveraged traders.”
Specifically, One River cited the Lightning Network. This system was introduced in 2015 by independent programmers from the blockchain world to process smaller payments. One problem for everyday use was its slow pace. But the network can now process billions of transactions in a second, according to One River. And payment providers like Bottlepay are accepted by the Financial Conduct Authority in the U.K. – meeting a key money laundering test, it said. According to One River’s pricing model, BTC would need to be priced at $50-60,000.

Unbroken activity

Fidelity Digital Assets stated the network is showing resilience as it continues to spread around the world. Interestingly, despite Chinese urges and notwithstanding blackouts in Kazakhstan – surprisingly the world’s second largest Bitcoin miner – the hash rate on Bitcoin just hit another new high, it said. Last Thursday, 215 million terahashes per second were registered.

Buying online at Walmart

Cryptos also got a boost from Walmart: according to CNBC, the supermarket giant registered seven new trademarks late last month to sell goods online – electronics, home decor, toys, cosmetics, etc. Most important, customers will be able to pay with virtual currencies.

Skepticism remains

Last but not least, that leaves James Malcolm of UBS as a dissenting voice: The crypto analyst wrote that the market is bearish because the U.S. Securities and Exchange Commission (SEC) has not approved Bitcoin ETFs. Moreover, Bitcoin is not a better money, the technology is not mature and regulation is another hurdle, he said. We look forward to seeing how the story continues. 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.