News

When we keep talking about accelerating inflation due to the Fed printing money, that is only part of the problem. The second part is that the other major central banks in the world are also printing money. And, of course, the ECB is clearly one of them.

EURUSD

The European Central Bank’s printing press is unstoppable and is causing collisions that any normal investor cannot imagine. For example, the yield on five-year Greek government bonds has dropped below zero. It turns out that one has to pay a premium to lend money to a country that is effectively bankrupt. Recall that the level of Greek public debt is above 180% of the country’s gross domestic product.
In many European countries a cash deposit in a bank can only be placed at 0% per annum in EUR. In Swiss francs the yield is negative. It is obvious to everyone why the value of the Swiss franc or German government bonds is so high. In the event of a collapse of the Eurozone, both assets will at least save investors money. At the most, they would also offer investors an opportunity to make good profits.
However, in the case of Greek government bonds this is definitely not the case. Even without a collapse of the Eurozone, Greece may simply not pay its debts after 5 years. We all remember that a few years ago this country was on the verge of default. And the whole Eurozone (its political part), was saving the Greeks from bankruptcy.
A question may arise. Why then is the EURO not falling? What is the point of buying the same Greek bonds with negative yields? After all, you can invest in U.S. securities and get a yield of 1-2% per annum. The problem is that the American monetary unit can devalue even faster than the European one. The situation is reminiscent of two trees at risk of falling, each resting on the other. And thus prevents the first one from falling.

03.30 Australian unemployment rate for May
09.30 Swiss National Bank interest rate decision

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.

A few days ago in our BTC newsletter we noted the following. The market goes down on the bad news that comes out almost every day. Then it tries to rebound and gets another bad news again. We made a pretty reasonable assumption.

BTC

That bad news will end sooner or later, it cannot be generated all the time. And the market will go straight up. That is exactly what has happened in the last 2 days. There is simply no new negative news. But there are a number of positive news.
The most significant of which is the following. Finally Elon Musk has been forced to make excuses. It is already clear to everyone that his tweets are market manipulation. But the other day he was accused of this by the CEO of a large company from South Africa, with a personal fortune of over 1 billion dollars.
Here Elon Musk couldn’t keep quiet and responded. It turned out that Tesla had sold only 10% of its bitcoins. And this was motivated by a desire to clarify market liquidity. As if a few hundred million dollars could significantly shake that liquidity or collapse the price. But tweets can certainly bring it down.
Moreover, Elon Musk has stated that Tesla will again start accepting bitcoins as payment for cars in the future. As soon as the mining of the first cryptocurrency becomes more environmentally friendly. I believe he has stated this before. But the difference is exactly in the emphasis. Back then it was that Tesla was refusing to pay in BTC because of environmental concerns. And now it says that in future such payment will be accepted again after these problems are solved. Does it seem the same to you? Yes, it is! A sleight of hand. And another manipulation of the market.
Bitcoin went up to $41,000. What matters here is that the first cryptocurrency is above the $40,000 mark, where it has long failed to gain a foothold. If there is no more “bad news” on the market in the coming days, the upward trend can be expected to resume.

04.00 China retail sales for May
14.30 Canadian Consumer Price Index for May
20.00 US Federal Reserve Bank interest rate decision

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.

15.06.2021 – Special Report. Oops, he did it again: Elon Musk has pushed the price of Bitcoin up again. It went almost as high as 40,000 dollars. Tesla may accept BTC again after all. Will this push last? The e-car magnate admitted that his company has indeed sold Bitcoin. That looks like pump and dump. And gives government watchdogs new ammunition for a Bitcoin ban.

Musk calls for green electricity

The Tesla boss tweeted that his company could possibly accept BTC as a means of payment again. But only if the environmental balance of the digital currency improves significantly. As a benchmark for this, the eccentric 49-year-old mentioned a share of renewable energies of around 50 percent in Bitcoin production.
We think: The goal could be achieved if only a large part of the mining disappears from China, where coal is often still used to generate electricity. Beijing wants to displace the cryptos anyway in order to launch its own e-yuan. And if the Americans take over, who already consume a lot of clean natural gas, then maybe the green grandmaster will be happy again. The background: Bitcoins are created by complex computing tasks in server farms. Large amounts of electricity are consumed in the process.

Tesla has sold around 10 per cent of its BTC

Musk had repeatedly disturbed the crypto community with contradictions. On the one hand, he rejected accusations of price manipulation. On the other hand, he admitted that Tesla had indeed sold around 10 percent of its Bitcoin holdings. But this was only to prove that it was possible to sell them off without causing a major shift in the price.

Pump and Dump

Musk was apparently responding to an accusation by Magda Wierzycka, one of South Africa’s richest women and CEO of the financial firm Sygnia. According to CoinTelegraph, thundered she: “The [Bitcoin] volatility we have seen is an unexpected function of what I would call market manipulation by Elon Musk. “She added: “If that happens to a listed company, he would be investigated and severely sanctioned by [the] SEC. “Musk had indeed first pumped up the price and then sold a large part of it at the high. “What we have seen with Bitcoin is price manipulation by one very powerful and influential individual,” said Wierzycka. We think that even if the CEO of a listed company like Tesla does not get into trouble with the US Securities and Exchange Commission, other players could intervene.

For speculation and ransom

Coincidentally, the extremely crypto-hostile head of the Bank for International Settlements (BIS), Agustin Carstens, has just spoken out again. In an interview with “Der Spiegel” he said: “This is a bubble. “And “an environmental disaster”. The market is “easy to manipulate – Bitcoin and other cryptocurrencies are susceptible to fraud”, Carstens told “Der Spiegel”. “Bitcoin is only good for two things – speculation and ransom payments,” Carstens said. It was important to improve regulation, he added. Then he gave a hint of things to come: one had to start above all with platforms “on which cryptocurrencies are traded”. The head of the BIS also urged central banks to develop their own digital currencies.

Traders happy – investors sceptical

In any case, the back and forth has made traders happy – those who react quickly to Musk’s tweets earn good money. But investors are put off by the posturing. Nikolaos Panigirtzoglou, an analyst at JP Morgan, also admitted this. He stated that institutional investors are holding back: “If I look at these bitcoin fund flows, there is no evidence here of a buying-the-dip mentality,” he explained. Demand from large investors is weak and futures are trading below the spot price. Whatever the case, we are keeping an eye on the situation for you – 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.

The price of black gold has been rising on world markets over the past week. The WTI crude oil price surpassed $70 a barrel. This is the first time in 2.5 years. Why is oil rising? And what to expect from it in the short term?

OIL.WTI

API data showed another drop of more than 2 million barrels in US oil inventories. The start of the summer season in the Western Hemisphere and the increased demand for petrol from motorists are having an impact. Optimism about this continues to drive prices higher.
The second reason is the hope, not only of investors but of everyone in the developed world, that the COVID-19 pandemic is effectively over. The daily rise in new infections continues to steadily decline. Government health officials are making high-profile statements. The head of the Norwegian Ministry of Health, for example, has expressed the opinion that “the pandemic is largely over”.
We will see epidemic outbreaks in developing countries for a long time to come. But they will not have a global impact on demand. The topic of coronavirus is likely to recede into the background in 2022.
At the same time, according to the latest report from the EIA, the forecast for a recovery in US shale oil production in 2021 and 2022 has not changed much. Which gives support to black gold. After all, the rapid growth of shale production has completely tied OPEC’s hands.

What could prevent the oil price from rising further?

The main risk factor is the OPEC cartel itself. Its overcapacity is more than 5 million barrels a day. It is clear that all this idle capacity, sooner rather than later, will start pumping oil again. This will immediately lead to a surplus of supply over demand.
At the moment, OPEC’s large under-utilisation of capacity is fully incorporated into the price. Therefore, risks are constantly hanging over the market and speculators are trying to ignore them. Before the next OPEC meeting, however, there could be strong pressure on the price of black gold. In fact, many traders will want to lock in profits on the back of the most favorable situation.
It is also important to understand the following. The spread between the benchmark grades of Brent and WTI has narrowed to just $2 a barrel. Historically, when that happens, the market is near its highs.
What will outweigh it in the end? We will find out in the next couple of weeks.

06.30 Japanese industrial production for April
11.00 EU industrial production in April

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.

As we anticipated yesterday, the US consumer price index for May substantially exceeded analysts’ forecasts. However, the first reaction of the US stock market was irrational. The market began to rise and showed a new all-time high.

S&P 500

Yes, the backlash has already started within an hour. However, the reaction to the news is very alarming. Perhaps someone knows more than we do. Namely that despite accelerating inflation, the Fed will continue to print money. And not even hint at a tightening of monetary policy.
In this case the first reaction of the market is fully justified and rational. The US dollar is depreciating faster and faster. And there is an urgent need to get rid of it. American equities, in this case, can also serve as a value preservation tool. After all, the products and services of companies are getting more expensive. And so revenues and profits will go up.
The main thing is that it does not turn out to be another bull trap. But as practice shows in recent years, absolutely all falls in the US stock market are redeemed, and the S&P 500 Index reaches new all-time highs.
The reaction to the gold news is also telling. Its quotations have jumped. So the big gold bulls also see no hint of an interest rate hike any time soon, which could lead to a strong correction in the yellow metal’s market.
Is this good or bad for us? It is worth splitting the question into two parts here. If we are talking about traders, there is no difference. The main thing is that the price moves and not stands in a narrow corridor. And if we are talking consumers, things are very sad.
Our savings are rapidly depreciating. And deposits in banks are melting before our eyes in real terms, relative to the cost of real estate, new cars, holidays and everyday services.

13.45 ECB interest rate decision
14.30 US Consumer Price Index for May

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.

The EUR/USD and GBP/USD have been in a tight corridor for the last few days. But all that could change as soon as today! Why? At 2.30pm US inflation data for May will be released.

EUR/USD

China’s producer price index was published on Wednesday. It rose immediately by 9% year-on-year, after rising 6.8% a month earlier. This has not been seen in 13 years, since September 2008. The reason for this increase remains the same: The appreciation of key commodities, which China is obliged to import. We are talking chiefly of iron ore and copper.
Monthly producer price data for China comes out slightly ahead of US data. In fact, they are a leading indicator. It’s a subtle hint that inflation continues to rise rapidly around the world. Which raises investor fears that US inflation data will also significantly exceed forecasts.

What can this lead to?

If the year-on-year consumer price index exceeds 5% (analysts expect 4.7%), we can expect a strong collapse in stock markets around the world on Thursday. U.S. Treasury yields would soar. And with it, the dollar will break out of the bandwagon and continue rising. This reaction will be based on the increased likelihood of a premature unwinding of the Fed stimulus and an increase in the discount rate.
In the EUR/USD this will lead to the risk of a renewal of the June lows at 1.1986. And in the GBP/USD it will lead to the removal of a huge amount of stops below 1.408, which have accumulated there over the past 3 weeks. It will be very interesting to watch the dynamics of gold. If it falls first on this negativity and then rallies back it will be a strong bullish signal. And the target of $2000 per troy ounce could be reached as early as June.

13.45 ECB interest rate decision
14.30 US Consumer Price Index for May

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.

If you don’t follow the daily fluctuations of the first cryptocurrency, it seems to be becoming less and less interesting to investors. But we are traders. And we follow closely the processes that take place within the day.

BTC

For the last couple of weeks bitcoin has been trying to rise almost every day. And almost every day (or every other day) it drops sharply and then tries to rise again. Staying in the 32-40k corridor.
Where do these sharp drops come from? You can see them particularly well on M5 and M15 timeframes. It’s all news that has a dramatically negative impact on the mood of the entire cryptocurrency community. And hence on the price, collapsing it downwards.
Recently, we suggested that there is a deliberate attack on the first cryptocurrency by major governments around the world. And even Elon Musk’s tweets fit fully into this theory. He can’t be shooting himself in the foot when Tesla has bitcoins on its balance sheet, can he? Elon Musk can only do that if the benefits from his tweets far outweigh the losses from the decline in the value of BTC. And the US government will find many ways to motivate him in this way, for example by awarding government contracts.
Why governments are fighting bitcoin we all understand very well. It is practically the only thing in today’s world that no one can control. But who will win?
From a technical point of view, the long-term owners of the first cryptocurrency are winning so far. The price, despite the daily negativity, has never fallen below the $29,000 level. That is, whatever news comes out, the market ignores it, starting to grow the next day.
Now let’s imagine what will happen if the flow of negative news stops. At some point it will stop or this negative news will not be noticed at all. From that moment the upward trend will continue again. All who wanted (weak hands) sold their BTCs for May and first week of June. The question is rhetorical, into whose hands these coins went.

03.30 China Consumer Price Index for May
16.00 Bank of Canada interest rate decision

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.

The US unemployment figures for May were published on Friday. It was slightly worse than analysts’ expectations. However, not as nightmarish as in the previous month. But even that was enough for the US dollar to start falling against all currencies.

DXY

The chart above shows the dollar index (DXY). From a technical point of view, nothing serious has happened yet. Only the short-term uptrend has stopped. On the fundamental side, however, all is not so good. The big investors realise that such unemployment figures prevent the Fed from even talking about stopping the printing press.
This means that inflation growth in the USA will at least not decrease but rather accelerate further in the coming months. Recall that so far it is industrial goods and raw materials which are rising the most. Only with a lag of a few months will it have an effect on consumer goods. For example new cars, computers, everyday consumer goods.
It’s only fair that everyone wants to protect their money from inflation. There aren’t many options left. If you want to invest your depreciating dollars in real estate, it is already too late. It is already appreciating at a record pace.
Investors and traders are looking at more stable currencies, as well as the comodities, which have not had time to increase in value much. A great option is to buy the yellow metal, which actually becomes an alternative to fiat currencies.
But the real question about the future of the American dollar will be if the Dollar index breaks through 89. The chart will open an abyss, which can fall into for a very long time, without seeing any support.
What can stop this process? Apart from good labour market data, which we may see in the coming months, it is worth keeping in mind the seasonal factor. Summer and a couple of holidays are starting. This could reduce the amplitude of the fluctuations in the markets, putting them in a flat.

08.00 German factory orders for April
08.30 Swiss consumer price index for May

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.

The US Federal Reserve has announced new plans. By the end of 2021, it wants to sell off the corporate bonds it bought at the height of the coronavirus pandemic in 2020 from its balance sheet.

S&P 500

Of course, these are still small numbers, around $14bn. It is a drop in the bucket compared to the $120bn in government and mortgage bond purchases each month. However, it is worth pointing out the fact. The Fed is about to sell some assets off its balance sheet and remove a small amount of liquidity from the system.
At the time before covid, in the autumn of 2017, the quantitative tightening programme also started with a small amount of $10bn a month. No one was paying attention at all at the time. But by the end of the following year, many were no longer laughing. It is worth remembering the precipitous drop in stock markets in December 2018. After that, the Fed came to its senses and started pumping money into the economy again.
There is still a long way to go now. The Federal Reserve is supposed to announce plans to slow down the printing press in the near future. But judging by the regulator’s actions and rhetoric, this process could be stretched out over time. Most likely, it is being done to pump as much money into the system as possible. In the future it will allow buying government bonds to finance the huge hole in the federal budget.
It is important for traders to remember that a lot will depend on the unemployment data which is released today. Last month the reality was like a nightmare. If the opposite happens now, it will untie the Fed’s hands for more signals about tightening monetary policy.

11.00 EU retail sales in April
14.30 US Unemployment Rate for May
14.30 Canadian unemployment rate for May

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.

On Tuesday, 1 June, WTI crude broke through resistance and hit a new yearly high. Naturally, all eyes immediately turned to black gold. And the questions began. What is it? The beginning of a new trend to the area of $100 per barrel? Or another bull trap, of which there have been many in recent years?

OIL.WTI

Let’s start with the fundamentals. What has changed recently? In principle, nothing has changed. Gradually, developed countries are beating the coronavirus pandemic. But the situation in developing countries is even worse than a year ago. Air travel is also increasing, which means there is a greater demand for aviation fuel. But we all knew that before.
However, there is a potentially new downward factor in the market. It is the possible removal of restrictions on oil exports from Iran. And that will be the real nail in the coffin of the uptrend.
But then why is the oil price rising? You could put the question another way. Are you sure the price of oil is going up? Let’s just say inflation is rising. Oil simply follows the upward trend in the price of all manufactured goods. At the same time, oil is rising much more slowly than copper, timber, rare metals.
Can the price of oil show $100 per barrel in the medium term? Yes it can. But only for one reason – anything is possible in the market. It means that speculators will try to push the price to the sky under a particular futures contract. Who does not believe in it, just recall the events of a year ago when the price of WTI oil reached -37 USD per barrel.

03.30 Australia’s Q1 GDP
08.00 German retail sales for April

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.