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16.02.2020 – Special Report. BTC is scratching the price of 50,000 dollars. No wonder – three new bullish news items just hit for the e-devise. Apparently the dam is breaking and the posh world of old money is toying with the idea of investing. But at the same time, two bearish news items have also hit the cyber coin. We shed light on the current state of affairs.

New all-time high

By the time you read these lines, it could be that time: BTC may have already surpassed the round mark of 50,000 dollars. In any case, the e-money just marked an all-time high before a small setback took place. What had happened? Quite simply, three respected Wall Street figures had spoken out in favour of BTC.

U-turn at JPMorgan

On Friday, JPMorgan – until now an enemy of cryptos – officially came out of the closet with the idea of investing. On CNBC, co-president Daniel Pinto said that there was no real demand yet. But: “If over time an asset class develops that is going to be used by different asset managers and investors, we will have to be involved.” If necessary, the investment bank will bow to demand. Four years ago, the head of JPMorgen, Jamie Dimon, had called bitcoin a fraud; he had also said in the meantime that “any trader trading bitcoin would be fired for being stupid. “

Morgan Stanley is also considering

In addition, Bloomberg reported on Saturday, citing well-informed sources, that Counterpoint Global was considering investing in Bitcoin. The investment firm is owned by Morgan Stanley and has $150 billion in assets under management.

Mellon commits to BTC

And last but not least, BTC received a very special accolade last Thursday: According to the Wall Street Journal, the Bank of New York Mellon announced that it would hold, transfer and issue Bitcoin and other cryptos for customers. Shocking: The oldest bank in the USA has declared its commitment to modernity.

Investors see a dam burst

In fact, some investors see a dam breaking because of these developments: “With each major announcement like the one BNY Mellon made, other institutions are spurred to more rapid adoption and deployment of digital assets,” s said Patrick Campos, Chief Strategy Officer at Securrency, in an interview with Bloomberg on Friday. The icebreaker, of course, was Elon Musk. Campos continued: “Tesla’s recent announcement will embolden other large corporates and institutions to accept crypto as not just a worthy asset class, but perhaps even an essential one. More important, is the corresponding build-out of institutional services to support these developments will trigger other digital assets-related developments within those institutions and in the larger ecosystem. ”
We are curious to see whether the herd will now start running. In any case, there is still room for improvement in the fine world of institutional investors: Only just under 3 percent of the market is currently in the hands of financial firms. When these illustrious investors buy, the supply will probably become much tighter, because such addresses usually hold their stocks for quite a long time. Currently, according to CoinTelegraph, only 24 firms hold around 461,000 BTC, which most recently corresponded to a market value of around 22 billion dollars.

Warning shot from India

Ultimately, the usual reference to politics remains as a counter-voice. They don’t like unregulated, uncontrollable e-currency – because taxes are lost through undeclared work, because monetary policy with its devaluation of currencies becomes powerless, because money from corruption and crime disappears into e-space.
A new report from India comes as little surprise: there are growing indications that the Indian parliament will soon pass a ban on crypto trading. Such speculation has been circulating since the end of January. With the planned law called “The Cryptocurrency and Regulation of Official Digital Currency Bill 2021”, the subcontinent would lead the way internationally. The Reserve Bank of India had already banned trading for about two years, but was thwarted by the Supreme Court in March 2020. If the example is followed in other countries, the price of BTC is likely to plummet because panicked traders will have to get out of the asset quickly.

Cyber crime is booming

And there is also a threat of trouble from another side: IT criminals are increasingly targeting investors and their wallets in view of the bull market. The crypto exchange KeepChange just announced an attack. According to the report, cyber thugs tried unsuccessfully to steal Bitcoin funds from users. However, the attackers did steal some data such as names, email addresses and other data.
So you see: The cyber battle between bulls and bears is in full swing. We are keeping an eye on this exciting affair 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.

WTI crude almost reached a price of $60 a barrel in trading on Friday. This is the highest price for black gold in a year. That’s exactly when the story of the coronavirus pandemic spilled over from China into Europe. The situation is getting more interesting by the day.

WTI

Why did the value of oil plummet last winter/spring? Countries closed their borders and entrepreneurs closed production, restaurants, hotels. Airlines drastically reduced the number of flights. And stocks of oil and petroleum products rose at a rapid pace.
Why is oil rising now? The idea is the same as we have written about many times before. The coronavirus pandemic is expected to end by the end of 2021. And as early as this summer, life will return to what it was before the epidemic in many countries around the world. The first of these countries will, of course, be Israel, which will soon be vaccinating virtually its entire population. This means it will be able to open its borders and remove all restrictions on business.
Against this background, speculators and investors are predicting a rapid increase in demand for oil. That means pushing up the price of oil futures contracts.

What’s wrong with that logic?

The first problem is that absolute demand may never rise to the level it was before the COVID-19 pandemic. We have dealt with this issue in detail. On the one hand there is the abandonment of a huge number of events, meetings and conferences which previously required flying. It turns out that everything can be done perfectly well online. On the other hand, the green and alternative economies are coming on top of the oil companies. And at the forefront of it is Elon Musk, who aims to eradicate petrol-powered cars from metropolitan areas altogether.
The second problem is more real and dangerous for the price of oil and the oil companies. The absurdity is that the oil companies themselves are to blame. They are now selling futures contracts in huge numbers against future oil supplies, at prices they are comfortable with. And other oil companies, producing shale oil, are ramping up production by selling those very futures again.

How will it all end?

Most likely by the fact that a price of $60 a barrel of black gold will be a medium-term high for the next few years. Of course, speculators will try to push prices much higher, towards $70 and even $80 a barrel. After all, oil went to -$37 last spring. Whether the speculators will succeed, we do not know. But if it happens, then there will be a powerful pullback with closing of long positions by stops.
As Senator Cato used to say at the end of his speeches, “Yes, and more! Carthage must be destroyed!
So say we, too, with our two decades of experience in trading – Yes, and one more thing! Never try to guess the bottom or the top in the oil market by trading with your leverages.

00.59 Japan’s Q4 GDP
11.00 EU industrial production for December

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.

12.02.2020 – Special Report. What a catch-up in the market for crude oil: after the incredible dive into negative territory in oil futures last April, the price of WTI in the spot market is once again scraping the $60 per barrel mark. Some analysts believe this will continue as the global economy picks up. Others warn of new Corona stoppers. We analyse the situation.

Falling supply in the USA…

In the meantime, the oil price has pretty much reached the pre-Covid level. One factor for this is the cap on oil production in the US market. According to the Energy Information Agency (EIA), inventories fell to the five-year average at this time of year in the week ending 29 January. Normalisation, then. US producers are currently pumping 2.4 million barrels per day less than a year ago, according to Oilprice.com.

… and at OPEC+

And OPEC+ is also cutting supply. Last week, OPEC announced that a further 2.1 million barrels would be withheld since the peak of the Covid crisis in April 2020. This means that currently around 9.7 million barrels per day less is being pumped by the expanded cartel than pre-Covid. On top of that, there is a small gift of 1 million barrels per day on top from Saudi Arabia. This has consequences: Martin Rats, analyst at Morgan Stanley, told the Wall Street Journal this: “the amount of crude oil and petroleum products stored around the world down by about 5% since its peak in 2020.”

Bulls refer to the cold snap

Goldman Sachs sees a price of 65 dollars by the end of the year. Analyst Damien Courvalin recently pointed out that the cold spell is boosting demand for oil by at least 1 million barrels per day. This is because more diesel is being burned in generators. The cold snap in the midst of the global warming hysterically conjured up by the Green Left is also quickly showing up in another market: according to S&P Global Platts, spot prices for natural gas at some regional gas suppliers and pipeline operators in Kansas, Oklahoma and Arkansas just shot up – from around 2 dollars per mmBTU (million British thermal units) to almost 50 dollars. This is because increased demand for propane burners was met with supply shortages due to icing in the Midwest.

Why is this important? Because you can assume that this trend on a small scale will soon be observed on a large scale. Heating and power plants are likely to have burned an enormous amount of oil – and will be buying up massive amounts of crude oil and products like diesel in the coming weeks to refill the tanks.

Hoping for the travel season

Some oil bulls are also hugely optimistic for the summer. It all depends on whether the US and other major countries achieve Corona herd immunity by the summer – and then whether demand for gasoline and jet fuel picks up in the travel season. “By the summer, the vaccine should be widely provided and just in time for summer travel and I think things are going to go gangbusters,” hedge fund manager David D. Tawil of Maglan Capital told Reuters news agency.

Flood of money pushes up commodities

In addition, most players believe in continued stimulus in the US and elsewhere. Which boosts the economy and guts purchasing power – in inflation, commodities are in demand. Because of the various stimuli, Amrita Sen of Energy Aspects sees an oil price of 100 dollars and more. “We’ve always called for $80 plus oil in 2022. Maybe that is $100 now given how much liquidity there is in the system. I wouldn’t rule that out,” Sen said in an interview with Bloomberg. “Oil companies, for the first time in a long time, are likely to make a big comeback,” Jean-Louis Le Mee, head of hedge fund Westback Capital Management, also said in an interview with Reuters. “We have all the ingredients for an extraordinary bull market in oil for the next few years.”

Will OPEC+ continue to throttle?

But the higher price and the hope of more demand awakens greed. The coffers of many oil producers are empty. So OPEC+’s resolve on production restraint is likely to crumble in the face of rising prices. The question is whether this status quo can be maintained at the next meeting on 4 March. Then there is Iran. Tehran is also not taking seriously Joe Biden, who has signalled his willingness to reinstate the 2015 nuclear deal in new appeasement. Therefore, several million barrels of oil could be back on the market in quite a short time.

Corona is what counts

There is also a lot of hope in the prices for Corona in the future. Should the world’s governments decide on new lockdowns because of mutations in Brazil, South Africa or elsewhere, the recovery will get a bump. For example, according to Reuters, tens of millions of people in China are currently being kept at home and subjected to mass testing. The government is afraid that a new wave of infections will roll over the country in the course of the New Year. Should this effect intensify, demand from the Middle Kingdom will collapse. This is compounded by an inability to mass vaccinate as in the European Union.

Backwardation in the market

So the picture is mixed. And how does the market see the whole mixed situation? We recently saw backwardation, which means that the price for the futures contract is lower than the spot price. This usually happens when the demand for immediate delivery of the product is significantly higher than the demand for future futures contracts. So the market assumes a future higher supply or weaker demand. We are keeping an eye on this exciting topic 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 British Pound continues its rise both against the US Dollar and against all other currencies, the world’s leading economies. We have repeatedly drawn the attention of our subscribers to this medium and long-term idea. What has changed since the last newsletter?

GBP/USD

We have added trend lines to the chart. A nice rising channel has emerged. It looks like the pound is moving forward like a heavy tank. Slowly, solidly and sweeping away all obstacles in its path.
Since the Brexit referendum in the UK, the British currency has been in constant trouble. And changes of prime ministers have only added to the pessimism of its holders. Then the coronavirus situation, when it became clear that the island, in this case, was not an advantage. All in all, a huge amount of negativity hovered over sterling for years.
And suddenly the negativity ended all at once. The Brexit story is over, no one is going to replace the Prime Minister, there are no further parliamentary elections, and the coronavirus vaccination is proceeding at the fastest pace in Europe.
What was the pound supposed to do in such a situation? That’ s right, start to rise. And in the long run, it is not clear at all what negativity could appear on the market for the trend to change. The first target for the Pound/Dollar pair is the 1.40 level. Then there is no resistance visible on the chart, until the round value of 1.50.
The only thing that may interfere with this development is a sharp rise of the American dollar against all major world currencies. But we have explained this point in detail several times before. For those who have forgotten, let’s open the chart of the Euro/Pound Sterling pair. We see the same strong trend, which has a lower speed. But at the same time the risks in this pair are minimal.

08.00 UK Q4 GDP
16.00 University of Michigan consumer confidence index for February US

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.

Below is a daily chart of the Dollar Index (DXY). Looking at it you can see that the US dollar has declined for the fourth consecutive day against a basket of the world’s major currencies. What is going on? Let’s get to the bottom of it.

DXY

A few days ago, in a newsletter about the fall in gold, we noted the following. Gold broke through the lower triangle line precisely because of the sharp rise in the US dollar against most other assets. On the same day, the Euro/Dollar pair fell below the crucial support at 1.20. In that newsletter, we recommended waiting first for confirmation that a long-term upward trend for the US currency had begun.
The next day everything changed 100%. The dollar began its 4-day decline. Stops on the euro/dollar pair below 1.20, on the dollar/japanese yen above 105 and on the dollar/frank above 0.90 were removed.
And it reminded us of something. We have seen similar patterns involving the removal of stops behind round levels throughout most of 2020. This year is expected by experts and analysts to be extremely volatile. The levels of 1.10 and 1.30 for the Euro/Dollar pair are being called, which may not only be reached but also heavily crossed.
What if the situation turns out to be exactly the opposite? This year, in spite of all the experts, will not be a trend year. In this case, time after time, stops will be knocked out behind important levels, then the price will return to the corridor. And the pattern will repeat on the other side of the corridor.
There are considerable prerequisites for this. On the one hand the US dollar should fall as the Fed continues to print new money in huge quantities. On the other hand, as we have already pointed out, the coronavirus situation in the USA will be brought under control very quickly. This will (already is) leading to a rise in trader’s interest rates. A dynamic equilibrium situation is emerging, which prevents the US currency from making a 5-10 figure leap in one direction.

09.00 Address by ECB Vice-President De Gindos
14.30 US jobless claims reapply for the week

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.

We recently explained why the hamsters ended up losing to the banking industry in the equity market. And how they can defeat that mob in the cryptocurrency market. However, they have not yet taken any real action to buy bitcoin. And then help came from where it was never expected.

BTC

Tesla, Ilon Musk’s company has invested $1.5 billion in BTC. First, let’s dispel a myth that’s been circulating in the market. No, Tesla did not buy bitcoins in January, as most analysts rushed to report. The company said in a report that it was changing its policy as of January. And will consider selling new cars for BTC.
That is, bitcoins were being bought back in the summer/autumn. And this is a very important point. Why? Because if they were bought this January, the average value of the purchased BTC would be 30-35 thousand dollars. And if bitcoins were purchased earlier, Elon Musk could collect a position at an average price of $8-15 thousand.

What does this mean for the market?

Hamsters have 8 million followers on Reddit. And Elon Musk has about 45 million followers on Twitter. Even the numbers are symbolic. Bitcoin started with 8k and got to 45k.
What will Ilon Musk’s followers do? It is not at all certain that at least half of them will buy Bitcoins tomorrow. More important is another. Now 95% of them, will know that BTC is not just cool, but a great investment. And bankers, regulators, governments will just fool them by calling bitcoin worthless. Sound familiar? That’s exactly what the hamsters are coming down on Wall Street with.
The same thing will happen in the minds of the management of large companies and corporations. If Elon Musk has already invested in BTC, then so should they. And the sooner the better. After all, if bitcoin grows to $100,000 by the end of the year, the first question investors will ask is. “Why didn’t you buy bitcoin at $45,000 when you found out about Tesla’s investment and robbed us of huge profits?”
And another important point from a technical point of view. Perhaps BTC’s pullbacks downwards will become smaller in percentage terms. That is, no one will be expecting a 30% drawdown. And with a 10-20% drop, companies and funds will happily pick up the cheaper bitcoin on pullbacks.

02.30 China consumer price index for January
08.00 Germany Consumer Price Index, January
14.30 US Consumer Price Index for January

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.

09.02.2020 – Special Report. Bitcoin bulls are popping the champagne corks: News that Tesla has bought into BTC is pushing the price away towards $50,000. Soon there could be another, far more violent push for the e-devise: An analyst at the Royal Bank of Canada muses that soon Apple should get in even bigger. Simply by establishing a gigantic Bitcoin exchange for its customers’ army via smartphone.

Next stop $50,000

And off it goes: Bitcoin fizzled away at its high on Tuesday to a good 48,000 dollars. The day before, the market had been enraptured by the news that the e-car manufacturer had invested 1.5 billion dollars in Bitcoin, according to a document for the US Securities and Exchange Commission. It got even better: “We expect to accept Bitcoin as a means of payment for our products in the near future, subject to applicable laws and initially on a limited basis,” the SEC document reads. So the self-driving e-car for the smartphone customer with a wallet – a perfect match.

Hedge fund bull sees $100,000

And where do we go from here? Perhaps this is the dam breaking for the mass suitability of the cyber currency. The Financial Times does not believe that many more companies will now use BTC. But a cyber cop like Mike Novogratz sees it differently, of course. He is aiming for a price target of $100,000. The head of Galaxy Investment Partners believes that the whole herd will now pounce on Bitcoin – that after Tesla, every company will buy the e-currency, he said on Bloomberg TV.

RBC recommends “Apple Exchange

And analyst Mitch Steves of RBC Capital Markets also sees golden times for the e-device. The expert from the Royal Bank of Canada recommends that the iPhone champion should focus on an “Apple Wallet”. In other words, Apple should offer a closed payment system for BTC. The company could thus combine its approximately 1.5 billion customers into a gigantic exchange – this “Apple Exchange” would resemble Coinbase, the largest marketplace for BTC, right off the bat. Should Apple then buy BTC for only 1 billion dollars – or “4 days of cash flow” – this would attract even more customers to the “Apple Exchange” and push things forward.

Apple to compete with Coinbase and co. Competition

And, along the way, boost Apple’s value substantially. The analyst literally: “Taking a big picture view of this, if we look at recent articles from The Block, which suggest Coinbase will be valued at ~$50B (at $200/share), this means Apple could potentially generate a similar or higher amount of value. Why? The firm already has a robust software ecosystem and install base to take significant and sudden market share from crypto currency exchanges (others include Binance, Kraken, and Gemini – all private companies but would be competitors in this situation). ” In other words: this marketplace would bring around 50 billion dollars in additional value. Which would, of course, help the Apple share in particular, whose price target Steves sees at 171 dollars.
So: Apple should become a BTC exchange. And open up an interesting new business field with Bitcoin trading. Steves points to PayPal: the payment service provider “does not allow for crypto assets to be sent off the system to a hardware wallet (individual custody). “A closed system, in other words, from which Apple could collect hefty fees.

At 5 billion in BTC, the thing pays for itself

The costs for this Apple exchange would virtually finance themselves. Steves continues: “Looking at it from another angle, if we assume that the cost of developing a crypto wallet/exchange on the Apple ecosystem would cost $500M, they could synthetically pay for the development cost by acquiring the underlying asset. For example, if the firm purchased $5B of Bitcoin (20-25 days of cash flow), the price of the underlying asset would need to rise by 10% for the firm to fully fund the entire project in the first place! This is a solid value proposition in our view as the business would be funded without diluting any other projects at the firm (iPhones, potential cars, etc.)”. So: a small purchase of BTC for 5 billion dollars and the thing carries itself.

A brilliant business idea

We think: A clever idea indeed – and too good to be wrong. It should be noted that analysts do not float in a vacuum. These experts are fed information by the companies. Through such test balloons, manufacturers can prepare their customers and shareholders for things to come without breaking the stock market rules on insider trading. Perhaps Apple has long since bought into BTC and is quietly working on the payment system so that at some point it can explode the price of BTC towards the sun with a confirmation. Technically and as a business idea, the Apple Exchange would be quite brilliant: Apple has the customers and the electronics – and with the delivery of its I-Phones, it can offer the payment system for the tech-savvy world of millennials, who rely more than others on BTC and co. Why leave the business to the many other small exchanges? A completely new business segment that would make the smartphones even more interesting. So let’s wait and see. So you see: The BTC world remains fascinating – 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.

09.02.2020 – Special Report. New records on Wall Street, Bitcoin also sniffed fresh highs before the latest setback. Of course, it is the large amount of air money in the US that is pushing up prices: no sooner have the Dems passed the $1.9 trillion stimulus than news of the next money gift is circulating. Nevertheless, the monetary buffet is spoiling the appetite of some professionals.

New helicopter money for parents

According to a report in the “Washington Post”, millions of families and single parents with children under the age of six are to receive 3,600 dollars per year from the state. According to the Democrats’ 22-page bill, which will be introduced in the House of Representatives today, families with older children can look forward to $3,000. The benefit will be paid to singles earning up to $75,000 and to families earning $150,000. A few other small things are to become part of the bill.

The debt bubble is growing

According to the financial blog ZeroHedge, this further inflates the US deficit of 3.1 trillion dollars, not including the stimulus of 900 billion dollars from December. When is all this supposed to end? How much more money does America want to create out of thin air – and how much do the other countries in the world want to create with their stimuli? History teaches that air money flows into the stock market. But also into meaningless companies or zombie companies, or into mortgages supposedly serviced by solvent house builders. And at some point it goes “boom” and banks and companies topple over.

This is how an investment legend positions himself

It is interesting to hear how the legendary investor Stanley Druckenmiller, head of the Duquesne Family Office, analyses the situation. In a conversation with Tony Pasquariello, Global Head of Goldman Hedge Fund Coverage, which has only just been published, Druckenmiller said that what is currently being served is “the wildest cocktail I’ve ever seen in trying to figure out a roadmap”. In three months of 2020, the Federal Reserve had inflated the deficit more than in the previous five recessions (1973, 1975, 1982, the early 1990s, the dotcom bubble and the Great Financial Crisis).

And how has Druckenmiller positioned itself? Mainly like this: First, he’s short long Treasuries. Second, he is long commodities. Third, he is “very, very short” the dollar. He also owns assets from China, Japan and Korea. “Asia is the big, big winner coming out of COVID-19.” The People’s Republic, for example, has not borrowed so much from its own future and has kept the money supply low – M2 in China is at the same level as 3 years ago. Quite the opposite of the USA.

BTC is the child of the central banks

When asked whether BTC was the “mother of all asset bubbles or something genuine”, Druckenmiller replied “maybe both”. He doesn’t know the future, but one thing is clear: Bitcoin “wouldn’t do what it’s doing without central bank behaviour.” So we think traders and investors need to pay attention to the central banks: as soon as they stop flooding money, the flight into non-manipulable assets like cyber currency could be over. But can the central banks stop at all? The problem with the current (monetary) policy: it is addictive. Without the permanent doping, no equity gains. In the economy, the heroin of state support must not be allowed to fail, otherwise voters who were previously sedated by subsidies, government spending or helicopter money cheques will mutiny. But the sad truth is: it cannot go on forever.

The apocalypse is near

At least that is what another investment icon believes: Jeremy Grantham recently turned apocalyptic and warned that the bursting of this current epic bubble will be the most important investment event in our lifetime. In an interview with Bloomberg, the co-founder of GMO, who correctly predicted the last two crashes, said Joe Biden’s economic policies will drive stocks to dangerous heights, followed by an inevitable crash. Grantham literally: “We will have a few weeks of extra money and a few weeks of putting your last, desperate chips into the game, and then an even more spectacular bust.” He continues: “When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years.

Stay alert

Our conclusion: The warnings of a violent correction are getting louder. Trade the wave, but don’t forget that bubbles burst at some point. With ever new records and exuberant optimism, everything is set for a crash. If you trade CFDs, you should now first keep an eye on the 50-day line that the S&P 500 tested at the end of January.
Just before this setback, two investment banks called for profit-taking. Morgan Stanley said that the number of shorted shares and the wild speculation around GameStop was a clear sign that the stock market bubble was continuing to inflate. And Bank of America advised, in the face of all the optimism, “take some profits or other defensive measures.” The Bernstein Bank wishes you good luck!

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.

In the first part we gave our opinion as to why the hamsters would end up losing to the Wall Street mob. Events over the last 2 trading days of the week have only confirmed our guesses. The stocks that the hamsters are holding in the longs have fallen hard. However, this group of traders still has a great opportunity to punish Wall Street.

BTC

Of course we are talking about bitcoin. The main difference with the stock market is that no one can cancel trades in BTC retroactively. Or banned. Or stop trading.
There are already 8 million people registered in the hamster group on Reddit. If they start buying bitcoin in a coordinated manner on cryptocurrency exchanges, even for amounts of $1,000 to $10,000 each, the following will happen.
The bitcoin exchange rate will start to rise sharply. And not just due to their purchases. Sellers, having learned from the bitter experience of hedge funds, will withdraw their offer to sell. And other big players and funds will join the buying, investing much larger amounts than the hamsters.
The value of BTC could reach any level up to $100,000 in a few days, burying bitcoin-shorting funds such as those on the Chicago Futures Exchange.
But it won’t even be about a few dead funds and their investors. The hamsters will prove that Wall Street itself has little understanding of what is going on in today’s realities.
Representatives of companies, funds, and regulators have unanimously stated that crypto is a bubble, has no value and is the province of geeks. In fact, it will turn out that the big hedge fund managers, who constantly criticized bitcoin, are simply ignorant of the issue. And they are dinosaurs who should be consigned to the dustbin of history. What’s more, they have overlooked the best investment of the decade. And perhaps the best investment of this century, without making their investors a huge amount of money.

07.45 Swiss unemployment rate for January
08.00 Industrial production in Germany for December

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 second part of the article on the battle of the hamsters vs Wall Street, promised yesterday, will be moved to Monday. On Thursday there was a more important event for traders in the forex market.

Gold

Remember the picture above? We already gave it about a week ago. You can see a narrowing triangle on the chart. On Wednesday, gold prices broke through the triangle downwards. And the price of the gold metal fell sharply.
Why did this happen? Is there something wrong with gold? No! Something is wrong with the second ticker in the dollar/gold pair, namely the US dollar. It continues its rapid rise against most of the world’s currencies. The 2 most important levels were broken yesterday. 1.20 for the Euro/Dollar pair. And 0.9 for the USD/CHF pair.
A couple of days ago we drew our subscribers’ attention to a new factor that will push the American currency up. An earlier unwinding of US stimulus measures and a rise in interest rates. With this development, the yellow metal becomes the first contender for a fall.

Is it necessary to run out and sell gold urgently?

So far there is no evidence that the dollar reversal trend has taken on a long-term character. What will be important during the next 2 trading days is whether EUR/USD will hold below 1.20 and also whether gold will hold below the lower boundary of the triangle.
Break-down of EUR/USD at the level of 1.15 will be a medium-term confirmation of the trend change. From here, nobody will wait for the levels of 1.30-1.35, which were called by the experts as a target for the end of 2021.
Therefore, getting rid of gold is definitely not a good idea. The main thing is to understand the only risk (expectation of an earlier increase of interest rates in the USA), which might lead to a decline.

14.30 US non-farm payrolls for January
14.30 US Unemployment Rate for January
14.30 Canada January unemployment

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.