News

The oil market has been in an unusually narrow range for six months now. Meanwhile, an event is approaching which could dramatically alter the balance of supply and demand, and therefore the value of black gold. We are talking about the upcoming meeting of OPEC+ member countries. It is scheduled to take place from 30 November to 1 December.

OIL.WTI

Participants in the transaction will discuss the level of production reduction after December 2020. To date, the cartel and its accession countries have reduced production by 7.7 million barrels per day. However, the current agreement will reduce this to 5.7 million barrels per day from January 2021. This is already included in the first quarter 2021 futures price.
However, preliminary negotiations by the Technical Committee, which met on Monday, led to a recommendation to postpone production growth by 1-2 quarters. The reason is a second wave of coronavirus infection and a sharp increase in Libyan oil production. Of course, this could support black gold quotations in the short term. But there are no official statements yet, and everything is circulating amidst rumours.
What’s more! There are also much more serious rumours. The UAE is considering exiting the OPEC+ deal. The reason for this is disagreement with Saudi Arabia and Russia (the countries that have reduced oil production to the maximum) on quota distribution. According to sources, the UAE Energy Minister expressed the following opinion in a closed session of OPEC+ on Tuesday. It is required that all parties to the transaction fulfil their previous commitments to completely reduce oil production. Only then should the current agreement be amended or extended. It is no secret that at least half of the OPEC+ countries are guilty of overproducing oil in excess of the agreed volumes.
All this is superimposed on fresh data from Cushing, where oil storage facilities are already 83% full, which is only 3 million barrels below spring peaks.
All of this shows that the volatility, which has decreased significantly in recent months, could explode at any time, showing the huge price swings we saw this spring.

What awaits us today?

09.30 Business activity index for the German manufacturing sector for November
10.00 EU Productive Sector Business Index for November
10.30 UK Service Business Activity Index for November
15.45 US Manufacturing PMI for November

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.

Most stock markets declined on Thursday, continuing the trend of previous sessions. Investors are worried about the continuing rise in the incidence of COVID-19 and the number of initial claims for unemployment benefits in the US.

S&P 500

Fears of a bigger blow to the economy are becoming more and more credible: New York City is closing municipal schools for the first time since spring, which poses great risks to the city’s economy, forcing large numbers of teachers and staff to stop working.
The number of Americans who submitted initial applications for government unemployment benefits last week rose to 742,000 as fears increased that the rise in the number of COVID-19 diseases will further slow down the recovery of American labour. Economists were waiting for applications to drop to 707,000.

Euro

The single European currency brought a surprise. For the first time in 7 years, it has outpaced the US dollar in global settlements (trade). The euro’s share in international payments in October was 37.82%. The share of the US dollar decreased to 37.64%.
The third and fourth places were occupied by the English pound sterling and the Japanese yen, the fifth place was occupied by the Canadian dollar, which beat the Chinese yuan, SWIFT reported.
Of course, this is a strong positive signal for the EURO. However, it should not be overestimated. The fact is that the US dollar is still the world’s main funding currency. And it is American bonds, which are denominated in US dollars, that receive the world’s largest financial flows.

Gold

As we noted in one of the last newsletters, gold refuses to grow. Moreover, it is even slowly declining. We suggest that you take a closer look at the daily chart. There is a strong support zone around $1,850 per troy ounce. The price has already tested it several times and bounced upwards. If the level is broken through, it is simply an abyss below, without the support levels visible on the daily chart.

What awaits us today?

02.30 Decision by the People’s Bank of China on interest rate
08.00 UK retail sales for October
14.30 Retail sales in Canada for September

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.

19.11.2020 – Special Report. After the positive Corona news from Pfizer, Biontech and Moderna, the joy in the market can hardly be stopped. All the more interesting is the bearish interjection from Masa Son, the CEO of Softbank. At the DealBook Online Summit of the “New York Times” he warned of an imminent “disaster”. The giant white whale Softbank had recently eaten up even high-tech shares.

Fear of the domino effect

The software boss played the cassandra: in the coming months, world markets could collapse due to a second, intensified corona wave. According to Son, even with successful vaccines, this could bring “some major company” to its knees and trigger a domino effect running around the world. It would have to be a single bank – just like in the Lehman crisis. In any case, he himself was prepared for the “worst-case scenario”, explained Son. In this context, the blog ZeroHedge pointed out that the Nasdaq futures have been on hold for almost four months. High-tech stocks are always the forerunners in the euphoria.

Feeding frenzy at Big Tech

Perhaps Son was particularly pessimistic because his company had been hunting high-tech stocks as a “white whale” in the summer, and had pretty much spoiled his stomach. For example, the investment vehicle Northstar had bought US high-tech stocks worth $17 billion by the end of September. Of these, 6.3 billion were bought by Amazon, 2.2 billion by Facebook, 1.8 billion by Zoom and 1.4 billion by Alphabet. Since then the conglomerate has been sitting on a minus of 3.7 billion dollars.
And with this concentration on tech stocks, we have a potentially explosive mix with the current (monetary) political and medical situation. The porftolio of the soft bank also allows cross-links to the overall market.

Bet on Biden

From a political point of view, the Softbank investment was a bet on the victory of Joe Biden. After all, the high-tech companies in Silicon Valley gave the Democrats massive support. As “Breitbart News” reported, citing the media company Advertising Analytics, a lobby group called “Future Forward” donated a whopping $100 million to the Democrats’ TV spots in the final spurt of the election. According to the report, Facebook co-founder Dustin Moskovitz contributed around 22 million. Former Google CEO Eric Schmidt donated 2.5 million dollars, as the “New York Times” also reported. Crypto trader Sam Bankman-Fried donated 5 million dollars, former Twitter CEO Evan Williams 2.5 million dollars, Netflix boss Reed Hastings 1 million. If Donald Trump finally overturns the election in court, Big Tech is threatened with trouble from this side. Because the Republicans will take revenge.

Vaccination kills special corona sales

The vaccine also makes things dangerous for Big Tech. Almost all of the companies Softbank has bought into are beneficiaries of the lockdown – increased online trading, social contacts almost exclusively via social media, no more cinema or concerts but movies at home, web conferences instead of live meetings, more digitalisation in companies and so on. If a vaccination normalises the situation, the profits of the crisis winners will no longer bubble up as strongly as before.

The return of the fear of interest

And finally, there is the threat of the interest rate side for the high tech sector. If the Federal Reserve comes to the conclusion that the real economy is stabilising, it could reduce quantitative easing or even raise interest rates. And growth stocks always react particularly sensitively to interest rate hikes.
Our conclusion is that the market could soon turn to the other side of the coin when it comes to the corona breakthrough. And then the mood could turn quickly. Especially since the American Association of Individual Investors has just noted that the bull ratio – the ratio of bull to bear on Wall Street – has just risen to an incredible 69 percent. If two thirds of the players are bullish – who should still buy?
From a chart technical point of view the view on the Nasdaq Composite remains: It has recently ripped a gap between around 11,200 and 11,400 that wants to be closed. And if all of this happens, the S&P 500 is also threatened with bad luck if it does: only five FAAMG shares (Facebook, Apple, Amazon, Microsoft, Google – Mother Alphabet) account for around a fifth of the total market capitalisation of the S&P.

The Bernstein Bank is keeping an eye on the matter for you – and 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 movements of the first cryptocurrency are beginning to resemble those of 3 years ago. Bitcoin is growing faster and faster. But there are also significant differences. The main question is who is buying BTC today, pushing the price up.

BTC

3 years ago, at these levels, Bitcoin was bought by the public, who for the most part did not understand anything at all about cryptocurrencies. Then, after a powerful pullback, people lost a lot of money. And many people left the market forever.
Today, the situation is completely different. Bitcoin is being bought by banks, investment and pension funds and even public companies. They don’t buy for speculation, but to preserve the value of money that is rapidly depreciating.
More and more bankers and experts are adding oils to the fire, showing that everyone is expecting a yield of 10% per annum, not standard for the stock market. The rates are much higher here. The projected annual return is on average 100-1000%.
For example, the Executive Director of Citibank says that Bitcoin will be traded at $318,000 by the end of 2021. This is not a bank analyst or any clerk in the planning department, but Tom Fitzpatrick, Citibank Group’s global product manager with the status of executive director.
He expects the price of bitcoin to peak at $318,000 by the end of 2021. The forecast may sound incredible, but Fitzpatrick claims that this spike will be the weakest rally for a digital asset compared to other assets such as gold.
And while Fitzpatrick predicts that Bitcoin will be subject to even greater regulatory restrictions in the future. However, unlike other digital currencies such as the digital currencies of the Central Bank (CBDC), bitcoin cannot be confiscated, making it a safer asset.

When to wait for $20,000 for 1 BTC?

It is not clear why everyone is so closely following the previous maximum reached 3 years ago. Does anyone believe that this achievement will be followed by a powerful correction again, as it is a strong level of resistance?
It is more likely that the opposite will happen with precision. A break-down in the level of $20,000 for 1 BTC will cause a new surge in purchases by the funds. And the nearest stop is seen at $22,000, which is about 10% above this level.

What awaits us today?

01.30 Minutes of the meeting of the Reserve Bank of Australia
14.30 US retail sales for October
15.00 Address by the Head of the Bank of England E.Baye

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 graph below is very illustrative. For 3 months now the yellow metal has been in a slight downward trend. At the same time, the world economy continues to be pumped with printed money, which is supposed to flow to the gold market. However, it refuses to grow. Let’s find out why.

Gold

There is a classic situation on the market. When everyone is waiting for yellow metal to grow, the latter refuses to grow. You can remember that the same thing happened to Bitcoin during the year. All analysts were waiting for it to grow, and it was in the corridor for a long time. But when everyone was tired of waiting, Bitcoin suddenly started the rally, rising from levels of $8,500-9,000 to $16,000, and this is far from the limit.
Several factors prevent the price of gold from rising in the short term:
• It is likely that large buyers of gold are taking a break before the end of the US presidential election.
• And at their end, when they see that there is no riot that was expected, speculators reduce long positions.
• There is 1 other interesting observation noted by brokers. Players are increasingly less interested in gold ETFs. Why? More and more players are moving to the BTC, believing that next year the first cryptocurrency can show 100% growth again.
• And of course the encouraging news about the COVID-19 vaccine suggests that money is being transferred into risky assets.

What awaits us in 2021?

However, the major US investment banks continue to have a positive view of gold in 2021. For example, Goldman Sachs forecasts a price of $2,300 and Wells Fargo forecasts a price of $2,100 for 1 troy ounce.
But the most important driver of growth in the cost of gold has not yet even begun to pay back. It is that in 2020, for the first time in history, the growth in demand for investment gold will outpace the growth in demand from the jewellery industry. What can this lead to? A tangible shortage of physical gold, which buyers will feel in the first half of 2021.

What awaits us today?

00.50 Japanese GDP for Q3
03.00 Retail sales in China for October
09.40 Speech by Philip Lowe, Head of the Bank of Australia

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 all remember how, from late spring to mid-summer, the S&P 500 rally pushed up the EUR/USD pair. The pair then went from 1.08 to 1.18. The fourth quarter of 2020 is very similar to the second quarter. Will this story really happen again?

EUR/USD

We are now seeing the US stock market begin to reverse the upward trend after the presidential election. Investors predict that Democrats will provide unprecedented support to the economy and pour huge amounts of liquidity into financial markets. It is also worth noting that in a period of uncertainty before the election, many investors were cached and are now beginning to return to risk assets.
In this situation, the US dollar is likely to increasingly lose ground against major world currencies.

What is happening now in Europe?

Coronavirus is spreading more and more throughout Europe, but this time the government is trying to control the situation. People continue to work and various quarantine measures are being introduced, but it can already be seen that the second wave of the disease is being controlled in a more organised way.
In general, the economy is not falling apart like it was in spring, and it is likely that in this condition Europe will be able to wait for a vaccine to help stabilise the situation.
Of course, the ECB does not like this kind of Euro at all, as the cheap Euro always supports exports and speeds up inflation. It is no accident that Christine Lagarde, in her last speech, confirmed the effectiveness of the emergency asset buyback programme due to the pandemic, as well as the anti-crisis early refinancing operations. From her words, we can assume that these actions from the ECB will continue in the near future.

Will the Euro go higher?

The ECB balance sheet is growing at a slower pace than the US Federal Reserve, so we can now assume that the EUR/USD pair has the potential to grow to at least the nearest level at 1.20, although the ECB will try to prevent this in many ways. But everybody remembers when the Bank of England’s monetary policy easing announcement led to the pound rising in November. The same thing could be repeated for the Euro.
Of course in the current situation a lot will depend on the state of the US financial markets, but the Euro bulls have a good chance of showing themselves.

What awaits us today?

08.45 Harmonised consumer price index in France for October
11.00 Eurozone GDP for Q3 and since the beginning of the year
14.30 US producer price index for October

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.

Many were frightened by the strong fall in gold on Monday and, for sure, someone began to doubt the future of this trading instrument. Why did this happen and what awaits us next?

Gold

Amidst the euphoria of Pfizer news, investors rushed into risky assets and gold was being sold in large volumes. Even though the price per ounce fell by $100, the level of $1860 survived.
Everyone knows that US government bonds are the safest asset for investment, but how profitable is it to invest in them?
– Ten-year bonds have a yield of around 0.9% and the projected average US dollar inflation is 2.5%.
– yields on annual bonds are around 0.2% and annual inflation in the USA is 1.4%
Looking at these figures, it can be estimated that a government bond investor loses around 1.5% of the real value of assets per year, taking into account the difference between yield and inflation. Considering that interest rates are nowhere to be lowered, bonds cannot grow and the yield cannot be higher than inflation. Investors are therefore increasingly starting to adjust their investment portfolio towards gold and stocks.

Experts estimate that all gold in the world is worth around USD 12 trillion, shares worth USD 90 trillion and bonds worth USD 250 trillion. This means that gold takes up around 3.5% of the value of all investment assets.
The amount of gold in the world cannot grow rapidly as production depends on the capacity of the mining companies. Therefore, in order for gold to take up not 3 but 5 per cent of the investment portfolio, its value must increase from $2,000 to $3,000.
If there are no force majeure events in the world, gold must continue the upward trend over the next few years. All major central banks continue to print money to keep interest rates low and drive inflation up. Of course, this movement will be accompanied by some kickbacks, given skyrocketing inflationary expectations and possible adjustments to central banks’ monetary policy.

What awaits us today?

08.00 UK GDP for 3rd quarter and since the beginning of the year
14.30 Number of initial applications for unemployment benefit in the USA
17.00 US crude oil reserves

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 American S&P 500 Index opened on Monday with a gap-up at new historical highs. Then, during the trading session, it rose strongly, but by the close of the session, a correction had begun, which continued on Tuesday. What happened?

S&P 500

German company BioNTech and American pharmaceutical giant Pfizer reported on Monday the successful third phase of the Coronavirus vaccine clinical trial – it showed more than 90% effectiveness in preventing COVID-19 contamination. The application for the vaccine is scheduled to be submitted to the US in November. In this news, stock markets around the world have risen sharply.

But what exactly does it do in the short term?

Talking about the vaccine is certainly good, but the situation with COVID-19 around the world is rapidly deteriorating right now. The number of hospitalizations with coronavirus is increasing day by day. And this is, in fact, the most important indicator for authorities when they decide to introduce lockdown.
This means that we can expect more and more stringent measures aimed at physically distancing people. As a result, a new collapse is expected, primarily in the service and tourism sectors.
“Smart Money“ understands all this very well. And at the trading on Monday and Tuesday, they sold their shares to the public at an increased volume.

When will the vaccine have a positive effect on the economy?

It is expected that each person will need 2 vaccinations in 15 days. And to repeat this procedure 2 times a year. This means that only 1 person will need 4 doses of vaccine annually. The European Commission said that it is going to buy 300 million doses of vaccine. At the same time, the EU population is 450 million people. This means that we will actually need at least 5 times more doses.
The problem is that even 300 million doses of vaccine still need to be produced. And no one can guarantee that production will increase to this level in 2021. It will most likely take at least 2-3 years before enough production facilities are opened worldwide to achieve collective immunity based on the accepted vaccine.

What is the bottom line?

It can be expected that the economies of the world’s leading countries will not begin to grow until 2023 at the earliest. This means that central banks will continue to print money in huge quantities, spinning inflation.

What awaits us today?

02.00 Decision of the Reserve Bank of New Zealand at interest rate
14.00 Address by ECB Head Christina Lagarde

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 weak dollar has a very negative impact on the Japanese economy. The Japanese yen continues to strengthen and the usd/jpy pair reached its lowest level in 4 years. We saw these values in March during the market crash, but it only lasted a couple of days. Then the Japanese currency started weakening again.

USD/JPY

What should the Bank of Japan do?

The regulator is already printing yen, hoping to support the country’s export-oriented economy. And then a new problem is that the yen is at its 4-year high, which makes Japanese goods less competitive in the global market.
The level of 100 yen per dollar is considered critical and it is already very close. Close to it, the probability of currency interventions by the Bank of Japan will increase dramatically. Yes, we remember the times when currency interventions started from 80 yen to 1 US dollar. But now the situation has changed a lot.
Different night surprises may be awaiting usd/jpy in the near future.
What could become a movement trigger in the near future? The most important statistical data will be released in a week. We will know Japan’s GDP volume for the 3rd quarter of this year. If the figures turn out to be worse than expected again, the Japanese yen could rise sharply, which would force the Bank of Japan to intervene.

What can speculators bet on?

A good trading idea is to buy a dollar/yen pair in a range of 100-100.5 with stops below 100 yen for 1 US dollar. If the stops are not knocked down, there are 2 options. Or an intervention by the Bank of Japan and a quick profit taking. Or the market itself will turn from the most important level 100 and go up. In this case, it is possible to leave the longs for a medium-term period.

What awaits us today?

07.45 Unemployment rate in Switzerland for October
08.00 Trade balance in Germany for September
11.35 Address by Bailey, Head of the Bank of England

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.

At the trading on Thursday, investors finally showed activity. It turned out that the unrest in the USA, which everyone was so afraid of, had not yet taken place. It is likely that Biden will win. This means that you can buy any asset and, above all, any risky one. Against this background, the US dollar has fallen sharply against all major currencies.

Gold

The positive developments in the markets indicate that no more delays are expected in the adoption of the new USD 2 trillion stimulus programme in the USA. Of course, the money will not go into real production. Who will be involved in its expansion when we face a total world lockdown? On the other hand, a lot of money will go to the stock and commodity market.
According to a comment on the Fed’s interest rate decision, we see a strong concern about the COVID-19 pandemic. This is an additional factor that suggests that the interest rates will not be increased for a very long time. As long as the labour market does not fully recover.

Gold

As always, gold will be one of the main beneficiaries. On Thursday, yellow metal grew by almost $50. If the price of $2,000 per troy ounce is taken over the next few days, we expect new historic highs by the end of the year.

Oil

But the positive side of the oil market is completely unclear. Yesterday we talked about the risks to black gold associated with Biden’s victory. However, that is not all. The fact is that the new American administration may again start negotiations with Iran on a nuclear programme, which is a priori impossible under Trump. If the embargo is lifted, about 2 million more barrels of oil per day will enter the market. This is another reason why the long-term run of oil should be kept extremely careful.

What awaits us today?

01.30 Comment from the Reserve Bank of Australia on Monetary Policy
08.00 Industrial production in Germany for September
14.30 Number of new jobs in non-US agricultural sector for October
14.30 Unemployment rate in Canada for October

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.