News

As we predicted, Wednesday’s trading is a chaotic movement in both directions. There is no need to look for meaning in what is happening. We are not expected to know the preliminary results of the US presidential election until Friday.

WTI

Let’s remember the American election campaign. Biden crushed Trump in only 1, but a very important issue for American voters. Most Americans believe that the administration of the incumbent president has failed to fight the pandemic. Biden, if he wins the election, promises to quickly take control of the COVID-19 situation.

How could he do this?

This is the main question. If Biden does what he promised his voters, there is only one solution. Total quarantine, which will have to put most American states in jail. If Europeans have already fully experienced all the delights of the lockdown this spring, then Americans have not experienced such strict restrictions.
Total quarantine means a dramatic reduction in the use of personal vehicles and air travel. It also means stopping many non-critical industries.

What happens to oil in this case?

It is important to note that the WTI oil will suffer the most. Just a couple of weeks after the start of the lockdown, stocks of oil and petroleum products in the US will again begin to rise sharply. We remember where this might lead with the events of this spring. The price will initially go down every week, along with the release of data on weekly changes in US oil reserves. And then it can just start to panic, because at some point nobody will want to buy physical oil that has nowhere to go.
In this case, the price of $10 per barrel of WTI oil throughout the winter does not seem like a fantastic scenario.

What can prevent this from happening?

Just one thing. The fact that Biden’s election promises will remain just election promises. To decide to put the world’s economic leader under strong quarantine is probably to get a lot more enemies than Trump has now because of COVID-19.
The most interesting things await us even before Christmas.

What awaits us today?

11.00 EU retail sales for September
13.00 Bank of England decision on interest rate
13.30 Address by Bailey, Head of the Bank of England
20.00 US Federal Reserve interest rate decision
20.30 Press conference US Federal Reserve

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 predicted that trading on Tuesday would be extremely sluggish. Investors are waiting for the results of the US presidential election and will be staying away from the markets. However, we were wrong. The US dollar fell to all assets throughout the day. We are talking about currencies, stocks, commodity futures.

EURUSD

It is possible that investors did stand aside. This means that the liquidity was low. Speculators entered the game and managed to move the market strongly. In any case, the most interesting things await us on Wednesday, after the announcement of the election results.
By the way, gold has once again exceeded $1,900 per troy ounce. In general, it is not clear why the yellow metal fell so much from its maximum values. After all, the uncertainty is very high, which means that the demand for protective assets is increasing, especially against the background of printing empty money.

What do the markets expect?

Theoretically, if Trump wins the election, the stock market should grow. And if Biden wins, then it should fall. The difference is as follows. Republicans are in favour of tax cuts and a maximal market economy. Naturally, with this policy, American companies and the stock market feel great.
Democrats traditionally wanted to raise taxes in order to increase aid to poor people. They also want to tighten regulations. Of course, neither companies nor markets like this.
The main thing is to understand. No matter who wins the election, there can be very strong movements in any direction during Wednesday’s trading day.

What awaits us today?

10.00 EU Service Sector Business Activity Index for October
10.30 UK Service Sector Business Activity Index for October
14.15 ADP US Employment Report for October
16.00 ISM Business Activity Index in the US Service Sector 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.

03.10.2020 – Special Report. Happy Birthday, Bitcoin: The e-currency has just celebrated its 12th birthday. And it has developed magnificently since then, with the price peak at just under 20,000 dollars. The past two months in particular have been good for BTC again: the price rose from under 8,000 to around 14,000 dollars at the weekend. Cyber money has some arguments on its side. Politics, for example. But also the gutting of the US dollar. And especially the age of the investors – young people are increasingly turning to cryptos.

Bitcoin in response to Lehman Brothers

Looking back: On 31 October 2008, a certain anonymous author with the pseudonym Satoshi Nakamoto – or perhaps it is a woman or a group, we don’t know – published a thesis paper entitled: Bitcoin: A Peer-to-Peer Electronic Cash System. In it, Nakamoto developed a plan that allowed “online payments to be sent directly from one party to another without going through a financial institution. And these financial institutions had just suffered severe damage to their image: Shortly before, the entire system had been shaken by the collapse of Lehman Brothers. Now scepticism is rising again.

Escape to a safe haven

Driven by the buzz around the US election, many investors have stocked up on crypto-currencies in recent weeks. People do not always trust banks, play it safe and make cash – Wall Street, on the other hand, presented one of the worst October ever before a presidential election. Riots are in the air. In times of crisis, hard assets are in demand: gold, silver, Bitcoin, weapons.

More and more air money

This is compounded by the continuing gutting of the US dollar. Infinite amounts of stimuli are already bubbling up to revive the US economy. Should Joe Biden become president, a prolonged lockdown with even greater government debt than at present is to be expected.
Incidentally, the Federal Reserve is already working on the introduction of a digital dollar, which will bypass the commercial banks as disruptive elements that park government money on their own balance sheets. The Bank of America judged, “the next frontier for central bank revolution is use of digital currencies as conduit for policies such as UBI (universal basic income), MMT (Modern Monetary Theory), student debt forgiveness, to induce sustained rise in inflation expectations. In other words: inflation has to go up, no matter what it costs – unconditional basic income, helicopter money, writing off university loans. The BoA Council: “own inflation assets.” Inflation protection through hard assets. Ergo, investors flee into alternative currencies. Bitcoin, for example.

Gold versus Bitcoin

With the older ones betting on gold and the younger ones on Bitcoin, as JPMorgan just reported. JPMorgan’s quantitative analyst Nick Panigirtzoglou recently pointed to this dichotomy in his report “Flows and Liquidity”: “the older cohorts prefer gold, while the younger cohorts prefer bitcoin as an “alternative” currency. Both gold and bitcoin ETFs have been experiencing strong inflows this year, as both cohorts see the case for an “alternative” currency. Earlier, Charles Schwab had already pointed out that Grayscale Bitcoin Trusts is the fifth largest holding company for future pension payments among the millennials, i.e. children born around the year 2000 or in the years before.

Push from PayPal

The JPMorgan expert also discussed PayPal’s decision to accept Bitcoin in its payment processing. His verdict: This “is another big step towards corporate support for bitcoin, which in our opinion would facilitate and enhance over time Millennials’ usage of bitcoin as an “alternative” currency. PayPal customers can also buy crypto currency directly from the shop. Ethereum (ETH), Bitcoin Cash (BCH) and Litecoin (LTC) are also accepted. PayPal is one of the largest payment processors worldwide with around 346 million active accounts.

JPM: doubling and tripling possible

JPMorgan stated that Bitcoin could increasingly compete with gold because of the upcoming cohorts of young investors in the investment universe. The current market capitalisation of BTC is around US$ 240 billion. This means that the market for Bitcoin would have to increase tenfold to match gold – in coins, bars or ETFs – as the gold market is 2.6 trillion in size. Even a moderate displacement of gold by Bitcoin would be bullish – it would mean “doubling or tripling the bitcoin price from here”.

Millenials are familiar with BTC

Our conclusion: It all sounds great – in fact, there are many arguments in favour of Cryptos. Young people are increasingly opting for electronic payments via apps – they are “digital natives” and are very familiar with smartphones, the Internet and the like. So the increasing digitalisation of business life and the advance of buyers also known as “Generation Y” or “Generation Me” is playing into BTC’s hands. After all, anyone who trusts in the e-wallet when buying sneakers no longer has any reservations about investing with BTC.

Nevertheless, the volatility of Bitcoin could argue against risk-averse investors going into the asset class – even young people are sometimes risk-averse. The question of all questions is also whether the world’s central banks will stand idly by and watch the rise of an uncontrolled parallel currency. That is the greatest danger for e-foreign currencies. The Bernstein Bank is keeping an eye on the matter for you – and wishes you good 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.

Only a couple articles ago we wrote about a new look at Bitcoin. We advise everyone who hasn’t looked to reread our newsletter. At the end of the week and at the weekend another important BTC event takes place, which is worth mentioning in detail.

BTC

Throughout 2020, the first cryptocurrency correlated with the S&P 500 index. Until mid-February, the index was growing, so was the Bitcoin. Then there was a powerful sell-off in the stock market associated with 1 wave of coronavirus, and BTC also collapsed powerfully. Then the economy started pumping money, stocks went up again and bitcoin was growing with it.
This week ended again with a massive sell-off of stocks. Bitcoin usually started falling after the stock market. But this time something went wrong. Following the fall of Wednesday night, Thursday night saw strong growth. Then on Thursday and Friday, Bitcoin tried to fall again, following the stock, but it bought back and grew back. And on Saturday the price hit all the stops and rose to $14100 for 1 BTC.

What does all this mean?

We forecast that the correlation between Bitcoin and the stock market has been completely broken. Moreover, BTC now does not correlate even with gold, which has also been declining recently. This means that Bitcoin is no longer even dependent on the amount of new money printed. We noted last week that the biggest fall on Wednesday in the stock markets was due to the postponement of the adoption of the new $2 trillion aid package for the US economy.
So speculators are trying to sell bitcoins, remembering the existing correlation. And “smart money” is happy to buy back the first cryptocurrency at any price. This shows that demand is really starting to exceed supply.

Where can this lead to?

In the first wave of the pandemic, investors sold all assets, received money and did not know what to do with them. Now the opposite situation can happen. In the second wave of the pandemic, investors will also sell all the assets and put the money into bitcoin. We will know whether this version has the right to live before the New Year.

What awaits us today?

10.00 EU Manufacturing Index for October
10.30 UK Manufacturing Index for October
16.00 US ISM Manufacturing 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.

In both Europe and the USA, everyone has already accepted the second wave of coronavirus. It is likely that we will only see relief by next summer. With the warmth in the northern hemisphere, the spread of the virus will decrease. Plus, everyone is waiting for the vaccine in the first half of 2021. But there is still six months to come. What should traders do?

AUD/CAD

Above is the weekly schedule for this pair. What do we see on it? The Australian dollar fell sharply in February-March against the Canadian dollar, in hysteria over the first wave of coronavirus. Why did this happen? Coronavirus or just any crisis, there is no big difference. Traders must remember that in any problem in the global economy, the Australian dollar always falls faster than the Canadian dollar.
Australia is a more resource-based economy, and it is also heavily tied to China. That’s why it always suffers to the fullest extent. Canada is a stronger country, and it is no coincidence that it is in the G7.
During the summer, the Australian dollar rose significantly against both the Canadian dollar and the US dollar, as well as against the EURO, as a result of the positive developments associated with pumping the economy with money and the declining incidence of coronavirus. Now it is time for a correction in the second wave of the pandemic. If you prefer to take small risks, it is best to sell the Australian in pairs with the Canadian dollar. They are 2 commodity currencies, but as we have shown above, the Canadian dollar is more resilient in times of crisis.
The fundamental picture is clear. And the technical one in the weekly chart above says that the top has formed and has turned down.

What are the risks of selling the AUD/CAD pair?

The main risk is a sharp drop in oil to levels of $15-25 per 1 barrel. And, just as importantly, oil must stay there for several months. This will hit both the Canadian economy and the Canadian dollar hard.
However, if this happens, it is likely that coronavirus will be the culprit, which means that things will be much worse in the world economies than they are now. In this case, the Australian dollar will also fall sharply.

What awaits us today?

08.00 Retail sales in Germany for September
11.00 GDP in the EU for the 3rd quarter
11.00 EU consumer price index for October
14.45 Chicago PMI 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.

On Wednesday 28 October, stock markets around the world ended in a major collapse. What served as the trigger? Could it be that German Chancellor Angela Merkel suggested closing bars and restaurants in November to reverse the upward trend in infections? Or that France is planning to introduce a second national quarantine? Or maybe the data that the disease rate in the USA is at its highest level since August? Of course not!

S&P 500

The real reason for the fall is entirely the same as the markets have been growing since spring – the new money that the US Federal Reserve is printing uncontrollably. Everyone was waiting for a new $2 trillion package of measures to support the US economy. Republicans were supposed to be able to push the bill before the presidential election to help Donald Trump.
However, hopes collapsed after Mitch McConnell, the Republican majority leader in the Senate, announced that the Upper House of Congress would not resume work until November 9. And there may not be a package of measures aimed at supporting the economy anymore. After all, Donald Trump has repeatedly stated that he will not admit his loss in the presidential election.
What all experts have been saying for several months now is happening. There is simply no one to buy shares at these prices, without new, empty money coming to the markets. Investors have decided to pause and wait for news from the USA, who will be the next president. In the near future we can expect additional correction in the stock markets.

Oil

Oil prices also collapsed on Wednesday. One wonders why this did not happen earlier. Empty Central Bank money will in no way revive real demand, which is beginning to shrink again due to the second wave of coronavirus.
It seems that traders have already forgotten about the negative price of oil, which we saw just recently. This means that a strong downward movement, even to levels of $20-25 per 1 barrel, will trigger a new huge wave of margin calls.

What awaits us today?

04.00 Bank of Japan decision on interest rate
13.30 Annual US GDP data for Q3
13.45 ECB interest rate decision
14.30 ECB press conference on monetary policy

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.

Over the course of the year, we have already commented on Bitcoin in detail several times. We explained what exactly is the basis for its both short-term and long-term growth. Especially with the beginning of the fourth quarter, another important factor was added, which has so far received little attention.

BTC

Funds are moving towards long-term purchases

In 2020, dozens of investment and venture funds bought Bitcoin for the first time. So far, this has not led to huge changes in the market. However, these purchases have in any case led to an increase in the price of the first crypt currency.
The main bomb is as follows. By 2020, the funds that have invested in bitcoin will show a return on this instrument of 50%-200%, depending on the entry point. Their investors will be very satisfied with the managers.
Now let us imagine what investors in thousands of other, more conservative funds will do. They are watching bitcoin grow, about 70%-80% for the second year in a row. And at the end of this year, a lot of investors will ask their managers a question. And why don’t you invest in BTC? After all, there are funds that do this and these funds show huge returns for their investors.
If the manager says “we will not invest in BTC in 2021”, some investors will simply shrug their shoulders. They will then take the money from this fund and give it to another fund that invests in Bitcoin.

What should a manager do?

On the one hand, nobody forbids them to buy “a lot of Bitcoin” in 2021. But there is always the risk that this particular year will be bad for the first cryptocurrency. In this case, investors will again be extremely angry at the management of the fund.
That is why there is a solution that allows you to invest in BTC on the one hand. On the other hand, it is possible to bear extremely low risks. This is called the “1% rule”. If the fund’s assets are 5 billion dollars, then BTC will be bought for 50 million dollars (1%). Even if the bitcoin drops by half next year, the total assets of the fund will only drop by 0.5%. But if Bitcoin grows again, management, at the annual report to investors, will be sure to note that “our fund is extremely progressive, it invests in bitcoin and gets higher returns on this instrument”.
Perhaps 2021 will be the last year when some funds will not buy BTC as a matter of principle. In 2022, they will simply withdraw most of the money from such funds. What is 1% for funds? It is an amount of about $1 trillion, which is 4 times the current capitalisation of the first cryptocurrency.

What awaits us today?

01.30 Consumer price index in Australia for Q3
15.00 Bank of Canada interest rate decision
16.15 Press conference of the Bank of Canada

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.

27.10.2020 – Special Report. All-time low for the Turkish lira: the price of the consumptive currency slipped below the much-noticed 8 lira to the dollar mark on Monday. Overall, the currency has fallen by 15 percent against the greenback in the past three months. The lira has also just reached an all-time low of 9.53 lira against the euro. There is no end in sight to this frenzy of depth. For Ankara continues to rattle its sabre in the Mediterranean and Corona has killed Turkish tourism.

Imperial megalomania

Turkey has unilaterally expanded its maritime territory and is drilling for natural gas in Greek waters. It may soon be facing war with Hellas, but also with Cyprus and Israel. The allies want to build a gas pipeline to Italy, which will run right through the area now occupied by Ankara. Because of the interference in the Libyan civil war, there is also the threat of a military conflict with Egypt. Moreover, Turkey is setting fire to Nagorno-Karabakh on the side of Azerbaijan. Turkey has fallen out with France. American sanctions are threatened because of the use of the Russian S-400 missile defence system.

Dwindling foreign exchange reserves

All quite heavy burdens for the empty treasury. Investors flee the country, investors turn away. This year foreign investors have sold Turkish shares and bonds worth 13.3 billion dollars, the news agency Bloomberg reports – the largest amount since about 2005. Ergo, Ankara burned its currency reserves to support the lira. Without success. This year alone, the value of the lira has fallen by more than 25 percent. Only the Brazilian real was even weaker. Since spring 2008, the lira has lost half its value against the dollar, and 85 percent since the financial crisis.

Back and forth in monetary policy

Moreover, the Turkish central bank lacks continuity. Investors no longer know how to trade the erratic course of the authoritarian-led state. Last week, the Turkish central bank shocked the market by not raising interest rates significantly, contrary to expectations. On average, the consensus among 27 analysts was that the CBRT set the interest rate by 175 basis points to 12 percent – and that the lira will appreciate strongly thereafter. But last Thursday the central bank left the rate unchanged, citing brightening inflation expectations.

Full of surprises

As late as 24 September, the central bank had surprised forex traders by raising the interest rate by 200 basis points. The central bank raised key interest rates completely unexpectedly from 8.25 to now 10.25 percent – this was the first interest rate increase in about two years. Remarkably, this was apparently done against the will of President Recep Erdogan – who wants cheap loans to boost economic growth. Even more surprising was the reasoning of the guardians of the currency: “Inflation has followed a path that was higher than expected”. Steps to tighten monetary policy would have to be stepped up in order to contain inflationary expectations. So within a month the situation has turned around – believe it or not, you will be blessed.

Just before the junk level

No wonder that investors are turning away angrily in view of the strange monetary policy. The rating agency Moody’s reacted last month by downgrading the credit rating. Government bonds received a B2 credit rating, the lowest ever in the country’s history. Previously they had been at level B1. Out of 21 levels that Moody’s knows for the rating of sovereigns, Turkey thus slips to the 15th level. The country is now on a par with countries like Sri Lanka and Tunisia, and even slightly worse than Rwanda, Bahrain and Albania. This means that Turkey is now only two notches above the “junk level”, which starts with a rating of Caa1.
Moody’s verdict was devastating: “Political pressure, limited central bank independence, slow reactions by those in charge and a lack of predictability of their reactions increase the likelihood of disorderly exchange rates and economic adjustments”.

Maybe the help from abroad

Our conclusion: we had foreseen this development. It is not foreseeable how this trend will be reversed. Wars, Corona, a strange monetary policy. There is much to suggest that a currency reform is imminent, if the decline in exchange rates continues. The Turks are reacting with foresight – the “Wall Street Journal” recently reported a real rush for gold. The buying frenzy is unusual because people usually make their money at the all-time high. The paper also registered a run on safes for installation in the home. So the inhabitants are apparently expecting a bank crash. Indeed, the European Bank for Reconstruction and Development recently warned that banks might have to pay for the government’s forced expansion of lending to stimulate the economy with high bad debts.
However, the slide of the lira could be halted by a small injection of money from Russia or China. If Moscow or Beijing buy lira or provide dollar loans. So traders and investors should screen the news for such a development. The Bernstein Bank wishes 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.

Over the past week, global stock exchanges have shown positive dynamics. The focus was on the debate between Trump and Biden, which went more smoothly than in the past.

S&P500

The next couple of weeks will be important for the entire financial sector. Many different events will directly affect the future of the economy. These are the presidential election in the USA, the Brexit negotiations, as well as the fight against the Coronavirus.
You can now see that investor sentiment is rising and appetite for risk is improving. One positive development is the full approval by the FDA of Remdesivir, a drug used to treat COVID-19.
Most central banks will be meeting this week and Europe and the US will be giving preliminary estimates of GDP. It should also be noted that the agreement package to stimulate the American economy is almost ready. The adoption of the package before the elections will give additional impetus to market growth.
On Friday, the S&P500 index showed a slight increase of 0.11% and the DAX index rose 0.8% to 12645.

Euro

The ECB and the Fed have published statistics on their balance sheet changes. As expected, the balances have continued to grow. Countries actively continue to print money to support their economies. It is worth noting that the growth rate of the ECB balance sheet is lower than that of the US Federal Reserve, which is already affecting the euro. So far, there are no prerequisites for its fall. The coronavirus situation in Europe is being controlled, but otherwise the European economy is feeling good. The euro rose 0.39% on Friday to 1,1860. Attempts to grow to a key level of 1.20 are likely to continue.

ALUMINIUM

As long as gold and oil remain unclear due to a large number of external factors, the aluminium market situation is worth considering. China’s economic recovery has led to increased demand for this metal. The price has broken through the resistance level of 1828 and is now trying to gain a foothold above it. This dynamic gives us an opportunity to assume that the movement will not stop and that active growth will continue. Aluminium may now take a short respite from its strong growth, but the $2000 level is becoming a new target for a large number of traders.

What awaits us today?

10.00 Unemployment rate in Spain
16.00 Sale of new housing in the USA for September
16.30 Manufacturing Index from Dallas FRS

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.

Every day starts with the same thing. Investors are waiting for the outcome of negotiations on financial support for business in the USA. Information appears that the parties tend to approve a $2 trillion package.

BTC

On Thursday, the indices again show mixed trends. It is difficult for investors to make decisions when it is not clear what lies ahead. News about the financial aid package even overshadows the statistics on the coronavirus pandemic, which is gaining momentum day by day in almost every country in the world.
On Thursday late in the evening, the US is hosting the last pre-election debate in which candidates will try to tilt the scales in their favour. Election day is getting closer every day. Of course, the acceptance of the aid package will bring life back to the markets, and at this point it is important who will be in charge of this process.
The forecast is still disappointing. If no aid package is accepted before the election, indices are likely to fall slowly to the election result, because there are no drivers for growth and you don’t want to sell either, because something positive should happen after the election anyway.
The DAX closed on Thursday at 12543, 0.12% below its opening level.
The S&P500 index was traded just above the opening price at 3445.

Euro

The EUR/USD pair is moderately declining on Thursday, and this is logical after this week’s rise. The current EUR price is more a local condition than a trend reversal. The dollar is losing positions every day and will lose even more after the financial aid measures are taken. The EUR/USD keeps its growth potential at 1.20. The dollar is still among the outsiders in the market and should support the growth of the Euro.

Oil

The price of WTI oil was delayed in the range of 40-41 dollars per barrel. The growing second wave of coronavirus has stopped the growth in consumption and demand for gasoline and oil. Many people just stay home and do not spend fuel.
The price of oil depends directly on the results of the US elections. If the Democrats win, they are likely to try to return the markets of Iran and Venezuela to export. In that case, a lot of cheap oil will contribute to the commodity market.

What awaits us today?

10.00 IFO German Business Climate Index for October
10.30 UK PMI Composite Index for October
19.00 Total and active number of drilling rigs in the USA from Baker Hughes

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