News

The US stock market was in doubt about the economic recovery, which immediately affected the quotes of leading companies. Does the huge amount of money that has been pumped does not help?

GBP/USD

The data published by the Ministry of Labour showed that the value of initial applications for unemployment benefits remained the same at 884,000. Overall, the number of unemployed people in the USA reached 29.5 million.
American analysts are not discouraged by this situation and believe that the US economy is recovering at an excellent pace. US GDP growth in the third quarter may be higher than consensus and will be 23% year-on-year. A solid figure for the world’s largest economy.
On Thursday, the S&P500 traded at 3380, which is almost at the opening level. The DAX closed with a slight drop of 0.35% to 13200.

Pound Sterling

The British pound became an outsider against the US dollar on Thursday. In just one trading week, due to tough disagreements between governments over Brexit, the GBP/USD pair lost all profits since late July.
The pound is now in a very bad situation. The bearish trend is starting to develop at a rapid pace. The pair came close to the daily SMA200 at 1.2730. Probably there should be a slight upward correction from it, and then the decline will continue. Until there are some optimistic statements from the UK government about Brexit, no growth in the pound is expected.

Bitcoin

As many have already noticed, the crypto market and, in particular, the cost of bitcoin move together with the US stock market. This is not surprising, because bitcoin is a risky asset that can be compared to company shares. In the current situation, the rate will depend on the dynamics of the US dollar as well as the recovery of the stock market. So far, the goal for a bitcoin is to get above the important $10950-$11000 range. If this is not achieved by the end of the week, it is likely that the rate will fall to $9000 per bitcoin.

What awaits us today?

08.00 UK GDP since the beginning of the year
08.00 UK manufacturing output for July
14.30 US Consumer Price Index Baseline for August

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 run-up to the ECB meeting, it is worth thinking about how the central bank will act to halt the rise in the euro. With the current weakening of the US dollar, this will be quite difficult to do, but the European currency needs to decline in order to ensure the right pace of economic recovery.

Gold

The ECB does not have many possible levers left in stock. The central bank has gone quite far, making the rate negative and further reduction of the rate will be ineffective. There are also side effects that have a negative effect on the economy. People do not receive interest on their deposits and banks have problems with margins. Rapid growth in mortgage lending leads to serious risks if the rate changes in the positive direction.
The positive dynamics of economic growth in the Eurozone are still in place and there is no reason for the data to be revised for the worse yet. There may be some decline in inflation in August, but compared to the data from July, it will not be significant.
Christine Lagarde will try to lower the Euro in her speech, but history says that after such declines the Euro is recovering very quickly.
Given the strengthening trend for the weakening US dollar, the Euro has little chance. Although we are still seeing a relative sideways trend on the EUR/USD, we can already see that the level at 1.20 will be taken soon.

Gold

In the course of current events, it is safe to say that gold is returning to its upward trend. The fundamental factors exerting pressure on the US dollar remain in force. Firstly, there is a change in the attitude towards targeted inflation. Secondly, it is an extra soft monetary policy and a huge amount of unsupported dollars that have been pumped into the economy.
It is safe to say that gold is already rebounding from serious support of $1900 per ounce and growth to $2000, and then to $2100.

What awaits us today?

14.30 Number of initial applications for unemployment benefits in the USA
14.30 ECB press conference and comments on monetary policy
17.00 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.

As we predicted in previous reviews, uncertainty is increasing in financial markets. Donald Trump is once again starting to speak out for China. Now he wants to ban cotton imports from China and put an end to America’s dependence on those products. Additionally the negotiations about Brexit are at an impasse.

GBP/USD

The closer the election, the more passionate it will become. Markets understand that it is difficult to work calmly in such uncertainty, so we saw sell-outs on Tuesday. These were mainly shares of companies in the technology sector, which have grown very well in the last few months. There is a good swing ahead of us, especially in the technology and IT sectors. Against the backdrop of recent events, we should not expect strong growth in the American market.
In Europe, too, things are not easy. The 14.8% drop in GDP in the Eurozone is severely damaging the mood of investors.
The markets are likely to be waiting for the outcome of the September meeting of the European Central Bank, which will be held already this Thursday. The DAX index is losing 1% and is trading at 12980.

Pound Sterling

It seems that the British pound and the UK itself are starting to have serious problems after all. Negotiations are once again at an impasse. Olaf Scholz, the German finance minister, said that London is less and less ready to reach an agreement on Brexit and this will lead to a catastrophic situation. Of course, UK’s exit without a deal will be a very big problem for the country’s economy and for its citizens.
Against this backdrop, the GBP/USD pair has lost almost 1% and is trading at 1.30, which is a strong resistance. Due to the strengthening of the US dollar, further decline in the pair is possible.

Oil

Oil was squeezed into a narrow price range and several key factors did not give a chance for growth. The first was the strengthening US dollar, which put considerable pressure on the price. The second is the second wave of tension between the US and China. The third is the global economy, which is still bubbling after the pandemic and cannot quickly increase demand for black gold.
On Tuesday, WTI oil loses almost 7% and trades at $37 per barrel. So far, only the rapidly dwindling oil reserves in the US stand a chance that the price will try to recover slightly.

What awaits us today?

03.30 Consumer price index in China since the beginning of the year
16.00 Bank of Canada decision on interest rate
22.30 Weekly crude oil reserves in the USA according to the American Petroleum Institute

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.

08.09.2020 – Special Report. A gigantic white whale has been chasing high-tech stocks on the stock market for weeks under the surface. In other words: A buyer with deep pockets stocked up massively. Which also explained the excellent rebound after the Corona shock. Now he was exposed – it was SoftBank. But perhaps the whale spoiled itself the stomach. We illuminate the background.

Some media still do their job really well. ZeroHedge for example. The blog had repeatedly pointed out the strange correlation that the VIX was rising, even though the stock market kept setting new records. For a long time, colleagues had suspected that only one large buyer, possibly SoftBank, was behind a buying frenzy for a few shares. Many traders had also noticed this, so they took precautions. A rise in the VIX along with new highs in tech stocks – that’s what happened when the dotcom bubble burst. We had recently pointed out this connection at this point.

SoftBank in a feeding frenzy

This was followed by confirmation from the “Financial Times”, which reported that the Japanese conglomerate was indeed the “Nasdaq whale” responsible for the rally at Big Tech. The Masa Son conglomerate had bought billions of dollars of US derivatives. In concrete terms: SoftBank ” made a splash in trading derivatives linked to some of those new investments, which has shocked market veterans. Some brokers have described the volume as the largest in 20 years. Ergo, for example, the implied vola of Apple calls rose to a new all-time high when the stock marked a new historical top.

According to the “Wall Street Journal” SoftBank spent about 4 billion dollars on call options – for Apple, but also for other tech stocks. Which, according to ZeroHedge, is ten to a hundred times the underlying because of the leverage. SoftBank also bought shares in high-tech stars such as Amazon, Google, NVidia, Tesla, Netflix and Zoom in the second quarter. A further effect of SoftBank’s call purchases: According to Goldman Sachs, many retail investors followed the big example and also entered the market for a long time.

Strange timing for the Nasdaq sellout

So is the whale full now? Who knows. It is probably no coincidence that the sell-out of the previous week was accompanied by the publication of the SoftBank story. Maybe big addresses have bet against SoftBank because they suspect that the election has overeaten itself. And maybe they let their puts on the options market be followed by stock sales. If so, the Japanese company might now have a small short problem – some calls might have exploded, maybe SoftBank needs cash. Which could result in a wave of sell-offs.

Google in sight

Especially since SoftBank may have underestimated the influence of US politics. This is likely to have played its part in the tech crash of the previous week. The “New York Times” reported that the US Department of Justice wants to file a cartel lawsuit against Google’s mother Alphabet within a few weeks. The White House wants to settle the matter before the US presidential election – the administration accuses democratic lawyers of delaying the matter.
At this point, we had already warned a while ago against breaking up Big Tech. Silicon Valley is ticking left and is in cahoots with the Democrats. During the Democratic Convention, for example, masses of critical comments on videos by Joe Biden disappeared from Google’s subsidiary Youtube. Apparently, Google also reduced the traffic to conservative news sites. Even the leftist “New York Times” stated: “Alphabet was an obvious antitrust target. Through YouTube, Google search, Google Maps and a suite of online advertising products, consumers interact with the company almost every time they search for information, watch a video, hail a ride, order delivery in an app or see an ad online. Alphabet then improves its products based on the information it gleans from every user interaction, making its technology even more dominant”.

Big Tech threatens the destruction

The next candidate would be Amazon – the online operator destroys small businesses, profits from Corona and favors a long lockdown. Just like the Democrats, who want to damage Trump with an economic slump. Ergo, appeals for a long lockdown can be read again and again in the “Washington Post”. By the way, the paper is owned by Jeff Bezos, head of Amazon. Apple, too, has gotten into the cartel’s crosshairs because of the pricing policy at App Stores – in Europe and in the USA. Moreover, the White House is not happy with production in China. This is compounded by the discrimination of right-wing opinions on Twitter or Facebook.
In short: Dinner is served. Anyone who bets on Big Tech must be prepared for a break-up. With consequences for the stock market. What SoftBank may have overlooked. The Bernstein Bank keeps an eye on the topic 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.

07.09.2020 – Special Report. Labor Day in the USA – only now are Americans traditionally concentrating on the presidential election. The ballot is likely to be one of the most important decisions since the re-election of Abraham Lincoln in 1864 in the middle of the war of recession. De facto, a new civil war is possible. With devastating consequences for the financial market. We examine the possible scenarios.

Overloading of the US Postal Service

The election is made explosive by the mass postal vote – in this case the late arrival of ballots can be expected. The Democrats have had bad experiences in their own primaries in New York and Ohio. The team around ex-candidate Mike Bloomberg did not think that maybe Donald Trump would win on election night – but would lose in the days and weeks after the election due to the results of the postal vote. In fact, according to a survey by USA Today/Suffolk University, 47 percent of the Democrats want to vote by mail – compared to only 21 percent of the Reps. In contrast, 56 percent of Republicans want to vote in the booth on election day, but only 26 percent of Democrats. And, of course, the possibility of electoral fraud is on the table.

The shaking already starts

If the outcome of the election is unclear, it will be uncomfortable on the stock market. Blueprint for what might come is the year 2000: Five weeks the election outcome between George W. Bush and Al Gore hung in the air because of the close decision in Florida. Only when the Supreme Court prohibited a recount did Gore give up – from election day to December 20, the S&P 500 lost a whopping 12 percent, as RBC Capital Markets recalled.
In fact, the most important indicator of all points to a no-win scenario. Until last week, the S&P 500 showed a clear victory for Donald Trump. The index has been right nine times since 1984, as broker LPL Financial reported: In the three months leading up to the election, rising prices pointed to a victory for the incumbent, losses to a triumph for the challenger. So the deadline would be August 3. Since the recent sell-off, however, the index is dangerously approaching the loss zone. And Andrew DeFeo, head of Optimize Advisors, in an interview with Fox News, pointed out the increasing volatility in options on the S&P for December and January. So let’s take a look at what could happen.

Scenario 1: Slight Biden bear market

Clear victory for Joe Biden, quick result: Wall Street is likely to go down in the breadth. Because new taxes, open borders including free health care for all threaten. But Big Tech is likely to benefit, since Facebook, Twitter, Goole and Amazon have openly supported the Dems. Ditto, stocks from the environmental sector are likely to pick up. In contrast, oil and energy stocks in particular are likely to go down hard – Joe Biden has wobbled back and forth here, but his deputy Kamala Harris has clearly spoken out against fracking and in favor of a Green New Deal.

Szenario 2: Massiver Harris-Crash

Clear victory by Joe Biden, quick result – but Biden resigns shortly after the election and is replaced by Kamala Harris: Harris may be the darling of the media and the cultural chic in Hollywood. But she has nothing in common with the average American.
Since she announced a restriction on the possession of weapons by presidential decree when she sits in the White House, she could trigger the uprising. Harris had rallied behind the left-wing demonstrators in the cities ruled by incompetent Democrats and called for “Defund the Police. A fund supported by her also provided bail for troublemakers who got out of prison again and immediately committed serious crimes. If Harris took office, people would have less police, more violence, a cuddle course with revolting left-wing radicals and would have difficulty getting weapons to defend themselves. The Americans will not put up with this. The result would be a total crash of the indices.

Szenario 3: Total Chaos

Even worse would be a month-long election chaos in the USA: Massive postal vote including recount in scarce Swing States. Plus endless lawsuits for election fraud. Conservative media like “The American Mind” are already speculating about a coup by the establishment – the coup had started with the demonstrations in May. USAWatchdog quoted a former CIA agent as saying the violence on the streets had only just begun. The question is who is financing all this – many provocateurs are roaming the country.
One thing is clear: if there is no result by Inauguration Day on January 20, 2021, then it will be really bad. President and Vice President would then be gone. First, according to the Presidential Succession Act of 1947, the House Speaker takes over the presidency. But in a counting chaos the majority could be unclear. Next in line would be the majority leader in the Senate, currently a Republican. But also in the Senate 35 seats are up for re-election.
In this case, Trump and the other players would probably not step down and insist on a final count. The consequence for the stock market: a total crash to unprecedented depths and a steep recovery when the battle is over.

Scenario 4: Moderate Trump-Crash plus follow-up bull market

Trump wins on election evening – although he is currently worse nationally than four years ago. But he is doing better in the battleground states of Wisconsin, Michigan, Minnesota and Florida. Afterwards a few weeks of confusion because of the count. The stockbrokers go underground and play it safe. Then Biden shows reason and admits defeat. After that, broad recovery on Wall Street. Except for Big Tech, which is likely to be about to be crushed.

Scenario 5: Immediate massive Trump bull market

Maybe everything will turn out differently: Corona is on the retreat or a working vaccine will give people new courage – people are no longer afraid to go to the polling stations. Moreover, many US citizens realize that postal voting only brings problems. The economy and the stock market pick up, Trump triumphs. The bulls can look forward to a mega bull market. Especially since the victory over Corona should bring about a strong economic recovery.
So the next few weeks will be exciting. Assume that the stock market will fluctuate wildly depending on the probability of a scenario. The live debates between Trump and Biden will be important – the Democrats are looking forward to them with concern, as their candidate recently showed some signs of dementia again. For example, he read the stage directions of his team during interviews. The Bernstein Bank wishes successful trades – we will keep an eye on the matter for you.

Important Notes on This Publication:

The content of this publication is for general information purposes only. In this context, it is neither an individual investment recommendation or advice nor an offer to purchase or sell securities or other financial products. The content in question and all the information contained therein do not in any way replace individual investor- or investment-oriented advice. No reliable forecast or indication for the future is possible with respect to any presentation or information on the present or past performance of the relevant underlying assets. All information and data presented in this publication are based on reliable sources. However, Bernstein Bank does not guarantee that the information and data contained in this publication is up-to-date, correct and complete. Securities traded on the financial markets are subject to price fluctuations. A contract for difference (CFD) is also a financial instrument with leverage effect. Against this backdrop, CFD trading involves a high risk up to the point of total loss and may not be suitable for all investors. Therefore, make sure that you have fully understood all the correlating risks. If necessary, ask for independent advice.

So the first week of September, which turned out to be multidirectional, ended. The sharp fall in the stock markets on Friday showed that the current situation must be assessed more carefully.

S&P500

It is already clear that it is time for investors to pay attention to macroeconomic statistics. COVID-19 is receding into the background, although the number of people falling ill is not falling. Definitely the driver of decision-making will be the potential for independent economic growth without incentives. Many investors understand that dust after a pandemic must lie down, only then will it be clear where the entire economy is going. On Friday, the S&P500 index fell by 1.35% . The US labour market is recovering, so the wishes of the US Federal Reserve are beginning to be fulfilled.
There are two months left until the US election, which is a very risky time for financial markets. Most investors are sitting back and thinking about whether or not to fix current positions because they have already taken good profits. Traders can buy back that kind of drawdown, or they can take a waiting position. One thing is clear: with the current monetary policy, such drawdowns will be even greater and the volatility will increase.

USD

On the eve of NFP, many investors are cautious and look out for the growth of the US dollar. The technical picture indicates that the US dollar index is preparing for its reversal. Aggressive US monetary policy is likely to strengthen long-term forecasts for the dollar, but it is already clear that the appetite for risk is beginning to balance the desire to preserve its capital.
The strengthening of the US dollar in the long run may not have very good consequences for risk assets, whose dynamics are directly related to inflation.

Oil

The oil market is ambiguous. On the one hand, after the storm in the Gulf of Mexico American companies had to reduce more than half of their oil production at sea. On the other hand, the refinery’s maintenance time is approaching, during which the price per barrel also falls. On Friday, the WTI oil price went below $40 per barrel and is trading at $39.50.

What awaits us today?

05.00 Export volume in China since the beginning of the year
08.00 Volume of industrial production in Germany for July
16.30 UK Housing Price Index from Halifax for August

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 first days showed that the indices are still not ready to rise every day to a new maximum. Another important thing is that there are only two months left until the presidential election in the USA. There is a very difficult power struggle between the two most powerful parties ahead of us.

EUR/USD

The year 2020 is still exciting with its events. There is turbulence between India and China. Turkey is clinging to Greece. Together with yachts, warships are sailing in the resorts.
In the USA, there is a conflict between law enforcement agencies and citizens. New footage of the use of violence appears almost daily. Many people tend to think that these are well-thought-out provocations by the Democrats, who are doing everything they can to win these elections.
What is this all about? In the very near future, we must make very careful decisions on the markets, given the tense situation. Analyse your assets and try to protect them in case of serious shocks. In case of an aggravation, financial markets can fall very deeply.

Euro

If you look at the daily chart of the EUR/USD pair, you can see that since the beginning of August the price has been moving more and more sideways. It is likely that such fluctuations will continue. Therefore, in the current situation we should apply a trading strategy within the channel 1.20 – 1.17.

PLATINUM

Platinum has recently been attracting more and more investors. Because of COVID-19, the price of platinum has fallen by more than 25%, making many nervous. After lows, the platinum price has already risen by 12.5% in the last two months. The metal now needs to overcome a strong resistance level of $960 and then the $1040 level.
Platinum is mainly used in catalytic converters for diesel cars, and once the coronavirus vaccine is developed, demand for cars will inevitably increase. The second price driver will be the reduction in production of this metal by almost 3% due to problems in South African mining companies.

What awaits us today?

03.30 Retail sales volume in Australia for August
10.30 UK Construction Business Index for August
16.30 Change in non-agricultural employment in the USA for August

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.

Who would have thought that at the time of the coronavirus pandemic, some of the world’s indexes would reach new heights. It feels like a kind of bubble is being inflated, which could burst at any moment.

DAX

Leil Brainard, a member of the US Federal Reserve Board of Governors, gave some details on the future economic support system. In particular, her speech included expressions such as “pursuit of profitability” and “other bubbles”. However, “monetary policy is not about blowing out these bubbles”. This is an interesting statement which, given the current situation, could have serious consequences for financial markets.
From this conversation it became clear that the Fed’s task will be to stimulate or slow down the overall economic environment, and how this will happen is not so important. Of course, no one will allow for sharp imbalances, but they are also not going to impose serious restrictions with the slightest deviation.

Euro

After such statements, it seems that there is no end to the decline of the dollar, and the Euro should be flying up above 1.20 very soon. But ECB colleagues are not sleeping and are also watching the situation. Even now the ECB states that the EUR/USD rate is very important for the current monetary policy of the ECB. Given these statements, it is clear that the central bank is not very favourable to the exchange rate above 1.20 and will not let the rate go too high, but it is not going to weaken much either. In the current situation, 1.1850-1.1750 looks good for buying.

Gold

Gold has been trading in some sidewalls lately, but this is good in some ways because it allows investors to take a breath and gain strength for a new breakthrough.
There is a correlation between inflation in the US and the value of gold. So there are calculations that corrected the price of gold adjusted for inflation in the USA until 1980. At that time, inflation was around 8% per year, and at those prices in 1980, adjusted for an ounce of gold, it was worth as much as $18,000! That’s just an incredible value.
No one is saying yet that gold will go to this level. But it is worth thinking that the USA printed more money in the last June than in the last 200 years. In total, 10 trillion dollars have been sent to the economy, which cannot but affect gold and its growth.

What awaits us today?

03.45 Composite business activity index (PMI) in China for August
10.30 UK Composite Business Activity Index for August
16.30 Address by Andrew Bailey, Governor 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.

The last month of summer was the best August in three decades for the US stock market. The Federal Reserve is going to reduce unemployment and rebuild its economy. Will the markets be able to survive such a major rally without significant losses?

EUR/USD

During the pandemic, capital was concentrated in the high-tech companies sector as well as the market for everyday consumer goods. If geopolitical risks increase in the world, or if the U.S.-China trade conflict gathers pace before the elections, there could well be a collapse in stock prices for major players. Everyone remembers the dotcom bubble, so you can’t rely on the IT sector alone.

Euro

On Tuesday, the EUR/USD pair tested the level of 1.20. Of course, this level cannot be passed from the first time, but the EUR now has all chances to overcome this serious resistance. In the current situation, the weakness of the dollar is affecting the growth of the pair, as the EU economy as a whole is still sluggish. A fall in the exchange rate may occur due to possible intensification of trade and economic conflicts in the world.

OIL.WTI

The oil market is virtually frozen and shows mixed dynamics. August oil has closed on the plus side, but the upward trend is fading. The level of $43 per barrel has been taken, but in a larger case this is a credit to the falling US dollar. The market is responding positively to any information regarding coronavirus vaccine development, as economic activity in many countries is still suffering from a pandemic. Ahead of this is data on oil reserves in the USA, which are forecast to decline, which will provide some price support.

Bitcoin

On the first day of September, the main cryptocurrency is growing and trying to break through the level of 12000. If Bitcoin succeeds in securing itself above this level, the road to 14000 opens. Investors have a very positive attitude. After all, the statements of the US Federal Reserve and the weakening of the US dollar have benefited the cryptocurrency.

What’s waiting for us today?

03.30 Australia GDP since the beginning of the year
14.15 Change in non-agricultural employment in the USA for August
16.30 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.

01.09.2020 – Special Report. The Chinese are suddenly sending out conciliatory signals regarding the customs dispute. And this is not by chance. The mood in the US election campaign is changing. We shed light on the current state of affairs and opportunities for investors and traders.

Hiding Biden

Presumably the Communists in Beijing wanted to sit out the U.S. election campaign. And why not: a new president Joe Biden would be a guarantee that punitive tariffs would be reduced. After all, the former vice president and ex-president Barack Obama had allowed China to destroy parts of American industry with dumping products, such as steel and textiles.
But apparently the Chinese no longer believe in Sleepy Joe. In fact, in the latest survey by the Rasmussen polling institute – the only one that was correct in 2016 – Biden is only one percentage point ahead of Trump; a few weeks ago it was ten points. Whereby national polls are irrelevant anyway, because there are millions of votes in the popular republics of California and New York that fall to the Dems anyway. The Swing States are important. Like Wisconsin.

They talk again

Probably the Chinese have followed all this very closely. Last Monday, U.S. Trade Representative Robert Lighthizer and Treasury Secretary Steven Mnuchin spoke on the phone with Chinese Vice Prime Minister Liu He. The call was originally scheduled for August 15, six months after the first day of the agreement. However, because of China’s cover-ups in the Corona pandemic and the totalitarian crackdown in Hong Kong, U.S. President Donald Trump had postponed the appointment. US economic adviser Larry Kudlow told Fox News that China is buying more agricultural commodities, which will secure jobs in the US. “The meeting went quite well.”

But now China is really buying soya

The Bloomberg news agency also reported in the middle of last week, citing unnamed sources, that American and Chinese officials had confirmed that the Phase 1 deal was still valid. And that China is planning a record amount of soy purchases in the near future. In total, the Middle Kingdom is planning to make purchases of 40 million tons this year. China has actually increased its purchases of US agricultural goods since the end of April. Ergo, the soybean futures in Chicago recently rose to a seven-month high.

So far nothing but empty words

However, there is probably a lot of wishful thinking in this reaction. Bloomberg estimates that in the first seven months China has only fulfilled around 27 percent of its obligations under the trade deal. And the US Department of Agriculture reported only meager purchases of 408,000 tons of corn and 204,000 tons of soybeans on Tuesday. The Chinese government now announced increased purchases at the end of the year. And the blog ZeroHedge, citing Reuters, judged that China had completed just five percent of its promised energy purchases worth around 25 billion dollars in the first half of the year.
Our conclusion: The recent positive comments on the customs dispute look very much like an election campaign on the US side – with a view to the farmers in the Midwest. And on the Chinese side it could be the usual delaying tactic.
However, it is quite possible that Beijing will go shopping after all because of a feared comeback of Trump. Then the previous week would also be the week of change in terms of the customs deal. If China fills the deal with life, it would be bullish for some assets. Especially for soybeans, the Chinese stock market and also for Wall Street. And of course for the yuan – which strengthened in the previous week from 6.92 to 6.87 against the US dollar. We keep an eye on the matter for you and wish 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.