News

On Wednesday, the yen fell sharply against the U.S. dollar to its lowest level since May 2019. If you look carefully at the daily chart of the pair below, you can see how long the price was trying to break through the resistance of 110 yen for 1 US dollar.

The USD/JPY chart of the day

What’s next? If the markets believe in the next statements of the Chinese authorities about the reversal of the coronovirus situation, the upward movement may be stronger.

STOCK MARKETS

The growth of stock markets on Wednesday was based on the positive from China. Perhaps we do not understand something, but the situation only keeps getting worse. The virus is beginning to get out of control in Japan, Thailand and South Korea. And in China itself, what will happen when 50 million people under quarantine go to work? There are no answers to these questions. Therefore, investors, when buying stock indices at these levels, must be extremely careful.

EURO

The sharp decline of the European currency in the last 10 days may be unexpected for anyone, but not for our subscribers. 2 factors: The actual recession in the economy and a strong negative swap continue to put pressure on EUR. However, we do remember that Central Banks have an unspoken policy on the actual freezing of exchange rate fluctuations in the forex market. Most likely, the European currency was allowed to fall to correct the situation in Europe at least a little.

BITCOIN + GOLD

Both the first crypto and the precious metal feel great even against the background of investors’ risk appetite. Synchronous growth makes Bitcoin an increasingly interesting asset for those who are afraid of rising inflation but want to diversify by investing not only in GOLD. Investors understand that gold may grow by 25% to the level of $2000. And Bitcoin, theoretically, can grow by 250%. Accordingly, investing in BTC even in 5 times less funds than in gold, it is possible to achieve excellent diversification.

What is waiting for us today?

01.30 Unemployment rate in Australia for January
02.30 Decision of the People’s Bank of China on interest rate
10.30 UK retail sales for January
13.30 Information on the ECB monetary policy meeting

Wichtige Hinweise:

Der Inhalt dieser Publikation dient ausschließlich allgemeinen Informationszwecken. Es handelt sich in diesem Kontext weder um eine individuelle Anlageempfehlung oder -beratung, noch um ein Angebot zum Erwerb oder der Veräußerung von Wertpapieren oder anderen Finanzprodukten. Der betreffende Inhalt sowie sämtliche enthaltenen Informationen ersetzen in keiner Weise eine individuelle anleger- bzw. anlagegerechte Beratung. Jegliche Darstellungen oder Angaben zu gegenwertigen oder vergangenen Wertentwicklungen der betreffenden Basiswerte erlauben keine verlässliche Prognose oder Indikation für die Zukunft. Sämtliche aufgeführte Informationen und Daten dieser Publikation basieren auf zuverlässigen Quellen. Die Bernstein Bank übernimmt jedoch keine Gewähr bezüglich der Aktualität, Korrektheit und Vollständigkeit der in dieser Veröffentlichung aufgeführten Informationen und Daten. An den Finanzmärkten gehandelte Wertpapiere unterliegen Kursschwankungen. Ein Contract for Difference (CFD) stellt darüber hinaus ein Finanzinstrument mit Hebelwirkung dar. Der CFD-Handel beinhaltet vor diesem Hintergrund ein hohes Risiko bis zum Totalverlust und ist damit unter Umständen nicht für jeden Anleger geeignet. Stellen Sie deshalb sicher, dass Sie alle korrelierenden Risiken vollständig verstanden haben. Lassen Sie sich gegebenenfalls von unabhängiger Seite beraten.

19.02.2020 – Special Report. The bulls are scratching their hooves: An interesting formation has just formed for fans of chart analysis. The “Golden Cross” decides on wealth or ruin. Crypto fans expect a bull market up to 26,000 dollars.

50-day line cuts 200-day line

The professionals at CoinTelegraph have been paying attention. The rising 50-day line at BTC has just crossed the moving 200-average from below. The phenomenon is known as the “golden cross” and is a rare occurrence in the crypto-currency.

Golden cross already in April – plus 170 percent

And that’s not all. In addition, according to CoinTelegraph, BTC has hung in a bullish, rising triangle at around 9,800. In these days the decision is made – either the recent highs at $10,400 are attacked or the lows at 9,500 are tested.

A bullish indicator is the fact that a price gap was torn in futures trading last week. As a result, Friday’s session closed at $10,495, while Monday began at below $10,000. BTC has always filled such gaps, making a rise to 10,500 the more likely option. Yesterday’s forecast has apparently been internalised by the bulls – BTC has recently stayed above 10,000 dollars again.

But all is not yet evening. Because the chart formation “Golden Cross” is too simple to be true. Moreover, a 200 line can quickly turn out to be massive resistance. But if enough traders believe in it, the effect of the Gold Cross as a “self-fulfilling prophesy” occurs.

BTC bulls take a run-up

By the way, the investment advisor Fundstrat also assisted, BTC could climb to 27,000 dollars by August. The reason and the prerequisite for this is precisely the above-mentioned sustained break of the 200-day line. And venture capitalist Mike Novogratz also assisted that BTC/USD will test the all-time highs until Halving in May.

So let’s wait and see – such a forecast is neither surprising nor altruistic for blogs and investors who are committed to Cryptos. We will keep an eye on the matter for you – the Bernstein-Bank wishes successful trades!

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.

19.02.2020 – Daily Report. Cautious optimism on the German stock market. And this despite ongoing warnings of future corona dips in corporate earnings. Hopes remained that China would get a grip on Covid-19. Now the Federal Reserve also came back into focus.

Prices in Frankfurt rise

Investors on the Frankfurt trading floor on Wednesday noon first ticked off Apple’s turnover warning triggered by Corona. The DAX was 0.5 percent firmer at 13,751 points, bringing the all-time high of 13,795 points back within reach. The data on manufacturing industry in Germany in December 2019 also hardly caused any excitement: According to Destatis, orders fell by 0.3 percent compared to the previous month.

However, prior to the publication of the Federal Reserve’s meeting minutes in the evening, the volume was rather low. US futures rose by 0.2 percent. Brokers pointed to declining numbers of new infections during the epidemic in China.

Asia with mixed trend

This naturally also supported the Asian stock exchanges. The CSI-300 in China closed the morning, just barely holding its own, with a minus of 0.2 percent at 4,015 points. In Tokyo, the Nikkei 225 gained 0.9 percent to 23,401 points. Investors rewarded the latest Japanese export data. Although exports fell by 2.6 per cent in January, the Nikkei was able to maintain its position. However, most economists had expected a setback almost twice as high as in the same month last year.

New York adorns itself

Wall Street had a slight setback yesterday. Whereby, of all things, the high-tech indices immediately shook off Apple’s little nose-blow. The Nasdaq Composite even squeezed out a new record finish: the index closed 1.57 points higher at 9,733 points after turning up in late trading. In contrast, the Dow Jones lost 0.6 percent to 29,232 points and the S&P 500 dropped 0.3 percent to 3,370 points.

Only the tip of the iceberg

Analyst Eleanor Creagh from Saxo Bank sent out a warning to stock market participants: that Apple is just the tip of the iceberg. Specifically, “The warning from a member of the $1 trillion dollar tech club is as big a red flag as any for a market priced for perfection.” The effects in China are more drastic than feared: Many factories are still closed, whole cities are closed.

In addition, the investment bank Macquarie has pointed out that steel stocks in China have reached the highest level ever for this season. A clear warning for the Chinese construction market and the

demand for iron ore or coke, Saxo Bank said. The disruption to supply chains would take time to work its way through. But FiatChrysler had already shown what could come: Production in Serbia was stagnating because of missing parts from China.

The Saxo expert had previously written that the disappointing economic data (pre-virus) from Japan in the fourth quarter was only a foretaste of what is waiting for investors in terms of “Downside Surprise”.

What the day brings

The diary brings some interesting events, you can find the overview as always here:Market Mover

In the USA, for example, construction starts and permits for January are received at 02:30pm..

At 08:00pm German time, the FOMC minutes of the Federal Reserve meeting of 29th of January 2020 are published.

Finally at 10:30 pm the API oil report will follow.

The Bernstein-Bank wishes successful trades!

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.

What happened on Tuesday was that everyone was tired of waiting. Gold finally showed a trendy day with a wide range. The level of 1600 dollars was passed, and the day’s highs were above 1605 dollars per troy ounce.
What was the catalyst for the movement? Most likely an extra day off (on Monday, American markets were closed due to the holidays). The accumulated energy + new negative on the stock markets led to a rapid growth of yellow metal.

Chart of the Day – Gold

STOCK MARKETS

TFutures on American indices opened at night with a gap down. And that gap was not bought out. On the contrary, the price fell further down. This is a very important moment. If the gap is not closed by the end of this week, it is likely that last week formed the top of the price on the chart.
What was the source for the negative? In fact, we didn’t learn anything new this weekend. The number of people who got sick and died from the coronavirus is increasing. However, investors were just tired of this uncertainty, which was to explode at some point. That’s what we warned our subscribers about just a couple of days ago.

OIL

Our oil forecast from last newsletter didn’t work out. After the morning decline, oil was traditionally bought back at European and American sessions. However, the bulls could not push the price up further. We did not see a strong upward directed day completing the short-term oil bounce. But now there are 2 options. Either this directional day will happen or the oil price will slide down again. It is absolutely unclear who will buy black gold at this price to hold a position at least for a couple of weeks.

What awaits us today?

00.50 Orders for engineering products in Japan for December
10.30 UK Retail Price Index January
14.30 Canada Consumer Price Index Base for January
20.00 Minutes of the US Federal Reserve’s Open Market Committee Meeting

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.

18.02.2020 – Daily Report. When Apple talks, the stockbrokers listen. Suddenly and unexpectedly the economic damage of the Corona virus comes to the fore. Scepticism is also growing in Germany. The DAX falls back.

Losses on the Frankfurt Stock Exchange

A small shock of reality for investors on the Frankfurt stock market: The DAX lost 0.5 percent to 13,714 jobs at midday. Yesterday, the leading German index had reached a historic high of 13,795 points. Futures on the S&P 500 and Dow Jones recently fell by 0.7 percent.

The reason for this was that the high-tech company Apple revised its sales forecast for the current quarter, which was only a few weeks old. There are supply bottlenecks for iPhones because production in China is being ramped up more slowly than planned. In addition, the demand for smartphones in China is stagnating because of Covid-19.

Pessimism in the German economy

Meanwhile, Corona is also increasingly eroding the confidence of German business. The ZEW index for expectations for the next six months fell surprisingly sharply by 18 points to the plus 8.7 mark in February. This is the first decline after three consecutive rises. The Mannheim-based institute commented that especially the export-oriented sectors were sceptical.

Asia steps on the brakes

Asian stock markets also fell back after Apple’s warning yesterday. The leading index Nikkei in Tokyo lost 1.4 percent to 23,194 points. And in China the CSI-300 crumbled by 0.5 percent to 4,058 points. Meanwhile, speculation is mounting that China will postpone the start of the National People’s Congress from 24 February to 5 March because of Corona.

No impulses from New York

Wall Street is only today again intervening in the events. The US stock exchanges remained closed yesterday because of “Presidents’ Day”.

Consumption of the Turkish Lira

Let’s take a look at the currency market: the Turkish lira has just slid to its lowest level since May 2019 at the time of the greenback. At 6.0725 lira, one dollar cost 0.5 percent more than the previous day. EURTRY rose to 6.5712. Analysts expect the Turkish central bank to lower interest rates further.

Under the current “Erdoganomics” Ankara is trying to strengthen the currency by lowering the key interest rate. Which turns the prevailing doctrine in economics upside down – according to this, a currency becomes firmer when interest rates rise.

Investors are also worried about the simmering conflict in the northern Syrian province of Idlib, which borders on Turkey. A war costs money that the state could obtain via the printing press. Moreover, many investors think twice before investing money in the autocracy: The public prosecutor’s office issued almost 700 arrest warrants against followers of the preacher Fetullah Gülen.

What the day brings

The calendar of events on Tuesday brings only a few interesting events, you can find the overview as always here: Market Mover

For example, the Empire State Index for February starts at 2:30pm in the USA.

And at 4:00pm the NAHB index, also for February, follows.

The Bernstein-Bank wishes successful trades!

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.

Due to a holiday in the US, the first day of the week was marked by a lack of price movements for most assets. We had an opportunity to switch from forex and futures and discuss the crypto market.

Bitcoin/Dollar Chart of the Day

After a confident breakthrough of the level of 10.000$, the second day shows a strong correction. From last week’s highs, the first crypto currency dropped by 8%. At the same time, the other altcoins out of the top 10 have fallen much harder.
The following dynamics can be traced. When the market grows, altcoins grow much faster than BTC, and when it falls, they fall much faster. This tells us that Bitcoin remains the only cryptographic currency attractive for long-term investors. All other tokens are the province of speculators due to the extremely high volatility.
Despite the fact that BTC has already shown a 40% growth compared to the beginning of this year, the potential of the movement is not yet exhausted. Halving is expected at the end of May, which will lead to the ruin of at least half of the miners, if the price does not rise by at least another 20-30%. Long-term futures quoted in the US are worth more than the spot price of the bitcoin. This indicates that major investors are also expecting the BTC to grow in the coming months.

POUND STERLING

The only currency that moved on Monday was pound sterling. The pound/dollar fell by 60 points and came close to the most important level at 1.30. As we noted yesterday, all the positive of the British currency was caused by the negative against the EURO. However, the decline of the European currency has stopped, and therefore the incentives to move from it to the pound have disappeared. Throughout Monday, speculators were fixing profits.

OIL

Oil grew for five days in a row. Today will be a critical day for understanding the future movement. After the opening of the American market it is possible to have a strong unidirectional upward movement. If that happens, it is likely that the closing of the day will be the maximum of the current rebound of the black gold.

What awaits us today?

01.30 Minutes of the Australian Reserve Bank
10.30 UK unemployment rate for December
14.30 New York FBI Manufacturing Index for February

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.

17.02.2020 – Daily Report. Apparently everything is fine on the world’s stock exchanges. Wall Street is soaring to all-time highs. Even the DAX is conquering a new peak. Because in China there is a strong buying mood – the central bank is intervening. Yet the consequences of the corona virus are not yet foreseeable.

New record in Frankfurt

Attracted by the strong Chinese stock market, the DAX posted gains at the beginning of the week. Most recently, the leading German index was up by 0.2 percent to 13,772 positions. Right at the beginning, the DAX had marked a new all-time high of 13,793 points in passing. Last Friday, the high had been 13,789 points. The futures on Dow Jones and S&P 500 rose by around 0.3 percent in the morning.

So much carelessness is amazing. Global trade is relying on the intervention of central banks to prevent the economy from stalling in the wake of the epidemic spreading from China.

Cash injection in China

The tug-of-war between cheap money hopes and real economic desperation can best be observed in Asia. The central bank in Beijing, for example, cut interest rates and announced new repo tenders; the Ministry of Finance announced steps to cushion the economic consequences of Corona. Specifically, the People’s Bank of China (PBOC) reduced the interest rate for one-year medium-term lending facilities (MLF) from 3.25 to 3.15 percent. A larger interest rate step for the key interest rate Loan Prime Rate (LPR) is expected for Thursday.

As a result, the CSI-300 gained a solid 2.3 percent to 4,077 points in the People’s Republic in the morning. The Shanghai Composite also gained 2.3 percent to 2,984 points.

Japanese economy collapses

Meanwhile, the Nikkei 225 lost 0.7 per cent to 23,523 points on Monday. The economy on the Nippon shrank more than feared at the end of the year, mainly due to the increase in value-added tax on October 1. Calculated for the year as a whole, gross domestic product (GDP) in the three months to the end of December slipped by 6.3 per cent compared with the previous quarter. And now brokers fear an even harder blow to the economy because of corona.

New highs in the USA

Investors in the USA had taken it easy on Friday. The Dow Jones Industrial dropped 0.1 percent to 29,398 points for the weekend. On a weekly basis, this was a plus of 1 percent. The S&P 500 was up 0.2 percent to 3,380 on Friday. And the Nasdaq Composite gained 0.2 percent to 9,731 points. Both the S&P 500 and the Composite thus achieved new all-time highs.

Petroleum worry lines

The mood is quite different for oil. WTI rose by 0.1 percent to 52.10 dollars, but Brent fell by 0.2 percent to 57.22 dollars. There could soon be an oil flood here because of China. According to the information service S&P Global Platts, major oil exporters such as Russia or Brazil are currently drastically cutting their prices for delivery in April – the main reason is sluggish demand in China, but also in Japan. Given the cut in flights and the discontinuation of tourism in China, this is not surprising. The largest Asian refinery group Sinopec, for example, has reduced production by 600,000 barrels per day this month – an average of 12 percent compared to the average of 5 million barrels achieved in 2019. The number two in Asia, PetroChina, reduced processing by 320,000 barrels per day.

Goldman Sachs assisted that the oil market has not yet correctly classified the epidemic risks, a surrender of the speculators could send Brent into the 40s or even deeper. The Goldman Sachs reduced their price target for North Sea oil for the full year by 10 dollars to 53 dollars. Meanwhile, a tweet from a Bloomberg reporter in Singapore, “Tankers, tankers everywhere! The supertankers piled up in front of one of the largest ports in the world.

What the day brings

The week begins relaxed. There are no really important appointments. As always, you can find the overview here: Market Mover

In addition, Wall Street is closed for the holiday of Presidents’ Day.

The Bernstein-Bank wishes successful trades!

Important Notes on This Publication:

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

The US dollar is steadily strengthening against all currencies and even against the Japanese yen. The latter seems completely irrational against the background of the coronovirus raging in Asia. There is only one world currency that has grown against the US dollar in recent days. It’s the English pound. Naturally, against the EURO, the pound has grown much stronger.

Chart of the Day EUR/GBP

Pound Sterling

Is it really the new leader on the currency market? In fact, the pound rose against the dollar, as often happens, not because of the weakness of the U.S. dollar, but because of the “extreme weakness of the EURO”. The latest data on the European economy led to a large-scale flight of investors from EURO. Large funds try not to keep all the eggs in one basket. They have enough dollars.
So it makes sense to transfer money to another European currency. But in what currency? The Swiss franc? But the franc has a maximum negative swap. Then in fact, in Europe, there is no other applicant with huge liquidity, except for the pound sterling.
In addition, the idea that the island would be much easier to quarantine if the epidemic spreads to Europe begins to unfold. But it’s worth remembering the main thing. If this happens, the pound will still grow against the Euro, but will begin to fall against the American dollar, especially given the negative swap.

OIL

On Friday, oil grew for 4 consecutive days. The evil market keeps pulling the stops of speculators, who opened large positions with the leverage. This rebound is relatively small compared to a 20% decline since the beginning of this year. Fundamentally, however, nothing is changing. China is introducing more and more restrictive measures in its big cities, further reducing the demand for energy resources.

What’s waiting for us today?

00.50 Japan GDP data for Q4
05.30 Industrial production level in Japan for December
12.00 Speech by ECB representative Lane

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.

14.02.2020 – Daily Report. The stock market experts assume that the central banks will somehow already flood away the economic damage of the corona virus. The World Health Organization is also pouring oil on the waves because of the recent increase in cases. The DAX marks an all-time high in early trading.

DAX with new record

Despite the drastic increase in infection figures reported yesterday, the DAX was robust on Friday. The German leading index climbed to 13,783 points on Friday morning – a new record high. Most recently, the indicator was still up 0.2 percent at 13,771 points. US futures also rose by around 0.2 percent.

It’s all a question of counting

Brokers referred to the latest statement of the World Health Organization – the WHO tried to smooth the waves. For example, the sudden rise in cases in China on Thursday does not mean that many more people have suddenly become infected with the virus. Rather, the approximately 14,000 newly reported cases are of patients in whom the virus has not been detected in laboratory tests – but who, according to the doctors, have indeed become infected with Covid-19.

Meanwhile Beijing reported more than 5,000 new infections on Friday. This brings the total number of people infected to almost 64,000.

German economy stagnates

Meanwhile, the figures for German gross domestic product were sobering: The zero growth in the fourth quarter of 2019 was worse than most experts had expected. Many had hoped for at least a slight increase of 0.1 percent. Yet the effects of the China epidemic have not yet reached the Western economy. This is likely to change soon.

Alibaba warns of the Black Swan

The Chinese online retailer Alibaba expressed itself in this direction. Group CEO Daniel Zhang warned that Covid-19 could become a “black swan event”. In other words, an unexpected horror for China and the global economy.

Reuters attempted to quantify the impact of the epidemic by interviewing 40 economists worldwide. According to the survey, China’s gross domestic product will only increase by 4.5 percent between January and March compared to the same quarter last year. In the last three months of 2019, growth had still amounted to 6 percent.

No clear trend in Asia

The Asian stock markets reacted unevenly to the news. The Chinese CSI-300 gained 0.7 percent to 3,988 digits. But the Nikkei 225 lost 0.6 percent to 23,688 points.

New York lurks below the summit

Meanwhile, Wall Street continued to count on possible intervention by the Fed, which had recently signalled that it would keep an eye on Covid-19 as a new factor in economic matters. The US leading index Dow Jones finally lost 0.4 percent to 29,436 points. The S&P 500 closed 0.2 percent lower at 3,374 points and the Nasdaq 100 technology index fell 0.2 percent to 9,596 jobs. These two indices set new records in the course of trading, but fell back afterwards. Overall, this was the second-highest close of all time. One could almost think that it was nothing.

US banks are in the doldrums

However, a look behind the scenes shows that mistrust is rampant. American banks are cautious and are reluctant to lend money to each other. Ergo, the Federal Reserve is already stepping in. The blog ZeroHedge reported that the most recent repo auctions were almost twice oversubscribed, the strongest demand since last September – at that time the US banking market was on the brink of the reocalypse, i.e. drying up. The Federal Reserve has now pumped a further 79 billion dollars into the market.

What the day brings

In the diary there are several important events at the end of the week, you can find the overview as always here: Market Mover

At 2:30pm it gets exciting on US equities, dollars and treasuries when the retail sales figures for January are reported.

Same with import and export prices as well as industrial production.

Also January’s capacity utilization.

At 4:00pm the University of Michigan will publish its consumer confidence.

Simultaneously the stocks for December are reported.

The Bernstein-Bank wishes successful trades and a relaxing weekend!

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.

Last night, something that everyone had long suspected happened. The Chinese doctors reported that the number of people who got the coronovirus is much higher than the real number. In one day, this number increased immediately by 30%. It was also noted that tests for coronovirus give a lot of errors. We also knew this, but for the first time the situation was recognized at the official level.

The S&P500 chart of the day

At night, it was possible to observe in real time how stock markets and oil were falling down. But what happened next? The American market opened and a new growth of indices began.
How could it be and what is happening in general? It’s all about the Central Banks. We remember the crisis of 2008, when the Fed spared money to rescue investment banks from Wall Street. The situation got completely out of control in just a few days. Subsequently, representatives of the Fed admitted that it was a huge mistake and it was worth solving the problem in the bud.

STOCK INDICES

And as we can see, central banks learn from their mistakes. Now, with any movement in the world economy, markets are immediately filled with a huge amount of “cheap” and even free money.
What is important to understand? The situation can last a long time. And as long as it lasts, the more players will believe in it. Then, at one not very good moment in time, the terrible thing will happen, that no one will wait. Markets will start to fall, investors will buy on falling, and prices will go down further and further. Be extremely cautious and don’t let yourself get caught up in this trap.

OIL + GOLD

Why did we decide to combine these 2 different assets? Thursday was an extremely interesting day. Both gold and oil were growing, although it’s almost always the other way around. What is the contradiction? Actually, there is no contradiction. Gold has been growing since the night of the news from China. On the same news, oil fell sharply, and then began to rise throughout the trading day.
Major players were trying to make money from speculators who recklessly opened short positions on oil. These positions were fully calculable, which means that there is a great opportunity to play back.
With each passing day, traders found it harder and harder to make money from what had worked before (strong directed movements on the news). This should be taken as granted and try to work not from news, but only from price movements.

What is waiting for us today?

08.00 German GDP data for the 4th quarter.
11.00 EU GDP data for 4th quarter
14.30 US retail sales level in January
16.00 University of Michigan Consumer Confidence Index for February

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.