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30.01.2020 – Daily Report. The buyers are turning over: The corona virus weakens their defenses. The Fed does not want to lower interest rates – despite the threat of a slowdown in the global economy due to the epidemic. And the disease is spreading.

DAX, futures, oil plunge

The recent recovery has fizzled out: the DAX plunged 1 percent to 13,210 points on Thursday. And once again our advice to the friends of chart analysis: Yesterday the DAX fell almost exactly on the 50-day line and better not close below it today. The US futures also fell by about half a percent. Oil was under pressure again – prices slipped by 1.4 percent. A barrel of WTI cost 52.56 dollars, Brent was traded for 58.06 dollars.

The fear of the epidemic persists

Once again, the fear of the rapidly spreading corona virus threw investors off course. China has now reported 170 deaths, and India also reported the first death. Deutsche Bank analysts warned of effects on the global economy – these would tend to be much greater than in SARS. Since 2003, China’s share in the global economy has more than tripled.
The Nikkei in Tokyo closed 1.7 percent lower at 22,978 points. The Hang Seng in Hong Kong lost 2.6 percent to 26,4490 jobs. There was again no trading on the Chinese mainland stock exchanges due to the Chinese New Year. A foretaste of what could happen after the reopening was provided by Taiwan’s Taiex index, which fell by more than 5 percent.

Phase 1 is in danger

The disease could also affect the trade deal between China and the USA. Trade adviser Peter Navarro told CNBC that existing US tariffs on Chinese goods remained in place despite the virus. We think: A bitter blow for the already ailing economy in the Middle Kingdom. Appropriately, Zhang Ming of the Chinese Academy of Social Sciences, which is close to the state, judged in the magazine “Caijing” that the growth of the Chinese economy in the first quarter could fall below 5 percent. Last year the Chinese gross domestic product had climbed by 6.1 percent.

Which brings us to the question of how Beijing is to buy 200 billion dollars worth of goods in the USA, as envisaged under Phase 1, if the domestic producers themselves are starving. In fact, the South China Morning Post blew that very horn.

New York hesitates

In the USA, brokers had held back the previous evening. The Dow Jones Industrial ended trading almost unchanged at 28,734 points. The S&P 500 fell 0.1 percent to 3,273 points. And the Nasdaq Composite saved a small plus of 0.1 percent to 9,275 points. Particularly bitter: According to comments by the Fed, the indices gave up their previous gains.

Powell is reluctant

In fact, Jerome Powell disappointed the market with his statements after the interest rate decision. As expected, the key rate remained unchanged for the second time in a row. But Powell was dissatisfied with the inflation trend in the US. The Lord of the Money made it clear that the Fed would stick to its course and not – as US President Donald Trump repeatedly demanded – pursue a laxer monetary policy.
But maybe that will change soon. Powell called the corona virus a “serious issue” that is likely to slow down the economies of China and Japan and possibly the global economy. After all, he announced that he would be supporting the interbank market with repo auctions at least throughout April – which should prevent a freeze on credit supply and a crisis in the US banking market.

Tension at Sterling

Meanwhile, traders in the British pound are waiting for today’s meeting of the Bank of England at 13:00. – the exit is more open than ever before. Most investors expect an interest rate cut of 25 basis points. However, a “once and once only” signal could stabilize the pound.

What the day brings

In the USA it gets exciting at 14.30 if you trade CFDs or online US stocks – or even the dollar and treasuries. Because that’s when the US GDP for the fourth quarter is reported; and also the weekly initial applications for unemployment benefits.

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.

On Wednesday investors were looking forward to the outcome of the Fed meeting. It was clear that the rate would not change. As always, the main interest was in comments.
Fed signaled that the cost of borrowing will remain unchanged for now, with moderate economic growth and low unemployment expected to continue until this year’s presidential election. There are no expectations of a rate cut now.

The Bitcoin chart of the day

The regulator’s press release notes that the labor market remains strong and economic activity is growing at a moderate tempo. In recent months, jobs have been growing steadily on average and unemployment rates have remained low. Although household spending is increasing at a high rate, investment in fixed assets and exports remain weak. On a 12-month basis, core inflation falls below 2%.

EURO

The euro/dollar pair has frozen at the most important level 1.10. Yesterday afternoon there was even a symbolic removal of stops behind the round level. The situation is similar to the movement of the pound/dollar, when the stops were removed slightly above 1.35 and the dollar/yen, with the removal of the stops above the level of 110.
A solid consolidation for 2 days below 1.10 will indicate a move into a new range of 1.05-1.10. There are no strong fundamental reasons that affect the situation now. Therefore, the movements are chaotic, allowing traders to make money on rebounds.

BITCOIN

The main hero for the third consecutive day is Bitcoin. A couple of days ago, we advised you to pay close attention to him. On Wednesday night, the first cryptocurrency showed a sharp increase, securing itself near the mark of $ 9400. The closest target of $10,000 is now very close.

What awaits us today?

09.55 Germany’s unemployment rate for December.
13.00 Bank of England decision on interest rate
13.00 Planned volume of asset purchases by the Bank of England
14.30 Annual data on GDP in the USA for the 4th quarter

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.

29.01.2020 – Daily Report. Surprisingly robust, Wall Street has countered the latest setback. And the DAX is also showing resistance to the fear of the corona virus. However, the German leading index is not making much progress. No wonder: the stock market is waiting for the Fed.

Frankfurt swings sideways

Investors on the German stock exchange have let the recent events in China subside for the time being. Encouraged by the strong performance of Wall Street, the DAX recently hovered 0.1 percent higher at 13,333 points. Incidentally, the indicator had caught up exactly on the 50-day line yesterday.
GfK’s Nuremberg-based market researchers brought positive news: the easing of tension in the customs conflict between the USA and China has made German consumers more optimistic about the future. The consumer climate barometer for February rose slightly by 0.2 to 9.9 points. We are curious to see how the events in China will be reflected.

It is probably not over yet

The corona virus is likely to keep investors on tenterhooks for some time yet. Chinese authorities have now reported nearly 6,000 confirmed cases and 132 deaths. Meanwhile, the financial blog ZeroHedge continued a story first published in China by the well-connected Epoch Times, which is affiliated with the Falung Gong movement and has active relations with exiled Chinese.
According to this, there is growing evidence that the Wuhan Institute of Virology is indeed the epicentre of the epidemic. A leading scientist there has researched the spread of deadly diseases such as Ebola, SARS and the corona virus via bats – the animals apparently spread the killer germs without themselves becoming ill. In mid-November last year, the expert is said to have been looking for post-doctoral students via job advertisement. Has this brought inexperienced youngsters into contact with the deadly viruses? In fact, the magazine “Nature” had already quoted experts with safety concerns in 2017. By the way, bats were offered for consumption at the now closed fish and wild animal market in Wuhan. If the speculation is correct, it would raise considerable question marks about the Chinese’ safety skills. And would probably soon be reflected on the stock exchange.
Especially as the question of the efficiency of the quarantine in Wuhan also arises. According to the blog MishTalk, several international flights are scheduled to arrive at Wuhan airport today, including to Paris, Bangkok and San Francisco. We could not verify this after researching fligthstarts.com, but we did find several Chinese domestic flights for Wuhan Tianhe International Airport, in addition to flights to Tokyo and Hong Kong. Among them to the international hub Beijing. We very much hope that the data is out of date.

Nikkei firm – Hang Seng loses

The Nikkei in Tokyo gained 0.7 percent to 23,379 points in the morning. In contrast, the Hang Seng in Hong Kong lost 2.8 percent to 27,161 points. On the Chinese mainland stock exchanges, trading was again suspended due to the Chinese New Year.

Recovery in New York

On Wall Street, the bulls were in charge again yesterday. The Dow Jones Industrial closed up 0.7 percent at 28,723 points. The S&P 500 climbed 1 percent to 3,276. And the Nasdaq 100 rose 1.6 percent to 9,091 points. Strong US economic data, such as orders for durable goods and the mood of US consumers, created a buying mood.
As a result, all major US indices immediately closed the downward gap they had torn the day before yesterday. Is that all there is to it now with the correction? The corona virus is likely to stall some companies, as Apple and Starbucks have already warned.

Oil getting stable

Crude oil broke its recent losing streak and gained about 1 percent. Brent cost USD 59.32 in the morning, while the price of WTI rose to USD 53.99. OPEC and its main allies successfully resisted the bear market: Now the production cutbacks are to be extended until June of this year.

Everyone waits for the Fed

Tonight, the focus is on the Federal Reserve. No one expects the Fed to abandon its loose monetary policy. Most brokers expect the key interest rate to remain unchanged in the range between 1.5 and 1.75 percent. Statements by the Federal Reserve on the US economy are expected from 8 pm German time.
Otherwise, US data on pending home sales in December will be received at 4:00pm.
You find the entire appointment calendar as always here: Market Mover

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.

After two days of “big blood” in the stock markets, the bears took a break today. The S&P 500 index is confidently closing the day on the plus side. However, many risky assets, such as oil, Australian and New Zealand dollars, almost did not respond to the positive. This once again confirms that the American stock market is increasingly living its own life.

Chart of the day S&P500

Nothing in the world has changed fundamentally in a day, the number of coronovirus patients in China continues to grow. The main question that everyone is concerned about is why the number of confirmed cases in other countries is still very low. If the answer lies in the long duration of the incubation period, a new wave of chaos may await us in the coming days.

SWISS FRANC

Frank never ceases to amaze. During the first half of January, we noted that it is growing as stock markets are growing. That is, it does the exact opposite of what a protective asset should do.
However, the situation has changed with the arrival of the coronovirus. Ideally, the franc should continue to grow, and it begins to decline against the U.S. dollar. What’s the catch?
There’s probably no catch. On the one hand, just terrible trade balance data came out today, much worse than predicted. They show that the patience of the Swiss central bank against the strengthening of the franc is not forever.
On the other hand, investors are increasingly pessimistic about the outlook for 2020, against the backdrop of a new epidemic. So this year, many of them are likely to spend “in the money”. Against this background, it is certainly better to buy U.S. dollars and receive income on U.S. bonds than to pay a negative interest rate from your pocket for owning the franc. In the next couple of weeks it will be clear whether this version has the right to exist.

BITCOIN

In the previous newsletter we paid attention to the first crypt currency starting a new growth cycle, and already today we have new highs of the year. In theory, there are no obstacles for further growth of gold and Bitcoin (new digital gold). The main battle of bulls and bears will go beyond the level of 10.000$, which we should see in the 1st-2nd quarter of this year.

What’s waiting for us today?

01.30 Q4 Consumer Price Index in Australia
20.00 US Federal Reserve Interest Rate Decision
20.30 Press conference of the US Federal Open Market Committee

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.

28.01.2020 – Daily Report. Deep intoxication in global trading: US indices rupture striking downward gaps, the DAX yesterday broke through the 50-day line from above. But on Tuesday morning, the first thing on the agenda is an attempt at a recovery. Everything depends on the corona virus.

Frankfurt dares resistance

A brief stopover in the downward trend: The DAX was recently unchanged at 13,203 points. However, the slight gains before the stock exchange melted away. The German leading index broke through the 50-day line yesterday. First of all, an attempt at a rebound and thus a re-conquest of the moving average must be assumed. Since the German stock market has been far less enthusiastic than Wall Street in recent weeks, not as many optimists as in the US have entered the market. US futures were pointing 0.3 percent north. If, however, the 50-day line in Frankfurt breaks sustainably, the next stop will be the moving 200-day average at currently around 12,500 points.

Make or break through the corona virus

Everything now depends on the further course of the epidemic. Presumably the apparently determined steps of the Chinese against the lung disease will take effect sometime. But in the coming days you can expect a sharp increase in the number of cases diagnosed. If only because many people are now sensitized and are more likely to see a doctor; and because the authorities at the airports are taking a closer look. Overnight, the number of cases reported in China doubled. More than 4,000 infections have now been confirmed worldwide, and the number of deaths has climbed to over 100. So it fits into the picture that the first case was identified in Germany.
However, if the virus becomes really dangerous due to mutations and cannot be contained convincingly in a timely manner, then we can expect a mega slump. Since the market does not yet see the possibility of a global epidemic, the depth of the fall in the event of a case cannot be estimated at all.

Nikkei corrected

Initially, many investors in Japan parted with their shares as a precaution. The Nikkei slipped by 0.5 percent to 23,215 points. Stock exchanges in Shanghai, Hong Kong and Taiwan remained closed due to the Chinese New Year.

US indices fall like stones

The Dow Jones Industrial closed yesterday with a minus of 1.6 percent at 28,536 points. The S&P 500 suffered its biggest daily loss since the beginning of October and also closed down 1.6 percent at 3,244 points. The Nasdaq 100 even lost 2.1 percent to 8,952 points.
All major American stock market barometers have now torn nice downward gaps. At the same time, the fear indicator VIX shot up with an upward gap. According to the lessons of chart analysis, these price gaps will close again at some point. Just when? Certainly not in times of fear like these. Especially since the 50-day line on the indices is now pulling prices from below like a magnet.

Oil market slump

The sell-off in oil also continued. WTI fell by 0.6 percent to 52.81 dollars, while Brent fell by 0.9 percent to 58.07 dollars. A trader from Global Risk Management told the Wall Street Journal that the recent crash was 100 percent due to Corona. Saxo Bank commented that a glut of gasoline supply in China would have a global impact.

Heading for safe havens

Conversely, safe havens were once again in demand. Meanwhile the price of gold in euro terms reached a new all-time high at 1,443, see our Special Report yesterday.
Ten-year US government bonds rose to their highest level since early October.

This went in the Impeachment

And what’s new in Impeachment? Well, there’s currently no threat to Wall Street here. Yesterday there was a real highlight when Pam Bondi, former Attorney General of Florida and now a member of Donald Trump’s Communications Team, reminded the Senate and the US voters of interesting facts. She said there were good reasons for Trump to talk to Ukraine about investigations into corruption against the Biden clan; after all, Hunter Biden, Joe Biden’s son, had collected up to 83,000 dollars a month from the Burmese gas company, even though he has no experience in the energy business. A total of $3 million is said to have been paid out. With the focus on his allegedly corrupt clan, Joe Biden is finished as the Democrats’ main middle-class eligible candidate.
Very nice also the feigned indignation of the Democrats about the fact that allied Ukraine was withheld from Trump for a short while its military aid of almost 400 million dollars. What you rarely or never read in this country: Barack Obama’s administration provided Kiev with blankets and medicine when the Russians attacked. Four of the eight current Democratic house managers in the Senate Inspectorate also refused to allow Ukraine to use lethal weapons. Only Trump sent Ukraine urgently needed Javelin-type armor-piercing missiles. So where has Trump abandoned an ally and how has he compromised national security?
Either way, you should keep your eye on the impeachment. If some Republicans want to switch sides and subpoena new witnesses together with the Democrats – which is quite possible – Wall Street will get a new short argument.

What the day brings

The schedule on Tuesday is quite clear, see here:Market Mover
In the USA, at 2:30pm, the order intake for durable goods in December is reported.

Consumer prices for January arrive at 4:00pm.
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.

On Monday morning, the stock markets and all risky assets began to fall rapidly. This may have been a surprise for many, but it was definitely not for subscribers to our daily newsletter.
As expected, AUD/JPY pair worked best in panic conditions (chart below). Oil also declined, while gold rose.

Chart of the day AUD/JPY

Will the markets continue to fall? This is the main question that interests everyone. Now everything depends on the situation with the coronovirus. No meetings of the National Bank, which are expected soon, are no longer of interest to investors.
What should be understood? Until the growth trend of 40%-50% infected per day is broken, there are no prospects for risky assets.

EURO/USD

The pair came close to the most important support level 1.10. Most likely, tomorrow the it will start to test this level. The bears will try to remove the stops and partially fix the profit.

Oil

At the auction on Monday, WTI oil fell for the sixth consecutive day. Of course, at any moment we can see a slight bounce. However, it will allow the bears to enter the market at a slightly better price. Fundamentally, the situation with black gold is terrible. The sharp decline in demand for air transportation is still just beginning. The situation may become avalanche-like, when tourists will refuse to fly not only to China, but to all Asian countries.

Bitcoin

Against this negative backdrop, Bitcoin began another phase of growth. The price is only $300 below its recent highs. There is a very significant factor, which is almost not thought about yet. What happens if China’s population gets hysterical and starts transferring some of their savings into the first crypt currency? We think an answer is not even required. Therefore, it can be extremely dangerous to short BTC in this situation, without stops.

What’s waiting for us today?

08.00 Swiss trade balance for December
14.30 US Durable Goods Orders for December
16.00 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.

27.01.2020 – Special Report. A minor bloodbath on the stock market – fear of the corona virus in China has sent share prices in global trading plummeting. In contrast, gold, calculated in euros, has just reached a new all-time high. Once again its status as a safe haven in times of crisis is taking effect. And with international monetary policy, there is another, longer-term, massive buying argument.

Fear everywhere

Red numbers everywhere in the free real time prices – on the trading platform a feast was prepared for the bears. Saxobank said the stock market had just realised that the 2019-nCoV virus would have a significant economic impact as the quarantine in China now affects around 56 million people. In fact, initial hopes that the government in Beijing would get the disease under control had been severely dampened over the weekend – the number of deaths and reported cases of the disease has soared. The financial blog ZeroHedge has, as always, presented this in an exemplary manner in a pretty chart.

Escape into gold

One reaction of investors: they bought gold. Calculated in Euro, the yellow metal just reached an all-time high at 1,437 Euro. Already in the course of the tensions between Iran and the USA at the beginning of the year, gold in dollars had risen to as high as $1,595 in January. This had been the highest level since the beginning of 2013. That might not have been the end of the story. For apart from acute crises, it is above all the monetary policy of the major central banks that should further boost demand for precious metals.

Here comes the tide

According to the blog Goldmoney.com, in the last quarter of 2019 the Federal Reserve began to aggressively pump fresh money into a surprisingly illiquid banking system. We recall our special reports on the subject of repurchase agreements and the threat of a reocalypse in the frozen US banking market. Given the lack of foreign demand for US Treasuries and a rising savings rate, the US budget deficit can only be eliminated through monetary inflation.
Furthermore, the European Central Bank resumed its quantitative easing in November; the ECB will probably also provide new liquidity for ecological issues. Furthermore, the Bank of Japan is prepared to further ease its monetary policy if the inflation target of 2% is jeopardized. All in all, in view of the international flood of money, paper money is likely to lose even more of its purchasing power, which has apparently long been the case with gold anyway.

Threatening chaos

Another conclusion from Goldmoney.com: The markets are in more trouble than ever before, as negative interest rates and negative bond yields proved. A major systemic crisis in the market is only a matter of time, and soon one or more major banks will probably have to be rescued. “Monetary chaos promises to be greater than anything seen heretofore, and it will engulf all western welfare-dependent economies and those that trade with them. If this prophecy is correct, the next crisis is imminent and should provide fresh demand for gold.

Precious metals as stragglers

The thoughts of financial advisor Evergreen Gavekal go in the same direction – the investment boutique sees gold as a latecomer. It was one of the shocking surprises of the decade that has just ended that inflation has fallen but not risen despite a wave of artificially created money of around 15 trillion dollars. And unlike US equities and global bonds and real estate, gold and the other precious metals did not attract equivalently.
We add restrictively: with the exception of palladium, which recently reached an all-time high of $2,501. Which leads us to suspect that there may still be room for improvement in other precious metals with industrial uses – i.e. platinum and silver.

Central banks and private individuals buy

Goldmoney.com also looked at the demand side for gold. The central banks had bought about 4,400 tonnes of gold since 2008 – all reserves currently amount to 34,500 tonnes. Buyers are mainly Asian, Eastern and Central European central banks. Russia, for example, is replacing its dollar reserves with gold. We think: The central banks themselves are best placed to assess the impact of inflationary monetary policy.
There is more to it than that: the private sector in China in particular has so far bought 17,000 tonnes, the sum is derived from the figures of the Shanghai Gold Exchange, Goldmoney continued. And according to the World Gold Council, private individuals in India have so far hoarded 24,000 tonnes. This means that people in two countries who have already had some negative experiences with the devaluation of paper money are buying particularly heavily.

Hated Gold

Apropos: It could well be that not only the Bundestag will make it more difficult to buy gold in future, but also other countries that are busy pumping air money into the system. In this connection we remind you of the over-the-counter transactions in Germany – the exemption limit was reduced from 10,000 to 2,000 Euros on 1st January. Naturally, a buying frenzy set in before the end of the year.
The blog SafeHaven.com speculated that this probably had nothing to do with the vanishingly small number of money laundering cases. But perhaps with these three reasons:
1) The government fears an economic collapse due to the high savings rate: Berlin wants to make saving more difficult and stimulate consumption.)
2) The government is building up an information base for the later confiscation of gold.
3) The government does not want its own citizens to own unknown gold, because otherwise it lacks information about the financial situation of its subjects (we add: Because without knowledge of the financial situation the government cannot collect money specifically through new taxes, as is the case for example through the land registry for real estate).
We further suspect: While the central banks themselves are buying in order to increase their reserves, the government must prevent the flight of private individuals from paper money into gold. This would mean that politicians would lose control over their own money – which is to be further devalued by zero and negative interest rates so that states can somehow repay their debts. Those who follow our thesis keep gold on the long side in their sights.
The Bernstein-Bank wishes successful trades and investments!

Important Notes on This Publication:

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

27.01.2020 – Daily Report. It’s not a panic yet. But concerns about an economically disastrous spread of the corona virus are growing – in China, in Europe and in the USA. This gives the bears new arguments for sales. And Wall Street its trigger for the long overdue reset.

Frankfurt goes underground

Investors on the German stock exchange played it safe at the beginning of the week: At the start of trading, the DAX had fallen sharply in the meantime. Most recently, the leading German index was down 2 percent to 13,313 points – a loss of 264 points. US futures were in the loss zone at 1.3 percent. On the stock exchange, fears of the corona virus were allayed. Unsurprisingly, it was mainly the Lufthansa share in the DAX that plummeted.

Ifo index disappointed

The Ifo business climate index also provided food for the bears: The indicator unexpectedly dropped to 95.9 points in January. In December, the index had still been at 96.3 digits. This was the first decline since August 2019.

Fear of the lung virus

Worldwide, the fear of epidemics dominated events. Over the weekend, the number of confirmed infections climbed by more than 700 to over 2,700, and that is just the number of known cases – lung disease is contagious even before the first symptoms appear. The number of deaths has risen to 80, compared to 26 on Friday.
Many brokers drew comparisons with SARS – starting from China, around 8,000 people were infected in 2002/2003 and around 800 died. The World Bank and the World Health Organization (WHO) had estimated the total damage to the global economy at 30 billion US dollars. And the current virus is said to be even more dangerous than SARS at that time. In the meantime, new cases have been confirmed in more than ten other countries.
In the meantime, the Chinese authorities extended the Chinese New Year holidays by three days in order to contain the spread. If the economy in China, with its gigantic industrial and consumer demand, were to collapse, this would have a negative impact on the global economy. No wonder that crude oil has gone into hiding: North Sea Brent and WTI oil became more than 3 percent cheaper. Our conclusion: the corona virus is the Black Swan, which hardly anyone had on their radar before. Now he has landed.

Safe haven escape

As so often, investors reacted by fleeing to safe havens. The price of gold rose to $1,583 an ounce. The Swiss franc was also in demand. The euro slid against it to 1.063, its lowest level in almost three years. US government bonds were also on the buying list; the yield on ten-year bonds had fallen to almost 1.4 per cent on Friday, the lowest level since December.

Asian sell-off

Meanwhile, investors parted company with Asian assets. In Tokyo, the Nikkei fell by around 2 per cent to 23,344 points – the lowest level in more than two weeks. The Korean Kospi lost about 1 percent to 2,246 points. On the Chinese stock exchanges there was still no trading due to the New Year. But the offshore yuan gave a foretaste of the coming price development on the Chinese stock exchanges, and the dollar rose to 6.9367.

New York in reverse

Investors on the US stock markets also parted company with their assets on Friday because of the virus. The Dow Jones dropped 0.6 percent to 28,990 points, bringing the week’s balance to minus 1.2 percent. The S&P 500 dropped 0.9 percent to 3,295 points on Friday. The Nasdaq 100 lost 0.8 percent to 9,141 points.
And that might not be the end of the story: As explained here days ago and before the current virus scare, the indices are hovering well above the 50-day and 200-day lines. A little panic could cause the indicators to drop loosely down to these levels.

What the day brings

At the beginning of the week the diary is only sparsely filled. As always, you can find an overview here:Market Mover
In the USA the figures for the sale of new homes are due at 4:00pm.

The Bernstein-Bank wishes successful trades and a profitable week!

Important Notes on This Publication:

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

The main topic on Friday and the weekend is the coronovirus from China. The American stock market has been growing for 8 weeks in a row. Growing on every news story. And even on this virus, it’s been growing for 10-15 days.
The Chinese authorities have cut off several cities with a population of 50 million people from the transport infrastructure. Most likely, the Asian markets will be the first to collapse very sharply, and in their wake also the markets of Western countries. We will be glad if that does not happen. But you have to be very careful.

Chart des Tages S&P500

Epidemics always start very slowly, for 2 reasons: the presence of an incubation period + a small number of affected patients. At some point, both indicators reach a critical mass, and then everything turns into an avalanche. According to virologists, 1 affected person infects 4-5 people. This means that if there is no dramatic improvement in the near future (e.g. if the virus mutates and becomes less contagious), the number of patients will reach hundreds of thousands of people for a week. Please note that these are really sick people and not the number announced by the Chinese authorities.

AUD/JPY

As always with any Asian disaster, AUD/JPY is becoming the most active pair. If the stock markets continue to fall, it will likely be the best pair to short. The Aussie is falling against the US dollar, while the Japanese yen is rising against the US dollar.

Oil

On Friday, the BRENT oil broke through an important psychological mark of 60 dollars per 1 barrel. It is not yet visible what can stop the fall. The demand for black gold will fall next month due to lower consumption in China and fewer flights. Tourists are massively turning in previously purchased tours. And China has banned organized tourist groups from leaving their country.

Gold

Against this negative background, yellow metal feels great. The exit of investors from stocks raises the question “what to do with the money”? Gold is the first candidate for the accumulation of free cash flow. Already in the first 3 days of the new week the level of $ 1600 an ounce can be tested again.

What awaits us today?

Chinese New Year
10.00 IFO Germany Economic expectations indicator for January
16.00 New home sales in the United States for December
16.30 Business activity index of the US Reserve Bank of Dallas for January

Important Notes on This Publication:

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

24.01.2020 – Daily Report. Gains on the Frankfurt stock market: The DAX immediately closed yesterday’s small downward gap. On a day with little news, the turnaround on Wall Street in particular provided a good mood.

Frankfurt is picking up

Recovery on the German stock market: The leading German index has regained some ground by Friday noon. The DAX recorded a plus of 1.3 percent to 13,561 points. Thus the small price gap between 13,498 and 13,486 points was immediately closed again. A thoroughly bullish signal. But will the recovery bear fruit? Before the weekend this seems quite optimistic.

Little news on Friday

News was rather scarce. After the nose-blowing from the USA regarding the threat of punitive tariffs of 25 percent on European cars, Finance Minister Olaf Scholz (SPD) first spread optimism. In an interview with the US station CNBC, he said that he was by no means pessimistic about the prospects of a trade deal between Europe and the USA.
Yesterday’s ECB meeting was positively received on the trading floor, as the key interest rate remains at zero, as expected. The greening of the European Central Bank caused some brooding: ECB President Christine Lagarde said that in future monetary policy will be much more strongly influenced by climate change. What does this mean in concrete terms and how is this to be achieved? Does the central bank want to lower interest rates as soon as governments pump billions into environmental policy? That looks like a carte blanche for governments to raise taxes – the ECB will already take countermeasures with low interest rates.

Tense wait in Asia

Investors in Asia held back before the weekend. The Hang Seng in Hong Kong closed with a minimal gain of 0.2 percent at 27,950 points. And the Nikkei entered the weekend 0.1 percent firmer at 23,827 digits. The stock exchanges on the Chinese mainland remained closed due to the upcoming New Year celebrations on Saturday – and yesterday investors had already put their money on a safe haven with heavy selling.
In the coming days, stock market traders are likely to keep an eye on the further course of the corona virus. The National Australia Bank analysts believe that the lung disease could reduce economic output in the Middle Kingdom by 1 percent in the first quarter. And Guan Yi, director of the State Key Laboratory of Emerging Infectious Diseases at Hong Kong University told the financial magazine “Caixin” that the current epidemic could be ten times worse than the SARS outbreak in 2003, when 800 people died.

Resident Evil in Wuhan

A little creepy factlet on the side: Apparently reality is currently imitating fiction. According to the financial blog ZeroHedge, Wuhan is probably the real Racoon City from the horror flick “Resident Evil”. It is possible that the virus escaped from the National Bio-Safety Laboratory, which specialises in highly dangerous viruses; the laboratory had already been portrayed by “Nature” three years ago.
Meanwhile, China has sealed off the 11 million metropolis of Wuhan and other cities – a quarantine unprecedented in history. Around 40 million people in China are now affected by travel restrictions. The pathogen has been detected in more than 830 people and the number of deaths has risen to 26 according to official figures. Nevertheless, the World Health Organization (WHO) has not yet classified the epidemic as an international health emergency.

Intraday Reversal in New York

Wall Street had consolidated at a high level on Thursday – prices made a nice catch-up in late trading. The Dow Jones Industrial, for example, closed at minus 0.1 percent and 29,160 points. The Nasdaq Composite even turned the corner and gained 0.2 percent to 9,402 positions. The S&P 500 also made up for its early losses and gained 0.1 percent to 3,326 points.

What the day brings

At the end of the week the schedule is quite clear – all dates can be found here: Market Mover
At 3:45pm the American Purchasing Managers’ Index Manufacturing and Service Markit will run over the tickers for January.
The World Economic Forum ends in Davos.
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.