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19.12.2019 – Daily Report. The brokers don’t want any more. Two US indices tripped once again to a new high. But the investors in Frankfurt have apparently ticked off the year. Which is no wonder after a great performance. The British pound could be exciting again today. And some interesting economic data is also being reported in the USA.

Prices in Frankfurt are crumbling

Hardly any movement on the trading platform: Germany’s leading index fell by 0.2 percent to 13,194 points on Thursday morning. The DAX had already fallen by 0.9 percent the day before. Nevertheless, the stock market year is likely to be the most successful since 2012 – the indicator has risen by around a quarter since the beginning of January.

Asia without vigor

Shareholders in Japan also showed little interest in acquisitions. The Nikkei lost 0.3 percent to 23,865 points. The CSI 300 index with the 300 most important red chips lost 0.1 percent to 4,027 positions.

New York drags ahead

On Wall Street, the S&P 500 once again set a new course record. In the end, however, the index fell by 0.04 percent to 3,191 points. The Nasdaq Composite, on the other hand, set a final record with a minimal gain of 4.38 points or less than 0.05 percent at 8,828 points. The Dow Jones Industrial closed 0.1 percent lower at 28,239 points.
Impeachment was not an issue. A total of five Democrats voted against, abstained or did not vote; two Republicans did not vote – otherwise they all voted against the impeachment. So Donald Trump has support in his own party and can look forward to a final verdict in the Senate rather calmly.

Thus the Impeachment ran

Yesterday’s debate provided some interesting facts that were little discussed in this country. Just a few minutes after its inauguration in January 2017, for example, the Washington Post, the mouthpiece of the Democrats, had just uploaded an article entitled “The Campaign to Impeach President Trump has begun”. According to the article, some groups have worked from the first moment on towards an impeachment.
In fact, the radical wing of the Democrats has tried impeachment THREE times before. Dozens of MPs wanted to get rid of Trump because, among other things, he fired FBI chief James Comey; because he had verbally roughened up the “squad” – a group of women politicians; or because the president had called on American football players to stop at the national anthem. Until yesterday, the moderates among the Democrats had still slowed down the Socialists.
All in all, it looks like it doesn’t really matter what Trump does – the Democrats never accepted the result of the 2016 presidential election. According to this, a good 200 parliamentarians from the House would now presume to cancel the people’s verdict in the presidential election. This could pay off in view of the bull market on the stock exchange, the booming US economy and low unemployment.

Setting the course for the pound

Sterling remained almost unchanged against the euro at 1.1758. Today, the traditional Queen’s Speech presents the government program of the Tories. It is likely that Johnson will have the law on the withdrawal from the European Union presented to the MEPs before Christmas.

From 13.00 o’clock it becomes exciting with the bank of England – an interest rate change is considered up-to-date as impossible. But traders in the foreign exchange market are hoping for economic prospects after the British parliamentary elections and for Brexit. There could also be indications of the succession of central bank chairman Mark Carney, who will step down on 31 January 2020. According to the BBC, his deputy Minouche Shafik is the government’s favourite. The official announcement of his successor is scheduled for Friday.

This is what the day brings

The US current account will be reported at 2:30pm for the third quarter.
At the same time, the Philly Fed index will be published.
And also the first weekly applications for unemployment benefits.
At 4:00pm the early indicators follow for November.
At the same time, sales of second-hand real estate are reported.
As always, you can find the calendar of events here: Market Mover
The Bernstein Bank wishes you 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 happens to the first cryptocurrency? In the summer it seemed that the price would not go below $10,000, then for a long time it fluctuated around $8500-9500, and now it has confidently moved to the level of $6500.

BTC Chart of the day

Bulls, especially those who bought above 10k, were in a real panic. The moods of the miners were even darker. The general background is extremely negative.
However, even against this background, the BTC is still 2 times higher than at the beginning of the year. The only question is to what extent this money will be enough. Wednesday afternoon candlestick is indicative. We saw a strong reversal day. First the new lows, then the pair buyback at all round levels up to $6900.
Thursday is a very important day for us. If we see another upward movement of $200-300, the December lows are probably already behind us.

EUR/USD

For 5 days in a row, the euro tested the resistance of the 200-day moving average. And not once in these five days, the pair could not close lower. This is an extremely strong bearish signal, which on Wednesday was recouped by massive sell-offs of the single European currency. There are 1.11 and 1.10 levels ahead. There is no good reason why we will not be able to see the Euro there before the end of the year.

GOLD

The gold has frozen in time. It is no longer interesting to look at the chart. It seems that no event can push the yellow metal out of the corridor. Now everybody earns money on the counter trend strategy: they buy at the bottom and sell at the top. And the longer this uncertainty persists, the more traders earn. Naturally, this cannot last forever. The volatility spring is shrinking and we are waiting for a very powerful outflow of bulls or bears.

What awaits us today?

01.30 November unemployment rate in Australia
04.00 Resolution of the Central Bank of Japan on interest rate
13.00 Decision of the Bank of England at the interest rate
13.00 Publication of protocols 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.

18.12.2019 – Daily Report. Wall Street lacks the momentum, but the indices are still just reaching new highs. Asia, on the other hand, is weakening, and there is hardly any buying mood on the Frankfurt Stock Exchange either. Turnover is low – Christmas holidays have already begun for many investors. Meanwhile, a drastic warning from the Federal Reserve about a bubble in the financial market caused eyebrows to rise.

Frankfurt without impulses

The DAX was last quoted unchanged at 13,284 points. Following the positive Ifo business climate index, the stock market indicator dampened its early slight losses. According to Helaba analysts, many market participants have already closed their books for the current year or are in the process of doing so. As a result, there is hardly any movement in the free real-time prices.
All in all, the important issues have been settled: a small deal in the customs dispute between China and the USA; the election in Great Britain plus sell the news after the announcement that Prime Minister Boris Johnson considers almost a year long enough to tie up the details with the European Union. GBPEUR recently recorded a minimal plus of 1.1773.

Drastic warning of the Fed rebel

And then there was a quite clear request to speak before a crash of the financial market. Currency guardians usually speak in riddles, but the president of the Boston Fed, Eric Rosengren, did not mince his words on Tuesday in front of The Forecasters Club of New York. According to ZeroHedge, the central banker warned that lower interest rates would lead market players to increased risk exposure and over leverage, i.e. increased trades on credit. Moreover, the Fed is not only responsible for all the bubbles to date – but for the largest ever. And that’s what’s going on now. The Fed must not only focus on inflation, but also on asset prices.
And he adds: “Low interest rates would sooner or later lead to a financial crisis. And only higher interest rates could prevent an apocalyptic end. In concrete terms: “I do have concerns about that financial stability. I would prefer probably a different level of rates.” Rosengren is entitled to vote in the FOMC and voted against all three Fed rate cuts this year. We ask ourselves: How bad must the situation be behind the scenes when a regional Fed head speaks plain language in public?

Goldman saves the zombie unicorn

In keeping with Bloomberg’s report on the subject of “excessive risk”, Goldman Sachs has provided a credit line of 1.75 billion dollars for WeWork. According to a spokeswoman, no securities were deposited for the deal, the money could be called from next month. WeWork is a real estate company that mainly leases joint offices. The company saw itself valued at 47 billion dollars in January 2019. An unlisted company with a value of more than 1 billion dollars is called “Unicorn”, i.e. a mystical unicorn. The stupid thing: WeWork withdrew its plans for an IPO; according to CNBC, the value of WeWork in September was still 10 billion dollars – the company had only collected investor money to the tune of almost 13 billion dollars to date.

Losses in Asia

Back to the Exchange. The Chinese CSI-300 lost 0.2 percent to 4,033 points in the morning. The Nikkei finished trading with a minus of 0.6 percent at 23,934 points. Trade data from Nippon caused worries: Exports of the world’s third-largest economy slipped by 7.9 percent compared to the same month last year. This was the twelfth consecutive month of declining exports.

Records and little dynamism in New York

The momentum on Wall Street has slackened off a lot on Tuesday. According to Marketwatch Dow, S&P 500 and also Nasdaq Composite closed close to new record highs. The Dow Jones Industrial gained a moderate 0.1 percent to 28,267 points at the closing bell. The S&P 500 barely closed at a measurable 0.03 percent plus at 3,193 points. The Nasdaq Composite recorded a gain of 0.1 percent to 8,823 positions. Data from industry and the construction sector were quite robust. Let’s wait and see whether the stock market sees the impeachment theater as a pretext for profit taking.

This is what the day brings

Today is the political date of the year – with potentially severe consequences for the stock market and foreign exchange. The House of Representatives is expected to vote today on the impeachment of US President Donald Trump. Opposition leader Nancy Pelosi announced only yesterday evening that the vote will take place this Wednesday afternoon (local time). However, it could drag on until tomorrow due to the floor duels. Anything but a simple majority of Democrats in the vote would be a surprise. If the democrats fail, the stock exchange might begin to a small joy jump. But if too many Republicans stab their president in the back, it’s probably a good thing. Traders should keep an eye on the US dollar, Wall Street and treasuries.
Otherwise, the Wednesday calendar is only thinly filled, you can find the overview here as always: Market Mover
The oil report is due at 4:30pm.
And at 6pm the Fed President of Chicago, Charles Evans, steps up to the microphone at the Economic Club of Indiana. Evans is a voting member of the Fed’s Open Market Committee, so his statement could move dollars and treasuries.

The Bernstein Bank wishes you 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.

Today is the day of the complete defeat of the bulls who bought the pound sterling after the news on the results of the parliamentary elections in UK. Of course, our readers were aware of this potential development, and we hope they have saved their money from getting hit by the stops.

Chart of the Day – GBP/USD

Summary of previous episodes. The pound rose three weeks in a row before the vote. The idea was simple and clear. Boris Johnson’s party wins the election. Then leave the EU before the new year. The main thing is that the country could finally get certainty, and it was a powerful benefit for the pound.
The election exceeded the Conservatives’ wildest expectations. An instant spurt of 3 figures followed and a symbolic withdrawal of stops just above the round mark of 1.35. What happened next? Then exactly what we predicted happened. The euphoria of the election was 100% overpriced.
And it’s been replaced by reflection on the future of Britain after Brexit. And they are extremely indifferent. It was on these thoughts that the pound of sterling rolled down. Moreover, today’s closing of long positions resulted in the pair falling even below the level observed just before the elections.
The next few days the market is expected to be highly volatile, which means that speculators get an excellent opportunity to earn money.

Swiss Franc

It’s very interesting to find out where the money from the pound’s sale went. If you think that this was a traditional euro (as the nearest European competitor), then this time you are wrong. The main beneficiary of the sale was the Swiss franc. In recent days, it has already grown sufficiently against the major world currencies, and today it has shown new highs against the U.S. dollar over the past 3.5 months.
And this is even though the world stock indices are in the area of historical highs. Theoretically, the latter means that investors, on the contrary, should sell the Swiss franc massively, entering the risky assets. However, this time everything is different. Does anyone know anything?

What awaits us today?

09.30 Speech by ECB Head Christine Lagarde
10.30 UK Consumer Price Index for November
14.30 UK Consumer Price Index for November

Important Notes on This Publication:

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

17.12.2019 – Daily Report. International bull market after the customs deal: records on Wall Street, profits in Asia. Only the DAX hesitates after its high for the year on Monday. There was a bearish surprise with the British pound.

Frankfurt is adamant

Once again, the stock market players on the German stock market gave the spoilsports. Most recently, prices on the trading platform were predominantly red, with the DAX slipping 0.7 percent to 13,318 points.
On the previous day, the DAX had reached its highest level to date in 2019 at 13,425 points. The Dow future fell by 0.1 percent, the contract on the S&P 500 remained unchanged. One reason for this was the fact that the customs deal party is now over and most brokers realized that the devil is in the details. On the other hand, new Brexit turbulences are looming.

Surprise at Sterling

Boris Johnson had a cold shower ready for the shareholders and sterling bulls – the pound put back strongly. According to reports by ITV, “The Times” and “Financial Times”, the British prime minister wants to legally block an extension of the transitional phase after the Brexit. This would put pressure on Johnson and his parliament to negotiate a trade agreement with the EU within eleven months of Britain’s withdrawal from the EU on 31 January. An extension beyond the end of 2020 would then be illegal. Johnson actually has more than twice as much time. And all of this sudden brought the possibility of a hard and chaotic Brexit back into play.

Asia wants to go up

Investors in Asia, on the other hand, took the momentum from Wall Street with them. The Nikkei ended Tuesday with a gain of 0.5 percent at 24,066 points. The Chinese CSI-300 closed the morning with a solid premium of 1.4 percent at 4,042 points. Strong industrial production in November also provided a tailwind there.

Record hunting in New York

Fueled by the rather meager tariff deal, investors on Wall Street took to the streets. All three major indices reached record highs on the third day in a row. The Dow Jones Industrial closed 0.4 percent higher at 28,236 points. The broad-based S&P 500 gained 0.7 percent to 3,191 points. And the Nasdaq Composite Index gained 0.9 percent to 8,814 points. In the Dow, Nike, Apple and Microsoft shares each set new records. The stock market initially ignored the political theatre for impeachment in Washington.

Rally at Palladium

Meanwhile, palladium cost more than 2,000 dollars an ounce for the first time. The white precious metal is used both as jewellery and in car catalytic converters. There are currently supply bottlenecks in South Africa due to the poor energy supply – and demand from the global auto industry remains high.

This is what the day brings

The calendar of events brings some important dates on Tuesday, you can find everything here: Market Mover
At 2:30pm the start of construction and approvals will be received in the USA in November.
At 3:15pm industrial production will followfor November.
At the same time, capacity utilization is reported for November.
And at 7:00pm the Fed President of Boston, Eric Rosengren, gives a speech.
The Bernstein Bank wishes you 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.

Everything is wrong with it, for the OPEC countries, as well as for Russia. The recent decision of these countries, as well as of the countries that have joined it, to reduce production by 0.5 million barrels per day is almost never taken back by the market. Previously, oil could easily make +20% on such news, but now it is squeakily gaining a couple of dollars by moving upwards.

OIL.WTI Day Chart

And this is despite the fact that the U.S. stock market shows historical highs. What would be on the decline of the market? The main problem is that the OPEC countries can do nothing about the shale revolution, which was not expected, but it came. U.S. and Canadian companies are constantly increasing production, the price is falling, and OPEC is already reducing its production.
But the problem is that American companies are not included in OPEC. And on the decline in production of the latter, they are increasing their production even more. It turns out that Russia and the cartel, step by step, give their market share for the sake of maintaining oil prices. And the U.S. does not face such a problem. As a country and the world’s largest economy, on the contrary, it benefits from further reduction of oil prices.
In such a situation, the time-consuming nature of the situation, when there are simply no moves, is driving the countries whose budget is critically dependent on the export of hydrocarbons.

EUR/USD

Euro pair is growing slightly on Monday, but continues to be close to the critical level of resistance, which is the 200-day moving average. The data coming out this week should help to determine. Or the euro confidently breaks through this level and goes up or bounces down, under the pressure of negative interest rates.

INDICES

As we expected last week, the Fed’s moderate comments launched a New Year’s rally. The shortists are horrified to close their positions, pushing stock markets around the world to new highs. So far, there has been no good reason why the trend could reverse in the coming days.

What awaits us today?

01.30 Minutes of the meeting of the Reserve Bank of Australia
10.30 Unemployment rate in Great Britain in October
20.15 Statement by Mark Carney, Head of the Bank of England

Important Notes on This Publication:

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

16.12.2019 – Special Report. Hooray – the open trade war is averted. Washington and Beijing announced on Friday that there is a deal for Phase I. The announcement calmed the stock market down for now. But once again important details remain unclear. Which increases the potential for setbacks.

This brings Phase I

Particularly important for China: The USA has committed itself to partially withdraw already imposed tariffs, said China’s Deputy Trade Minister Wang Shouwen. Washington wants to levy only 7.5 percent on most products that were previously subject to a rate of 15 percent. According to press reports, China’s President Xi Jinping had demanded such a step from Trump in order to save face.
But: For some time now, punitive tariffs of 25 percent have been imposed on imports from China amounting to around 250 billion US dollars. But it remains that way.
The most important fact is that the US has cancelled the new tariffs on goods worth around 150 billion US dollars that had actually been planned since yesterday. Almost all consumer goods – such as computers, video game consoles and iPhones manufactured in China – would have been affected for the first time by the new US punitive tariffs. The voters would certainly have grumbled during the Christmas shopping. This would have meant that additional customs duties would have been levied on almost all imports from China worth around 500 billion US dollars per year.

China wants to buy US agricultural goods

For its part, the People’s Republic had threatened to introduce additional taxes on wheat, maize, aircraft and other imports from the USA. That is now a thing of the past. In return, the Middle Kingdom also agreed to purchase agricultural, industrial and energy products from the United States on a large scale. But which and to what extent?
The partial agreement also includes chapters on intellectual property, technology transfer, agricultural products and exchange rates, according to Vice Secretary of Commerce Wang. Does China want to stop sinking the yuan?

These are the shortcomings of Phase I

Goldman Sachs complained that although the signals were pointing in the right direction with the reduction in tariffs, the reduction in punitive tariffs now agreed was only half what the investment bank had expected. In addition, the impression once again suggests itself that technical and legal details are still not fixed.
In fact, a text on Phase 1 has not been published – it does not even exist yet. US Trade Representative Robert Lighthizer told journalists in Washington that the deal would be signed at ministerial level in early January. In addition, it is not known whether and how punitive mechanisms should work if China tricks once again.
The question also arises as to how much China can and will buy agro-products. Trump expects China to import goods worth 50 billion dollars by 2020. Lighthizer also said China had promised to buy $40 billion worth of goods in the first year, and is working hard to make it $50 billion the following year. That would loosely be a four- or five-fold increase. But the Chinese Deputy Minister of Economics, Wang Shouwen, did not give a concrete figure. That’s why the analysts at Nomura already doubted whether the Americans would reach the magnitude they expected. In fact, Chinese purchases from American farmers even at a high only amounted to 25 billion dollars, as the chart of the International Food Policy Research Institute (IFPRI) impressively shows.

These are the odds

This leads us to short and medium-term trading scenarios for traders and investors. If we leave out all other factors – such as a meltdown in the US repo market, a crash of debt states in the eurozone or a global recession, plus the Federal Reserve’s interest rate policy – then the trade dispute will probably turn into a fairly clear course.
All in all, this looks like a lean deal. But at least it’s one thing that delights the cops on the stock market. So the bull market on Wall Street will probably stay with us for a while. Especially since this is Trump’s second trading success in a short space of time: he had just persuaded the Democrats in the US House of Representatives to approve the reformed USMCA trade agreement between the US, Mexico and Canada. Chinese indices also tend to stay on the long side because of better export prospects.
The same applies to the yuan. Since US punitive tariffs have been abolished and China has made a half-hearted commitment, there are few reasons for Beijing to manipulate the Chinese currency downwards and annoy the domestic middle class.
When trading CFDs, you should also keep an eye on the futures on pork bellies and soybeans. Regardless of whether the 50 billion will be reached or not, there is a lot to be said for buying from China. Because swine fever is rampant, the high prices in China are a factor for increased imports of meat, and if China boosts offspring, demand for soy is likely to pick up. If China also buys energy in the US, this could argue for an investment in US shale drilling.

Pump and Dump in Phase I

The scenario just described becomes obsolete, of course, if the deal still breaks. But the stock market must not collapse before the election – this would cause problems for the pension funds and thus annoy the voters. The same stalling tactics as in the past months are therefore called for. So keep expecting success stories from Washington, especially after the stock market has reset. But interrupted by critical trump tweets when Wall Street is overflowing and/or the Chinese don’t track as intended. With the continued existence of punitive tariffs, the USA will retain a means of exerting pressure – and the USA could reactivate the tariffs that have been set aside. This pattern, nicely compiled by ZeroHedge, you have been able to observe very well recently.

Difficult Phase II

Trump now also wants to negotiate Phase II immediately. We doubt it will be anything like that in 2020. Because this is about the actual core of the trade war: the Chinese business model of copy and paste – in other words, the theft of intellectual property. The state-imposed or tolerated industrial espionage of Chinese companies abroad will certainly not be stopped by Beijing. The same applies to government contracts that are only awarded to Chinese companies. Xi has so far strictly refused to stop the subsidy programme for the expansion of future key technologies.

It will not be until 2021 that the “candour” will be achieved.

We suspect that only after the presidential election and when half of the Congress members will be new, things will really go smoothly. Since the Democrats are destroying themselves with the Impeachment theatre, the Republicans are likely to gain the majority in Congress. And then Trump, with the backing of Congress, will probably put on the hard bandages against China.
So from November 2020 we could be threatened by a severe bear market on Wall Street and therefore also in the DAX – and a bull market in gold, the usual safe haven. But until then it will be a while. Bernstein-Bank wishes you successful trades and investments – 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.

16.12.2019 – Daily Report. We’ll take care of the annoying details later – now we want to celebrate a little. According to this motto, the market welcomes the many question-marked customs deal between Beijing and Washington. Wall Street marks new highs, but then resets. The DAX rises on Monday.

Frankfurt attracts

The DAX rose by 0.6 percent to 13,358 points at the start of the week. The futures on the Dow rose by 0.2 percent, the contract on the S&P 500 by 0.4 percent. On Friday, however, the German stock market indicator proved that investors had their first doubts in view of the customs deal: the DAX reached a new high for the year at 13,423 points, but fell back to 13,283 points by the close of trading.

Scepticism about customs deal

That’s no wonder, because the customs deal leaves some questions unanswered. This is a fact: Both governments announced on Friday that, as part of the agreement, America will halve part of its existing punitive tariffs on Chinese shipments. The most important fact is that the US has cancelled the new punitive tariffs that were actually planned yesterday. In return, Beijing agreed to purchase agricultural, industrial and energy products from the US on a large scale.
However, no text has been published on phase 1 – it does not yet exist. Nor has there been a logical official signing ceremony between Presidents Donald Trump and Xi Jinping.

No clear trend in Asia

This was not enough for investors in Japan – they used Monday for profit taking. The Nikkei 225 closed 0.3 percent lower at 23,952 points. Japan’s leading index had climbed to its highest level for more than a year on Friday due to the prospect of the partial agreement. The Chinese CSI-300, on the other hand, rose by 0.5 percent to 3,988 positions on Monday. The data on industrial production and sales in the retail sector also provided a buying mood. The yuan rose to 6.98 against the US dollar.

Oil and Euro Slightly Higher

Investors in other markets were cautiously optimistic. On the one hand, Brent rose in the hope of stimulating global trade by 1 percent to 65.32 dollars; WTI also gained 1 percent to 60.17 dollars. EURUSD rallied to 1.1150 on Monday morning, while gold’s troy ounce remained unchanged at 1,476.22 dollars.

Hesitations in New York

Investors in New York first took the opportunity on Friday to change their minds. The Dow Jones, S&P 500, Nasdaq Composite and Nasdaq 100 all reached new highs. But then sales set in: The Dow Jones index closed virtually unchanged at 28,135 points. The S&P 500 also dropped out of trading almost unchanged at 3,169. The Nasdaq Composite gained 0.2 percent to 8,735 positions.

This is what the day brings

The calendar of events brings some interesting events on Monday, you can find the overview here as usual: Market Mover
First, the Empire State Index for December will be reported at 2:30pm.

At 3:45pm the Markit PMI Manufacturing and Services will be published for December.
And at 4:00pm the NAHB index will start.

The Bernstein-Bank wishes you 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.

As we noted in last week’s newsletter, the main driving idea for the pound sterling was the parliamentary elections. On the night of Thursday to Friday, the results were announced. Despite the skepticism of the analysts, the conservatives, led by Boris Johnson, won the majority in the parliament. This means that they will be able to form a government on their own, without joining coalitions with other parties.

GBP/USD Day Chart

This is the biggest success of Tories of the last 30 years. And this party now says with certainty that the parliamentary majority will vote for the UK’s exit from the EU.
Is it over? No! Actually, it’s just getting started! Yes, the British people are fed up with the uncertainty. However, the coming certainty hides a lot of problems, which are not yet clear how to solve.
First of all, we are talking about visa policy with regard to EU citizens and trade agreements. Potentially, next year we may face a sharp drop in production in the UK and a decline in GDP by 2-3%. Of course, this will be a huge shock to the economy. Everything has to be paid for. And it will be a payment for the country’s ability to make independent decisions, without regard to other EU countries.

EUR/USD

Very interesting Friday was for Euro/Dollar. In the morning, the pair finally broke through the 200-day simple moving average line from bottom to top. However, as the day before, the euro turned down and closed the week below this critical resistance.
If we look at the situation in the H1 timeframe, we can see that the positive news, and then the negative one is almost identical to the movement of the pound sterling against the U.S. dollar.

GOLD

Despite a lot of positive developments, both from the side of elections in Great Britain and from the side of negotiations between China and the USA, gold grew on Friday’s trading. The dynamics is sharply opposite to what we saw in the positive news over the last 2 months. Perhaps the gold metal has already fallen off and there is no one to sell it even on such a negative background for gold news.

What awaits us today?

03.00 Industrial production in China in November
09.30 Composite Business Activity Index in Germany for December
10.00 Composite Business Activity Index in the EU for December
10.30 UK Services Business Activity Index December
15.45 U.S. Manufacturing PMI Index for December

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.

13.12.2019 – Daily Report. What a great day for bullish traders: The customs deal between China and the USA has apparently been concluded. Wall Street celebrates new records, the DAX marks an annual high. In addition, British Prime Minister Boris Johnson has achieved a historic victory – the pound hisses away. And largely unnoticed by the local mainstream media, the Federal Reserve is pumping its financial stores full. The USA is facing the biggest liquidity injection in the repo market of all time: 500 billion dollars are to prevent the crash at the end of the year.

Annual high in Frankfurt

Glory Days! This looks very much like a tightened year-end rally now: At the start of trading on Friday, the DAX reached a new annual high of 13,408 points. Germany’s leading index recently held its own at 13,387 points with a gain of 1.3 percent. This brings the all-time high of 13,596 points closer again. No wonder, the most important brake blocks for the stock market have now been removed. Particularly in the customs dispute between China and the USA, it now looks very much like an easing.

Phase 1 to come

After Wall Street closed, Bloomberg reported that a deal would be closed. Then CNBC and the Washington Post followed suit. According to this, the US punitive tariffs planned for 15 December will be postponed and existing tariffs will be halved. China had promised to buy US agricultural goods on a large scale. In addition, there is to be a penalty mechanism. The matter has not yet been officially announced and has probably not yet been included in a contractual framework. The market has also ignored the fact that the details are unknown and that Beijing may be squeezing its way out. Never mind – as you know, you shouldn’t go against Mr. Market when trading CFD or online stocks. Nevertheless, you should keep an eye on regular market updates and a possible disappointment in mind – as so often in this matter.

Asian stock markets are attracting

Initially, however, investors in Asia took action. The Nikkei in Tokyo climbed by 2.6 percent to 24,023 points. In Hong Kong, the Hang Seng also rose by 2.6 percent to 27,688 points. The Chinese CSI-300 rose by around 2 per cent to 3,968 points.

Record hunting in New York

After the China News, Wall Street was also a joyful place to be. US President Donald Trump delivered fat booty for the bulls via Twitter: “They come very close to a big deal with China. They want him and so do we! The result: a high in the Dow and the S&P 500, a final record in the S&P 500 – ditto both for Nasdaq Composite and Nasdaq 100. Specifically, the Dow Jones Industrial gained 0.8 percent to 28,132 points at the closing bell after setting a new record in trading at 28,225 points. The S&P 500 climbed 0.9 percent to 3,169 points. And the Nasdaq 100 gained 0.8 percent to 8,467 points.

Sterling and Midcaps explode

Told you so: As predicted in our Special Report, the British pound is hissing away after the overwhelming election victory of the Tories in Great Britain. The pound jumped to 1.3516 dollars in the largest jump since March 2009. GBPEUR rose to 1.2082. Of course, profit taking began. But not only the currency market, the stock market also celebrated. The British mid-cap index FTSE 250 recently shot up by 4 percent to 21,617 positions.
As it recently looked, the Tories will conquer 364 (+48) of the 650 seats in the House of Commons and thus a comfortable absolute majority. Labour (203 seats / -59) received the receipt at the urn for the permanent sabotage in Brexit. The biggest victory for the Conservatives since Margaret Thatcher – merry Brexmas!

The Fed pumps 500 billion into the market

Last but not least, another financial highlight: The New York Federal Reserve is stocking up its repo arsenals – and is raising its auctions of overnight loans sharply in an intensified series of auctions between today’s 13 December and 14 January 2020. As the NY Fed has just announced, a large overnight auction of 120 billion dollars is under way today, and two other particularly fat tenders are on and around New Year’s Eve with 150 billion and 120 billion dollars respectively. Financial market expert Scott Skyrm of Curvature Securities commented: “Massive”. (…) The largest series of RP operations ever! (…) All total, I count the Fed committed to pump $500 billion in the Repo market over year-end.”
It almost seems as if the Federal Reserve has read our report on the Repocalypse Reloaded yesterday. Of course it didn’t, that would be too much of an honour. But the guardians of the currency certainly reacted to the sinking warnings of repo pope Zoltan Pozsar of Credit Suisse. He had warned of a drying up of liquidity and a flight into treasuries at the end of the year due to the tax deadline on Monday and the Basel rules for systemically important banks – which could lead to a collapse of hedge funds and a crash on the stock exchange. So the downfall seems to have been averted…

That’s what the day brings

Friday brings two more big dates, you can find the overview as always here: Market Mover
In the USA, retail sales for November will be reported at 14:30 hrs.

Stocks for October follow at 16:00.
Bernstein-Bank wishes you 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.