Inflationary collapse!

By 11/06/2021News

Gold  1900,36

EURUSD   1,2187

DJIA  34469,50

OIL.WTI  70,055

DAX   15585,50

As we anticipated yesterday, the US consumer price index for May substantially exceeded analysts’ forecasts. However, the first reaction of the US stock market was irrational. The market began to rise and showed a new all-time high.

S&P 500

S&P 500

Yes, the backlash has already started within an hour. However, the reaction to the news is very alarming. Perhaps someone knows more than we do. Namely that despite accelerating inflation, the Fed will continue to print money. And not even hint at a tightening of monetary policy.
In this case the first reaction of the market is fully justified and rational. The US dollar is depreciating faster and faster. And there is an urgent need to get rid of it. American equities, in this case, can also serve as a value preservation tool. After all, the products and services of companies are getting more expensive. And so revenues and profits will go up.
The main thing is that it does not turn out to be another bull trap. But as practice shows in recent years, absolutely all falls in the US stock market are redeemed, and the S&P 500 Index reaches new all-time highs.
The reaction to the gold news is also telling. Its quotations have jumped. So the big gold bulls also see no hint of an interest rate hike any time soon, which could lead to a strong correction in the yellow metal’s market.
Is this good or bad for us? It is worth splitting the question into two parts here. If we are talking about traders, there is no difference. The main thing is that the price moves and not stands in a narrow corridor. And if we are talking consumers, things are very sad.
Our savings are rapidly depreciating. And deposits in banks are melting before our eyes in real terms, relative to the cost of real estate, new cars, holidays and everyday services.

13.45 ECB interest rate decision
14.30 US Consumer Price Index for May

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.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 83% of retail investor accounts lose money when trading CFDs with this provider.
You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.