2022/08/18 (058) Column

DAX Moderately Forward After Pullback Today.
TRY Extends Plunge Following Rate CutFar,
While Stocks in Turkey Hit All-time High.
Wall Street Indecisive Before Opening.


Dax Moderately Forward After Pullback

The Dax coped well with its setback the day before and rose again on Thursday morning, up to the current hour, good 2 hours before Wall Street, opens. Around noon, the leading German index was up 0.45 percent at 13,688.24 points. The day before our german DAX had failed after a week’s winning streak on the way to the 14,000 point mark. The returned fear of high interest rates and economic weakness had pushed the barometer down by a good two percent and thus also below the 100-day line for the medium-term trend, which is currently at 13,691 points. “About a technical correction that was due after the strong growth of the past few weeks.”, the bernecker letter wrote today. “But the market now needs positive impulses that can compensate for the renewed concerns about inflation and interest rates,” wrote capital market strategist Jürgen Molnar from broker RoboMarkets. “Otherwise, with a seasonally weaker trading volume, there is a risk of another slide in the coming days,” he warned.

Turkish Lira Extends Plunge Following Rate Cut

The Turkish lira plunged past 18.1 per USD in August, extending its decline to eight-month lows after the Turkish central bank unexpectedly slashed its key interest rate by 100bps to 13%. The decision added to the 600bps in total rate cuts that took place since the start of the cycle in September of 2021, sparking a currency crisis that pressured the lira to an all-time low of 18.4 in December. Consequently, inflation in Turkey hit a 24-year high of 80% in July, as the low purchasing power of the domestic currency exacerbated price pressure from surging energy costs that Turkey must import. Meanwhile, the latest current account figure pointed to a deficit of $3.5 billion, tripling from the corresponding period of the previous year and contradicting Erdogan’s pledge that Turkey would consolidate a strong current account surplus position. Stabilization and harsh “liraization” measures by the central bank failed to support the lira.

Stocks In Turkey Hit All-time High

The Borsa Istanbul 100 index edged 0.3% higher to reach a new fresh high of 2,990 on Thursday, adding to the 15% rally since the start of August as investors continued to use equities as a hedge for surging prices and a plunging lira. Inflation in Turkey jumped to 80% in July, the highest in nearly 24 years, underpinned by 500bps of unorthodox interest rate cuts and costly measures to stabilize the lira by the country’s central bank amid strong pressure by President Tayyip Erdogan. The lira plunged over 53% against the dollar since August of 2021. Consequently, trading volumes sharply increased as since the start of the TCMB’s rate cut path, as Turkish residents sought assets to store their savings. The index has risen 60% since the start of the year and more than 100% since the start of the central bank’s monetary loosening cycle in August of 2021.

Wall Street Retreats After Fed Minutes And Is Indecisive Before Todays Opening Bell

The Dow Jones lost more than 170 points on Wednesday, after rising for five consecutive sessions as investors digested the latest Fed minutes while weak earnings and economic data weighed on sentiment. The S&P 500 retreated 0.7% and the Nasdaq shed 1.3%. The FOMC showed the pace of future interest rate hikes would depend on incoming data, with investors betting more on a 50 bps rate hike instead of a third 75 bps rate increase, though that remains a close call. Fed officials remained committed to keeping raising interest rates until inflation is under control, the Fed minutes showed. On the economic data front, the Commerce Department reported that retail sales stalled in July, as sales fell at gasoline stations and car dealers. Regarding individual price share movement, Target shares declined after reporting weaker-than-expected earnings results while home improvement chain Lowe’s Cos Inc was up after posting a better-than-expected quarterly profit.

Stock futures contracts tied to the three major indices were trading around the flatline on Thursday as investors weighed the minutes from the last Federal Reserve meeting. Policymakers reaffirmed their commitment to bring inflation back to its 2% target while signaling that a dovish pivot is unlikely until such an aggressive tightening would drag on growth. On the corporate side, dissipating quarterly results from retailer Target exacerbated worries about an inflation-induced slowdown in consumer demand. Critical economic data will also be released today, including weekly jobless claims and existing home sales. In regular trading on Wednesday, the Dow fell 0.5%, the S&P 500 lost 0.7%, and the tech-heavy Nasdaq Composite dropped 1.25%.

Sensex Notches 5 Sessions In The Green

The BSE Sensex pared early losses and closed marginally above the flatline at 60,300 on Thursday, recording its fifth consecutive session in the green to levels not seen since early April as investors weighed on growing macroeconomic concerns in China and minutes from the FOMC July meeting. The US central bank signaled it abandoned forward guidance and will depend solely on economic data for upcoming policy decisions, adding that interest rates must continue to increase until inflation cools substantially. Gains for the financial sector and real estate companies offset sharper losses amid healthcare and tech. Kotak Mahindra and Indusind added nearly 4% and 1.5%, respectively, to lead the performances for banks. On the other hand, Infosys dropped 1.5% to set the decline for tech stocks.

Gold Steadies As Traders Digest Fed Minutes

Gold prices steadied above $1,760 an ounce on Thursday. Markets are currently priced for a half-percentage point Fed funds rate hike in September.DEVISE 2 DAY Another 48 Hours – Where I Was Wrong, Where I Was Right

Long in the USDX (since 02/14/2002) around 96 points and/or also long MSFT (since 03/07/2022) around 285 USD are meanwhile our only two open long trading capabilities. In addition to our last long in the Dow Future at 31.140 (since 07/11/2022). After we realized our lost long FB trading capability (from 02/17/2022) end of june`22 with painfully 48 USD. Fortunately, MSFT stock had turned above our stop at 240USD. And we now have a small booking gain again. Although our long trading capability in the Dow Future is even bigger, it has already left our target of 33,500 points last week. So that we in this trading capability let our position continue also. And tighten our stop to 33.500 points. So that we can definitely book 2,360 points. Without to praise myself, I would like to expressly write here: “Let run all our open positions continue, this week as well!” And that’s despite the economic data out of China all being worse year-on-year than last month. And that’s despite the economic data out of China all being worse year-on-year than last month. CNY House Price Index came out with -0.9% (-0.5% previous), CNY Industrial Production with 3.8% (3.9%). And/or CNY Retail Sales with 2.7% (3.1%). What, to put it bluntly, does not exactly describe a strong economic growth in China. Even though CNY Unemplyoment Rate falls to 5.4% (5.5%). But all this reads much more worse tha it is – which you can read in the following 4XSetUps.This week I want to focus on the price of UKOIL again.
After joining the movement earlier this year during the outbreak of war in eastern Ukraine (entry 83 USD with a target by 120 USD). And or also had to post a loss (entry 112 USD with an exit by 100 USD) in our second trading capability. I formula a new trading capability in UKOIL because I no longer assume that Russia’s war of aggression in eastern Ukraine will escalate any price action further. But don’t assume an unexpected quick peace treaty between the two states, which I naturally wanted. That’s why I’m assuming that we won’t see prices over 100 USD again anytime soon. And accordingly I have formulated a short trading capability, at least for this week, for this and/or next week, in the UKOIL.Further rising US interest rates, but not as steeply and quickly as feared by most on US Wall Street in June 2022, are weighing on bulls on the US stock market. And the weak US economic growth of just 1.6% yoy is fueling fears of a US recession. Even if the recent somewhat better inflation data provided some relief, the recession fear is still there. And now this weak economic data from China at the start of this week. That`s why I can very well imagine an even lower UKOIL price, at least for this week and/or next week. Because the fear that there is also an economic slump in China could also dampen demand for oil