2023/02/16 (172) Column

Are 40 years of trends
in the financial market over?


For 40 years we have seen stock markets rise steadily, since the early 1980s.
Admittedly, with 2.3 year pits at times – i.e. falling price developments (so-called draw down phases).
But in the end it always went up. Because the conservative freedom-loving economic policy goal was always growth – monetary material growth. So a society in material abundance. But since the well-known left-wing political virus, a happy society in the form of an economy of scarcity, had infected the political class, including more and/or more conservative, freedom-loving ones, under the cloak of a green ideology, that the goal of politics might not be monetary material growth after all!?

“Those times are over now,” says the investment company Blackrock in its annual outlook for 2023.
“Today, central banks would deliberately trigger recessions in order to get the rampant inflation under control. That will manifest itself in 2023, say the analysts, which is why the interest rate hikes then will be weaker than this year. But even if inflation rates fall – they are still a long way from the two percent target on both sides of the Atlantic.”

At this point, however, I would like to strongly disagree with the analysis that my esteemed colleagues are of the opinion that the central banks will trigger recessions. And start with a counter-question, my counter-argument: “Would US GDP have been higher without interest rate hikes?” 
Of course not!
And that is the crux of the matter, the root of the problem, our current economic stagflation.
Because central banks only produce and/or lend the money. While states, companies, ultimately all of us – as taxpayers and/or consumers – use it. And that’s why the rub is buried here. Because the rising inflation was and is, first and foremost, a logical economic consequence, due to the fiscal policy of our governments in the so-called West. Who first organized our society to a standstill; and therefore also the economy. And then, in good faith, they had taken and distributed so much money, as in the history of mankind, that the prices had to rise as a result. Since production, i.e. the supply of services and goods, did not increase at least as much as the existing money supply.

The US Democrats’ energy policy, under the watch of Joe Biden, is a case in point. Under Donald Trump, the US produced more oil than it consumed for the first time. While Joe Biden organized a green economic policy right at the beginning of his term. Which went so far that the USA now has to organize oil from abroad again. What green political theater? That only costs! Us taxpayers and consumers – who we all are. And all, more or less, in various national phenomena, in almost all states, in our so-called West, currently have to suffer financially materially.

For us,
who deal with market price action on a daily basis, this means
factoring in the damage to the various national stock markets.
And also for currencies, let alone individual yield curves. The majority of my colleagues, if I may write so, did not address this issue so sharply. And swims in the opinion published by the majority that the monetary policy of the central banks, especially the Fed, was and is the core problem. And not the fiscal policy of our respective governments.

Therefore, a short current comment, which hardly differs in content from the annual outlook for 2023 from the investment company Blackrock. Because I also assume that interest rate increases in 2023 will be weaker than in 2022. And that inflation rates will continue to fall – but the euro zone is likely to remain a long way from the two percent target. Unlike the US. Because I assume that by the end of 2023 we will see more or less 2% again. But that interest rates will not be lowered again this year 2023. “But higher interest rates are a gift for investors,” the analysts wrote. And recommend short-term, i.e. a maximum of 5-year government bonds, as the preferred asset class. I can only agree. But we still have to be more active than before in these volatile times, when stock market shocks follow at ever shorter intervals. So adjust our open positions in our depot more often to current circumstances, such as the latest central bank information. And analyze and evaluate individual stocks and or at least various national stock markets in more detail and more clearly as before.
DEVISE 2 DAY 48h
– Last News About What Drives The News Media

Heavy fights
Ukraine reports Russian attack wave with new tactics

The Russian invading forces have apparently tried a new tactic in a new barrage of Ukrainian targets. During the night, 36 projectiles of various kinds were fired within two hours, Ukrainian military chief Valeriy Saluschnyi announced on Thursday. Air defense intercepted 16 of them. The National Security Council announced that the Russians had tried to fool the defense with balloons.

Officials said targets across the country were hit.
The governor of the eastern Ukrainian region of Dnipropetrovsk, Serhyj Lyssak, reported that a 79-year-old had been killed by rocket fire in the city of Pavlohrad. At least seven others were injured. According to Lyssak, seven houses were destroyed and 30 others damaged in the attack in Pavlohrad. There was a fire in an industrial plant that was extinguished by emergency services within hours. The governor of the Lviv region in western Ukraine, Maxim Kosizkyj, said a fire broke out in a facility that is part of critical infrastructure. He did not initially give any further details. Russian soldiers may be attempting to bypass Ukraine’s air defenses, which have had a high hit rate in previous Russian missile and drone strikes.

The head of the Ukrainian presidential office, Andriy Yermak, said the Russians had “changed their tactics”. So they used “active reconnaissance” and/or “false targets”. National Security Council Secretary Oleksiy Danilov said the invaders launched balloons with angle reflectors to mislead Ukraine’s air defenses. “It shows that the Russians are preparing and not sleeping,” he said on television.

As at the beginning of the week, on Monday, in the same place, briefly commented, pictures of bitter battles are frequent here in Germany, in the individual TV stations. Which is not good for us, who want to earn money on the financial market – regardless of the humanitarian disaster that is costing lives (on both sides) in Ukraine. Because without a civilized political retreat of leftist ideological green politics, under the guise of democracy, here in the West. Let alone a civilized military withdrawal by the Russians from eastern Ukraine, inflation is unlikely to come back – quite the opposite! And US WallStreet, the isolated stock markets distributed around the globe, seems to feel it more or less. Because there should be the second negative week in a row on Wall Street. So lower index levels than on Friday night before…
DEVISE 2 DAY Another 48h – Last News About How Drives The Price Action

Blackstone President Jonathan Gray warns that interest rates should peak in a range of 5.25 to 5.5%. The capital market has currently priced in a level of 5.25%. Producer prices rose 6% in January, beating expectations of 5.4%. The core rate also came in above market targets at 4.5%. Month-on-month rates came in at 0.7% and 0.5%, compared to expectations of 0.4% and 0.3%. The stock market has so far ignored the rise in yields, as well as warnings from the Federal Reserve. At the latest after the end of the reporting season, the tide should turn to the detriment of Wall Street. Results have been mixed since last night. Cisco, Roku, Twilio, Zillow, and Crocs are all trending positive based on the results, while Paramount, Synopsis, and Shopify are all down.

Forex
Euro Weakens Below $1.07DXY Turns Positive after PPI Data
Sterling Hovers at $1.20

10-Year Government Bond Yields
US 10-Year Treasury Yield Rises after PPI, Claims Data

Stock Markets
Asian Stocks Mostly Advance
MOEX Falls for Third Session
FTSE 100 Extends Record Rally
European Stocks Extend Gains for 2nd Session
Wall Street Slips on Another Inflation Report

Forex
Euro Weakens Below $1.07
DXY Turns Positive after PPI Data
Sterling Hovers at $1.20

Euro Weakens Below $1.07
The euro depreciated below $1.07, moving further away from a nine-month high of $1.1034 touched on February 2nd, as investors rushed for the dollar amid expectations that the Federal Reserve would stick to its hawkish monetary policy for longer after the recent PPI release pointed the price pressures remain elevated in the US. Meanwhile, the European Central Bank is seen maintaining its aggressive policy tightening, despite signs that inflationary pressures mayhave peaked and recession is looming. ECB President Lagarde reiterated the central bank would keep raising rates to slow down underlying price pressures. At the same time, ECB board member, Panetta backed the case for raising interest rates in smaller increments and avoiding committing to future moves. The bloc’s central bank raised interest rates by 50 bps at its February meeting to the highest levels since late 2008, flagging one more increase of the same magnitude next month and reaffirming its commitment to battle inflation.

DXY Turns Positive after PPI Data
The dollar index turned positive and rose to above 104 on Thursday, approaching a 6-week high after stronger-than-expected producer price inflation reinforced expectations that the Federal Reserve will need to extend its tightening cycle. US producer prices increased 0.7% month-over-month in January, the most in seven months and higher than market forecasts of 0.4%. Another report showed weekly claims edged down only marginally last week. Earlier this week, retail sales data highlighted the economy’s strength, suggesting the Federal Reserve has more room to hike rates. The latest data also showed that the annual inflation rate in the US slowed slightly to 6.4% in January, the lowest since October 2021 but above market expectations of 6.2%.

Sterling Hovers at $1.20
The British pound hovered at $1.2, remaining below the $1.24 touched early in the month, after fresh CPI figures offered some relief that price pressures may be finally easing, raising bets the Bank of England will not need to pursue a more aggressive policy stance and may stop raising rates in March. Money markets are now pricing a 4.55% interest rate peak by September compared to 4.69% before the CPI report. The UK inflation rate slowed more than anticipated to 10.1% in January and the monthly rate turned negative for the first in a year. Also, annual core inflation eased to the lowest in seven months.

10-Year Government Bond Yields
US 10-Year Treasury Yield Rises after PPI, Claims Data

US 10-Year Treasury Yield Rises after PPI, Claims Data
The yield on the US 10-year Treasury note, seen as a proxy for global borrowing costs, was above 3.8%, a level not seen in more than a month, as investors adjust their portfolios for a higher terminal rate. The closely watched US CPI reading for January landed at 6.4%, the lowest since October 2021, still above economists’ forecast of 6.2%. Producer prices also came above forecasts while initial jobless claims surprised on the downside, which supports Fed’s view that the labour market remains tight and inflation elevated, opening the door to further rate hikes. Money markets have now priced at least two more 25 basis point rate hikes this year and see interest rates peaking at 5.2% by July.

Stock Markets
Asian Stocks Mostly Advance
MOEX Falls for Third Session
FTSE 100 Extends Record Rally
European Stocks Extend Gains for 2nd Session
Wall Street Slips on Another Inflation Report

Asian Stocks Mostly Advance
Asian equity markets mostly rose on Thursday, tracking gains on Wall Street overnight as the market’s bullish sentiment overshadowed strong US retail sales data that suggested further Federal Reserve tightening ahead. Investors also digested data showing Japan posted a record trade deficit of 3.5 trillion yen in January, while machinery orders in the country remained subdued in December. Elsewhere, the unemployment rate in Australia unexpectedly increased to 3.7% in January from 3.5% in December, while home prices in China declined for the ninth straight month in January. Shares in Australia, Japan, South Korea and Hong Kong all advanced, while mainland China stocks declined as investors took some profits off the table following a strong rally in Chinese growth stocks.

MOEX Falls for Third Session
Equities in Moscow dropped for a third consecutive session on Thursday, with the ruble-based MOEX closing near a two-month low of 2,150 points, dragged by the heavyweight metals & mining sector. Risk appetite remained subdued by headlines suggesting that the European Union is discussing a 10th sanctions package against Russia. The sanctions list may include Alfa-Bank, Rosbank, Tinkoff Bank, and the National Welfare Fund. On the corporate side, GDR X5 RetailGroup N.V.ORD and Surgut were among the biggest losers, down 2.8% and 1.3%, respectively.

FTSE 100 Extends Record Rally
Equities in London advanced for a fourth consecutive session on Thursday, with the benchmark FTSE 100 climbing above the 8,000 mark to notch a fresh record closing high, driven by gains in the technology, energy, and materials sectors. On Wednesday, data showed that the annual inflation rate in the UK slowed more than expected to 10.1% in January. Still, investors remain cautious about the prospect of further interest rate hikes from the Bank of England, with a tight labor market and elevated inflationary pressures supporting such a stance. Centrica rallied almost 6% to lead the FTSE 100, saying it will extend its share buyback program by 300 million pounds after its annual profit more than tripled. Standard Chartered was also among the top gainers, up over 4%, after announcing a new $1 billion share buyback amid a 28% rise in annual pretax profit.

European Stocks Extend Gains for 2nd Session
European equity markets pared some gains but closed Thursday’s session higher, with the benchmark Stoxx 600 and the German DAX up 0.2% each. Elsewhere, the French CAC Index notched an intraday record high of 7,387.29 in the morning, after the UK’s FTSE 100 closed at a record level on Wednesday.

Wall Street Slips on Another Inflation Report
All three major US indexes finished in the red on Thursday, after better-than-expected producer’s inflation report raised worries that the Fed will take its monetary policy tightening further. The Dow lost more than 400 points, while the S&P 500 and Nasdaq 100 were down almost 1.4% and 1.8%, respectively. The producer price index, a gauge of prices for final demand products, rose 0.7% MoM in January, the most since June 2022, while analysts expected a modest 0.4% gain. At the same time, initial jobless claims, the most timely snapshot of the labor market, came in lower-than-expected at 194,000 for the week ended Feb. 11, pointing to a tight labor market. On the corporate side, Shopify plunged 15.9% after the cloud-based commerce platform reported first-quarter revenue that missed expectations. Paramount declined 4.2% after the media giant posted earnings that surprised investors on the downside. Tesla shed 5.7% after recalling 362,000 US vehicles over Full Self-Driving software.DEVISE 2 DAY 48h
– Where I Was Wrong, Where I Was Right

After TESLA stock traded at $202 last week; and we have once again reached our price target, we closed oir long 4XSetUps in the DOW Future also. Now, we`re long in the EURUSD pair, in the DAX Future, and/or long in the ADIDAS share & BITCOIN (since monday, this week). Even if I`m not a friend of cryptos – quite the opposite! But I don’t write my DEVISE 2 DAY Affiliate Financial Market Online Newspaper for me, but for you.

In addition, I am still undecided to formulate a new further 4XSetUp via UKOIL, i.e. a CFD on the Brent future. And this despite the fact that the price action today was under pressure. Brent crude futures were hovering around the $85.5 per barrel mark on Thursday, as concerns about sluggish near-term demand, particularly in the US, prompted investors to unwind some long positions after a rally that saw prices hit a peak of $87 on February 13th. The latest EIA report showed that US crude inventories jumped by 16.283 million barrels to 842.973 million last week, the highest level since early October, signaling weakening demand. At the same time, prices have been under pressure after the US government announced plans to release 26 million barrels of oil from strategic reserves. Worries about tight supplies also eased after the EIA said it expected record March production from the seven largest US shale basins. Helping limit the downside, the IEA raised its forecast for 2023 oil demand growth and said that restrained OPEC+ output could bring a supply deficit in the second half.