2023/03/02 (182) Column

Learning
To Perceive Uncertainties As Opportunities


Anyone who has diligently studied the history of central banks, their economies, and/or their associated national stock markets, like my humble person, may know that stocks, sooner or later, more or less, rally when inflation falls. But what reads so easy is practically more difficult to implement pragmatically than many can imagine. In such a scenario, it is important not only to predict when inflation will turn, but also to predict its speed. And that in relation to monetary policy – let alone the (not) priced-in reaction of the stock market. Many colleagues write and propagate that the unique combination of disruption in the global economy and monetary policy interventions are on an unprecedented scale. And precisely because of this uncertainty, many investors are likely to switch positions in 2023. Because the classic portfolio with 60 percent equities and 40 percent bonds delivered a disastrous performance in 2022. Nevertheless, there are enough opportunities to learn to understand uncertainties as opportunities; even turning uncertainties into opportunities.

For example,
I still expect that the stock markets will remain unsettled, since the bottom is usually only reached when the profit outlook has been reduced. Nevertheless, many stocks have become cheaper in 2022, especially on the NASDAQ. That`s why “stock picking”, i.e. the selection of promising individual stocks, should be the key to a successful selection of 4XSetUp Trading Capabilities! And that in addition to at least 50% cash – preferably 75% (for the next 6 months). Because you now can get more and/or less 4 percent for the next 6 months, and without risk, in Chicago, thanks to a more expensive us yield curve. Which in New York, on WallStreet, at the us stock markets, first have to be negotiated out, day by day, daily…
DEVISE 2 DAY 48h
– Last News About What Drives The News Media

Putin: Will the perpetrators “crush”Baerbock says to Lavrov’s face: “Stop the war”
Putin’s spokesman leaves Security Council agenda open
Scholz: “You can’t negotiate with a gun on your head”

Putin: Will the perpetrators “crush”
It was “another terrorist attack and another crime,” Putin said at a video conference on Thursday. The domestic secret service FSB had previously spoken of heavy fighting with “Ukrainian nationalists” in Bryansk near the border with Ukraine. Kiev rejected responsibility for the incidents and spoke of targeted Russian disinformation. Putin again described the elected government in Kiev as “neo-Nazis” who wanted to use violence to rob Russia of its historical identity and language. “But I repeat myself: they will not succeed and we will crush them.” The attackers were later pushed back into Ukrainian territory, the state agency TASS reported, citing the Russian domestic intelligence service FSB. There they were fired upon by Russian artillery.

Baerbock says to Lavrov’s face: “Stop the war”
Federal Foreign Minister Annalena Baerbock appealed to her Russian colleague Sergei Lavrov at a foreign ministers’ meeting of the G20 countries in New Delhi: “Stop the war. Not in a month or a year, but today.” Unlike at the G20 meeting a year ago, the 72-year-old did not leave the room this time, but listened to the criticism. US Secretary of State Antony Blinken also exchanged a few words with Lavrov for the first time since the Russian war of aggression began on February 24, 2022. According to the US newspaper “New York Times”, he told his Russian colleague that the United States would continue to support the attacked Ukraine. At a meeting with his Chinese counterpart Qin, Lavrov stressed the importance of close ties with Beijing.

Putin’s spokesman leaves Security Council agenda open
Kremlin chief Vladimir Putin has called a special session of the National Security Council after reports from his secret service about fighting with Ukrainian units on Russian territory. A planned trip to the Caucasus was canceled at short notice. It was not initially known what the meeting of the important committee would be about. Ukraine accuses Russia of targeted disinformation. Russian Presidential spokesman Dmitry Peskov replied to journalists’ question as to whether the Security Council would continue to upgrade the war, which Moscow described as only a “military special operation”: “I don’t know, I can’t say that yet.” There has long been speculation that Russia could officially declare war on Ukraine or order another wave of army mobilization.Scholz: “You can’t negotiate with a gun on your head”
Chancellor Olaf Scholz made it clear in a government statement in the Bundestag that he is not currently expecting peace negotiations. “You can’t negotiate with a gun to your temple – except about your own submission,” he said. With clear words, the SPD politician rejected all those who recently demanded concessions from Ukraine. “Love of peace does not mean submission to a larger neighbor. If Ukraine stopped defending itself, it would not be peace, it would be the end of Ukraine,” said Scholz.
DEVISE 2 DAY 48h
– Last News About How Drives The Price Action

Forex
Dollar Strengthens after Labour Data Release
Euro Eases on Thursday
Indian Rupee Hits 4-week Low
Pakistan Rupee Hits Fresh Record Low

10Y Bond Yields
European Bond Yields Rise as Inflation Stays High
German Bund Yield Hits Fresh 11-1/2-Year High
Israel 10Y Bond Yield Hits 9-year High

Commodities
Sugar Holds Momentum on Tight Supply

US Stocks Close Higher, Yields Hold Above 4%
Stocks in Ireland Hit 12-month High
European Shares Close Higher
FTSE 100 Rises for Second Session
Russian Stocks Trade at 5-Month High
Hang Seng Closes 0.9% Lower

Forex
Dollar Strengthens after Labour Data Release
Euro Eases on ThursdayIndian Rupee Hits 4-week Low
Pakistan Rupee Hits Fresh Record Low

Dollar Strengthens after Labour Data Release
The dollar index strengthened to 105 on Thursday after fresh data continued to point to a tight labour market, raising bets interest rates will need to stay higher for longer. Initial jobless claims unexpectedly fell last week and labour costs for Q4 2022 were revised higher to double the expectations. Markets now see the feds funds rate rising to a range of 5.5%-5.75% in September, compared to the current 4.5%-4.75% target. At the same time, Fed officials have been reiterating that more work is needed to bring down inflation. Atlanta Fed President Raphael Bostic called for continued rate hikes to above 5% to make sure inflation does not pick up again, while Minneapolis Fed President Neel Kashkari said the central bank’s rate hikes are not having much of an impact on the services sector.

Euro Eases on Thursday
The euro was softer at $1.062 on Thursday, after gaining 0.8% in the previous session, which was the biggest gain in a month. The latest data showed that inflation in the bloc slowed less than expected in February, but some investors were already expecting a surprise acceleration in the headline figure after unexpectedly strong readings in Germany, France and Spain. Also, the core inflation rate hit a fresh record level, raising bets the ECB will need to raise rates further than previously expected. Traders expect the European Central Bank to raise key rates by another 50bps in March, and expectations for another 50 bps hike in May are growing. Meanwhile, the dollar strengthened on hawkish remarks from Fed officials Raphael Bostic and Neel Kashkari.

Indian Rupee Hits 4-week Low
USD INR decreased to a 4-week bottom of 82.307, pressured by worries over the potential end of interest rate increases in the near term due to signs of slowing inflation and weakening growth. Reuters projected that the Reserve Bank of India would lift borrowing costs by just 25bps in April to take the main interest rate to 6.75% and then keep it unchanged until the end of 2023. In the US, however, the Federal Reserve is expected to continue raising rates at least into the middle of the year to tame high inflation. Meanwhile, recent data showed the Indian economy grew by 4.4% yoy in Q4 of 2022, below the 6.3% advance in the three months to September and forecasts of 4.6% gain. The local currency traded not far from its record low of 83 touched last October.

Pakistan Rupee Hits Fresh Record Low
Pakistan’s rupee weakened to its lowest level on record, depreciating more than 6% toward the 280 mark against the dollar amid mounting political and economic pressures. The delays in settlement, which Pakistan and the International Monetary Fund have been negotiating since early last month, have significantly increased default risks while bringing uncertainty to the currency market. The country’s central bank foreign exchange reserves now stand at amounts that hardly cover three weeks of imports. Meanwhile, in an off-cycle meeting, policymakers hiked its key interest rate by 300 basis points hike to 20%, bringing borrowing costs to a record level.

10Y Bond Yields
European Bond Yields Rise as Inflation Stays High
German Bund Yield Hits Fresh 11-1/2-Year High
Israel 10Y Bond Yield Hits 9-year High

European Bond Yields Rise as Inflation Stays High
Germany’s 10-year government bond yield rose for a fifth straight session to touch 2.77% on Thursday, a new high since July 2011, as investors weigh signs inflationary pressures in the Euro Area remain elevated and brace for further rate hikes from the ECB. Meanwhile, Italy’s 10-year bond yield hit a fresh 2-month high at 4.64%, the French benchmark rose above 3.2%, also the highest since 2011 and the Spanish yield topped a nine-year high of 3.8%. Preliminary figures for the Eurozone showed inflation eased to 8.5% in February, but shy of forecasts it would fall to 8.2% while the core rate unexpectedly jumped to a new record high of 5.6%, defying expectations it would stay unchanged at 5.3%. At the same time, the unemployment rate hold steady at 6.7% in January, remaining close to a record low of 6.6% in October. The peak rate for the ECB’s benchmark deposit facility is now seen at 4% in February 2024, compared to 3.9% seen on Monday and 3.5% in July 2023, projected a few weeks ago.German Bund Yield Hits Fresh 11-1/2-Year High
Germany’s 10-year government bond yield rose to 2.77% on Thursday, the highest since July 2011, ahead of the highly anticipated Eurozone’s inflation data due later today. Data on Thursday showed the Netherlands’ inflation picked up to 8.0% in February after four months of deceleration, while CPI numbers released earlier this week showed inflation in the bloc’s largest economies, including Germany, France and Spain, rose more than expected.

Israel 10Y Bond Yield Hits 9-year High
Israel 10 Year Government Bond Yeld increased to a 9-year high of 4.137%

Commodities
Sugar Holds Momentum on Tight Supply

Sugar Holds Momentum on Tight Supply
Raw sugar futures in the US were above 20.5 cents per pound in early March, not far from the six-year high of 22.5 touched on February 27th amid expectations of tighter supply in the near term. Top producer Brazil confirmed the end of its tax exemption program for gasoline, raising demand for lower-taxed sugarcane ethanol in the country. The policy increases the profitability of domestic blenders and forces producers to allocate sugarcane for fuel production instead of sugar crushing, limiting the sweetener supply. Elsewhere, poor sunlight by major producer India cut the country’s exports by nearly half to 6.1 million tonnes in the current marketing year. Still, the latest estimates by DATAGRO suggest that sugar output from Brazil’s center/south region is expected to rise by 13% in the next marketing year.

Szock Markets
US Stocks Close Higher, Yields Hold Above 4%
Stocks in Ireland Hit 12-month HighEuropean Shares Close Higher
FTSE 100 Rises for Second Session
Russian Stocks Trade at 5-Month High
Hang Seng Closes 0.9% Lower

US Stocks Close Higher, Yields Hold Above 4%
The Dow Jones finished 341 points higher on Thursday, while the S&P 500 and Nasdaq 100 added 0.7% each, as Federal Reserve Bank of Atlanta President Bostic’s comments boosted sentiments. Still, bond yields continue to rise and the 10-year benchmark rose above 4% for the first time since November. A surge in labor costs and a pullback in jobless claims pointed to a still-tight labor market and opened the door for further interest rate increases. On the policy side, Fed Bostic said he is in favor of a quarter-point rate hike and the central bank could pause rate hikes sometime this summer. Some other Fed officials have said they are in favor of hiking by half a point and warned that rates must go higher to bring down inflation to its target. In corporate news, shares of Salesforce jumped 11.5% after upbeat quarterly results and guidance. Tesla plunged 5.8% as its “Master Plan 3” fell short of details. Silvergate Capital plunged 57.7% after the company delayed its 10-K annual report.

Stocks in Ireland Hit 12-month High
ISEQ increased to a 12-month high of 8292

European Shares Close Higher
European equity markets reversed losses to close higher on Thursday, after CPI numbers in the Euro Area came in above market expectations, but not as high as investors had feared based on national readings in recent days. Data showed the bloc’s inflation eased further to 8.5% in February, compared with market consensus of 8.2%, while the core rate hit a fresh record high. Meanwhile, ECB President Christine Lagarde said that rates will have to rise higher and stay higher for some time to combat inflation. Markets are fully priced for a ECB’s 50bp hike this month, and are flirting with another 50bp in May. On the corporate front, Germany’s Merck KGaA said its 2023 earnings would slip due to a decline at its electronic chemicals unit and a drop in COVID-related demand, and London Stock Exchange Group announced plans to seek shareholder approval for a buyback directed at shares owned by Blackstone and Thomson Reuters. Flutter reported full-year core profit at the lower end of its guidance.

FTSE 100 Rises for Second Session
London equities extended gains for a second consecutive session on Thursday, with the blue-chip FTSE 100 finishing around 7,950 points, driven by a rally in the energy and materials sectors. The export-oriented index rebounded from a gloomy opening clouded by hotter-than-expected inflation data across most European countries, which prompted investors to bet on further interest rate rises from the European Central Bank. Across the Atlantic, several Federal Reserve policymakers echoed a similar narrative of higher-for-longer interest rates. CRH and oil giant BP were among the top gainers, up 8.5% and 2.5%.

Russian Stocks Trade at 5-Month High
The ruble-based MOEX Russia index was little changed on Wednesday, hovering near five-month highs and attempting gains for the fourth session. Oil and gas companies traded higher led by Lukoil while Gazprom was down by over 0.5%. Metals and mining stocks also rose, in particular, steel producer MMK (+0.8%). On the other hand, financial equities were trading in the red. The Russian stock benchmark has been supported by strong economic data that suggested that Russian companies can rebuild supply chains to adapt to Western sanctions.

Hang Seng Closes 0.9% Lower
The equity market in Hong Kong lost 190.25 points or 0.92% to close at 20,429.46 on Thursday, swinging from the prior sessions’ gains of over 4% while mirroring a decline in US stock futures, amid fragile sentiment as Fed officials remain hawkish, and the benchmark Treasury yields broke the psychological 4% level. Traders were also cautious ahead of China’s annual parliament that will kick off Sunday and will launch the biggest government reshuffle in a decade. In addition, Beijing is likely to scale back fiscal stimulus this year to ease the strain on government finances, Bloomberg News said. China Renaissance Hlds. fell 0.6%, as its CEO, Bao Fan, has been detained since February by China’s antigraft investigators. Retail trade, consumer services, and tech dragged down the index, with large-cap such as Sands China sinking 5.3%, alongside Koolearn Tech. 4.3%, Zhongsheng Group Hlds. (-4%), JD.Com (-2.2%), Sunny Optical tech. (1.8%), Tencent Hlds. (-1.4%), and Meituan (-1%).DEVISE 2 DAY 48h
– Where I Was Wrong, Where I Was Right

The Market is under pressure since two, three weeks!
The Market? Yes, the US WallStreet, in New York – the stock market.
But not the US Yield Curve, in Chicago, which is more expensive than years; than decades! At that is the crucial point; why the stock market is breathing out; last days, last weeks.

However,
we stay long in EURUSD, long in the DAX Future, and/or also (since the beginning of last week before) now long in the ADIDAS share & BITCOIN. And since last thursday, even last week, we`re back short in UKOIL also.

Nevertheless it itches me again to formulate a new 4XSetUp in the DOW Future. And that because i don`t realize a bullisg technical chart, right now. That`s why i will write a new long Technical Analysis 4XSetUp only if at least the technical picture looks bullish again. Because currently, at least in my personal subjective individual opinion, it still looks rather bearish in the short term. And that just before the upcoming US labor market data next week and/or much more the US inflationnumbers in the calendar week after next week. So I prefer to wait a little longer. Because going anti-cyclically long in the DOW Future, let alone in the NASDAQ Future, only because of the hope of worse than expected US labor market figures and/or lower than expected inflation numbers, is too speculative for me. That`s why the motto for this week, in relation to the DOW chart, is observe, analyze, and/or evaluate. And if you dare, you can get long in the DOW Future this week again. But at least I want to have a weekly candle in the plus in my back to go long again. That’s the minimum; even if it smells and/or tastes old school…