2022/05/11 (044) Column

US Stock Market Recovery Failed Miserably On Wednesday,
As US Inflation Burns More Or Less Around Historic Highs With 8,3% YoY.
The Cryptocurrency Sell-Off Accelerated In The Afternoon Trading Session,
While Apple Is No Longer The World’s Most Tradeable Valuable Company.


The Renewed Attempt To Recover On The US Stock Exchanges Failed Miserably On Wednesday

Again, it was the prices of the tech giants that dragged markets down with them. Heavyweights like Apple, Amazon and Microsoft came under pressure. The tech-heavy Nasdaq 100 fell 3.06 percent to 11,967.56 points, falling below 12,000 points for the first time since November 2020.

Selling pressure increased in late trading. The leading index Dow Jones Industrial did better than the Nasdaq stock exchange with a discount of 1.02 percent to 31,834.11 points. Still, the Dow is testing its lowest level since March 2021. Tech stocks were also the biggest losers in the Dow. The market-wide S&P 500 fell 1.65 percent to 3935.18 points, its lowest in more than a year.

Inflation again provided a headwind: Consumer prices rose by 8.3 percent in April over the year. Analysts had expected a lower increase on average. “Inflation is likely to fall, but not as much as the central bank hopes. The Fed remains under pressure,” commented economist Christoph Balz from Commerzbank. Inflation is also likely to remain higher than before the pandemic. Because of the tight labor market, wage costs have risen more than they have in at least 20 years.

The prospect of rising interest rates is causing investors to sell technology stocks in particular. Because in the long phase of cheap money, investors had increasingly relied on high-growth tech companies. Now, however, interest rates are likely to rise sharply in view of the high inflation, which means that Apple, Amazon & Co could turn out to be overvalued. Amazon and Microsoft each fell more than three percent. Because of these giants’ heavy weighting in stock market indices, weak share prices are dragging the indices down with them.

US Stocks Extend The Sell-Off On Wednesday`s Trading Session Today

Wall Street losses deepened in the last hour of trading on Wednesday with the Dow closing down 326 points, the S&P 500 dropping 1.65%, and the Nasdaq sinking 3.2% after stronger than expected inflation reading reinforced the view that the Federal Reserve may be forced to hike rates quicker tipping the economy into a recession. The annual inflation rate in the US slowed to 8.3% in April, less than market forecasts of 8.1%, while core CPI, gained 6.2% compared to expectations of 6%. Adding to concerns, Fed Bank of Atlanta President Bostic said he’s open to “moving more” on rates if inflation persists at elevated levels. On the corporate side, Coinbase slumped more than 26% after US largest cryptocurrency exchange reported a quarterly loss and a 19% drop in monthly users. Also, Toyota dipped over 4% after the automaker said it expects net profit to drop 21% this fiscal year, because of higher costs of materials and logistics.Apple Is No Longer The World’s Most Valuable Company

The world’s largest oil company, Saudi Aramco, replaced the technology group Apple as the world’s most valuable company on Wednesday. Because while Saudi Aramco’s share price had benefited from the high oil prices in the past few weeks, the iPhone manufacturer’s papers had come under increasing pressure due to rising capital market interest rates, supply bottlenecks and growth concerns. This Wednesday, Apple fell five percent to its lowest level since the end of October last year.

Saudi Aramco’s price on the home exchange Tadawul in Riyadh had risen by more than 17 percent since mid-March with the high oil prices. The Apple price, on the other hand, has lost more than 18 percent since the end of March. The prospect of rising interest rates caused investors to sell technology stocks in particular. Because in the long phase of cheap money, investors had increasingly relied on high-growth tech companies. Now, however, interest rates are likely to rise sharply in view of the high inflation, which could mean that Apple, Amazon, Microsoft & Co are clearly overvalued.

The shares of Saudi Aramco, which went public at the end of 2019, had recently reached a record high. The company currently has a market capitalization of $2.43 trillion. In doing so, they left Apple behind for the first time since 2020. The company from Cupertino in California is only worth 2.37 million dollars with aloss of a good five percent this Wednesday. However, only a small proportion of Aramco shares are freely tradable, and the vast majority are in state hands. At the beginning of the year, Apple, at around $3 trillion, was $1 trillion heavier than the Saudi Arabian oil producer.

The US Federal Reserve is likely to raise interest rates by a further 1.5 percentage points this year. That and the prospect of an ongoing war in Ukraine mean that the big tech companies cannot be expected to return to their former strength anytime soon, said Tim Ghriskey, portfolio strategist at Ingalls & Snyder. Hespoke of “panic selling” at a number of technology stocks and other highly rated companies. Investors are likely to reinvest the funds that are freed up in the process, not least in energy stocks whose growth prospects are rosy. “Companies like Saudi Aramco benefit considerably from this mixed situation,” says the expert.

DEVISE 2 DAY Another 48 Hours
– Where I Was Right, Where I Was Wrong

Apple falls today also under 150 USD! So that i was wrong with this trading capability – and this SetUps closed with a lost. Sorry, that wasn’t my intention! But you can’t make money against the mass of market participants. Man has to trade with her at times. And I was just wrong about this. I hope, that this in contrast to the short NDX 100 trading capability – where we are still in the money – relieves your loss. If you have realized both trading capabilities.

Anyway, Jim Cramer says on CNBC today that the market could be headed for a sustained rally thanks to some ‘positives’. The “Mad Money” host explained on Wednesday why despite Russia’s invasion of Ukraine and soaring inflation that continue to dog the stock market, there could be hope for a sustained rally.

His word in God’s ear! But I don’t believe in it anymore! The economic consequences of Biden are just too devastating. Don`t udnerstand me wrong! I am watching Jim Cramer too – like Jim Cramer. But the Democrat, and definitely non outspoken Trump policy supperter, strikes me as a male stewardess trying to calm his passengers down, because his pilot Sleepy Joe! Can he? The PPI data tomorrow? And the Consumer Sentiment on Friday will prove it? Sorry my mistake! Of course, I mean the reaction of the market – of the financial market participants to the price action will give us the answer…