Another shot of cheap money

Stock market analyse

 

13.09.2019 – Daily report. The European Central Bank delivered as hoped and further relaxed monetary policy. The stock market is satisfied and buying. But this is only restrained: For perhaps the era of cheap money will end after the departure of Mario Draghi – resistance is apparently forming in the central bank. Otherwise the investors wait for new economic data from the USA. And hope for a customs deal between China and the USA.

Moderate gains for the DAX

The German stock market continues to make progress. By Friday midday, the leading index had climbed by 0.2 percent to 12,439 points. Not bad: Since the low in August, the DAX has thus gained more than ten percent.
No wonder, the ECB decided at its meeting yesterday to raise the penalty rate for bank deposits from 0.4 percent to 0.5 percent for the first time since 2016. In addition, the ECB wants to buy bonds worth 20 billion euros per month again from November 1. Thus, the program to buy government and corporate bonds, which was terminated at the end of 2018, will be reactivated – it will now continue indefinitely. The debt states, like addicts, are thus always getting new material. How the gigantic debt bubble will ever be reduced remains a mystery – with considerable crash risks for the stock market if at any time a state declares default.

Resistance to the flood of money

This insight also seems to be moving forward in the ECB. According to the “Spiegel”, the majority of the Central Bank Council was this time as close as never before, even if Draghi later presented things differently. According to insiders, a two-digit number of the 25-strong committee opposed the new steps – the Bundesbank and even the French, but a formal vote had not taken place. When you trade CFD or online stocks, you need to keep an eye on possible internal turmoil in the ECB – this has implications for stocks, bonds and currencies. Especially now that Christine Lagarde is taking up her post as head of the ECB – and according to many experts, she has earned herself a reputation of ignorance in the Argentine crisis.

US customs concession?

Meanwhile, overseas investors are counting on an agreement in the customs dispute between China and the USA. US President Donald Trump, on the advice of his entourage, is apparently thinking about a transitional deal with China. This was reported by the news agency Bloomberg with reference to several insiders. According to the report, the US could postpone or even reverse new punitive tariffs on Chinese goods if China is prepared to make concessions in return. Trump did not confirm this clearly to reporters in Baltimore – he said he favoured a full deal, but the easy points might have to be settled first in an interim deal – although there are no really simple issues.
While the Chinese stock market was unable to react due to a holiday, the Nikkei gained 1.1 per cent to 21,988 points – its highest level in over four months.

Rising prices in New York

Brokers in New York also bet on a tariff dispute deal: the Dow Jones Industrial climbed for the seventh consecutive trading day, missing its all-time high by 100 points. After profit taking set in, the Dow saved a gain of 0.2 percent to 27,182 points. The S&P 500 finally gained 0.3 percent to around 3,010 points and the Nasdaq 100 gained 0.4 percent to 7,917 points.

This is what the day brings

The calendar brings some interesting events, you can find the overview as always here: Market Mover
First of all, at 2:30pm the US retail turnover in August is due, ditto the import prices.
At 4:00pm, consumer confidence at the University of Michigan in September and stocks in July will follow.
US consumption in particular will be closely monitored as the domestic market will be a key factor for the Federal Reserve to cut interest rates.

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