- SUS debt ceiling and possible bankruptcy of PacWest Bank cause concern -.
The US state could run out of money in June. The debt ceiling of 31.4 trio. USD will be reached in June and then the US Congress will have to set a new debt ceiling. This is already being negotiated between the Democrats and Republicans, with positions very far apart. In 2011, no agreement was reached and the stock markets plummeted by more than 20 percent.
In addition, US banks are under enormous stress due to weak bond prices and high deposit withdrawals. The next bank to go bust could now be PacWest Bank from California, where 10 percent of deposits were withdrawn in 1 week. The money is being withdrawn from banks and is going into money market funds, where over 5.3 trillion USD are already parked. USD are parked. A good alternative could now be banks from Georgia and Kazakhstan. Freedom Broker now allows market access to Kazakhstan for the first time. if you open an account beforehand, which is easily possible at the following link: https://freedom24.com/invite_from/2952896
Andreas Männicke also gives his assessments of the new opportunities in his stock market letter EAST STOCK TRENDS (www.eaststock.de) and in his new EastStockTV video, episode 211 at www.YouTube.com.
Is the USA about to go bust?
All investors’ eyes will be on the USA in the next two weeks. Of importance there are not only the next inflation and labour market data, but above all whether the US Congress can agree on a new debt ceiling. The current debt ceiling is 31.4 trillion. USD (about €28.6 trillion). US Treasury Secretary Yellen has only $150 billion in funding left to be paid out and then the debt ceiling will be reached. If the US Congress, i.e. the Democrats and Republicans, cannot agree on a new debt ceiling by the beginning of June, the government will not be allowed to spend any more, not even, by the way, to Ukraine, which urgently needs funds to continue the war. Interest rates on very short-term bonds have already risen to 5.1 per cent, which is higher than the US inflation rate. The inverse interest rate structure points to a recession in the second half of the year. Corporate profits and profit margins are likely to decline rather than increase in the second half of the year, which would cause prices to fall.
Central banks in a dilemma
The big question is what the central banks will do in the coming months, having recently raised interest rates by 0.25 basis points each. Further rate hikes could destabilise the very fragile global financial system. On the other hand, inflation rates are still far too high, especially in the euro area, at 7.2 per cent. Increasing strikes, such as the big rail strike in Germany now, also ensure that inflation rates do not go down so quickly because salaries are now being increased sharply, which will depress corporate profits.
Eastern European stock markets with outperformance opportunities
The world stock markets are still very stable. The DAX is up 13 per cent since the beginning of the year at 15,913 index points, the S&P index from the USA is up 7.8 per cent and the NASDAQ Composite Index is even up 18.3 per cent at 12,284 index points. Microsoft and Alphabet are now fully committed to artificial intelligence, where the next leaps in innovation are to be expected, but which is also a dangerous game if the processes get out of control.
But also the CECE index with Hungary, Poland and the Czech Republic in the bottom already rose by 14.01 percent to 1529 index points, which means a new high for the year. The UTX index for shares from Ukraine has already gained 31.7 percent despite the war, and the KTX index for shares from Kazakhstan has already risen 12 percent to a new annual high. There are always clear outperformance opportunities in Eastern Europe. Therefore, investors should also invest part of their money in Eastern Europe. The Balkan region and the Baltic States in Eastern Europe are also developing very positively.
US banking crisis not yet over
In 2011, no agreement was reached on the new debt ceiling and the stock markets fell by more than 20 percent. The same is threatening to happen now. Therefore, investors should now invest more in liquidity. Moreover, a wave of bankruptcies in the US banking sector is looming. After the bankruptcy of Silicon Valley Bank, Signature Bank and First Republic Bank, there is now the threat of the bankruptcy of PacWest Bank from California with a deposit volume of USD 5 billion, i.e. a relatively small and insignificant bank. Here too, however, 10 percent of the deposits were withdrawn last week. But this is now happening to many banks in the USA. The money then flows into money market funds, where the volume has already risen to a new record level of over 5.38 trillion USD. USD has been reached. Premiums for credit default swaps are still at record levels, which is proof that the banking crisis is not over yet.
Freedom Broker enables market access to Kazakhstan
Therefore, the stock markets are likely to correct soon. Nevertheless, there are good opportunities with some banks from Georgia and Kazakhstan, such as the Bank of Georgia from Georgia as well as Kasip.kz and Halyk Savings Bank from Kazakhstan. The broker Freedom Broker (www.freedom24.com) now offers German investors direct market access to the stock exchanges from Kazakhstan for the first time, which is very promising. The Russian gold and silver producer Polymetal, which makes two-thirds of gold and silver production in Kazakhstan and is now very cheap because of the sanctions, can also be traded there. Shares from Kazakhstan offer a good alternative for shares from Russia, which are still not tradable because of the sanctions. The prerequisite for direct market access to shares from Kazakhstan with very high dividend yields is the opening of an account with Freedom Broker, which can be done online very easily at this link: https://freedom24.com/invite_from/2952896
First inform, then invest
There are also new opportunities in general in Eastern Europe, where there are always outperformance opportunities. Inform yourself now in detail about the background and the development of the Ukraine/Russia crisis but also about the future recovery potential of undervalued shares from Eastern Europe. There are also new opportunities in the Baltic States, Kazakhstan, Georgia and Ukraine.
Review: In 2018, 10 stock markets from Eastern Europe were among the best-performing stock markets in the world, all of which clearly outperformed the DAX and also the US stock market. The Moscow Stock Exchange was the clear outperformer among all world stock markets in 2019, with a gain of over 46 per cent in euro terms. However, the Bucharest Stock Exchange (Romania) also rose by over 32 per cent in 2019. The stock markets in South-Eastern Europe and also in the Baltic countries remained very stable on the plus side (Croatia +13 per cent). In 2020, 6 stock exchanges from Eastern Europe were among the 30 best performing stock markets in the world and last year even 11 stock exchanges from Eastern Europe. In 2021, shares in Kazakhstan rose by more than 80 per cent. Last year, 5 Eastern European stock exchanges, mainly from the Balkans, clearly outperformed the DAX, and this year there are already 10 Eastern European stock exchanges among the 30 best-performing stock markets in the world. The CTX index for shares from the Czech Republic has already risen by 21 percent this year and the CROX index for shares from Croatia by 15 percent. The UTX index for shares from the Czech Republic has already risen by 31 per cent despite the war, after it admittedly fell by over 70 per cent last year due to the war. So even after the Ukraine war, it is still worthwhile to look beyond the horizon to Eastern Europe.
Order now a trial subscription (3 issues by e-mail for only 15 €) of the monthly stock exchange letter EAST STOCK TRENDS (EST) with another Ukraine/Kazakhstan/Russia special and a dividend/bond special as well as with a lot of background information and new investment suggestions such as the “Stock of the Month” and lucrative certificates at www.eaststock.de, there under Stock Exchange Letter. The next EST will be published in May 2023 with a special on Kazakhstan and Russian ADR/Russia.
TV/radio notes: The last radio interview was on 2 March 2023 and previously on 31 October on Börsen Radio Networks. The next radio interview is on 2 October 2023 Stock Exchange Radio Networks. Also watch the latest EastStockTV video on YouTube about the Ukraine war and the new outperformance opportunities of the Eastern European stock markets. Every 14 days Mr. Männicke is also on YouTube at the “Finanzstammtisch” of Capital-Manager.com, most recently now again on 21 March 2023 at 2.00 p.m. with the topic: “The shocking truth about the banking crisis that everyone needs to know “. You can download the interviews and videos at www.eaststock.de, there under the heading “Interviews” as well as the videos from EastStockTV. By the way: have you already subscribed to the EastStockTV YouTube channel?