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Monday, 14. November 2022

– Share prices recover strongly, but cryptocurrencies in free fall –

Hamburg Stock Exchange Day: “G7 vs BRICS – where to invest?”

On 12 November, the Hamburg Stock Exchange Day was again very well attended, where I gave a presentation for Freedom Broker on the topic “G7 vs BRICS – where to invest?”. The Ukraine war has led to the fact that we are now coming to a new world order faster than we would like. The next decade will be characterised by precisely this topic, which means new risks, but also new opportunities. The G20 summit in Indonesia, which has just begun, will be exciting, where different interests will meet and be discussed, which is also urgently necessary – also to defuse the Taiwan conflict, which could become the next flashpoint after Ukraine.

The sanctions against Russia boomeranged

The G7 wanted to isolate Russia and weaken it through sanctions so that Russia would not be able to sustain a long war against Ukraine. As I expected and announced, however, the sanctions became a dangerous boomerang for the EU and Germany, which now find themselves in a serious home-made energy crisis. In contrast, Russia now has enormous current account, trade and even budget surpluses and its war chest is as bulging as never before, i.e. exactly the opposite of what the G7 had previously planned. Moreover, after the beginning of the never-ending spiral of sanctions, the rouble became one of the strongest currencies in the world.

Climate change, i.e. the warm weather in October and November, mitigated the energy problem, but did not solve it completely. On the contrary, due to the government’s stubborn attitude of not using the Nordic pipeline to get cheap gas from Russia, Germany now has to permanently buy very expensive and also extremely environmentally harmful LNG gas from the USA and other questionable countries, which will permanently weaken Germany’s competitive position.  After all, gas prices have already fallen sharply in October/November due to the relatively warm months – without the intended gas price brake. There are quite a few who now even fear a nationwide blackout due to the acute energy crisis, which would lead to chaos and paralyse the economy. But in any case, a wave of insolvencies and recession is now threatening Germany.

FED continues to fight inflation despite falling inflation rates…

The global economy is still growing at a rate of almost 3 per cent, with clear growth weaknesses in the USA, the EU and also in China. China is handicapping itself because of the excessive and nonsensical 0-covid strategy, which is also causing global supply chain problems. Next year, Germany could go into recession. The worst thing for central banks is “stagflation”, i.e. a stagnating economy with persistently high inflation, because this leads to real losses of wealth and purchasing power. Thus, the central banks have recently reaffirmed their restrictive course, which is likely to be maintained at least until the end of the year.

…but falling inflation in the USA gives hope for a year-end rally

On the other hand, the declining inflation rates in the USA now give some hope. Inflation rates peaked in the USA in June at 9.1 per cent. After that, they have been falling slightly every month. The inflation rates on 10 November in the USA were therefore awaited with great excitement. At only 7.7 percent, they not only turned out to be significantly lower than expected, but they have even fallen for four months in a row. This nourishes the hope that the peak of inflation in the USA has already been passed, which could cause the FED not to make such large interest rate steps in the near future. However, it is to be feared that inflation rates in Europe will continue to rise, especially since the trade unions are now demanding higher wages and the wage-price spiral will only really get going next year. Therefore, the ECB will probably continue its restrictive monetary policy for the time being.

Price fireworks even before New Year’s Eve on 10 November due to falling US inflation rates.

Nevertheless, the news about the decline in the inflation rate on 10 November had the effect of a liberating blow on the world’s stock markets. After the news, the DAX rose by 300 index points (!) or more than 3 per cent to over 14,000 index points within a few minutes and thus also sustainably exceeded the still falling 200-day line.  On Friday, the DAX rose by a further 0.56 per cent to 14,226 index points. But also the S&P index recovered strongly from 3760 to 3950 index points on 10 November and also continued the rally on Friday with a rise of 0.96 percent to almost 4000 index points.  The NASDAQ Composite Index even recovered by more than 7 percent after the announcement and rose again on Friday by 1.18 percent to 11,323 index points, which admittedly still means a minus of 28 percent since the beginning of the year. This means that the DAX is now only down 11 per cent since the beginning of the year, the S&P index 16.75 per cent, but the Dow Jones Industrial Index only 7.76 per cent. Now all investors are hoping for a year-end rally, but this is only likely to happen if inflation rates also fall significantly in the euro area.

Cryptocurrencies like Bitcoin and Ethereum slump after FTX bankruptcy

But the euro also recovered a little to 1.03 EUR/USD. Gold also jumped from 1700 to 1767 USD/ounce and silver from 21.1 to 21.6 USD/ounce. Copper recovered strongly from 8000 to 8600 USD/tonne. Only bitcoin and Ethereum, as well as many altcoins, saw their prices plummet in the last few days because the crypto exchange FTX got into trouble and had problems with payouts. In addition, tokens were said to have been stolen there. Then there were rumours that the crypto exchange Binance would take over FTX, but this did not happen because the problems at FTX could not be solved so quickly. The uncertainty among investors is now very great.

The crypto fund Three Arows Capital had already gone bust before because of the Terra/Luna crisis. Bitcoin (BTC) fell 21 percent in 1 week from 21,000 to 16,000 BTC/USD and now seems to be stabilising at 17,000 BTC/USD. The BTC price has already fallen by 73 percent in 1 year. Ethereum (ETH) also plummeted in price by 22.6 percent from 1600 to 1,100 ETH/USD in 1 week, to now stabilise at around over 1200 ETH/USD, which also means a price loss of 72 percent in 1 year. The nerves of many new crypto followers are now lying idle, because no one knows what domino effects the FTX bankruptcy could still have.

Will there soon be an end to the war in Ukraine?

Otherwise, the mood among investors is gradually brightening, which could also be seen at the well-attended “Hamburg Stock Exchange Day”. In Ukraine, the Ukrainian troops are advancing further and further after Kharkiv and the strategically important city of Kherson were taken. Obviously, there were major supply problems for Russia there and the Russian army does not seem to be as strong as previously assumed. But maybe the withdrawal was also a result of diplomatic negotiations, because some sanctions were lifted on some Russian banks. However, one does not know exactly what is now happening behind the scenes in the struggle for a new world order. Perhaps we will learn more about this at the next G20 summit in Indonesia, even though Putin unfortunately did not come.

Will Trump make a comeback despite the Republican defeat?

The next G20 summit in Bali would be an opportunity for Putin and Biden to meet and talk, but this is unlikely to happen. It would be urgent to take a diplomatic path now and bring about a ceasefire. Without a ceasefire, the war will continue for a long time and many people will die unnecessarily. It can be assumed that under Trump a ceasefire would have been reached more quickly and then a “deal” as already envisaged in Helsinki. Now, however, the Democrats have won the Senate again, which is unlikely to please Trump.  Nevertheless, Trump will probably declare his presidential candidacy soon, although he has a serious rival in Florida Governor Ron DeSantis after his grandiose victory in Florida.

Freedom Broker with many new investment opportunities

Investors in Russian ADRs should make an effort to convert the ADRs into original Russian shares via Freedom Broker, although BNY Mellon now wants to close its books again, which is also a political issue. Freedom Finance has the Freedom Broker platform and is based in Cyprus, but has a branch in Berlin on Kurfürstendamm. The employees of Freedom Broker can help you to convert the Russian ADR into original Russian shares, but also to open ruble deposits for you, so that you can also sell the Russian shares later after the sanctions.

A good alternative to Russian shares now are shares from Kazakhstan, whereby Freedom Finance also has a very strong market position as a broker and fintech bank in Kazakhstan. The fintech bank Kaspi.Kz was already recommended in the summer in the stock market letter EAST STOCK TRENDS (www.eaststock.de) and since then the share has already risen by over 50 percent. Kaspi.kz continues to grow very dynamically and therefore has further upside potential.

The Russian way of conversion is only possible until the end of the year. In order to make the conversion possible, you should therefore open an account with Freedom Broker as soon as possible, if you have not already done so. Use the following link to do so: https://freedom24.com/invite/?utm_source=referral&utm_medium=invite&utm_campaign=pfu2952896.

Opening an account with Freedom Broker is also worthwhile for several other reasons. 1. you always get 3 percent on US dollar accounts. 2. you can participate in IPOs on the NASDAQ and, very recently, 3. you can also participate in 2 pre-IPOs, which can be particularly lucrative if you consider the success stories of Tesla, Facebook and Twitter, among others. In this way, even tenbaggers (price multiples of ten) are possible in the long term. This topic of “pre-IPOs for investors” is unfortunately treated very stepmotherly in Germany, but is an important investment topic in the USA. This must and should now change through Freedom Broker.

IPOs and new analysis on gas, wheat, meat at Zerich Securities Ltd.

But it is also worth opening an account with Zerich Securities Ltd or Mind Money, regardless of the sale of Russian ADRs, because the broker also offers participation in IPOs, as was recently the case with Porsche. The Porsche share got off to a bad start on the first day of trading, but subsequently rose by 17 percent. Zerich Securities Ltd. now wants to make an analysis of commodities such as gas, wheat and meat, because it is also possible to earn money with certain products or shares from this area, even in bear markets like now.

First inform, then invest

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 clearly outperforming 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.  This year, 6 Eastern European stock markets, mainly from the Balkans, clearly outperformed the DAX. 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 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 at the end of November.

TV/radio notes: The last radio interview was on 12 November 2022 and previously on 31 October on Börsen Radio Networks.  Also watch the latest EastStockTV video on YouTube about the Ukraine war and the new outperformance opportunities in Eastern European stock markets. Every 14 days, Mr. Männicke also appears on Capital-Manager.com’s “Finanzstammtisch”, most recently on 11 November 2022. You can download the interviews and videos at www.eaststock.de, under the heading “Interviews”, as well as the videos from EastStockTV. By the way: have you already subscribed to the EastStockTV YouTube channel?

 

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