Markets

DAX-Sentiment: The Market Timers

13. February 2014

12 February 2013. FRANKFURT (Börse Frankfurt). It was no exaggeration to say that professional investors on Boerse Frankfurt’s weekly sentiment panel urgently needed a rebound in stock prices last week. Although this group had steeled themselves for some kind of pullback in January, many would concede that the decline, when it came, was a somewhat more brutal than they had expected. Nonetheless, they stuck to their dip-buying plan, buying as the German benchmark index slumped. At this time last week, the panel’s overall optimism stood at its highest level in over a year – it was make or break time. So when, starting on the very next day, prices started to recover strongly, gaining some 4.5 percent on a week-on-week comparison, these investors required no advice about what should be their next step: profit-taking.

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DAX-Sentiment: Careful What You Wish For

6. February 2014

This is not exactly the correction investors had in mind

5 February 2013. FRANKFURT (Börse Frankfurt). Although investors had prepared themselves for an equity price correction last month, we suspect they have imagined it little differently to the way it unfolded. When one thinks about what a future correction might look like, the tendency is to see it as a step-by-step pullback, burdened by news that, while negative, doesn’t ultimately change the fundamentals. In this respect, the heavy snowfalls that battered the US east coast fit the bill perfectly. What one does not expect is a heavy price slide that unfolds against the backdrop of an apparently contagious emerging market currency crisis and emergency central bank policymaking. One also does not imagine a seven percent decline in the German DAX, which, even though it was spread over more than two weeks, was in reality concentrated into three dreadful one-day losses. However, the most important thing that one sees when one imagines a future correction is the price recovering thereafter. So far, therefore, the DAX has not fully met popular expectations.

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DAX-Sentiment: Crises with Benefits

31. January 2014

Investors profit from steep correction to rebuy

29 January 2013. FRANKFURT (Börse Frankfurt). It was not obvious why the German DAX index had to fall three percent last Friday. There was no catalyst, no economic data release, for example. Rather there appears to have been a build-up of headwinds for the equity markets that had finally managed to tip the sailboat over. To begin with, there was a nascent currency crisis in the developing markets. The Argentinian peso had slumped some 13 percent 24 hours earlier and trading in some other currencies like the Turkish lira and Venezuelan peso had also become more nervous. Investors also looked back on the credit crunch in China and on the underwhelming earnings announcements of US corporates. Some commentators even dwelled on the likely second instalment of the Federal Reserve’s stimulus withdrawal (due today) as an explanation for the sudden fragility in the DAX. None of the factors were brand new, and none could have upset the valuations of German blue-chips on its own, but all coming together proved to be too much.

Read more at Boerse Farnkfurt’s website

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DAX-Sentiment: Where the Air is Thin

23. January 2014

DAX investors can envisage 10,000, just not yet

22 January 2013. FRANKFURT (Börse Frankfurt). Economic forecasters, both public and private, are brimming with optimism. For the first time in years, argue analysts around the globe, the financial headwinds have died down and the risks are moderate. Even the International Monetary Fund, which has been known for its conservatism in recent years, has given a thumbs-up for the global economy. And the latest survey by PricewaterhouseCoopers, a consultancy firm, has revealed that just 7 percent of international CEOs believe the global economy will worsen; this figure stood at 28 percent 12 months ago. The US is the country where they see the greatest promise, but close behind is Germany, where exports are set to flourish. The enthusiasm is such that not even a slightly disappointing Chinese growth number was able to sour the mood.

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DAX-Sentiment: A Sober Start to 2014

9. January 2014

Investors could hardly wait for the New Year to sell

8 January 2013. FRANKFURT (Börse Frankfurt). Three weeks make for a stretched comparison when one looks at the results of what is typically a weekly sentiment survey. Yet that is how long it has been since Boerse Frankfurt last sounded out domestic professional investors for their opinions on the DAX benchmark index. In the previous poll, the sentiment panel had expressed their most bullish views of 2013. As they had tended to be rather sceptical of German blue chips during the second half of the year – the period during which practically the entire 2013 performance was delivered – it was noteworthy that they stepped up to the plate in the final full week of the year. This, we considered, would be the admittedly window-dressed holding they would report at the year-end. This intention proved to be more challenging than any of them probably imagined – not because of losses, though, but because of the sudden appearance of impressive gains.

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DAX-Sentiment: Fully Loaded

12. December 2013

Investors’ late play on a Santa-Claus Rally

11 December 2013. FRANKFURT (Börse Frankfurt). This is second consecutive week in which members of Boerse Frankfurt’s sentiment panel have had to judge the DAX index against a backdrop of week-on-week declines. This time, the dip is a little meatier: 1.4 percent. It appears all the more grim if one considers that the major US benchmarks  drifted back up to their record peaks during the same period. The domestic professionals on the panel are also short of a plausible explanation for the weakness, or any obvious alternative asset that investors might have preferred instead.  For instance, the euro currency remains very much in favour – its value rose every day since the previous survey and now stands at its highest level against a basket of major trading since July 2011 – so there was no apparent flight from the eurozone. Similarly, German long bond yields rose since last week, so there was no apparent asset re-allocation from stocks to bonds…

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DAX-Sentiment: What’s up with the DAX now?

5. December 2013

Professional investors are unmoved by the fall

4 December 2013. FRANKFURT (Börse Frankfurt). November was barely over, but stock market chroniclers already seemed to be writing the tale of the German DAX in 2013 – and it included a rally in the final month of the year. Why not? The blue-chip index had climbed an average of five percent in each of the three preceding months.  Of course, those gains were only available for those who were fully invested. For the professional investors on Boerse Frankfurt’s weekly sentiment panel, this precondition was probably not met. They have only expressed any reliable optimism in the weekly survey in the past four weeks, and even this has been at bullishness levels very close to the year-to-date average…

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DAX-Sentiment: No Profits to Take

28. November 2013

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Cudda shudda wudda

22. November 2013
Wormhole

‘What’s going on?’ I thought to myself when the price of bitcoins leapt beyond $900 this week. It had increased four-fold since that drizzly Thursday afternoon two weeks ago when I tortured myself over whether I should buy some at $220. If only, just for once, I had ignored my gut instinct and listened to my blogger-in-crime, Herman. Of course, now he cannot help but remind me of his timely advice: “Didn’t I tell you’ve got to get some of those bitcoins!”

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DAX-Sentiment: The Record High IS the News

21. November 2013

Investors’ focus remains on a pursuit of the year-end rally

20 November 2013. FRANKFURT. It has been an unusually quiet week for news-flow in the stock markets. Since the major news shocks from the ECB and from the US Bureau of Labor Statistics, most of the headlines about central bank policy have been regurgitated. For instance, many Fed governors have spoken in the meantime, but all have simply restated their earlier stances about the likelihood of tapering. Similarly in the eurozone, ECB Governing Council members have been at pains to downplay any suggestion of a north-south rift in policy setting, and to dispel the fears of deflation that emerged after the eurozone’s inflation figures were published earlier this month…

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A Century of Investment Lessons

19. November 2013
Papierbündel-1

Why didn’t anybody tell me before? Had I been aware of a 2012 study by Credit Suisse and the London School of Economics I might have been better prepared for swift evaporation of inflationary pressures currently taking place around the globe. The study investigated the degree to which major asset classes protect against inflation and deflation using data from 19 countries over a 112 year period.

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Bitcoin Mania

15. November 2013
Goldschmelze_bearbeitet-1

I only narrowly missed it. I finally decided to activate my account at the bitcoin exchange Mt.Gox last Thursday so I could buy some of this virtual money. All I had to do was to submit my credit card details and a scanned copy of my passport (what could possibly go wrong?) and I could become a bitcoin investor.

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DAX-Sentiment: Draghi Delivers a Windfall

14. November 2013

Investors will jump through a flaming hoop, but not twice

13 November 2013. FRANKFURT (Börse Frankfurt). Buying stocks at record high prices is a challenge for even the most disciplined investor. Buying stocks at record prices after one has spent months convinced about the vulnerability of the equity market requires no less than a Herculean effort. This is because it involves not only exposing oneself to the risk of future regret if prices should go lower again, but also conceding that one was previously wrong. This is the psychological equivalent of jumping through flaming hoops. Yet this is precisely what the domestic professional investors on Boerse Frankfurt’s sentiment panel confessed to in the previous weekly poll

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DAX-Sentiment: The White Swan

7. November 2013

Domestic investors position themselves for the year-end rally

6 November 2013. FRANKFURT (Börse Frankfurt). Volatility has been eerily absent on the Frankfurt bourse since the previous sentiment survey. After arriving at a record peak one week ago, the DAX index has basically just sat there; the week-on-week change is just one-tenth of one percent. Like a swan gliding across the water (let’s make it a white swan), the apparent tranquillity in the price understates the furious activity below the water line. Despite the largely unchanged prices, domestic professional investors on Boerse Frankfurt’s weekly sentiment panel have revealed a dramatic shift in their opinion of the market. The bearish camp has simply wilted: the proportion that expresses a pessimistic view has declined by seven percentage points, almost all of which has gone straight into the bullish pool…

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DAX-Sentiment: There’s no denying a bull market

31. October 2013

Domestic investors would like a cheaper entry into the year-end rally

 

30 October 2013. FRANKFURT (Börse Frankfurt). At last, the cheerleaders for the German DAX index have returned. Earlier in the year, even though the equity benchmark had managed a decent performance, and had even recorded a new all-time peak, we had wondered why more market commentators were not singing its praises. Usually, when a market climbs into record territory after a bull run, analysts and statisticians crunch the numbers to show how much investors could have earned if only they had been fully engaged. This year, however, it has required two assaults on record territory before such statistics have been considered worthy of publication. But, once again the message is the same: over the long-run, investors forgo an equity engagement at their peril…

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DAX-Sentiment: DAX welcomes the world’s investors

24. October 2013

Germany might be benefitting from global asset re-allocation

23 October 2013. FRANKFURT (Börse Frankfurt). The undeniably risky decision to add German blue-chips to one’s portfolio just as the US congress embarked on the most bitter budget standoffs in recent history, finally paid off for domestic investors on Boerse Frankfurt’s sentiment panel. Since the start of September, the DAX has delivered an impressive performance that has taken it to a new record high. However, the professional investors on the panel have not held their breaths waiting for more; after barely being able to testify to optimism at the year’s average, we note that their positive mood has evaporated again. Sentiment, as measured by the Cognitrend Bull/Bear-Index is again struggling to hold above the 50-level.

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DAX-Sentiment: Thinking the Unthinkable

17. October 2013

Optimism shrinks, but not because of US default risk

16 October 2013. FRANKFURT (Börse Frankfurt).This is not the first government shutdown in US history yet, three weeks ago, there were very few market participants who thought matters would come to that. Once the shutdown actually started, and Federal workers were sent home, few thought it would last. When the US Treasury announced the debt ceiling would be reached by October 17th, few believed the deadlock would be allowed to fester up to that date. Yet, here we are…

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DAX-Sentiment: No sceptics left to cry ‘wolf’

10. October 2013

Threat of mid-October US default, but no crash fears

9 October 2013. FRANKFURT (Börse Frankfurt). For second consecutive week, professional investors on Boerse Frankfurt’s weekly sentiment panel have become more upbeat about the outlook for the German DAX index. In fact, this is the first time since early-July that overall optimism, as measured by the Cognitrend Bull/Bear-Index, has shown an above-average reading. Clearly, the newfound enthusiasm for German blue-chips is not news driven. In any other year, if one had told investors that the US government was in shutdown and the Treasury was warning of a default by mid-October if a budget impasse was not resolved, equity investors would be rushing to the hills for fear of a crash…

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DAX-Sentiment: US Politics Fail to Rattle DAX Bulls

3. October 2013

Investors buy into a shallow market pullback

 ”As worrisome as this shutdown might sound to foreign ears, it is not that alien to US politics: it results from a 147 year old law that forbids government officials from incurring any expenses that has not been authorised by Congress. So to prevent anyone risking a fine or jail-term, it is prudent to switch off all the computers and send staff home. Since 1937, there have been no fewer than 19 such shutdowns. The worrying thing about the current political gridlock is that it centres on President Obama’s headline healthcare law, a reform that some Republicans have been trying to repeal since it was signed in 2010. So the political positions are very well dug in. The second worrisome feature of the shutdown is that comes just as the US economy is slowly recovering from the deepest recession since the Thirties.”

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DAX-Sentiment: Optimism Shrinks ‘by Default’

26. September 2013

Many investors had to change their view, both bulls and bears

25 September 2013. FRANKFURT (Börse Frankfurt). The German national elections were never a major calendar event for DAX investors. This realisation must have perplexed several market commentators, although it shouldn’t have: over the past 25 years of German elections, the influence on stock prices has largely negligible. Nonetheless, in the closing days of the campaign, many seemed determined to marry the themes ‘elections’ and ‘bourse’ in a single article…

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DAX-Sentiment: German Angst

19. September 2013

Headlines have changed, but scepticism hasn’t

18 September 2013. FRANKFURT (Börse Frankfurt). If we define ‘bullishness’ as a score on the Cognitrend Bull/Bear-Index above the average of the year, domestic professional investors have not been bullish on the DAX since early July. At that time the market was recovering from its early summer swoon and had just managed to clamber back above the 8,000 bar. Today the German benchmark printed its highest level ever at survey time, having climbed 7.5 percent in the ensuing two months. Yet, during this time, the members of Boerse Frankfurt’s weekly sentiment panel have found little reason to be enthusiastic about the market.

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DAX-Sentiment: Bullish, but only just

12. September 2013

Sceptics have had to watch their bearish arguments crumble

11 September 2013. FRANKFURT (Börse Frankfurt). Since last week’s survey, the environment has become somewhat hostile for DAX bears. All of gaping pot-holes in the road they were so afraid the German equity benchmark might plunge headlong into have been impressively sidestepped or speedily repaired. The ECB meeting, the US non-farm payroll, and tense international stand-off over Syria, were all cited as reasons to exercise caution. Yet none of these events has been enough to derail the DAX. On the contrary, there has been some unexpectedly good news on the economy from the eurozone and from China. The result was that today’s survey took place with the DAX index at its highest level ever at polling time…

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DAX-Sentiment: ‘Unchanged’ gains in popularity

5. September 2013

Investors are convinced not much will happen with the DAX

4 September 2013. FRANKFURT (Börse Frankfurt). Politico-economic journalists have emerged from the summer’s ‘silly season’ with some earnest news stories to report on: evidence of quickening economic recovery in the major economies; a currency meltdown in some emerging markets; monetary policy shifts in the pipeline in the US; and the grim prospect the global economy could be roiled by overt and co-ordinated military engagement in the Syrian civil war by international powers. On the face of it, domestic DAX investors on Boerse Frankfurt’s weekly sentiment panel seem to be keeping their investments firmly hedged. As measured by the Cognitrend Bull/Bear-Index, overall sentiment remains squarely in pessimistic territory, barely changed from the previous week. However, this broad picture hides some notable shifts in the voting pattern.

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DAX-Sentiment: Syrian Conflict Buries Fed Debate

29. August 2013

28 August 2013. FRANKFURT (Börse Frankfurt). The German economy is flourishing; tax revenues are up; public pension funds are reporting surpluses; and never has the Treasury spent so little to finance government debt. On paper, at least, there is some ground for celebration. Yet, a positive mood among German consumers is still difficult to detect. One reason for this could be the semblance of fragility in the global economy. In short, they still have something to worry about…

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Oopps! Economic growth

15. August 2013

Sentiment shifts vastly exaggerate changes in fundamentals

 

14 August, FRANKFURT: Question: What does a DAX investor do on a Monday morning when data releases on the previous Friday have been thin, when the US markets ended the week on a rather shaky basis, and when the first news out of the Asian markets is a worse-than-expected GDP growth number out of Japan?  Sell, of course. That much was obvious at the start of the week. However, even Monday’s sharp downward reaction didn’t push the German equity benchmark out of the range of the previous week – despite the disappointing news…

Read more on Boerse Frankfurt’s website

 

 

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DAX-Sentiment: All or nothing

8. August 2013

Equity inflows may have forced fund managers’ hand

7 August 2013. FRANKFURT. Domestic institutional DAX investors on Boerse Frankfurt’s weekly sentiment panel have been disenchanted with their market for quite some time now. Overall optimism, as measured by Cognitrend’s Bull/Bear-Index has so deteriorated over the past four weeks it now stands at its lowest level in almost a year. In DAX terms, this means that investors have distrusted the market recovery since prices climbed back above 8,100 in mid-July.
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DAX investors see asymmetric risks in the US

1. August 2013

Good US news can’t help the German market, but bad news…

31 July 2013. FRANKFURT (Börse Frankfurt). Equity market participants hardly complain – so far, at least, there has been no trace of the infamous summer pause. On the contrary, the month of July could well turn out to be one of the best months of the year for the German market; only the month of May has yielded a better performance. Investors can thank the Fed Chairman, Ben Bernanke, for the positive price development. Even today,

Read more at Boerse Frankfurt’s Website

 

 

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DAX-Sentiment: We Want a Summer Pause!

25. July 2013

Investors have learned not to trust rallies like this one

24 July 2013. FRANKFURT (Börse Frankfurt). Fed chief, Ben Bernanke, was once again the catalyst for a stock market rally over the course of the past survey week. His willingness to show some ‘flexibility’ when it comes to tapering the central bank’s monthly asset purchases provided the reassurance equity investors needed to drive the major US indices to new record highs. Bernanke again expressed his disappointment with the labour market, his sanguinity concerning inflation, and his preparedness to act in case rising mortgage rates started to negatively impact the housing market recovery. Everybody knew what that meant: more bond purchases…

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DAX-Sentiment: Where is Our Green Light?

18. July 2013

Investors watch central banks agonise over policy steps

17 July 2013. FRANKFURT (Börse Frankfurt). Since Ben Bernanke’s press statement at the close of the Federal Open Market Committee meeting last week, the stock market traffic lights ought to have changed to green. The Fed chairman reiterated a message he and other Fed governors had been trying to impress upon investors for weeks: the central bank would reduce its monthly asset purchases as soon as the still distant economic pre-conditions were satisfied, but rate hikes remained a dimmer and even more distant prospect. Holders of risky assets needn’t fear, he implied, the Fed would keep printing money until the economics justified the loftier valuations. US investors appear to have seen the light change: they roared their engines, burnt their rubber, and drove the S&P500 to a record closing high…

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DAX-Sentiment: Better Than Expected?

11. July 2013

“One might have thought the biggest firms in an export-orientated economy would delight in the news that one of its main trading partners had created almost 200,000 new jobs, yet the DAX finished down on the day….”

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