Hole in one in Jackson Hole – hedging equities with US dollar

Hole in one in Jackson Hole – hedging equities with US dollar

25 August 2022 from Carlsquare

Equity markets are quite on the edge as investors are waiting to see just how hawkish chairman Jerome Powell will be at the annual Fed conference in Jackson Hole this Friday, August 26th.

Last year at the annual conference, Powell took the stance that inflation might prove to be a temporary phenomenon, driven by short-term effects following the pandemic shutdowns. Since then, the Fed’s view on inflation has changed. Markets are expecting Powell to address their outlook on Friday.

The big question is whether the Federal Open Market Committee will go ahead with heightening rates by another 75 basis points (bps) in September to counter inflation. Powell’s speech is expected to be highly indicative of what move the feds will make.

An aggressive rate increase will punish equity markets and strengthen the US dollar as the money supply decreases. Hedging the equity portfolio ahead of the conference with the US dollar might offset some expected short-term equity volatility.

 

Source: Infront and Carlsquare. Note: Past performance is not a reliable indicator of future results.

Source: Infront and Carlsquare. Note: Past performance is not a reliable indicator of future results.

The full name for abbreviations used in the previous text:
EMA 9: 9-day exponential moving average
Fibonacci: There are several Fibonacci lines used in technical analysis. Fibonacci numbers are a sequence of numbers in which each successive number is the sum of the two previous numbers.
MA20: 20-day moving average
MA50: 50-day moving average
MA100: 100-day moving average
MA200: 200-day moving average
MACD: Moving average convergence divergence

Important notice

 
This information is neither an investment advice nor an investment or investment strategy recommendation, but advertisement. The complete information on the trading products (securities) mentioned herein, in particular the structure and risks associated with an investment, are described in the base prospectus, together with any supplements, as well as the final terms. The base prospectus and final terms constitute the solely binding sales documents for the securities and are available under the product links. It is recommended that potential investors read these documents before making any investment decision. The documents and the key information document are published on the website of the issuer, Vontobel Financial Products GmbH, Bockenheimer Landstrasse 24, 60323 Frankfurt am Main, Germany, on prospectus.vontobel.com and are available from the issuer free of charge. The approval of the prospectus should not be understood as an endorsement of the securities. The securities are products that are not simple and may be difficult to understand. This information includes or relates to figures of past performance. Past performance is not a reliable indicator of future results.

02/12/2022 04:24:22

 

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