Dax: To new shores? Capital, prices and factors of production

It took a long time, but now the Dax has started after the great decay! So, after a long wait, the index has been celebrating the Wall Street party – the US tax reform is triggering the almost daily new all-time highs of US indices. Today, the vote in the US House of Representatives, which should not be a problem, and in the US Senate, the tax reform is also likely to come through, after the shaky candidate Susan Collins yesterday announced her “yes” vote. However, US Vice President Mike Pence has canceled a planned business trip, if necessary – with a stalemate of 50:50 votes in the US Senate – tip the scales to be able to play after disease-related John McCain will not appear to vote (with only 51 Vote Republican, with Jeff Flake being the only Republican who hasn´t yet decided with his vote).

What does all this mean? Especially when the US tax reform comes in, there will be a lot of liquidity available. Either because the countless billions of dollars that have been parked by US companies abroad, partly return to the US (and thus the “rest of the world” dollars withdraw). Or simply because the US companies will have more money after taxes, so that a lot of free capital will be on the way, partly in investments, but mainly in share buybacks (which “cheapen” the respective stock by lowering the earnings per share ratio) or increased dividends will flow.

In other words, this release of liquidity will not only, but to a not inconsiderable extent, flow into the stock markets. Thus, there is a liquidity boom that, following the monetary stimulus that the central banks have been practicing for years, and in some cases still practicing (ECB, Bank of Japan), is now followed by a fiscal stimulus. Thus, a drug-addicted patient gets even more drugs called liquidity, which increases the asset prices (stocks, real estate, etc.) even further. Money is there enough, so non-replaceable goods become more expensive, just paid by a “more” of that money, which flows more and more abundantly.

As you know, there´re three factors of production: labor, capital and land. Work is under devaluation pressure through automation, capital can be multiplied seemingly infinitely (now accelerated by the creation of new digital currencies!) – only the soil (and the raw materials) are finite and not reproducible. So you have to count only 1 and 1 together!

Back to the Dax: The index has now opened a new trading zone with the breakout of the existing since the beginning of November sideways range: below the area 13245 as support, above as a (light) resistance initially the area 13350, but more important is the zone at 13410 points before the all-time high at 13537 points would come into view.

It´s possible that the Dax yet again consolidates to 13245, but much lower it should not go – maybe even in the range 13200/13190 and thus a reunion with the upper edge of yesterday torn upwards gulf. Otherwise, however, the chart technical situation of the Dax has improved significantly with yesterday´s situation!

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