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Buckle up the Tesla ride is going to be bumpy

This looks likethe time for traders to bet against Tesla (TSLA) shares in the short term as the market reacts to reports that Model 3 electric vehicle (EV) deliveries are going to be delayed with news stories about escalating production costs, production line issues and lay-offs throwing doubt on the company’s ability to turn a significant profit on its new model.

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The chart above shows that after steep rise of 68% throughout the year the share price is showing signs of volatility.

Barclays were among the first to advise their clients to short Tesla with their analyst Brian Johnson suggesting a $210 price target – well below the $340 consensus on Wall Street.

Barclays feel Tesla’s November 19 announcement about truck production will be decisive in swaying investor confidence in the company.

Tesla are projecting production targets of several million per year in the near future as well as significant progress in other business opportunities like battery storage.

On the back of these projections some analysts have been uber-bullish about Tesla with Morgan Stanley’s Adam Jonas – who is widely followed on Wall Street – raising his 12-month price target from $317 to $379.

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Patience may pay off for General Electric traders
 
Many analysts expect General Electric (GE) to exceed their profit expectations when they post their third quarter earnings report on October 20, as it has done in eight of the last nine quarters. However, there is also a high expectation that its share price will fall as it has done for the past seven quarters after earnings results are released.

Fears over a dividend cut have eased since last week – which would have led to an investor exodus and a serious drop in share value – but there still seems to be a lot of work to do for recently appointed CEO John Flannery who is overseeing restructuring and reorganising efforts.

“A dividend cut could crush the stock as retail investors flee, but maintaining it gives GE little or no excess cash to grow,” Jeffrey Sprague, an analyst at Vertical Research Partners, said last week. “GE has continued to shrink the company but it has not proportionally shrunk the dividend.”

Moody’s Investors Service credit analyst Rene Lipsch told Reuters that GE’s options would narrow next year when it no longer receives billions from asset sales at GE Capital. Adding that, long term, the dividend “depends on Flannery’s ability to increase cash flow from the businesses.”

Flannery’s appointment has been followed by the announcements that its CFO was leaving the company along with news that two vice chairs were retiring which have been taken as a bad sign by analysts.

JPMorgan are one that hasn’t been impressed by the new appointments or restructuring at GE.

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Boeing share price soaring, but turbulence lies ahead
 
Boeing’s (BA) share price has risen an impressive 66% compared to this time last year, boosted by enthusiasm in the airline and defence markets. Increased travelling has had a positive effect on airline traffic, while rising international tensions have prompted countries to increase spending on defence.

But there is turbulence ahead for Boeing in the shape of increased competition in its biggest operating segment, airline business, which has yielded $65 billion of the company’s $95 billion total revenue over the last two years.

While this is unlikely to send Boeing’s share price into a tailspin, it might be expected to move sideways for the foreseeable future.

Airbus, Boeing’s main rival in the airline business, have traditionally made bigger planes and hadn’t been able to benefit from the recent downsizing trend in the airline industry and increased demand for smaller, more fuel-efficient planes.

However, now Airbus has taken a majority stake in Bombadier’s C series jet programme, and in an instant, has added a high-performing, smaller sized aeroplane to its range without incurring any acquisition costs.

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Virtual trading and the global economy
 
We have seen the rise of the virtual world in the twenty first century, which is a world that exists entirely on the internet. The currency that is used  is known as bitcoin, but it does not possess any physical form. Bitcoin has now become a widely used currency, especially in China, the economic powerhouse. However, the lack of physical form makes bitcoin completely different to what money should be.

A long time ago, the value of money was exactly what it was made of. Gold coins were made, and their value depended on the amount of gold in circulation. Nowadays, most money is printed on paper, which does not have that much value. Therefore, the government can print as much money as it wants as long as it has the cheap materials needed to print the money.

Bitcoin is the next step in this worrying trend regarding the creation money. Bitcoins have no physical form, and they cost almost nothing to create. However, using bitcoin is very convenient as online transactions can be carried out  using a currency which is suitable for  expediting simple financial transactions.

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Microsoft flying high on wings of Cloud business

Over the last few years Microsoft (MSFT) has dramatically changed direction as a company to generate new sources of revenue and in doing so altered consumer perception of the brand and impressed a number of Wall Street analysts who are eagerly awaiting the company’s quarterly earnings report (October 26) which they hope will confirm their selection astheir top large cap pick.

Under CEO Satya Nadella the company is now well-placed to enjoy a period of sustained growth with growing revenue derived from its Cloud offering (which is well on target to reach the $20 billion annually predicted by Nadella by 2018) and increased revenues from new ventures as well as revitalization of revenue from its existing portfolio of products.

Former CEO Steve Ballmer took the initial decision to move into Cloud services and turn Office into a subscription based product. However, when Nadella picked up the baton in February 2014, he ditched many of the business practices that had been in place when the company dominated the marketplace with its Windows operating system.

Back when Microsoft lead the PC market it sold copies of Office or parts of it (Word, Excel, PowerPoint etc.) to run on them, but then smartphones and tablets ate away at its market by giving users computing power in the palm of their hands which also created a perception that the PC giant was now behind the curve.

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Introducing Skrill at FXB Trading

FXB trading have introduced Skrill as a payment method for funding and withdrawing from your account. If you already have a Skrill account, you’ll be aware that Skrill is an international electronic wallet that you can maintain in your local currency and fund by transferring funds from your bank account, cheque, credit/debit cards or via alternative payment methods available in your country.

You can use Skrill for secure online purchases without worrying about disclosing your credit card information. It’s a safe and efficient online payment method that does not require its users to send payment information every time they make a transaction.

The option to use Skrill is just one of many trusted, international payment service providers that are available to traders at FXB Trading.

How do I fund the Skrill account?

Please see Skrill’s fees for the list of funding methods available in your country as well as respective fees.

How can I make a purchase using Skrill?

Skrill is fully integrated via the ‘Deposit Methods’ screen. While in the members area, click on ‘Deposit Funds’, you will see an option to use Skrill. Please click on the ‘Select’ button located on the Skrill payment method.

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Who should you trust with your money?

How many of you reading this have or had a bank account with HSBC? My guess is that more of you have banked with them than any other major bank. And why shouldn’t you. After all, they were known for being the world’s local bank and are amongst the biggest in the world.

They’ve been around so long and are so big that trusting them is implicit. You don’t even bother looking at the library of licences they hold for the myriad of financial services they offer.

But have they earned your trust?

Cairn Energy trusted HSBC to carry out a $3.5 billion foreign exchange deal for them in 2011.

The Financial Times reported recently that US prosecutors have accused HSBC of turning an illicit profit from the exchange by exploiting the confidential information they had of Cairn’s sizeable order.

It’s a practice also referred to as scalping and authorities claim it earned HSBC over $8 million at Cairn’s expense.

It’s far from an isolated incident.

Reuters reported in December 2012 that HSBC agreed to pay a record $1.92 billion in fines to US authorities for allowing itself to be used to launder drug money flowing out of Mexico and terrorist organisations as well as other offences which were loosely described as banking lapses.

HSBC benefited from a deferred prosecution agreement from the Justice Department and Chief Executive Stuart Gulliver said at the time of the judgement: “We accept responsibility for our past mistakes. We have said we are profoundly sorry for them, and we do so again. The HSBC of today is a fundamentally different organization from the one that made those mistakes.

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Bitcoin takes a big stride away from fringes of finance

CME Group’s announcement on Tuesday (October 31) that it intends to offer futures on Bitcoin this month sent the cryptocurrency surging past $6,400 for the first time; the group’s move has been viewed as bringing Bitcoin a step closer to acceptance within mainstream finance by placing it alongside the CME’s stable of futures on interest rates, stock indices, commodities and currencies.

Bitcoin’s price has soared from $966 at the start of the year, breaking through the $5,000 mark for the first time on October 11 before settling at $6,362.65 in afternoon trading on October 31, up by 4% for the day.

Futures are derivatives contracts that investors and companies typically use to speculate on prices or hedge risk against turns in the market. Other major markets like stocks, bonds, commodities and currencies all have derivatives based on them. CME’s futures option would allow investors to hedge bets that the price of bitcoin will rise, something that is difficult at present.

CME Group, the world’s largest derivatives exchange, explained that the futures will be cash-settled and based on the CME CF Bitcoin Reference Rate, a Bitcoin price index it launched last year.

The news comes as a surprise because in September CME president Bryan Durkin told Bloomberg: “I really don’t see us going forward with a futures contract in the very near future.”

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Starbucks might be about to surprise Wall Street

For years Starbucks Corporation’s (SBUX) shares have mirrored their phenomenal success, but recently the coffee giant has come under attack from the likes of McDonalds and other fast food giants as well as indie coffee shops which has been reflected in the value of their share price.

After reaching a peak price of $64.87 in June, Starbucks shares are down 1.41% overall this year. However, Starbucks has expanded into new territories and brought greater convenience to its clients with the use of innovation which has prompted some analysts to predict that the coffee-making giant will surprise Wall Street when it releases its fourth quarter earnings on November 2.

Starbucks experienced tremendous growth between 2011 and 2016 with sales growth above 5%. It all changed in the third quarter of 2016 when sales growth was just 4% while for the first time transaction growth was flat. For the next quarter, sales growth remained below 5% while transaction growth was negative (-1%).

Starbucks’ growth has been affected by competition from indie coffee shops and traditional fast food giants who have widened their menus to capture some of the coffee drinking market.

Indie coffee shops are opening everywhere and have taken away the trend-focused millennials market, while the price-focused crowd is now going to McDonalds for their coffee.

Changing consumer preferences have had a big influence on Starbuck’s recent performance. The competition has expanded their menu options and physical store locations to better reach a wider customer base which has drawn consumers away from Starbucks and resulted in the slow down of sales growth.

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Alibaba’s global perspective sends share price soaring

Alibaba’s (BABA) ongoing experimentation with new ways to lure shoppers into spending their money, diversification and expansion into new territories has earned widespread approval in the markets, pushing its share price to record highs of $192.12 ahead of their quarterly earnings report (November 2). 

The Chinese e-commerce giant’s shares have more than doubled in value this year (see chart) with much of Alibaba’s growth being fueled by the internet retailing boom in China. The move into cloud computing is currently loss-making, but with the number of users almost doubling to 1 million in a year and expansion into Malaysia and India it is expected to turn that around. Also, Alibaba’s diversification into groceries, digital entertainment and financial services are showing potential for future growth. 

Alibaba’s goal is to reach 2 billion customers around the world within 20 years. In some cases, it has begun with digital payments, as in India. In others it has invested in e-commerce sites, as with Lazada, in South-East Asia. But it intends to build a broad range of services within each market, including payments, e-commerce and travel services, and then link local platforms with Alibaba’s in China.   

Alibaba’s recent success has, in part, been helped by Beijing’s severe restrictions on foreign internet companies which has allowed them to benefit from the boom in e-commerce while only contending with domestic competition. 

However, at the core of Alibaba’s success has been innovation. Sales events like its ‘11.11 Global Shopping Festival’ have been phenomenally successful and provide a platform upon which Alibaba experiment with new forms of retail and customer engagement which rely extensively on interactivity, technology and consumer analytics. 

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Australia’s economy is going down and under

Australia recently recorded its 104th consecutive quarter of growth without a recession, an achievement which breaks the record set by the Netherlands. It prompted Australia’s federal Treasurer Scott Morrison to claim that the economy was in “surprisingly good shape”. His statement is reminiscent of that old joke. How can you tell if a politician is lying? His lips are moving.

Australia’s economy is not in good shape. Its growth has been built on demand for commodities like coal and steel from China and investment in an over-inflated property market that has been fuelled by years of cheap credit. These dual dependencies are about to be brutally exposed.

The exact timing and full impact of Australia’s economic tailspin is unknown. However, a precise date and exact knowledge of its magnitude are unnecessary in order to take advantage of the collapse as a trader. The circumstances that make an economic crash inevitable are already in place and it is far better to be five months early rather than five minutes late for an opportunity like this.

The inevitability of Australia’s financial meltdown is in part due to an external factor which it has no control over: China.

Societe Generale’s China economist Wei Yao recently said: “Chinese banks are looking down the barrel of a staggering $1.7 trillion worth of losses”. Hyaman Capital’s Kyle Bass calls China a “$34 trillion experiment” which is “exploding”, where Chinese bank losses “could exceed 400% of the US banking losses incurred during the sub-prime crisis”.

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Join the few who gain from economic Armageddon
 
The warning signs that a market crash is looming are becoming louder and more frequent. Despite this, most market participants are behaving like it can never happen. In fact, bullish trading is pushing the markets to new highs on an almost daily basis. The warnings are seen, heard and then ignored.

Join the few who will take advantage of what’s about to happen. The same few who profited handsomely when billions were lost in the last global economic crisis almost a decade ago rather than those who simply follow the herd.

For most people these warnings are like the graphic images printed on today’s packets of cigarettes, they spell out the dangers and yet all the same people are still smoking.

Warnings about an impending market crash are being made by people who predicted with considerable accuracy in 2006 and 2007 what was ahead when the US sub-prime mortgage market collapsed and triggered the global financial crisis.

The one thing these analysts can’t predict is an exact time and place for when the crash will happen. It’s the same reason people continue to smoke; nobody can say with certainty the number of cigarettes required to kill a person.

So, trading continues regardless until the day the sudden dramatic drop in prices exceeds the 10 per cent threshold that officially marks the point that the crash has arrived.

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