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5 income strategies to supplement Social Security in retirement

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By jill111 from Pixabay5 income strategies to supplement Social Security in retirement

Social Security is only designed to replace about 40% of the average retiree’s income, leaving two options — either dramatically reduce your standard of living, or create additional income from other sources.

While annuities are certainly one way to create an income stream, there are some downsides to this popular approach. Specifically, annuities often have high fees, and better returns can often be achieved elsewhere.

With that in mind, here are five retirement income strategies that could be smart options for you to supplement your monthly Social Security checks.

Reverse mortgages

As the name implies, a reverse mortgage works in the opposite manner of a traditional mortgage. Instead of making monthly payments to a bank and building equity in your home, the bank makes payments to you in exchange for your equity.

Reverse mortgages are available to homeowners 62 and older who own enough equity in their home to justify the loan. Upon obtaining a reverse mortgage, the lender makes payments to you and interest begins to accumulate on the outstanding balance.

However, you’ll never have to pay back the reverse mortgage unless you sell your home. Reverse mortgages are generally paid off through the sale of a home, either during the borrower’s lifetime or after death.

To be clear, there are some downsides to reverse mortgages. Even so, in many cases, reverse mortgages can be a smart way to create an income stream without touching your retirement nest egg.

Bond laddering

When it comes to creating retirement income, I’m a fan of maintaining a properly allocated investment portfolio of stocks and bonds.

We’ll get to stock investing later, but there are some basic problems with bond investing, especially that bonds pay extremely low interest rates on a historical basis.

The concept of a bond ladder can help you still get current income, while also allowing yourself to boost your future income if rates rise.

Here’s a simplified explanation of how a bond ladder might work. Let’s say that you have $100,000 to invest, so instead of putting it all in 10-year bonds, you would put 20% in bonds that mature in two years, another 20% in four-year bonds, and so on. The result is that you’ll get the higher income of some longer-dated bonds, but every two years, you’ll have $20,000 to put to work at the then-current long-term rates.

Buy, start, or invest in a small business

This is the most “outside-the-box” way to create retirement income on the list, but it has become more popular recently. For example, a retired couple who plans to retire to a beach town might buy a bed and breakfast.

The “buy a business” route can be an especially good option because it can help cure another issue commonly encountered in retirement — boredom. Operating a business can keep you active and engaged.

There are clearly some downsides of this option. For example, owning your business can be a risky way to make money, and not all retirees are physically capable of running a business. However, this is an interesting option for entrepreneurial-minded retirees.

Real estate

Investing in real estate can produce excellent income, and can also increase your net worth over time. And thanks to the power of leverage (mortgage financing), retirees don’t necessarily need a ton of money to get started.

There are several risks to be aware of. Vacancies, bad tenants, and unexpected maintenance issues are just a few of the uncertainties. However, for many people, the reward potential can definitely outweigh the risk. In fact, investing in rental properties is a big part of my own retirement planning strategy.

Dividend growth investing

Last, but certainly not least, stock investing can be an excellent way to generate a growing income stream in retirement.

A smart approach for retirees is to focus on dividend growth stocks — in other words, stocks that not only pay dividends, but have a solid history of increasing their dividend payments. For example, Procter & Gamble has an above-average 3.7% dividend yield and has increased its payout for 62 consecutive years. Stocks like this pay more than you can get from many intermediate-term investment-grade bonds, with the added probability of rising income over time.

If you aren’t comfortable with choosing individual stocks, you can invest in diverse assortments of these companies through mutual funds and ETFs.

Related links:

• Motley Fool Issues Rare Triple-Buy Alert

• This Stock Could Be Like Buying Amazon in 1997

• 7 of 8 People Are Clueless About This Trillion-Dollar Market

Which is best for you?

The best choice for you depends on your risk tolerance, the level of involvement you want to have, and other factors. While it’s likely that not all these suggestions are ideal for you, my point is to get you thinking about alternatives before putting your retirement nest egg into an annuity or other fixed-income strategy.

Published at Mon, 21 May 2018 14:23:16 +0000

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GE can't get rid of its light bulb business

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By Capri23auto from PixabayGE can't get rid of its light bulb business

GE changed our lives. Why is it struggling?

GE changed our lives. Why is it struggling?

General Electric has been linked to the light bulb for the past 126 years. Now, GE is having a hard time getting rid of it.

It’s been nearly a year since cash-strapped GE revealed plans to sell the struggling light bulb business and focus instead on moneymakers like jet engines and MRI machines.

But GE (GE) has yet to find a taker for the iconic unit. The company is in “active discussions” with potential suitors for the lighting division, CEO John Flannery told analysts during a conference call last month.

However, no concrete deal has been reached yet. Even as GE has moved forward with sales of other storied businesses like the 111-year-old rail division, the company declined to provide CNNMoney this week with an update on efforts to sell GE Lighting.

The struggle to sell the light bulb unit underscores the dim outlook for the lighting industry that GE and the conglomerate’s cofounder Thomas Edison pioneered.

GE’s lighting sales plunged by 59% last year to just under $2 billion. Although lighting long defined GE, today it’s the company’s tiniest division, accounting for less than 2% of its $122 billion in annual revenue. GE has decided to shift focus onto three core areas: healthcare, power and aviation.

The lighting slump isn’t special to GE, which has also been grappling with troubles in its insurance, power and transportation businesses. It’s an industrywide problem driven by low prices and the popularity of LED lights that last for decades, limiting the need to replace them.

“It has not been a particularly good business to be in,” said RBC analyst Deane Dray.

Related: GE’s latest sale: Its 111-year-old rail business

The other issue is that light bulbs, unlike some of GE’s other products, are relatively pedestrian these days. One light bulb may not be dramatically distinguishable from another.

“It’s become more commoditized. It’s not a technology-rich business,” said Cowen analyst Gautam Khanna.

A century ago, the light bulb unit produced some of GE’s greatest innovations. In 1892, GE began machine-molding bulbs instead of hand-blowing them. A GE engineer developed the first modern light bulb in 1906. And in 1935, GE light bulbs were used to light the first nighttime Major League Baseball game.

GE, coming off its worst year since the 2008 crisis, has promised to sell $20 billion of businesses by the end of next year to raise cash and pay down debt.

Wall Street cheered GE’s $11 billion deal on Monday to exit the rail business. The sale was seen as a step in the right direction and potential evidence that the worst is over for GE. The company’s stock has soared 10% in May, though it remains down 12% this year.

Related: GE’s subprime mortgage unit could file for bankruptcy

GE’s dealmaking is complicated by effort to limit its bill to Uncle Sam. For instance, the rail deal is tax-free, but it’s an intricate transaction that will take place over several years and involve a mix of cash, stock and a spin-off. Repeating the same task for the light bulb unit may take time.

“That makes this process much more complex. It becomes a much, much harder needle to thread,” said RBC’s Dray.

Related: GE is sitting on a ton of debt

The other problem: If a lighting sale is anything like the rail deal, GE may still be stuck with the business’s costly liabilities.

Even though GE is selling the rail business, the US pension and retiree health liabilities will not transfer to the new company, a person familiar with the matter told CNNMoney.

In other words, GE is getting rid of the cash flows from the rail division, but holding onto some of the negatives.

Wall Street’s biggest GE skeptic, JPMorgan Chase (JPM) analyst C. Stephen Tusa, Jr., warned in a report on Monday that GE’s asset sales will likely fail to bring in enough cash to ease debt concerns.

“The need to do more to raise cash to ameliorate the ratings agencies,” Tusa wrote, “remains the elephant in the room.”

–CNNMoney’s David Goldman contributed to this report.

Published at Tue, 22 May 2018 15:59:00 +0000

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American banks had their most profitable quarter ever

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By Alexas_Fotos from PixabayAmerican banks had their most profitable quarter ever

Big banks are raking in monster profits

Big banks are raking in monster profits

American banks are hauling in record-setting profits just as Congress prepares to cut regulations.

Bank profits soared by 28% during the first three months of 2018 to $56 billion, according to statistics published by the FDIC on Tuesday.

The blockbuster earnings report, boosted by President Donald Trump’s tax cuts and the healthy economy, easily tops the prior record set just three quarters earlier.

The stellar results were released hours before the House of Representatives is expected to pass legislation that would roll back some rules on community banks and regional lenders designed to prevent another financial crisis.

Although bankers have complained of excess regulation, the FDIC report shows that the industry is hardly drowning in regulation. The Dodd-Frank reform law was signed into law in July 2010 by former President Obama. Since then, bank profits have increased by 135% as the American economy climbed out of the Great Recession.

At the urging of regulators, American banks have also built up quite the rainy day fund. The industry is sitting on nearly $2 trillion of capital that can help weather the next storm. Wall Street is betting that deregulation will let banks return some of that cash back to shareholders.

The FDIC said that 70% of the nation’s 5,606 banks grew their bottom line during the last quarter. The percentage of money-losing banks dropped to just 3.9%. The FDIC’s list of problem banks fell to just 92, the lowest level since the first quarter of 2008. Problem banks are at risk of failure.

Related: Big banks are minting money right now

The financial industry owes a chunk of the mega earnings to Trump’s corporate tax cut. The FDIC said the tax law boosted bank profits by about $6.7 billion.

However, banks would have still made a record $49.4 billion without the tax cuts.

“Tax reform has allowed an already strong banking industry to grow even stronger,” James Chessen, the chief economist of the American Bankers Association, said in a statement.

Not surprisingly, the vast majority of the industry’s earnings come from the mega players on Wall Street, which are not directly helped by the deregulation legislation. Big banks reported gigantic profits during the first quarter, thanks largely to the tax cuts.

Both Morgan Stanley (MS)and Bank of America (BAC) logged record quarterly earnings, while a critical measure of profitability at Goldman Sachs (GS) hit a five-year high.

More impressive, JPMorgan Chase (JPM), the largest American bank, made $8.7 billion last quarter. That was the largest quarterly profit by any US bank ever.

Lending has been a sore spot for larger banks, despite the strength of the US economy and healthy bank balance sheets. The FDIC said that commercial and industrial loans increased by 1.9% last quarter, while nonfarm nonresidential loans ticked up by 0.8%. Mortgage lending inched just 0.4% higher.

“Loan growth has remained anemic,” said Brian Gardner, Washington policy analyst at investment bank KBW. He cited a combination of “weak” demand for loans and regulatory pressure.

“Regulators have been looking over bankers’ shoulders with increased vigilance since the crisis,” said Gardner.

Related: House clears path to roll back post-crisis banking rules

Community banks, which many say were unfairly snagged by Dodd-Frank, look healthy as well. The FDIC said that the nation’s 5,168 community banks grew their bottom lines by 18% during the first quarter to $6.1 billion. The agency noted that community lenders grew loans faster than the overall industry.

Still, FDIC Chairman Martin Gruenberg warned banks not to get reckless just because the US economy is humming along right now.

“With the current expansion in its latter stage,” Gruenberg said, “the industry needs to be prepared to manage the inevitable downturn in order to avoid financial system disruption.”

Published at Tue, 22 May 2018 17:30:30 +0000

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JCPenney CEO leaves for Lowe's

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By analogicus from PixabayJCPenney CEO leaves for Lowe's

Why JCPenney is in serious trouble

Why JCPenney is in serious trouble

Lowe’s has tapped JCPenney CEO Marvin Ellison as its new chief executive.

Ellison had been trying to lead a turnaround at JCPenney, but that has not been going well recently. It lost $69 million in the most recent quarter.

JCPenney will replace Ellison with an “office of the CEO” in which four executives will share responsibility for running the company while it conducts a search for a new CEO.

Shares of JCPenney (JCP) plunged 7% following the announcement. Shares of Lowe’s (LOW) climbed 3% on the news.

Ellison is currently one of only three black CEOs leading a Fortune 500 company. He came to JCPenney in 2014 after a 12-year career at Lowe’s rival Home Depot (HD), eventually serving as executive vice president of that chain’s US stores. He had worked at Target (TGT) for 15 years before that.

“Attracting Marvin is a great win for the entire Lowe’s team,” said Marshall Larsen, lead director of the Lowe’s board.

Related: Why JCPenney is in serious trouble

At first it appeared that Ellison had succeeded in turning around JCPenney. It reported a strong holiday season for 2015, a year after he took the top job there and predicted the improved sales would continue. But soon the losses returned.

Ellison will start at Lowe’s on July 2, replacing retiring CEO Richard Niblock. Unlike Niblock, he will not be chairman — the company named director Richard Dreiling to that post.

Published at Tue, 22 May 2018 13:29:15 +0000

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Tax cut sparks record-setting $178 billion buyback boom

Why stock buybacks may deepen income inequality
Why stock buybacks may deepen income inequality

Tax cut sparks record-setting $178 billion buyback boom

1. It’s raining buybacks: Corporate America is throwing a record-setting party for shareholders.

S&P 500 companies showered Wall Street with at least $178 billion of stock buybacks during the first three months of 2018, according to Howard Silverblatt of S&P Dow Jones Indices.

That’s a 34% bump from last year and tops the prior record of $172 billion set in 2007, just prior to the start of the Great Recession. Apple (AAPL) rewarded shareholders with $22.8 billion in buybacks — the most of any company in any quarter ever.

Total S&P 500 shareholder payouts — buybacks plus dividends — for the past 12 months could top $1 trillion for the first time ever, Silverblatt said.

The buyback bonanza occurred during the first full quarter after President Donald Trump signed into law a massive corporate tax cut that was supposed to lift business spending on job-creating investments.

The tax law reduced the corporate tax rate to 21% from 35% and gave companies a break on taxes owed when returning foreign profits. That one-two punch allowed companies to reap huge profits, a sizable chunk of which have been returned to shareholders. Profits had already been on the rise thanks to the accelerating economy.

Buybacks are clearly booming, more than 5.5 million employees received a tax cut bonus, pay raises or 401(k) hikes, according to the White House. But business spending — the stated goal of the tax law — has not significantly accelerated, at least not yet.

One broad measure of business spending, real nonresidential fixed investment, rose by 6.1% during the first quarter. That’s solid growth signaling a strong economy. However, it was roughly in-line with the past several quarters. It even marked a slight deceleration from the final three months of 2017.

That means companies have not significantly boosted spending on equipment, factories and other investments that create jobs and boost wages.

Some economists aren’t surprised that the early windfall of the tax cuts is going to Wall Street, instead of Main Street. They note that companies have long had access to tons of cash.

“If they had plenty of cash, you shouldn’t really expect having access to more would lead them to invest,” said Alan Auerbach, director of Berkeley’s Robert D. Burch Center for Tax Policy and Public Finance.

2. Mark Zuckerberg faces the European Union: Facebook’s CEO will meet senior members of the European Parliament as soon as next week to discuss how Facebook uses personal data.

Antonio Tajani, the parliament’s president, said he hopes Zuckerberg can restore the confidence of Facebook’s European regulators and customers.

The parliament will also organize a series of committee hearings with Facebook representatives and other tech companies, though Zuckerberg is not expected to attend.

Facebook(FB) faces scrutiny around the world following the Cambridge Analytica data scandal. Zuckerberg testified before the US House of Representatives and the Senate in April, but he has refused to testify before the United Kingdom’s parliament.

3. Rollback of Dodd-Frank: The House is set to vote next week on a Senate bill that would cut Obama-era regulations for thousands of community banks and regional lenders, including State Street (STT), BB&T (BBT) and SunTrust (STI).

The bill would raise the threshold at which banks are considered “too big to fail.” More than two dozen midsize US banks would be shielded from some Federal Reserve oversight.

They would no longer have to hold as much capital to cover losses on their balance sheets. They would not be required to have plans in place to be safely dismantled if they failed. And they would have to take the Fed’s bank health test only periodically, not once a year.

4. Home sales: The economy is booming, inflation is picking up, interest rates are rising, and people are scrambling to buy the limited supply of homes available on the market.

On Wednesday, the Commerce Department will report the number of new homes sold in April. New home sales surged to a four-month high in March.

But existing home sales have only been inching higher. Homeowners are reluctant to sell as home prices and mortgage rates soar. They worry that their next homes will be more expensive than the ones they live in now — even if they can get a lot more money for their current homes. The National Association of Realtors will report Thursday how many homeowners sold their homes last month.

Mortgage rates hit a seven-year high this month. The average rate on a 30-year fixed mortgage has jumped to 4.61%, according to Freddie Mac.

5. Europe’s new data protection law: On Friday, the European Union will start to enforce a sweeping new data protection law that will give consumers much more control over how their personal details are used.

Regulators say the rules are necessary to protect consumers in an era of huge cyberattacks and data leaks, highlighted by Facebook’s admission that the personal details of millions of its users were improperly harvested.

The EU General Data Protection Regulation applies to any organization that holds or uses data on people inside the European Union. Google (GOOGL), Facebook and other tech companies must comply. You’ve probably already seen emails from tech companies explaining their new privacy policies as businesses scramble to get up to code before the rules go into effect.

6. Coming this week:

Tuesday — Kohl’s (KSS) reports earnings

Wednesday — New home sales report; Lowe’s (LOW), Tiffany (TIF) and Target (TGT) and L Brands (LB) report earnings

Thursday — Existing home sales report; Best Buy (BBY) and Gap (GPS) report earnings

Friday — EU General Data Protection Regulation goes into effect

Published at Sun, 20 May 2018 14:32:01 +0000

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Deere Plowing to Positive Charts on Earnings Beat

Deere Plowing to Positive Charts on Earnings Beat

By Richard Suttmeier | May 17, 2018 — 10:55 AM EDT

Deere & Company (DE) makes equipment for farming, snow removal, lawn mowing and construction. An improving economy and potential infrastructure spending could make the weekly chart for Deere positive on a rally following an upbeat earnings report and solid forward guidance. The stock closed Wednesday at $147.35, down 5.9% year to date and in correction territory at 15.9% below its 2018 high of $175.26 set on Feb. 16. The stock has recovered by 12.3% since setting its 2018 low of $131.26 on May 3.

Analysts expect Deere to post earnings per share between $3.33 and $3.40  when the company reports results before the opening bell on Friday, May 18. The key will be demand for agriculture and construction equipment sales, as those segments will determine the company’s performance in the key farming and housing industries. A benchmark is beating the 34% year-over-year revenue growth seen in the year-ago quarter. (See also: 9 High-Return Stocks for a Shaky Market: Goldman.)

The daily chart for Deere

Daily technical chart showing the performance of Deere & Company (DE) stockCourtesy of MetaStock Xenith

Shares of Deere have been above a “golden cross” for more than 52 weeks. The 50-day simple moving average has been above the 200-day simple moving average since May 2, 2016, when the stock closed at $84.29. This indicated that higher prices would continue, and they have. Note how weakness on May 15 held the 200-day simple moving average of $143.58. The horizontal lines show that the stock is well above its semiannual value level of $124.90 and below my annual pivot of $150.12. My quarterly risky level is $166.26.

[Check out Chapter 2 of the Technical Analysis course on the Investopedia Academy to learn about using moving averages to develop your trading strategy]

The weekly chart for Deere

Weekly technical chart showing the performance of Deere & Company (DE) stockCourtesy of MetaStock Xenith

The weekly chart for Deere will end this week positive it the stock closes Friday above its five-week modified moving average of $147.49. The stock is well above its 200-week simple moving average at $102.10, which is also the “reversion to the mean,” last tested during the week of Oct. 7, 2016, when the average was $85.49. The 12 x 3 x 3 weekly slow stochastic reading is projected to rise to 23.79 this week, up from 19.25 on May 11 and rising above the oversold threshold of 20.00. The technical dynamics change quickly – during the week of Jan. 26, the stochastic reading was 96.91, well above the 90.00 threshold as an “inflating parabolic bubble” that popped during the stock’s correction.

Given these charts and analysis, my strategy is to buy Deere shares on weakness to my semiannual value level of $124.90 and reduce holdings on strength to my quarterly risky level of $166.26. My annual pivot of $150.21 has been a magnet since Feb. 9. (For more, see: 6 Stocks at High Risk in a Trade War.)

Published at Thu, 17 May 2018 14:55:00 +0000

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Wall St. drops as Treasury yields surge

Wall St. drops as Treasury yields surge

(Reuters) – A surge in U.S. government bond yields to their highest level in almost seven years sent Wall Street shares sliding on Tuesday after strong retail sales data stoked inflation concerns and investors fretted about looming trade talks between the United States and China.

All three major U.S. stock indexes closed down, with the S&P 500 ending a four-day winning streak and the Dow Jones Industrial Average posting its first loss in eight sessions.

The yield on 10-year U.S. Treasury notes jumped to its highest level since July 2011, suggesting an uptick in inflation and sending the dollar index .DXY to its highest close in 2018, raising expectations for further interest rate hikes from the Federal Reserve.

“A combination of firm growth and higher interest rates is unnerving,” said Anthony Chan, chief economist for Chase in New York. “A stronger dollar means downward pressure. … A creeping up of these things continues to keep the market nervous.”

Core April retail sales – which excludes gasoline, automobiles, building materials and food services – rose at a brisker 0.4 percent monthly pace over March, as consumer spending is quickening its pace after a first-quarter slowdown.

Investors also remain preoccupied by the run-up to high-level talks between China and the United States set to commence this week in Washington. U.S. ambassador to China Terry Branstad said the two countries remain “very far apart” regarding a tariff resolution, after which White House economic adviser Larry Kudlow told Politico he supports efforts to reach an agreement.

“A little bit of today’s jitters are related to a hangover to yesterday’s wrongly placed exuberance that a trade deal was imminent, and the reality is we are in for a long slugfest between the U.S. and China,” said Jon Mackay, investment strategist at Schroders North America in New York.

The Dow Jones Industrial Average .DJI fell 193 points, or 0.78 percent, to 24,706.41, the S&P 500 .SPX lost 18.68 points, or 0.68 percent, to 2,711.45 and the Nasdaq Composite .IXIC dropped 59.69 points, or 0.81 percent, to 7,351.63.

The losses were broad-based, with all 11 major S&P sectors except energy .SPNY closing down. Real estate .SPLRCR, healthcare .SPXHC and technology .SPLRCT stocks posted the biggest percentage losses.

Home Depot Inc (HD.N) shares slipped 1.6 percent after the home improvement retailer missed sales forecasts as the long winter put a damper on demand for spring products. Smaller rival Lowe’s Companies Inc (LOW.N) was down 1.0 percent.

Declining issues outnumbered advancing ones on the NYSE by a 1.87-to-1 ratio; on Nasdaq, a 1.14-to-1 ratio favored decliners.

The S&P 500 posted 10 new 52-week highs and seven new lows; the Nasdaq Composite recorded 82 new highs and 51 new lows.

Volume on U.S. exchanges was 6.60 billion shares, compared with the 6.67 billion-share average for the full session over the last 20 trading days.

Reporting by Stephen Culp; additional reporting by Lewis Krauskopf; editing by Jonathan Oatis

Published at Tue, 15 May 2018 21:41:51 +0000

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Open Ended Investment Company – OEIC

Open Ended Investment Company – OEIC

What is an ‘Open Ended Investment Company – OEIC’

An open-ended investment company (OEIC) is a type of company or fund in the United Kingdom that is structured to invest in other companies with the ability to adjust constantly its investment criteria and fund size. The company’s shares are listed on the London Stock Exchange, and the price of the shares are based largely on the underlying assets of the fund. These funds can mix different types of investment strategies such as income and growth, and small cap and large cap.

BREAKING DOWN ‘Open Ended Investment Company – OEIC’

An open-ended investment company is used in the United Kingdom for investing in the stock market. Investors’ money is pooled and spread across a wide range of investments, such as equities or fixed-interest securities. This diversification helps reduce risk of losing an investor’s principal. OEIC funds offer the potential for growth or income as medium to long-term investments for five to 10 years or longer.

Due to changes in U.S. legislation, U.S. residents may not hold shares in OEICs. U.S. shareholders must have the OEIC sell their shares or transfer their investments to U.K. residents.

Features of an Open-Ended Investment Company

U.K. investors 18 years or older may invest in a wide range of funds managed by industry experts. Various levels of risk are available for capital growth, income or a combination of both. Shareholders may invest for themselves or for their children. When children turn 18 years old, they hold the investment in their own right.

OEICs are useful for investors who do not have the time, interest or expertise for actively managing their investments. Investors may provide a single payment or monthly payments with minimum amounts depending on the fund, and access to funds online or over the phone is generally easy. Shareholders may pay a fee when moving between funds. However, shareholders may invest tax-free through a stocks and shares Individual Savings Account (ISA).

However, investment values and resulting income are not guaranteed and may increase or decrease, depending on investment performance and currency exchange rates for funds investing overseas. Therefore, a shareholder may not get back the original amount invested.

Charges for Open-Ended Investment Company Shares

Investors pay an initial charge of around 2% when buying new shares, as of 2016, which lowers the amount of money going into the fund. An annual management charge (AMC) may be 1.5% or more of the value of an investor’s shares and covers the fund managers’ services. Funds that are not actively managed, such as index trackers, have much lower fees.

The total expense ratio (TER) or ongoing charges figure (OCF) is quoted by most funds. Each charge includes the AMC and other expenses used for comparing different products. The TER and OCF do not include dealer charges that can add significantly to annual costs if the fund has a high turnover rate.

The exit charge for selling shares is a percentage of the total value of the sale. Many OEICs do not charge exit fees.

Difference Between Open-Ended Investment Companies and Unit Trusts

In the United Kingdom, unit trusts (UT) and OEICs are the two most used types of investment funds. Unit trusts consist of a manager who buys stocks and bonds for holders of a fund, in an open-ended format. Each unit is priced based on the net asset value of the underlying assets of the fund, and the price is only given once each day. OEICs, on the other hand, create and cancel shares instead of units as investors enter and exit the fund, much like a public company.

The two also differ in the way that they are priced. Unit trusts will have two prices, the bid price (price per unit received for each unit sold back to the fund) and the offer price (the price to purchase each unit of the fund). OEICs publish only one price per day.

Published at Tue, 15 May 2018 04:12:00 +0000

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What Comcast, Disney and Fox all see in Sky

 

Bob vs Brian: Which boss will win?
Bob vs Brian: Which boss will win?

For America’s most powerful media companies, the battle for dominance may be best fought overseas.

Comcast and Disney are both trying to buy Sky, which operates pay-TV services in the UK and other regional markets like Germany and Italy.

The bidding war has been brewing for months. Both companies are trying to diversify as a way of bolstering their influence in an industry that has been upended by Netflix (NFLX), Amazon (AMZN) and other tech companies.

“Between Fox and Sky, there’s a dramatic amount of overseas assets,” said Rich Greenfield, a media analyst at BTIG Research. Comcast is still largely a domestic company, which Greenfield believes is influencing its desire to expand elsewhere.

Disney also sees the appeal. Last year, CEO Bob Iger called Sky a “a real crown jewel” in an interview on Bloomberg TV, and complemented the broadcaster’s “value proposition to their consumers.

International success has long been on the minds of American media companies. In a call with investors Tuesday, Discovery CEO David Zaslav used the Sky battle to tout his companies’ own global footprint.

“We’ve been hanging out outside the US for the last 25 years,” Zaslav said, citing the company’s reach in Europe, where it has a deal to broadcast the Olympics. “And so when we see people fighting over Sky, that looks to us like, ‘Hey, we’ve been there.'”

Newer services are also taking notice. Netflix, for example, has been investing heavily in its own worldwide expansion, and expects to have about 80 foreign-language shows this year.

Disney’s(DIS) role in buying Sky is unfolding by proxy through 21st Century Fox (FOXA), which agreed to sell most of its assets — including any Sky stake — to the former last year. Fox already owns 39% of Sky and struck a deal for the rest in late 2016.

But Comcast (CMCSA)seems intent on crashing that arrangement. Last month, it formalized its own bid for a majority stake in Sky as a challenge to Fox, leaving the broadcaster’s fate uncertain.

Now the NBCUniversal owner wants to up the ante. News broke earlier this week that Comcast is talking to investment banks about usurping the Disney-Fox deal, too. If it prevails, the company could walk away with all of Sky, along with a bunch of Fox film and TV assets.

Fueling the fire, Iger and Comcast CEO Brian Roberts deeply dislike one another because of a personal feud that dates back to Comcast’s hostile takeover attempt of Disney in 2004, sources familiar with their relationship tell CNNMoney. The battle for Fox and Sky could be unpredictable and irrational.

Some have questioned whether Disney would be willing to relinquish Sky. The Hollywood Reporter on Wednesday reported that Disney may let Comcast have the company so it can keep the Fox assets.

Greenfield, however, called Sky “critical” to Disney’s growth.

“Disney’s keen interest in Sky supports our view that the only way Comcast can take control of Sky is to acquire all of Fox,” he wrote on his BTIG Research blog Wednesday.

The Comcast-Disney fight, meanwhile, may take some time to play out. According to a source involved in the deliberations, Comcast will probably only move forward with a Fox bid if AT&T is allowed to buy Time Warner, CNN’s parent company.

The Justice Department has sued to block AT&T’s (T) purchase of Time Warner (TWX), and a judge is currently working on a ruling in the case.

— CNNMoney’s Brian Stelter and Dylan Byers contributed to this report.

Published at Fri, 11 May 2018 10:34:43 +0000

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Wall Street rallies and Apple approaches $1 trillion value

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 19, 2017. REUTERS/Brendan McDermid

Wall Street rallies and Apple approaches $1 trillion value

(Reuters) – Wall Street jumped on Thursday, and Apple inched closer to a $1 trillion stock market value, as tepid inflation data eased worries of faster U.S. interest rate hikes this year.

Fueled by a $100 billion buyback plan unveiled last week, Apple rose 1.43 percent to a record high close of $190.04, lifting the S&P 500 more than any other stock. The iPhone maker is about 7 percent away from becoming the first company ever to have a market capitalization of $1 trillion.

The U.S. Labor Department’s consumer price index increased 0.2 percent in April, less than economists’ expectations, as rising costs for gasoline and rental accommodation were tempered by a moderation in healthcare prices.

Core CPI, which excludes food and energy components, edged up 0.1 percent in April, slower than the previous two months, and did little to alter traders’ expectations of a June rate hike. [MMT/]

A higher inflation number could have increased fears of more aggressive interest rate hikes by the U.S. Federal Reserve.

“The CPI came in at a level where it’s not so alarming as far as what the Fed is thinking,” said Mark Kepner, an equity trader at Themis Trading in Chatham, New Jersey. “There’s comfort that the Fed won’t have to move too quickly.”

The U.S. stock market rallied broadly, with all 11 major S&P sectors posting gains.

With investors setting aside concerns about a trade war with China, the S&P 500 has risen 3.55 percent in the past week, its strongest five-session showing since February. The S&P 500 reclaimed its 100-day moving average for the first time since April 19, suggesting to some traders that the market may move higher.

The Dow Jones Industrial Average rallied 0.8 percent to end at 24,739.53 points, while the S&P 500 gained 0.94 percent to 2,723.07, its highest level since mid-March.

The Nasdaq Composite added 0.89 percent to 7,404.98.

CenturyLink gained 7.54 percent after its first-quarter report. That helped the telecoms sector jump 1.9 percent, more than any other sector.

AXA Equitable Holdings, the U.S. division of French insurer AXA, rose 1.7 percent in its market debut. Although its offering raised less than targeted, it was still the biggest U.S. IPO this year.

The top losers on the S&P 500 included Victoria’s Secret owner L Brands, which fell 7.15 percent, and Booking Holdings, formerly called Priceline, which dropped 4.74 percent. Both companies gave disappointing outlooks.

Advancing issues outnumbered declining ones on the NYSE by a 2.57-to-1 ratio; on Nasdaq, a 1.65-to-1 ratio favored advancers.

The S&P 500 posted 37 new 52-week highs and two new lows; the Nasdaq Composite recorded 165 new highs and 36 new lows.

Volume on U.S. exchanges was 6.7 billion shares, compared with the 6.6 billion-share average over the last 20 trading days.

Additional reporting by Sruthi Shankar and Savio D’Souza in Bengaluru; editing by Chizu Nomiyama and Jonathan Oatis

Published at Thu, 10 May 2018 21:38:40 +0000

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Tesla Stock Bouncing Back After Musk Misfire

 

Tesla Stock Bouncing Back After Musk Misfire

By Alan Farley | May 7, 2018 — 11:35 AM EDT

Tesla, Inc. (TSLA) CEO Elon Musk stunned Wall Street analysts during last week’s earnings conference, cutting off questions about the controversial automaker’s capital requirements and customer reservations. His reaction to “boring bonehead” questions triggered a double-digit decline and quick $3 billion loss in market value. Tesla stock has bounced back since that time, but the outburst could undermine longer-term buying interest and investor confidence.

The stock entered a stealth downtrend after topping out near $390 in June 2017 and has been flirting with a 52-week low in recent months, caught between an April 2017 breakout and March 2018 breakdown. This holding pattern is likely to generate a strong trend move as soon as the battle between low Model 3 production levels and high cash burn provides a clearer view of Tesla’s ability to survive and prosper into the new decade. (See also: Is Elon Musk Making Things Worse for Tesla?)

TSLA Long-Term Chart (2010 – 2018)

The company came public at $19.00 in June 2010 and posted an all-time low at $14.98 one month later. The subsequent uptick mounted the IPO opening print in November, ahead of a buying spree that stalled at $36.42 in December. Multiple breakout attempts failed into the second quarter of 2013, when the stock took off in a momentum-fueled advance that stalled in the $260s in February 2014.

A pullback into May established support in the $180s, ahead of a rally wave that exceeded the prior high by 26 points in September. It sold off from that level, triggering a failed breakout while reinforcing a broad trading range that broke to the downside in January 2016, dropping the stock to a two-year low at $141.05. It remounted broken range support two months later, trapping short sellers in a squeeze that reached range resistance in April.

The stock posted a higher low in the $180s after the presidential election and took off in a positive feedback loop that cleared major resistance in April 2017. Long-term trend followers then entered aggressive positions, but the uptick ended just two month later near $387, generating a September test at that level, followed by a downtrend that broke a 10-month double top and the 200-day exponential moving average (EMA) in March 2018.

TSLA Short-Term Chart (2016 – 2018)

A decline into April 2018 undercut the 2017 breakout level by 40 points, but the stock bounced strongly, once again shaking out overeager short sellers. It is now trading in no-man’s land, stuck between triangle resistance above $310 and breakout support stretched between $270 and $290. Neither long nor short positions make sense within this battleground, which could persist until Model 3 production levels take off or the company runs out of cash.

On-balance volume (OBV) topped out in 2014 and entered a broad distribution wave that finally ended in the first quarter of 2016. Buying pressure into 2017 reached the prior high, ahead of a breakout that coincided with bullish price action. The indicator carved a topping pattern into 2018 and broke support in April, triggering a bearish divergence that raises the odds of price following suit in the coming months.

Broken double top support roughly aligns with the .382 Fibonacci retracement of the uptrend into 2017 and the round number $300, while the 200-day EMA has now turned lower at $315. The price band between $300 and $320 now marks major resistance that will take considerable buying power to overcome, with a breakout setting off bullish signals that could generate an advance above $400. Conversely, a decline through the 2015 high at $287 would sound a warning bell that could presage downside through $200. (For more, see: Tesla Shorts May Soon Lose Their Attractiveness: S3 Partners.)

The Bottom Line

Tesla broke a triangle top in March 2018, confirming a downtrend that started in May 2017. However, the stock is still holding the last level of major support and could recover if the persistently negative news flow dissipates. (For additional reading, check out: After Call, Tesla Gets Most Bullish Forecast Yet.)

Published at Mon, 07 May 2018 15:35:00 +0000

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$70 oil will create headaches for these companies

 

$70 oil will create headaches for these companies

  @MattEganCNN

A 50% spike in the price of crude oil over the past year has set off a celebration for Big Oil. But it’s sending shudders through other major businesses.

Fears that President Trump will kill the Iran nuclear agreement lifted crude above $70 a barrel late Sunday for the first time since late 2014. Wall Street is already banking on fatter profits for the likes of ExxonMobil(XOM), Chevron(CVX) and shale giant Continental Resources(CLR).

Yet the return of higher oil prices — and $3-a-gallon gas — will also be greeted with eye rolls, not just by American drivers but by CEOs of big companies like Hershey(HSY) and Sherwin-Williams(SHW). More expensive oil will eat into their bottom line.

That’s especially true for certain chemicals, paper packaging, retail, transportation and packaged food companies.

Chemicals makers are particularly vulnerable because they use crude oil as a major ingredient. Polyone(POL), Univar(UNVR) and KMG Chemicals have at least half of their production costs in oil and products derived from petroleum, according to Goldman Sachs.

Eastman Chemical(EMN), Huntsman(HUN) and paint giant Sherwin-Williams spend nearly as much on oil.

Raw materials costs are “all heading in the wrong direction,” Sherwin-Williams chief financial officer Allen Mistysyn recently told analysts.

Oil is also a major expense for Goodyear Tire & Rubber(GT), as well as auto parts companies such as AutoZone(AZO), Advance Auto Parts(AAP) and Adient(ADNT).

higher oil prices companies
Goodyear, General Mills and Sherwin-Williams are among the companies that could feel the pinch of higher oil prices.

Consumer products companies are likewise nervously watching the rising price of raw materials, especially crude oil.

For instance, Goldman Sachs found that oil and oil products make up at least 18% of expenses for Hershey, Estee Lauder(EL), Clorox(CLX), Mondelez(MDLZ) and Church & Dwight. These companies spend on oil to manufacture, package and ship their products to customers.

Other big oil spenders in consumer goods include Post-It maker 3M(MMM), Haagen-Dazs and Cheerios maker General Mills(GIS), and JM Smucker(SJM).

CEOs have recently warned that they are already grappling with the higher cost of raw materials, especially steel and aluminum, which have become more expensive since President Trump imposed tariffs.

“Obviously with the oil price at $70, that just puts further pressure,” Whirlpool(WHR) CEO Marc Bitzer said during a recent call with analysts.

Higher oil prices can be a double whammy for consumer companies. Not only are their expenses higher, but Americans will have less disposable money to spend at the stores if they’re dealing with pain at the gas pump.

Airlines are also bracing for higher fuel costs. American Airlines(AAL) CEO Douglas Parker noted on April 26 that oil prices have spiked 60% from last summer. “That’s a big increase over a short period of time,” Parker warned, adding that it will have a “material” impact on all airlines.

The good news is that many major companies, especially airlines, use hedging strategies to lock in energy prices when they’re low. That means the pain from higher prices may not be immediate.

Other companies should be able to pass along higher energy costs to their customers, especially because the US and world economies are healthy. The US unemployment rate fell below 4% in April for the first time since 2000.

The surge in oil prices has been driven by a range of factors, including robust demand and production cuts by Russia and OPEC countries.

More recently, the oil market has been lifted by geopolitical factors such as plunging output in Venezuela and, now, expectations that Trump will re-impose sanctions on Iran. Trump faces a May 12 deadline to decide the fate of the Iran nuclear deal.

Tamas Varga, lead analyst at brokerage firm PVM Oil Associates, predicted “panic buying” that will briefly lift benchmark US oil prices to $75 a barrel if Trump snaps sanctions back on Iran.

The big question will be whether Iran’s major customers — China, India, South Korea and the European Union — comply with new sanctions. There has been considerable pushback, especially in Europe, to Trump’s bid to rip up the Iran nuclear deal.

On the other hand, crude oil prices could plunge if Trump surprises the market and re-certifies the Iran deal.

In the longer term, the surge in oil prices could be contained by two major factors.

First, oil traders will be watching closely to see how fast shale drillers in the United States respond to $70 oil by ramping up more production. A healthy dose of new US output could cool the market off.

And at a certain point, high prices are likely to cure themselves. Varga said “demand destruction” will eventually “limit any upside.”

Published at Mon, 07 May 2018 17:48:15 +0000

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Enjoying The Ride?

Enjoying The Ride?

May 4, 2018

I promised you volatility and the market delivered – in spades* I may add. And that’s all I’m seeing right now, random dips and rips but at the same time an equities market that refuses to roll over and die. Until now that is, as a drop below ES 2580 would force longs to start covering all the way into ES 2400. What seems to be keeping things aloft thus far is a  shallow volume hole right below yesterday’s spike low near ES 2590.

Which is a classic make or break pattern for the bulls as a dip through it would invite continuation of a developing series of lower highs and lower lows on the daily panel.

Wave wankers would call it a series of 1s and 2s while more sane contemporaries simply look at it as a support cluster, which once broken would be difficult to regain in the near term future.

Now I’m not going to sugar coat it for you guys. The bulls are having a real problem here. See that dip below the -25 mark on the ROC panel below the VIX? That represented a low in realized volatility that was expected to correlate with a new low in IV and of course a new high in the SPX.

Which it did but on both ends the recovery had been too shallow and as that meant that the bears started to smell blood, suspecting that another take down attempt may be successful. Which it has  of course.

And emotionally the bulls have been taking quite a bit of a beating. It’s mostly psychological of course as price has stubbornly remained > the ES 2600 mark. But keep in mind that most market participants at this point consider 50 handles down on the SPX to be the epitome of a raging bear market.

On the other hand ZeroEdge and its ilk have cried wolf so often since 2008 that nobody really believes in a real bear market anymore. So it’s a bit of a mixed bag of cognitive biases going on here. Low pain threshold based on recency bias paired with general complacency.

I’m very tempted to be long here and what irks me the most right now is the UVOL:DVOL signature during yesterday’s late session punch higher.

The Zero on the other hand produced a very nice looking bullish divergence and I hope some of you guys caught that one. Just glancing over the comment section over the past two days it feels like I’m on SOH or something.

It was fine to be short at the launch of yesterday’s session. But I have no understanding how one could miss two consecutive stacked spike lows accompanied by a Zero signal like the one shown above in the right panel. Don’t trade the market you want to see – trade the one in front of you. Did I stutter?

It seems like the current Dollar rally may be heading into it’s last phase or may already be over. Having entered near 89.4 it’s been an amazing run and at my count the best campaign of this year thus far with already 9R plus in profits.

If only all campaigns would run so smoothly, but I guess then it would quickly turn out to be boring. Okay, we actually have a ton of entries today, so let’s get to it:

I really don’t want to take out a long position here based on what I presented above but I cannot pass up a spike low like that until (and that is important) major bullish support has been breached.

Until that happens I will continue to favor the bullish scenario, which puts into a long here with as top below ES 2606. I give this one 50:50 odds at best, so my position sizing is only 0.5%.

I’m also grabbing a long in copper with a stop below 3.043. Beautiful formation on the short term panel and although it’s a whipsaw market from a daily perspective a run into 3.2 is a possibility.

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It’s not too late – learn how to consistently bank coin without news, drama, and all the misinformation. If you are interested in becoming a subscriber then don’t waste time and sign up here. The Zero indicator service also offers access to all Gold posts, so you actually get double the bang for your buck.

Please login or subscribe here to see the remainder of this post.

* Thanks to Darrel for pointing out that it’s ‘in spades’ as opposed to ‘in spates’.

Published at Fri, 04 May 2018 12:15:53 +0000

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Buffett’s Berkshire Hathaway bought 75 million more Apple shares in first quarter: CNBC

Buffett’s Berkshire Hathaway bought 75 million more Apple shares in first quarter: CNBC

Buffett’s Apple commitment over the past two years has surprised many, given his historical aversion to companies associated with the technology sector.

Berkshire’s initial investment in Apple was small, suggesting it was made by one of Buffett’s investment deputies, but with the latest stake purchase, it has grown to a solid 240.3 million shares worth $42.5 billion.

“If you look at Apple, I think it earns almost twice as much as the second most profitable company in the United States,” CNBC quoted Buffett as saying.

The billionaire investor recently sold out of an unsuccessful investment in International Business Machines Corp, at the same time he was buying Apple.

Berkshire said in February Berkshire’s Apple stake grew by about 23 percent since the end of September to roughly 165.3 million shares. [nL2N1Q422I]

Buffett has praised Apple Chief Executive Tim Cook and suggested he views Apple more as a consumer company, despite its Silicon Valley pedigree.

However, there may also be another reason for the investment: Berkshire’s cash position.

Berkshire has gone more than two years since a major acquisition, and Buffett said in his annual letter that he wants one or more “huge” non-insurance acquisitions to help him reduce Berkshire’s $116 billion in cash and equivalents.

Buying Apple accomplishes that, even though Buffett would rather buy whole companies than their stocks.

Berkshire typically discloses its largest common stock holdings and percentage stakes in its quarterly and annual reports. The report for the first quarter is scheduled for release on Saturday morning, just before Berkshire’s annual shareholder meeting in its Omaha, Nebraska, hometown.

Apple reported $61.1 billion in revenue for the March quarter, up from $52.9 billion last year, and promised $100 billion in additional stock buyback.

Berkshire Hathaway and Apple were not available for comment outside regular business hours.

Up to Thursday’s close, Apple stock had risen more than 5 percent since Berkshire disclosed on Feb. 14 that it had raised its stake in the Cupertino, California-based company.

Reporting by Philip George in Bengaluru and Jonathan Stempel in New York; Editing by Amrutha Gayathri

Published at Fri, 04 May 2018 04:08:04 +0000

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World stocks set for biggest weekly loss in a month, dollar climbs before U.S. payrolls

World stocks set for biggest weekly loss in a month, dollar climbs before U.S. payrolls

LONDON (Reuters) – World stocks were set for their biggest weekly loss since the middle of March on Friday, while the dollar hovered near highs hit on its recent rally as investors awaited jobs data from the United States.

The MSCI All-Country World Index .MIWD00000PUS, a gauge of stocks across 47 countries, was up less than 0.1 percent on the day. It was set for a 1.2 percent loss this week, its highest since the week ended March 23.

Gains in Europe outweighed earlier losses in Asia, where Indonesian stocks .JKSE sank as Japan was closed for a holiday. Broad-based gains in European banking stocks .SX7P helped lift the pan-European STOXX index 0.3 percent.

Meanwhile, the dollar rose against a basket of currencies .DXY, hugging recent highs posted on the back of a sharp rally that has fully reversed its 2018 losses. The currency was set for its third week of gains.

Analysts at ING reckon the dollar’s recent reversal is likely to be short-lived.

“When dissecting the anatomy of this dollar correction, we feel it exhibits all the hallmarks of a short squeeze. Positioning had clearly been stretched,” they wrote in a research note.

While short dollar bets have receded somewhat, they are still holding near a record $28 billion registered in late April. Bearish dollar bets have ballooned rapidly over the last year on expectations that Europe and the UK will start normalizing monetary policy as growth momentum spreads.

Investors’ focus was now on U.S. payrolls data, due at 1230 GMT, with the April report likely to underscore labor market strength.

Non-farm payrolls were likely to have increased by about 192,000 last month, according to a Reuters survey of economists, after rising only 103,000 in March.

But it will be the wages figure that analysts will focus on.

“A further pick-up in the pace of wage gains could be the ‘smoking gun’ for the Fed (Federal Reserve) to express any shift away from ‘roughly balanced’ risks to inflation,” said Mizuho analyst Vishnu Varathan in a note.

Besides the jobs report, investors were also keeping a close watch on U.S.-China trade talks, though analysts said they had little confidence that the U.S. delegation in Beijing, led by Treasury Secretary Steven Mnuchin, will achieve any breakthrough on the tariff standoff between the world’s two biggest economies.

Chinese shares stumbled, with the blue-chip index .CSI300 off 0.4 percent and Shanghai’s SSE Composite .SSEC down 0.3 percent.

MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS fell 0.5 percent, and looked set for a third straight weekly loss.

TRANSATLANTIC SPREAD NEAR THREE-DECADE HIGH

The difference between German and U.S. government bond yields was close to its highest in nearly three decades.

Both the short-dated US2DE210=RR and long-dated US10DE10=RR “transatlantic spread” between U.S. Treasuries and German Bunds, at 307 and 241 basis points respectively, were just a shade away from their highest levels since early 1989.

Inflation in the euro zone, at 1.2 percent, fell short of expectations in the first quarter of the year, according to data released on Thursday. After stripping out the effects of energy, processed food, alcohol and tobacco, it was even lower, at just 0.7 percent.

U.S. consumer prices, on the other hand, accelerated in the year to March towards the Federal Reserve’s 2 percent target.

This means that the Fed could go ahead with rate hikes this year, while prospects for a European Central Bank rate hike keep getting pushed further down the line.

In commodities, U.S. crude oil CLc1 dipped 0.2 percent to $68.29 a barrel, while Brent crude LCOc1 fell 0.3 percent to $73.38.

Spot gold fell 0.1 percent XAU= to $1309.61 per ounce.

Reporting by Ritvik Carvalho; Editing by Kevin Liffey

Published at Fri, 04 May 2018 09:10:45 +0000

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Thumbs Up Monday

Thumbs Up Monday

April 30, 2018

My ongoing campaigns managed to survive the weekend intact – and as they are all longs – seem ready to bust higher. Otherwise I don’t see much of interest today. A scan across my charting universe yields either fully trending or stagnating symbols, not much in between. Thus a great day sit and watch whilst waiting further instructions.

A very fortuitous entry has now bestowed me (and hopefully you as well) with about 1.8R in MFE. However I decided to trail very conservatively as the pace of the advance is decreasing, thus opening the door for a little shake out back down to the 100-hour SMA.

Not much else to say here that I haven’t already reported last week. What the bulls ought to be doing here is to take advantage of temporary weakness and thus squeeze as hard as possible to trigger as much short covering as possible.

Don’t get me wrong a low volatility advance has merit and can lead to bears being slow cooked in their own juices. But as with everything in life context is everything and in the current situation the bulls frankly do not have that luxury. They have appeared very weak over the past month and a show of strength is long overdue.

The ZB campaign is still looking solid but has not yet kicked into break-out mode. Of course it’s still early days and a lot could happen here. For one we have not seen a retest of the 100-hour SMA, which happens quite a bit ahead of a punch higher. I think I have allowed for enough room to sit that one out, so let’s see what happens here over the coming days.

The Dollar continues to squeeze higher and at least thus far what I’m seeing in the major crosses (i.e. EUR/GBP/JPY/AUD/CAD) looks supportive of continuation. I have not touched last week’s trail as the 100-hour SMA is now advancing > our trailing stop.

As I mentioned previously – I’ve got big plans for this one and my target range is near the 92.75 mark. The recent drop in the EUR/USD has been helping my exchange rate of course but it’s still at 1.21 and thus miles away from the 1.05 I enjoyed just before Trump was sworn in.

That’s not a swat at our president and I do understand why he would want a weaker Dollar in context of his ambitions of restoring American manufacturing to its former glory. But in general I am categorically opposed to weakening one’s currency in exchange for more competitive exports.

With the U.S. Dollar already being a mere shadow of it’s former self it is now increasingly being challenged as the world’s reserve currency. Just recently China launched a new RMB based crude futures contract, which could quickly establish itself as an Asian benchmark.

Having achieved relative energy independence over the past few years the U.S. clearly cares less about the middle East these days and the dynamics of the Petro Dollar are now changing. But at the same time its monetary policies very much are dependent on enjoying reserve currency status and thus a consistently falling Dollar will not be as easily defendable as it perhaps used to be until about a decade ago.

In other words, be careful what you wish for. Because you may just get it.

Okay I managed to find one promising looking entry but will have to keep it for my intrepid subs. But it’s a good one and hopefully will work out as well as the last time we took it. If you’re not a sub then now is a good time to join the team!

Published at Mon, 30 Apr 2018 10:46:24 +0000

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Guggenheim Partners’ Minerd: ‘This is the rally to sell’

Guggenheim investment chief: Expect a recession in the next two years
Guggenheim investment chief: Expect a recession in the next two years

Guggenheim Partners’ Minerd: ‘This is the rally to sell’

Scott Minerd, managing partner at the global investment and advisory firm Guggenheim Partners, has a message for investors.

“This is the rally to sell, not to buy into,” Minerd told CNN correspondent Paula Newton on CNNMoney’s “Markets Now” on Wednesday.

Minerd said a recession could hit in about two years. He cited two historical patterns: A narrowing of what’s called the yield curve, the gap between short and long-term Treasury rates, and a move toward what economists consider full employment.

But there are still opportunities to gain in the market, Minerd said.

“That penultimate year before a recession often has the best return for equities, on average in the area of 15 or 20%,” he said.

The recent surge in earnings, he added, and relatively low interest rates mean that “we probably have some more room to run in stocks.”

“I think for people that are in the market, they should stay in,” Minerd said. But “you’re kind of getting late in the game,” to start buying, he said.

Last year’s tax cuts and more government spending could stimulate the economy in the short term, but all that deficit-financed help from Washington could also speed the demise of the recovery.

For years, the economy has recovered slowly but steadily from the Great Recession, which ended in 2009. At 106 months old through April, the recovery is tied for the second-longest economic expansion in American history.

But it won’t set any records for speed. It took far longer than many hoped for unemployment to get back to healthy levels, and wages have only recently begun to accelerate meaningfully.

“Markets Now” streams live from the New York Stock Exchange every Wednesday at 12:45 p.m. ET. On Wednesday, Newton filled in for the program’s regular hosts, CNNMoney editor-at-large Richard Quest and CNNMoney anchor Maggie Lake.

Each week, the 15-minute show features interviews with markets experts who share insightful commentary on the news. You can watch “Markets Now” at CNNMoney.com/MarketsNow from your desk or on your phone or tablet.

Last week, hedge fund manager Kyle Bass told Quest that he believes demand for oil is about to go up.

Can’t watch at 12:45 p.m. ET? Don’t worry. Interview highlights will be available online and through the Markets Now newsletter, delivered to your inbox every afternoon.

— CNN’s Matt Egan contributed to this report.

Published at Wed, 02 May 2018 18:22:50 +0000

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Apple surprises with solid iPhone sales, announces $100 billion buyback

Apple surprises with solid iPhone sales, announces $100 billion buyback

(Reuters) – Apple Inc on Tuesday reported resilient iPhone sales in the face of waning global demand and promised $100 billion in additional stock buybacks, reassuring investors that its decade-old smartphone invention had life in it yet.

Apple’s quarterly results topped Wall Street forecasts, which dropped ahead of the report on growing concern over the iPhone. The Cupertino, California-based company also was more optimistic about the current quarter than most financial analysts, driving shares up 3.6 percent to $175.25 after hours.

Suppliers around the globe had warned of smartphone weakness, playing into fears that the company known for popularizing personal computers, tablets and smartphones had become too reliant on the iPhone.

Sales of 52.2 million iPhones against a Wall Street target of 52.3 million was a comfort and up from 50.7 million last year, according to data from Thomson Reuters I/B/E/S.

Apple bought $23.5 billion of stock in the March quarter, and said it planned to hike its dividend 16 percent, compared with a 10.5 percent increase last year. Analysts believe the heavy emphasis on buybacks will bolster share prices, but some investors wished Apple had found different uses for the cash.

“I’d hoped for more on the dividend side or maybe a strategic investment,” said Hal Eddins, chief economist for Apple shareholder Capital Investment Counsel. “I assume Apple can’t find a strategic investment at the current prices that will move the needle for them. The $100 billion buyback is good for right now but it’s not exactly looking to the future.”

The cash Apple earmarked for stock buybacks is about twice the $50 billion market capitalization of electric car maker Tesla Inc.

Apple posted revenue for its March quarter of $61.1 billion, up from $52.9 billion last year. Wall Street expected $60.8 billion, according to Thomson Reuters I/B/E/S.

Average selling prices for iPhones were $728, compared with Wall Street expectations of $742. The figure is up more than 10 percent from $655 a year ago, suggesting Apple’s iPhone X, which starts at $999, has helped boost prices.

Analysts had feared the high price was muting demand for the iPhone X, but Apple Chief Executive Tim Cook said it was the most popular iPhone model every week in the March quarter.

“This is the first cycle that we’ve ever had where the top of the line iPhone model has also been the most popular,” Cook said during the company’s earnings call.

“It’s one of those things like when a team wins the Super Bowl, maybe you want them to win by a few more points. But it’s a Super Bowl winner and that’s how we feel about it.”

The iPhone X has shaped up to be “a good, not a great product. There was a time prior to its introduction that investors expected it to be a great product,” said Thomas Forte, an analyst with D.A. Davidson Companies.

“Now that we know it is a good product, as investors have lowered expectations, that is enough, in my view, for shares to go higher from current levels.”

Positive iPhone news boosted shares of chip suppliers.

Skyworks Solutions Inc rose 2.9 percent, Broadcom Inc was up 2 percent, while Cirrus Logic gained 4.3 percent.

Apple also predicted revenue of $51.5 billion to $53.5 billion in the June quarter, ahead of the $51.6 billion Wall Street expected as of Monday evening, and the share repurchases in the March quarter drove Apple’s cash net of debt down slightly to $145 billion.

“We are returning the cash to investors as we have promised,” Chief Financial Officer Luca Maestri told Reuters in an interview.

Profits were $2.73 per share versus expectations of $2.68 per share, as of Monday, and up from $2.10 a year ago.

Apple’s services business, which includes Apple Music, the App Store and iCloud, posted $9.1 billion in revenue compared with expectations of $8.3 billion. Heading into earnings, investors were hopeful that growth in that segment could help offset the cooling global smartphone market.

Julie Ask, an analyst with Forrester, said Apple’s services segment results were positive but warned that Apple needed to continue to boost subscriptions on its platforms, which reached 270 million users in the March quarter and includes people who subscribe to third-party apps on the iPhone as well as Apple’s own services like iCloud.

“Apps are carrying most (services revenue) right now, but Apple needs to get to a place where it’s mostly subscriptions and monthly fees and not just one-off downloads,” Ask said.

Apple traditionally updates its share buyback and dividend program each spring, and the $100 billion it added this year compares with an increase of $50 billion last year.

In February, Apple said it planned to draw down its excess cash, although Cook had downplayed the possibility of a special dividend.

But investors have had concerns around Apple because of brewing trade tensions with China.

Greater China sales rose 21 percent from a year earlier, Apple’s best growth rate there in 10 quarters, to $13.0 billion. While there has not yet been a tariff on devices such as Apple’s iPhone, Cook traveled last week to Washington to meet with U.S. President Donald Trump at the White House to discuss trade matters.

“China only wins if the U.S. wins and the U.S. only wins if China wins,” Cook said on the call, when asked about a possible trade war. “I’m a big believer that the two countries together can both win and grow the pie, not just allocate it differently,” he said.

Apple has been emphasizing its contributions to the U.S. economy in recent months, outlining a $30 billion U.S. spending plan and highlighting the tens of billions of dollars it spends each year with U.S.-based suppliers.

In recent months, Apple has been emphasizing the size of its overall user base, which includes used iPhones, rather than focusing strictly on new device sales, a sign of the increasing importance of making money off users without selling them new hardware.

Reporting by Stephen Nellis in San Francisco; Editing by Peter Henderson, Lisa Shumaker and Peter Cooney

Published at Wed, 02 May 2018 02:35:12 +0000

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Why Exxon isn’t enjoying America’s big oil party

 

Trump attacks OPEC for rising oil prices
Trump attacks OPEC for rising oil prices

Why Exxon isn’t enjoying America’s big oil party

  @MattEganCNN

ExxonMobil missed the invitation to America’s big oil party.

Booming shale oil production could soon make the United States king of the oil world. Yet Exxon, the nation’s most powerful oil company, is still in decline in large part because of its late arrival to the shale game.

Exxon(XOM) delivered a fresh reminder of its difficult position on Friday, reporting oil and natural gas production fell by 6% during the first quarter. That’s despite the recent surge in crude oil prices.

It’s part of an alarming trend: Exxon’s output is down seven of the past eight quarters.

“They are trying to catch up, but they’re late to the party,” said Brian Youngberg, senior energy analyst at Edward Jones.

Chevron(CVX), Exxon’s smaller US rival, has been able to move much more quickly to capitalize on the shale boom and higher prices. Chevron’s global production jumped 6% last quarter, helping to fuel a 33% profit increase that exceeded expectations.

Not surprisingly, Chevron’s fastest growth occurred in the shale oil hotbed of the Permian Basin, where output spiked by 65%.

Exxon is struggling to keep up — and Wall Street is losing patience. The oil giant said shale production increased by a more modest 18% at its Permian and Bakken projects.

Even though the US is on track to pump a record amount of oil in 2018, Exxon’s domestic oil production inched up just 2% during the first quarter. Overall oil output failed to grow for the seventh quarter of the past eight. Exxon pumps less oil than it did a decade ago.

“Production was on the low side. That’s obviously not a good thing. There is no escaping that,” said Pavel Molchanov, an energy analyst at Raymond James.

Exxon’s stock fell 3% on Friday, leaving it down 4% over the past year. Chevron is up 20% over that span, while ConocoPhillips(COP) has soared 38%.

Darren Woods, Exxon’s CEO, attempted to reassure investors by saying that the company is positioned “well for future growth” thanks to new discoveries and acquisitions. Exxon also noted that it ramped up capital spending by 17%.

One bright spot: Exxon generated the highest amount of cash flow from operations and asset sales since 2014. That’s despite Exxon being hurt by an earthquake in Papua New Guinea that halted production.

Yet Exxon is still recovering from missteps during the leadership of former CEO Rex Tillerson, who left Exxon last year to become US Secretary of State. Under Tillerson, Exxon was slow to recognize the game-changing potential of shale oil. Huge technology advances unlocked vast amounts of oil that had been trapped beneath the earth.

“They viewed shale as not important,” said Youngberg.

Instead of plowing money into what became lucrative shale plays in Texas and North Dakota, Exxon stuck to the Big Oil script by investing heavily in expensive projects, including ones in Russia, Alaska and the Gulf of Mexico.

However, some of these big bets failed to pay off. Most notably, Exxon’s dream of teaming up with Russian oil company Rosneft was scuttled by US sanctions on Moscow. In March, Exxon pulled out of the Rosneft joint venture, undoing one of Tillerson’s crowning achievements.

Shortly after Tillerson left the company, Exxon made a shale splash in January 2017 by acquiring assets in the Permian Basin for $5.6 billion.

The deal doubled Exxon’s position in the Permian, the fastest growing shale field in the United States. It was also Exxon’s biggest purchase since buying natural gas producer XTO Energy for $41 billion in 2010, just before natural gas prices crashed.

“That was one of the worst acquisitions in the history of the energy business. It was exquisitely poorly timed,” said Molchanov. “Rex Tillerson deserves much of the blame for it. It was essentially $40 billion down the drain.”

Rather than invest in shale, prior to 2015 Exxon spent heavily on share buybacks that were ill-timed. Exxon’s stock price has since declinedand the company halted buybacks during the oil-price crash three years ago.

“They used to buy a ridiculous amount of shares — at the wrong time,” Youngberg said.

Exxon upset Wall Street on Friday by saying it won’t restart its buyback program just yet. Exxon did boost its dividend more than expected though.

Given the ground Exxon has to catch-up to its rivals, Youngberg said holding off on buybacks probably makes sense.

“It reflects their strategy of attempting to jump-start growth,” said Youngberg.

Published at Fri, 27 Apr 2018 16:16:08 +0000

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Microsoft Stock Breaks Out Toward Top of Channel

 

Microsoft Stock Breaks Out Toward Top of Channel

By Justin Kuepper | April 28, 2018 — 10:06 AM EDT

Microsoft Corporation (MSFT) shares initially moved lower in the aftermath of its third quarter financial results, but they recovered on Friday following new guidance and analyst upgrades. Revenue rose 15.6% to $26.82 billion – beating consensus estimates by $1.05 billion – while earnings per share of 95 cents beat consensus estimates by 10 cents per share. The strongest growth came from server and cloud services, which grew 20%.

On its conference call, the company provided fourth quarter revenue guidance of $28.8 billion to $29.5 billion, which was higher than the $28.08 billion consensus estimate. JPMorgan analysts upgraded the stock from Neutral to Overweight and increased their price target to $110 per share, which represents a significant premium to the current market price. Additional analysts could weigh in on the results next week and provide potential catalysts for traders. (For more, see: Microsoft Jumps After Earnings Beat.)

Technical chart showing the performance of Microsoft Corporation (MSFT) stock

From a technical standpoint, Microsoft stock rebounded from the 50-day moving average at $93.06 to break out from R1 resistance at $96.65 and prior highs, but it remains within its price channel dating back to December of last year. The relative strength index (RSI) appears neutral with a reading of 56.82, but the moving average convergence divergence (MACD) continues to trend higher past the zero line, suggesting potential for a further rebound ahead.

Traders should watch for a breakout from the upper end of its price channel at around $100.00 to R2 resistance at $102.02 or a breakdown to retest support at the 50-day moving average or pivot point at $91.86. Despite the positive financial results, traders should tread carefully moving into next week given that Friday’s black candlestick shows a close below the highs of the day. That said, the intermediate trend remains bullish. (For additional reading, check out: Microsoft: 7 Secrets You Didn’t Know.)

Chart courtesy of StockCharts.com. The author holds no position in the stock(s) mentioned except through passively managed index funds.

Published at Sat, 28 Apr 2018 14:06:00 +0000

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