Author Archive for InvestMacro – Page 35

21 Nov

Colleges face gambling addiction among students as sports betting spreads

By Jason W. Osborne, Miami University 

Three out of four college students have gambled in the past year, whether legally or illegally, according to the National Council on Problem Gambling.

An estimated 2% to 3% of U.S. adults have a gambling problem. The portion of college students with a problem, however, is potentially twice that number – up to 6%.

As an educational psychologist who follows gambling in America, I foresee the potential for gambling on campus to become an even bigger problem. Sports betting continues to expand, including on college campuses, since a 2018 Supreme Court ruling allowing states to make it legal.

As a faculty fellow at an institute that promotes responsible gaming, I know that colleges can take steps to curtail problem gambling among students. It is all the more urgent given that adolescents in general, including college students, are often uniquely susceptible to gambling problems, both because of their exposure to video games – which often have hallmarks of gambling behavior – and the stress and anxiety of college life, which can lead to using gambling as a coping strategy.

The spread of legal sports betting

As of November 2023, sports betting is legal in some form in 38 states and Washington, D.C. Further, 26 states allow sports betting online. Bills have been introduced – and some recently passed – in more states. These states include Vermont, Missouri and North Carolina. Thanks to technology, sports betting is now accessible beyond casinos. Anyone can access it online and on their smartphone.

More than US$268 billion has been gambled legally on sports betting between June 2018 and November 2023. Revenue in all U.S. gaming sectors has increased significantly, with sports betting growing the fastest, at an estimated 75% annually. It has generated about $3.9 billion in tax revenue to date.

Sports betting is also becoming more accessible on college campuses. A New York Times investigation found that sports betting companies and universities have essentially “Caesarized” college life. That is to say, they’ve made campuses resemble elements of the world famous casinos by introducing online gambling to students.

College betting scandals shine light on campus wagering.

These profits have driven increased advertising. Some estimate that total advertising through all media channels could approach $3 billion annually. This includes social media platforms like TikTok, where young adults are more likely to see ads for gambling. A study in the United Kingdom found that 72% of 18- to 24-year-olds have seen gambling ads through social media.

While advertisers reportedly focus on young adults of legal age, research suggests that children under 18 are also being exposed to advertising related to gambling. The intensity of advertising activity on social media has raised concerns and brought scrutiny. Earlier this year, for example, prosecutors in the Massachusetts attorney general’s office expressed concern that sports betting and other gambling might spread quickly through college campuses as a result of advertising.

Why college students are at greater risk of gambling addiction

Gambling addiction affects people from all backgrounds and across all ages, but it is an even bigger threat to college students. Adolescents of college age are uniquely likely to engage in impulsive or risky behaviors because of a variety of developmental factors, leaving them more susceptible to take bigger risks and experience adverse consequences.

It’s no secret that drinking alcohol is prevalent on college campuses, and this can increase the likelihood of other risk-taking behaviors such as gambling. Like other addictive behaviors, gambling can stimulate the reward centers of the brain, which makes it more difficult to stop even if someone is building up losses.

What colleges and universities can do to help

If you’re worried a student in your life might have a gambling problem, the Mayo Clinic describes signs to look for. These include restlessness or irritability when attempting to stop or reduce gambling, gambling more when feeling distressed, and lying to hide gambling or financial losses from it. Gamblers Anonymous provides a 20-question, self-diagnostic questionnaire to help people identify problems or compulsive gambling.

For more resources, organizations like the Gateway Foundation offer information and support to help someone with a gambling problem. Immediate help is available at the national problem gambling helpline, 1-800-GAMBLER. The National Council on Problem Gaming has lists of resources within each state that can provide more local support and assistance.

At the Miami University Institute for Responsible Gaming, Lottery and Sport, my colleagues and I are working to ensure that the recent dramatic expansion of legalized gaming is matched by effective guidance for policymakers and leaders within higher education. Many institutions, like the University of Oregon, have begun to acknowledge that widespread legalized sports betting and gambling can affect their students. A comprehensive and coordinated approach is required to protect them from harm.

There are resources available to help institutions, such as the “get set before you bet” initiative adopted by the University of Colorado, Boulder and others. This gives students practical tips to follow if they are going to gamble, such as setting time and money limits before they start.

Colleges and universities could do even more. According to the International Center for Responsible Gaming, institutions can address gambling risks to students by:

  • Ensuring there are clear policies on gambling and making sure they align with alcohol policies. United Educators provides examples of how institutions can create effective policies and support student wellness, like Arizona State’s policy. Theirs prohibits legal and illegal gambling at any event related to ASU and reinforces that alcohol possession, consumption or inebriation is illegal for all students under 21.
  • Promoting awareness of addiction as a mental health disorder and making resources for getting help available to students.
  • Ensuring those who work in campus counseling and health services are familiar with gambling addiction and prepared to support students struggling with addiction or problem behavior. Providers should also be aware that multiple addictions can be present, enhancing the challenges to management and recovery.
  • Surveying student attitudes toward gambling to track changes in attitudes, behaviors and norms.

With various sports championships, including in baseball, football and college basketball, taking place throughout the academic year, there’s no shortage of occasions for universities to check in with students about sports betting on campus. Gambling addiction is treatable, but preventing it from the start is the best solution.The Conversation

About the Author:

Jason W. Osborne, Professor of Statistics, Miami University

This article is republished from The Conversation under a Creative Commons license. Read the original article.

 

Economics & Fundamentals Opinions
21 Nov

The holiday shopping season provides support for US stock indices. Asian indices are growing amid expectations of a positive NVDA report

By JustMarkets

US stock indices continued their rally yesterday. At the close of the stock exchange, the Dow Jones Index (US30) rose by 0.58%, and the S&P 500 Index (US500) gained  0.74%. The NASDAQ Technology Index (US100) closed positive by 1.13% on Monday. At the same time, the S&P 500 Index (US500) and Dow Jones (US30) hit 3-month highs, and the NASDAQ Index (US100) reached a year high. Rising technology stocks led the overall market higher, with Microsoft (MSFT) and Nvidia (NVDA) rising to record highs amid optimism about artificial intelligence.

Favorable outlooks for the holiday shopping season are also lending support to stocks. According to a Deloitte survey, consumers plan to spend an average of $567 during Black Friday and Cyber Monday, up 13% from last year. Additionally, the National Retail Federation predicts that 182 million people will shop between Thanksgiving and Cyber Monday, the highest number since 2017.

Bearish factors include hawkish comments from FRB President Richmond Barkin, who said he favors raising the interest rate for longer due to unsustainable inflation. US leading indicators for October declined by 0.8% m/m, slightly weaker than expectations of 0.7% m/m and the largest decline in 6 months.

Microsoft Corporation (MSFT) shares hit record highs yesterday after recently fired OpenAI CEO Sam Altman joined the tech giant.

Equity markets in Europe traded flat yesterday. Germany’s DAX (DE40) decreased by 0.11%, France’s CAC 40 (FR40) added 0.18% on Monday, Spain’s IBEX 35 (ES35) jumped by 0.79%, and the UK’s FTSE 100 (UK100) closed negative by 0.11%.

Ahead of the release of this week’s Autumn Budget, UK Prime Minister Rishi Sunak promises to cut debt and cut taxes to further boost the country’s economy. Today, Prime Minister Sunak tweeted, “Now that inflation is halved, we can turn our attention to cutting tax… We will reward work by cutting taxes and reforming our benefits system so work always pays.” In another tweet, Prime Minister Sunak added: “I will do what is necessary to get our debt down and provide financial security. That will help keep inflation falling and get mortgage rates back down to affordable levels.”

Monday’s decline in the dollar index to a 2.5-month low helped energy prices. Crude oil prices also rose amid concerns that OPEC+ countries may extend and even deepen oil production cuts at a meeting this weekend. OPEC+ will meet in Vienna on November 25-26 to discuss extending oil production cuts. Geopolitical concerns have heightened shipping risks in the Middle East due to the war between Israel and Hamas and are supporting crude prices after a Japanese-chartered Israeli ship was hijacked Sunday in the Red Sea by Iranian-backed Houthi rebels. The rebels have said they support Hamas in the conflict and will continue attacks on Israeli territory and ships.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) decreased by 0.59% yesterday, China’s FTSE China A50 (CHA50) added 0.33% on Monday, Hong Kong’s Hang Seng (HK50) was up by 1.86% on the day, and Australia’s ASX 200 (AU200) was positive by 0.13%. Most Asian stocks rose at the open on Tuesday. Optimism about a recovery in China’s real estate sector is boosting sentiment. Yesterday, there were reports that the Chinese government plans to take additional measures to support the sector.

Nvidia (NVDA) will report its earnings for September on Tuesday after the US market close. EPS is estimated to be $3.36 on revenue of $16.18 billion. For the past three quarters, Nvidia has consistently beaten forecasts, citing a huge increase in demand due to advances in artificial intelligence. The company develops chips that are specifically used to develop and power artificial intelligence platforms that place high demands on computing resources. Nvidia’s strong results invariably spark a rally in Asian chip companies and have also been the driving force behind a significant rally in Japanese stocks this year. Nvidia recently unveiled a new flagship chip for AI development, the H200.

S&P 500 (F)(US500) 4,547.38 +33.36 (+0.74%)

Dow Jones (US30) 35,151.04 +203.76 (+0.58%)

DAX (DE40)  15,901.33 −17.83  (−0.11%)

FTSE 100 (UK100) 7,496.36 −7.89 (−0.11%)

USD Index  103.49 −0.43 (−0.41%)

News feed for 2023.11.21:
  • – Australia RBA Bullock Speech at 01:00 (GMT+2);
  • – Australia RBA Meeting Minutes at 02:30 (GMT+2);
  • – Switzerland Trade Balance at 09:00 (GMT+2);
  • – Hong Kong Inflation Rate at 10:30 (GMT+2);
  • – Canada Consumer Price Index (m/m) at 15:30 (GMT+2);
  • – US Existing Home Sales (m/m) at 17:00 (GMT+2);
  • – Eurozone ECB President Lagarde Speaks at 18:00 (GMT+2);
  • – US FOMC Meeting Minutes at 21:00 (GMT+2).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
21 Nov

USDInd hits 3-month low. More room to fall?

By ForexTime

  • Dollar weakened as markets raise bet on Fed rate cuts in 2024
  • USDInd approaches key support levels around 103 region
  • Daily close below 103 region could spark another 1,300-point drop
  • Other technical indicators suggest 350-point rebound ahead
  • FOMC meeting minutes later today may spark more volatility

 

The USD index has fallen by some 4000 points since its November 1st intraday high.

There may be little ahead to cheer for the index, given current market expectations that the US Federal Reserve may start to cut interest rates as early as May 2024.

Recall that greater expectations for lower interest rate cuts tend to translate into a weaker currency.

 

At the time of writing the US Index is approaching a convergence of support levels:

  • 103.000: an important round number level
  • 102.910: the 261.8 Fibonacci level

The Fibonacci levels are taken from the 29th September low to the 3rd October high.

A daily close below these levels could see the index fall further to 101.900 to trade around its lowest since August.

USDInd may see 350-point technical rebound soon

From an Elliot wave perspective, the USDInd D1 is in its 5th impulse wave of the decline from 107.914 posted on November 1st.

Based on the Elliot wave theory, wave 5 is usually followed by a correction with sequence A-B-C coming in different forms.

If the key support levels around 103.00 hold, we may see the index bulls come in for a counter trend move back up to its 200-day moving average.

 

Note also that the Relative Strength Index (an indicator that shows us extreme buy and sell zones) is teetering at the 30-point level.

If the RSI falls below 30,  it becomes technically oversold.

Such a technical event would increase the probabilities of a rebound.

 

However, the Average Directional Movement Index (an indicator that shows us the strength of the trend) is pointing upwards.

This means that the downward bias for the USDInd remains strong.

This could spell an extended decline in the USDIndex, until we see a peak in the ADX signaling weakness in the current bearish strength.

 

What could move USDInd today?

With FOMC meeting minutes due at 7:00 pm GMT tonight, traders and investors around the world are looking for confirmation that peak US interest rates is truly here.

In other words, markets want to know whether the Fed is truly done with its rate hikes for this cycle.

If so, that could send the USDInd to a fresh 3-month low.

 

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Forex and Currency News
20 Nov

Nvidia’s Q3 earnings: challenges ahead for chipmaker giant

By George Prior 

Nvidia’s third quarter earnings when they are revealed on Tuesday will be impressive and the guidance positive, but the company faces challenges ahead, yet almost every investor needs exposure to semiconductors.

This is the prediction from Nigel Green, CEO and founder of deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organizations, ahead of the chip maker’s report this week.

All eyes are on the tech giant after a strong second quarter performance that saw revenues soar to $13.5bn.

The deVere CEO says: “Nvidia’s second-quarter, epic, shock-and-awe-esque earnings report still looms large in the minds of investors around the world.  Now all eyes are on the semiconductor titan’s revenues on Tuesday.

“While we expect the revenue growth to still be hugely impressive and the company’s stellar rise will undoubtedly continue, its trajectory also faces challenges ahead.”

He continues: “There is growing and intensifying competition in the semiconductor market and this will threaten Nvidia’s market share and, therefore, margins over the longer term.

“In addition, the 170% surge in the second quarter mainly came from data centre revenues and Nvidia is very exposed to China.

“With China tightening regulations and cracking down on various industries, including technology, the company may face headwinds in this critical market. Regulatory uncertainties and geopolitical tensions could impact Nvidia’s ability to sustain its mighty results, especially if there are disruptions to its business operations in China.”

Despite the potential challenges on the horizon, the overarching theme remains—semiconductors are a cornerstone of the contemporary tech-driven world.

“Almost every investor should recognise the strategic importance of semiconductor stocks in their portfolios,” notes Nigel Green.

“As the backbone of the digital era, semiconductors power a vast array of technologies, from consumer electronics to advanced computing systems.”

The semiconductor industry’s continued growth is propelled by the increasing demand for smart devices, the expansion of 5G networks, and the rapid development of artificial intelligence and machine learning.

Including semiconductor stocks in a diversified portfolio offers investors exposure to a sector with long-term growth potential. The sector’s resilience, adaptability, and its role in driving technological innovation make it an attractive choice for those seeking stability amid market uncertainties.

“Nvidia’s upcoming earnings report is a pivotal moment for investors to assess the company’s standing in the dynamic semiconductor landscape.

“Investors, recognizing the critical role of semiconductors now and in the future, are likely to find value.

“Your future self will thank you for maintaining or establishing positions in this key sector,” concludes the deVere CEO.

About:

deVere Group is one of the world’s largest independent advisors of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.  It has a network of more than 70 offices across the world, over 80,000 clients and $12bn under advisement.

 

Financial News Stock Market News
20 Nov

PBoC left key rates unchanged. OPEC+ plans to cut production to support oil prices

By JustMarkets

At Friday’s close, the Dow Jones Index (US30) added 0.01% (+2.01% for the week), while the S&P 500 Index (US500) increased by 0.13% (+2.44% for the week). On Friday, the NASDAQ Technology Index (US100) closed positive by 0.08% (+2.76% for the week). The broad market initially went down on Friday as bond yields rose following Friday’s economic news from the US showing an unexpected increase in October housing starts and building permits, a hawkish factor for Fed policy. However, bond yields retreated from highs towards the end of the trading session, allowing stocks to recover towards the end of the trading session.

On Friday, Fed Vice Chairman for Supervision Michael Barr said he believes the Fed is at or near peak interest rates, but San Francisco Fed Chair Mary Daly and Boston Fed President Susan Collins emphasized the need for more evidence of cooling inflation.

According to Bank of America, EPFR Global data showed global equity funds attracted US$23.5 billion in the week to November 15, the second-largest inflow this year. This indicates that funds are building up positions in equities and, therefore, believe in further growth amid the end of the tightening cycle by the US Federal Reserve.

X (formerly Twitter) billionaire owner Elon Musk has been ratcheting up tensions with his posts on the platform supporting an anti-Semitic conspiracy theory. IBM, NBCUniversal, and parent company Comcast said they would stop advertising on X after it was reported that their ads appeared alongside content supporting the anti-Semitic movement. On Thursday and Friday, ads from Apple, Oracle, Amazon, and NBA Mexico were also placed next to anti-Semitic material on X, and there is a high probability that these companies will also stop using the platform. The value of company X continues to plummet. Twitter was sold for $44 billion dollars, and X is now valued at $11 billion dollars.

Equity markets in Europe were mostly up on Friday. Germany’s DAX (DE40) gained 0.84% (week-to-date +4.15%), France’s CAC 40 (FR40) added 0.91% (week-to-date +2.32%) on Friday, Spain’s IBEX 35 (ES35) jumped by 0.97% (week-to-date +3.74%), and the UK’s FTSE 100 (UK100) closed positive by 1.26% (week-to-date +1.95%).

On Friday, ECB Governing Council representative and Bundesbank President Nagel said that borrowing costs should remain high for a sufficient period of time and an ECB rate cut is highly unlikely in the near term. His colleague, ECB Governing Council representative Holzmann, also said that it would be too early for the ECB to start cutting interest rates in the second quarter of next year, and in general, market expectations for a rate cut are premature. At the moment, the ECB still prefers to stick to tight monetary policy, but if the pace of wage growth starts to shift downward in the near future, the current ECB stance will soften sharply, and the door for rate cuts will be open.

A new budget will be presented in the UK this week. UK Treasury chief Jeremy Hunt said that the government can afford to cut some taxes in the face of lower inflation, but cuts to social benefits will accompany any cut. Hunt also said the government needs to reform the welfare system to get more people back to work. Economists believe Wednesday’s autumn budget will also include relief for businesses and wealthy property owners. The tax cuts, along with improvements in the labor market, will improve economic performance but could be factored in more persistent inflation next year.

Crude oil and gasoline prices rose sharply Friday and recovered much of Thursday’s sharp sell-off. Oil prices also rose after Goldman Sachs said it expects OPEC to act to support oil prices. As early as next Sunday, OPEC+ will consider deepening oil production cuts. This could lead to a sharp gap up at the market opening on Monday, November 27. Goldman Sachs believes OPEC+ countries will ensure Brent Crude oil prices in the $80 to $100 range in 2024, providing a moderate deficit.

Asian markets were mostly up last week. Japan’s Nikkei 225 (JP225) gained 2.34% for the week, China’s FTSE China A50 (CHA50) declined 0.04% over five trading days, Hong Kong’s Hang Seng (HK50) ended the week up by 1.11%, and Australia’s ASX 200 (AU200) ended the week positive by 1.04%.

The People’s Bank of China (PBoC), as expected, kept key lending interest rates near record lows. At the same time, the People’s Bank of China injected about 80 billion yuan of additional liquidity into the markets. However, Chinese equities were mostly supported by the rise in real estate stocks after Chinese regulators pledged to provide additional policy support to the struggling real estate sector.

S&P 500 (F)(US500) 4,514.02 +5.78 (+0.13%)

Dow Jones (US30) 34,947.28 +1.81 (+0.01%)

DAX (DE40)  15,919.16  +132.55 (+0.84%)

FTSE 100 (UK100) 7,504.25 +93.28 (+1.26%)

USD Index  103.82 −0.53 (−0.51%)

News feed for 2023.11.20:
  • – China PBoC Loan Prime Rate (m/m) at 03:15 (GMT+2);
  • – German Producer Price Index (m/m) at 09:00 (GMT+2);
  • – UK BoE Gov Andrew Bailey’s Speech at 20:45 (GMT+2);
  • – New Zealand Trade Balance at 23:45 (GMT+2).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
20 Nov

Brent has risen with support from an OPEC+ decision

By RoboForex Analytical Department

The price of a Brent barrel climbed to 81.20 USD on Monday.

The market primarily relies on OPEC+ member countries reducing crude oil supply to control prices. Energy carrier prices have declined for four consecutive weeks due to diminishing concerns about supply disruptions related to the Middle East conflict.

An OPEC+ meeting is scheduled for 26 November. The possibility of discussing additional supply cuts may arise.

Since the end of September, crude oil prices have dropped by nearly 20%.

Technical analysis of Brent oil:

On the H4 Brent chart, a growth wave is forming to 82.72. A correction to 79.70 might follow, after which a new growth wave to 86.85 could initiate. This is a local target. Technically, this scenario is confirmed by the MACD, with its signal line below zero, strictly pointing upwards.

On the H1 Brent chart, the growth wave movement to 82.72 is complete. This represents the first target. After the price reaches this level, a correction to 79.70 is expected to start, and a rise to 83.25 is expected next. Breaking through this level may unlock the potential for climbing to 86.85. This is a local target. Technically, this scenario is confirmed by the Stochastic oscillator, with its signal line above 80, strictly pointing upwards. New highs are expected to be set in this scenario.

Disclaimer

Any predictions contained herein are based on the author’s particular opinion. This analysis shall not be treated as trading advice. RoboForex shall not be held liable for the results of the trades arising from relying upon trading recommendations and reviews contained herein.

Energy Financial News
20 Nov

Trade Of The Week: UK100_m knocks on major resistance

By ForexTime 

  • UK100_m trapped in wide range
  • Index could be rocked by political and economic forces
  • Keep eye on UK Autumn Statement
  • Key levels of interest at 7605, 7500 and 7370
  • Possible breakout on the horizon?

Over the past few months, it has felt like the same old story for the UK100_m as it’s traded within a wide range. Significant support can be found at 7240 and resistance at 7730.

Note: The UK100_m tracks the underlying FTSE100 

The index has been influenced by various forces ranging from the pound’s performance to Bank of England (BoE) hike expectations and quarterly earnings from UK companies.

Note: The FTSE100 has a strong international focus with 75% of revenues from FTSE100 companies coming from outside the UK.

With prices flirting around the 50 and 100-day SMA ahead of a big week for the UK economy, a potential breakout may be on the horizon.

Here are 3 things to keep an eye on:

  1. UK Autumn Statement 

On Wednesday, Chancellor of the Exchequer Jeremy Hunt will present the Autumn Statement to Parliament.

Although this event swings more towards politics, investors will be paying close attention to key updates on the country’s finances and the government’s plan for tax and public spending. Confidence towards the UK economy has improved over the past two weeks as the country not only avoided a contraction in Q3 but inflation fell to its lowest rate since October 2021 at 4.6%. It will be interesting to see how this development impacts the Autumn Statement and whether bold steps are taken to boost the UK economy. This political event could impact sentiment towards the UK economy and the British pound, influencing the UK100_m as a result.

Note: The UK100_m has an inverse relationship with the British pound. When the pound appreciates, it translates to lower revenues for FTSE100 companies that acquire revenues from overseas, pulling the index lower as a result. The same is true vice versa. 

  • The UK100_m may trade lower if the Autumn budget boosts optimism over the UK economy and strengthens the pound as a result.
  • Should the Autumn budget disappoint and weaken sterling, this could push the UK100_m higher.

  1. Key UK economic data 

A day after the Autumn Statement, the focus shifts back to economic data with the Gfk consumer confidence and PMIs in focus. Sentiment remains shaky despite the good news from the UK over the past two weeks. Should the Gfk consumer sentiment confidence and manufacturing along with other PMIs paint a gloomy picture, this could hit confidence and fortify expectations around the BoE being done with rate hikes with the next move a cut.

As of writing, traders are currently pricing in a 55% probability of a 25-basis-point rate cut by May 2024.

  • The UK100_m could receive a boost if disappointing UK data weakens the pound and boosts bets around a BoE rate cut.
  • If UK data beats forecasts and the pound strengthens as a result, the UK100_m may trade lower.

  1. Technical forces 

The UK100_m remains in a wide range on the daily charts with prices flirting around the key 7500 level as of writing. 

  • Another daily close beyond the 7500 point could open a path toward the 200-day SMA at 7605 and major resistance at 7730.
  • Should prices remain capped below 7500, this could trigger a decline towards the 7370 and major support at 7240.

Forex-Time-LogoArticle by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

Financial News Stock Market News
17 Nov

Hydrogen Firm Craters Over Liquidity Concerns

Source: Streetwise Reports  (11/16/23)

Many people consider hydrogen an important part of the emerging green economy. However, one major player in the field for the past 20 years is facing new and growing issues.

Plug Power Inc. (PLUG:NASDAQ) has spent the past two decades trying to position itself as a provider of turnkey hydrogen fuel cell turnkey solutions. It provides electrolyzers that allow industrial refueling stations to generate hydrogen on-site for use as a fuel.

Plug Power focuses on using this fuel for industrial mobility applications, including electric forklifts and electric industrial vehicles, as well as stationary power systems that support critical operations, such as data centers, microgrids, and generation facilities.

Its technologies are designed to be used in both backup power and continuous power roles, with the ultimate goal of replacing batteries, diesel generators, and the grid for telecommunication logistics, transportation, and utility customers.

The company’s products include GenDrive, GenFuel, GenCare, GenSure, GenKey, ProGen, Electrolyzers, Liquefaction Systems and Cryogenic Equipment. It serves the North American and European material handling markets. It is based in Latham, New York.

 Collapsing Share Price, Market Confidence

On November 13, Investing.com reported that “Plug Power shares slipped in premarket U.S. trading, extending a steep loss posted on Friday, after Morgan Stanley slashed its share price target of the hydrogen fuel cell system developer in the wake of a going concern warning.”

Morgan Stanley lowered its price target for Plug Power from US$9.00 to US$3.50, explaining that it expects “valuation pressure will remain until the company, at a minimum, improves its liquidity position.”

“[We] believe the next three to four months will be consequential in rebuilding investor confidence in the business model,” Morgan Stanley analysts wrote.

Morgan Stanley lowered its price target for Plug Power from US$9.00 to US$3.50, explaining that it expects “valuation pressure will remain until the company, at a minimum, improves its liquidity position.”

This considerable valuation downgrade comes after Plug Power raised doubts about its own viability last week. In a regulatory filing, the company estimated that its “existing cash and available for sale and equity securities will not be sufficient to fund its operations” over a 12-month horizon.

Quite simply, the company was expressing that it would need to secure additional capital in order to stay in business, a concern that the Morgan Stanley analysts echoed. Plug Power claims it is facing a “historically difficult” hydrogen supply environment, especially in North America, where it is facing “multiple frequent force majeure events.”

Shares in the company lost more than 40% of their value on Friday, and the company as a whole has lost over half of its market capitalization since the start of the year.

Hydrogen Hype Hides Inefficiencies

Hydrogen as a fuel has a long and storied history, but the tech and associated supply lines have never really matured in a manner capable of causing a green revolution. In fact, over two years ago, Forbes was already asking, “Why Are We Still Talking About Hydrogen?” In that insightful piece, James Morris examined the many impediments to widespread hydrogen adoption.

Chief among these is that “It can’t seem to escape how massively inefficient it is compared to battery-powered alternatives.”

“The flaw is basically caused by the laws of physics,” Morris explains. “For hydrogen to be completely green, it must be produced by electrolyzing water, which splits this into the H2 and O that it is made of.

New Constructs credit rating issued a suspended neutral rating for Plug Power on November 11, classing the company’s Adjusted Debt to Capital and Adjusted Cash to Debt ratios as “Very Attractive” while listing the Adjusted EBITDA to Debt and Adjusted FCF (3yr avg) to Debt ratios, as well as the Adjusted Interest Coverage, as “Very Unattractive.”

You can produce H2 from fossil fuels (usually methane), but this creates either “gray” hydrogen (which still produces lots of CO2) or “blue” hydrogen (which captures 90% of the CO2 and stores it, merely delaying the problem). Only electrolyzing hydrogen from water using electricity generated from renewable sources makes the fuel entirely green.”

“This is an inefficient system that wastes energy,” Morris continues. “According to a frequently cited study by Transport & Environment, the process of electrolyzing hydrogen already loses 30% of the energy from the process of splitting the H2 from the O. You then have another 26% loss of the remaining energy from transporting the hydrogen to the fuel station, meaning you’ve already lost a total of 48% of the energy before any hydrogen makes it into a vehicle.”

“You can save some of this by making hydrogen on-site,” — which is the model Plug Power is attempting to develop — “but electrolysis plants cost millions, so they will more likely be centralized.

In comparison, the typical loss from transferring electricity over wires to a charging station is just 5%, so you still have 95% left.”

Non-Automotive Solutions

Now, there’s a valid argument that Plug Power isn’t competing in the automotive market but rather in the industrial space. However, as electric vehicle technology grows in popularity, we will inevitably see spillover into industrial uses, such as forklift operation, further squeezing the market for on-site industrial solutions.

In addition, poor efficiency is only one of the concerns associated with the increased use of hydrogen fuel in industrial settings. Writing for Issues in Science and Technology, Joseph J. Romm explains that “hydrogen has its own major safety issues. It is highly flammable, with an ignition energy that is 20 times smaller than that of natural gas or gasoline. It can be ignited by cell phones or by electrical storms located miles away.”

“Hence,” he writes, “leaks pose a significant fire hazard, particularly because they are hard to detect. Hydrogen is odorless, and the addition of common odorants such as sulfur is impractical, in part because they poison fuel cells. Hydrogen burns nearly invisibly, and people have unwittingly stepped into hydrogen flames.”

“Hydrogen can cause many metals, including the carbon steel widely used in gas pipelines, to become brittle. In addition, any high-pressure storage tank presents a risk of rupture. For these reasons, hydrogen is subject to strict and cumbersome codes and standards, especially when used in an enclosed space where a leak might create a growing gas bubble.”

These strict use codes further hamper the industry’s ability to endorse and onboard hydrogen solutions, even where they would otherwise be a decent fit.

“Some 22% or more of hydrogen accidents are caused by undetected hydrogen leaks,” Romm reports.

Such leaks occur “despite the special training, standard operating procedures, protective clothing, electronic flame gas detectors provided to the limited number of hydrogen workers,” writes Russell Moy, former group leader for energy storage programs at Ford, in the November 2003 Energy Law Journal, concluding that “with this track record, it is difficult to imagine how hydrogen risks can be managed acceptably by the general public when wide-scale deployment of the safety precautions would be costly and public compliance impossible to ensure.”

Why Now? Massive Discount

Given the realities of the hydrogen market and the considerable barriers to its growth mentioned above, it might be easy to give up on Plug Power. Clearly, many former shareholders have already made that determination.

That said, where some see crisis, others see opportunity. If you’ve been looking for an undervalued pathway into the hydrogen market in particular — perhaps as a hedge against electric vehicles or even fossil fuels — this massive writedown could be just the goad you need to pick up a position after someone else has eaten a major loss.

However, if you choose to play in these waters, remember that volatility is the name of the game. Third-party advisors seem more unsure of what to do with Plug Power than any stock in recent memory.

Streetwise Ownership Overview*

Plug Power Inc. (PLUG:NASDAQ)

Institutions: 56.95%
Retail: 33.08%
Strategic Investors: 9.08%
Management & Insiders: 0.89%
57.0%
33.1%
9.1%
*Share Structure as of 11/16/2023
Source: Thomson Reuters

 

For example, New Constructs credit rating issued a suspended neutral rating for Plug Power on November 11, classing the company’s Adjusted Debt to Capital and Adjusted Cash to Debt ratios as “Very Attractive” while listing the Adjusted EBITDA to Debt and Adjusted FCF (3yr avg) to Debt ratios, as well as the Adjusted Interest Coverage, as “Very Unattractive.”

Ownership and Share Structure

According to Reuters, 0.89% of the company is owned by management and insiders. Out of this group, Director and Chairman of the Board George McNamee has the most at 0.15%, with 0.94 million shares.

9.08% is with one strategic investor, SK Inc., which owns 9.08%, at 54.97 million shares.

56.95% is held by institutions. Top investors in this category include The Vangaurd Group Inc. at 8.85%, with 53.60 million shares, and BlackRock Institutional Trust Company N.A. at 4.98%, with 30.16 million.

The rest is with retail investors.

Plug Power Inc. has a market cap of  US$2.13 billion with 605.5 million shares outstanding.

 

Important Disclosures:

  1. Owen Ferguson wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
  2. The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.

For additional disclosures, please click here.

Energy Financial News
17 Nov

Real Estate Co. Shares News We’ve Been Waiting For

Source: Ron Struthers  (11/16/23)

Recently, Greenbriar Capital Corp. shared news that has Ron Struthers of Struthers Resource Stock Report giving it a Strong Buy rating.

Greenbriar Capital TSXV:GRB OTC:GEBRF Recent Price – $1.11 Entry Price – $1.15 Opinion – Strong Buy

Greenbriar Capital Corp. (GRB:TSX.V; GEBRF:OTC) announced that their 995-home sustainable entry-level residential subdivision, Sage Ranch in California, has received Planning Commission approval for the Precise Development Plan (“PDP”) at the November 13, 2023 Planning Commission meeting.

Wow! This is huge news we have been waiting for. Just consider it lucky that this development was not in Canada because it would have probably taken another two years to get approved. Construction will soon start, and Greenbriar will sell around 140+ plus homes per year for about six years. I can give a more solid revenue projection when we see what the first homes sell for, but some simple round numbers of $100,000 profit per home on 140 homes is US$14 million per year revenue.

Greenbriar only has 35 million shares out, so a measly $39 million market cap.

Jeff Ciachurski CEO of Greenbriar, says: “The City has requested our team meet with the city staff within the next day or two to get everyone moving forward to obtain the necessary construction permits. Sage Ranch was purchased by the company 12 years ago, and today marks a huge milestone to have a 995-home project approved in the State of California. We congratulate city staff, the Planning Commission, the City Council, and our Greenbriar engineering, building, and architectural teams for this gold medal effort.”

From an environmental standpoint, Sage Ranch will be a low-carbon showcase. Nowhere in the subdivision will any resident be more than a short three (3) block walk to either elementary, middle, or high schools. Match this with State-mandated solar roofs, smart meters, optional battery storage and EV charging, smart appliances, and energy-efficient building techniques; Sage Ranch amounts to an exceptional model of environmental planning and carbon reduction.

Greenbriar is also named as one of the top performers on the TSXV Venture Exchange. The 2023 TSX Venture 50 celebrates the strongest performances on the TSXV over the last year.

The Top 50 ranking is selected from 1,713 TSXV public companies. It is great the stock is among the top, but in reality, GRB stock is about even on the year or down a bit, proving how bad the TSXV has been.

‘

 

Important Disclosures:

  1. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of: Greenbriar Capital Corp.
  2. Ron Struthers: I, or members of my immediate household or family, own securities of: Greenbriar Capital. I determined which companies would be included in this article based on my research and understanding of the sector.
  3. Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
  4.  This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

For additional disclosures, please click here.

Struthers Resource Stock Report Disclosures

All forecasts and recommendations are based on opinion. Markets change direction with consensus beliefs, which may change at any time and without notice. The author/publisher of this publication has taken every precaution to provide the most accurate information possible. The information & data were obtained from sources believed to be reliable, but because the information & data source are beyond the author’s control, no representation or guarantee is made that it is complete or accurate. The reader accepts information on the condition that errors or omissions shall not be made the basis for any claim, demand or cause for action. Because of the ever-changing nature of information & statistics the author/publisher strongly encourages the reader to communicate directly with the company and/or with their personal investment adviser to obtain up to date information. Past results are not necessarily indicative of future results. Any statements non-factual in nature constitute only current opinions, which are subject to change. The author/publisher may or may not have a position in the securities and/or options relating thereto, & may make purchases and/or sales of these securities relating thereto from time to time in the open market or otherwise. Neither the information, nor opinions expressed, shall be construed as a solicitation to buy or sell any stock, futures or options contract mentioned herein. The author/publisher of this letter is not a qualified financial adviser & is not acting as such in this publication.

Financial News Real Estate
17 Nov

Oil prices fell to a 4-month low. China’s economy shows signs of recovery

By JustMarkets

US stock indices traded flat yesterday amid disappointing corporate earnings results. Cisco Systems (CSCO) fell by 11%, sending technology stocks tumbling after cutting its full-year earnings forecast. Also down more than 7% were shares of retailer Walmart (WMT) after it struck a cautious tone on the outlook for US shoppers. In addition, a more than 3% drop in the price of WTI crude oil to a near four-month low pressured energy stocks. At the stock market close, the Dow Jones Index (US30) was down by 0.13%, while the S&P 500 Index (US500) jumped by 0.12%. The Nasdaq Technology Index (US100) is up by 0.07%.

US weekly jobless claims rose by 32,000 to a two-year high of 1.865 million, indicating a weak labor market versus expectations of 1.843 million. Additionally, October manufacturing production fell by 0.7% m/m, weaker than expectations of 0.4% m/m and the largest decline in 4 months.

The US Senate voted 87-11 on Wednesday night to pass a temporary funding measure to avert a government shutdown. President Biden will now sign the bill into law. The measure would fund some parts of the government through January 19 and others through February 2.

Equity markets in Europe traded all without any momentum. Germany’s DAX (DE40) rose by 0.24%, France’s CAC 40 (FR40) fell by 0.57% yesterday, Spain’s IBEX 35 (ES35) jumped by 0.28%, and the UK’s FTSE 100 (UK100) closed negative by 1.01%.

Crude oil and gasoline prices fell sharply on Thursday, with crude oil falling to a 4-month low and gasoline falling to an 11-month low. Crude oil prices weathered Wednesday’s negative impact when the EIA reported that weekly crude inventories rose more than expected. Additionally, crude oil funds saw selling on Thursday as weaker-than-expected global economic news weighs on the energy demand outlook.

Natural gas prices declined on Thursday after the EIA’s weekly natural gas inventories rose more than expected. Natural gas inventories rose 60 Bcf last week, above expectations of 42 bcf and well above the 5-year average of 20 bcf.

Asian markets were mostly falling yesterday. Japan’s Nikkei 225 (JP225) was down by 0.28% for the day, China’s FTSE China A50 (CHA50) decreased by 0.79%, Hong Kong’s Hang Seng (HK50) lost 1.36% for the day, and Australia’s ASX 200 (AU200) was negative by 0.67% for Thursday.

Yesterday, Australian employment data for October was released, which showed a good result: plus 55k jobs vs. 22.8k expected, while the unemployment rate rose from 3.6% to 3.7%, in line with expectations. AUD/USD reaction was subdued as markets remain convinced that the RBA has peaked on interest rates.

The Bank of Japan (BoJ) is the only major central bank in the world to maintain negative interest rates and has yet to show any signs of abandoning unprecedented easing measures. Moreover, Wednesday’s dismal GDP report, which showed that the economy contracted for the first time in three quarters, should allow the BoJ to postpone any policy changes, retreating from its ambitious monetary easing course. This, in turn, could undermine the Japanese yen (JPY) and contribute to a new rise in USD/JPY quotes.

Data from China’s National Bureau of Statistics (NBS) showed on Wednesday that retail sales of consumer goods, a key indicator of consumption growth, rose 7.6% year-on-year in October, the fastest pace since May and accelerating from the 5.5% growth recorded in September. Industrial production also beat market expectations, rising at a 4.6% annualized rate in October, accelerating from September’s 4.5% increase. This growth was also the strongest since April. Employment remained broadly stable, with the unemployment rate at 5% in October, unchanged from September. Considering the main economic indicators, the economy has maintained a steady recovery momentum and has laid a solid foundation for achieving full-year growth targets.

S&P 500 (F)(US500) 4,508.26 +5.38 (+0.12%)

Dow Jones (US30) 34,945.60 −45.61 (−0.13%)

DAX (DE40)  15,786.61 +38.44 (+0.24%)

FTSE 100 (UK100) 7,410.97 −75.94 (−1.01%)

USD Index  104.42 +0.02 (+0.02%)

News feed for 2023.11.17:
  • – UK Retail Sales (m/m) at 09:00 (GMT+2);
  • – Switzerland Industrial Production (m/m) at 09:30 (GMT+2);
  • – Eurozone ECB President Lagarde Speaks at 09:30 (GMT+2);
  • – Eurozone Consumer Price Index (m/m) at 12:00 (GMT+2);
  • – Canada Producer Price Index (m/m) at 15:30 (GMT+2);
  • – US Building Permits (m/m) at 15:30 (GMT+2);
  • – US FOMC Member Daly Speaks at 17:00 (GMT+2).

By JustMarkets

 

This article reflects a personal opinion and should not be interpreted as an investment advice, and/or offer, and/or a persistent request for carrying out financial transactions, and/or a guarantee, and/or a forecast of future events.

Economics & Fundamentals Financial News
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