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Archive for Opinions – Page 48

Cultural differences impede trade for most countries – but not China

By Bedassa Tadesse, University of Minnesota Duluth

It’s a widely accepted notion among economists that cultural differences can pose a significant barrier to trade. The larger the cultural gap between two countries – judging by differences in language, customs, values and business norms – the more challenging and costly trade relations become. This is a recurring theme in research.

But there’s one big exception to the rule: China.

As an applied economist with a keen interest in how culture influences trade, I’ve conducted several studies of the dynamic. In one such effort, two colleagues and I meticulously analyzed China’s trade relationships with nearly 90 countries over 16 years.

Our research uncovered a distinctive pattern: Unlike many other nations, cultural differences rarely influence the scale of China’s trade activities.

Bridging cultural gaps: Strategies and successes

Countries have various tools to minimize the effects of cultural differences on their trade. Cultural exchange programs, bilateral trade agreements and international trade shows have shown remarkable success in fostering mutual understanding, easing trade negotiations and overcoming cultural barriers.

However, these options are available to all countries. What makes China unique?

I suspect that China’s national trading strategy, involving state-backed export industries and substantial global infrastructure investment, is a big part of the answer.

By aligning itself with the economic development needs of its trading partners, China has been able to minimize the negative effects of cultural differences on its trade. It’s a strategy that has proved to be remarkably effective.

A closer examination of China’s trade ventures in Africa, the Middle East and Latin America — all regions with significant cultural differences from China — paints a vivid picture of this observation.

Despite its cultural differences with nations on the African continent, each with its own unique traditions, languages and customs, China has built a multibillion-dollar trade network in the region that spans industries from mining to telecom. China’s engagement in Africa is facilitated by a combination of local infrastructure investment, affordable technology provision and favorable loan terms. These partnerships are more about creating symbiotic relationships and less about efficiency. This facilitates market access and helps China to overcome cultural barriers.

In the Middle East, too, China has made significant inroads by aligning itself with the region’s development goals, such as those outlined in Saudi Arabia’s Vision 2030 and the United Arab Emirates’ Centennial 2071. China’s Belt and Road Initiative complements these long-term development plans, offering the capital investment and construction expertise needed to bring ambitious infrastructure projects to life.

China’s presence in Latin America has also grown substantially over the past decade. Despite the geographical and cultural distance, China has become one of the top trade partners for countries such as Brazil, Chile and Peru. This relationship is built on reciprocity: Latin American countries supply raw materials and agricultural products in exchange for Chinese investment in the infrastructure and manufacturing sectors.

Again, this is a strategy that hinges on pragmatic economic interactions focused on mutual benefits and development goals.

The need for strategic adaptability

Some might argue that trading with China is an obvious choice due to its size and influence. The economic incentives include access to China’s population of over 1.4 billion and its significant role in global value chains, especially in electronics, textiles and machinery. As China’s influence in global markets grows, U.S. companies also face competitive pressures to maintain their market positions.

However, China’s trade practices, frequently entangled with governmental intervention, potentially undermine market efficiency — an established economic objective — in numerous ways.

In international trade, market efficiency refers to the extent to which prices in the global market reflect all available information, allowing resources to be allocated optimally across countries.

China has been known to require foreign companies to transfer technology to local firms as a condition for market access. This practice may distort market efficiency by forcing companies to share proprietary technology rather than compete on a level playing field.

Intellectual property theft and insufficient protection of intellectual property rights in China have also been major concerns for Western companies. The lack of robust intellectual property enforcement can lead to inefficiencies, as it discourages innovation and investment by foreign firms who fear their inventions and technologies may be copied without adequate legal recourse.

Western companies also face various market-access barriers in China, such as joint venture requirements, limits on foreign ownership and regulatory hurdles. These barriers can prevent the efficient allocation of resources and limit competition and innovation, resulting in a less efficient market overall.

Despite these concerns, Western firms continue to do business with China.

China’s adeptness in transcending cultural barriers, combined with Western firms’ continued engagement, pose a significant challenge for Western economies, notably the United States’. The challenge is heightened as the U.S. maintains a focus on traditional efficiency approaches in forging trade relationships across diverse regions such as Africa, Latin America and the Middle East.

Since traditional market efficiency approaches might not always suffice, Western economies may need to reconsider their strategies.

About the Author:

Bedassa Tadesse, Professor of Economics, University of Minnesota Duluth

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

Economics & Fundamentals Opinions

29 Jun

Currency Speculator raised their bets for Canadian & Australian Dollars

By InvestMacro

Here are the latest charts and statistics for the Commitment of Traders (COT) data published by the Commodities Futures Trading Commission (CFTC).

The latest COT data is updated through Tuesday June 25th and shows a quick view of how large market participants (for-profit speculators and commercial traders) were positioned in the futures markets. All currency positions are in direct relation to the US dollar where, for example, a bet for the euro is a bet that the euro will rise versus the dollar while a bet against the euro will be a bet that the euro will decline versus the dollar.

Weekly Speculator Bets led by Canadian & Australian Dollars

The COT currency market speculator bets were higher this week as six out of the eleven currency markets we cover had higher positioning while the other five markets had lower speculator contracts.

Leading the gains for the currency markets was the Canadian Dollar (25,519 contracts) with the Australian Dollar (17,980 contracts), the Mexican Peso (7,552 contracts), the New Zealand Dollar (6,313 contracts), the Swiss Franc (2,333 contracts) and with Bitcoin (99 contracts) also showing positive weeks.

The currencies seeing declines in speculator bets on the week were the Japanese Yen (-26,147 contracts), the EuroFX (-16,382 contracts), the British Pound (-3,573 contracts), the Brazilian Real (-2,563 contracts) and with the US Dollar Index (-73 contracts) also registering lower bets on the week.

COT Currency Roundup:

The Canadian dollar speculative position jumped by over +25,000 contracts this week but this was following three straight weeks of declines that had brought the overall position to an all-time record low level. The CAD position has fallen for 13 out of the past 17 weeks and dropped to a record bearish level on June 18th at a total of -147,931 contracts. This week’s speculator position settled at a total of -122,412 contracts. Helping keep the pressure on the Canadian dollar (also called the loonie) recently was the Bank of Canada’s decision to lower their interest rate on June 5th to 4.75 percent from the previous 5 percent. With inflation subsiding in the Canadian economy, there is speculation that interest rates will come down as well and in turn, dampen the perceived attractiveness of the loonie versus other major currencies.

The Japanese yen speculator contracts continued to drop this week and have fallen for three straight weeks. The yen speculative positioning has also declined in 13 out of the last 20 weeks as the overall bearish position has now been above -100,000 contracts for twenty consecutive weeks. The US Dollar/Japanese yen exchange rate continues to see Dollar strength (vs the yen) as the USDJPY currency pair touched above the 161.00 level this week – marking the highest level for the USD since the late-1980s.

The euro currency contracts flipped back into negative territory this week and are in a small bearish position for the first time since April 30th. The euro speculator bets have declined for three straight weeks and are standing at a total of -8,431 contracts this week. The euro exchange rate versus the US Dollar (EURUSD currency pair) has had a very subdued year so far with a fluctuation between approximately 1.0650 and 1.1000 since the beginning of January. This week the EURUSD closed at 1.0752.

The Australian dollar speculator position sharply rose for a second straight week this week with a gain of +17,980 contracts following last week’s +23,129 contract rise. The Aussie spec position has seen a marked improvement since hitting an all-time low on March 19th at -107,538 contracts with this week’s standing coming in at -23,676 contracts. This is the least bearish level since June 29th of 2021, almost exactly three years ago.

The large speculative US Dollar Index positions dipped very slightly this week by just -73 contracts. However, the Dollar Index speculative position has been on quite a run with gains in the previous eleven straight weeks. This improved sentiment brought the spec position from out of bearish territory to the highest level since December of 2023 above +17,000 contracts and near where the speculator position currently sits at +17,522 contracts. The Dollar Index price has also been on the upswing with gains in four straight weeks and closed out this week at the 105.50 level.

Finally, the large speculative New Zealand Dollar currency positions gained this week by over +6,000 net contracts. The NZD net positions have now increased for six consecutive weeks – adding a total of +37,842 contracts to the net position in that time. This improvement has taken the NZD spec contracts to the most bullish level in the past three hundred and twenty-three weeks, dating back to April 17th of 2018.

Currencies Net Speculators Leaderboard

Legend: Weekly Speculators Change | Speculators Current Net Position | Speculators Strength Score compared to last 3-Years (0-100 range)

Strength Scores led by Australian & New Zealand Dollars

COT Strength Scores (a normalized measure of Speculator positions over a 3-Year range, from 0 to 100 where above 80 is Extreme-Bullish and below 20 is Extreme-Bearish) showed that the Australian Dollar (100 percent) and the New Zealand Dollar (100 percent) lead the currency markets this week. The British Pound (82 percent), the Mexican Peso (60 percent) and Bitcoin (57 percent) come in as the next highest in the weekly strength scores.

On the downside, the Japanese Yen (4 percent), the Canadian Dollar (14 percent), the EuroFX (17 percent), the Brazilian Real (18 percent) and the Swiss Franc (19 percent) come in at the lowest strength levels currently and are in Extreme-Bearish territory (below 20 percent).

Strength Statistics:
US Dollar Index (41.4 percent) vs US Dollar Index previous week (41.6 percent)
EuroFX (16.7 percent) vs EuroFX previous week (23.7 percent)
British Pound Sterling (82.5 percent) vs British Pound Sterling previous week (84.9 percent)
Japanese Yen (3.8 percent) vs Japanese Yen previous week (20.1 percent)
Swiss Franc (19.1 percent) vs Swiss Franc previous week (15.0 percent)
Canadian Dollar (13.5 percent) vs Canadian Dollar previous week (0.0 percent)
Australian Dollar (100.0 percent) vs Australian Dollar previous week (78.6 percent)
New Zealand Dollar (100.0 percent) vs New Zealand Dollar previous week (86.8 percent)
Mexican Peso (59.8 percent) vs Mexican Peso previous week (56.1 percent)
Brazilian Real (18.0 percent) vs Brazilian Real previous week (20.8 percent)
Bitcoin (57.0 percent) vs Bitcoin previous week (55.5 percent)

New Zealand Dollar & Australian Dollar top the 6-Week Strength Trends

COT Strength Score Trends (or move index, calculates the 6-week changes in strength scores) showed that the New Zealand Dollar (79 percent) and the Australian Dollar (64 percent) lead the past six weeks trends for the currencies. The British Pound (43 percent), the US Dollar Index (32 percent) and the Brazilian Real (18 percent) are the next highest positive movers in the latest trends data.

The Japanese Yen (-30 percent) leads the downside trend scores currently with the Mexican Peso (-27 percent), Canadian Dollar (-22 percent) and the EuroFX (-11 percent) following next with lower trend scores.

Strength Trend Statistics:
US Dollar Index (32.2 percent) vs US Dollar Index previous week (33.6 percent)
EuroFX (-10.9 percent) vs EuroFX previous week (1.4 percent)
British Pound Sterling (42.5 percent) vs British Pound Sterling previous week (46.0 percent)
Japanese Yen (-29.9 percent) vs Japanese Yen previous week (-8.0 percent)
Swiss Franc (10.8 percent) vs Swiss Franc previous week (7.9 percent)
Canadian Dollar (-22.3 percent) vs Canadian Dollar previous week (-41.6 percent)
Australian Dollar (63.8 percent) vs Australian Dollar previous week (27.3 percent)
New Zealand Dollar (79.0 percent) vs New Zealand Dollar previous week (65.8 percent)
Mexican Peso (-27.1 percent) vs Mexican Peso previous week (-30.4 percent)
Brazilian Real (18.0 percent) vs Brazilian Real previous week (20.2 percent)
Bitcoin (-6.7 percent) vs Bitcoin previous week (0.9 percent)

Individual COT Forex Markets:

US Dollar Index Futures:

The US Dollar Index large speculator standing this week resulted in a net position of 17,522 contracts in the data reported through Tuesday. This was a weekly lowering of -73 contracts from the previous week which had a total of 17,595 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish with a score of 41.4 percent. The commercials are Bullish with a score of 59.8 percent and the small traders (not shown in chart) are Bearish with a score of 32.6 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

US DOLLAR INDEX Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	74.0	14.6	8.9
– Percent of Open Interest Shorts:	33.4	59.5	4.6
– Net Position:	17,522	-19,365	1,843
– Gross Longs:	31,947	6,304	3,848
– Gross Shorts:	14,425	25,669	2,005
– Long to Short Ratio:	2.2 to 1	0.2 to 1	1.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	41.4	59.8	32.6
– Strength Index Reading (3 Year Range):	Bearish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	32.2	-32.8	5.7

Euro Currency Futures:

The Euro Currency large speculator standing this week resulted in a net position of -8,431 contracts in the data reported through Tuesday. This was a weekly fall of -16,382 contracts from the previous week which had a total of 7,951 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 16.7 percent. The commercials are Bullish-Extreme with a score of 85.5 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 11.5 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

EURO Currency Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	25.7	60.1	11.0
– Percent of Open Interest Shorts:	27.0	61.6	8.2
– Net Position:	-8,431	-9,767	18,198
– Gross Longs:	167,370	390,837	71,392
– Gross Shorts:	175,801	400,604	53,194
– Long to Short Ratio:	1.0 to 1	1.0 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	16.7	85.5	11.5
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-10.9	10.7	-6.7

British Pound Sterling Futures:

The British Pound Sterling large speculator standing this week resulted in a net position of 44,048 contracts in the data reported through Tuesday. This was a weekly fall of -3,573 contracts from the previous week which had a total of 47,621 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 82.5 percent. The commercials are Bearish with a score of 20.5 percent and the small traders (not shown in chart) are Bullish with a score of 64.2 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BRITISH POUND Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	49.4	33.5	13.6
– Percent of Open Interest Shorts:	28.2	55.1	13.1
– Net Position:	44,048	-45,026	978
– Gross Longs:	102,547	69,497	28,209
– Gross Shorts:	58,499	114,523	27,231
– Long to Short Ratio:	1.8 to 1	0.6 to 1	1.0 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	82.5	20.5	64.2
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	42.5	-40.2	16.2

Japanese Yen Futures:

The Japanese Yen large speculator standing this week resulted in a net position of -173,900 contracts in the data reported through Tuesday. This was a weekly decline of -26,147 contracts from the previous week which had a total of -147,753 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 3.8 percent. The commercials are Bullish-Extreme with a score of 100.0 percent and the small traders (not shown in chart) are Bullish with a score of 57.6 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

JAPANESE YEN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	10.2	76.2	11.1
– Percent of Open Interest Shorts:	61.3	22.8	13.5
– Net Position:	-173,900	181,858	-7,958
– Gross Longs:	34,576	259,292	37,891
– Gross Shorts:	208,476	77,434	45,849
– Long to Short Ratio:	0.2 to 1	3.3 to 1	0.8 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	3.8	100.0	57.6
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-29.9	29.5	-2.7

Swiss Franc Futures:

The Swiss Franc large speculator standing this week resulted in a net position of -35,057 contracts in the data reported through Tuesday. This was a weekly advance of 2,333 contracts from the previous week which had a total of -37,390 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 19.1 percent. The commercials are Bullish-Extreme with a score of 84.9 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 12.3 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

SWISS FRANC Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	7.7	80.7	11.0
– Percent of Open Interest Shorts:	49.4	22.1	27.9
– Net Position:	-35,057	49,331	-14,274
– Gross Longs:	6,506	67,969	9,253
– Gross Shorts:	41,563	18,638	23,527
– Long to Short Ratio:	0.2 to 1	3.6 to 1	0.4 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	19.1	84.9	12.3
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	10.8	-4.1	-16.4

Canadian Dollar Futures:

The Canadian Dollar large speculator standing this week resulted in a net position of -122,412 contracts in the data reported through Tuesday. This was a weekly boost of 25,519 contracts from the previous week which had a total of -147,931 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 13.5 percent. The commercials are Bullish-Extreme with a score of 85.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 18.2 percent.

Price Trend-Following Model: Downtrend

Our weekly trend-following model classifies the current market price position as: Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

CANADIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	10.0	76.9	10.4
– Percent of Open Interest Shorts:	53.9	31.5	11.8
– Net Position:	-122,412	126,330	-3,918
– Gross Longs:	27,790	214,107	29,063
– Gross Shorts:	150,202	87,777	32,981
– Long to Short Ratio:	0.2 to 1	2.4 to 1	0.9 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	13.5	85.8	18.2
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-22.3	21.4	-16.7

Australian Dollar Futures:

The Australian Dollar large speculator standing this week resulted in a net position of -23,676 contracts in the data reported through Tuesday. This was a weekly advance of 17,980 contracts from the previous week which had a total of -41,656 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 100.0 percent. The commercials are Bearish-Extreme with a score of 1.5 percent and the small traders (not shown in chart) are Bullish with a score of 70.4 percent.

Price Trend-Following Model: Strong Uptrend

Our weekly trend-following model classifies the current market price position as: Strong Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

AUSTRALIAN DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	35.7	45.6	15.1
– Percent of Open Interest Shorts:	48.8	34.9	12.7
– Net Position:	-23,676	19,343	4,333
– Gross Longs:	64,620	82,549	27,370
– Gross Shorts:	88,296	63,206	23,037
– Long to Short Ratio:	0.7 to 1	1.3 to 1	1.2 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	100.0	1.5	70.4
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	63.8	-58.0	11.7

New Zealand Dollar Futures:

The New Zealand Dollar large speculator standing this week resulted in a net position of 26,642 contracts in the data reported through Tuesday. This was a weekly advance of 6,313 contracts from the previous week which had a total of 20,329 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish-Extreme with a score of 100.0 percent. The commercials are Bearish-Extreme with a score of 0.0 percent and the small traders (not shown in chart) are Bullish with a score of 71.3 percent.

Price Trend-Following Model: Weak Downtrend

Our weekly trend-following model classifies the current market price position as: Weak Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

NEW ZEALAND DOLLAR Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	72.3	17.8	7.5
– Percent of Open Interest Shorts:	28.2	63.4	6.0
– Net Position:	26,642	-27,567	925
– Gross Longs:	43,711	10,779	4,540
– Gross Shorts:	17,069	38,346	3,615
– Long to Short Ratio:	2.6 to 1	0.3 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	100.0	0.0	71.3
– Strength Index Reading (3 Year Range):	Bullish-Extreme	Bearish-Extreme	Bullish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	79.0	-76.6	26.3

Mexican Peso Futures:

The Mexican Peso large speculator standing this week resulted in a net position of 57,806 contracts in the data reported through Tuesday. This was a weekly lift of 7,552 contracts from the previous week which had a total of 50,254 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 59.8 percent. The commercials are Bearish with a score of 40.8 percent and the small traders (not shown in chart) are Bearish-Extreme with a score of 18.6 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

MEXICAN PESO Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	49.0	47.4	2.9
– Percent of Open Interest Shorts:	15.4	81.7	2.2
– Net Position:	57,806	-58,963	1,157
– Gross Longs:	84,314	81,667	5,020
– Gross Shorts:	26,508	140,630	3,863
– Long to Short Ratio:	3.2 to 1	0.6 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	59.8	40.8	18.6
– Strength Index Reading (3 Year Range):	Bullish	Bearish	Bearish-Extreme
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-27.1	27.5	-15.8

Brazilian Real Futures:

The Brazilian Real large speculator standing this week resulted in a net position of -22,320 contracts in the data reported through Tuesday. This was a weekly reduction of -2,563 contracts from the previous week which had a total of -19,757 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bearish-Extreme with a score of 18.0 percent. The commercials are Bullish-Extreme with a score of 83.7 percent and the small traders (not shown in chart) are Bearish with a score of 23.7 percent.

Price Trend-Following Model: Strong Downtrend

Our weekly trend-following model classifies the current market price position as: Strong Downtrend. The current action for the model is considered to be: Hold – Maintain Short Position.

BRAZIL REAL Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	38.5	56.3	2.2
– Percent of Open Interest Shorts:	61.4	32.2	3.3
– Net Position:	-22,320	23,477	-1,157
– Gross Longs:	37,622	54,945	2,107
– Gross Shorts:	59,942	31,468	3,264
– Long to Short Ratio:	0.6 to 1	1.7 to 1	0.6 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	18.0	83.7	23.7
– Strength Index Reading (3 Year Range):	Bearish-Extreme	Bullish-Extreme	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	18.0	-16.3	-10.9

Bitcoin Futures:

The Bitcoin large speculator standing this week resulted in a net position of -624 contracts in the data reported through Tuesday. This was a weekly increase of 99 contracts from the previous week which had a total of -723 net contracts.

This week’s current strength score (the trader positioning range over the past three years, measured from 0 to 100) shows the speculators are currently Bullish with a score of 57.0 percent. The commercials are Bullish with a score of 70.8 percent and the small traders (not shown in chart) are Bearish with a score of 21.6 percent.

Price Trend-Following Model: Weak Uptrend

Our weekly trend-following model classifies the current market price position as: Weak Uptrend. The current action for the model is considered to be: Hold – Maintain Long Position.

BITCOIN Statistics	SPECULATORS	COMMERCIALS	SMALL TRADERS
– Percent of Open Interest Longs:	73.3	3.7	5.0
– Percent of Open Interest Shorts:	75.3	2.9	3.7
– Net Position:	-624	241	383
– Gross Longs:	22,103	1,121	1,499
– Gross Shorts:	22,727	880	1,116
– Long to Short Ratio:	1.0 to 1	1.3 to 1	1.3 to 1
NET POSITION TREND:
– Strength Index Score (3 Year Range Pct):	57.0	70.8	21.6
– Strength Index Reading (3 Year Range):	Bullish	Bullish	Bearish
NET POSITION MOVEMENT INDEX:
– 6-Week Change in Strength Index:	-6.7	16.8	-4.9

Article By InvestMacro – Receive our weekly COT Newsletter

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators) as well as their open interest (contracts open in the market at time of reporting). See CFTC criteria here.

29 Jun

Speculator Extremes: Australian Dollar, Soybean Oil lead weekly Positions

By InvestMacro

The latest update for the weekly Commitment of Traders (COT) report was released by the Commodity Futures Trading Commission (CFTC) on Friday for data ending on June 25th.

This weekly Extreme Positions report highlights the Most Bullish and Most Bearish Positions for the speculator category. Extreme positioning in these markets can foreshadow strong moves in the underlying market.

To signify an extreme position, we use the Strength Index (also known as the COT Index) of each instrument, a common method of measuring COT data. The Strength Index is simply a comparison of current trader positions against the range of positions over the previous 3 years. We use over 80 percent as extremely bullish and under 20 percent as extremely bearish. (Compare Strength Index scores across all markets in the data table or cot leaders table)

Speculators or Non-Commercials Notes:
Speculators, classified as non-commercial traders by the CFTC, are made up of large commodity funds, hedge funds and other significant for-profit participants. The Specs are generally regarded as trend-followers in their behavior towards price action – net speculator bets and prices tend to go in the same directions. These traders often look to buy when prices are rising and sell when prices are falling. To illustrate this point, many times speculator contracts can be found at their most extremes (bullish or bearish) when prices are also close to their highest or lowest levels.
These extreme levels can be dangerous for the large speculators as the trade is most crowded, there is less trading ammunition still sitting on the sidelines to push the trend further and prices have moved a significant distance. When the trend becomes exhausted, some speculators take profits while others look to also exit positions when prices fail to continue in the same direction. This process usually plays out over many months to years and can ultimately create a reverse effect where prices start to fall and speculators start a process of selling when prices are falling.

Here Are This Week’s Most Bullish Speculator Positions:

Australian Dollar

The Australian Dollar speculator position comes in as the most bullish extreme standing this week. The Australian Dollar speculator level is currently at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score totaled 63.8 this week. The overall net speculator position was a total of -23,676 net contracts this week with a jump of 17,980 contract in the weekly speculator bets.

New Zealand Dollar

The New Zealand Dollar speculator position comes next in the extreme standings this week. The New Zealand Dollar speculator level is now at a 100.0 percent score of its 3-year range.

The six-week trend for the percent strength score was 79.0 this week. The speculator position registered 26,642 net contracts this week with a weekly boost of 6,313 contracts in speculator bets.

Silver

The Silver speculator position comes in third this week in the extreme standings. The Silver speculator level resides at a 94.9 percent score of its 3-year range.

The six-week trend for the speculator strength score came in at -4.8 this week. The overall speculator position was 55,978 net contracts this week with a gain of 4,077 contracts in the weekly speculator bets.

Coffee

The Coffee speculator position comes up number four in the extreme standings this week. The Coffee speculator level is at a 94.8 percent score of its 3-year range.

The six-week trend for the speculator strength score totaled a change of 13.1 this week. The overall speculator position was 70,712 net contracts this week with a rise of 3,163 contracts in the speculator bets.

Gold

The Gold speculator position rounds out the top five in this week’s bullish extreme standings. The Gold speculator level sits at a 87.3 percent score of its 3-year range. The six-week trend for the speculator strength score was 18.8 this week.

The speculator position was 246,229 net contracts this week with an increase by 3,145 contracts in the weekly speculator bets.

This Week’s Most Bearish Speculator Positions:

Soybean Oil

The Soybean Oil speculator position comes in as the most bearish extreme standing this week. The Soybean Oil speculator level is at a 0.0 percent score of its 3-year range.

The six-week trend for the speculator strength score was -13.8 this week. The overall speculator position was -75,739 net contracts this week with a drop of -28,553 contracts in the speculator bets.

Cotton

The Cotton speculator position comes in next for the most bearish extreme standing on the week. The Cotton speculator level is at a 2.5 percent score of its 3-year range.

The six-week trend for the speculator strength score was -20.4 this week. The speculator position was -23,975 net contracts this week with a rise of 3,789 contracts in the weekly speculator bets.

Japanese Yen

The Japanese Yen speculator position comes in as third most bearish extreme standing of the week. The Japanese Yen speculator level resides at a 3.8 percent score of its 3-year range.

The six-week trend for the speculator strength score was -29.9 this week. The overall speculator position was -173,900 net contracts this week with a large drop by -26,147 contracts in the speculator bets.

5-Year Bond

The 5-Year Bond speculator position comes in as this week’s fourth most bearish extreme standing. The 5-Year Bond speculator level is at a 5.2 percent score of its 3-year range.

The six-week trend for the speculator strength score was -9.6 this week. The speculator position was -1,486,197 net contracts this week with a decline of -32,797 contracts in the weekly speculator bets.

Palladium

Finally, the Palladium speculator position comes in as the fifth most bearish extreme standing for this week. The Palladium speculator level is at a 6.2 percent score of its 3-year range.

The six-week trend for the speculator strength score was -12.3 this week. The speculator position was -12,906 net contracts this week with an edge higher by 650 contracts in the weekly speculator bets.

Article By InvestMacro – Receive our weekly COT Newsletter

COT Updates Opinions

27 Jun

Mid-Year Review: Monster Movers & Shakers

By ForexTime

Bitcoin ↑ almost 45% in H1

Gold ↑ 12% year-to-date, but are bulls tired?

US500 party to roll on or hit final hour?

The first half of 2024 has been remarkable for global financial markets.

Shifting monetary policy expectations, geopolitical tensions, elections across the globe and the A.I mania set the tone.

At the start of the year, we picked 3 assets that could see big moves.

Here’s how they have performed so far:

1) Bitcoin set to boom or bust?

What we discussed in the 2024 outlook

We were bullish on the “OG” crypto and suggested how the “hype could go into overdrive due to the approval of Bitcoin ETFs by January and halving event in April”.

How things played out in H1

Bitcoin rallied as much as 74% in the first quarter of 2024, hitting an all-time high at $73,850.

The approval of Bitcoin ETFs along with expectations of lower US interest rates sent prices skyrocketing. However, gains were capped in Q2 due to escalating geopolitical tensions and uncertainty over monetary policy despite the halving in April.

As the first half of 2024 concludes, Bitcoin is under pressure thanks to cooling demand for Bitcoin ETFs and developments concerning the failed Mt. Gox exchange.

What could happen over the next 6 months

Other than US interest rates, the next major risk event for Bitcoin could be the US presidential elections.

And Biden’s opposition, Trump the catalyst. His pro stance towards cryptocurrencies may boost sentiment towards Bitcoin should he triumph.

To be clear, determining what influence Trump will have on the SEC is uncertain – but the idea of a pro-crypto US president may translate to fresh upside gains across the crypto space.

Technical outlook

Our technical section initially pointed out $50,000 as a key level of interest with a bullish breakout opening a path toward $69,000 and $100,000.

Before

Prices remain trapped within a weekly range with support at $60,000 and resistance at $71,000.

Sustained weakness below may open a path back towards $50,000 and potentially lower.

Should $60,000 prove reliable support, prices may rebound towards $71,000 and the all-time high at $73,850.

After

2) Gold bulls running on fumes?

What we discussed in the 2024 outlook

We examined how gold could deliver glittering returns this year due to lower interest rates, a weaker dollar, and geopolitical risks.

How things played out in H1

Despite the slow start to the year, gold prices surged almost 10% in March amid growing bets around lower interest rates. The precious metal was propelled higher by escalating geopolitical tensions and central bank buying, with prices hitting an all-time high at $2450 in May.

But bulls have struggled to keep up the momentum in recent weeks thanks to cooling rate cut bets and the PBoC’s decision to end its 18-month of gold buying. Still, prices are up roughly 12% year-to-date.

What could happen over the next 6 months…

While US election uncertainty could translate to increased volatility for gold, it’s all about what actions the Fed takes in the second half of 2024.

At the start of the year, the central bank was expected to cut rates by as much as 150 basis points. However, due to sticky inflation and stronger-than-expected data – traders are only expecting one rate 25 bp cut by November with 75% probability of a second cut by December.

Given how gold pays no interest, the prospect of higher for longer rates could be an invitation for bears to pounce.

Technical outlook

Our technical section flagged $2000 as a reliable support that may open doors to fresh all-time highs.

Before

Gold is under pressure on the weekly charts with key support at $2290.

A solid break below this point could spark a selloff towards $2235 and $2147.

Should $2290 prove to be reliable support, prices may rebound toward $2350, $2425 and $2450.

After

3) US500 bull party approaching final hour?

What we discussed in the 2024 outlook

After gaining almost 25% in 2023, we were firmly bullish on the US500 and anticipated volatility due to the US presidential elections in November.

How things played out in H1

The Index was initially supported by Fed cut bets with solid corporate earnings and the A.I hype turbocharging upside gains. Nvidia, the poster child of the AI boom was able to satisfy investors lofty expectations by posting solid earnings in February and May.

Although the US500 is up 15% year-to-date and remains in an uptrend, the Relative Strength Index (RSI) is screaming that prices are heavily overbought.

What could happen over the next 6 months…

After repeatedly hitting record highs, the question is whether bulls can maintain their hunger for gains?

A combination of U.S election jitters and cooling expectations around Fed rate cuts could limit upside gains. It is worth noting that earnings season is around the corner with the bar set high for Nvidia and other tech giants to deliver blockbuster results.

Regarding the US elections, whatever the outcome it could inject fresh levels of volatility into the US500.

Technical outlook

Back in January, we highlighted how “a strong close above 4820 could open the doors towards fresh the all-time highs”

Before

The US500 continues to respect a bullish channel but the RSI signals that a technical “throwback” could be around the corner.

A solid weekly close above 5500 could pave the way to fresh all-time highs.

Should 5500 prove to be a tough nut to crack, this may trigger a decline back toward 5300 and possibly lower.

After

Article by ForexTime

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

Economics & Fundamentals Opinions

27 Jun

Is It Time To Unload Nvidia?

Source: Streetwise Reports (6/26/24)

Some financial experts say yes, others no. Read on to learn the rationale behind the conclusions and stance of several.

The movement of Nvidia Corp.’s (NVDA:NASDAQ) stock during June, rising to its all-time high and then plunging, has investors debating now whether to jump into it, bolster their existing position, or abandon it altogether. Whereas financial analysts and other experts generally agree the information technology (IT) stock has been overbought since early June, they differ, some radically, in their current recommendations on it.

“Nvidia has likely become one of the most overheated stocks we’ve witnessed in a quarter century,” Eric Fry of Fry’s Investment Report said in an InvestorPlace interview.

On June 18, Nvidia ousted Microsoft Corp. (MSFT:NASDAQ) from its spot as the world’s most valuable company, and last week, Nvidia’s stock peaked at US$140.76 per share. Since, it dropped to third place, therein suffering a loss of about US$500 billion ($500B) in value, Seeking Alpha reported on June 25. However, NVDA maintains about a 140% year-to-date gain and thus is the second-best performer in the Standard & Poor’s (S&P) 500 Index.

Is it OK To Buy?

None of the factors behind the stock’s recent descent into its current correction constitutes a sound reason to “turn gloomy on Nvidia,” Garfield Reynolds, Bloomberg’s Markets Live Asia team leader, wrote in a June 24 article. The five causes were expiring options, insider sales, the stock’s technically overbought state, investor reassessment of the stock after it dethroned Apple Inc. (AAPL:NASDAQ) and Microsoft, and a long squeeze.

“The bull case for the artificial intelligence (AI) darling along with the broader tech sector remains strong over the short to medium term, at the very least,” he wrote.

It would take a major event, such as a broad economic slump or a big earnings miss, to keep Nvidia down for long, asserted Reynolds.

Certainly, numerous analysts recommend Nvidia as a Buy. According to TipRanks, of the 41 analysts who rated the stock at some point in the last three months, 38 have it Buy, three Hold, and none Sell. Zacks Investment Research, for instance, has a Strong Buy rating on it.

“Even with those concerns about overconcentration lingering,” he added, “the selloff would need to extend significantly further to change the narrative away from the consensus call that the AI revolution will keep going and that Nvidia stands to benefit hugely as a result.”

As such, Reynolds expects new buyers of the stock on future price dips, he wrote.

Certainly, numerous analysts recommend Nvidia as a Buy. According to TipRanks, of the 41 analysts who rated the stock at some point in the last three months, 38 have it Buy, three Hold, and none Sell. Zacks Investment Research, for instance, has a Strong Buy rating on it.

In a June 22 article, The Motley Fool’s Edward Shelton suggested that investors should consider three points when deciding what to do regarding Nvidia.

One, Nvidia stock being overbought does not preclude it from climbing further. Case in point, he said, is the stock’s last pullback, in March, of 20%, after which the price soared to its highest point ever.

Two, NVDA is not in a bubble, despite what analysts say, because the fundamentals support its valuation.

Three, the company’s earnings per share (EPS) guidance for 2025 of US$3.61 could be conservative. Should earnings turn out to be higher (some analysts predict US$5), the stock would look cheap.

Ballanger Says Think Twice Before Buying

According to Michael Ballanger, editor & publisher of GGM Advisory Inc., investors should take seriously Nvidia’s recent shift into a correction. The stock is coming down from its peak “with a full bearish moving average convergence/divergence (MACD) rollover and ‘sell signal’ now complete,” he described in a June 24 email alert.

A sector rotation out of tech stocks and into more conservative Dow Jones Industrial Average blue chip stocks is underway, he noted, but the whiplashing of this a long-time market leader into a correction could be a harbinger of what is to come.

“If ‘AI’ starts to correct,” Ballanger warned, “the entire market is going with it, including the Dow and the S&P 500.”

Newsletter Writers Say Do Not Buy Now

Chris Johnson, Money Morning qualitative specialist, implied that it might be better to wait to Buy Nvidia as there is a good chance the stock will present a short-term opportunity to do so on a future pullback.

“If ‘AI’ starts to correct,” Michael Ballanger of GGM Advisory Inc. warned, “the entire market is going with it, including the Dow and the S&P 500.”

These opportunities often arise with heavily traded stocks after they experience persisting overbought conditions and the pullbacks that typically follow.

“Investors looking for a deeper correction in the stock should consider the US$100 price target as an ideal price for longer-term support for Nvidia shares,” he noted in a June 24 article. (At close today, the tech company was at US$126 per share.)

Kimberley Koenig with Investor’s Business Daily flat out advised against buying Nvidia right now. Instead, she recommended on June 25, “Wait for selling to subside and another base to form or follow-on buy point to present itself to buy the AI chip stock.”

One Expert Says Sell It All Today

The advice of Technical Analyst Clive Maund, based on his interpretations of the stock’s 10-year and two-year charts, is to sell Nvidia.

“The main takeaways for us are that Nvidia should be ‘avoided like the plague’ simply because it has gone up so much and is massively overbought,” he wrote in a June 23 report. “Anyone holding should, of course, take profits soon.”

He explained that on the charts, the MACD indicator shows the stock has become “insanely overbought.” However, he noted, “Recent volume does not look terminal as it has not (yet) risen to become climactic, and the accumulation line remains strong.” These indicators suggest that rather than immediately plunging, the stock may form a large top pattern over some months, during which time it could even creep higher.

Eric Fry of Fry’s Investment Report suggested investors follow the lead of the country’s billionaires and unload not just Nvidia stock but also the other tech giants’ stock now because, he said, an entire tech market crash is coming.

“There’s an undeniable tension gripping the markets right now, and if your gut is telling you that something monumental is lurking just over the horizon, trust me, your instincts are dead on,” he said.

Fry likened Nvidia stock today to Cisco stock in the 1990s. Though Cisco then had nearly twice the earnings power of Nvidia today, he said, when the dot-com bubble burst, it dropped about 87% from its peak.

Yes, there is room for growth in the AI market, and yes, Nvidia could be an AI star over the long term, said Fry. However, world-changing stocks go through their own boom and bust periods.

“I do want people to be aware of the cyclical risks involved here, at these crazy valuations,” he added.

Fry forecasted a future “tidal wave of selling to engulf the tech titans of Wall Street — Nvidia, Apple, Microsoft, Google, Meta and more” — in what he’s calling The 2024 Tech Reset. Billionaires, including Jeff Bezos, Warren Buffet, Elon Musk, and Mark Zuckerberg, have already started selling tech stocks, even their own company’s stock. They are moving their money into next-gen stocks, which Fry defined as “stocks of businesses that are essential for the growth and prosperity of society as a whole.”

This massive selloff Fry predicted will cause tech stocks to plummet from their record highs and will, in the process, drag down thousands of other stocks, he warned. It will “erase years of investors’ gains, in the blink of an eye.”

Sector to Hit $29 Trillion by 2030

Currently IT is facing some challenges, and in the short term “the demand environment remains uncertain as enterprises add more scrutiny to the budgeting process and reduce discretionary IT spending,” CIBC wrote in a June 20 report. The current environment has dampened the expectation held since last year that demand would start improving in H2/24.

The report asserted that the initial “gen AI boom” is in the rear-view mirror, and what is happening now is a “period of resetting expectations.” Despite most companies knowing they need AI strategies, they are still deciding on what these will be, the analysts said.

The long-term outlook for IT is brighter. Growth for the IT market is forecasted up to 2030, at a 15% compound annual growth rate, according to Exactitude Consultancy, a market research and consulting services firm. By 2030, the market is projected to increase to US$28.99 trillion ($28.99T) in value from US$10.9T in 2023.

Streetwise Ownership Overview*

Nvidia Corp. (NVDA:NASDAQ)

	Institutions: 67.7%
	Retail: 28.02%
	Management & Insiders: 4.23%
	Strategic Investors: 0.05%

67.7%

28.0%

4.2%

^*Share Structure as of 6/26/2024

Source: Thomson Reuters

Accelerated advancement in AI, cloud computing, the Internet of Things and cybersecurity is the primary growth driver, noted Exactitude.

Ownership and Share Structure

According to Reuters, 4.23% of the company is held by management and insiders.

0.05% is with strategic investors. Milestone Resources Group Ltd. has 0.02%, with 4.39 million, and Banco Santander SA has 0.01%, with 2.10 million.

67.70% is held by institutions. The VanGuard Group Inc. has 8.63%, with 2,122.88 million shares. BlackRock Institutional Trust Company N.A. has 4.82%, with 1,186.45 million. Fidelity Management & Research Company LLC. has 4.51%, with 1,109.18 million.

The rest is with retail investors.

Nvidia has 24.6 billion (24.6B) shares outstanding and 23.5B free float traded shares.

The company’s market cap is US$3.1 trillion. Its stock has traded between US$39.23 and US$140.76 per share over the past 52 weeks.

Important Disclosures:

Doresa Banning wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor.
This article does not constitute investment advice and is not a solicitation for any 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. Each reader is encouraged to consult with his or her personal financial adviser and perform their own comprehensive investment research. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company.

For additional disclosures, please click here.

Opinions Stock Market News

27 Jun

Young investors: Here’s some tips for getting into the market

By Sorin Rizeanu, University of Victoria

You’ve likely heard of Minecraft. It’s a simple game where you slowly place blocks and craft items from containers to castles and entire cities. You’ve probably also heard of the first-person shooter Call of Duty (COD), where players navigate fast-paced war zones.

Like gaming, investing is all about how you approach it. You can build slow but safe, like in Minecraft, or you can go fast and risk more, like in COD.

If you’re a young person who has just gotten your first paycheck or saved a tidy sum from your first job, you might be thinking about how to invest your money.

However, the stock market can be a daunting place. Fortunes are built and lost in days. You can take the fast approach and risk it all on getting the big win. Or, with the proper temperament, you can build a significant source of additional income one block at a time. But where to start? And how does it all work?

Investing 101

You’ve probably heard of investment apps like Robinhood or Wealthsimple, or ones like Coinbase that allow you to invest in crypto currencies.

Investing is pretty much what you make of it. It can be like Minecraft, slowly placing blocks to develop a long-term diversified set of assets through investment funds, like exchange traded funds (ETFs) or mutual funds.

Most investment funds hold portfolios of stocks, bonds and other investments. ETFs trade on exchanges just like stocks, and most passively track an index, with little or no active management by fund managers. Mutual funds are more actively managed and they generally have higher fees than ETFs.

If you’re more of a risk-taker, investing can also be fast-paced like COD: shooting with options, penny stocks, crypto and other speculative tools.

Similar to gaming, you are only one participant in a much bigger world. There are days when you will lose and days when you win. Strategies that work in some situations but not in other situations. Expert players and novices.

If you’re completely new to things, try out an investing simulation. Some trading platforms allow you to use a version of their app or website where you can make simulated investments. Some of them are free or cost around $10-$15, like TradingView and eToro. MarketWatch even lets you create an investing game that you can invite your friends to participate in.

Next, you’ll need an investment account. Most big banks offer self-managed investment accounts. If you want to save a bit, check out discount brokers that charge lower or no commission (but read the fine print and know what other fees they might charge you).

Be sure to check out any tax-free investing accounts available in your country, like the TFSA in Canada or Roth IRA in the United States. These are a valuable way to grow your net worth without paying additional tax.

What kind of investing should I get into?

Take a lesson from Bob, the world’s worst market timer. He starts investing at 22, and every time he does, the market crashes. You’d guess he loses all his money, right? Not really, over his working life Bob invests $184,000, but ends up with a total of $1.1 million at retirement.

How? Bob put his money into an S&P 500 index fund and kept it to retirement, through good or bad.

The moral of the story is that you don’t have to be lucky or very savvy. Most important is to have a diverse portfolio and stay in the market. Don’t sell or buy in a panic, keep contributing. Buy diversified funds, rather than individual stocks, at least in the beginning. Then, as you learn, you can pick stocks and even invest part of your portfolio in riskier assets.

You still have decades to slowly get your millions.

Some strategies that have proven their worth

The value investing strategy, made famous by financial analyst Benjamin Graham and championed by the likes of American investor Warren Buffett, is summarized by with the motto: “This too will pass.”

Basically, pick a good company, in a moment when it’s undervalued for some reason: bad news, lost contract, temporary mismanagement etc. Buffett has likened good companies to castles with a deep moat around them – that is they have a competitive edge durable in time, an unique product, customer loyalty or pricing power. Think Apple, American Express or Coca Cola.

The growth investing strategy, championed by fund manager Cathie Wood, tries to identify companies whose earnings will grow very fast (but could crash equally fast). Companies like Tesla, Coinbase, UiPath, Roku etc. AI has given a huge boost to this strategy recently, but in long term, it’s hard to tell if it’s better than the value strategy.

A different approach, favoured by investors that prefer a more stable stream of income, is the dividend strategy. Dividends are the money distributed to shareholders from company’s profits.
Historically, dividend stocks have outperformed the S&P 500, and with less volatility. Think about it: you get a return on investment from stock price growth as well as dividends that you can reinvest.

In sum, pick a strategy that fits you and get to work. You can pick stocks, or you can pick diversified funds. As investor Peter Lynch insisted, “know what you own, and know why you own it.” Invest in stocks or funds whose business model you understand. Love cars? Study different manufacturers, see what different companies are working on, what customers like this year, and figure out who’s making money before quarterly statements are pointing out the winners and losers.

What should I be careful about?

Many new investors buy on the hype. Imagine there’s some good news coming up about Tesla. You wake up, and while having your coffee, you see the news and buy the stock.

But think. Investors following TSLA already know what the article is about. By the time you’ve read the news, people with deep pockets on Wall Street are already placing their bets. By the time you buy the stock, the market will have already integrated that news and now the price will probably go down.

Same with the long-term hype: when your cab driver is giving stock or crypto advice it’s time to get out of the market.

Another pitfall is the quick money, speculation, dopamine addiction. Subreddits like r/wallstreetbets provide many great examples of this. If you turn your life into a casino, you will win some times, but in the end the house always wins. A bet here and there can be fun though.

As a young person, you have an advantage: time. As you get older you will understand the long-term trends and market drivers — economy, geo-politics, innovation and so forth. As you progress in your career, you will understand more about your industry and this too may turn into profits. Over the years, eight per cent per year, with compounding, goes very far.

Finally, as ethical people, we need to walk the talk. We can’t pretend to want to save the Earth if our money is going to heavy polluters. Beware of pretenders — many are just deceptively mimicking behaviours to get high environmental, social and governance scores.

Research well your investment and its entire supply chain. Think about what goes into making the product, the people behind it and what impact it has on our world. Are you morally comfortable giving your money to certain companies?

Put in the time and don’t rush in, some investments are for life.

About the Author:

Sorin Rizeanu, Assistant Professor, Gustavson School of Business, University of Victoria

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

Opinions Stock Market News

25 Jun

Chevron vs. NextEra Energy: Which Dividend Stock is the Better Buy?

By The Ino.com Team

Despite the industry challenges, Chevron Corporation (CVX) and NextEra Energy, Inc. (NEE) are both gaining significant traction and rewarding shareholders with reliable dividends. But if you had to choose between them, which would be the better buy?

Chevron’s Dividend Strength Over 37 Years

Chevron is one of the largest integrated energy majors globally, with operations spanning oil production, transportation, and processing. This strategic spread helps cushion the inherent volatility in oil and gas markets, ensuring stability and sustained growth.

Recently, oil prices dipped after hitting seven-week highs. Brent crude futures slipped to $85.27 a barrel, while U.S. West Texas Intermediate crude dropped to $81.47 per barrel. Despite the cyclical nature of the oil sector, Chevron’s solid operational and financial performance continues to shine through.

In its latest earnings release, the company reported a double-digit increase in worldwide production and returned $6 billion in cash to shareholders. CVX beat first-quarter earnings estimates, with an adjusted EPS of $2.93, surpassing analysts’ expectations of $2.87. U.S. production surged to 1.57 million barrels of oil and gas per day, a 35% increase from a year ago, thanks to strong output from the Permian and Denver-Julesburg basins.

What truly sets Chevron apart is its financial muscle. The company’s debt-to-equity ratio is a mere 0.12, the lowest among its peers. This low leverage gives CVX the flexibility to support its operations and sustain its dividends even during downturns, providing a significant competitive advantage.

In the first quarter of 2024, Chevron’s return on capital employed exceeded 12%, reflecting efficient management and strategic investments. The company increased its quarterly dividend by 8% sequentially to $1.63 per share and repurchased nearly $3 billion worth of its shares.

With 36 consecutive years of dividend growth and a forward dividend yield of 4.16%, Chevron offers investors a compelling mix of income and growth potential. CVX has a four-year average yield of 4.35%, and its dividend payouts have grown at a CAGR of 6.4% over the past three years.

Moreover, the company aims to grow its annual free cash flow (FCF) by nearly 10% through 2027, even if Brent crude prices fall to $60 per barrel. With Brent crude currently around $83 per barrel, Chevron has ample room for growth. CVX’s strategy focuses on improving ROCE by investing in high-return areas like the Permian Basin, expected to drive substantial cash flow growth.

Increasing cash flow and robust dividend growth make CVX an attractive long-term investment. The company’s ability to navigate market fluctuations and maintain financial stability positions it as a top choice for investors seeking security and growth in the energy sector. Shares of CVX have gained over 4% over the past six months and nearly 5% year-to-date.

How Is NEE Positioned to Reward Shareholders?

NextEra Energy is a dual force in the energy sector, uniquely positioned with substantial operations in regulated utilities and renewable energy. As one of the largest regulated utility companies in the U.S., NEE enjoys stable earnings through its main subsidiary, Florida Power & Light (FPL).

FPL’s recent expansion efforts, including the addition of 1,640 megawatts of new solar capacity, underscore its commitment to clean energy and meeting the growing electricity demands. In the first quarter that ended March 31, 2024, FPL reported a net income of $1.17 billion or $0.57 per share, reflecting an increase of 9.5% and 7.5% year-over-year, respectively.

Simultaneously, NextEra Energy Resources, the company’s renewable energy arm, continues to advance in sustainable energy production. The segment had a record quarter, adding approximately 2,765 megawatts of new renewables and storage projects to its backlog. Its adjusted earnings for the quarter were $828 million and $0.40 per share, up from $732 million and $0.36 per share in the first quarter of 2023.

Financially, NEE’s performance remains robust. During the quarter, the company’s adjusted earnings amounted to $1.87 billion or $0.91 per share, reflecting an increase of 11.6% and 8.3%, respectively. Its adjusted EBITDA was $462 million, and $164 million cash was available for distribution. Moreover, its revenue and EPS have grown at respective CAGRs of 16.6% and 20.2 over the past three years.

Looking forward, NEE sees significant growth potential in the U.S. renewables and storage market, expecting it to triple over the next seven years from 140 gigawatts to around 375-450 gigawatts. With an existing 74-gigawatt operating fleet, split between FPL and Energy Resources, the company aims to expand to over 100 gigawatts by 2026, further strengthening its operational scale and creating additional value for its stakeholders.

On June 17, NEE paid its shareholders a quarterly dividend of $0.52 per share. With 28 consecutive years of dividend growth and a forward dividend yield of 2.84%, NEE offers an attractive proposition for income-oriented investors seeking exposure to the clean energy sector. Also, it has a four-year average dividend yield of 2.23% and has grown its dividend payouts at a CAGR of 10.2% over the past three years.

All said, NEE stands at the forefront of the energy transition, leveraging its dual strengths in regulated utilities and renewable energy to drive sustainable growth and value creation. The stock has gained over 21% over the past six months and over 19% year-to-date.

Should You Buy Chevron or NextEra Energy?

Analysts are bullish on these dividend-paying giants, each presenting significant upside potential. So, how do these two stack up?

Mizuho gave Chevron a Buy rating and raised the price target from $200 to $205, implying a substantial 23.59% upside from the current price of $156.64. This sentiment is echoed by other prominent analysts, with HSBC and Scotiabank setting price targets of $178 and $195, respectively. This results in an average price target of $186.95, suggesting a potential 16% upside.

On the other hand, NextEra Energy has also caught the eye of analysts. BMO Capital recently maintained an Overperform rating on the stock and raised the price target from $78 to $79, suggesting an 8.3% upside from the current price of $72.46.

In terms of dividend yield as a rough measure of value, CVX’s 4.2% yield is far more attractive compared to NEE’s modest 2.8%. While both stocks historically offered higher yields during oil downturns, NextEra Energy’s current yield is comparatively lower. This positions CVX as a stronger income play and suggests it may be the more attractive stock between the two.

By Ino.com – See our Trader Blog, INO TV Free & Market Analysis Alerts

Source: Chevron vs. NextEra Energy: Which Dividend Stock is the Better Buy?

Opinions Stock Market News

24 Jun

Trade of the Week: USDInd set for rollercoaster ride?

By ForexTime

USDInd ↑ 0.9% MTD

US Presidential debate & PCE deflators in focus

Over past year PCE deflators triggered moves of 0.3% ↑ or ↓

Technical levels – 106.50, 105.60 & 105.20

Watch this space because FXTM’s USDInd could be jolted by economic and political forces!

It’s all about the Biden vs. Trump faceoff and US PCE deflators which may translate to heightened dollar volatility this week.

After securing a weekly close above the 105.60 resistance, prices are turning increasingly bullish. However, the next major level for bulls to crack can be found at 106.50.

Note: FXTM’s USDInd tracks the US Dollar Index. This measures how the dollar performs against a basket of six different G10 currencies, including the Euro, British Pound, Japanese Yen, and Canadian dollar.

The lowdown…

Dollar bulls have made a return this month thanks to stronger-than-expected US data including the solid US May jobs report. Last Friday, reports revealed that both U.S manufacturing and services sectors expanded in June – further trimming rate cut bets.

The USDInd could end H1 with a bang, here are 3 reasons why:

1) Biden vs. Trump: US Presidential debate

The spotlight shines on the first US presidential debate on Thursday, June 27th.

Investors will most likely focus on every little detail, starting from mental states, messaging, overall accuracy of information, and policies among other things. There are just over four months till the US presidential election with national polls suggesting that Biden and Trump are neck-and-neck! This could add more flavour to the upcoming debate which may shape the overall election result.

Whatever the outcome of this big political event, it could trigger fresh volatility for the dollar and across financial markets.

2) US May PCE deflators

On the data front, the Fed’s preferred inflation gauge – the Core PCE could influence expectations about when the central bank will cut rates in 2024.

Markets are forecasting PCE deflators to cool in May with the core figure falling to 2.6% year-on-year compared with the 2.8% seen in the previous month. Ultimately, more signs of cooling price pressures could boost bets around lower US interest rates.

Traders are currently pricing in a 73% probability of a 25-basis point cut in September with a move fully priced in by November.

It will be wise to keep an eye on speeches by numerous Fed officials and other US data that could also move the USDInd.

Golden nugget: Over the past year, the US PCE deflators have triggered upside moves of as much as 0.3% or declines of 0.3% in a 6-hour window post-release.

The USDInd may slip on more signs of cooling price pressures in the United States, with dovish comments by Fed officials fuelling the downside.

Should the PCE deflators print higher than expected, this may support USDInd bulls as markets further push back Fed cut expectations.

3) Technical forces

Prices are trending higher on the daily charts with support levels at 105.60 and 105.20.

There have been consistently higher highs and lows, while the candlesticks are trading above the 50, 100 and 200-day SMA.

Should 105.60 prove to be reliable support, this could encourage an incline towards 106.50.

A daily close below 105.60 could see prices re-test 105.20.

Weakness below 105.20 may open the doors towards the 100-day SMA at 104.70.

Article by ForexTime

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

Forex and Currency News Opinions

23 Jun

Why Broadcom’s (AVGO) 10-for-1 Stock Split Could Attract a New Wave of Investors

By The Ino.com Team

Broadcom Inc. (AVGO), a prominent player in the semiconductor industry, announced a 10-for-1 forward stock split set to take effect on July 15, 2024, taking advantage of a rally in its shares this year. This decision comes on the heels of an outstanding second-quarter performance, underscoring Broadcom’s strategic positioning amid the burgeoning artificial intelligence (AI) revolution.

Understanding Stock Split Mechanics and Strategic Implications for Broadcom

A stock split involves dividing each existing share into multiple shares, effectively lowering the share price proportionally while maintaining the company’s total market capitalization. In AVGO’s case, each shareholder will receive nine additional shares for every one share held, resulting in a tenfold increase in the number of outstanding shares.

The primary objective of a stock split is to make shares more affordable and accessible to a wide range of retail investors by reducing the nominal share price. Given Broadcom’s share price surpassing $1,800 recently, the split aims to address perceived affordability barriers that may have deterred investors.

The increased accessibility can broaden AVGO’s investor base, potentially stimulating demand for its shares. Consequently, a higher number of outstanding shares resulting from the stock split typically leads to higher trading volumes. This enhanced liquidity can benefit both existing and new investors, allowing for easier entry and exit from positions.

Comparison with NVIDIA’s Recent Similar Move

Broadcom’s stock split mirrors a similar move by NVIDIA Corporation (NVDA), its rival in the AI hardware market. With more individual investors gaining access to Nvidia’s shares post-split, which came into effect at the close of trading on June 7, increased trading activity and demand were observed, potentially driving share prices higher.

NVIDIA’s stock is trading above its 50-day and 200-day moving averages of $99.28 and $68.61, respectively. NVDA’s successful split this month was preceded by significant market gains, highlighting the strategic timing of Broadcom’s decision to capitalize on investor sentiment surrounding the AI and semiconductor sectors.

Historically, stock splits are viewed as a bullish signal. According to data from BofA research, total returns for companies announcing stock splits are about 25% in the 12 months after a stock split compared to 12% gains for the S&P 500 index.

Broadcom’s Unprecedented Growth Amid the AI Boom

With a $839.05 billion market cap, AVGO is a technology leader that develops and supplies semiconductor and infrastructure software solutions. The company manufactures sophisticated networking chips for handling vast amounts of data used by AI applications such as OpenAI’s ChatGPT, positioning it as one of the beneficiaries of increased enterprise investments in the boom.

According to Grand View Research, the global AI market is projected to reach $1.81 trillion by 2030, growing at a CAGR of 36.6% during the forecast period (2024-2030). As AI continues to revolutionize industry verticals, including automotive, healthcare, retail, finance, and manufacturing, chipmakers like Broadcom are at the forefront, providing the essential chips that power AI applications.

Broadcom’s second-quarter results were primarily driven by AI demand and VMware. For the quarter that ended May 5, 2024, AVGO’s net revenue increased 43% year-over-year to $12.49 billion. Its revenue surpassed the consensus estimate of $12.01 billion. Revenue from its AI products was a record $3.10 billion during the quarter. Broadcom reported triple-digit revenue growth in the Infrastructure Software segment to $5.29 billion as enterprises increasingly adopted the VMware software stack to build their private clouds.

AVGO’s gross margin grew 27.2% from the year-ago value to $7.78 billion. Its non-GAAP operating income rose 32% year-over-year to $7.15 billion. Furthermore, the company’s non-GAAP net income came in at $5.39 billion or $10.96 per share, up 20.2% and 6.2% year-over-year, respectively. Its EPS exceeded the analysts’ expectations of $10.84.

Also, the company’s adjusted EBITDA grew 30.6% from the prior year’s quarter to $7.43 billion. It reported a free cash flow, excluding restructuring and integration, of $4.45 billion, up 18% year-over-year. As of May 5, 2024, AVGO’s cash and cash equivalents were $9.81 billion.

After an outstanding financial performance, Broadcom raised its fiscal year 2024 guidance. The company expects full-year revenue of nearly $51 billion. Its adjusted EBITDA is expected to be approximately 61% of projected revenue.

Favorable Analyst Estimates

Analysts expect AVGO’s revenue for the third quarter (ending July 2024) to grow 45.6% year-over-year to $12.92 billion. The consensus EPS estimate of $12.11 for the current quarter indicates a 14.9% year-over-year increase. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.

For the fiscal year ending October 2024, Street expects Broadcom’s revenue and EPS to grow 43.4% and 13% year-over-year to $43.37 billion and $47.74, respectively. In addition, the company’s revenue and EPS for the fiscal year 2025 are expected to increase 15.3% and 25.6% from the previous year to $59.22 billion and $59.95, respectively.

Bottom Line

As AI continues to revolutionize several sectors, chipmakers such as Broadcom are at the forefront, offering essential semiconductor and infrastructure software solutions powering this technology. Driven by robust AI demand and VMware, AVGO reported solid second-quarter performance, exceeding analysts’ estimates for revenue and earnings.

The management expressed confidence in the company’s growth prospects by raising the company’s fiscal year 2024 guidance for revenue to $51 billion and adjusted EBITDA to 61% of revenue. Moreover, AVGO’s strong financial health enabled it to approve a quarterly dividend of $5.25 per share, payable on June 28, 2024.

The company pays an annual dividend of $21 per share, which translates to a yield of 1.17% on the current share price, while its four-year average dividend yield is 2.69%. Its dividend payouts have grown at CAGRs of 12.9% and 17.5% over the past three and five years, respectively. Broadcom also raised its dividend payouts for 13 consecutive years.

In the last quarterly earnings release, AVGO announced a ten-for-one forward stock split of its common stock, making ownership of Broadcom stock more accessible to investors. The company’s decision to execute a stock split represents a strategic move to enhance shareholder value and broaden investor participation.

By making its shares more accessible and increasing liquidity, Broadcom positions itself to attract a diverse array of investors keen on capitalizing on the AI-driven semiconductor boom. The stock split is a pivotal catalyst that could propel AVGO’s growth trajectory forward, cementing its status as a critical player in the evolving tech industry.

In a report released on June 16, William Stein from Truist Financial maintained a Buy rating on AVGO, with a price target of $2,045. Further, Oppenheimer’s Rick Schafer increased the price target on Broadcom from $1,500 to $2,000 while maintaining a Buy rating on the stock.

In addition to Oppenheimer’s rating update, other analysts adjusted their price targets for AVGO. Goldman Sachs’ Toshiya Hari raised the price target from $1,550 to $1,850 and maintained a Strong Buy rating. Also, JP Morgan’s Harlan Sur raised the price target from $1,700 to $2,000 and maintained a Strong Buy rating on the stock.

In conclusion, for investors eyeing opportunities in the dynamic intersection of AI and semiconductor sectors, Broadcom’s ten-for-one stock split presents a compelling avenue to consider, backed by sound fundamentals and strategic foresight.

By Ino.com – See our Trader Blog, INO TV Free & Market Analysis Alerts

Source: Why Broadcom’s (AVGO) 10-for-1 Stock Split Could Attract a New Wave of Investors

Opinions Stock Market News

22 Jun

FX, Stocks, Commodities, Cryptos… Learn How to Know When This Key Price Pattern is Over (Video)

By Elliott Wave International

“12345-ABC.” That’s a basic Elliott wave pattern in a nutshell. That “12345” is a so-called impulse, and it’s a key price pattern to know, because impulses point in the direction of the larger trend. In this clip from a recent Trader’s Classroom lesson, host Favio Poci shows you step-by-step how to spot an impulse and know when it’s likely over. (Market in focus: EUR/CHF, but you can apply this to any liquid market.)

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For a very limited time, you can get free access to our online course, “How to Spot and Capitalize on Impulse Waves.” ($99 value)

In about 1 hour, you’ll learn:

“What do I look for?” — just what, exactly, should you look for on a price chart? See an easy way to spot an impulse wave.
“What does it tell me?” — Impulse waves are great at showing you the direction of the larger trend (which, as you know, is “your friend”!)
“Are there variations?” — Most impulse waves are simple, but some are… well, different. You’ll see how to quickly distinguish one from another.

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This article was syndicated by Elliott Wave International and was originally published under the headline FX, Stocks, Commodities, Cryptos… Learn How to Know When This Key Price Pattern is Over (Video). EWI is the world’s largest market forecasting firm. Its staff of full-time analysts led by Chartered Market Technician Robert Prechter provides 24-hour-a-day market analysis to institutional and private investors around the world.

Opinions Stock Market News

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