How does the brain think?

By Jennifer Robinson, Auburn University

Curious Kids is a series for children of all ages. If you have a question you’d like an expert to answer, send it to [email protected].


How does the brain think? – Tom, age 16, San Diego, California


Have you ever wondered how your brain creates thoughts or why something randomly popped into your head? It may seem like magic – but actually the brain is like a supercomputer inside your head that helps you think, learn and make decisions.

Imagine your brain as a busy city with lots of streets and buildings. Each part of the brain has a specific job to do, just like certain areas of a city or certain buildings serve different purposes. When you have a thought, it’s like a message traveling through the city, passing from one area to another.

As a professor of psychology and neuroscience, I have studied the brain for almost 20 years. Neurologists, neuroscientists and neurosurgeons work every day to understand the brain better. And there’s still a lot to learn.

Your brain has four major compartments, and each compartment has lots of “buildings.”

Practice and repetition create skills

The neuron is a key player in the brain – these are tiny cells that send and receive signals and messages so they can communicate with each other.

Your brain has somewhere between 80 billion and 100 billion neurons. Neurons tend to group together to form neural tracts, which would be like the streets and highways in the city analogy. When you have a thought, neurons in your brain fire up and create electrical impulses. These impulses tend to travel along similar pathways and release tiny chemicals called neurotransmitters along the way.

These neurotransmitters are like the construction crew that builds the roads, making it easier for the messages to be delivered. You can imagine it as a dirt road, but as more traffic – that is, neuron signals – travel the dirt road, the road gets upgraded to a paved street. If the traffic continues, it gets upgraded to a highway.

As you learn new things and experience the world around you, these connections grow stronger. For example, when you are learning to ride a bike, you may be unsteady and find it hard to coordinate all of the different muscles along with your ability to balance. But the more you practice, the more the neurons controlling your muscles and your ability to balance fire together, which makes it much easier as you practice. Neurons are wiring together and forming neural networks.

That’s why practice and repetition are important for improving your skills, whether playing the piano or learning a language. Neural networks are created and then strengthened the more times they communicate together. Scientists have a saying in this field: “Neurons that fire together wire together.” Certain thinking or behavior patterns can be chalked up to this kind of repeated synchronized activity.

Developing creativity

You are conscious of only a very small portion of the information your brain takes in. It is constantly receiving input from your senses – sights, sounds, tastes, smells and touch. When you see a cute puppy or hear your favorite song, your senses send signals to the brain, triggering a chain reaction of thoughts and emotions.

The brain also stores memories, which are like files in a computer that you can access whenever you need them. Memories help shape your thoughts and influence how you see the world.

If you remember a fun day at the beach, it might make you feel happy and relaxed. If you smell an apple pie, it may remind you of your grandma’s baking. These thoughts are triggered because these pleasant associations have been formed in your brain, and through repetition, strengthened over time.

Creativity is another superpower of the brain. When you let your imagination run wild, your brain can come up with new ideas, stories and inventions. Artists, writers and scientists all use their creative brains to explore new possibilities and solve problems.

Have you ever experienced a “eureka” moment when a brilliant idea pops into your head out of nowhere? That’s your brain’s way of connecting the dots and coming up with a solution.

Walnuts, leafy greens, chickpeas and berries are on the list of brain foods.

Keeping your brain healthy

Most scientists agree that sleep is really important for your brain to process information from the day and to allow it to rest and form new connections. A lot of people find that they have new ideas or thoughts after a good night’s sleep. The opposite is true, too – without enough sleep, you may feel like you can’t think straight.

Along with enough sleep, eat healthy foods and exercise. Just like a car needs fuel to run smoothly, your brain needs nutrients and oxygen to function at its best and to boost your thinking power.

Activities that challenge you are also great: reading, doing puzzles, playing music, making art, doing math, writing essays and book reports and journaling. Positive thinking also helps. Keep in mind that whatever you are consuming – what you’re eating or what you’re watching, listening to or reading – has the power to influence your brain.

Conversely, smoking cigarettes, vaping, drinking alcohol and using drugs kills brain cells. So might head injuries that can occur when playing sports such as football, soccer and bicycling – but wearing a helmet can make a big difference.

The brain is a fascinating organ that works tirelessly to create thoughts, memories and ideas. As technology continues to improve, scientists will learn more and more about how biological processes give rise to our conscious experiences. The challenges of learning about the brain are like a neuroscientific moonshot – we have a long way to go before we completely understand how it works.


Hello, curious kids! Do you have a question you’d like an expert to answer? Ask an adult to send your question to [email protected]. Please tell us your name, age and the city where you live.

And since curiosity has no age limit – adults, let us know what you’re wondering, too. We won’t be able to answer every question, but we will do our best.The Conversation

Jennifer Robinson, Professor of Psychology, Auburn University

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

Target Thursdays: UK100, Wheat & EURUSD hit targets!

By ForexTime

  • UK100 bulls bag 770 points
  • Wheat “throwback” rewards bears
  • EURUSD secures all bearish targets

Here are how these discussed instruments performed this week:

 

    1) UK100 touches fresh record high

  • Where and when was Target Price (TP) published?

In our week ahead article published on Friday, 3rd May:

We were bullish on the UK100 and suggested that a solid “close above 8200 may encourage a move toward the next psychological level at 8300”

 

  • What happened since TP was published?

After hitting a fresh all-time high last Friday, the index extended gains on Tuesday after the bank holiday at the start of the week.

A weaker pound and optimism around the Bank of England (BoE) cutting interest rates down the road have turbocharged FTSE100 bulls.

Note: UK100 could see more volatility this week due to the upcoming BoE meeting and Q1 GDP figures

 

  • How much in potential profits?

Those who took advantage of a move above 8223 would have been rewarded 770 points.

 

    2) Wheat ready to resume upside?

  • Where and when was Target Price (TP) published?

Earlier in the week, we discussed how FXTM’S new commodity Wheat could push higher due to fundamental forces.

However, we cautioned that “prices may experience a technical throwback” with “sustained weakness below 629 opening a path towards 615….”

 

  • What happened since TP was published?

Wheat prices slipped on Wednesday, tumbling towards the 615 level before prices rebounded back towards 629.

Note: The soft commodity could see more volatility this week due to the WASDE report on Friday.

 

  • How much in potential profits?

Traders who took advantage of the breakdown below 629 and exited at 615 would have caught a roughly 2% move to the downside.

 

    3) EURUSD hits all bearish targets

  • Where and when was Target Price (TP) published?

This technical scenario (EURUSD) is based on the FXTM Signals that are released once a day, before the opening of the U.S. trading session.

These signals are designed around a trading instrument’s most influential factor – PRICE – making them a powerful asset to your trading strategy.

It can be found in the MyFXTM profile under Trading Services… FXTM Trading Signals.

 

  • What happened since TP was published?

The EURUSD fell as the dollar appreciated across the board.

Market caution and hawkish comments from a Fed official seem to be supporting the greenback.

 

  • How much in potential profits?

EURUSD has hit all its profit targets.

Traders who entered at 1.07418 and exited at the final target level of 1.07271 would have gained roughly 15 pips.

Feel like you missed out on these profits?

You can keep following our “Daily Market Analysis” for fresh trading ideas and opportunities across global financial markets.


Forex-Time-LogoArticle by ForexTime

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

US-Africa trade deal turns 25 next year: Agoa’s winners, losers and what should come next

By Bedassa Tadesse, University of Minnesota Duluth 

The African Growth and Opportunity Act (Agoa) is a landmark piece of trade legislation enacted by the United States in 2000. Its goal is to promote economic growth, development and poverty reduction in sub-Saharan Africa by providing qualifying countries with duty-free access to the US market for over 6,500 products. By eliminating import tariffs and quotas, Agoa aims to stimulate trade, attract foreign investment and foster economic integration between the US and African nations.

Agoa has made strides in boosting exports from eligible African countries to the US. Between 2001 and 2021, the annual value of US imports from Agoa-eligible countries nearly tripled, from US$8.15 billion to US$21.8 billion. The trade preferences have particularly benefited sectors like apparel, textiles, agriculture and light manufacturing. However, Agoa’s impact has been uneven across the region. Some countries have used the opportunities more effectively than others.

As Agoa approaches its 25th anniversary next year, policymakers are considering extending it for a further 16 years. I recently conducted a comprehensive review of scholarly articles and policy reports that analyse the impact of Agoa on the economic performance of sub-Saharan Africa. Below are the four key observations.

1. Some countries have benefited more than others

Agoa’s benefits can’t be measured in just one metric. They reflect in various terms for various countries. But available research indicates that the countries that benefited most from Agoa include South Africa, Kenya, Lesotho, Mauritius, Madagascar, Ethiopia and Ghana.

These nations have used Agoa preferences to substantially increase their exports to the US, particularly in sectors like apparel, textiles and light manufacturing.

Kenya, where apparel-dominated exports to the US have grown from US$55 million in 2001 to US$603 million in 2022, is a shining example of growth in exports. Mauritius exported chocolate and basket-weaving materials. Mali exported buckwheat, travel goods and musical instruments until its 2022 suspension. Mozambique exported sugar, nuts and tobacco. Togo exported wheat, legumes and fruit juices.

Lesotho’s success story is equally inspiring. It has had rapid export growth and job creation in its apparel sector, and this has contributed to new manufacturing jobs.

These success stories underscore the potential of Agoa to drive economic growth and job creation.

2. Some countries have not benefited much

Central and west African countries have not extensively used Agoa’s benefits. They have been held back by weakness in infrastructure, governance and global market integration.

Burundi, the Central African Republic, Equatorial Guinea, Eritrea, The Gambia, Guinea-Bissau and Mali have seen little export growth and foreign direct investment, or no benefits.

3. Reason for the uneven benefits

The variation in Agoa’s impact across sub-Saharan Africa is down to several factors. First, countries with better infrastructure, stable governance and conducive business environments are better positioned to attract foreign investment and increase exports.

Second, the level of economic diversification and export capabilities matters. Countries with more diversified export baskets and established manufacturing sectors have managed to make the most of Agoa’s opportunities.

Third, national policies and strategies to complement Agoa are essential. Countries that put in place policies to improve productivity, integrate value chains and ease supply-side constraints appear to have had success under Agoa. Cultural (historical) connections with the US market may have also provided an advantage for some countries, like Kenya and Lesotho.

4. What the future holds

The US Senate is considering extending Agoa for another 16 years. It is vital to consider the lessons learned from the past 25 years.

Diversify the economy and add value: Many countries still rely heavily on primary commodity exports. This leaves them vulnerable to global price movements and limits their economic development prospects.

Invest in infrastructure: Transport, energy and communication are critical to enhance competitiveness and attract more foreign direct investment. Public-private partnerships and multilateral development financing could help to fill infrastructure gaps.

Promote good governance, political stability and institutional reforms: These create an enabling environment for businesses and investors. It means strengthening legal frameworks, combating corruption and ensuring the rule of law.

Build capacity and develop skills: It should be a priority to enhance human capital and create a skilled workforce that can support the other steps outlined above.

Recognise the diverse economic, political and social contexts in sub-Saharan Africa: Tailored strategies and targeted assistance could work better for individual countries.

As Agoa approaches its 25th anniversary, the potential extension through 2041 presents a strategic opportunity. The sub-Saharan African countries should refine and broaden Agoa’s impact to better serve the diverse needs of the region. By tackling the uneven impacts and focusing on sustainable development goals, Agoa can continue to play a part in the region’s economic transformation. The US and beneficiary countries must work together closely to ensure the benefits are widespread and inclusive.The Conversation

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.

 

What’s in a VIN? How to decode the vehicle identification number, your car’s unique fingerprint

By Jordan Frith, Clemson University 

Every vehicle built after 1981 has a unique vehicle identification number, or VIN. The location of this string of letters and numbers varies, but it’s located somewhere on every car, SUV, motorcycle and truck – typically on a small metal plate or a sticker.

VINs serve many purposes. They help consumers learn about a used car’s history, including whether it was stolen, or determine whether rebates for a particular electric vehicle are available. This code appears in the paperwork necessary to do everything from insuring your car to selling it.

I research data standards and became interested in VINs while doing research for my book about the cultural history of barcodes.

Like barcode numbers, a VIN’s characters are standardized. They can tell a story if you know what to look for.

A string of numbers and letters with the heading 'Decoding the VIN'
A lot of information is packed into these 17 characters.
The Conversation U.S., CC BY-SA

What VINs can tell you

VINs can convey at least seven pieces of information.

  1. Origin
    If a VIN begins with a 1, 4 or 5, that means it’s a vehicle assembled in the U.S. Many other countries have their own unique identifier. A 2, for example, means the vehicle was made in Canada; a J stands for Japan.
  2. Manufacturer
    The second and third characters indicate the manufacturer. In some cases, the code corresponds with a line of vehicles that now belongs to a larger corporation. Dodge and Jeep, now part of Stellantis, each has its own. So does Lincoln, which became a division of Ford Motor Co. in 1922.
  3. Description
    The fourth through eighth characters provide several details, such as body type and engine type.
  4. Security
    The ninth character is a “check digit” determined by a complex mathematical equation based on the rest of the VIN’s numbers and letters. This digit, either a number or the letter X, is used to authenticate that the VIN is not a forgery.
  5. Year
    The 10th character indicates the model year. There’s only one slot for this, and not all letters and numbers are used, resulting in repetition. An R could signal either 2024 or 1994, for example.
  6. Factory
    The 11th character indicates the specific plant where the vehicle was assembled.
  7. Serial number
    The VIN’s final six characters compose a serial number that differentiates the vehicle from all others made in the same factory that are the identical type and model year.
A drawing of a car with the heading 'Where's my VIN?'
Vehicle identification number locations vary but are generally found in one of four places.
The Conversation U.S., CC BY-SA

Finding more information

Only experts can tell where a vehicle was assembled or what type of engine it has by looking at its VIN. But help is available.

The National Highway Traffic Safety Administration provides a handy VIN decoder. When I plugged my vehicle’s VIN into the decoder, the site correctly determined that my SUV is a 2011 Subaru Forester with an automatic transmission.

Of course, I already knew all that.

What I didn’t realize was that it weighs between 4,000 and 5,000 pounds, has a 2.5-liter engine and features side curtain airbags to protect the driver and passengers in the front and back seats. I also learned that this Subaru Forester was assembled in Gunma, Japan.

Those details had been invisible to me as a consumer, but they had been within easy reach ever since I bought my Forester in 2018. I had somehow driven that car well over 100,000 miles without realizing the number on the side of my driver’s seat contained some history.

Before buying the Forester, even though I didn’t know that my VIN could say so much, I did run it through a free online system to make sure it hadn’t been stolen.

To be sure, VINs won’t tell you everything you might want to know about a vehicle, such as what color it was when it rolled off the line. But if you can do a little decoding and make use of widely available online tools, they do harbor important information.The Conversation

Where’s your VIN and what’s it for?

 

About the Author:

Jordan Frith, Pearce Professor of Professional Communication, Clemson University

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

USDSEK: Golden cross on the horizon?

By ForexTime 

  • USDSEK jumps on Riksbank cut
  • Currency pair in megaphone pattern
  • Key point of reference at golden 161.8 Fib level
  • Potential golden cross on horizon
  • Other key levels at 11.0678 and 10.8333

The USDSEK punched above 10.9 on Wednesday after Sweden’s central bank cut rates for the first time in eight years!

In an expected move, the Riksbank trimmed its policy rate by 25 basis points to 3.75% and signalled two more cuts in the second half of 2024. This makes Sweden’s Riksbank the second major one after the Swiss National Bank to cut interest rates.

As of writing, traders see a 67% probability of another 25 basis point Riksbank cut by June with this fully priced in by August.

The Riksbank dovish stance contrasts with the US Federal Reserve which has struggled to cut rates in the face of sticky inflation.

Incoming data from the US this week is likely to influence bets around when the Fed will join the rate cut club.

At 12:30, GMT, the Unemployment claims data out of the US is expected to show 212,00 individuals filed for unemployment for the first time during the past week. If so, this will signal a relatively healthy labor market and continue to weaken bets of near-term rate cuts.

Technically speaking,

USDSEK is in a broadening pattern, also known as a megaphone.

In a broadening pattern, price peaks and valleys, are bounded by two diverging trendlines.

USDSEK is in a 3-day rally (coming off the support of the megaphone) and may be heading for the upper trendline of the pattern at 11.0678.

Golden cross on the horizon?

Interestingly, the 50-day SMA is close to crossing above the 200-day SMA.

This price phenomenon is called a “golden cross” and is used as an early “warning” sign to show that price could rally further.

When we add the Fibonacci retracement tool, drawn from November 30th 2023 high (10.5387) to December 27th 2023 low (9.9043), we see 10.9309 at the golden fib (161.8%)  ratio acting as resistance and a point of reference.

A strong close above this level may open the floodgates for USDSEK bulls (those looking to see the minor pair rally).

However, USDSEK bears (those looking to see a decline in the pair) will have their eyes set on the following levels.

  • 10.8333: the 21-day SMA

  • 10.7079: the lower trendline of the broadening pattern

Finally, the Relative Strength Index, – an indicator that shows overbought and over-sold zones- is above the 50-point mid-way line and pointing upwards towards the overbought zone, signaling a bullish sentiment in the asset.


Forex-Time-LogoArticle by ForexTime

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

Oil prices are rising amid rumors of increased production by OPEC countries. European indices are growing amid the “dovish” position of the ECB

By JustMarkets

The US stock indices traded mixed on Tuesday. The Dow Jones Index (US30) rose by 0.08%, while the S&P 500 Index (US500) gained 0.13%. The NASDAQ Technology Index (US100) closed negative 0.10% yesterday. Minneapolis Fed President Kashkari’s comments on Tuesday were hawkish when he said that given the latest inflation data, he doubts that Fed policy is restrictive enough to bring price growth back to the Fed’s 2% target. He added that the Fed will likely keep interest rates unchanged “for an extended period” until it is satisfied that inflation will align with the target. Investors await further comments from the central bank and Friday’s Michigan consumer sentiment index to better understand how rates will move.

First-quarter earnings results were mostly better than expected, which is favorable for the stock. First-quarter earnings are expected to be up 6.5% YoY, well above the 3.8% forecast before the reporting season.

Equity markets in Europe mostly went up yesterday. Germany’s DAX (DE40) rose by 1.40%, France’s CAC 40 (FR40) closed 0.99% higher, Spain’s IBEX 35 (ES35) added 1.50%, and the UK’s FTSE 100 (UK100) gained 1.22%.

ECB Governing Council representative De Cos said that the ECB may cut interest rates in June if inflation persists. On the back of positive economic news from the Eurozone, European indices were supported on Tuesday. Eurozone retail sales for March rose by 0.8% m/m, which exceeded expectations of 0.7% m/m and was the largest increase in a year and a half. German factory orders for March unexpectedly fell by 0.4% m/m, weaker than expectations of 0.4% m/m. German trade news was better than expected: exports for March added 0.9% m/m, stronger than expectations of 0.3% m/m. In addition, imports for March unexpectedly rose by 0.3% m/m, stronger than expectations of 1.0% m/m.

WTI crude oil prices fell to $78 per barrel on Wednesday, back to their lowest levels in nearly two months after reports that Russian Deputy Prime Minister Alexander Novak said OPEC+ may consider increasing oil production. The group of major producers will meet on June 1 to decide on production policy for the year’s second half. The current supply agreement, which takes about 2.2 million barrels a day off the market, expires at the end of June.

Asian markets were mostly up on Wednesday. Japan’s Nikkei 225 (JP225) closed up 1.57% yesterday, China’s FTSE China A50 (CHA50) added 0.25% for the day, Hong Kong’s Hang Seng (HK50) was down 0.53% for the day, and Australia’s ASX 200 (AU200) was positive 1.44%.

The Hang Seng (HK50) attempted to near its highest level in eight months as traders focused on Chinese President Xi Jinping’s visit to Europe this week and how trade relations will develop despite ongoing inspections of various sectors. On the fiscal front, Beijing will allocate billions of yuan to upgrade infrastructure in China’s cities over the next three years. Meanwhile, foreign exchange reserves in China fell more than expected to US$3.20 trillion in April, and Hong Kong’s fell to the lowest level in six months, US $416.4 billion.

Finance Minister Shun’ichi Suzuki repeated a warning that authorities are ready to respond to excessive currency volatility. At the same time, Bank of Japan Governor Kazuo Ueda said they will study the impact of yen movements on inflation to guide policy decisions. Analysts say the intervention will only give the authorities some time, given the sharp interest rate differential between Japan and the US.

S&P 500 (US500) 5,187.70 +6.96 (+0.13%)

Dow Jones (US30) 38,884.26 +31.99 (+0.082%)

DAX (DE40) 18,430.05 +254.84 (+1.40%)

FTSE 100 (UK100) 8,313.67 +100.18 (+1.22%)

USD Index 105.37 +0.32 (+0.32%)

Important events today:
  • – German Industrial Production (m/m) at 09:00 (GMT+3);
  • – US Crude Oil Reserves (w/w) at 17:30 (GMT+3);
  • – US FOMC Member Cook Speaks at 20:30 (GMT+3).

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.

Japanese yen weakens despite government warnings

By RoboForex Analytical Department

The USD/JPY pair is on the rise again this Wednesday, recovering more than half of its previous losses despite ongoing warnings from Japanese authorities about sharp fluctuations in the yen. Finance Minister Shunichi Suzuki reiterated today that the government is prepared to act against excessive currency volatility. Additionally, Bank of Japan Governor Kazuo Ueda noted that the BoJ is assessing the impact of yen movements on inflation to inform future decisions better.

Last week, the yen strengthened by 5.2%, a move that the market largely attributes to financial interventions. While there has been no official confirmation of these measures, the market’s interpretation is bolstered by data from the Bank of Japan, which indicates approximately 60 billion USD in expenditures. These actions are likely aimed at stabilising the national currency’s value

However, these interventions only provided a brief respite for the authorities. The yen’s decline remains primarily influenced by the significant interest rate differential between the US Federal Reserve and the Bank of Japan. With rates at 5.5% and 0%, respectively, this disparity continues to exert downward pressure on the yen, and as long as it persists, the currency is likely to remain weak.

USD/JPY technical analysis

On the H4 chart, USD/JPY is currently forming a wave of decline towards 151.40. The local target of 151.86 has already been reached. The market is now correcting from the previous wave of decline and is expected to reach at least 156.00. After this correction, a new phase of decline towards 151.40 may begin. This scenario is technically supported by the MACD oscillator, whose signal line is below zero but directed upwards.

On the H1 chart, USD/JPY has formed a consolidation range around the 154.00 level, with an anticipated upward breakout leading to a correction towards 156.00. Currently, a growth link to 155.88 is forming. Following this, a potential decline back to 154.00 (testing from above) may occur before possibly rising again to 156.00. The Stochastic oscillator confirms this technical outlook, with its signal line above 80 and poised for a decline.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

Is Boeing (BA) a Recovery Play? Evaluating Upside Potential and Risks

By Ino.com

The Boeing Company (BA), a stalwart in aircraft manufacturing and services, has faced a cascade of challenges so far this year. Just as the dust was settling on its mid-air blowout incident in January, another report emerged of a plane having mechanical failures, though this one is somewhat different from the reports we’ve already heard.

This time, it’s a Delta flight from New York to Los Angeles, reporting a problem with the emergency slide on the right wing and a strange sound. While this isn’t good news for Boeing, given that the plane is quite old (flying since 1990), it’s not expected to cause too much trouble either.

Now, let’s evaluate the upside potential and risks associated with investing in BA, considering factors like financials, growth prospects, valuation, and industry dynamics.

A Tumultuous Start to 2024

Boeing and its aircraft manufacturer have faced significant media attention since the start of 2024, with a series of incidents prompting investigations. In January, an Alaska Airlines Boeing 737 MAX 9 had to make an emergency landing in Portland, Oregon, because a part of the plane’s fuselage blew out.

Although there were no casualties, the U.S. National Transportation Safety Board (NTSB) investigation revealed that the door was not properly secured due to missing bolts. As a result, it led to a grounding of its 737-9 MAX fleet, increased scrutiny of the plane maker’s 737 production and safety processes, and decreased overall plane production.

Later in January, an ANA (All Nippon Airways) Boeing 737-800 had to return to Japan after a crack was found on its cockpit window during flight.

On February 21, a United Airlines Boeing 757-200 made an emergency landing in Denver due to wing damage. Furthermore, in March, a United Airlines Boeing 777-200 had to land in Los Angeles after a tire fell off following take-off, damaging vehicles below.

Other incidents include a brief rudder control failure on a Boeing 737 Max in New Jersey, a United Airlines Boeing 737 MAX 8 going off the taxiway in Houston, and a Boeing 737 in Medford, Oregon, being found missing a panel.

Further, on March 18, an Alaska Airlines Boeing 737 had a cracked windshield upon landing in Portland.

Can Boeing Be Trusted Again?

Such incidents have dealt a significant blow to the company, raising concerns about BA’s approach of prioritizing profits over safety. Particularly, the Alaska Airlines incident led to tighter regulatory scrutiny, financial implications, and demands for compensation, potentially hampering Boeing’s growth trajectory.

However, the company has taken steps to improve quality, including expanding inspections, changing how work is performed, increasing training, and soliciting more feedback from employees.

“We are absolutely committed to doing everything we can to make certain our regulators, customers, employees and the flying public are 100 percent confident in Boeing,” Dave Calhoun, Boeing’s chief executive officer, said in a letter to employees last week.

Moreover, the company is also in talks to acquire Spirit AeroSystems Holdings, Inc. (SPR), a troubled supplier that builds the body of the Max jet, which had been a part of Boeing until it was spun out two decades ago. This potential acquisition reflects Boeing’s commitment to streamlining its supply chain, strengthening production capabilities, and exerting greater control over supplier policies and practices.

Disappointing Financial Performance

Despite a rocky start this year, Boeing reported a slightly better-than-feared quarter but continued to burn cash (almost $4 billion) as it tried to stabilize production. With fewer planes exiting factories in the last three months, Boeing’s revenue suffered a significant blow in the first quarter.

For the quarter that ended March 31, 2023, the company posted a 7.5% year-over-year decline in its total revenues to $16.57 billion. Its non-GAAP core operating loss came in at $388 million and $1.13 per share, respectively. Also, BA’s net loss for the quarter amounted to $355 million, which was not as steep as analysts had expected, and it was smaller than the $425 million loss in the prior year’s period.

Deliveries of Boeing’s commercial planes declined by 36% year-on-year in the first three months of 2024. The airline company also reported an operating cash outflow of $3.36 billion, compared with $318 million cash outflow in the last year’s period. Also, it posted a negative free cash flow of $3.92 billion, compared with a loss of $787 million a year ago. Further, the total company backlog grew to $529 billion, including over 5,600 commercial airplanes.

CEO Dave Calhoun, emphasizing the ‘tough moment,’ said, “Lower deliveries can be difficult for our customers and for our financials. But safety and quality must and will come above all else.”

Mixed Analyst Expectations

As Boeing continues to face substantial expenses in resolving identified issues, compensating affected parties, and handling potential legal matters, CFO Brian West believes the company will have a “sizable use of cash” in the second quarter.

Analysts expect BA’s revenue for the fiscal year (ending December 2024) to increase 4.2% year-over-year to $81.09 billion. However, the company is expected to report a loss per share of $0.55. For the ongoing quarter ending June 2024, its revenue is estimated to decline 3.6% year-over-year to $19.05 billion.

However, Street expects the company’s revenue for the next quarter (ending September 30, 2024) to increase by 18.5% year-over-year to $21.46 billion, while its earnings per share is expected to be at $0.41.

During this challenging period, Calhoun stated, “We are utilizing this period, challenging as it may be, to intentionally reduce the pace of operations, strengthen the supply chain, enhance our factory operations, and position Boeing to consistently deliver the reliability and quality our customers expect in the long run.”

Bottom Line

BA’s ongoing challenges, including numerous safety issues, production halts, and delayed deliveries, have put the firm in a complex situation where forecasting future demand has become increasingly precarious. These headwinds are significantly impacting its airline customer base, leading to declining profitability, cash flow problems, and inventory issues that might linger for a while.

Despite these short-term hurdles, the company is committed to strengthening its market position, achieving long-term growth outlooks, and improving predictability for both customers and investors. But this process is going to take some time and concerted effort.

Ultimately, the market’s confidence in Boeing depends on its ability to bounce back from its current challenges. However, the question remains: can the recovery be achieved soon?

Regarding price performance, the stock has plunged nearly 15% over the past three months and more than 33% year-to-date.

Moreover, the stock seems pretty pricey at the moment. In terms of forward P/E, BA is currently trading at 142.59x, which is substantially higher than the industry average of 23.99x. The stock’s forward EV/Sales of 1.81x is 2.9% higher than the industry average of 1.76x. Also, its forward EV/EBITDA of 33.92x compares to the industry average of 11.30x.

Besides, BA’s trailing-12-month gross profit and levered FCF margins of 11.48% and 4.01% are 62.7% and 38.9% lower than the industry averages of 30.80% and 6.56%, respectively. Also, its net income margin of negative 2.81% compares to the industry average of 5.86%.

Recently, Argus Research downgraded their outlook for BA stock from Buy to Hold, estimating a target price of $243.01, indicating a 40.1% upside. In addition, Northcoast Research downgraded the stock from Neutral to Sell.

Given these factors, we believe waiting for a better entry point in this stock could be wise now.

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

Source: Is Boeing (BA) a Recovery Play? Evaluating Upside Potential and Risks

Brent crude oil experiences modest uptick amid mixed market signals

By RoboForex Analytical Department

Brent crude oil is seeing a slight increase on Tuesday, priced around $83.57 per barrel. The market remains close to two-month lows, caught between optimism for a peaceful resolution to the Middle East conflict and concerns over crude oil inventories in the United States.

The primary focus in the stock market currently revolves around the ongoing negotiations between Israel and Hamas, facilitated by Egypt. However, these talks have hit an impasse, and there are renewed signs of conflict from both parties. Israel has expressed dissatisfaction, stating that the terms offered do not meet its demands, thereby complicating diplomatic efforts.

Despite these challenges, the ongoing conflict in the Middle East contributes to supporting energy prices due to fears of potential disruptions in raw material supplies. On the demand side, Saudi Arabia has recently increased its oil selling prices to Asian buyers, indicating an expectation of robust demand, particularly during the upcoming summer. This adjustment is often seen when a producer is confident about expanding demand, with Saudi Arabia likely counting on strong consumption from China, the world’s leading oil importer.

Brent technical analysis

On the H4 chart, Brent has achieved the local target of the growth wave at 91.50. The correction towards 82.70 is nearing completion, and we anticipate the formation of a consolidation range above this level. Should the price break upwards from this range, a new wave of growth towards $95.00 could be initiated. This bullish scenario is technically supported by the MACD indicator, which shows the signal line at the lows under the zero mark, indicating potential growth to new highs.

On the H1 chart, the structure of the fifth wave of correction to 82.70 has been formed. A consolidation range has developed above this level, and we expect a growth link to 84.44. Should this level be surpassed, it could open the potential for a growth wave to 85.70, which is the initial target. This technical outlook is corroborated by the Stochastic oscillator, with its signal line above 20 and prepared to ascend to 80.

 

Disclaimer

Any forecasts contained herein are based on the author’s particular opinion. This analysis may not be treated as trading advice. RoboForex bears no responsibility for trading results based on trading recommendations and reviews contained herein.

FXTM’s Wheat: Touches fresh 2024 high!

By ForexTime

  • Wheat kisses new 2024 high
  • Watch out for WASDE report on Friday
  • Bulls back in control on D1 charts
  • Key levels at 638, 629 and 615

FXTM’s new Wheat commodity is in the spotlight after hitting a fresh 2024 high on Tuesday!

Prices hit the 638 level this morning as fundamentals powered bulls.

Note: Wheat is priced per bushel. One bushel is equivalent to 60 pounds.

The soft commodity could see more action this week ahead of the highly anticipated WASDE report.

Note: WASDE is the abbreviation for The World Agricultural Supply and Demand Estimates.

This report is published by the United States Department of Agriculture (USDA).

But before we take a deep dive into the world of Wheat, here are the basics:

What is Wheat?

Wheat is a widely cultivated grain that is consumed across the world.

It is the main ingredient for many foods, ranging from bread, biscuits, cereals, and cakes among many other foods.

What does FXTM’s Wheat track

FXTM’s Wheat tracks the Chicago Soft Red Winter (SRW) futures.

This is the most actively traded wheat contract in the US and the global standard wheat benchmark in the world.

Some fun facts:

  • One of the oldest crops in the world
  • 6 classes of wheat grown across the US
  • China is the largest wheat producer
  • Russia is the biggest wheat exporter
  • Gained over 8% month-to-date

The lowdown…

Wheat prices have been appreciating in recent weeks.

The soft commodity has gained over 13% since the start of April due to worries about dry weather in key exporting countries.

A lack of rain in Russia, the world’s largest wheat supplier has fuelled concerns over global production.

The bigger picture

The world’s Wheat stockpiles have contracted over the past four years.

Russia’s war in Ukraine along with other geopolitical developments and negative weather conditions in key exporting regions have hit global wheat stocks.

This has fuelled concerns over a tightening between the supply and demand of wheat.

Why this is an important week

All eyes will be on the USDA’s World Agriculture Supply and Demand Estimate report due on Friday.

This may offer investors fresh insight into the production and stocks of key grain for 2024.

Should the report show a decline in wheat production, this could push prices higher.

Technical outlook…

Bulls have made their presence known on the daily charts, with prices flirting around the 2024 high.

Still, prices may experience a technical throwback before the uptrend resumes.

Looking at the H1 charts, prices are under pressure with 629 acting as a resistance level.

  • Sustained weakness below this point may open a path towards 615, 50 SMA, and 595.
  • Should prices push back above 629, this could trigger a move back towards 638 and the next psychological level at 650.


Forex-Time-LogoArticle by ForexTime

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