Hennessy Capital surges 34% on merger – here’s what you need to know

Hennessy Capital Acquisition Corp IV Class A (NASDAQ: HCAC) has recently gained a fresh vote of confidence from investors. The Special Purpose Acquisition Company (SPAC) has seen an impressive gain of 34% in the share price over the past month. On August 18th, the company announced it had reached a definitive agreement with Canoo, a high growth EV manufacturer to merge both companies. The Hennessy Capital merger is expected to be completed in Q4 of 2020, hence driving bullish investor sentiment. This article will breakdown what you need to know about the HCAC merger and the outlook on Canoo moving into 2021.

Hennessy Capital Key Merger details

Firstly, the merger is set to take place before the end of 2020, which will merge the two companies into one under the name Canoo (NASDAQ:CNOO). The transaction is set to raise a $600 million in capital. The funding will assist with the development and manufacturing of the innovative skate-board platform. The merger is valued at $2.4 Billion pro form, setting the tone for another EV powerhouse entering the US market. The merger is still expected to take place within the bounds of the fiscal year of 2020. However, this is assuming shareholders approve for the merger to take place and “satisfaction or waiver of other customary closing conditions.”

“We are thrilled to partner with Canoo on their mission to reinvent urban mobility with a greener, simpler and more affordable portfolio of EV solutions. Unlike any other EV company, Canoo has created a go-to-market strategy that captures both B2C and B2B demand with the same skateboard architecture and technology that has already been validated by key partnerships such as with Hyundai.”

Daniel Hennessy, Chairman & Chief Executive Officer of HCAC

HCAC Investors expect big things in 2022

Initially, we have seen numerous EV innovators enter the US markets this year via the modern day capital raising method, SPAC. The merger will provide Canoo the much needed capital to iniate its expansion. The first vehicle is set to launch in 2022, in which it plans to manufacture its first 10,000 vehicles. The Business to Business delivery vehicle program is expected to launch in 2023.

Furthermore, Canoo has projected 2024 revenue of $1.43 billion and expansion of its manufacturing to deliver 50,000 vehicles. The company also predicts its first profit at $188 million during the year of 2024. The outlook does provide a positive spin for investors, however other EV manufacturers plan to initiate much higher delivery volumes and sales before 2024. However, investors are intrigued by the innovative “skateboard” technology. This differentiates Canoo from its US and Chinese competitors.

The skateboard architecture allows Canoo to provide enough interior space without creating a gigantic vehicle. Second, Canoo is targeting the millennial market with its subscription-based EV model and unorthodox interior design.

Summary

Before I begin, I am obliged to remind our viewers that this article is not financial advice but rather investment commentary from extensive research.

In conclusion, the closing timeline for the HCAC/Canoo merger has been the key driver in the share price. Upon competition of the merger, investors will have access to trade Canoo directly on the NASDAQ. The general outlook for Canoo looks strong however the company has a long way to go before they begin the delivery of their first vehicles. Therefore, the share price is likely to remain volatile during this period of low activity, whilst Canoo concrete their supply chain and planning for expansion.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Will Workhorse land the USPS deal? – here’s everything you need to know.

Workhorse (NASDAQ:WKHS) investors are gearing up for an announcement from the United Stated Postal service (USPS) regarding their $6 Billion deal to revamp their delivery vehicles. WKHS surged 12.62% on Friday as Roth Capital analyst Craig Irwin noted that Workhorse was best fit for the USPS deal. Workhorse is the only contender for the deal offering an EV solution, which would aim to slash long term USPS maintenance costs.

The announcement is speculated for the 13th of October, which USPS may announce the winner or winners of the Next Generation Delivery Vehicle deal. Interestingly, the Moving Forward act passed by Congress will require USPS to replace 75% of their existing vehicles with EV or zero carbon alternatives. The bill will also prohibit USPS in purchasing the current delivery vehicle models (Grumman Long Life Vehicle) by 2040. This article will breakdown all the key information you need to know as we edge closer to the announcement date.

Key points

  • USPS speculated to announce the winner for the Next Generation Delivery Vehicle deal on the 13th of October 2020 (not confirmed by USPS, only speculation).
  • The deal initially was announced for $6 billion however sources have projected the costings to be in the ball park of $8.1 billion (See source here)
  • Recently passed Congress bill, The Moving Forward act shows positive positioning for Workhorse in the USPS deal. The act will put pressure on USPS to upgrade their delivery vehicles to a Zero Carbon solution.
  • Analysts argue that the WKHS stock has already “priced in” the potential USPS deal, however the Bulls believe the upside potential from the announcement will remain exponential.

Who are Workhorse’s competitors for the USPS deal?

Workhorse is one of three remaining contenders for the award. Details regarding the current prototypes haven’t been disclosed in full detail yet. From what we know Workhorse is the only competitor offering a complete EV transport prototype. According to linked sources the Karsan/Morgan Olsan is a hybrid prototype and Ford/Oshkosh is completely diesel.

Karsan/Morgan Olsan

A hybrid delivery vehicle designed by Karsan Otomotive and manufactured by USPS longstanding business partner Morgan Olsen. The prototype delivery van is to operate with two ports, one for convential petroleum and the other a plug-in for electricity. See the full prototype details here.The strong business relationship built between Morgan Olsan and USPS does pose a threat to Workhorse investors.

Oshkosh/Ford

The current transport van prototype is to run on diesel and incorporate a Ford Transit body. Ford is one of the largest vechile manufacturers in the world, boasting a $28 billion market cap. See the full prototype details here. If Oshkosh/Ford are putting forward a diesel prototype, the Moving Forward Act may have an external impact on USPS decision. However, Ford have gigantic manufacturing capabilities of which outnumbers Workhorse tremendously.

How volatility will impact WKHS next week?

Before I begin, I remind our viewers that this is not financial advice. Instead, the information is investment commentary from extensive research.

After months of speculation surrounding the USPS deal, investors are eager for an announcement next week. The market will have one day prior to the speculated announcement, which pre-market suggests speculators are keen on making a bet on the deal. From my experience in trading during this period, good news won’t reflect on the stock price for very long. What we are seeing is large amounts of speculators jumping between announcements. We know after the announcement, if Workhorse are unsuccessful then the stock will deduct its “priced in” value which may be detrimental.

If Workhorse land this deal, analysts expect the stock to explode. However, timing during highly volatile situations will deduct some of the associated risk (opinion not advice). As we know many speculators are relying on positive news, and we can conclude positive news will only delay the volume of speculators cashing inAnother popular scenario is that USPS will further delay the announcement or not announce any progression on the deal at all. This could see speculators shed their holdings immediately and the stock price feeling a strong hit.

There is no doubt this will be a mammoth week for WKHS investors, and we will continue to cover the events as they unfold this week.

Disclaimer: The author of this article is currently holding a short term position in Workhorse (NASDAQ:WKHS) at $24.45 a share. Please read our disclaimer and disclosure below for more information.

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The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Tyger Fitzpatrick, Founder of YIG.

Johnson & Johnson set to acquire Momenta Pharmaceuticals – here’s what investors need to know

Johnson & Johnson announced this morning that they have entered a “definitive agreement” to acquire Momenta Pharmaceuticals at $52.50 per share. The acquisition has been confirmed as an all-cash transaction, which has been approved “unanimously” by the Board of Directors from both J&J and Momenta. The acquisition is set to be finalised later this year, assuming all the closing conditions are met by both parties in the tender process. MNTA is up 69.39% pre-market while J&J share price has remained unchanged according to pre-market movements.

Table of Contents 
1. Acquisition details 
2. What this means for MNTA and J&J investors?

What this means for both MNTA and J&J investors?

MNTA Investors

There is no doubt, this is a very positive opportunity for MNTA to accelerate it’s current research and development in the treatment of autoimmune and rare diseases. At the core of MNTA business, lies the exploration and development of auto-immune diseases which have little to no current treatments.

MNTA have four treatments in the pipeline which include the use of Nipocalimab, to treat generalized myasthenia gravis (gMG), hemolytic disease of the fetus and newborn (HDFN) and autoimmune hemolytic anemia (wAIHA). These are three examples of auto-immune diseases that cause the immune system to react in a counter intuitive manner, causing harm to the host. The J&J acquisition will allow for further development of these treatments, ultimately assisting MNTA to reach a cure for these auto-immune diseases. This is excellent news for MNTA investors assuming the acquisition can be smoothly and efficiently finalised by the end of 2020.

J&J investors

J&J is one of the largest multi-national pharmaceutical companies in the US, boasting a tidy Market Cap at $395 Billion USD. The $6.5 Billion acquisition should have little effect to the Cash assets for J&J. All-cash acquisitions are a preferred alternative for most corporations as Cash agreements will not fluctuate at the levels stock value does. As large corporations focus on steady stock growth, the higher the buyers stock goes – the more they end up paying for the acquisition.

This is definitely a strong opportunity for J&J to extend their operations into the autoimmune treatment sector.

“We’re excited by the opportunity to further advance patient care by combining Johnson & Johnson’s world-class R&D, commercial and supply chain capabilities with Momenta’s talented people, pipeline and deep expertise in this important area.”

Jennifer Taubert, Executive Vice President, Worldwide Chairman, Pharmaceuticals, Johnson & Johnson – read full statement by J&J here

Summary of the risk involved

MNTA stock has boosted dramatically as J&J have agreed to buy-out all outstanding shares in MNTA via all cash transaction at $52.50. The risk for investors is that in the event the acquisition falls out, investors who bought in above $30 may be left with a significantly over priced stock. Although acquisition fall outs are rare, we have seen the detrimental effect it has on the investor. The recent Boeing acquisition fall out with Embraer was due to a three year long negotiation between both parties. Agreements were never met and the initial agreement fell out as per the closing conditions.

Nonetheless, this is also a strong opportunity for J&J to expand their wings into the auto-immune sector, lead by MNTA. This is definitely an acquisition to watch come late 2020.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

J.P Morgan set to release earnings on Tuesday – here’s everything you need to know

JP Morgan Chase & Co (NYSE: JPM) alongside other corporate giants will face the music this week as they are set to release second-quarter earnings for 2020. The timing of the JP Morgan earnings report will be on Tuesday, July 14, 2020. While the investor conference call will commence at 8:30 a.m. (Eastern US). Expectations for J.P Morgan earnings are speculated to under-perform as an alarming number of borrower defaults continue to rise. The EPS expectation for J.P Morgan according to CNN Business research data suggest an EPS of $1.15 and a total of $30 billion in sales. This is in comparison to a brutally low EPS of just $0.78 in Q1 this year. It is wise to note expectations at $1.15 seem a fair and reasonable assumption however investors may underestimate the underlying effects the US economy has had on the banking Goliath.

Table of Contents
 
1. Expectations vs Reality
2. Will the V shaped recovery effect J.P Morgan earnings?
3. YIG's take on the up-coming earnings announcement

Expectations vs Reality

This earnings season for Q2 results have left investors divided as to how heavily the pandemic has effected these corporations. The Bulls remain optimistic on COVID-19 treatment hopes alongside signs that the economy has bounced back from what seemed to be an inevitable recession. The Bears have aligned there predictions with growing cases of COVID-19, an uncertain election and an earnings season that remains almost impossible to predict.

So what’s the reality? In such times like these, the human behaviour of investors tends to become somewhat more irrational. As an investor, I prefer to base my investments on the fundamentals and innovation of a company itself. Therefore, I do struggle to understand the over-bearing power of optimism in a crisis like this. In my opinion, the earnings for Q2 will give investors the first clear-cut sign of how US businesses are currently coping.

Recent data suggests both US and AUS banks have had continuing issues with defaults and frozen mortgages. For companies such as J.P Morgan, the reality may be a lot worse off than what we may have first thought. However, you cannot rule out the possibility that J.P Morgan have a trick or two up their sleeve to substitute their initial losses. It is in times like these when the highest quality of management must steer the ship away from the iceberg.

Will the V shaped recovery effect J.P Morgan earnings?

The short answer is that the V shaped recovery has impacted J.P Morgan. The V shaped recovery was a strategy put in place by the US Government to fast track the lingering effects of a deep recession. The idea is to pump as much money into the economy during a downturn. This strategy remains an effective strategy assuming COVID-19 can remain controlled. The V shaped recovery will come at a price, especially to beneficiaries.

This consequence of a V shaped recovery is relevant to J.P Morgan because it’s lending branches directly deal with commercial lending including retail and property. This poses a huge exposure of risk to the company as the economic condition remains uncertain. From a shareholders perspective, the earnings report may not phase them. Considering the current economic environment, investors understand companies aren’t expected to post record breaking results. However, the increase in lending defaults and missed payments is a fundamental risk long term investors will be monitoring closely.

The current forecasts for this quarter next year multiply the current EPS expectation by 6 fold. It is for this reason I do not believe long term shareholders will budge too much from Tuesdays announcement. From a micro-economic perspective, J.P Morgan earnings will give investors a better insight into the industry as a whole.

What YIG have concluded from the up-coming events

I am obliged to remind our viewers that this is not financial advice and only my commentary on the topic. 

The up-coming earnings report will give investors a better insight into how our largest US corporations are currently travelling in these tough conditions. YIG predict that the COVID-19 immune companies such as Netflix and Tesla will continue to impress investors throughout 2020. The financing and travel industries will portray the true effects of COVID-19 on some of our largest sectors.

YIG will keep our viewers updated throughout the week on earnings reports and what these results will mean for investors.

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you. 

What TVIX investors need to know before Credit Suisse delists the ETN on July 12th

Credit Suisse announced its intention to delist the popular Exchange Traded Note VelocityShares Daily 2x VIX (TVIX). Alongside 8 other publicly listed ETN’s, TVIX will no longer be traded on the NASDAQ effective of July 12th while new issuances suspended on the 3rd of July. If you aren’t completely familiar with ETN’s we will breakdown what they are and what happens when they delist from a public exchange such as the NASDAQ.

Table of Contents
1. What is an ETN
2. What does delisting mean for TVIX investors?
3. What current holders can do before and after the ETN delists?

What is an ETN?

An ETN such as TVIX is issued notes (bonds) from a financial institution that promise to pay the principle + the return on a certain index over an agreed period of time. The “due date” is when the financial institution will pay this principle+return amount to the note holder.

So what does this mean for investors currently holding TVIX?

Short Answer: History tells us low levels of liquidity in the OTC market is the biggest threat.

In comparison to ETF’s which pay a cash value to the owner on the effective delisting date. ETN’s generally move over to an Over-The-Counter (OTC) market. An OTC market trades financial securities without a brokerage or third party. This leaves only two parties entering a transaction to buy and sell. An OTC market is notorious for lower liquidity levels, meaning it will make it a lot harder to find a buyer willing to buy the security at the price you are willing to sell at. OTC’s are less regulated and transparency around the current “market driven” price is non-existent. This creates a larger transparency issue for both the buyer and the seller.

If we go back to 2016, Credit Suisse’s VelocityShares 3x Long Crude Oil ETN (UWTI) was one of the more infamous delisting cases in ETN history. At the time, the ETN was one of the most heavily traded of its type. Just two weeks after the announcement from Credit Suisse, a Thomas Reuter fund researcher estimated a $675 million sell off. This left many investors who were not experienced in ETN’s or OTC to become stranded on a boat with no paddle.

Taking the ETN over to OTC proves a challenge most investors would not want to take. Experienced traders may look to sell TVIX at a greater premium in 6-12 months time on the OTC. If we are talking risk-reward, taking the ETN into OTC will provide you absolutely no guarantee of finding a seller. Let alone selling at a marked up price to flip a profit.

What tools are in place for investors in TVIX?

As we do not offer financial advice only market commentary, I have left a statement by Credit Suisse in regards to what steps investors can take before and after the ETN delists. The full press release entails further details as to what investors can do before a delisting of an ETN.

Subject to the minimum redemption amount and other conditions, investors can continue to exercise their early redemption right with respect to the ETNs prior to, and following, the ETNs’ delisting, pursuant to the terms of the ETNs as described in the Pricing Supplement. If investors wish to exercise their early redemption right, they and their broker must follow the procedures set forth in the Pricing Supplement, which can be accessed on the Securities and Exchange Commission website at www.sec.gov

Credit Suisse Press Release 22/06/2020

The Link for more information is here 

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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Market Update: The bulls & bears are locked in a titanic battle – who will emerge victorious?

Written by Sergeo Domtchenko

Trying to make sense of all the movements this week has left many investors with a migraine. Bouncing around between significant gains & losses, the ASX 200 gathered momentum to finish the week 1.6% higher at 5942.6 points. This marks a 30.7% increase from the market lows that we experienced on March 23.

However, this week saw renewed Australia – China tensions, a spike in international infection rates, and the publications of lacklustre economic data. This has left many investors pondering whether global markets are bubbles that are on the verge of popping?

Are Global Markets Overly Inflated?

Before we race to any conclusions, our readers must understand this week’s Market Sensitive Events (MSEs). MSEs provide investors with explanations on why the market moved either up or down for the week.

Market Sensitive Events over the Past Week

Positives

  • The NSW Government announced the further relaxing of social restrictions, with 80 people now allowed to meet up for a social gathering from July 1.
  • Newly released data continues to support a slowing in the overall infection rate of Coronavirus cases in Australia.
  • The Federal Reserve & the RBA announced that they would be buying back more government bonds to reduce household borrowing costs.
  • Donald Trump proposed an additional U.S $1 billion infrastructure stimulus package that will support the U.S. economy in its recovery.
  • U.S. retail spending had its best month on record, rising by 17.7% in May.
  • A clinical trial of 2000 people in the U.K. found that the drug ‘Dexamethasone’ reduced COVID-19 ventilator 28-day fatalities by 33%.
  • Global oil prices continued their recovery this week, with WTI futures rising by 11% to be trading at U.S. $40.25 (at the time of writing).
  • The $AUD was not immune to the volatility but did rise to be trading at 68.67 U.S. Cents (at the time of writing).

Negatives

  • Lebanon was the latest country ‘bailed out’ by the International Monetary Fund (IMF).
  • According to Scott Morrison, “More than A$100 billion in economic activity has been lost since the outbreak of the Coronavirus in Australia.”
  • Scott Morrison also suggested that it may take at least two years for the Australian economy to recover to pre-COVID levels.
  • Newly released figures by the Organisation for Australian Economic Development (OAED) highlight that 2.5 years of employment growth was eradicated in April.
  • Australia’s unemployment rate rose to 7.1% after 227,000 jobs were lost during May.
  • The Department for Foreign Affairs (DFAT) confirmed that Australia would not be opening its international borders until 2021.
  • Multiple Australian governmental & private sector organisations fell victim to a wide-scale international cybersecurity attack on Friday.
  • Fears have been raised about the outbreak of a 2nd wave of Coronavirus cases; with India recording 10,000 new cases in one day.
  • The global death toll from the Coronavirus surpassed 445,000 this week.

Are the Bulls Here to Stay?

Short answer: Yes, I expect markets to trade in the green this week (opinion not advice).

With the global economy starting to get back on its feet, I do believe that global markets will continue to surge over the coming week. However, I must make it clear that I think this week’s forecasted gains will be purely driven by FOMO and nothing else (opinion not advice).

Last week was the first time that fear started to seep into global indices. This was mainly fixated surrounding the possible outbreak of a 2nd wave of COVID-19 cases. India recorded more than 10,000 new cases in one day, while all schools in Beijing were closed in a bid to contain the spread.

Also, tensions between China & Australia ran high as Beijing warned its citizens of coming to study in Australia. This comes after the Australian government seeks to conduct a global enquiry into the origins of the Coronavirus pandemic. To add insult to injury, the latest economic data revealed that Australia’s unemployment rate jumped to 7.1%. According to Scott Morrison, “It will take at least two years for the Australian economy to recover to pre-COVID levels.”

CNBC’s Jim Cramer believes, “Many investors are ignoring the economic fundamentals and geopolitical risks. Markets are being driven up purely by the influx of 1st-time investors.” With so much going on, more then ever, investors must be across global developments – let’s break down what we know.

1. Coronavirus

New data continues to support a reduction in the transmission of new COVID-19 cases in Australia. Markets will continue focusing their attention on any developments surrounding possible treatments/trial results. A clinical trial of 2000 people in the U.K. found that the drug ‘Dexamethasone’ reduced COVID-19 ventilator 28-day fatalities by 33%. However, a 2nd wave of COVID-19 cases is sweeping across reopening countries such as the U.S., China, and India. How will these developments play on the minds of investors?

2. Australia – China Tensions

It’s fair to say that Australia’s relationship with China has dissolved. It all started when Australia announced it would be pushing for a global enquiry into the origins of the pandemic. China retaliated by threatening to place import tariffs on 80% of Australia’s exports and advising citizens to avoid studying in Australia. To add insult to injury, many parliamentary officials believe that China was behind the latest cybersecurity attack that crippled many government agencies & private sector organisations. Will this be the catalyst that cripples Australian indices?

3. Local Economic Data

A whole host of economic data is set to be released this week. Preliminary trade, employment and wealth data is set to be published throughout the week. Also, the 2018/19 business report will be made available on Friday. Will worse than expected results cause markets to retreat?

Movers & Shakers on Friday

Stock Trading Price Daily Gain/Loss
AP Eagers Ltd (ASX: APE) $7.57 9.87%
Netwealth Group Ltd (ASX: NWL) $9.03 9.06%
Avita Medical Ltd (ASX: AVH) $0.46 8.33%
WiseTech Global Ltd (ASX: WTC) $23.40 7.78%
Altium Limited (ASX: ALU) $36.36 6.57%
Western Areas Ltd (ASX: WSA) $2.23 -3.46%
Perenti Global Ltd (ASX: PRN) $1.40 -4.12%
A2 Milk Company Ltd (ASX: A2M) $18.57 -4.23%
Vicinity Centres (ASX: VCX) $1.52 -4.72%
Scentre Group (ASX: SCG) $2.21 -4.74%

ASX Announcements to Watch This Week

  • Monday: Speech by the Reserve Bank Governor.
  • Tuesday: Preliminary Trade Data (May) from the RBA and the CBA’s ‘Flash’ Purchasing Managers Survey results will be released today.
  • Wednesday: Preliminary Mortality (March quarter) & Skilled Vacancies (May) data will be published.
  • Thursday: Finance & Wealth (March quarter), Job Vacancies (May) and Detailed Employment (May) data will be released today.
  • Friday: The Australian Business 2018/19 report is set to be published today.

If you enjoy our articles or want to learn more, you can subscribe to us for free via email and get updates when we post new articles. From all of us at YIG, thank you for the support.

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Here is our free, uncomplicated, and extensive ASX portfolio

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Written by Sergeo Domtchenko, Associate of YIG.

Russia and OPEC extend historic oil cuts – are oil stocks in limbo land?

The demand for oil is at a nightmarish level. The lack of travel, the signifcant omission of cars in a stay at home economy, and the Russia-Saudia Arabia oil war are causing the oil crisis. The first two problems stem from COVID-19, which should dissipate. However, Russia- Saudi Arabi, and OPEC hold the future direction of oil in the palms of their hands. Thus, investors must be on the same page when it comes to Russia-Saudi Arabia developments.

Also, to add insult to injury, suppliers continue to produce oil even while demand is still considerably low. Mainly because if oil companies stop producing oil, then bankruptcy and shutdown alarms start ringing. Consequently, the oil industry is suffering from supply and demand shocks.

On one side, you have COVID-19 controlling the demand for oil. Then on the other side, you have Russia-Saudi Arabia and OPEC dictating the supply of oil.

 

Why did OPEC – Russia extend oil cuts?

The insurgence in oil demand is creating hope for the market. The aspiration to stabilise the oil market saw OPEC, and Russia delay the supply cuts until July. Russia, Saudi Arabia and other OPEC members agreed to cut oil by 9.7 million barrels per day in July.

The decision to delay cuts is wise for now. Because confidence in the oil market is what people need. However, the decision to delay cuts could create a range of unwanted problems. First, as demand grows suppliers, especially shale oil suppliers in the US, could ramp up production. Considering the US is the opposition to Saudi Arabia and Russia, an increase in US production could trigger a ridiculous increase in Russia and Saudi Arabia’s oil supply.

Second, a global recession is inching further by the minute. Any week now, we could see investor confidence fall off a cliff. The threat of a recession is causing OPEC to factor in further contractions in oil demand during 2020. Also, a global recession would trigger mass unemployment and restructuring of the oil industry. Ultimately, threatening the survival of smaller oil companies. A recession could cause another demand shock. Especially, as unemployed people stay at home, confidence in the economy plummets, and the pool of discretionary income for travel shrinks.

 

What does the extension mean for oil stocks?

Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.

On face value, oil stockholders would be extremely bullish. Especially those that bought in on March the 21st- negative oil day. Why? Because the delay in historic oil cuts should see demand rise, and thus the price of oil stocks will climb higher. Therefore short term oil investors should see green in their portfolios for the coming weeks. (opinion not advice).

However, the temporary rise in oil prices is just that temporary. The demand and supply for oil should soon run into another brick wall. Whether that be a global recession or a possible re-ignition of tensions between major oil countries. OPEC’s expectations of further contractions in the demand for oil should signal warnings to oil investors.

Overall, if I were a short term-investor, I would ride the wave over the next few weeks and cash in on a nice capital gain. (opinion not advice). Mainly because investing in a market with an uncertain future outlook is not necessarily a wise investment decision. If I were a long-term investor I would hold and become an aggressive buyer when the oil industry takes another hit.

If you enjoy our article or are wanting to learn more, you can subscribe to us for free via email and get updated when we post a new article. From all of us at YIG, thank you for the support.

The information above is not financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

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https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Patrick McLoughlin, Senior Manager of YIG.

Here’s the latest on the German DAX and the opportunities that are arising for investors.

The DAX is an index made up of some of the largest companies within Germany listed on the Frankfurt Stock Exchange. The companies listed on the DAX must meet specific criteria – a testament to the high quality these companies display. The DAX data over a period of 42 years – is relatively linear (inc. inflation) showing a strong positive relationship between time and the price of the DAX. But the 30 companies inside the index are attracting investors in incredible volumes. Here’s 3 companies that have been the main talking points in regards to the DAX performance.

WireCard

Wirecard AG (ETR:WDI) is a German payment processor and financial services provider with a market capital north of $10 billion. The stock itself has fallen from grace with a gradual decline since 2018. The stock was yet to find it’s equilibrium pre-COVID, with the price now bottomed out at $86. Now this is not the only hot water Wirecard has slipped into, as news broke the German accountancy watchdog has allegedly opened an investigation according to the Financial Review. This looks like bad news for long term shareholders, however some investors have seen this as an opportunity to buy. Trading at half it’s value in 2018, this is a stock that is one to watch.

Bayer

Bayer AG (ETR: BAYN) is a well known German pharma bragging a market cap of $57 Billion. The stock has seen a steady recovery since the market crash as investors find confidence in veteran pharma which was established in 1863. The stock surged on Monday as the company made headway in it’s current lawsuit which has linked it’s Round-up weedkiller product with cancer. The Weed killer was taken on by Bayer in 2018 when they actioned a $63 billion acquisition of agricultural chemicals company Monsanto. This acquisition had unseen consequences, however the company is aiming to resolve these lawsuits as fast as legally possible. This is good news for investors as the weight of this multi-billion dollar lawsuit begins to lift.

Allianz

Allianz (ETR:ALVG) would have to be one of the most profound German companies performing on a global scale. The company boasts a market cap of $67 billion and an impressive dividend yield of 6.17%. The company has seen some strong gains over the past weeks, as the markets begin to back-track their losses. The company has found an equilibrium trading price at $160, roughly a 30% decrease in stock value. This company has strong management and the potential to completely recover within the next 1-2 years (opinion not advise). Allianz is very similar to the ASX Macquarie Bank. Both companies have exceptional management as well as boasting sensational financial results pre-covid. We could be looking at a very steady and strong recovery if the market remains steady over the next few months. This is a stock to watch.

It seems the German DAX continues to provide global investors opportunities to enter a market with strong yields and impressive corporate Goliaths. If you enjoy our German updates, you can subscribe to us for free below.

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

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https://youth-investment-group.com/portfolio/

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Market Update: US – China tensions escalate – is this bull market a sucker’s rally?

Despite the false bull market the Australian markets failed to maintain their positive momentum throughout the week. The ASX 200 slipped on Friday to close out the week 0.96% lower at 5497 points. However, this was not enough to erase the gains that were made by Moderna’s positive vaccine results

However, this week saw renewed tensions between the U.S. & China. Making investors wonder whether the false bull rally is over?

Does this mark the end of the false bull recovery?

Before we race to any conclusions, our readers must understand this week’s Market Sensitive Events (MSEs). MSEs provide investors with explanations on why the market moved either up or down for the week.

Market Sensitive Events over the Past Week

Positives

  • Restaurants were allowed to reopen this week, with a maximum of 10 people allowed to be seated at any one time.
  • The NSW Government announced that from July 1, social gatherings will allow for 50 people to meet up at any one time.
  • Newly released data continues to support a slowing in the overall infection rate of Coronavirus cases in Australia.
  • Global oil prices continued to recover this week, with WTI futures rising by 12.3% to be trading at U.S. $33.56 (at the time of writing).
  • Deloitte provided an update on the administration process for Virgin Australia; saying it has narrowed down the potential buyer list to 4 candidates.
  • Nano Dimension surged by over 400% on Wednesday on the back of a breakthrough in the 3D printing industry.

Negatives

Is this the end of the false bull run?

Short answer: Yes, I expect markets to trade in the red this week (opinion, not advice).

This week saw renewed tensions between the two economic powerhouses. This was mainly fixated around the Trade War & China’s geopolitical sovereignty over Hong Kong & Taiwan. In addition, questions have been raised about China’s willingness to cooperate in a global enquiry focused on the origins & data transfer about the Coronavirus.

Also, a few weeks ago, the IMF announced that the Coronavirus pandemic had cost the global economy more than U.S. $100 trillion. Moreover, the RBA is forecasting that Australia’s GDP will contract by 8% this year. I would be amazed if we saw substantial gains this week (opinion, not advice).

Nonetheless, it is still vital you are across the significant COVID-19 developments — Lets breakdown what we know.

1. Coronavirus

New data continues to support a reduction in the transmission of new COVID-19 cases. This has been reflected in the rise across global equity markets for the past four weeks. Markets will continue focusing their attention on any developments surrounding possible treatments/trial results. Cansino Biologics (XHKG: 6185) has shown promising early signs for a COVID-19 vaccine. However, a 2nd wave of COVID-19 cases is sweeping across reopening countries such as the U.S., China and Italy. How will these developments play on the minds of investors?

2. U.S. – China Trade Talks

Before the outbreak of COVID-19, the U.S. – China Trade War was a significant constraint on global markets. It seems that further discussions of a Phase 2 trade deal have dissolved. To add insult to injury, economic tensions were reignited surrounding China’s trade & geopolitical policies. Will this be the catalyst that sends global markets into another bearish trend?

Source: Twitter – @realDonaldTrump.

3. Local Company Updates

Domestic companies such as Coca-Cola Amatil (ASX: CCL), Spark Infrastructure Group (ASX: SKI) and Costa Group (ASX: CGC) will be holding their AGMs this week. Also, Elders Ltd (ASX: ELD) & Orica Ltd (ASX: ORI) will be handing out dividends to shareholders. It will be interesting to see if any developments from these events have any influence over how Australian markets trend this week.

4. Local & International Economic Data

Both the RBA and the Chinese Federal Reserve will be releasing snippets of economic data this week. On Thursday, domestic capital expenditure data will be released by the RBA, while on Friday, Chinese manufacturing profits will be published. Many market analysts are forecasting decreases in both due to disruptions caused by COVID-19. Will worse than expected data put an anchor on global indices?

Movers & Shakers for the Past Week

Stock Trading Price Weekly Gain
NRW Holdings Limited (ASX: NWH) $1.98 31.02%
Nearmap Ltd (ASX: NEA) $1.94 22.08%
Lynas Corporation Ltd (ASX: LYC) $2.12 21.84%
Orocobre Limited (ASX: ORE) $2.30 21.69%
Super Retailer Group (ASX: SUL) $7.85 16.64%
Avita Medical Ltd (ASX: AVH) $0.44 -6.38%
NIB Holdings (ASX: NHF) $4.43 -6.54%
Unibail-Rodamco-Westfield/CDI (ASX: URW) $3.49 -7.92%
Austal Limited (ASX: ASB) $2.78 -8.25%
Southern Cross Media Group Ltd (ASX: SXL) $0.14 -9.38%

ASX Announcements to Watch This Week

  • Tuesday: Coca-Cola Amatil (ASX: CCL) will hold its AGM.
  • Wednesday: Spark Infrastructure Group (ASX: SKI) will hold its AGM.
  • Thursday: Costa Group (ASX: CGC) will hold its AGM, and domestic capital expenditure data will be released by the RBA today.
  • Friday: Chinese manufacturing profits data will be published.

If you enjoy our articles or want to learn more, you can subscribe to us for free via email and get updates when we post new articles. From all of us at YIG, thank you for the support.

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Here is our free, uncomplicated, and comprehensive breakdown of smart COVID-19 Strategies

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

Written by Sergeo Domtchenko, Associate of YIG.

US-China trade war escalations could create another bear market.

Before COVID-19, the tensions between the US and China were rising. The two economic powerhouses are already fighting over the origins of the virus, a trade war would see the relationship sink further. Many experts say that China and the US are in a “new type of cold war”. Especially as the level of trust between the two countries is considered to be at their lowest point since they established diplomatic ties in 1979.

The supply chain and disassociation war

The world economy is already in ruins. A trade war will likely put the markets into a state of concerning fragility. America began by cutting off chip supplies to Huawei, which is the world’s 2nd largest smartphone maker. Also, the US is convincing its allies to digress from Huawei for the next generation of 5G network. Because of the suspicion that Huawei’s 5G might be used for spying. The US continues to look for ways to cut the Chinese strings by imposing strict export controls and limits on integrated supply chains.

It seems the American people are in unison with the government’s negative attitudes towards China. According to a survey conducted by FTI Consulting, 40% of 1,012 adults surveyed said that they would not buy products from China. This poll had a further interesting finding that 78% said that they would be willing to pay more for products if the company made them moved to manufacture out of China.

However, merely relocating to a different supply chain would not solve the problem. Over the last decade, China has positioned itself at the centre of global manufacturing and has equipped itself with internal supply chains. Meaning, China can select a nation to trade without of a pool of potential candidates.

Also, the US consumers moving away from China may cause damage as the US is China’s largest export consumer. However, China is no longer highly dependent on its export in terms of its GDP. The export share of its GDP fell from 37% in 2007 to less than 20% today. Thus the US moving away from Chinese goods may be offset by the domestic demand in China and increase exports in other parts of the world. In fact, China already sees this as an opportunity by providing medical supplies to companies hard-hit by the pandemic.

Impact on the market

It is clear to say that vaccine, treatment, and testing companies hold the stock market remote control. Just look at how Moderna’s  COVID-19 results triggered a bullish rally this week. It seems absurd that investors push the pandemic-economic fallout to the side and buys stocks. Mainly because of the injection of government stimulus.

However, investors won’t likely push the worrying trade war consequences aside. Just look at the bearish reaction to the last time the powerhouses were down each other’s throats. Meaning if the tensions intensify, the bears could claw down the gains in the past few weeks.

Thus, investors must watch the trade war with a close eye. Because deterioration in the US-China relationship could cause the bears to come out of the woodshed.

Stocks that are likely to suffer from US-China tensions include:

How should investors prepare their portfolio?

Before I start, I am obliged to remind our viewers that this is not advice only general commentary from my extensive research in this area.

It would be crucial for investors to identify which industries are immune to US and China relations. For example, US Automobiles will seem to suffer if China increases tariff on US cars and disrupts the supply chain. Imposing a higher tax on supplies means that the US producers will have to pay more for parts in China. Ultimately, decreasing profitability if an alternative cannot be sought.

Many chip makers in the US had a high revenue exposure to China. As the US cuts its global chip supplies to China, chipmakers and electronic manufacturers are likely to suffer.

In light of the trade war, many investors gravitated towards gold. While gold is a great safe haven, that’s all the commodity equates to. Because gold’s intrinsic value is only what someone else is willing to pay for the shiny metal. Instead of slapping some gold on your portfolio, I would make sure my stocks can weather short term fear. (opinion not advice)

Lastly, do not let the US-China trade war fear infiltrate your mind. Because fear will cause you to panic and sell shares even if you take a loss (aversion loss). If you are a value or growth investors, then there is a high chance your stocks should survive the US-China trade war. (opinion not advice) Even if you see a short term loss on paper.

If you aren’t already subscribed to us, you can subscribe for free via email below and get updates when we post new articles and stock market news. From all of us at YIG, thank you for the support.

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

Written by Jaewon Jung, and Patrick McLoughlin Associate, and Senior Manager of YIG.

 

Market update: Is the bull market over?

Written by Sergeo Domtchenko 

It seems that the Aussie markets have hit a rough patch. Bouncing around between substantial gains and losses, the ASX 200 finished the week 0.25% higher at 5404.8 points. Culminating the seventh time in eight weeks that the index saw overall weekly gains.

The ASX 200 failed to achieve two successive days of straight gains. Making investors still ponder whether the false bull run is over?

Does this mark the end of the false bull recovery?

Before we race to any conclusions, our readers must understand this week’s Market Sensitive Events (MSEs). MSEs provide investors with explanations on why the market moved either up or down for the week.

Market Sensitive Events over the Past Week

Positives

  • The first stage of self-isolation restrictions was relaxed across Australia.
  • Iceland announced it would reopen its tourism industry on the 15th of June.
  • Newly released data continues to support a slowing in the overall infection rate of Coronavirus cases in Australia.
  • Global oil prices surged this week, with WTI futures rising by 49.5% to be trading at U.S. $29.65 (at the time of writing).
  • The ANZ Business Sentiment survey (business outlook) rose again this week, rising by over 39% for the past six weeks.
  • CBA shares rose by 2% on Wednesday, despite a 44% fall in profitability and credit provisions rising to A$1.5 billion.
  • Data released by the Chinese Bureau of Statistics suggests a 0.6% increase in manufacturing output during April.

Negatives

Is this the end of the false bull run?

Short answer: Yes, I expect markets to trade in the red this week (opinion, not advice).

This week marked the first time that there was any correlation between the U.S. Earnings Season and market performance. In conjuncture with the publication of mediocre retail and economic data in the U.S. and China, this sent chills down the spines of investors. Also, the IMF announced that the Coronavirus pandemic had cost the global economy more than U.S. $100 trillion. Furthermore, with the RBA forecasting Australia’s GDP contracting by 8% this year, it’s highly unlikely to see substantial gains across global markets this week.

Nonetheless, it is still vital you are across the significant COVID-19 developments — Lets breakdown what we know.

1. Coronavirus

Newly released data continues to show a slowing in the number of new COVID-19 cases. This has been reflected in the rise across global equity markets for the past few weeks. Markets will continue focusing their attention on possible treatments/trial results and any developments in the reopening of countries. Sorrento Therapeutics (NASDAQ: SRNE) looks to develop a viable treatment for COVID-19 by July potentially However, the fear of a 2nd wave of Coronavirus will be playing on the minds of many investors.

2. U.S. Earnings Season

The likes of companies such as Panasonic, Komatsu, Ryanair, Walmart, and Lowe’s will be releasing quarterly financials this week. Last week marked the first time that was any correlation between the U.S. Earnings Season and market performance. It will be interesting to see whether this trend continues into this week.

3. Local Company Earnings & Announcements

Domestic companies such as Australian Agricultural, CSR, and James Hardie Industries will be releasing quarterly results. Investors will be keeping a close eye on the impact that COVID-19 has had net profitability and dividend policies. Will worst than expected results put the brakes on Australian indices?

4. U.S. – China Trade Talks

Before the outbreak of the COVID-19 pandemic, the U.S. – China Trade War was a significant constraint on global markets. Further discussions for developing a Phase Two deal were supposed to commence last week. However, comments from Donald Trump this week suggest that he has no intention of retaining China as a trading partner. Could the tension between the powerhouses be the catalyst that sends global markets into another bearish trend?

Source: Twitter – @realDonaldTrump.

Movers & Shakers for the Past Week

Stock Trading Price Weekly Gain
Pilbara Minerals Ltd (ASX: PLS) $0.24 19.51%
Southern Cross Media Group Ltd (ASX: SXL) $0.16 18.52%
Resolute Mining Limited (ASX: RSG) $1.08 14.21%
Saracen Minerals Holdings Limited (ASX: SAR) $5.05 13.23%
St Barbara Ltd (ASX: SBM) $2.92 11.88%
Incitec Pivot Ltd (ASX: IPL) $1.98 -9.59%
Jumbo Interactive Ltd (ASX: JIN) $11.86 -9.81%
Unibail-Rodamco-Westfield (ASX: URW) $3.79 -10.40%
Challenger Ltd (ASX: CGF) $4.24 -10.92%
Corporate Travel Management Ltd (ASX: CTD) $10.53 -11.81%

ASX Announcements to Watch This Week

  • Monday: QUEBEC will be releasing its 2020 financial reports.
  • Tuesday: OFX Group will publish its full-year earnings results.
  • Wednesday: Australian Agriculture Company, CSR, and James Hardie all release their 2020 financials.
  • Thursday: Dropsuite will hold its AGM.
  • Friday: Sydney Airport will hold its AGM.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Sergeo Domtchenko, Associate of YIG.

 

 

Market Update: How long will the bull run last?

Written by Sergeo Domtchenko 

After experiencing two auspicious days of straight losses, the ASX 200 managed to claw back some ground to finish the week on a positive note. The ASX 200 rose by 0.5% to be currently sitting on 5391.1 points (a 2.8% weekly gain). Marking the sixth time in seven weeks that the Aussie markets have seen overall weekly gains.

This week’s substantial gain has left many investors wondering whether we’ve seen the worst from the COVID-19 pandemic?

Does this mark the start of a bull recovery?

Before we race to any conclusions, our readers must understand this week’s Market Sensitive Events (MSEs). MSEs provide investors with explanations on why the market moved either up or down for the week.

Market Sensitive Events over the Past Week

Positives

Negatives

  • Victoria saw 17 new cases of COVID-19 on Monday; 14 of which were linked to one abattoir.
  • Westpac announced a 62% fall in profitability year-on-year. This was accompanied by suspension in interim dividends.
  • Over 20 million people lost their jobs in the U.S. for April.
  • The total unemployment rate in the U.S. and the U.K. sits at 14.7% and 9% respectively.
  • The RBA announced that it expects Australia’s unemployment rate to hit 10% by the end of July.
  • The RBA forecasts that Australia’s terms of trade will deteriorate by 5% in 2020 as the demand for Australia’s exports idles.
  • The WHO announced that it is U.S. $1.7 billion short in the number of funds it needs to continue its COVID-19 response for the remainder of the year.
  • The death toll in Italy from Coronavirus surpassed 30,000.

Will the bulls continue to hang around for the week?

Short answer: Yes, I expect markets to continue trading in the green this week (opinion not advice).

Over the past few weeks, we have seen how adverse market events have had minimal effect on investor sentiment. After a poor U.S. Earnings Session that highlighted the economic fallout of the COVID-19 pandemic, the Dow Jones continues to trade only 17.6% short of the record highs that were recorded in February. Moreover, as more countries continue to ease restrictions, it’s highly unlikely that the markets will begin to slow any time soon (opinion not advice).

However, while I do expect the markets to continue trading higher this week, I do believe that this a false bull run. With the IMF announcing that the Coronavirus pandemic has cost the global economy more than U.S. $100 trillion, some stocks are unjustifiably overvalued (opinion not advice). Furthermore, the RBA forecasts that Australia’s GDP will contract by over 8% come June.

Nonetheless, it is still vital you are across the significant COVID-19 developments—Lets breakdown what we know.

1. Coronavirus

Newly released data continues to show a slowing in the number of new COVID-19 cases. This has been reflected in the rise across global equity markets for the past few weeks. Markets will continue focusing their attention on possible treatments/trial results and any developments in the reopening of countries. However, overly loosened restrictions have seen over 20,000 new cases of COVID-19 recorded in Georgia, USA. The prospect of a potential 2nd wave of cases will be playing on the minds of many investors this week.

2. ASX Company Updates & Earnings

The likes of companies such as Xero, CSR, Graincorp and Commonwealth Bank of Australia (CBA) will be releasing half-year and full-year earnings. Investors will be keeping a close eye on CBA’s dividend policy and impairment charges. It will be interesting to see whether local earnings results will have any influence over the markets this week.

3. Domestic Wages & Employment Data

Australian wages data will be released on Wednesday. Many analysts are expecting wages growth to slow to around 2.1%. Also, job losses for April are forecast to be approximately 550,000. Furthermore, the unemployment rate is forecast to jump to about 8%. However, both the RBA and the Federal Reserve are forecasting unemployment to peak at 10% in June. Will worst than expected results put the brakes on Australian indices?

4. U.S. & China Trade Talks

Further discussions since the Phase One deal was signed in January could start as early as this week over the phone. Before the outbreak of the COVID-19 pandemic, the U.S. – China Trade War dictated global market movements. If any positive developments come out of this week’s talks, they will most likely be well received by global markets.

5. U.S. & China Economic Data

Both the U.S. and Chinese Federal Reserves will be releasing economic data. Economists and investors will be fixated on inflation, retail sales, investment and manufacturing data. Many analysts are forecasting a 10% decrease in U.S. retail spending. If worse than expected results are released by the two largest economies, can we expect a steep market correction later this week?

Movers & Shakers for the Past Week

Stock Trading Price Weekly Gain
Afterpay Ltd (ASX: APT) $39.88 36.76%
EML Payments Ltd (ASX: EML) $3.41 28.68%
Polynovo Ltd (ASX: PNV) $2.55 28.14%
Appen Ltd (ASX: APX) $30.00 18.34%
Qube Holdings Ltd (ASX: QUB) $2.52 15.88%
National Storage REIT (ASX: NSR) $1.59 -5.92%
Qantas Airways Limited (ASX: QAN) $3.40 -6.08%
Alumina Limited (ASX: AWC) $1.52 -6.15%
Inghams Group Ltd (ASX: ING) $3.19 -6.45%
Orocobre Limited (ASX: ORE) $2.03 -6.45%

ASX Announcements to Watch This Week

  • Tuesday: CSR will be releasing full-year earnings results.
  • Tuesday: Amcor will release quarterly figures.
  • Wednesday: The CBA will be releasing its quarterly earnings.
  • Wednesday: Australian wages data will be released.
  • Thursday: Xero will be releasing its full-year earnings results.
  • Friday: Economic data will be released by the U.S. and Chinese Federal Reserves.

 

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Sergeo Domtchenko, Associate of YIG.

Market Update: The bears and bulls are fighting – but the bears have the upper hand.

Written by Sergeo Domtchenko 

It seems like the bears still have their claws well entrenched in the market. The bears are not letting go. All the weekly gains evaporated as the ASX 200 plummeted by more than 5% on Friday. Marking the single most significant daily drop over the past five weeks. Friday’s decrease is making investors wonder whether this bearish trend is here to stay?

Does this week mark the start of a bear market?

Before we race to any conclusions, our readers must understand this week’s Market Sensitive Events (MSEs). MSEs provide investors explanations of why the market moved either up or down for the week.

Market Sensitive Events over the Past Week

Positives

Negatives

  • The unemployment rate in the U.S. rose by another 3.8 million to exceed 30 million this week.
  • Automotive sales for the past month in the U.S. totalled $0 (not a joke).
  • NAB carried out an A$3.5 billion capital raise to increase its reserve fund pool.
  • Westpac and ANZ look to  carry out capital raises in the coming weeks.
  • NAB slashed its dividend by 60%, while Westpac and ANZ suspended interim dividend payouts this week.
  • Coles shares tumbled on Wednesday as it announced a 30% fall in demand for its petrol stations.
  • Germany reimposed self-isolation measures as endures a severe 2nd wave of COVID-19 outbreak.
  • The $AUD couldn’t escape the significant sell-off on Friday, falling to 64 U.S. Cents.

Is the bear market here to stay?

Short answer: Yes, and I expect markets to be in the red this week (opinion not advice).

We have already covered numerous times, the markets are primarily driven by the emotions of greed and fear. Friday’s market performance screams fear as the terror begins to penetrate the markets. Especially on the back of a weak U.S. earnings session and the IMF announcing that COVID-19 has cost the global economy more than U.S. $100 trillion. Moreover, the RBA is forecasting that Australia’s GDP will contract by 6.7% in 2020. Therefore, it is vital you are across the significant COVID-19 developments. Lets breakdown what we know.

1. Coronavirus

Newly released data continues to show a slowing in the number of new COVID-19 cases. Markets will be focusing their attention on possible treatments/trial results and the hopes of easing social restrictions. Gilead is at the forefront of COVID-19 clinical development. However, even if Gilead’s treatment works miracles the damage to the global economy is irreversible.

Thus, the bulls and bears will be in a fight for the week. The bulls are launching their second assault (reopening the economy and relaxing restrictions). However, the bears will likely emerge victorious.

2. Local Bank Earnings

Westpac (WBC) and Macquarie Group (MQG) will be releasing earnings data for the past quarter on Monday and Friday, respectively. Investors will be keeping a close eye on dividend policies. If we do see worst than expected results, can we expect continued losses on the markets this week?

3. Reserve Bank of Australia

The RBA will meet on Tuesday for its monthly meeting. Investors will be looking to see whether the RBA decides to loosen monetary policy even further. Many analysts are expecting that the cash rate will remain at its historic low of 0.25%. On Friday, the RBA will be releasing its quarterly economic outlook. It will be interesting to see how the markets react on Friday, based on the economic data released by the RBA and MQG’s quarterly earnings.

4. U.S. Economic Data

The Federal Reserve will be releasing quarterly economic data and its forecasts for the coming months. The main talking point will be the U.S. unemployment rate. Some analysts are forecasting that the unemployment rate will rise from 4.4% to a staggering 16.2%. Could this be the trigger point that sends global markets into meltdown?

5. U.S. Earnings Season

The likes of companies such as Electronic Arts, Beyond Meat, Disney, Mattel, General Motors, PayPal and Hilton Worldwide will be releasing quarterly financials. Dependent on the nature of the news surrounding these companies, they could have a significant bearing on how global markets perform this week.

Stocks to Watch This Week

Stock Trading Price Weekly Gain
Corporate Travel Management Ltd (ASX: CTD) $12.57 38.44%
A.P. Eagers Ltd (ASX: APE) $4.65 31.73%
oOh!Media Ltd (ASX: OML) $1.00 29.22%
Nearmap Ltd (ASX: NEA) $1.48 24.89%
IOOF Holdings Limited (ASX: IFL) $4.18 22.94%
Worley Ltd (ASX: WOR) $8.28 20%
Domain Holdings Australia (ASX: DHG) $2.57 19.53%
Nine Entertainment Co Holdings Ltd (ASX: NEC) $1.37 19.13%
EML Payments Ltd (ASX: EML) $2.65 18.83%
SKYCITY Entertainment Group Limited (ASX: SKC) $2.33 17.09%

ASX Announcements to Watch This Week

  • Monday: Westpac Banking Corporation’s quarterly earnings results to be released.
  • Tuesday: The RBA will hold its monthly meeting to decide on its monetary policy stance.
  • Wednesday: The Federal Reserve will be releasing economic data for the U.S.
  • Friday: Macquarie Group will be releasing its quarterly earnings.
  • Friday: The RBA will be releasing its quarterly economic outlook and forecasts for the coming months for both Australia and abroad.

If you aren’t already subscribed to us, you can subscribe for free via email below and get updates when we post new articles and stock market news. From all of us at YIG, thank you for the support.

Here is our free, uncomplicated, and extensive ASX portfolio

https://youth-investment-group.com/portfolio/

Want access to free, uncomplicated, and smart COVID-19 Strategies then click below?

https://youth-investment-group.com/2020/04/09/how-to-profit-off-smart-investments-during-covid-19/ 

The information above should not be taken as financial advice. Youth Investment Group has no liability for personal financial interests or investment decisions. You should make your own investment decisions based upon your own research and what you believe is best for you.

Written by Sergeo Domtchenko, Associate of YIG.