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Recession in Japan, China's stimulus and UK’s dataPerhaps the main event and surprise of yesterday were the devastating data on Japan's GDP for the fourth quarter. The country's GDP fell by 1.6% (the forecast was a decline of 0.9%) in terms of q/q and 6.3% in relation to the same quarter last year (the worst result since 2014). This is a very alarming signal for the global economy because Japan is the third-largest economy in the world. And although the reasons for such a failure are generally justified - a destructive typhoon and tax increases, the picture does not become less depressing. Given that China is Japan's largest trading partner, there is every reason to expect weak data in the first quarter of 2020 (consequences of the coronavirus epidemic). Do not forget about the loss of the tourism sector in Japan from China's ban on the travel of citizens. We are talking about hundreds of thousands of tourists from China who were supposed to visit Japan but did not visit with all the ensuing economic consequences. The second consecutive quarter of GDP decline is already officially a recession. That is, what we have been talking about for quite some time in our reviews is beginning to take on an increasingly clear line. What is characteristic, the Japanese yen against the background of such crushing statistics were not exposed to sales. Obviously, the demand for a safe haven asset in her person outweighs the desire to sell the yen to work out weak data. In this light, our desire to buy gold only intensified. Purchases of the Japanese yen, despite such weak data, also look good from current points. China, meanwhile, maybe trying to generate optimism after several weeks of continuous negativity. And this is not only about the statistics on the epidemic, which is beginning to decline but also about the position of the Chinese authorities, who yesterday promised to strengthen the stimulation of the economy in order to compensate for the negative consequences of the coronavirus. It is planned to reduce corporate taxes and increase government spending. Despite this positive, we believe that the damage has already been done and the world economy will still feel it in the first quarter. And the epidemic itself is still ongoing. According to experts, the Chinese economy will return to less or less normal functioning no earlier than in a month. In this regard, we recall our recommendation to sell oil. Demand for oil from China continues to fall, and refinery loading drops at a gigantic pace (at some plants, the decline was 10-20%). According to Citi analysts, the total volume of oil refining in China fell by 2 million barrels per day, while oil demand in China in February may show a decrease of 3.5 million BPD. These are very serious figures for the oil market. So we use any attempts to grow the asset as an occasion for its sales. For the British pound today is a pretty important day in terms of macroeconomic statistics - a block of data on the UK labor market will be published. In the past couple of days, the pound has somewhat lost its fuse, which was received in the form of promises to increase government spending. Today's data can either increase pressure on the pound, or give it the opportunity to return to growth. So we follow the numbers and adjust the positions depending on the nature of the data.
Short
by Trade24Fx
Diversified Gas & Oil - Longterm Hold - ISA Investment Possibly?Industry Sector - Energy, not exploration (so plus point). Rough Technical - Presently support 96p and resistance around 110 - 120p, though the stock ranks low for general momentum and quality. Present Presently 103p at 20200116. Price peaked at 125p in Jul 18 and 19. I am thinking of entry between 90-100p. Jan 2020 it is trading on future earnings of 8 thimes, which is average for the industry, though the sales growth has been phenomenal, so this could be a cheap share if the sales growth continues. History - Came to market in 20170203 at around 55p, gas and oil producer. The Company is engaged in conventional natural gas and crude oil production in the Appalachian Basin of the United States. The Company owns and operates over 7,500 conventional natural gas and crude oil wells in Pennsylvania, West Virginia and Ohio. The Company's daily production is approximately 60,000 barrels of oil equivalent per day, which consists of approximately 26,000 million cubic feet (mcf) per day of natural gas and 475 barrels of oil per day. The Company operates over 3,000 wells in Ohio on approximately 164,000 leased acres in multiple counties along the I-75 corridor. The Company operates approximately 235 conventional wells in the West Virginia state and holds over 6,500 acres of leasehold. The Company operates over 4,000 wells and approximately 863,000 leasehold acres, in Pennsylvania, over multiple counties. Accounts trade in dollars - so currency risk, as I am based in UK Income - First dividend was at 5%, next dividend is forecast to be 9%. Div cover is over 7 times. Next Ex-Div date is 20200305 at 3.5 USX (2.5p UK) - though early to estimate, looks like 2 dividends a year March and September, though last year was 3 dividends. Share liquidity - Heavily buying back shares from the market, directors have shares at around £1M at around 107p, In April 2019, Diversified Gas & Oil announced a maiden share buyback scheme of up to 54.3m shares representing some 7.8% of the company’s outstanding share cap. The move is essentially a call on the relative merits of buying back stock versus using excess cash after dividends for further acquisitions. DGOG suffered a "bear attack" in Jan 2018 and Directors bought to support. 3 month volume is over 700k, so passed my personal threshold of 120k. 49% of shares are held by investors with less than 5% holdings (this is good for liquidity and price discovery). Cashflow - Really only 2018 to see, sales income $201M, after admin etc.. $87.7M, Negative CF of -$767M (acquisitions) (this was funded from issuing stock of $426M and debt of £304M, plus retained cash). Overall retained cashflow was neg $13M, was Poss $24.9M year before. So early for this company which has been around 6 years. Profit / Loss - Again only 2018 to view due to age of company. Revenue $290M, GP $140M, Op Profit $287M, Net ProfitBT $201M. Diluted EPS is 22.4p BS - Nothing too awkward net assets are $749M. Tough it flags on my bankruptcy checker at cautious. Proposed Listing upgrade - In September, the AIM-listed firm announced plans to move from the small caps to the premium segment of London’s main market after the publication of its full-year results for this year, to be released during the first quarter of 2020. As part of the preparations for the main market, the company has completed a tender process to sign-up with a ‘big four’ accounting and auditing firms, for the fiscal year to end 31 December 2020. If it moves to the main market, then ETF's will be buying the share eventually (though AIM ETF's (which are smaller) will be selling. The main Risk - Shale Gas - DGOG is heavily into the "dirty energy", not the cheapest to extract and is dependent on gas prices. For shale oil (not gas) the break even point is supposed to be somewhere around $40 per barrel, though it has been reported that that price is for the best sites, the horizontal sites are around $60 per barrel, with some rumoured to be $90 per barrel. This basically means that some shale oil sites are left idle when the oil price drops. I assume this will be the case for shale gas if gas prices fall low enough, at the time of writing (Jan 2020) the present gas price is $21.00, basically the lowest gas has been since 2016, 2012, 2009, 2002. So presumable shale gas producers must be running on tight margins. So this is the main risk. I n the UK an ISA is like a mix between the US a 401K and IRA - but with softer tax rules. I do not have a position as yet, but I am considering it - so please add comments if you like.
DLong
by OldManFit
Whitbread - Premier level to get inn? (Sorry!)Buy Whitbread (WTB.L) Whitbread PLC is a United Kingdom-based company, which owns and operates hotels and restaurants. The Company is organized into a single business segment, Premier Inn. Premier Inn provides services in relation to accommodation and food both in the United Kingdom and internationally. Market Cap: £6.38Billion Whitbread moved sharply higher on the result of the election before Christmas as the price gapped higher. The shares have corrected lower in recent days to close the gap at 4654p and fresh buyers emerged. The shares are now breaking higher from a flag/pennant pattern on the daily chart, which suggests a continuation higher will be seen in the short term. The formation has a measured move target at 5940p, which is roughly 24% above the current price. Stop: 4550p Target 1: 5100p Target 2: 5940p Target 3: 6680p
LSE:WTBLong
by Investamate
Travis Perkins - Supplying profits and building accounts?Buy Travis Perkins (TPK.L) Travis Perkins plc is a United Kingdom-based product supplier to the building, construction and home improvement markets. The Company operates through segments, which include General Merchanting, Plumbing & Heating, Contracts and Consumer. Market Cap: £4.07Billion Travis Perkins has completed an inverse head and shoulders bottom pattern on the weekly chart as prices advanced above 1495p. The shares gapped higher on the outcome of the general election in the UK, rising sharply towards 1841p. The shares have consolidated in recent weeks to close the gap created at 1544.5p and we have now seen a break higher from a wedge pattern. This suggests there will be a continuation higher in price over the coming days and weeks. Stop: 1495p Target 1: 1830p Target 2: 2000p Target 3: 2330p
LSE:TPKLong
by Investamate
Weak UK data, EUR/JPY sales and market sentimentAs we announced, this week is extremely full of various kinds of macroeconomic statistics. As yesterday's UK data showed, one should prepare for surprises and most likely with a “-” sign. Data on GDP (-0.3% with a forecast of 0%) and industrial production in the UK (-1.2% with a forecast of 0%) justified the worst fears of experts. The only positive point of yesterday's statistics on Britain was the data on the trade balance (and even then rather conditionally). The deficit was expected at -11.800 billion pounds, but in fact, it was at around 5.256 billion pounds. In connection with such data, the support test of 1.2970 was more than logical. Nevertheless, the inability of the bears against such a fundamental background to take the level is symptomatic in itself. We refer to our recommendation to buy the pound, which so far has not lost its relevance. And the barrier between bulls and bears loomed even more clearly. So while the pound is paired with the dollar above 1.2960-1.29970, its purchases, even against the backdrop of weak macroeconomic data, remain relevant. But if the pair goes lower, and against the backdrop of another portion of weak data (inflation statistics for the UK will be published on Wednesday and retail sales data on Friday), this will clearly indicate that the initiative is in the hands of bears. Otherwise, the markets continue to monitor what is happening in Iran, await the signing of the first phase of agreements between the US and China and try to think exclusively positively, which can be seen in the dynamics of gold, the Japanese yen, and the US stock market. We already habitually maintain a moderate negative, as we try to look a little further than the time horizon of 2-3 days. And therefore, the purchase of safe-haven assets remains relevant to us. In particular, the pair EUR/JPY entered very interesting places for sales. Also, intraday oil purchases from current prices look very attractive. Of course, with small stops, since the markets are now set to sell, but at the same time, potential profits definitely outweigh the number of risks expended. What could trigger a rally in safe haven assets? At least reporting season in the USA. Weak financial results (especially the dynamics of profits) of companies in the overshot market can lead to a massive exodus from risky investments in gold and the Japanese yen.
by Trade24Fx
EURJPY Short IdeaHi everyone, here is a small idea I have: EURJPY Short. JPY in my opinion is getting a little bit stronger considering the tensions that are a little bit rising with the US-China Trade War. Also, JPY has released some good numbers these past couple of days, like GDP, etc. so in my opinion JPY is Strong. EUR in my opinion is a little bit neutral, I don't see anything good or very bad for them, so I would say EUR is neutral. I am open to other opinions, so please comment if you have any other opinions or ideas on this trade.
Short
by jimnakmtl
Hypothetical UK Election Trade ...Election results come in... (for which party will be in government). which results in a rise or fall in GBP due to it's significance (in this instance it was seen as a good result and GBP rose). -We know there is going to be volatility, so we can profit regardless of whether the price goes up or down as when the price reaches certain points (A if price rises and B if price falls) it will trigger a trade which will cancel the other one -Can be executed on many pairs/ stocks if large results are due. -Eliminates bias with OCO order. --(DISCLAIMER) Set TP and Trigger point on major support resistance, you don't want to trigger then go the opposite direction!! Straddle Trades can be good for profiting regardless on where the price goes (in times of high volatility) and you could have made some good profits here, this could be replicated for trades such as EUR/GBP, Non farm payroll, US Elections etc... and are also known as OCO (One Cancels the Other) orders
Education
by Sampdm8