(April 24/ 2017)
Oil’s Unpredicatble Ride
For the first three months of this year, the oil price barely moved, enjoying a period of calm after OPEC, a group of oil-producing countries, agreed to limit their production – and thus boosted the oil price. But the past month or so has proved much more tumultuous, as the oil price has risen and fallen by more than 10% three times. The price appears to be driven primarily by the conflict between America’s increasing production and OPEC’s willingness to extend its supply cuts beyond the initial agreement (which is due to end in June).
For the markets: It’s very difficult to predict how this will play out.
It appears that the acceleration of US oil output is set to continue, as it’s profitable for US producers to ramp up drilling as long as the oil price remains in this general area. Whether or not OPEC will agree to extend its cuts remains unclear, although suggestions from Saudi Arabia indicate that it will. Another wild card is whether demand for oil will increase (many, including Goldman Sachs, think it will), which would be a positive factor for the oil price.
What Does This Mean?
The bigger picture: The price of oil tends to have an impact on overall stock prices.
It’s not always the case, but stock prices often move down when the oil price sells off and vice versa. For one, lots of companies are, of course, involved in drilling oil or servicing those that do – and their success creates more well-paid consumers for the wider economy to feed off of. In addition, if demand for oil falls (or doesn’t grow) it can be a sign of wider economic weakness (there are also other reasons too!).
General Electric Sends Positive Economic Signals
One of the world’s biggest industrial conglomerates, General Electric (GE), reported earnings on Friday that appeared to beat Wall Street’s expectations – but its stock still fell over 2%...The good news was that GE made both more revenue and profit than expected. And an important measure of its sales, which excludes things like changes in currency values, was up 7% – an encouraging number given relatively slow global economic growth.
GE posted a much lower “cash flow” measure however, than what the market was expecting. Often, investors use cash flow, which is literally the amount of money (in cash) that the company took in (or gave out) during the quarter, as a clean measure of a company’s performance (e.g. it doesn’t include complicated things like writing down the value of ageing equipment, which typically affects “profit”). GE said its weak cash flow was due to one-off factors, like the timing of customers’ orders, and that it would even out later this year; but the big drop certainly gave investors pause for thought.
What Does This Mean?
For the markets: It was a good day, on the whole, for industrial companies – and the economy.
Rockwell Collins and Honeywell, two other large manufacturers, both reported earnings that beat Wall Street’s expectations and saw their stock prices jump. Industrial companies are usually good bellwethers for economic growth as a whole, since, for one, they provide a lot of the equipment that other businesses use – and the signs from the first quarter appear to be, at the very least, decent.
The bigger picture: According to GE, Global growth is accelerating.
GE is active all over the world, and therefore has a worthwhile perspective on global economic growth. In the CEO’s view, the US continues to improve, and Asia, Latin America and Africa appear to be growing more strongly than last year – which is good news for the global economy.
Ask A Question:
RE: Uber Opens Its Hood
“Could you further explain the concept of a private market funded bubble?”
In financial terms, “a ‘bubble’, usually refers to a situation where the value of a certain set of investments is much higher than it fundamentally should be worth, usually because too many people are trying to invest too much money into too few genuine opportunities. Famous bubbles in history include Dutch tulip mania in 1637 and the dot-com bubble of 1999-2001. Some think that privately funded tech companies are currently substantially overvalued, a.k.a. in a bubble.”
Big winners today
Congratulations to a number of intermediate level traders who followed our advice regarding the French elections. Marie T (UK), Eugene D (UK), Prakash P, (UAE), Jon T(SE), each made over $25,000 in a few hours on the rising Euro. This is one of the keys to successful trading; being at the right place at the right time. Its not about luck but rather following the news and capitalizing on it.
The Million Dollar Taxi Ride
We received buckets of mail over the last few months on our article about the wealthiest cab driver in New York. Readers have been writing me and asking me how they can join in the action. Its really quite simple. If you are a taxi driver or even if you wish to create your own network with other taxi drivers this can be an extremely lucrative business.
How are some taxi drivers making a fortune with GSI? From tips! However not from tips that customers give them, but rather from tips the taxi drivers give to the customers! How is that? Here is the catch.
A taxi driver who picks up a business passenger at a nice hotel and takes him to the airport can make a reasonable assumption that this client could be a potential investor in the financial market. During the conversation if the taxi driver mentions an exciting tip he heard there is a good chance that his passenger may follow up on this tip and leave his business card.
If this passenger ends up investing with us, that business card may be worth $1000, $10,000 or $100,000 to that cab driver. If you are a cab driver or an entrepreneur interested in starting your own network without any fees reach out to me and I will send you some easy to follow guidelines. Who knows your next passenger may be your million dollar ride! More Info.