Rand Falls. Audi Goes Tech. Lululemon Down. Degree Program

 

VIP Trades 

(March 31/ 2017)  

 

South Africa's currency plummets after finance minister is fired

 

High-profile politics in South Africa has slammed the country's currency.

The rand nosedived nearly 4% against the dollar after President Jacob Zuma ousted his experienced finance minister, Pravin Gordhan, plunging the country into a new round of political turbulence. More.  At this time a sell on EUR/RUB could be quite profitable. 

 

 

 

Audi Invests In Tech

In another win for car sharing platforms, luxury car maker Audi has agreed to purchase US car rental startup Silvercar!  Silvercar was founded in 2012 specifically to serve the high-end airport rental car market. Audi has been a partner since day one (Silvercare only rents Audi A4s), and Audi bought a minority stake in the company back in 2015. Audi’s attraction to Silvercar is presumably similar to General Motor’s investment in Lyft: carmakers are looking to ward off the threat to car ownership posed by the transformation of personal transport.

What Does This Mean?

For markets: The future of personal transportation is not just about automation – the network will be hugely important. 
There’s a great deal of fascination about the technological prospects of autonomous driving, e.g. how will the cars drive themselves or what sort of ethical decisions will they make? But creating/owning the platform on which autonomous driving will be built is also hugely important. It seems unlikely that we’ll each own a self-driving vehicle; instead, we’ll hail a self-driving car much as we hail an Uber today. The provision of this platform will likely be an important and valuable part of the self-driving ecosystem. 

The bigger picture: Buying innovative startups is one way to accelerate a new strategy. 

Audi’s “mobility services” are already reasonably well advanced, with sharing services like Audi on Demand (short-term rentals) and Audi Select (a leasing model with access to multiple cars). But it seems as though Audi wants to accelerate its efforts. By purchasing Silvercar, it immediately gets technology specifically developed for car sharing as well as ownership of Silvercar’s network (it’s active in 15 US cities) and any associated benefits of its brand.

 

 

Lululemon Takes A Tumble


Shares of athletic wear maker Lululemon plunged more than 20% on Thursday after the company said sales growth was slowing.


Lululemon joins Under Armour and Nike as athletic apparel companies that are struggling to keep pace with the previous year’s sales growth – and are being punished by investors as a result. Lululemon’s CEO was at pains to make clear that its problems were of its own making rather than an indication of industry-wide malaise, although investors appear less convinced (the CEO blamed things like not having enough colors in its products to suit the spring season and a poor presentation online). The idea is that Lululemon will be able to fix these “execution” issues in the coming quarters, although investors are now suspicious that its problems run deeper.
 

What Does This Mean?

For markets: High expectations can lead to big disappointments. 
Lululemon has been a market darling for years (except for that time it made see-through yoga pants…). Consequently, Lululemon’s value relative to its profit was much higher than peers. Investors are willing to pay such a high price as long as the company delivers on those high expectations – but it can be very painful for the stock price when the company doesn’t. 

The bigger picture: The athleisure trend may have peaked. 

Lululemon’s disappointing results come a week after Nike reported revenue that fell well short of Wall Street’s expectations. Under Armour, another competitor, has seen its stock plummet as sales growth falls. One theory is, essentially, that people are done stocking up on yoga gear and other athletic gear that’s worn casually. Even if that isn’t quite true, the segment is experiencing a huge increase in competition as other retailers, including Amazon, launch athletic wear of their own. Neither of those factors are good for incumbents like Lululemon.


Q&A

RE: Brexit The Deal Breaker
Mario asked:


“Can you further enhance the explanation of how a currency appreciates and depreciates?”

“The thing to remember about currencies is that their value is almost always compared to another currency, and that other currency can be affected by factors that have nothing to do with the currency you’re looking at – e.g. the value of the euro can be expressed in terms of the US dollar. In effect, both sides of the equation are moving, often independently of each other – which makes it a little more difficult to figure out what’s going on. Typically, however, the value of a currency is an indication of investors’ confidence in its economic prospects. Investors like investing in areas of growth, and will move money into a country to do so – which involves buying its currency, thus pushing up its value versus other currencies.”

 

Finally I have Time to Study

Sam Shimoda retired Banker and now studying top be a Trader in the  Financial Market

'I have always wanted to understand how to trade in the Financial Market but I never had time', says Sam Shimoda a recent graduate of our first level Market Analysis program. Sam started taking tutorials with our Financial Analysts in 2015 and today has a sizable portfolio of stock, currencies and commodities.

'One of the things I really appreciate is that I am learning with people who are actual traders themselves.  Its not like a school where your learn theory.  My personal trainer has been practicing for years and saves me a lot of time showing me what is really important and what is less important. I used to search through pages and pages on Google and just get more frustrated. Now I know exactly where to go and what to search for. Of course I also get many tips from the analyst I am working with and I have done exceedingly well this year!" 

Note: If you have family or friends that have some extra time and are interested to learn more about the financial markets refer them to GSI and make a percentage of their profits just by your referral. More.

 

Dear Traders: To those of you who are following my blog.  I will be away on Monday.  I am speaking at a conference for start-up investors. Typically Mondays are good days for technical trading.  Follow the technical signals and trade accordingly.  Try using the High Impact Reverse Candle Technique. Good Luck with your trades! 

If you have any questions feel free to contact me here.