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iFOREX Blog by Iforex Team - 4d ago

After the Federal Aviation Agency (FAA) squashed Amazon’s hopes of testing out autonomous drones for delivery by other companies, it looks like the battle for new, innovative autonomous delivery methods is still a top priority.

It is now being reported that both Amazon and GM are currently in talks to invest in electric truck manufacturer Rivian Automotive LLC. Various sources are reporting that the deal could give Rivian a value of $1-2 billion – but nothing is final or official yet of course.

Rivian, a start-up headquartered in Michigan, is involved with manufacturing both sport utility vehicles (SUVs) and pickup trucks. The concept vehicles were on display and debuted at the Los Angeles Auto Show last year, where all the industry’s bigshots like to make an appearance and boast their future plans. The always-informed Bloomberg tells us that a source close to the matter said that a deal could be reached as soon as Friday.

With the Chevy Bolt, GM could be on the cutting edge of affordable electric vehicles that are expected by many to rival competitors like Tesla. But as a backer of Rivian, GM can now also position themselves as the first to market with regards to emissions-free pickup trucks and SUVs. This move can potentially offset their competition.

Jeff Schuster, who is the senior vice president of forecasting at researcher LMC Automotive, said that “Rivian is being cast in the same light as Tesla, a startup that’s outside the inner circle of the auto industry, and that’s appealing to GM.” He continues by saying that while GM has the technology and base of pickup clients to build its own electric pickup, it’s missing Rivian’s separation and image.

Talks between the three companies was originally reported by Reuters.

Just like Tesla, Rivian bought a vehicle assembly plant for peanuts from a different car manufacturer. In 2017, the start-up purchased a factory from Mitsubishi for just $16 million. According to Rivian, their R1T model pickups will have the ability to reach 60/mph in just 3 seconds and can tow 11,000 pounds. If all goes as planned, the vehicles are set to roll out in 2020.

Amazon can benefit from electric vehicles as they can start and finish journeys at various charging stations without fear of the battery expiration.

Electric trucks aren’t the only mode of transportation Amazon is looking into – and no, we’re not talking about a new kind of drones. In 2018, Amazon unveiled a delivery service partner program whereby 3rd party contractors could start their own business by employing drivers and leasing vehicles to deliver goods.

After the program was announced, Amazon boasted more than 100 new businesses throughout the United States delivering packages for Amazon. The recruiting process is still ongoing.

It’s likely that Amazon’s rapid growth has put pressure on the Seattle based corporation to search for delivery partners outside of the usual avenues like the U.S. Postal Service, FedEx Corp and United Parcel Service Inc (UPS) .

If the rumors turn out to be exact, Rivian would be Amazon’s second investment in an automotive company. The first was their participation in a $530 million round of funding for Aurora Innovation, a start-up in the autonomous vehicle space.

 

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It’s a word that makes most people grumble as soon as they hear it. It moves up and down, it grows and shrinks, one of the bestselling financial magazines in the world is named after it, it’s often paired with scary words like ‘inflation’ and ‘depression,’ and every country in the world has one. We’re of course talking about economy, a word we like to blame for the terrible stuff that happens in life, like money problems and unemployment rates, but about which we actually know very little.

To better understand what the economy is and how it works, we’ve compiled 11 fun facts that explain what economies around the world can do in the best and worst of times. Read on.

  1. President Obama loved debt.

So much, in fact, that that US national debt climbed more during his first term than it did under the previous 42 presidents—combined. According to The Balance, the actual number ranges between $983 billion to $9 trillion. How come? Well, there are a few answers including debt carried over from the previous president (hardly his fault), projected budget deficits and new initiatives introduced by Obama. What initiatives? Well, many people remember his famous stimulus package and tax cuts. The silver lining is that in the short term, deficit spending can drive both economic growth and employment, often resulting in an initial surge to the overall economy.

  1. Prices aren’t the only thing that go up over time.

So does debt, and not even the biggest economy in the world is safe from such an increase. In the United States, the total debt in 1970 was less than $2 trillion, and was a combination of government debt, business debt, and consumer debt. Today, that number has risen to a staggering $56 trillion and counting.

  1. Big economy? Build a city from scratch.

When you’ve got the world’s second largest economy, you can do crazy things, like build a city twice the size of Manhattan out of nowhere in order to solve overcrowding. This is exactly what’s happening now in China with Xiongan, located 100km southwest of Beijing, and which, when completed, will cover an area of 2,000 sq km—more than double New York City or Singapore.

  1. In China, they’ve got unicorns.

Sadly, while China’s unicorns won’t fly you away to a mythical land, they could make some people rich. A unicorn is the name given to a private company valued at $1 billion or more, and China has at least 100 of them. Companies valued at over $10 billion get the name decacorn, and there are over 8 of them helping to float the economy, including giants like Alibaba-owned Ant Financial, Didi Chuxing (the UBER of China), and mobile phone maker Xiaomi. For size perspective, consider this: the net worth of these 108 companies is $435 billion, almost the size of Belgium’s economy.

  1. The U.S. Economy might not be top dog for much longer.

In 2001, the World Bank reported that with $10.6 trillion, the US GDP accounted for 32% of the World Economy (estimated at roughly $80 trillion). But by 2016, according to Forbes, that number had dropped to 22% as global superpower China caught up. It’s still in the lead, but according to various reports, there are signs suggesting that China is quickly catching up and Japan is also advancing.

  1. Bigger doesn’t necessarily mean better.

An economy’s size doesn’t always mean life is easy. India has the sixth largest economy in the world, with a $2.6 trillion GDP, and is one of the fastest growing economies by today’s standards. Still, regional disparity means that almost one-third of the population are below the poverty line. Two of India’s largest regions—Uttar Pradesh and Bihar—have a combined population that almost matches the U.S., but their combined GDP is less than Michigan, which ranks #14 in the country with a GDP of $505 million.

  1. A big economy means you can recreate history.

China has announced plans to build a new Silk Road, committing $1 trillion to the project. The modern update to the ancient network of trade routes will be called One Belt, One Road, and basically serve the same purpose—to connect China more directly with its biggest western trading partners, including Central Asia, the Middle East, and Europe. However, this time, rather than thousands of miles of paths and mountain passes, One Belt, One Road will consist of a network of interlinking trade deals and various infrastructure projects, ultimately involving more than 68 countries and 4.4 billion people.

  1. Look to the sun for a possible economic boost.

Renewable energy is touted as one of today’s most powerful economic boons, and not just because it’s good for the earth. First, it brings in jobs. There are over 10 million people around the world employed in renewable energy positions, with just over 3 million in solar power alone. Secondly, it attracts attention and investments. In the U.S., wind power has brought in more than $100 billion in investments since 2005, with a growing rate of $10 to $20 billion every year since. China invests more in renewable power each year than any other country in the world, plus it’s the biggest generator of solar power in the world. As one of the biggest exporters of renewable energy technology and equipment, Germany has added significantly to its economy, an amount that according to estimations is expected to climb to up to €69 billion by 2030.

  1. Technology is partly to blame for India’s economic expansion.

It’s no secret that India is quickly becoming one of the world’s most prolific countries in terms of technology. As one of the biggest exporters of IT and software services nowadays, its growth is staggering when you look at the numbers. Back in 1990—about the time modern day technology began its growth—IT exports in India were next to nothing, but within 20 years, India’s net IT exports have grown to over $70 billion.

  1. London’s not really the center of the economic universe.

Contrary to popular belief, as well as the fact that two of the world’s most important financial centers—City of London and Canary Wharf—are located in London, the majority of UK’s economic growth takes place in the north, not in the capital. According to different reports, a huge number of new businesses have been popping up lately in northern cities like Manchester, spurring an average economic growth of 74%.

  1. Brexit’s ultimate effect on the British economy still remains a mystery.

While most people watch the television for updates on Brexit, financial analysts watch the markets, and the U.K.’s departure from the EU has been one of the biggest hot button issues in recent years. Every time a meeting is held or an agreement is rejected, the markets take a tumble. In December 2018, the pound plummeted to its lowest level in two years—just after Prime Minister Theresa May delayed the parliamentary vote on her Brexit deal. Stock markets continue to rock back and forth, with economic fears growing by the day. But in the end, the general feeling is that leaving the EU will be bad for the economy, though there’s no way to tell exactly how.

 

Want to find out why people involved in finance, such as traders, have such an interest in global economies? Find out more about how economic activity affects the financial markets at iFOREX.


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According to recent statistics released by the International Energy Agency, continental Europe experienced a decline in new diesel fueled auto registration. Last year, it was at 32% while the previous year, it was 39%. One reason could be that premium price for gasoline in Europe is the lowest it has been since 2008.

According to some people, the story is pretty straightforward: There’s simply a greater supply of oil than there is demand. As anyone who attended a basic economy class will tell you, when supply increases, prices drop, until demand grows again. But this trend could also change course and gasoline demand might increase as diesel gradually falls further from grace.

In the meantime, gas prices appear to be diminishing as they are currently priced at a mere three euro cents a liter above diesel. To give you a bit of perspective, back in 2015, it was a whopping 23 cents a liter.

The truth is that gas would be even less expensive if it weren’t for taxes. If the tax wasn’t a factor, it would be cheaper by 9 cents a liter across the European continent. Back in 2015, it was 4 cents higher on average.

Gasoline powered vehicle owners are benefiting from a renewal in American oil production which is affecting the supply on oil markets as a whole. But heavier grades that are more suitable for diesel engines are suffering as major oil exporters like Iran and Venezuela are halting production for reasons that are not necessarily in their control. With all this new oil in circulation, gasoline is a less profitable product for European refineries.

According to the She Spanish Automobile Association, diesel powered vehicle registration has declined by almost 30% in Spain. That’s the lowest it has been in eight years. On the other hand, the number of gasoline powered vehicles has risen by over 60% in the last five years.

Germany appears to be in sync with the trend. That’s because data from the Federal Motor Vehicles Office showed that diesel car sales were at their lowest since 2009 last year.

Gasoline sales in the UK increased by over 1.5 billion liters in November. That’s the first time that has happened in that month since 2013. Noting an increase in fuel costs such as taxes and other charges as well as environmental concerns, Luke Bosdet, a spokesman for the Automobile Association stated that “there has been a dramatic collapse of new diesel car sales in the UK”.

One factor that might be behind the increase in diesel prices, are new regulations concerning the sulfur content in shipping fuel. As the regulations require a cleaner shipping fuel, the demand for diesel is rising. Diesel fuel is cleaner than gasoline and therefore, satisfies the regulatory requirements.

At iFOREX, you can trade WTI oil, Brent oil, Gasoline and natural gas in the form of CFDs, as well as hundreds of other CFDs. Login now to take a look at our full list of tradable instruments. Not a client yet? Register now for free.

 

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The post Gasoline Prices Drop While Diesel Rise appeared first on iFOREX Blog.

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Following a crushing defeat during of her last Brexit deal proposal, UK Prime Minister Theresa May is returning to the parliament. She informed her counterparts that getting enough parliamentarians on both sides of the political isle to agree on the terms of a Brexit deal is proving to be a near impossible task.

This is going to be her fourth time appearing in the chamber of the House of Commons in just eight days. As you may recall last week, the deal she negotiated with the EU was eviscerated in what was considered to be a highly anticipated parliament vote. The very next day, she managed to salvage a vote of confidence in her government. In the meantime, May has sought parliament ministers from both sides of the political divide to help rewrite the failed deal.

Unfortunately for May, little has come of those meetings. At this point, the Prime Minister’s objective is to garner enough pro Brexit ministers on one side and just enough of her allies in the Democratic Unionist Party on the other side to agree to a new deal.

The problem is that the deal that was just struck down took eighteen months to negotiate with the European Parliament. Chances of them agreeing to renegotiate a new one aren’t looking good. Those who hoped for a more diluted Brexit deal will likely be disappointed. Meanwhile, opposition leader Jeremy Corbyn is hanging a vote of no-confidence over her head if her deal does not meet his demands.

However, it should be noted that May isn’t the only decision maker we should be keeping our eye on today. Parliament members will also be voting on a motion to assert control over the entire Brexit process. Ex Attorney General Dominic Grieve is working on an amendment to the standing orders of the House of Commons which would grant more time for a backbench motion on what the steps should be taken next. Nick Boles, another ex-minister, is working to pass a bill that would force the parliament to provide an extension for Article 50 if a deal is not reached. Article 50 gives any EU member state the right to quit the union unilaterally. This amendment in the Treaty of Lisbon is being used by the former lawmaker as a last resort if negotiations with the EU fail.

The EU seems to also prefer a negotiated exit. But the question that now remains is how long of an extension should be offered. Some EU officials have even recommended delaying the extension by up to a year! At this juncture, the EU members appear to be split between those who want to wait out an agreement that both sides can live with and those who would like to pressure the UK to vote on an agreement as soon as possible.

After being defeated by 116 votes last week, May has two potential allies; the pro-Brexit alliance of Conservatives and Northern Ireland’s Democratic Unionist Party, or Labour. The Labour wants a customs union with the EU included in any deal. If May grants them their wish, they could theoretically decide to back her. That said, Labour could just as easily join forces with an outraged crowd of pro-Brexit Tories that attempts to compel the UK to go to elections in light of a failed proposal. If May wants to recruit Labour dissenters, she would have to negotiate a new deal. But this will likely split her own Conservative party. Either way, January is proving to be a difficult month for May.

For traders, market uncertainty presents risks, but also opportunities. Stay alert for potential volatility in the EUR and GBP pairs, UK shares and indices and a variety of other CFD instruments and stay informed.

 

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The post January isn’t Smiling at May appeared first on iFOREX Blog.

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iFOREX Blog by Iforex Team - 1M ago

For Tesla, 2018 was full of bumps and roadblocks. It faced continuing pressure to meet its Model 3 production deadlines and, for the most parts, failed. Debts grew exponentially, plans for an ambitious factory automation process were tossed out the window at an especially high cost and some investors were less confident.

Elon Musk didn’t help much. His honest approach of stating that Tesla was blowing through $100 million a week did little to reassure the skeptics. And don’t get us started on his numerous social media slips and meltdowns, not to mention his seeming inability to hold back from sharing is each and every thought with his millions of Twitter followers.

Now let’s fast forward. Tesla is now producing over 4,700 Model 3 vehicles every week, which could help shrink debts. According to Bloomberg, it’s currently one of the world’s most valuable car companies, with a share value greater than Ford, BMW, GM and nose to nose with the mighty Daimler. Who would have thought? Tesla certainly took the long way around.

Tesla invested billions preparing for the Model 3. It built the world’s biggest battery factory in Nevada, expanded factories in California and assembled robots. Tesla 3’s production difficulties meant spending continued but revenue did not.
In March, Moody’s downgraded Tesla’s debt and Musk admitted that the company was “within single-digit weeks” of actually running out of money.

The, Model 3 production literally doubled, exceeding 4,000 vehicles a week, providing the company the capital it needed to breath. By the time September made its appearance, Tesla had $2.98 billion – enough, according to the eager CEO, to fund growth and covering debts without selling new bonds or more stocks.
In the last weeks before 2018 turned into 2019, Tesla (finally) sold its 500,000th car. This took 10 years. How long will the next half million expected to take? If the current production rate holds, around 15 months.

This doesn’t mean that the automaker now faces a smooth ride, but now, at least, the whole “will Tesla make it into the mass production stage” issue has been resolved. The cash flows challenge has also undergone substantial changes. In the 1st half of 2018, Tesla burned roughly $1.7 billion. In the 3rd quarter, it generated $774 million.

The company also tightened its relation for the major source for global growth: China and is posed to be the 1st major auto factory owned completely by a foreign company on China’s soil.

And what is up with the shares? Well, since October 2018, Tesla shares surged 35%.

And as the stats show, Tesla is now the official queen of global electric car market. In the 1st 9e months of 2018, Tesla sold 19% of the world’s electric vehicles. Can it do the same in the 2019? It’s hard to tell, especially considering that according to estimations, the company will face some serious competition.

The major questions for 2019 remain as follows:
• Will Tesla keep its domination in the electric car market?
• Will it manage to balance its debts and expenses?
• Will its investments pay off?
• Will Elon Musk learn keep drama under control?
• Will the expansion into China prove successful?

In February, Tesla is scheduled to report earnings in February. Stay informed. Stay alert and remember: At iFOREX, you can trade Tesla and many other car company shares in the form of CFDs, as well as hundreds of other CFD instruments.

 

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Happy birthday Jeff Bezos! Let’s give a round of applause to legendary Amazon CEO who has taken a book store and turned it into an empire, while revolutionizing the online shopping business along the way. True, he is famous, but we bet we can still surprise you with a few fun facts that you may not know. Let’s find out if we’re right…

  1. He may be a billionaire, but he started from a humble profession. How humble? He used to work for McDonald’s while he was attending high school. That’s serious supersizing.
  2. Bezos showed interest in science and technology from an early age. As a child, he built an electric alarm and used it to keep his siblings out of his room.
  3. Bezos was planning to name Amazon ‘Cadabra’ (as in ‘Abracadabra’), but his lawyer misheard the name, calling it ‘Cadaver’ that has a pretty negative association. So, Amazon was selected, inspired by the great river Amazon.
  4. He adores change, believing its key to his business, earning him the occasional title ‘a Change Junkie’.
  5. He never schedules early morning meetings.
  6. Bezos has a two-pizza rule. It states that meetings need to be small enough so that all participants can be fed by two pizzas.
  7. According to Amazon’s company policy, after two years with the company, every employee has to work two days at the customer service desk. Bezos is not exempt.
  8. Think you’re having a bad day? During the infamous dotcom crash Amazon share price fell from around $100 to about $6.
  9. com was no different. Its share price fell from $100 to as low as $6.
  10. How much is it today? Around $1650.
  11. With $112 billion at his name, Jeff Bezos is the richest man in the world, according to the Forbes 2018 richest people list.

 

At iFOREX you can trade Amazon share CFDs as well as hundreds of other CFDs including competitors Ebay and Alibaba. Want to see how these shares performed recently? Drop by our trading platform and take a look.

 

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The post 11 Fun, Interesting Facts about Jeff Bezos appeared first on iFOREX Blog.

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iFOREX Blog by Iforex Team - 1M ago

As we enter 2019, many people wonder if gold will continue to shine. So far, the bullion has rallied for a fifth day in a row as stocks are showing new losses. This follows the most dismal stock market performance since the 2018 recession. Increasing signs of slowing growth are being felt not only in the US, but also in Asia on the backdrop of a US Federal government shutdown.

For investors who eye the precious metal, there is a lot to consider. Gold reached a six-month high peaking at $1.300 per ounce. The development comes on the heels of recent news showing a slowdown in Chinese production while the expansion of Singapore’s trade reliant economy failed to meet market expectations.

 

Some opinions
Gnanasekar Thiagarajan, director at Commtrendz Risk Management Services told Bloomberg that “people are moving toward safe-haven assets, such as gold, because of the volatility in the equity markets”. He continued saying that the US Federal government shutdown “will only further create more uncertainty, so that will be supportive”.
Is here right? It depends on whom you ask.

Meanwhile, Jasper Lawler, head of research at London Capital Group, is quoted as saying that “Gold is holding onto six-month highs supported by the prospect of fewer Fed hikes and a softer dollar, concerns over slowing economic global growth and wild swings in the stock market”. Lawler said that more and more data suggests that the Chinese economy could be losing its luster.
What happened in 2018?
The yellow metal climbed in the fourth quarter of 2018 as investors readied for a worldwide slowdown in production. Additionally, fewer rate hikes are expected from the Federal Reserve which paved the path for a rush towards safe haven assets like precious metals. Major selloffs also catalyzed gold to rise. Despite the fact that President Trump implied that he would make efforts to end the government shutdown, gold-oriented ETFs were very volatile as well.

Fresh Highs
Bloomberg also reported that spot gold reached up to 0.4% hitting $1,287.45 an ounce. That is the highest price it’s been since mid-June. In December of 2018, bullion reached its highest quarterly increase since March of 2017. Following the upsurge, its two-week RSI was above 70. Some people might see this as hitting a new resistance level.

The politics
Despite the fact that President Trump had invited both Democrat and Republican congressional leaders to the White House in an effort to resolve the shutdown, the markets didn’t respond in kind. In China, two separate financial data providers (Caixin Media and IHS Markit PMI) dropped to 49.7, it’s lowest since May 2017.
Singapore’s disappointing data didn’t help. While the markets expected a 3.6% expansion, results suggested a mere 1.6% in Q4 of 2018.

What’s next?
Gold remains one of the most popular assets for traders worldwide, but as the new year begins, there are many factors that could impact the price of the precious metal in the upcoming months. Of course, as you well know, CFD traders can always choose to open a Buy or Sell deal, potentially trading regardless if they believe the price will increase or decrease.

At iFOREX, you can trade gold and hundreds of other CFDs. Want to know more? Open your account for free.

 

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Any indication of past performance of a financial instrument is not a reliable indicator of current and/or future performance of such financial instrument.

The post Will Gold Shine in 2019 appeared first on iFOREX Blog.

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If some people would say 2017 was the year of Bitcoin, it’s not farfetched to call 2018 the year of oil. That’s because since climbing to four-year highs in early October 2018, the price of crude futures has crashed by more than a third before the year’s end.

This type of volatility has inspired many traders to speculate on crude oil’s future price movements, but that’s not the only hot topic that was on the table. Whether it be a Trump’s trade war (and truce) with China or UK Prime Minister Theresa May’s Brexit vote, 2018 could also be dubbed the year of economic uncertainty.

This leaves us begging the question: What does 2019 have in store for us traders? If you are a pessimist, or as they’re better known on Wall Street, ‘bearish’, there is a lot to think about following New Year’s Day. In fact, the American Association of Individual Investor’s (AAII), bearishness is at its highest levels since February 2016. Additionally, the State Street Investor Confidence Index for North America (ICI) reached its highest bearish level since 2012.

So which assets are most pessimists looking at? Here are a few to consider.

The Dow Jones Industrial Average

In 2018, the index suffered its worst December since 1932. For you history buffs out there, 1932 was smack in the middle of America’s Great Depression. Could this be a sign of things to come? It depends who you ask, but meantime, this index could draw plenty of attention in the next year, as well as the CFD asset based on its movement – the US 30.

USD

Although the US dollar largely outperformed its counterparts in 2018, 2019 could have different plans in store for the greenback. A Reuter’s poll of foreign exchange strategists suggests that the USD might be ‘undermined in 2019 on increasing concerns about slowing U.S. economic growth’. Federal Reserve Chairman Jerome Powell said that U.S. interest rates were nearing neutral levels in late December, but former Fed Chairman Alan Greenspan told CNN Business that “investors should prepare for the worst”. So who should we believe – Greenspan or Powell? Greenspan does have more experience as a Fed Chairman than Powell and he is responsible for the quantitative easing, but the latter is far more likely to spread hints regarding his personal inclinations, and he is the one currently holding the reign.

Facebook

In 2018, it looks like lots of investors unfriended Facebook. The social network plunged 8.5% in December in a downfall that started in early 2018 during the Cambridge Analytica scandal. When that happened, Facebook revealed that they had been sharing user data with a British based political consulting firm. This quickly spiraled into Russians using Facebook to meddle in US elections to accusations of ‘fake news’. But Zuckerberg’s multiple apologies weren’t forgiven by Wall Street. The latest scandal came out in December when it was revealed that from 2010 until today, FB shared users’ private data, including private messages and contact info, with over 150 companies including Netflix and Spotify. It seems that every news regarding Facebook and user data results in a stock price drops. And since sharing user data is Facebook’s primary business model, there’s no knowing how or when this will end Additionally, as these revelations continue to come in and are viewed by the government as scandals, it will likely invite more regulation upon FB’s business model. This is compounded by the notion that the pro regulation Democrats have gained a more prominent presence in the US congress.

The bottom line

Although no one likes to be the bearer of bad news, sometimes, when it comes to investing, it is important to listen to the doom and gloom. Besides, when you trade CFDs with iFOREX, you can always choose to go short or long – Sell or Buy – potentially taking advantage of price change in any direction. Think that the price of an instrument will rise? Open a Buy deal. Think it will decrease? Open a Buy deal, and may 2019 be kind to your portfolio.

 

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The post The Pessimist’s Guide to 2019 appeared first on iFOREX Blog.

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The Santa Claus Rally is a seasonal financial phenomenon that sometimes occurs when stocks start to rally during the final weeks of December and continue to rally into the first two days of January. Does it always happen? Of course not, but historically it has been spotted and discussed many times.

There are a few possible reasons for the Santa Claus rally. They include tax considerations, a positive holiday vibe on Wall street, consumers spending their Christmas bonuses as well as the theory that most bear market investors are on vacation in a land far away from the opening bell, a mere theory with no evidence to support it.

A Lot of economists credit the Santa Claus rally, a phenomenon that often translates into a boost in stock prices, to a little something known as the ‘January Effect’.

What is the January Effect?
The January effect is the notion that stock prices climb higher in January than they do any other month of the year. The January effect usually inspires traders to buy stock in December in hopes of prices climbing in the next month – January. The January effect was originally stumbled upon back in 1942 by Sidney B. Wachtel. Mr. Wachtel was an economist, investment banker and founder of Wachtel & Co., a Washington-based investment and brokerage firm. He realized that since 1925, small stocks showed an improved performance in January each year.

There are two reasons for the January Effect. One is tax reasons, impacting portfolios, especially those managed by corporations and large companies. The other reason is because a lot of employees that get Xmas bonuses often invest them into buying shares of publicly traded companies.

It’s called the ‘Santa Claus’ rally because the general environment is that of a warm and cozy holiday season on Wall Street. And as you may or may not know, the markets are moved by sentiment. Therefore, happy investors in a good mood can also create favorable trading conditions. But like all theories, there are holes. After all, if many investors bought into to the Santa Claus rally, many would purchase shares at the same time. This would likely lead prices to rise. That type of scenario would likely result in the precise opposite intention of the January Effect.

Is there any truth to it?
The Santa Claus Rally might be credible but then again, maybe not. That’s because according to Standard & Poor’s Capital IQ, shares have actually risen during the 4th quarter almost 4 out of 5 years since the year 1945. During that time period, the S&P 500 increased approximately 7.2% in the Q4, after an average 10% drop in the Q3.

Conclusion
So, here’s the million Dollar question: Will there be a Santa Claus Rally 2018? Even if one concludes that stocks more often than not rise towards the end of December and the beginning of January, or even if the inverse is proven to be true, there exists no guarantee that past performance is any indication of future results. Additionally, if the US economy goes into a recession like it did in 2008, or even a depression like it did in 1929, the chances of a Santa Claus effect happening are about as good as a flying reindeer.

 

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The post Is the Santa Claus Rally 2018 Coming to Town? appeared first on iFOREX Blog.

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The oil market is heating up with news. With sanctions, Qatar, Russia, Saudi and even Canada all making headlines, it hard for oil traders to figure out what article to read first.

Luckily, the iFOREX Blog is here to sort things out.

For starters, we have to talk about Qatar, that surprised everyone (well, surprised us – perhaps you had better sources) by announcing that it will leave OPEC as of January. While it’s only 12 on the list as far as WTI production is concerned, this is an indication of the kind of pressure that has been shaking the foundation of the organization recently. Political disagreement among members have accumulated to a level rarely seen before and remember- we are talking about organization that has maintained unity throughout political turmoil, rivalries and even wars.

Then there are the oil production cuts. Russia and Saudi, two of the world’s largest crude producers, announced that they will cut their production or, more accurately, extend existing cuts. Then, Alberta, Canada’s largest oil producing province, also stated it will lower its production by 325,000 barrels a day.
We’ve learned to expect cuts from OPEC member and Russia, but Canada?

And all this, might we remind you, happens just as the oil market was beginning to calculate the impact of the US sanctions against Iran.

And just look at this year’s oil volatility…

Between January and October, oil skyrocketed 26%, before decreasing over 35% by November 29th.
Then, Russia, Saudi Arabia and Canada made their statements about production cuts. Can you guess what happened next? That’s right! Oil prices began to climb again, gaining 8.9% in a few days.

So, the million Dollar question: What will happen next? Will oil continue to gain momentum or is the next fall just around the corner?

At iFOREX, you can trade WTI oil, Brent oil and hundreds of other CFDs and choose to short or long your position.

Go to the platform!

 

Found this article interesting?
Want to see how quickly you can take your first steps in the world of online trading? iFOREX has one of the most popular training packages.  

The post Russia, Saudi & Canada Announce Oil Cuts appeared first on iFOREX Blog.

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