Forex News 24

Zuora Earnings: ZUO Stock Plunges on Downside Q2 Guidance
Carnage Continues Amid Weak Global Growth
Ben & Jerry’s CBD Ice Cream Is Coming: 11 Things We Know
Which is More Critical Measure of Stability Amid Trade Wars?
Friday Apple Rumors: Apple May Kill iTunes Soon
EUR/USD. May 31. Results of the day. The fall of the euro slows down in the long run. Possible reversal of the global trend
7 Bank Stocks to Leave in the Vault
Where U.S. Tariffs Stand Now After Trump’s Mexico Tweet
Why Nio (NIO) Stock Remains Quite Risky at This Point
GBP/USD. May 31. Results of the day. Brexit party can seize power in Britain in case of dissolution of Parliament

Zuora Earnings: ZUO Stock Plunges on Downside Q2 Guidance

Posted: 31 May 2019 09:39 PM PDT

Zuora earnings for the company's first quarter of fiscal 2020 have ZUO stock falling hard on Friday.

Zuora Earnings: ZUO Stock Plunges on Downside Q2 Guidance

Source: Shutterstock

The bad news for Zuora (NYSE:ZUO) comes from its outlook for the second quarter of its fiscal year. The company says that it is expecting losses per share for the quarter to range from 15 cents to 13 cents. That's a blow to ZUO with Wall Street estimating losses per share of 11 cents for the quarter.

Zuora also says that it is expecting revenue for its second quarter of fiscal 2020 to come in between $66.00 million and $68.00 million. That's another negative for ZUO stock with analysts looking for revenue of $71.14 million for the period.

When it comes to the full year of fiscal 2020, it's more of a mixed bag for Zuora. The company is expecting losses per share ranging from 44 cents to 40 cents on revenue between $200.00 million and $206.00 million. Wall Street's expectations for the fiscal year have it reporting losses per share of 41 cents on revenue of $291.22 million.

The rest of the Zuora earnings report for its first quarter of fiscal 2020 also didn't do ZUO stock any favors today. That includes the enterprise software company reporting losses per share of 40 cents on revenue of $47.31 million. These both come in below analysts' losses per share estimate of 13 cents and revenue estimate of $64.15 million for the period.

ZUO stock was down 29% as of noon Friday, but is up 9% since the start of the year.

As of this writing, William White did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2019/05/zuora-earnings-hit-zuo-stock/.

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Carnage Continues Amid Weak Global Growth

Posted: 31 May 2019 09:20 PM PDT

OIL PRICE OUTLOOK – TALKING POINTS

Oil prices swoon nearly 10 percent over the last 5 trading days as recession fears resurface
Crude has cratered 5 out of the last 6 weeks amid evaporating bullish sentiment
Oil commodity traders turn to next week's barrage of economic data and events for clues to crude's next move
Check out this free educational guide discussing the Core Fundamentals of Oil Trading

Last week's oil forecast highlighted how the global growth narrative was set drive the price of crude. Crude oil prices have since plunged to $53.25/bbl – the lowest level since February 14 – as recession fears resurface amid escalating risks to global economic growth. The release of China's manufacturing PMI this past Friday showed a contraction and dealt the latest blow to oil prices due to waning prospects for oil demand.

OIL PRICE CHART: DAILY TIME FRAME (DECEMBER 18, 2018 TO MAY 31, 2019)

The impact from Trump tariffs and deteriorating US China trade relations in addition to several other downside risks to global GDP growth have sent crude oil on a 16.5 percent nosedive over the month of May – and prices could still head lower. Market sentiment, as well as oil demand and prices, threaten to deteriorate further considering the barrage of high-impact economic events and data releases next week which look to provide the latest health check on risk appetite and could further spark cross-asset volatility.

Recent crude oil carnage could be curbed, however, if the fundamental backdrop for global growth improves on the back of upbeat data or trade war rhetoric. Strength in the US economy may shine and inspire investor confidence if leading indicators like the ISM manufacturing and services PMI readings surprise to the upside. Although, markets are likely still digesting the looming effect from the US slapping a 5 percent tariff slapped onto all Mexican goods exports with any whiff of downward global GDP growth revisions risking more downside in oil.

CRUDE OIL – COMMITMENT OF TRADERS (NET FUTURES POSITIONING)

Crude oil commitment of traders CFTC Net Positioning

According to the latest CFTC Commitment of Traders data, net oil futures positioning shows a reduction in net short positioning as the volume of commercials longs outpaced that of shorts for the last 5 weeks. The bullish bets from commercial hedgers could provide crude oil prices with a bit of buoyancy, but it is noteworthy that non-commercial speculative futures traders have grown increasingly bearish over the last month as prices spiral lower.

– Written by Rich Dvorak, Junior Analyst for DailyFX

– Follow @RichDvorakFX on Twitter

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Ben & Jerry’s CBD Ice Cream Is Coming: 11 Things We Know

Posted: 31 May 2019 08:56 PM PDT

<br /> Ben & Jerry’s CBD Ice Cream Is Coming: 11 Things We Know | InvestorPlace

The ice cream can’t come out yet due to restrictions on CBD

By William White, InvestorPlace Writer

May 31, 2019, 12:57 pm EDT

May 31, 2019

Ben & Jerry's CBD ice cream is in the works, but isn't available just yet.

Ben & Jerry's CBD Ice Cream Is Coming: 11 Things We Know

Source: Shutterstock

Here's what to know about the Ben & Jerry's CBD ice cream.

The company is already working on the ice cream, but can't release it yet.
This is due to restrictions from the U.S. Food and Drug Administration (FDA).
These restrictions don't allow companies to use CBD oil in foods or beverages.
However, the FDA is currently looking over the matter and may make a change to this stance.
If this takes place, it will result in a change at the federal level that would allow CBD in foods and drinks.
According to the ice cream company, it has plans to release its Ben & Jerry's CBD ice cream if this change occurs.
Due to the nature of the product and legal situations, there currently isn't a release window for the product.
It's also worth noting that the FDA is holding a public hearing on the legalization of CBD in food and beverages today.
The agency will also be allowing public comments on the hearing until July 2, 2019.
Fans of the company that want to try out that Ben & Jerry's CBD ice cream are advised to submit their comments to the FDA.
This could help influence the FDA's decision concerning letting companies add CBD oil to foods and beverages.

You can learn more about the Ben & Jerry's CBD ice cream and the FDA's public hearing at this link.

As of this writing, William White did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2019/05/ben-jerrys-cbd-ice-cream-is-coming/.

Which is More Critical Measure of Stability Amid Trade Wars?

Posted: 31 May 2019 08:48 PM PDT

Reversal Talking Points:

President Trump’s tweet about a 5 percent blanket tariff on all Mexican imports added a material sense of despair to risk Friday
As the permanent damage of an ongoing trade war sinks in, fears over the economy and effective stabilizers grows
Themes may override event risk for market influence, and the Dollar may ultimately prove the biggest victim in this scrum

See how retail traders are positioning in the Dow and S&P 500 following their tentative technical reversal along with the FX majors, other indices, gold and oil intraday using the DailyFX speculative positioning data on the sentiment page.

Risk Aversion May Finally Overcome Apathy to Dramatic Result

The greatest restraint on the markets these past weeks and months has not been a lack of quality technical levels nor influential fundamental themes. In fact, we have sported an abundance of both across most of the benchmarks for risk assets. The firebreak between catalyst and substantial market movement has instead been a general apathy towards changing winds that has capped meaningful moves before they could ever build a head of steam. Complacency is a difficult trait in a market to find its origin, to find its borders and to determine its breaking point. And yet, its influence is unmistakable. From what we have seen this past week, we may be experiencing the strongest bid to break the inertia that we’ve seen so far this year. The evidence of this shift in sentiment is best measured in the charts. I start with speculative benchmarks in the US indices. The Dow and S&P 500 put in unmistakable technical reversals this past week with the break of ‘necklines’ on very prominent head-and-shoulders patterns. Initial breaches have not been our trip point for new trends, but rather the like of significant follow through after the high profile move. It seemed we were heading for that familiar and frustrating pattern until Friday issued another strong and productive drive lower.

Chart of S&P 500 and Opening Gaps (Daily)

With a Friday gap lower – the 12th in the past 18 trading days – the S&P 500 and Dow made another strong push against their overt reversal patterns. That move would also close out the month of May which was the third worst monthly performance for the broader index in 7 years – and all three of those sharp losses were registered in the past 7 months. The more evidence that accumulates behind a bearish shift, the higher the probability that the sentiment swing proves permanent. Meanwhile, the breadth behind the market’s struggles has indicated trouble long before the US equity markets capitulated. Rest-of-world equities have traded at a stark discount to their US peers, particularly since this year’s recovery effort. The German DAX, French CAC, Italian FTSE MIB and Japanese Nikkei 225 all projected their pain through Friday. Junk bonds, commodities, carry trade and global government bond yields all followed suit, falling form significantly lower levels than the Dow. There is a lot to learn from the exceptions, so the fact that the EEM emerging market ETF held steadfast perhaps indicates a sense of relief found via the aggressively dovish swing in Fed rate forecasts.

Chart of Relative Performance for SPX, Carry Trade, Emerging Markets and More (Daily)

Dow or Dollar: Which is More Critical Measure of Stability Amid Trade Wars?

The progression of bearish evidence of late – from the reversal from record highs on May 1st to the head-and-shoulders ‘neckline’ break this past Wednesday to the charge of follow through on Friday – signals deepening conviction. However, even a string of technical milestones doesn’t ensure a systemic change in both bias (bullish to bearish) and intent (range to trend). Trading with a sense of caution and recognition of the probabilities is still the appropriate approach as we look for fundamental footholds to ensure the changing of the guard.

In Order of Prominence: Trade Wars; Recession Risks; Central Bank and Government Impotency

As we watch the market assess its delicate balance of risk exposure against the hope for further returns (income and capital gains), the most definitive charges of confidence or pessimism will come via key fundamental themes. At the top of the list for influence in the week ahead is the familiar trade war banner. The US-China economic conflict is still the largest notional tab – no surprise as it involves the world’s two largest economies. China’s tariff hike from 10 to 25 percent on the $60 billion in US imports took effect Saturday morning, June 1st. That was retaliation for the United States instituting the same jump in import tax for the $200 billion in Chinese goods on its list. Looking to mirror the Trump administration’s more unorthodox policies, it was also reported that the country had prepared a list of American companies it was preparing to ban and was prepared to use rare earth materials as a tool. Expect headlines between these two countries’ troubled relationships to show up unexpectedly and command further periods of volatility.

Chart of USDCNH and FXI China ETF Volatility Index (Daily)

Dow or Dollar: Which is More Critical Measure of Stability Amid Trade Wars?

Where the US-China engagement is a steadily unfolding issue, the leading edge of trade wars as a market-wide threat is the recent flare up between the United States and Mexico. Up until President Trump’s unexpected tweet on Thursday, it seemed that the North American neighbors were finally finding their way out of a self-imposed trade dispute. The White House announced it was lifting the steel and aluminum tariffs on Canada and Mexico a few weeks ago, ostensibly to move forward the USCMA (replacement for the NAFTA accord). All of that optimism came crashing down however Thursday evening when the President announced in a brief social media update that he would apply a blanket 5 percent tariff on all Mexican imports starting June 10th. We learned Friday that this was a decision made against the advisement of key senior officials (Lighthizer and Mnuchin) and that US businesses were bringing legal pressure to force a change in course. Trump stated that the move is in response to illegal immigration which has brought Legislative complaint. With all the blowback, it would seem a walk back a high probability. However, this administration has made clear it was willing to break from convention to get its point across.

Chart of USDMXN and 20-day Moving Average (Daily)

Dow or Dollar: Which is More Critical Measure of Stability Amid Trade Wars?

Trade may be the most overt theme, but it isn’t the only one to keep track of next week. Economic activity is a theme slowly gaining traction against the backdrop of sentiment and data. Most of the official 1Q GDP figures have already crossed the wires and now we are due less official monthly figures like PMIs and NFPs in the week ahead. With Fed surveys, consumer sentiment reports and business groups all warning of economic strain under the burden of range of issues, the trade wars seem a point of unnecessary provocation. And, the more likely a stall or correction in the global economy seems, the greater the interest in stabilizing forces. Governments’ in-fighting while countries find themselves increasingly at odds with each other, a true reliance on something like the US infrastructure spending program should worry. Monetary policy is a more familiar and actively-used tool, but it has been used to the point of disrepair. Anticipation of further easing by the major authorities when we are already at or close to emergency settings should raise serious concerns.

Systemic Fears Vs Scheduled Event Risk for the Dollar, Euro, Pound and Yen

Pulling back from the market-wide issues, there are a host of crucial fundamental issues for which FX traders and regional investors should be mindful. The Euro and Pound have been in something of a holding pattern of late, but that could very well change in the week ahead. For the world’s second largest economy, the ECB rate decision and Eurozone unemployment rate are just a few of the data-oriented updates we are due. My real interest is in the scale of tension between Italy and the European Community moving forward. The country’s leadership has made clear it intends to breach financial restrictions with Deputy Prime Minister Salvini warning the EU could fine Italy 3 billion euros for the transgression. The EC is due to review the country’s financial position on Wednesday. As for the British Pound, Parliament is due back from recession and the Conservative Party has to step up its leadership decision with Prime Minister May due to step down on Friday. Most believe that the PM resignation and EU Parliamentary election results significantly raises the risk of a ‘no-deal’ Brexit that hurts local markets.

Chart of EURGBP (Daily)

Dow or Dollar: Which is More Critical Measure of Stability Amid Trade Wars?

As the risks mount and distinct caveats alter the shape of the market’s landscape, the need for appropriate safe havens grows more important. One of the currencies which seems to draw a defacto simple haven moniker – a designation ill-deserved – is the Japanese Yen. Historically, this currency correlates to risk aversion flows as speculative interests are unwinding carry trade funded through a short Yen position, but there isn’t much carry trade to burn at the moment. Nevertheless, my equally-weighted Yen index has extended a remarkable two-month drop to trade at lows not seen since the January 3rd flash crash with a low not seen since November 2016 on a closing basis. Another unusual haven of interest to me is the Swiss Franc. This currency is similarly loaded with fundamental flaws, but it also happens to be a familiar unit with substantial liquidity without the troubling connection to full-tilt trade wars (Dollar), systemic stability risks (Euro) or crashing through a delicate economic separation (Pound). Then there is of course Gold which is the alternative to risk aversion that happens to come alongside a recognition of broad financial instability. It was hard to miss the Friday surge from the metal above $1,300.

Chart of Equally-Weighted Yen Index (Daily)

Dow or Dollar: Which is More Critical Measure of Stability Amid Trade Wars?

Perhaps one the most conflicted but important currencies to monitor moving forward is the US Dollar. The currency is still a safe haven owing to the unmatched size of its economy and the depth of its markets – particularly Treasuries and money markets. When the markets are crashing, appetite for these anchored assets will bolster the Dollar as it facilitates the foreign purchases. However, short of a systemic wipe out, the Dollar has unmistakable issues. Its economic forecast is dropping quickly and the rate forecast for the Fed shows an official Fed Funds futures outlook for three cuts through the end of next year but reliable bank teams are starting to favor multiple cuts before this year is out. That would be an extreme course reversal, so if that is your baseline, it would likely also accompany some significant degree of financial crisis. The most important consideration for the Greenback moving forward – one that will also be overlooked as it is more abstract – is the gradual faltering of the benchmark currency owing to its position at the center of so many trade and political conflicts. Trade partners are increasingly forced to find alternatives to transacting in the Dollar. With the Mexico tariff move, the risk of a collective retaliation has risen sharply (China was always going to struggle with mustering sympathy). We discuss all of this and more in this weekend Trading Video.

Chart of DXY Dollar Index and Implied Fed Funds Futures Yield for Dec 2020 (Daily)

Dow or Dollar: Which is More Critical Measure of Stability Amid Trade Wars?

If you want to download my Manic-Crisis calendar, you can find the updated file here.

2019-06-01 03:28:00

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Friday Apple Rumors: Apple May Kill iTunes Soon

Posted: 31 May 2019 08:19 PM PDT

Leading the Apple (NASDAQ:AAPL) rumor mill today is news of the death of iTunes. Today, we'll look at that and other Apple Rumors for Friday.

iTunes Death: A new rumor claims that Apple is going to kill off iTunes in the near future, reports MacRumors. According to this rumor, the tech company is planning to retire the Mac app in favor of separate apps. This includes different apps for Music and TV. It was initially thought that AAPL would continue to support the iTunes app after these new apps launch, but this rumor claims that this won't be the case.

iPhone Download: Anyone using an iPhone can now download larger apps without Wi-Fi, 9to5Mac notes. The company is now allowing users to download apps as large as 200MB over cellular data. This is a 50MB increase over the previous limit of 150MB. This is a strange limit to have on mobile devices, especially in the era of unlimited data plans.

Cable Recall: There's a recall in place for Heyday Lightning cables, reports AppleInsider. These cables were sold by Target (NYSE:TGT) and are being recalled due to potential dangers. Among these dangers are them being shock and fire hazards. The recall comes after several reports of just such issues from customers. This has the retail chain recalling 90,000 of the Lightning charging cables.

As of this writing, William White did not hold a position in any of the aforementioned securities.

Article printed from InvestorPlace Media, https://investorplace.com/2019/05/apple-may-kill-itunes-soon/.

EUR/USD. May 31. Results of the day. The fall of the euro slows down in the long run. Possible reversal of the global trend

Posted: 31 May 2019 08:13 PM PDT

4-hour timeframe

The amplitude of the last 5 days (high-low): 38p – 29p – 39p – 49p – 27p.

Average amplitude over the last 5 days: 36p (47p).

As we expected in the evening review yesterday, the euro/dollar pair began to adjust on the last trading day of the week and month. Correction – purely technical, associated with the desire of traders to fix part of the profit at the end of the month and week. No strong data from Europe has been received today to provoke the strengthening of the European currency. America received data on personal expenses and income of Americans in April. Both indicators exceeded the forecast values, so it would be more logical to see the strengthening of the US dollar. However, as we have already noted, the desire of traders to close some short positions was stronger. Thus, the European currency closes the month of May near the lows of the year. In terms of the Foundation, we can sum up some results: Donald Trump’s trade wars have a very indirect impact on the EUR/USD pair, the problems of the eurozone are more important in the eyes of traders, weak statistics from America in recent weeks only pressed the US currency for a while. Thus, in general, we can say that the mood of traders remains bearish. Next month, we expect to overcome the lows of this month with a further fall of the euro. We also note that the average volatility for the last 5 days was 36 points, which indicates not too much desire of bears to sell the pair at such low price levels. Theoretically, the 1.11 point can become a reversal for the pair. However, the fundamental component gives a high probability for the continuation of the formation of the downward trend.

Trading recommendations:

The pair EUR/USD started to adjust at the end of the month. Thus, if the pair remains below the critical line, then on Monday, it is recommended to wait for the MACD indicator to turn down and resume selling the euro with the target of 1.1122.

Long positions can be considered if traders manage to gain a foothold above the critical line. In this case, the nearest target for bulls will be the resistance level of 1.1194 (very short target).

In addition to the technical picture should also take into account the fundamental data and the time of their release.

Explanation of illustration:

Ichimoku indicator:

Tenkan-Sen – red line.

Kijun-Sen – blue line.

Senkou Span A – light brown dotted line.

Senkou Span B – light purple dotted line.

Chinkou Span – green line.

Bollinger Bands indicator:

3 yellow lines.

MACD indicator:

A red line and a histogram with white bars in the indicator window.

The material has been provided by InstaForex Company – www.instaforex.com
2019-05-31 15:17:19

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7 Bank Stocks to Leave in the Vault

Posted: 31 May 2019 07:44 PM PDT

After the Trump tax cut in 2017, it was easy to see that big corporations were the big winners. They could extend their massive stock buyback programs into 2018 and keep earnings growing until the economy got back up to speed. But it also helped the banks, especially regional bank stocks.

They were able to increase their lending and much of the red tape that was put on bigger national banks was reduced for the regionals, like lowering reserve requirements to induce lending.

Also, an improving economy, steady interest rates and low inflation all contributed to their ability to lend with better margins. But the culmination of Q4 with the December selloff, gave some pause to the industry.

However, given the economic picture in the U.S., regional banks looked like their run would continue, regardless of trade wars and external factors.

Things are changing. Some financial stocks still have what it takes, but others are getting increasingly unstable, and they're overbought at this point. The seven bank stocks to leave in the vault are at the tip of a growing iceberg.

My Portfolio Grader has rated all of these stocks with ratings at D or below.

Barclays (BCS)

Barclays PLC ADR (NYSE:BCS) is a U.K.-based bank that has been operating in and beyond the British Empire since 1896. But as the empire shrank, so did BCS influence.

Today it remains a respected global banking institution, but it has had its troubles in recent decades. One of its biggest problems now is Brexit. With no idea how Brexit will (or won't) be delivered, the City — the financial center of London — is losing businesses.

The British economy is on hold and investors are looking for more clarity in their banking partners and their investment money.

That explains why BCS is flat year-to-date and off 30% in the past 12 months. Things aren't getting any better at this point. Best to watch this one from afar, even with its 4.4% dividend.

Umpqua (UMPQ)

Umpqua Holdings Corp (NASDAQ:UMPQ) is a mid-cap regional bank that is headquartered in Portland, Oregon.

With roots going back to the timber industry in the 1950s, UMPQ has grown with Oregon, especially Portland. But like the timber industry in the Pacific Northwest, times are a little tougher for this regional bank these days.

It has locations across Oregon, Washington, Idaho and California. And it has an array of customers, from individuals to large corporations. But the investment side of the business is slowing since investors aren't investing like they were in 2018. Treasuries yields are dropping. And housing starts are slowing. None of which are good for a banks' asset portfolio.

UMPQ stock is up a mere 1.5% YTD and off 32% in the past year. Its 5.2% looks generous, but isn't worth the risk at this point.

UBS Group (UBS)

UBS Group AG (NYSE:UBS) has been around in one form or another for more than 155 years and remains the largest bank in Switzerland. In the good ol' days, it had quite a brisk international business since the Swiss had such rigorous privacy laws.

And even now, half the billionaires in the world still have accounts with the bank.

But the privacy laws have changed significantly and the financial crisis in 2008 laid UBS low. When it re-emerged, it had transitioned into more of an investment bank that also specialized in wealth management.

It remains a significant financial institution, but this isn't a good time for the bank since it is still sorting out its issues from a decade ago and is trying to navigate the challenges of its global business. This isn't the time to bank on UBS stock.

While it delivers a generous 6% dividend, the stock is off 26% for the year and 7% year to date.

State Street (STT)

State Street Corp (NYSE:STT) is a holding company that operates State Street Bank. But its chief income generator is an investment services and wealth management company.

The problem is, while the markets have been chugging along up now, the amount of investment in the markets is down overall. That means after the big December selloff and subsequent rally, some of the sidelined cash didn't make it back in the markets.

That's pretty evident in STT's late April Q1 earnings release. Its fee income was off considerably. Fee income is the money the company makes off account-related fees. And the stock has been punished for it.

STT stock is off 43% in the past year and 11% YTD. In the past 3 months, it's off 23%, which shows the effect of that dour earnings report. Its 3.4% dividend isn't even that tempting.

PacWest Bancorp (PACW)

PacWest Bancorp (NASDAQ:PACW) is headquartered in Beverly Hills, California. That may give you an idea of the customers that they are looking to attract.

And PACW isn't a bank for individuals, rather a bank that focuses on services for mid-sized companies. You can imagine that its reach up and down California means it has a good book of business in tech, aerospace, shipping and agriculture.

But the thing is, the tech sector is getting hit because of the trade war with China, as are the aerospace and ag sectors. It announced Q1 earnings in mid-April and they weren't encouraging. It beat earnings expectations by a penny but came in below expectations on revenue, which was off 3% for the same quarter last year.

PACW stock has been trending down for the past year, off 31% in that time. And while it's up 9% YTD, that's because of the January rally; since then, its general trend has been downward.

Its 6.6% dividend may look tempting, but it comes at the price of performance.

KeyCorp (KEY)

KeyCorp (NYSE:KEY) may have started in Albany, New York over 190 years ago, but now it has operations across the Northeast, Midwest and West. It operates in 15 states and has over 1,100 branches.

But KEY did not have a strong Q1 and its quarter-to-quarter numbers were also down significantly. The biggest red flag to all this is the fact that conditions should be ideal for a regional bank that spans a number of different regions.

However, the Midwest manufacturing and agriculture sectors aren't strong and tech is challenged. And that showed in Q1 numbers — earnings missed, revenue missed, net interest income was down as was noninterest income. Also down were net interest margin and return on average assets, while book value rose.

Even its 4.2% dividend isn't worth the trouble at this point.

BankUnited (BKU)

BankUnited Inc (NYSE:BKU) was the 2009 reincarnation of a failed bank under the same name. It was capitalized by private equity firms like Blackstone Group (NYSE:BX), Carlyle Group (NASDAQ:CG) as well as Secretary of Commerce Wilber Ross.

It operates in South Florida as well as the New York, New Jersey and Connecticut areas. While it has retail and commercial operations, it focuses on the commercial side.

The trouble with the bank now is, the economy is slowing and with U.S. Treasury yields dropping, it is going to have a challenging year providing growth. A bank's Treasury portfolio is a large part of its revenue since it has to have a good chunk of ready reserves to cover its loans. Lower rates mean lower margins on its loan book.

BKU stock is off 23% in the past year, yet YTD it's up 9%. But don't think that means there's bullish sentiment. The stock rallied in January and has slid off those highs. Its paltry 2.6% dividend isn't a game changer.

Louis Navellier is a renowned growth investor. He is the editor of four investing newsletters: Growth Investor, Breakthrough Stocks, Accelerated Profits and Platinum Growth. His most popular service, Growth Investor, has a track record of beating the market 3:1 over the last 14 years. He uses a combination of quantitative and fundamental analysis to identify market-beating stocks. Mr. Navellier has made his proven formula accessible to investors via his free, online stock rating tool, PortfolioGrader.com. Louis Navellier may hold some of the aforementioned securities in one or more of his newsletters.

Where U.S. Tariffs Stand Now After Trump’s Mexico Tweet

Posted: 31 May 2019 07:03 PM PDT

Tariffs are back in the news in a big way. President Donald Trump announced on Thursday — via Twitter (NYSE:TWTR), naturally — a 5% tariff on all goods entering the U.S. from Mexico. Mexican stocks fell on the news, with the iShares MSCI Mexico ETF (NYSEARCA:EWW) falling nearly 4% in early trading Friday. EU stocks tumbled overnight, though Chinese stocks, perhaps surprisingly, have held up somewhat well.

Source: Shutterstock

The new tariffs on Mexico — which are slated to rise unless or until the country significantly slows migration into the U.S. — are among several imposed by the Trump Administration. And while the various tariffs have made news, their impact on investors so far has been relatively muted.

The fear now, as equities worldwide selloff, is that the new front on the trade war will be one too far. U.S. GDP projections for the second quarter have come down to a median estimate of 1.6%. China's economy likely is taking a hit. Growth in the Eurozone continues to be stagnant. There's certainly a sense that both a precarious global economy and wobbly equity markets could tip with the slightest push.

In that context, it's worth understanding Thursday's news in the context of tariffs imposed so far. The new tariffs on Mexican goods aren't the biggest ones imposed — yet.

But that doesn't mean they won't be the most important or the most damaging.

Trump Tariffs So Far

It took just over one year for the Trump Administration to start playing the tariff card. In January 2018, the U.S. imposed levies on solar panels (at a 30% rate) and washing machines (20%), citing significant injury to domestic producers. Those tariffs weren't targeted at China in particular, but given that the rising Asian giant manufactures the majority of the world's solar panels, China felt the biggest hit.

Less than six weeks later, the Administration added steel and aluminum to the list. Four countries — South Korea, Argentina, Australia and Brazil — received permanent exemptions. The European Union, Mexico, and Canada were excluded on a temporary basis to allow for bilateral negotiations. On June 1, 2018, however, those countries were included as well. As part of negotiations over the USMCA (United States-Mexico-Canada Agreement), this month tariffs were removed from Mexican and Canadian imports.

From that point, the focus turned to China. China had retaliated against the steel and aluminum levies with tariffs of its own. In May 2018, both countries agreed to put the trade war on hold to continue negotiations. When talks failed, the US implemented new tariffs on some $50 billion of goods in two separate moves.

In September, the U.S. added another $200 billion in goods to the list, at a 10% rate that would rise to 25% by January 1, 2019. China again retaliated; a pause again was declared in December. Talks failed once more. The U.S., adhering to a deadline it had set, raised the rate to 25% in early May.

Then, this week, Trump announced the 5% levy on all Mexican goods. That rate, too, could rise to 25% if the Mexican government doesn't meet unspecified, vague goals.

Where We Sit Now

For all the noise about tariffs over the past eighteen months, it's mostly U.S.-China trade that is affected. The U.S. has levied tariffs on $250 billion in Chinese goods; China, in turn, has targeted $110 billion in U.S. products.

The USMCA negotiations had led to the lifting of retaliatory tariffs by Canada and Mexico. Whether that will hold amid the new levies on Mexican imports remains to be seen. In the meantime, Mexico will see a 5% tariff beginning in July that will rise 5% each month through October to a potential maximum of 25%.

The European Union has added its own tariffs on automobiles and motorcycles, which most notably have hit U.S. manufacturer Harley-Davidson (NYSE:HOG). There, too, talks appear to have broken down. Both sides additionally continue to argue over alleged airline subsidies, part of the broader battle between Boeing (NYSE:BA) and Airbus (OTCMKTS:EADSY).

Admittedly, in the context of the global economy — roughly $88 trillion in GDP — even 25% tariffs on less than half a trillion dollars' worth of goods seems relatively minimal. Most countries have no part in the trade war. And hopes persist that the U.S., in particular, can negotiate new deals — or back off from an escalating game of chicken.

But in an interconnected world, tariffs can cause disruption. And at least on Friday, investors clearly are showing their discomfort with the surprise move toward Mexican products.

Is This an Overreaction?

It is worth pointing out that, for all the noise, tariffs haven't really impacted equities all that much. Chinese stocks clearly have taken a hit. Big names like Alibaba (NYSE:BABA) and Tencent Holdings (OTCMKTS:TCEHY) declined sharply toward the end of last year, and have weakened again of late. For Chinese plays, there's been a clear correlation between trade sentiment and stock prices.

But elsewhere, the impact of tariffs on equities has been muted. EU stocks, using the Euro Stoxx 50 index, have rallied since Trump's election despite weak domestic economies. Even Mexican stocks are essentially flat. US equities occasionally have been shaky but have performed even more strongly.

So far, trade wars and tariffs haven't really hit stocks. The December dip — driven in part by trade concerns — proved to be a buying opportunity. It's possible that recent declines may prove to be the same.

But the broader, deeper fear is that even a seemingly small 5% tariff winds up being one step too far. The imposition of levies on Mexico during USMCA talks has raised questions about whether China can negotiate with a rival who may change its policy on a whim.

The U.S. presidential election now is less than 18 months away; Trump's re-election prospects are roughly 50/50 at the moment, at least per betting markets. Might trade partners choose to simply wait out the current Administration in hopes of finding a new, more trade-friendly, replacement?

If tariff hikes continue through early 2021, equity markets are going to feel pressure. And some investors clearly are looking to get out ahead of that eventuality. It remains to be seen whether that's prudence, or an overreaction.

As of this writing, Vince Martin has no positions in any securities mentioned.

Why Nio (NIO) Stock Remains Quite Risky at This Point

Posted: 31 May 2019 06:28 PM PDT

Shares of Chinese electric vehicle (EV) manufacturer NIO (NYSE:NIO) have been under serious pressure for most of 2019. Early in the year, NIO stock got a huge bump from favorable coverage in a "60 Minutes" special.

If Nio Stock Has Disappointed You, Read This

Source: Shutterstock

That rally was ultimately short-circuited by an announcement from management that early 2019 deliveries were trending below late-2018 levels amid a slowdown of China's auto sector. NIO's delivery volumes have remained depressed ever since, and Nio stock price has sputtered from above $10 earlier this year to just above $3 today.

But there's reason to believe a turnaround may be in the cards for Nio stock.

The bull thesis on Nio stock goes something like this: NIO's early 2019 delivery numbers have been weak, mostly because the China auto market has been weak. But if trade tensions between the U.S. and China deescalate, China's economic conditions and consumer sentiment will improve. That will re-accelerate the growth of China's auto market, resulting in strong delivery numbers for NIO.

Further, NIO is slated to launch a new car (the ES6) in June. If this launch happens at the same time that China's auto market starts to pick back up, then NIO's delivery volumes in the second half of 2019 could benefit from a double tailwind.

A huge boost in delivery volumes in the back half of the year will naturally lead to a huge rally by Nio stock. But will this bull thesis on NIO play out as planned?

Maybe. Maybe not. The bull thesis on Nio stock hinges on two things: economic conditions in China need to improve, and the ES6 has to be a huge success. Both of those things may not materialize. Thus, until investors start to see some traction on either of those fronts, Nio stock will remain weaker for a long time.

If Everything Goes Right, Nio Stock Price Can Rise Tremendously

NIO is an early-stage company in the potentially enormous China electric vehicle market. As a result, if everything goes right for this company over the next several years, Nio stock could at least double or triple.

The math isn't hard to follow. China is home to the biggest auto market in the world. That market is growing rapidly, thanks to massive urbanization. Back in 2012, China accounted for roughly 25% of global car sales with 15 million vehicle sales. In 2017, China's share zoomed to 35%, with nearly 25 million vehicle sales. Over time, this share will keep growing, albeit at a slower rate as the China urbanization boom slows. By 2030, China should account for roughly 40% of global auto sales, which should equate to about 32 million vehicles.

In the big China auto market, the primary growth area is EVs. From 2015 to 2018, EV unit sales in China have grown at an 80%-plus compounded annual growth rate, with EVs rising from under 1% of all vehicles sold in 2015 to over 4.5% in 2018. This year, EV unit sales in China are expected to hit 1.8 million, or roughly 7% of all vehicles sold. That trend will persist thanks to legislation in China that promotes EV adoption. By 2030, the EV penetration rate will likely be around 25%, giving the EV market a unit count of roughly 8 million cars.

NIO is currently a very small player in the China EV market. Nearly 1.2 million EVs were delivered in China last year, and only around 11,000 of NIO's ES8 were delivered, implying market share of less than 1%. But the idea is that NIO, like Tesla (NASDAQ:TSLA) will consistently build out and ramp production of its new vehicles. driving gradual market share gains.

Assuming NIO's market share reaches 5% by 2030, that would imply 400,000 deliveries by 2030. At an average selling price of $50,000, its total revenue would be $20 billion. Gross margins should hit 20%, thanks to its growth, and its operating-spending rate should fall to 10%. Thus, its operating profits would be around $2 billion. Taking out 25% for taxes, that implies $1.5 billion in net profits by 2030, which, based on a market-average forward multiple of 16, equates to a $24 billion market cap for Nio stock in a decade.

Nio stock currently has a market cap of roughly $3.1 billion. Consequently, if everything goes right for this company, Nio stock price could rise many times from its current levels.

Everything Probably Won't Go Right

The problem with the aforementioned multi-bagger bull thesis on Nio stock is that it bakes in a lot of risky assumptions about the growth of NIO.

First of all China's auto market may not continue to grow. It's already showing signs of weakness this year against the backdrop of a slowing economy. If China's economy continues to slow, the auto market might just stall out around 25 million vehicles per year. EV penetration rates are very likely to continue to go up. But 25% share may be aggressive. Perhaps 20% share is more realistic, implying 5 million EV unit sales in China in 2030.

Most importantly, NIO could struggle to gain market share. Right now, the ES8's delivery volumes are already weakening after just a few months of production. Set to launch in June, the ES6 has attracted a huge number of pre-orders. But so did the ES8.

If the ES6 and NIO's subsequent vehicles decelerate in a similar fashion as the ES8, then NIO will never hit 5% market share. That number will more likely be closer to 2%, implying 100,000 deliveries for NIO in 2030.

Using the same math as above ($50,000 average selling price, 20% gross margins, 10% opex rate, and 25% tax rate), NIO could report just $375 million of net profits by 2030. Based on a forward multiple of 16, which is average for the market, that implies a 2029 valuation target of $6 billion, which represents a return of just 4% per year.

The Bottom Line on Nio Stock

NIO stock has fallen so far, so quickly, and has broad exposure to a rapidly growing sector. Consequently, if all goes right, Nio could increase multiple times from its current levels.

But current trends imply that everything won't go right for NIO over the next several years. Until those trends turn around, Nio stock price will remain depressed.

As of this writing, Luke Lango was long TSLA.

GBP/USD. May 31. Results of the day. Brexit party can seize power in Britain in case of dissolution of Parliament

Posted: 31 May 2019 06:03 PM PDT

4-hour timeframe

The amplitude of the last 5 days (high-low): 86p – 81p – 54p – 59p – 60p.

The average amplitude over the last 5 days: 68p (72p).

As for the pound/dollar pair, the bears did not even want to reduce the “dollar” positions at the end of the month, so great is the desire to sell the pound further. Well, given the serious political crisis in the UK, the resignation of Prime Minister May, the complete uncertainty with the prospects of Brexit, traders can understand. At the end of May, the pound fell to the US dollar by 4.5 cents. The pair has approached the 1.5-year lows, and if the situation in Britain does not improve in the near future, it risks the continuation of the fall. Only the early selection of a new Prime Minister and the unity of the Parliament on Brexit (current or new composition) can save the pound. Traders need clarity on the question: what awaits the country in the future? We are talking not only about private traders but also about major institutional players, banks and Central banks. It is no secret that the pound is used by many large financial institutions as the currency of reserve storage. Given how much the pound fell over the past three years, the share of reserves in the pound declined. It can be reduced in the future, provoking even greater collapses of the British currency. Thus, the Parliament urgently needs to elect a new Prime Minister and begin to agree on the final version of Brexit or re-elect parliamentarians. Given the sharp drop in the popularity of the Labor party and the Conservatives, it is possible that Nigel Farage’s party will win in the new parliamentary elections.

Trading recommendations:

The pound/dollar currency pair may start the correction at the end of the month, but has not yet begun. If the MACD indicator turns up, it is recommended to reduce short positions and wait for the correction to be completed for new sales of the pound sterling.

Buy orders can be considered very small lots not earlier than fixing the price above the Kijun-Sen line with the first goal of the Senkou Span B line.

In addition to the technical picture should also take into account the fundamental data and the time of their release.

Explanation of illustration:

Ichimoku Indicator:

Tenkan-Sen – red line.

Kijun-Sen – blue line.

Senkou Span A – light brown dotted line.

Senkou Span B – light purple dotted line.

Chinkou Span – green line.

Bollinger Bands Indicator:

3 yellow lines.

MACD Indicator:

A red line and a histogram with white bars in the indicator window.

The material has been provided by InstaForex Company – www.instaforex.com
2019-05-31 15:17:20

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