Press Release Regarding The Instability In The Market

NEPSE has been working to make the trading system more convenient and fast as well as efficient. Some of the optimistic changes NEPSE has been working on are:
1. Addition of Clearing Bank
2. Extension of Remote Work Stations.
3. Rules and Regulations to address current market scenario.
4: Entry of Broker Dealer to promote institutional investment.
5: Fully Automated Online Trading System

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Citigroup Sees Growth in Spain

Spain is one among the five biggest sources of income for Citigroup within Europe, the Middle East and Africa. It gets more of its revenue outside its home market in comparison to other U.S. lender. Citigroup Inc. (C) is expecting an increase in it's revenue in Spain by 5% to 10% in 2015. It is aware of fees from managing bond sales and share offerings to drive revenue in Spain.


According to the company's spokes person,“Large market capitalization companies always had access to capital markets, but medium-sized ones and companies with lower than investment grade rating needed access, and this has started to change in recent years.”

He added, “Equities will also have a good year in 2015, mainly through capital increases and accelerated equity offers.”

Chief Executive Officer Michael Corbat is working on plans to streamline the bank. The bank is leaving consumer banking in slow growth markets. It's the world's largest lender before the 2008 financial crisis. The bank is pulling out consumer banking from Spain including Japan, Egypt and Hungary. The bank sold all 45 branches, along with its credit card business in June.All together 950 people worked there. Those branches werr sold to Banco Popular Espanol SA (POP) for $296 million.Currently Citigroup now employs 260 people in Spain.

The bank expecting to build its business in Spain as the country recovers from a two-year recession and a sovereign debt crisis that led the government to seek aid from the European Union to recapitalize local lenders.

Country Officer William Van Dyke said,“The dynamics in the Spanish economy are better and we see an opportunity to strengthen and grow our balance sheet in the country.”

Spain is providing a 10-fold profit to Citigroup in comparison to 1990. It has $25 million in assets and increased revenue of 10% to 19% every year for the past seven years. It earned $75 million in fees from investment banking in the year through September in Spain. It has 5.6% market share and has to compete with Morgan Stanley.

The bank has client base of 60 companies. Citigroup arranged Spain's 10-year government bond issue in January and a five-year inflation linker in October.

Goldman Sachs Group Inc. is trying to avoid congressional scrutiny by detaching two commodities units

Goldman Sachs Group Inc. is avoiding congressional scrutiny by detaching two commodities units. One among two paid back it's investment in less than four years and remaining other is still on coa in Colombia


According to documents released by the U.S. Senate Permanent Subcommittee on Investigations, Goldman Sachs bought Metro International Trade Services LLC for $451 million in 2010. It's a  metals warehouse operator. In September 2013, the banks's board viewed a presentation that showed $465 million of gains from the investment. The profit excluded carry charges.

Head of Goldman Sachs’s global commodities principal investments group,Jacques Gabillon, said at a Senate hearing that the firm has received interest from potential buyers in Europe, Russia and China and it is still in the sales process for Metro International Trade Services LLC. The subcommittee chairman, Michigan Democrat Carl Levin, accused the bank of using Metro to improperly influence aluminum prices. Gabillon denied that the bank is involved in influencing aluminum prices.

As aluminum investor rose, Metro International Trade Services LLC increased its warehouses and  a plunge in demand for the metal after the financial crisis. Upto now the stake had returned $501 million in dividends. It had a carrying value of $396 million with debt.

There's still other profitable investment of Goldman Sachs. In 2003, the company purchased Cogentrix Energy Inc. for $457 million. Over the life of the investment it realized $1.75 billion of gains.


Related:
Goldman Sachs posts earnings, revenue that beat expectation

There was not always profit for the company. As of the September 2013 presentation, Goldman Sachs paid $569 million for Colombian Natural Resources, which had produced total gains of $2 million as of the September 2013 presentation. CNR even estimated last year additional cost upto $220 million for port.

Goldman Sachs bet that the price of coal would fall. It produced $246 million of gains, according to the 2013 presentation. According to the report from senate the firm is considering selling its CNR stake.

Airbus profits rise 16% to €1.399bn but more A400M is still making it's operation difficult

Airbus reported net income rose 16% to €1.399bn.This is the first time that Airbus reported a rise in profit for the nine months of the year. The report also came with a warning of more problems for its A400M military plane. Revenues rose 4% to €40.5bn and underlying earnings rose 12% to €2.59bn ($3.2bn; £2.1bn) for the nine-month period.

Currently: AIR:FP  48.4550 EUR + 0.7550  +1.58%

A400M military plane has problem related to negative cost and risk evolution. In 2010, problem started to delay it's production and received a bailout of €3.5bn. There were cost of €20bn with orders from several European countries and A400M has a fixed-price contract that hit production problems and cost-overruns. Except A400M, Airbus's products are doing great.

Airbus is taking responsibility of any future impact in its full-year results to be published early next year.

Harald Wilhelm, chief finance director of Airbus,told journalists: "Given our past history on it (the A400M), the objective remains to avoid any incremental charge, but we are on the way to assessing it. If you ask me whether I can exclude it, I cannot say that this is the case, so it's work in progress."

The order book up to the date 30 September, it was worth €765.4bn while it was worth €680.6bn at the end of 2013.

Tom Enders, Airbus Group chief executive, said: "An improved operational performance drove revenues and profitability higher over the first nine months of 2014."

The environment is not yet favorable, adverse exchange rate is affecting it's profit of last three month.
See Nissan's profit rise due to favorable exchange rate.

Airbus Data:

Tesco's share price has fallen nearly 50%, a huge mistake by the Sage of Omaha, Warren Buffett

Tesco's share price has fallen nearly by 50% reducing the value of investment by 50%.

The Sage of Omaha has said that his decision to invest in Tesco is a "huge mistake."
Berkshire Hathaway firm owns a 3.7% stake in Tesco, worth hundreds of millions of dollars and now  the supermarket's sales are declining and in addition to that share price has fallen to an 11-year low this year.
Tesco shocked investors last week by issuing a string of profit warnings. It revealed it had overstated its expected half-year profits by £250m.

The chairman of the Parliamentary Business Committee, Adrian Bailey, has described Tesco's error as "stratospheric".

He told on CNBC,"I made a mistake on Tesco. That was a huge mistake by me."

Mr Buffett is famous for comprehensive ability to understand the performance of a business for long period of time but now it does not seem so. The risk this time in Tesco are high.

Berkshire Hathaway's portfolio consist names like Coca-Cola, IBM and American Express and it started to include Tesco in 2006 and by 2012 owned more than 5% of the business.

What happened next?
The stake had fallen to 3.7% by the end of 2013 , with investment capital of  $1.7bn and continuing the fall since then Tesco's share price has fallen nearly 50%. It has now made the value to investment half of it's original value.

In addition to that Tesco has seen declining sales amid increased competition. The discount retailers like Aldi and Lidl are in the in the market and Marks & Spencer and Waitrose are providing high end offerings to attract customers.

Tesco says  Financial Conduct Authority (FCA) has been notified it that it is under investigation following its admission last week that it overstated its half-year profit guidance by £250m.
The supermarket giant will co-operate fully with the FCA and other relevant authorities.

The news induced a new fall in Tesco's share price, its lowest for more than 10 years. leaving it down 3% at 180p.

Tesco has itself has  launched its own investigation into the issue.  Deloitte, together with Freshfields, the group's external legal advisers will do the investigation.

Four executives were suspended in connection with accounting problem and there was change in high level management. Chief executive Dave Lewis has only been in the job a month, while chief financial officer Alan Stewart, who was originally due to join the company on 1 December, had his start date brought forward and took up the post last week.

European Market is upbeat, perhaps too upbeat while US financial markets are closely interconnected with European market, the impact is yet to be seen.

In April, the IMF had predicted that global output would grow by 3.6% in 2014 and 3.9% in 2015. 

At an event in the Robert Schuman Foundation in Paris, IMF head Christine Lagarde said that Europe continues to face important challenges concerning its long-term future and markets might be at risk of being too complacent. She said,"The good news is that the European economy is recovering from the crisis. Confidence is improving and financial markets are upbeat. Perhaps too upbeat."
She has warned that financial markets maybe a little too upbeat given the persistently high levels of unemployment and debt in European economies. She added that growth prospects in the region could be undermined due to continuing low inflation. Currently the inflation in  eurozone is 0.5%.

On the other hand, she was optimistic that European economy was recovering and until demand starts to rise, interest rates should remain low. European Central Bank prefers inflation close to 2%. Being optimistic she said,"Confidence is improving and financial markets are upbeat, perhaps a little too upbeat."

The European Central Bank cut its main interest rate to 0.15% last month. ECB chief Mario Draghi has since said interest rates will remain at their current level for an "extended period of time in view of the current outlook for inflation".

While ECB has become the first major central bank to introduce negative rates.It also cut its deposit rate - the rate it pays banks to keep money on deposit - to -0.1%

Confidence is improving and financial markets are upbeat, perhaps a little too upbeat.

Lagarde said,"Monetary policy should remain supportive until private demand has fully recovered" and the ECB "has achieved its price stability objective." She added,"There is a danger of a vicious cycle - persistently high unemployment and high debt-to-GDP ratios jeopardize investment and lower future growth."
"Global activity is picking up but the momentum could be less strong than we had expected because potential growth is weaker and investment ... remains subdued," she told.

She said,"Looking at emerging Asian countries, and in particular China, we are reassured because we do not see a brutal slowdown but rather a slight slowing of a growth that has become ... more sustainable and that we see at 7-7.5% this year."

In April, the IMF had predicted that global output would grow by 3.6% in 2014 and 3.9% in 2015. The information of IMF slashing US economic growth rate is there in the market. IMF slashes estimate for US economic growth in 2014, the annual review cut its growth forecast to 2%, citing a harsh winter, weak international demand for the country's products and problems in housing market.

After the financial crash of 2008, many nations across the globe have to restructure and re-balance their economies. While others were recovering substantial sovereign and bank debt led the euro zone to fall back into recession in 2011. In the summer of 2013, eurozone economy managed to expand again, but has failed to build on that with growth of just 0.2 percent in the last quarter compared to the previous period.

"More developed and diversified regional capital markets can support innovation, investment, and long-term growth," Lagarde said. "Deeper integration with world markets would improve productivity and plug countries into global supply chains."

Candlestick Chart: Why Candlestick Chart is used in stock market?

Candlestick Chart: Information about emotions.

Munehisa Homma (Japanese) in 1700s, who traded the futures market discovered that emotions are always involved during trading in the market. There was impact of supply and demand but the trader's emotion was also an important factor to be considered.

Homma found that if he could understand the emotions of traders in the market, he could be able to predict what would happen next in future. The next thing to find was difference between buying price and value of rice he used to trade. This difference is still considered during trading in stock market. All these are based on Candlestick Chart analysis.

Even though there are various rule and indications about when you should sell your stock, Candlestick Chart gives the emotional reason to that question.
We have no bull or bear in the chart. But we have fear and greed in the chart. These information are always vital because they are the basis for trading. In the chart, greed means many people what to purchase the same stock and price goes up which is bullish market trend and if people fear about the decline in price they sell at some amount shorter than opening amount and bearish market trend is seen. So information is vital for traders whether it's regarding emotion or trend, the whole point is to find the best price to sell and purchase.

The small greed pattern normally indicated that traders are willing to purchase the stock or anything that the chart represent. Greed for stocks make them to purchase with the anticipation that stocks might go up.

In case of fear, people are careful with the profit margin. They do not want to reduce the profit margin so they now start to sell even if small red candle are seen in the cart. They all are conscious about reducing the opportunity loss as well. They do have rules or they follow someone's rule while trading stocks.

What type of person you are? Bond holder or Stock Holder?

There is various differences between Stocks and Bonds, but both are used for capital formation.

Diffen is also clear about the various dimensions we can find distinct about these two. 

In this post we are discussing about what kind of person you are and what should you be holding. 

Characteristics of Bond holder:

1.  They are not interested in trading bond after holding it. They might sell sometimes but not like the way stocks holders do.

2.  Bond holders wait for interest.

3.  They own the bond of public sector authorities, credit institutions, companies and supranational institutions.

4.  They are attracted by the constant return they will get in regular time interval.

5.  They avoid the risk as much as they can. They don't want to worry about the stock price they hold.

6.  The inflation worries bond holder.

7.  Interest rate affects the opportunity loss.

8. They are committed for long time. And it's really a long time.

Characteristics of Stock holder:

1. Most of them are always the traders and rest don't care, they simply hold. More than that, they are owners of the company. They own certain portion of the company whose stock they hold.
2. Interest rate, inflation and maturity periods are least considered by a stock trader. These things does not force the stock traders to hold or sell his stocks.
3. They have their own rules for playing in stock market.
4. Stock holders do not settle for certain amount of money for regular interval of time.
5. They seek opportunity in loses. They lose sometimes and they gain sometimes but they don't depend on certain amount for stability.
6. They diversify and they are always up to date.

What most people do?

They invest in both. They invest in bond as well as share. They choose to invest in highest paying bond and they learn when to sell. This is used for minimizing the risk.

Decided which type of people you are after reading the characteristics? Please feel free to express.

Rules are the protector for playing safe while trading your stocks.

When the logical explanation for any changes in the market is not relinquishing your thoughts then the only option you can choose to justify market behavior is the rules which guide you while trading. These rules are necessary, not only for proving the existence of cause and effect behavior in share market but also to make sure that playing safe is also a part of trading stocks. Rules may not allow a trader to make sudden unexpected trading activity but it also ensures the ability of trader to make safe investment. They are like safety valves. They are used when internal pressure is too much inside a container and before the container explodes, the pressure is balanced by these safety valves. Same thing happens in stocks market. The traders use rules they formulate to have a safe and secured environment for trading stocks.

Sometimes all the trader encounter a unique situation which provides opportunity for the trader. They can choose to think out of the box or to think in way that could make them safe. Choosing to follow rules is far more easy than to seek and try to find environment which is not explored by other people. When unexpected events occurs, the trader can use the experience acquired and make decision on the basis of that experience. This makes a trader vulnerable to any possible event in the national or international scenario. In situations like that rules are life savers. They provide a guide line for what to do and  what not to do.

Rules provide a base on which traders can actually make the decisions. If a traders makes decision about using rules then it consist of buying rule, selling rule and holding rule. A simple eight standard mathematics provides the idea of buying and selling. Share market is a business. It's financial business. The fundamentals of business remains same for it too. It's buying at low cost and selling at higher cost. Then a trader should always try to purchase all the stocks which are to be traded at low cost as possible. When purchasing price is reduced from the beginning then even slight increase in selling price will provide seller a little more profit than purchasing same product at high price.
Next: selling rule.  While selling a trader must make logical decision about the stock he or she sell. If the decision of selling is not made in right time when the price is appropriate, then it might increase the  opportunity cost and leave a minimum amount of profit instead of maximum. It provides traders a base to judge the moment to sell and place right selling amount.
Finally holding rule. If the return is not suitable at the moment then it's best to hold the stocks. Even though holding stocks can put a burden of stable asset to trader, it also ensures a suitable and expected return on investment. Holding for long time without proper reason of benefit is never useful and it should be avoid as far as possible.