Oil Prices Expected To Sink To New Lows

In exactly one decade oil prices rose from $20 a barrel to roughly $100, with spikes of $134 in 2008 while the recession brought it at $40 for a brief period of time. Over the last couple of days the prices have headed down and many conclude that this is the direct effect of an increasingly stronger US dollar. There is a correlation between the fact that EUR/USD pair also sank below 1.30 but there are some who speculate that the price of oil is going to head into one direction: downwards.

Oil Production Increases, Demand Drops

From 1985 to 2001 the prices of oil revolved closely around the value of $20 per barrel despite the fact that oil production increased at a steady pace. It is not only the drilling performance that improved, but also the production of oil after the drilling declined. After oil fields are discovered, companies prefer to decrease the drilling activity because they still make enough money without taking any chances. The fear of a potential oil peak led to occasional spikes in oil prices with the historic highs recorded back in 2008.

Now that new fields are being identified and shale gas is picking up traction, oil companies are no longer uncertain about what the future will bring. They now facing a different challenge, the one of keeping the prices high enough to maximize their revenue, without alienating the few existing customers. They can't afford to increase production even though they have plenty of oil to extract, because demand is weak.

Demand for Oil Grows Slower Than the Economy

The major economies are no longer concerned about an imminent meltdown, with both the Euro zone and the American economy returning to growth. The problem is that the numbers are downright insignificant and this progress, can't diverge attention from the fact that emerging economies are growing at a slower pace. BRIC countries were recently the ones driving the prices upwards, while traditionally demanding economies such as the European and American ones stagnated. Oil prices could only surge if these consumers would miraculously recover and this is not something that investors should count on.

At the current growth rate, the impact on oil prices is insignificant and consumer sentiment is right now a stronger factor that dictates the price. Existing wells have a better output and oil companies extract sufficient oil from existing ones to be less concerned about the costs of exploring new fields. Overall, there is no reason to expect a rebound in oil prices anytime soon, so binary options traders should be undeterred in their decision of purchasing put options with a distant expiration date. It is not far-fetched to expect oil prices to sink below the psychological threshold of $80 per barrel by the end of the year.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Binary options traders might find the signals coming from the Australian banking sector contradictory and struggle to make up their mind about whether to buy put or call options. AUSTRALIA AND NEW ZEALAND BANKING GROUP LIMITED (ANZ) is one of the largest banks in the country and to some extent the most vulnerable one, which is not necessarily a bad thing for those who deal with binary options. Unlike buying and holding on stock, these short-term investments can be profitable regardless of the direction in which the price goes as long as it is correctly predicted.

The Impact of the Mining Sector Slowdown

In the recent years, the Australian economy grew mostly due to the increasing exports of resources that are plentiful on the continent. Now that the mining sector is slowing down as a result of lower demand for raw materials such as iron, it is only natural to expect some shockwaves to hit the banking sector as well. India and China are no longer purchasing high quantities of iron and Australian officials proclaimed that the mining boom is now over. Some of the most prominent banks on the continent such as ANZ have a relatively low loan book exposure on the mining sector but their profits are adversely affected.

Australia and New Zealand banking group has a stock price revolving around the value of $25 with the most optimistic investors expecting it to grow to $26 and beyond. A bearish binary options trader has much more liberty to acting in the opposite direction and values below $23 are not overly pessimistic. The bank's profits could easily contract to more than 9% and even double-digit values are not to be dismissed as excessive. Their stock has over performed in the last years and appreciated by 25%, which means that a severe correction could saw it losing all that it gained.

Still a Better Choice than American Banks

While there are serious reasons to expect that ANZ shares will take a dive in a not so distant future, those who are investing mostly in banks are facing a predicament. Compared to their American counterparts, the Australian banks are still a better choice and the only downside is that some of their stock are slightly overvalued. ANZ bank cut its dividend sharply in 2008 and 2009, but it now pays $0.83 per share which means that the value is actually 40% higher than what they did before the financial crisis.

Few American banks can brag about such performance and in terms of yields the Australian banks also hold the upper hand. The Australian economy is under less pressure and the unemployment is 5.6%, two percent less than the American, which implicate higher consumer confidence. Last but not least ANZ bank is well supported by its earnings and if China returns to strong economic growth, Australia and its banks will once again be its biggest trading partners.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

Some of the most important telecommunication companies in Europe, saw their stock plummeting due to the recent turmoil caused by the Cyprus crisis. The shockwaves were sent in all directions and even countries that don't have a significant exposure in Cyprus, were affected. Telecom Italia is not only one of the most important players in the peninsula, but also has millions of customers in Argentina and Brazil. Technical indicators suggest that the stock is currently underpriced, and fundamental analysis seems to be pointing into the same direction, with the company having serious growth potential.

Italian Elections Crippled Telecom Italia Stock

At the beginning of the year, the stock price stood firmly above the $10 threshold but it dropped dramatically as a result of the chaos produced by the Italian elections. In early March and April the price sank below seven dollars per share only to quickly rebound without improving above the nine dollars limit. There are clear signs that the results are not caused by sheer weaknesses of Telecom Italia, with the FTSE Milan Index dropping several percentages immediately after the elections.

The stock briefly climbed above eight dollars but now that the company has cut its stock dividend, it should have an easier task in covering interest payments. The last couple of years have been particularly challenging for Telecom Italia and their coupon senior unsecured notes traded at dismal values. The rebound came immediately after the worst of the European debt crisis abated with the Cusip values exceeding 110. Most rating companies regard this bond as a BBB, with Moody being the most generous by awarding a investment-grade of Baa3.

Telecom Italia Driven By Foreign Markets

Telecom Italia is one of the largest telecom companies in the world and is constantly expanding beyond borders, with Brazil and Argentina being the most profitable markets. In Brazil they operate through a subsidiary that goes by the name of Telecom Italia Mobile Brazil. The numbers speak for themselves, with the Italian company having more than 7 million telephone lines at the beginning of 2013. By comparison, the Argentinean market is much smaller but they are inching closer to 20 million clients, and there are millions more who could join in the foreseeable future.

To put things into perspective, Telecom Italia has in excess of 30 million mobile telephone clients in Italy making it the leading player in its home country. They go beyond serving telephone lines and operate one national TV network out of three currently existing in Italy. Binary options traders need to know that the major shareholder for the company is Telco S.p.A., a consortium made of an insurance company, a telecommunication company and the Intesa Sanpaolo bank. Trading at less than seven dollars per share, Telecom Italia is cheap and fully justifies the purchase of call options that expire in one month or more.

After the turmoil caused by the Italian elections and the negative Spanish unemployment figures, it looked like the EUR/USD pair would return above the 1.30 threshold. While European economies failed to rebound in March, the numbers were not exactly worrisome and the number or bears decreased sharply. The recent crisis in Cyprus has the potential of hurting the Euro badly and the most recent news suggest that the outcome of this new emergency will send shockwaves throughout the entire European Union.

Monday Is the Decisive Day For Cyprus

Binary options traders are in the fortunate position of capitalizing on this explosive situation, because they can collect quick profits. Depending on whether a solutions is reached by Tuesday morning or not, the Euro will either plunge or rally but most data suggest that Cyprus won't be able to talk its way out of this mess. After the Parliament rejected the solution suggested by the ECB, the president traveled to Brussels to reach an agreement so that the European Central Bank wouldn't't cut the country out of the money loop.

European officials seem unwilling to cut Cyprus any slack and some rumors indicate that the IMF is making new requests on an hourly basis. This suggests that the country is slowly but surely pushed out of the Eurozone and by Tuesday when the banks open, a definitive solution will be reached. Bank accounts over 100K will be subject to a haircut and the only real question is how significant this adjustment will be. The best case scenario involves a last minute agreement that will keep the country in the European Union, but even so a lot of money will be leaving Cyprus on Tuesday morning when the banks open.

Germany and France Are Not Faring Well Enough

The news coming from Germany are not necessarily bad, at least not if compared with the rest of the European Union but the country is expected to meet increasingly high expectations. The consumer sentiment increases in Germany but at a snail's pace and the same happens with the German import prices, with the grow counting in 0.1%. The unemployment rate has been kept below 7% which is not surprising and the money supply also climbed a bit. Unfortunately for the Germans and the ones counting on them to pull the Euro after them, the data coming from France is less impressive.

Here the consumer spending declined abruptly by 0.8% in January and the one to blame is the car industry where the sales were mediocre at best. At the same time the unemployment is rising, which explains why the short term prognosis are all based on data that suggest a mild recession. On the other side of the ocean things are far from being perfect, but the fact that the Euro couldn't't capitalize on the effects of quantitative easing speaks for itself.

Forex and binary options traders who follow the AUD/USD pair closely have surely noticed that the pair remained relatively stable over the last couple of weeks. The lack of any significant events made ample swings impossible and even when one currency gained value over the over, it soon returned to the previous values. The question is whether this eerie balance will be maintained over the next few weeks, or if some events will trigger a change that traders could take advantage of.

Mixed Australian Data Makes Forecasts Difficult

Binary options traders who use solely technical analysis are probably puzzled by the recent moves of the AUD/USD pair and have very little data to work with. The pair closed last week at 1.023 and the contradictory Australian data makes it even more difficult to come up with a convincing trading advice. On one hand, put options with a short expiration date are suggested by the fact that the trade balance and building approvals data failed to meet expectorations. On the other hand some encouraging news came from the retail sales, and what the AUD lost initially, it regained in a matter of days.

Looking back at what happened in January and February, it is hard not to notice the fact that the business confidence increased considerably. It soared by three points and if the growth proves to be sustainable, the markets will react positively in March and the currency pair will not remain immune to these moves. Equally important is the consumer sentiment and in this particular case the reports are not as encouraging, with the indicators being highly volatile in February. It ended up on a positive note, but with high expectations come high disappointments so traders shouldn't count on it exclusively.

The Impact Of Home Loans And Employment Change

These two indicators need to be factored in by those who intend to trade AUD/USD, because they carry the same weight in both Australia and United States. The American figures are encouraging and show that the economy created more jobs than expected, so Australia is hard pressed to come up with equally solid figures. The home loans gained a bit in February so the surge was well below 1%, but the markets reacted positively because this was the first increase this year.

In terms of employment, very little changed and the number of newly employed people was in line with the estimates, and revolved around 10,700 The numbers are not significant enough to cause amble movements in either direction and neither is this inflation expectation for March. It comes as no surprise that the currency pair hasn't been to attractive for binary options traders and it is expected for it to remain just as stable. At least on short term there is no reason to take any chances and those who choose to stay away from the AUD/USD are doing the right choice.

Dell is about to become a private company and this means that potential buyers are putting the company under a careful scrutiny to determine its real worth. Right now the stock is trading at slightly below $14 per share, and some analysts estimate that the company will sell at a valuation of roughly $24 billion, which would equal a $13.65 per share. At a first glance it might look like binary options traders should jump on the bandwagon right now and bet on the stock value to plummet. There are some arguments in favor of such a decision, but also enough that suggest the contrary.

What Caused the Lengthy Dell Slump?

For a company that innovated the industry since its inception, it might come as a surprise the fact that Dell missed out on numerous opportunities. It's been the uncontested leader in the PC business, with the only real competition being HP, but right now the company is only a shadow of its former self. In the early ages, it improved the PC experience and in conjunction with their tight supply chains, they were among the first to introduce brand-new concepts.

Unfortunately for Dell, not all of the innovative ideas gained traction and the biggest hit came from failing to capitalize on the increasingly high support for the mobile market. Tightly saddled in its business and focusing exclusively on personal computers, Dell entered a downward spiral in 2006 and its sales plummeted as a result. Privatization seems to be the only way out for the company, and if things go as planned by Michael Dell and other key investors, it might redeem itself.

The Reasons to Go Against the Flow

Dell announced revenues exceeding $56 billion and its shares rose slightly, with the analysts predicting an increase of more than $1.6 per share this year. Right now, their stock is neither cheap nor expensive which further complicates the mission of binary options traders looking for value in Dell positions. What changes the game plan completely is the announced privatization, but the question on everyone's lips is whether the company will sell to its premium value or not.

In order for the buyout to be successful, Michael Dell and the investors need to determine whether they will buy Dell at $24 billion as estimated, or for an amount that will exceed $30 billion. While being a public company is a necessity, the investors would benefit from a stock price in excess of $16 per share and this should prompt binary options traders to bet on a steep increase in shares price. Some shareholders have asked for share prices of almost $20 but although this is not a feasible scenario, there are plenty of indicators that Dell won't sell at the estimated $13.65 per share.