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What are the long-term consequences of the rising key rate, how profitable it is to invest in cars... or to invest in grain? All that in the new edition of market news by LH-Crypto.
And so they did it. On that very meeting on September 20-21, proclaimed as somewhat historical, no less, the Board of the US Federal Reserve did meet our expectations. As we pointed out in the previous issue of our Market News, the key exchange rate was up by the whole 75 basis points to 3–3,25%, which makes it the third time when the Fed rises the indicator by 75 basis points and the fifths rise in 2022 in a row– to the level once unimaginable back in ‘fat years’ (which still seem a not-that-far-distant yesterday).
Big troubles call for big solutions, so the US Federal Reserve has no fear of the shrinking stock market and equally painful fall of indices. Other major global liquidity providers, starting from the Bank of England to the European Central Bank, share this confidence as well. There is no denying, inflation in US is at forty-years record heights, while ‘inflation’ is not something they got used to in US.
Reporting at the traditional press-conference that follows every Fed Board meeting, the chairman Jerome Powell noted, that ‘it is highly possible that the exchange rate reaches 4,6% in the coming 2023’. Meantime, analysts of worlds’ major banks (of Deutsche Bank, in this case), do not consider the whopping 5% exchange rate in 2023 as something improbable.
In times, when even cryptocurrencies become, as they label it, ‘eco-friendly’ (it, generally, marks the product which production and distribution pursues wise attitude to the environment), you cannot just be a world-renowned automobile brand and still drive cars with gasoline engines.
And so, the Bayerische Motoren Werke Aktiengesellschaft company, much more commonly known by its abbreviation BMW, made a turn towards the technologies of tomorrow, and made it at the right time. For this reason, BMW is our today’s stocks advise.
For a number of consecutive quarters, the company exceeds expectations of revenue levels, EBITDA and production sales: for example, the results for the revenue in Q2, 2022, announces back in August, were €2,7 bln higher than expected, and profit margin peaked 9% against forecasted 8,41%. By the end of 2023, BMW expects to finish the €2 buyback of its stocks.
The electric cars segment of BMW’s business demonstrates even more impressive development dynamics: vast factory in China started manufacturing this June, €1 bln will be invested in BMW’s own electric engines know-how, company’s electric cars global sales are seen to grow by over 70% in 2023.
In the interim, technical analysis of the company stocks price chart advises the resistance from above at the level of 73 – BMW’s stocks have never been below that lows since the late 2020. The company’s great plans make us believe, that this time the price will jump up from the resistance level too, with a nearest target at 93.
Despite the peaceful solution of the collapsed grain supplies from Eastern Europe (region still remaining one of the world’s major grain producers) was found (sort of…), the drop of provision prices on stock exchanges is not as significant as it was expected. The prime explanation for that is the volume of the supplies: the grain is exported in tens of thousands tons, while it is hundreds of thousands (and even millions) of tons that can change the rules of the game, have enough impact on the market and send the prices down. Meanwhile, it is getting worse: exports from Russia Federation, the key player on the grains and wheat market, are down by 27% in July-August year over year.
Here are the numbers: although the price of the bushel of wheat (a measurement unit for grains) sloped from the earliesr record heights of 1300+, the price was unable to break the important level of 750 from the above twice. To the contrary, the price has formed the upward channel to the price level of 900, and, furthermore, to 1000-1050. Thus, we consider contracts for grains and wheat as a well profitable option for the months to come, at least until the events on the East that we all aware of come to an end.