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أسعار النفط تتراجع بسبب مخاوف من تخمة المعروض في ظل تأرجح إنتاج ليبيا

August 23, 2017 Dana 0

 تراجعت أسعار النفط يوم الأربعاء نتيجة مخاوف من زيادة إنتاج ليبيا ما يغذي تخمة المعروض في السوق إلى جانب زيادة مفاجئة في مخزون البنزين في الولايات المتحدة. وبلغت أسعار التعاقدات الآجلة لخام برنت الدولي 51.60 دولار للبرميل عند الساعة 0950 بتوقيت جرينتش متراجعة 27 سنتا عن مستواها عند الإغلاق السابق. وتراجعت أسعار التعاقدات الآجلة لخام غرب تكساس الأمريكي الوسيط […]

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Analysis of GBP/USD for August 23, 2017

August 23, 2017 Forex analysis review 0

Recently, the GBP/USD pair has been trading downwards. The price tested the level of 1.2792. According to the 30M time frame, I found that resistance at 1.2810 is on the test and my advice is to watch for potential selling opportunities. The Stochastic…

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GBPUSD: Remains Vulnerable To The Downside

August 23, 2017 MQL5: Traders' Blogs 0

GBPUSD: The pair continues to retain its downside pressure as it reversed its Monday gains to close on Tuesday. Support lies at the 1.2800 level where a break will turn attention to the 1.2750 level. Further down, support lies at the 1.2700 level. Belo…

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NZD/USD: New Zealand economic growth forecasts revised

August 23, 2017 MQL5: Traders' Blogs 0

According to a report published on Tuesday on economic and financial conditions in New Zealand, forecasts for the growth of the New Zealand economy were revised with a slight decrease.
Finance Minister Stephen Joyce said that in the next four years, th…

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FOREX FORECAST FOR 23 AUGUST

August 23, 2017 MQL5: Traders' Blogs 0

GPB/USD
At the moment the pound seems to be going to test the support in the range of 1.2275/59. The pair has now fallen below the Fibonacci mark at 1.2825 and is reaching the July low at the level of 1.2811. The fall below it will move the pair to th…

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(23 AUGUST 2017)DAILY MARKET BRIEF 2:UK – GDP set to continue growing in Q2

August 23, 2017 MQL5: Traders' Blogs 0

UK Q2 GDP will be released tomorrow morning. The British economy is expected to grow 1.7% for the second quarter (annualized). The growth definitely seems to be robust and solid.
Meanwhile, Brexit negotiations are only making slow progress and fears of…

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(23 AUGUST 2017)DAILY MARKET BRIEF 1:Summer lull ends for the BRL

August 23, 2017 MQL5: Traders' Blogs 0

After a bumpy start into the summer, caused by the temporary rise in political uncertainty, the Brazilian real has finally returned to its pre-crisis level and stabilised at around 3.15. The move came on the back of falling odds that Michel Temer would…

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World’s Largest Ad Company Crashes After Dismal Earnings, “Terrible” Guidance

August 23, 2017 Tyler Durden 0

If yesterday’s tape bomb came courtesy of the most prominent UK subprime lender, Provident Financial, which plunged over 70% after it gave a “clearly awful” business update coupled with the resignation of its CEO, today’s market shock belongs to ad giant, WPP, whose shares crashed the most since 2000 after the world’s largest advertising company cut full-year revenue forecast amid lower spending by customers, while reporting dreadful Q2 earnings.

In a clear warning to ad-dependent tech behemoths such as Google and Facebook, or rather their shareholders, WPP stock plunged as much as 12% after the company again slashed its revenue guidance, which is now expected to be between zero and 1% in 2017.

That’s down from an earlier 2% forecast. Just five months ago, in March, WPP,  which owns advertising agencies such as Ogilvy & Mather, Grey Global, and JWT, suffered its biggest drop since the financial crisis when it gave its initial forecast for 2% growth, the slowest pace since 2009. Now that number is down to 0%.

Source: Bloomberg

It wasn’t just the company’s forecast: in the second quarter, WPP’s “like-for-like” net sales fell 0.5% with July declining 2.6% and North America and Western Continental Europe were the poorest performing regions, according to Bloomberg. Worse, constant currency billings plunged 4.7% Y/Y, confirming just how little pricing power even the biggest market players in the field have. Q2 results confirmed unexpectedly weaker industry trends highlighted previously by U.S. competitor Interpublic.

The company, which according to analysts laid out dismal earnings and “terrible guidance”, blamed populist politics in the UK and US, fake news on platforms like Facebook and Google, and short-term thinking in business, for the terrible start to the year.

WPP also blamed “technological disruption, cheap money, activist investors and zero-based budgeting models, which focus incumbents on short-term profitability and cost control,” for putting companies off advertising and marketing. WPP said this is particularly an issue in the consumer goods sector, which accounts for a third of its revenues. As a result, 2017 has so far been “much tougher” than 2016, which was a record year for the business.

In the last year or so, growth has become even more difficult to find, perhaps due to increasing social, political and economic volatility, for example with the rise of populism typified by surprise election results in the United Kingdom and the United States and bumpy growth in three of the bigger BRIC countries of Brazil, Russia and China, although India continues to develop rapidly, despite introductions of demonetisation and a General Sales Tax.

 

Even the growth of the digital marketplace has been dogged by issues such as measurability, viewability, fraud, and fake news, let alone the duopoly of Google and Facebook and the growing dominance of Amazon in so many spheres, including, but not exclusively, ecommerce, retail, cloud computing and content.

 

In a slower growth world, both more recently and post-Lehman, inflation has been negligible, perhaps also suppressed by digital deflation. As a result, clients have markedly less pricing power and finance and procurement departments are very focused on cost. In this world, it is, perhaps, not surprising that clients have reduced spending.

It’s not just WPP: advertising companies worldwide have been hit as brand clients like Unilever and Procter & Gamble focus on cost-cutting to cope with sluggish global economic growth and technological disruption. WPP singled out a decline in ad spending on consumer goods – items such as laundry detergent and toothpaste that make up about one-third of its revenue – as coming under particular pressure. As previously reported, Unilever, one of WPP’s biggest customers, said earlier this year that it would cut ad spending by up to 30% and cut the number of creative agencies it works with to 1,500 from 3,000. That followed a failed takeover bid by Kraft-Heinz, which was the “seminal” moment in the first quarter, according to WPP Chief Executive Officer Martin Sorrell.

“That sent a shock-wave through the industry,” Sorrell told Bloomberg by phone. “It obviously had an effect in terms of people spending, particularly in the packaged goods sector.”


Martin Sorrell, WPP Chairman and CEO

Following the dismal news, WPP comp Publicis dropped 2.9% in Paris, while IPG and Omnicom are set for a lower open in the US. Shares of European television companies including TF1, ProSiebenSat.1 Media SE and ITV Plc declined as well.

Meanwhile back to WPP, the company has already seen its shares slide 12% YTD amid “a difficult economic climate and pressure on its businesses in North America.” Today’s plunge has chopped off 20% of its market cap in 2017 while its biggest rivals, including Interpublic Group of Cos., Publicis Groupe SA and Omnicom Group Inc., are each down more than 8% this year. So far, names like Google and FaceBook have remained unscathed but one wonders how long before cost-cutting advertisers slash online spending next.

In the most troubling sign, however, and reminiscent of what Dick’s CEO said when he warned about the pricing and market share “panic” gripping retailers, the ad giant blamed also said that competitors are turning to discounts and inducements to try and win business, saying: “These practices cannot last and will only result eventually in poor financial performance and further consolidation, the premium being on long-term profitable growth. Our industry may be in danger of losing the plot.

“For the short-term, therefore, we have to weather the storm,” CEO Martin Sorrell said hoping to focus on efficiency, new high-growth markets, digital marketing, and “technology, data, and content.”

Whether or not it can achieve that depends on both the economy, and what its competitors do. And while we wait to find out, here is a recap of the sellside’s unhappy response to WPP’s numbers, courtesy of BLoomberg.

EXANE

  • Results “a clear miss” on organic growth and net sales; margins up less than expected
  • Margin improvement guidance not sustainable if growth remains slow into 2018, keeping talent and investing will be costly and required
  • Estimate revisions likely to be modest with recent positive currency exchange rates and unchanged margin guidance
  • Remains cautious on stock and generally the industry

SHORE

  • Results show pressure on client spend and a weaker performance across all regions and segments
  • Deteriorating trading conditions are a concern; “minded to trim” FY pretax profit forecasts by 4%-5% to reflect the weaker outlook
  • Current valuation already reflects a weakening outlook following recent share price decline

CITI

  • Scale of the negative surprise is “unwelcome”
  • Nature of pressure is relatively narrow, even if deeper than originally feared
  • Even as headline shock is painful, the impact on consensus estimates is likely to be comparatively limited
  • Notes margin outlook maintained, which speaks to “relatively orderly” pressure on revenue, co. being comparatively well prepared
  • Sees 2%-3% downgrade risk to consensus EPS

JEFFERIES

  • Some of the weakness expected, report still “an incremental disappointment”
  • 2Q organic net sales disappointing, July weak and behind the budget

GOLDMAN SACHS

  • Results confirm weak trends seen across advertising companies/TV, with ad spending cuts in fast-moving consumer goods being the common driver
  • Key question whether pick-up in organic growth from 2H is credible
  • Goldman sees new organic growth guidance as “achievable,” based on comments by several consumer goods companies on higher ad spending in 2H, easier comparables, recent improvement in WPP’s new business performance

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