2020-02-25 • Updated
Have a look at MasterCard and Tesla share price performance. Both show the same period of observation – the last 7 years, since 2013. Now, Tesla made the rise from approximately $50 to almost $1000 during these years, while MasterCard rose from the same $50 to “only” $350. How good is each one?
“How good” comes down to what you need in your trade. If you have no problem admitting that the flip side of a 200% gain in 2 years is a risk to get halved in two days – meaning, you are an “honest” risk-taker – then Tesla may be good for you. Its vulnerability is its advantage – fundamental unpredictability. It’s fundamental because Tesla as an enterprise has not been fully successful in a business sense of the word, until now. It still functions largely on long-term liabilities, most of which come due in 4 years. And Tesla’s Model-3 purchase orders do not yet answer this question.
Even with the strategic horizon for electric cars as a global industry, Tesla still has the full potential to be wrecked at any time. Alternatively, it may rise to $2000, who knows. As Warren Buffet likes to say, if the knowledge of the past always led to wealth, Fortune-500 would consist of librarians.
Otherwise, if you prefer seeing your tree grow an extra apple every day, with no rush and no hustle, then MasterCard would be more interesting. Stability over risk, as usual. A clear advantage here – undeniable predictability. Recessions, wars, Coronavirus – whatever happens, the number of people will grow, the amount of money will grow, and the number of financial transactions will grow. Based on that, MasterCard is doomed to expand. The story becomes more interesting in view of the following facts.
Coronavirus causes damage. This damage made MasterCard to reduce its projections for the Q1-2020 revenue. Now, it expects its revenue to grow by just 9-10% in the first quarter, while before it was expecting to have 11-12%, similar to Q1-2019. Overall, the company expects the yearly revenue growth to stay at the lower border of the forecast. That is an alerting obstacle indeed. However, there would be no fight without a greater reward.
In the middle of February, an interesting announcement appeared in the media: MasterCard has finally obtained approval from the Chinese authorities to establish its bank card clearing in China. That means, $27trln-worth market opens its doors to the payment processing company. It’s too early to celebrate, however. First, AmEx is already there, having its formal approval since 2018. Second, local Chinese payment processing companies have long been servicing customers across the country, and they are already accustomed to paying by WeChat, etc. So yes, the path is clear, but no, it will not be an easy walk. MasterCard will have to struggle with no guarantee of success. But which is easier: fly to Mars or enter China? We will see.
China has issued new oil product export quotas to allow oil companies to send surplus barrels overseas, particularly Sinopec, which has the highest volume among quota holders. While the exact quota volume remains undisclosed, oil companies are forecasted to export approximately 3.5 million metric tons of clean oil products in September, a 10% increase from August.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Oil prices rebounded slightly on Friday but are still expected to show losses for the week due to concerns about slowing growth in the US and China. US crude futures rose 2.7% to $70.41 per barrel, while the Brent contract increased by 2.5% to $74.33 per barrel.
The past several weeks have been a real triumph for the bulls in the oil market. The Brent spot price grew by 8.5% during the last month.
Gold prices are rising for three consecutive days ahead of the Federal Reserve (Fed) interest rate decision, which is expected to remain unchanged due to declining inflation and a positive economic outlook. Investors are keen on the Fed's interest rate guidance, fearing a hawkish stance that could trigger market risk aversion.
Amid concerns of a Chinese economic slowdown, reports of declining investment often overlook China's efficient investment strategy in emerging sectors for long-term growth. China has taken measures to stabilize foreign and private sector investments, like reducing the reserve requirement ratio to boost investor confidence.
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