Now in focus: General Electric, British Pound, Crude Oil

It’s time again to think about speculation in the British pound. For several days this is a hot box now. Where reliable UK media sources have already announced important UK-EU settlements, earlier this week Jean-Claude Juncker and Theresa May failed to reach an agreement on Ireland and payment of money. The Unionists in Northern Ireland are probably the main problem.

And actually the rumors are circulating that they have agreed what role the European Court will play for Great Britain after Brexit. Details are not known or secured. According to a spokesman for the EU, the UK has time until Sunday in 3 days for clear positions and an agreement. Because on December 14, the EU Member States meet, and they want to prepare for what is on the table before they decide something.

The British pound jerked this afternoon. It´s nothing for the faint-hearted, especially if you intend to stay in this market over the weekend. So be careful!

Pound vs USD since this morning.

Euro vs GBP since this morning.

Crude Oil

Today and yesterday you can read a lot in some media publications that the OPEC lost control of the price of oil, or that after the intoxication now the disillusion is following. This refers to the OPEC meeting which was done exactly one week ago. The price of oil (WTI) rose from $ 42 in June to $ 59 only days before the meeting. An incredible increase! Much of this rally was euphoria that with this extension the oil inventory cut is sustainable. And that is possible, even if the US Frackers are constantly pumping more and more.

We are completely out of the forecasts, because the oil market is unpredictable! But what we can say: You should not talk about loss of control or something similar right now. Because if you compare the WTI oil price just a few hours before the OPEC meeting at $ 57.50, then the subsequent relapse to now $ 56.44 is just a tired twitch in the long-term chart. Actually, the relapse could be significantly larger without it really mean something. Because already the previous rally was as said driven by euphoria.

The motto should now actually be, as the stock market often likes to say: “Buy the rumor, sell the facts”. Since the facts just happened like the rumor, the relapse of just one dollar (so far) is not worth mentioning.

WTI Oil since April.

General Electric

Only some days after Siemens said the need to lay off workers in their Energy segment, now General Electric is doing the same. 12.000 workers will be fired. GE in it´s original words:

GE Power (NYSE: GE) today announced that it plans to reduce its global headcount by approximately 12,000 positions, affecting both professional and production employees. The headcount reductions, combined with actions taken previously in 2017, will position GE Power to reach its announced target of $1 billion in structural cost reductions in 2018. This announcement aligns with GE’s effort to reduce overall structural costs by $3.5 billion in 2017 and 2018. These actions will strengthen GE Power’s global competitiveness and drive increased value for customers and shareholders. The plans announced today are driven by challenges in the power market worldwide. Traditional power markets including gas and coal have softened. Volumes are down significantly in products and services driven by overcapacity, lower utilization, fewer outages, an increase in steam plant retirements, and overall growth in renewables.

GE Power is right-sizing the business for these realities and is focused on improving operational excellence and reducing its footprint and structure, which will help drive significant improvements in cash flows and margins. “This decision was painful but necessary for GE Power to respond to the disruption in the power market, which is driving significantly lower volumes in products and services,” said Russell Stokes, president and CEO, GE Power. “Power will remain a work in progress in 2018. We expect market challenges to continue, but this plan will position us for 2019 and beyond. “At its core GE Power is a strong business,” Stokes continued. “We generate more than 30 percent of the world’s electricity and have equipped 90 percent of transmission utilities worldwide. Our backlog is $99 billion and we have a substantial global installed base. This plan will make us simpler and stronger so we can drive more value for our customers and investors.” Where required, the process of informing and/or consulting with employee representatives regarding these proposals has begun or will begin shortly.

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