Two modern Bad News Items That Are Good Signals For Equity Investors

PEPSICO - Two modern Bad News Items That Are Good Signals For Equity Investors

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Despite a lot of negative press, there are several indicators to propose that the economy continues to make confident progress. Of course, much of this new is often ignored, particularly since the bad news brings a lot of relevance and warning during this period where one would expect only confident news. Overall, this suggests that investors should be finding at adjusting their strategies to adapt some of this concealed confident information. Here are two good news items worth considering:

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1. The Us Dollar is Gaining Strength. Although the dollar may only move ever so slightly on a day to day basis, its total trend has been such that many international associates that secure sales face of the domestic economy, like PepsiCo, are adjusting their behalf forecasts to allow for a stronger dollar. The way this works is that during period of low dollar valuations, other currencies will be converted at higher rates. For example, manufacture a sale in Euros when the Euro is at .60 Us means more to a firm like Pepsi than when the dollar gains compel and reduces the transfer rate to the point where a sale in Euros is only worth .45... That is virtually a 10% different, which impacts a associates sales considerably, even though the estimate of units sold remain the same.

Investors who do not want to see their equity prices decrease in the short term might be wise to adjust their holdings to less international companies. This way there will be less currency losses and adjustments, which impact numbers only but which also impact shareholder/market sentiment.

2. Bank of America is eliminating its broker program. This could be a confident move for Bank of America but is a sign that many other banks could be finding to bring their home loan programs in house. Not only will these financial institutions ensure they are able to properly underwrite such deals (therefore reducing loan losses and ensuring acceptable prestige underwriting is undertaken) but it will also sacrifice payment paid in finders fees. This could translate into a huge discount in expenses for some lenders, particularly the large ones like Bank of America.

This is a good sign for the economy as it can be seen as a sign that banks are finding at capitalizing on the mortgage firm that is improbable to start arrival their way with the next economic expansion. For investors, however, it could mean taking a closer look at their financial services holdings to make sure they are not overly exposed to brokerage associates or associates that will take on too much home loan risk if this trend of bank bringing loan programs in-house were to continue throughout the industry.

These are just two of the good news signs that have an impact on investors. While there are many others, all it takes is for a bit of reading in the middle of the lines for investors to see what the implications could be for their private portfolios as well as the shop as a whole.

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