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Morning Market Scoop 23 October 2018

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Barry Dumas
Moring-market-scoop

 

When the lights go out and rainbows go missing from stocks:

On Friday the problematic power utility, Eskom put two applications forward to NERSA with one application asking for tariffs to be increases “yet again” and the other claiming a shortfall on past tariffs.

Hasbro, the American multinational toy and board game company have released results which sent the shares plunging over 7% on Monday.

I'm Barry "The Beef Dumas" and this is your morning market scoop!

Lets get our trading day started!:

 

 

Eskom-NERSA-application

 

When the lights go out...

What’s the scoop? Eskom’s tariff increase

On Friday the problematic power utility, Eskom put two applications forward to NERSA with one application asking for tariffs to be increases “yet again” and the other claiming a shortfall on past tariffs. NERSA will hold public hearings on the matter and evaluate the applications that Eskom put forth. The application will be evaluated with a methodology that allows a company to claim within certain limits as well as scrutinises the costs to make sure they are justifiable.

  • The proposed tariff increase will have South Africans pay Eskom’s 15% plus the additional 4.4% which will be added if the application is successful.

The big picture with Eskom on the brink of collapse its focus has shifted in blaming municipalities owing the power utility over R15 billion as the reason for its financial difficulties. Not to mention the gross mismanagement, debt to government and the dubious Gupta deals over coal supply are all contributing factors to the downfall of Eskom.

What does all this mean for me?

  • The already over committed consumer will be under even more pressure as the full Eskom tariff will come to 19% over the 2019 to 2020 period.

Hasbro-share-price-plunges-7

 

No more rainbows for My Little Pony!

What’s the scoop? Hasbro’s share price

Hasbro, the American multinational toy and board game company have released results which sent the shares plunging over 7% on Monday. The company’s earningsmissed analyst’s expectations on the top and bottom line. Revenue from sales in North America dropped 7% due to the demise of Toys R Us and logistics in shipping to other retailers.

  • The sudden demise of Toys R Us, once the world’s largest toy retailer has played heavily on companies like Hasbro and rival Mattelwhich relied heavily on Toys R Us for sales.

The big picture  The toy landscapehas changed significantly over the last decade as more kids are preferring electronic games than physical toys. The partnerships with Disney and Marvel are great examples that Hasbro are changing with the times and these partnerships might be lucrative well into the future.

What does all this mean for me?

  • No material impact if you do not own shares in the company but some of Hasbro’s products have been household names since the early 80s like, the board games monopolyand twisterand toys of Transformers, I. Joe,My Little Ponyand Power Ranger to name few and they might just be here for a long time to come.

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