Today's big stories

Oil giants Exxon and Chevron reported second-quarter earnings
Our analysts explain how you can profit from a falling dollar – Read Now
The eurozone and US reported record economic shrinkage in the second quarter

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Exxon Stage Left

What’s Going On Here?

Boo Exxon, hiss Chevron: the two oil giants reported weaker-than-expected earnings on Friday, and investors eagerly gave their shares a bad review.

What Does This Mean?

The average price of an American barrel of crude oil during the second quarter was $28. A year ago, it was closer to $60. The slump – caused by, among other things, a demand-sapping pandemic and the Russia-Saudi Arabia price war – ultimately meant oil companies earned less selling the slippery elixir while spending as much as they normally would to extract it. Understandable, then, that analysts expected once-profitable oil firms to swing into a loss last quarter.

Exxon and Chevron duly delivered. Despite lowering its oil production, the former reported a quarterly loss for the second time in a row – one that was worse than investors had braced for, and its biggest in recent history. And after Chevron revised the value of some of its assets lower, it likewise turned in a worse-than-expected loss.

Why Should I Care?

The bigger picture: Protect the payouts.
Exxon’s stock initially fell by 2% and Chevron’s by 4%, but things could’ve been worse: both companies have so far managed to safeguard the dividends they regularly pay shareholders. That wasn’t the case over in Europe on Friday, where Italian oil company Eni cut its payout when it reported a second-quarter loss. The situation doesn’t bode well for European giants Shell and BP’s updates this week – especially considering BP’s already said it’s considering “scrip” dividends.

Zooming in: Pick your poison.
The oil company segment hit hardest by low prices is its “upstream” business, which finds and extracts the earth-juice. But given the dramatic swings in its price last quarter, oil companies with a major trading arm might’ve been able to partly balance out those losses – taking advantage of oil’s volatility to pocket at least some profit.

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2/3 Premium

How To Profit From A Falling Dollar

What’s Going On Here?

The dollar’s worst month in a decade has left its value down 9% against other currencies since March, and you may need to make some adjustments to your portfolio if the dip continues.

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3/3

Overcompensation Nations

What’s Going On Here?

The eurozone and the US will have to find new ways to make themselves feel big: they revealed late last week that their economies suffered their biggest shrinkages on record last quarter (tweet this).

What Does This Mean?

First the eurozone, which announced on Friday that its economy shrank by 12% in the second quarter compared to the one before. Seeing as it also contracted in the first quarter, the region is now officially – and, let’s face it, unsurprisingly – in a recession. The biggest of its economies, Germany, shrank by 10%, while the hardest-hit, Spain, shrank by almost 20%.

The US is in a recession too: it revealed its economy shrank at an annualized 33% last quarter, following a decline in the first. That’s not directly comparable to the eurozone’s non-annualized 12% shrinkage, but a quick back-of-the-envelope calculation suggests the eurozone’s comparable figure is around – oof – 36%.

Why Should I Care?

For markets: Always look on the blight side.
Tucked behind America’s headline figure was a 50% drop in private investment and 35% fall in personal consumption. The only good news was a 3% rise in government spending, which makes sense given the trillions it’s poured into support measures. But with the next round of aid still in gridlock, economists worry even that shot in the arm won’t last much longer. At least economists in Europe are feeling optimistic: they reckon the bloc’s support package and spending plans for the next few years better position its economy to bounce back.

For you personally: Come rain or shine.
Last week’s report also revealed Americans’ personal savings rate as a proportion of disposable income rose to 26% last quarter – its highest in years. Put simply, Americans are saving lots. That’s partly because early government support offset workers’ lost income, and partly because consumers are keeping money aside for rainy days. But with record low interest rates, that cash isn’t doing much in the dry either – so it’s worth considering growing that pot with an investment or two.

Take action: How to get your savings to go further.

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💬 Quote of the day

“You can’t write a script in your mind and then force yourself to follow it. You have to let yourself be.”

– Chimamanda Ngozi Adichie (a Nigerian writer)

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🤔 Q&A · RE: Oh Thank Pod

“What’s the point of Apple’s share split if investors can already buy fractional shares?”

– Brian in the UK

“You’re right, Brian, retail investors can buy fractional shares, but professional institutional investors – like asset managers and pension funds – can’t. That’s because when you buy a fractional share, your broker holds the full share in a custody account and allocates part of it to you – but the share typically isn’t registered in your name. And that means you lose out on the other rights which come with holding shares – like attending annual meetings and voting on company policies – that are pretty important to big investors. But by lowering the price for a whole share and keeping everything else about the company the same, it’s easier for more investors of all types to buy in.”

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🌎 Finimize Community

🤖 Bitcoin is coming for you

There’s been a lot of movement in the crypto space this week, but what exactly is going on, what does it mean for you, and does this mean the machines are finally about to take over because oh jeez we’re totally not ready for that, it’s been a hard enough year as it is and we for one welcome our robot overlords? Please do come to Thursday’s cryptocurrency event to find out.

🇬🇧 UK: Retire With A Smile – 1pm UK Time, August 4th
🇿🇦 South Africa: The Impact of COVID-19 on Cryptocurrency – 7pm South Africa Time, August 6th
🇬🇧 UK: The Power of ETFs – 12pm UK Time, August 8th
🇭🇰 Hong Kong: Is Fashion Going Out Of Style? – 9pm Hong Kong Time, August 11th
🇬🇧 UK: The Pathway to Homeownership – 5.30pm UK Time, August 15th

📚 What we're reading

Yes to interplanetary helicopters (Science Alert)
Eating vegetables can be fun? (Slate)
Taking the fake news to the next level (Inverse)

Finimize - ☠️ Oil is dead

Today's big stories

Exxon Stage Left

What’s Going On Here?

What Does This Mean?

Why Should I Care?

How To Profit From A Falling Dollar

💰 Make your money go further

Overcompensation Nations

What’s Going On Here?

What Does This Mean?

Why Should I Care?

👋 Say hello to YNAB

🤖 Bitcoin is coming for you

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