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New warnings of euro crisis! What’s the trade?

New warnings of euro crisis! What’s the trade?

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The euro has weathered a raft of different storms in recent years - bailouts, the migration crisis, Brexit and rise of populism. However, according to former European Commission president Jacques Delors, who helped build the European Union, the lack of solidarity between nations on how to deal with the impact of the coronavirus poses a 'mortal danger to the European Union'.

European heads of governments have refused to coordinate their fiscal policies taking the unprecedented decision to suspend the Stability and Growth Pact obligation which states that countries must make structural changes to meet their fiscal targets. Many analysts are now sounding the alarm bells for another eurozone crisis. Read on to learn more and the possible trading opportunities around it.

A political or monetary failing?

In the last crisis, the solutions were relatively easy to find. The European Central Bank would step in and support the financial and banking system with very cheap credit. This helped to oil the wheels and get the economy running again.

The impact and solutions to deal with Covid-19 are much more uncertain. Brussels has already warned that any economic recovery will be uneven across Europe posing a significant threat to the single market and the eurozone. The European Commission further highlighted the dangers facing the region commenting that the situation is "an economic shock without precedent since the Great Depression".

To make matters worse a German Constitutional Court issued a decision that shocked not only financial markets but also policymakers. On 5 May, Germany's highest court said the ECB's actions were illegal under German law. According to the court, the ECB's quantitative easing program did not "respect the principle of proportionality" and that the German central bank and government should have challenged them.

The ECB quickly reacted by arguing it follows decisions taken by the European Court of Justice rather than national courts. The rift is now causing legal and political issues in a time where countries need to work together. The ruling has caused divisions between member states and European institutions and is now weighing on the euro currency.

How to trade EUR/USD

Below is the long-term, monthly price chart of the euro against the US dollar (EURUSD):

Source: Admiral Markets MetaTrader 5, EURUSD, Monthly - Data range: from 1 January 2009 to 14 May 2020, accessed on 14 May 2020 at 10:30 am BST. Please note: Past performance is not a reliable indicator of future results.

It's clear to see the long-term weakness in the euro relative to the US dollar. What is most interesting to many traders is that it seems the currency pair is falling back to a significant long-term horizontal support level at 1.05196. With sellers seemingly in control of the market, there is a high probability chance EURUSD will reach that level at some point in the future.

The division between member states and European institutions has helped to put further pressure on the currency pair. Fundamentally, the outlook remains bleak as the recovery from the impact of Covid-19 has yet to get underway. While the downside pressure can be be seen on the monthly price chart of EURUSD, the shorter-term picture is unclear and traders and investors decide to stay out of the market.

Source: Admiral Markets, MetaTrader 5, EURUSD, Monthly - Data range: from 4 November 2019 to 14 May 2020, accessed on 14 May 2020 at 11:00 am BST. Please note: Past performance is not a reliable indicator of future results.

The above daily price chart of EURUSD shows a market which is struggling for direction. The two support and resistance lines that are drawn on in blue highlight a descending triangle chart pattern. The unprecedented market volatility seen in 2020 has caused some traders to remain on the sidelines. However, many traders will be looking for price to break outside of the chart pattern and most likely to the downside which is in line with the larger, monthly price trend.

If a trend develops in the same direction across multiple timeframes it may represent the beginning of a longer-trend developing. Of course, there is always the possibility of a new 'fundamental' news trigger or development that could cause some traders to buy the euro and sell the US dollar.

With US Federal Reserve Chairman Jerome Powell ruling out 'negative interest rates' in a speech on 13 May, traders may decide to stick with the dollar. This decision was met with instant backlash from US President Donald Trump and even investment bank Goldman Sachs believes the Fed may be forced into the situation if a second wave of coronavirus causes another setback in the US economy. For now, the outlook still remains bleak for EURUSD, how will you be trading it?

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INFORMATION ABOUT ANALYTICAL MATERIALS:

The given data provides additional information regarding all analysis, estimates, prognosis, forecasts, market reviews, weekly outlooks or other similar assessments or information (hereinafter "Analysis") published on the website of Admiral Markets. Before making any investment decisions please pay close attention to the following:

1.This is a marketing communication. The content is published for informative purposes only and is in no way to be construed as investment advice or recommendation. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and that it is not subject to any prohibition on dealing ahead of the dissemination of investment research.

2.Any investment decision is made by each client alone whereas Admiral Markets AS (Admiral Markets) shall not be responsible for any loss or damage arising from any such decision, whether or not based on the content.

3.With view to protecting the interests of our clients and the objectivity of the Analysis, Admiral Markets has established relevant internal procedures for prevention and management of conflicts of interest.

4.The Analysis is prepared by an independent analyst Jitan Solanki, Freelance Contributor (hereinafter "Author") based on personal estimations.

5.Whilst every reasonable effort is taken to ensure that all sources of the content are reliable and that all information is presented, as much as possible, in an understandable, timely, precise and complete manner, Admiral Markets does not guarantee the accuracy or completeness of any information contained within the Analysis.

6.Any kind of past or modeled performance of financial instruments indicated within the content should not be construed as an express or implied promise, guarantee or implication by Admiral Markets for any future performance. The value of the financial instrument may both increase and decrease and the preservation of the asset value is not guaranteed.

7.Leveraged products (including contracts for difference) are speculative in nature and may result in losses or profit. Before you start trading, please ensure that you fully understand the risks involved.

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Lunio raises $15M to combat click fraud with algorithms

The digital ads market is robust, with Statista predicting that worldwide spend will reach nearly $900 billion by 2026. But fake and fraudulent ad traffic…

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The digital ads market is robust, with Statista predicting that worldwide spend will reach nearly $900 billion by 2026. But fake and fraudulent ad traffic remains a major problem in the space. Global losses from ad fraud totaled $35 billion in 2020 alone. And beyond the wasted spend, invalid traffic can inflate metrics, leading brands to misidentify — and misunderstand — customer segments.

To combat ad fraud, Neil Andrew and Alex Winston co-founded Lunio, which attempts to exclude fake web traffic arriving from different channels by analyzing behavior patterns. The startup today announced that it closed a $15 million Series A round led by London and Smedvig Capital, bringing Lunio’s total raised to around $17 million.

“Back in 2016, we were running a digital marketing agency in the U.K. and working closely with one of their top clients, Segev Hochberg,” Andrew told TechCrunch in an email interview. “During that time, they kept noticing the same problem. Worthless clicks from fake users were eating away a chunk of Segev’s marketing budget every month. And ad networks weren’t exactly rushing to tackle the problem, because there was no real incentive for them to do so. So Neil, Segev, and I founded Lunio to help other marketers catch and block clicks from bad sources, while automatically reinvesting the money saved back into top-performing ad campaigns.”

Lunio claims to use a combination of data analysis and cybersecurity techniques to catch and block fake clicks, with algorithms that run client-side — within a user’s browser — to ensure personally identifiable information isn’t sent over the web. (While the IP addresses of ad interactions are stored and provided to users, they’re not combined with any other information that could make them personally identifiable, Andrew claims.) The algorithms attempt to predict the likelihood of invalid click activity on a range of ad networks, including Google, YouTube, Facebook, Reddit, Instagram and even TikTok.

Image Credits: Lunio

While Lunio is far from the first click fraud prevention tech vendor — others include CHEQ and Human Security — Andrew asserts that its platform has key technical advantages. For example, Lunio’s algorithms leverage WebAssembly, the web standard designed to enable near-native code execution speed in the browser, which Andrew claims is up to seven times faster than traditional JavaScript — the programming language many vendors use to analyze ad traffic.

“There’s a huge opportunity cost of having distracted sales processes downstream due to fake lead form submissions which follow on from fake clicks. Sales reps can waste many hours chasing leads that don’t actually exist,” Andrew said. “It’s not just about getting a refund on spammy clicks — if you even manage to. It’s about stopping all the knock-on effects of having fake traffic hit your website.”

Andrew says the pandemic was a boon for Lunio because it led to increases in fake user activity as brands and their customers moved online. Meanwhile, the economic downturn has increased the pressure on companies to stretch their ad dollars, Andrew says — leading to another windfall for the startup.

Lunio has more than 1,000 customers covering over 10,000 individual advertising accounts, Andrew claims. He opted not to share revenue figures, saying only that Lunio plans to expand headcount from 43 employees to around 55 by the end of Q1 2023 to “accelerate” its go-to-market efforts in Europe and North America.

“We feel very insulated from the forward-looking challenges many companies will face. We have implemented strong operational and investment discipline based on validated business cases to drive our future direction,” Andrew continued. “We operate on a best-in-class burn multiple and expect this to continue in relative terms as we scale the business.”

Lunio raises $15M to combat click fraud with algorithms by Kyle Wiggers originally published on TechCrunch

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Detectify secures $10M more to expand its ethical hacking platform

Detectify, a security platform that employs ethical hackers to conduct attacks designed to highlight vulnerabilities in corporate systems, today announced…

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Detectify, a security platform that employs ethical hackers to conduct attacks designed to highlight vulnerabilities in corporate systems, today announced that it raised $10 million in follow-on funding led by Insight Partners. CEO Richard Carlsson says that the new cash, which brings Detectify’s total raised to $42 million, will be put toward product development and improving the overall user experience.

Detectify was founded by four ethical hackers from Stockholm, including Carlsson, who realized the business potential in combining security research with automation. In an interview with TechCrunch, Carlsson pointed out that product development workflows have changed dramatically over the past few years, with new teams within organizations spinning up internet-facing apps and adding potentially vulnerable assets to their employer’s environment. The trend toward low- and no-code tools has lowered the app development barrier to entry, but it’s also made the jobs of security specialists that much harder.

Illustrating the challenges, a recent Dark Reading survey found that 26% of IT and security experts don’t trust the platforms used to create low- and no-code apps. Roughly as many — 25% — said that they don’t even know which apps within their companies are being created by these tools.

“While companies should integrate security best practices earlier in their development cycle and try to catch vulnerabilities in development, production is what truly matters,” Carlsson added via email. “Unless you have a completely linear development process, which no company actually has, you will never catch everything. And this legacy mindset and over-reliance on ‘shifting left’ instills a sense of false confidence in organizations that actually increases their risk level.”

Image Credits: Detectify

Detectify’s approach crowdsources real payloads — pieces of code that execute when hacker exploits a vulnerability — from a private community of ethical hackers and uses these contributions for payload-based tests. Carlsson claims that Detectify tests customers’ entire attack surfaces, exposing how malicious attackers might exploit internet-facing apps in production. 

In the near future, Detectify plans to roll out new functionality that’ll give security teams the ability to create custom alert policies. Teams will be notified if attacks on vectors like hosts, domains or DNS records are detected, Carlsson says. 

“With Detectify, organizations can maintain an external point-of-view of exactly how attackers would exploit their attack surface, manage exposure, and prioritize their remediation efforts,” Carlsson said.

Detectify currently has 2,000 customers, including “large government digital services” in Europe, and a user base exceeding 10,000. Carlsson asserts that demand remains robust in the face of competition like Cycognito, Crowdstrike’s Reposify, IBM’s Randori, Google’s Mandiant and Microsoft’s RiskIQ, driven by digital transformation efforts around the pandemic. 

To put it simply, the external attack surface has never been more complicated and harder to defend. This insulates Detectify against market headwinds,” he added. “While no company is immune to market trends, in cybersecurity, the pressure to reduce spend is pitted against cybersecurity teams’ need for best-of-breed solutions to protect the business against nation-state-level attacks.”

Detectify secures $10M more to expand its ethical hacking platform by Kyle Wiggers originally published on TechCrunch

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Butter, garage doors and SUVs: Why shortages remain common 2½ years into the pandemic

The bullwhip effect describes small changes in demand that become amplified as they move down the supply chain, resulting in shortages. The pandemic put…

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Consumers have been seeing empty shelves throughout the pandemic. Diana Haronis/Moment

Shortages of basic goods still plague the U.S. economy – 2½ years after the pandemic’s onset turned global supply chains upside down.

Want a new car? You may have to wait as long as six months, depending on the model you order. Looking for a spicy condiment? Supplies of Sriracha hot sauce have been running dangerously low. And if you feed your cat or dog dry pet food, expect empty shelves or elevated prices.

These aren’t isolated products. Baby formula, wine and spirits, lawn chairs, garage doors, butter, cream cheese, breakfast cereal and many more items have also been facing shortages in the U.S. during 2022 – and popcorn and tomatoes are expected to be in short supply soon.

In fact, global supply chains have been under the most strain in at least a quarter-century, and have been pretty much ever since the COVID-19 pandemic began.

I have been immersed in supply chain management for over 35 years, both as a manager and consultant in the private sector and as an adjunct professor at Colorado State University - Global Campus.

While each product experiencing a shortage has its own story as to what went wrong, at the root of most is a concept people in my field call the “bullwhip effect.”

What is the ‘bullwhip effect’?

The term bullwhip effect was coined in 1961 by MIT computer scientist Jay Forrester in his seminal book “Industrial Dynamics.” It describes what happens when fluctuations in demand reverberate and amplify throughout the supply chain, leading to worsening problems and shortages.

Imagine the physics of cracking a whip. It starts with a small flick of the wrist, but the whip’s wave patterns grow exponentially in a chain reaction, leading to the tip, a snap – and a sharp pain for anyone on the receiving end.

The same thing can happen in supply chains when orders for a product from a retailer, say, go up or down by some amount and that gets amplified by wholesalers, distributors and raw material suppliers.

The onset of the COVID-19 pandemic, which led to lengthy lockdowns, massive unemployment and a whole host of other effects that messed up global supply chains, essentially supercharged the bullwhip’s snap.

How the bullwhip effect works.

Cars and chips

The supply of autos is one such example.

New as well as used vehicles have been in short supply throughout the pandemic, at times forcing consumers to wait as long as a year for the most popular models.

In early 2020, when the pandemic put most Americans in lockdown, carmakers began to anticipate a fall in demand, so they significantly scaled back production. This sent a signal to suppliers, especially of computer chips, that they would need to find different buyers for their products.

Computer chips aren’t one size fits all; they are designed differently depending on their end use. So chipmakers began making fewer chips intended for use in cars and trucks and more for computers and smart refrigerators.

So when demand for vehicles suddenly returned in early 2021, carmakers were unable to secure enough chips to ramp up production. Production last year was down about 13% from 2019 levels. Since then, chipmakers have began to produce more car-specific chips, and Congress even passed a law to beef up U.S. manufacturing of semiconductors. Some carmakers, such as Ford and General Motors, have decided to sell incomplete cars, without chips and the special features they power like touchscreens, to relieve delays.

But shortages remain. You could chalk this up to poor planning, but it’s also the bullwhip effect in action.

The bullwhip is everywhere

And this is a problem for a heck of a lot of goods and parts, especially if they, like semiconductors, come from Asia.

In fact, pretty much everything Americans get from Asia – about 40% of all U.S. imports – could be affected by the bullwhip effect.

Most of this stuff travels to the U.S. by container ships, the cheapest means of transportation. That means goods must typically spend a week or longer traversing the Pacific Ocean.

The bullwhip effect comes in when a disruption in the information flow from customer to supplier happens.

For example, let’s say a customer sees that an order of lawn chairs has not been delivered by the expected date, perhaps because of a minor transportation delay. So the customer complains to the retailer, which in turn orders more from the manufacturer. Manufacturers see orders increase and pass the orders on to the suppliers with a little added, just in case.

What started out as a delay in transportation now has become a major increase in orders all down the supply chain. Now the retailer gets delivery of all the products it overordered and reduces the next order to the factory, which reduces its order to suppliers, and so on.

Now try to visualize the bullwhip of orders going up and down at the suppliers’ end.

The pandemic caused all kinds of transportation disruptions – whether due to a lack of workers, problems at a port or something else – most of which triggered the bullwhip effect.

The end isn’t nigh

When will these problems end? The answer will likely disappoint you.

As the world continues to become more interconnected, a minor problem can become larger if information is not available. Even with the right information at the right time, life happens. A storm might cause a ship carrying new cars from Europe to be lost at sea. Having only a few sources of baby formula causes a shortage when a safety issue shuts down the largest producer. Russia invades Ukraine, and 10% of the world’s grain is held hostage.

The early effects of the pandemic in 2020 led to a sharp drop in demand, which rippled through supply chains and decreased production. A strong U.S. economy and consumers flush with coronavirus cash led to a surge in demand in 2021, and the system had a hard time catching up. Now the impact of soaring inflation and a looming recession will reverse that effect, leading to a glut of stuff and a drop in orders. And the cycle will repeat.

As best as I can tell, these disruptions will take many years to recover from. And as recent inflation reduces demand for goods, and consumers begin cutting back, the bullwhip will again work its way through the supply chain – and you’ll see more shortages as it does.

Michael Okrent does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.

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