Facebook, Inc. (NASDAQ:FB) Libra will permanently hit Australian banks’ profits

Facebook, Inc. (NASDAQ:FB) Libra will permanently hit Australian banks’ profits

Facebook, Inc. (NASDAQ:FB) Libra will permanently hit Australian banks’ profits

Overnight the man in charge of setting up Facebook Inc’s (FB) digital currency, Libra, pretty much confirmed to CNBC business television that the project has one key service goal for now. 

During an interview David Marcus batted back worries about the high-profile departure of some original partners including VisaPayPal, and other tech giants to boast the project would succeed anyway.

The project’s big problem remains regulatory resistance in particular from legislators determined to protect central bank control of the money supply, with two U.S. senators even writing to the CEOs of some of the Libra Association’s original members (Visa, MasterCard, Stripe) to threaten with them regulatory beatings if they take part in the project. 

The reason governments and their central bank supporters want Libra browbeaten is concern that it could end up printing or creating money in the way central banks do via the principle of fractional reserve banking.

However, Mr Marcus guaranteed during the interview that Libra will never create money.

Instead the tech guru repeatedly made clear Libra would principally be used as an exchange mechanism to eliminate overseas transfer and bank fees for users wanting to send money around the world. Or for those users simply overseas on holiday. 

For example any blue-collar worker wanting to repatriate money overseas to their family would be able to avoid bank fees and the spread charged on the FX rate if the sender and receiver both had a free Libra wallet via Facebook accounts. 

Or a holiday maker and Facebook user could buy Libra in Australian dollars before spending it in Thai baht in Thailand with minimal Libra transaction fees. 

This is notable as it’s analogous to how the internet eliminated the cost of making phone calls overseas.

If you went overseas before 2000 you’d have been ripped off if you wanted to speak to your family back home, but the internet has changed that.

At the same time it has smashed the profits of large global telcos like Sprint or Vodafone. If you don’t believe me take a look at their share price charts. They’ve both gone nowhere since 2000. 

One conclusion is that the banks are heavily lobbying regulators and the politicians in their pockets to obstruct Libra as it could eliminate an easy source of profits for them. Just as the internet eliminated some of the mobile operators’ profits. 

Libra isn’t beyond reproach though as when Mr Marcus was asked how much in terms of fees Libra intended to charge on transactions I believe he said in the region of 25 basis points for “banked” users. Hardly a revolution.

While emerging market users without bank accounts would be slugged a lot more in fees to receive cash from digital Libra wallets via over-the-counter merchants. 

Sill investors in the likes of Commonwealth Bank of Australia (ASX: CBA), National Australia Bank Ltd (ASX: NAB), Westpac Banking Corp (ASX: WBC) and Australia & New Zealand Banking Group (ASX: ANZ) might want to keep in mind the disruptive growth of the digital economy  has a long way to run yet.

Technical Indicators

Overall, the bias in prices is: Upwards.

The projected upper bound is: 199.18.

The projected lower bound is: 181.81.

The projected closing price is: 190.49.

Candlesticks

A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 6 white candles and 4 black candles for a net of 2 white candles. During the past 50 bars, there have been 23 white candles and 27 black candles for a net of 4 black candles.

A long lower shadow occurred. This is typically a bullish signal (particularly when it occurs near a low price level, at a support level, or when the security is oversold).

A spinning top occurred (a spinning top is a candle with a small real body). Spinning tops identify a session in which there is little price action (as defined by the difference between the open and the close). During a rally or near new highs, a spinning top can be a sign that prices are losing momentum and the bulls may be in trouble.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 91.4374. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a sell 7 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 62.11. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 67 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 148.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a buy 10 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 6 period(s) ago.

Rex Takasugi – TD Profile

FACEBOOK INC A closed up 0.840 at 190.390. Volume was 33% below average (neutral) and Bollinger Bands were 11% narrower than normal.

Open     High      Low     Close     Volume___
190.300 190.840 188.765 190.390 9,761,548
Technical Outlook 
Short Term: Overbought
Intermediate Term: Bullish
Long Term: Bullish
Moving Averages: 10-period     50-period     200-period
Close: 183.41 184.09 178.02
Volatility: 23 30 35
Volume: 10,421,836 12,545,958 16,768,279

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FACEBOOK INC A is currently 6.9% above its 200-period moving average and is in an upward trend. Volatility is Our volume indicators reflect volume flowing into and out of FB.O at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on FB.O and have had this outlook for the last 1 periods.

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