The popular mobile video streaming app shuttered its doors on October 21, 2020 Wednesday, after receiving $1.75 billion dollars in VC (venture capital). The executives at Quibi sent a letter to its employees; that they were shutting down after exhausting all options to keep the company afloat.
Quibi’s investors included WarnerMedia, AT&T, Comcast/NBCUniversal, Alibaba, ViacomCBS, Disney, Sony and MGM. They incurred various partnerships with mobile telecommunications companies, for ex. T-Mobile was a provider. The company also had a large celebrity network promoting their mobile app as well. -SB
1) Many consider the next economic crisis to be the growing profusion of empty retail space, as tenants stop paying rent and reduce their offices, leaving commercial real estate in a pinch. Commercial real estate is in trouble, the $15 trillion dollar market is threatened with decline, and the longer the pandemic persists the more ill effects on hotels, retailers and office buildings, therefore the more difficult it is for property owners to meet their mortgage payments. The widespread downgrades, defaults and eventual foreclosures, coming from companies like J.C. Penney, Neiman Marcus and Pier 1 filing for bankruptcy, has retail properties losing major tenants with nothing to replace them. Motels and hotels are running below 50 percent occupancy, with the stimulus bill having no provisions to prop them up, the government hoping the commercial mortgages will just heal by themself.
2) The Justice Department is accusing the internet giant Google of illegally protecting its monopoly over search and advertising. The company is accused of building an illegal monopoly over parts of the internet. The Justice Department accused Google of building a monopoly over central parts of the internet. The main concern is Google working with other major internet companies to channel the internet to Google’s search engine, as the default search engine, by Google providing the engine to include in other company’s products through exclusive business contracts and agreements. The government contends that Google has used anti-competitive tactics to maintain and extend its monopolies in the markets for general search services, search advertising and general search text advertising which is the cornerstones of its empire. It is considered this will be a major test of the antitrust law. A victory for the government could remake one of America’s most recognizable companies and the internet economy.
3) NASA OSIRIS-REx spacecraft mission has successfully touched down on the asteroid Bennu to bring a rock-soil sample back to earth for analysis. The van-size spacecraft briefly touched down on a landing site the width of a few parking spaces. It collected a sample between 2 ounces and 2 kilograms, then the spacecraft backed away to safety. Bennu is a boulder-studded “rubble pile” asteroid shaped like a spinning top and is as tall as the Empire State Building. If everything runs smoothly, the spacecraft and its prized sample will begin the long journey back to Earth next year and land the sample on Earth in 2023.
4) Stock market closings for – 21 OCT 20:
Dow 28,210.82 down 97.97 Nasdaq 11,484.69 down 31.80 S&P 500 3,435.56 down 7.56
1) The drought in the western U.S. is the biggest in years and is predicted to worsen during the coming winter months. The drought is a major reason for the record wildfires in California and Colorado. Further damage can come from depleted rivers, the stifling of crops and diminished water supplies. Elevated temperatures have dried out the soil, exacerbating the drought and making fire weather conditions sever. New Mexico is also in extreme drought conditions with rivers running dramatically low, which feed the aquifers, and neighboring Arizona is also in a deep drought. The drought is extending into Wyoming, Idaho and Montana with little relief in sight for most. Human caused climate change is increasing the likelihood of precipitation extremes on both ends of the scale, including droughts as well as heavy rainfall events and resulting floods. A study in the journal ‘Science’ found that the Southwest may already be in the midst of the first human-caused megadrought in at least 1,200 years, which began in the year 2000.
2) The Federal government has indicted six Russian military officers for massive worldwide cyber attacks. The six Russian military intelligence officers have been involved in high-profile cyberattacks on the electric power grid in Ukraine, the 2017 French elections and the 2018 Pyeong Chang Winter Olympics. The 50-page indictment details the computer intrusions and malware attacks mounted over the past five years by Unit 74455 of the GRU, the Russian military intelligence agency. No other country has weaponized cyber capabilities as maliciously or irresponsibly as Russia, deploying destructive malware from November 2015 through October 2019 in efforts to undermine or retaliate against foreign nations and organizations around the world.
3) American workers are being laid off a second time as the Covid-19 again ripples through the economy. As the second wave engulfs the economy, eight months after the first hit to the economy, Americans are still being laid off en masse by companies like Disney, the U.S. airlines, retailers and MGM Resorts. Even companies such as Allstate insurance is laying off people, 4,000 getting their pink slips. But for some workers, a second layoff so soon leaves them with no benefits, while the Paycheck Protection Program has run out. The hospitality and food-service jobs were unstable before the pandemic, but with many of those jobs now gone, many face a bleak future.
4) Stock market closings for – 20 OCT 20:
Dow 28,308.79 up 113.37 Nasdaq 1,516.49 up 37.61 S&P 500 3,443.12 up 16.20
1) China has warned the U.S. that it may start detaining Americans. Repeated warnings have been made to U.S. government representatives and through multiple channels, including the U.S. Embassy in Beijing. The Chinese have warned that the U.S. should drop prosecutions of the Chinese scholars in American courts, otherwise Americans in China might find themselves in violation of Chinese law. The U.S. began arresting Chinese scientists, who were visiting American universities to conduct research, and charged them with concealing their active duty status with the People’s Liberation Army from U.S. immigration authorities. This tactic is referred to as ‘hostage diplomacy’, which China has used on other countries, such as Canada, Australia and Sweden on what officials from those governments have said are bogus allegations. In September the State Department issued a travel advisory, recommending Americans avoid China travel for a number of reasons, including a warning that the Chinese government detains other countries’ citizens “to gain bargaining leverage over foreign governments”.
2) The oil giant ConocoPhillips is doubling down on crude oil with a major acquisition. Conoco is taking over Concho Resources, a fracker in the Permian Basic with a $9.7 billion dollar ‘all-stock’ takeover. This will make Conoco the largest independent oil-and-gas company in the U.S., with daily production of more than 1.5 million barrels of oil. This will also leave Conoco more exposed to the same forces that have swiftly moved against fossil fuels, and therefore the results of next months elections. Because of the volatility , many investors refrain from the oil market, which met Conoco didn’t have to spend much on the deal. Concho is being acquired at just $10,700 per acre in the Permian Basin, much less than the $40,000 previously paid for the shale oilfield.
3) The private space company SpaceX has launched another 60 Starlink internet relay satellites into orbit, with another set due to launch in a few days. There are now 835 Starlinks in orbit for the rapidly expanding global network, which will eventually number thousands, for high speed internet to any point on the earth. Present plans are to launch at least 120 new Starlinks every month.
4) Stock market closings for – 19 OCT 20:
Dow 28,195.42 down 410.89 Nasdaq 11,478.88 down 192.67 S&P 500 3,426.92 down 56.89
1) Peloton, the exercise machine maker, has recalled pedals on 27,000 of their bikes which have caused some injuries. The 27,000 bikes were manufactured between July 2013 and May 2016. The company has received 120 reports of the pedals breaking resulting in 16 injuries to users, with 5 people requiring medical care including stitches. Peloton is one of the few companies who have benefitted from the coronavirus crisis because with people staying at home for long periods, they are purchasing home exercise machines. Their stock is up 380% a year to date, while their fitness subscribers is up 113% from a year ago.
2) The investment firm BlackRock considers China’s domestic bond market to be a good investment, offering a level of returns that may be difficult to find elsewhere in the current world economy. Economic data and continued monetary policy support, point to a sustained economic recovery, with foreign investors remaining under-invested in Chinese bonds. These investors account for only about 2% of the $16 trillion dollar market. Using diversified and resilient portfolio allows investors to avoid being exposed to risk specific for a company or sector. While there are some troubling signs, such as China Evergrande Group seeking government help in meeting its debt, looking across the whole spectrum, a fairly diversified portfolio can be built to yield a reasonable income.
3) General Motors will start operating robot cars in San Francisco without any human backups in the cars by the end of this year. The company Cruise has received a permit from California’s Department of Motor Vehicles to allow them to operate robot cars, without humans, on public highways. Other companies have gotten permits for autonomous automobile operation without humans, including Waymo, but none have set a date for autonomous ride-hailing services. Cruise will start ride-hailing service first in the surround neighborhoods, one at a time, slowly working their way into the heart of San Francisco with it’s dense traffic challenges. Progress towards fully autonomous ride-hailing services was retarded in 2018 when an Uber autonomous test car ran down a pedestrian in Temple Arizona.
4) Stock market closings for – 15 OCT 20:
Dow 28,494.20 down 19.80 Nasdaq 11,713.87 down 54.86 S&P 500 3,483.34 down 5.33
1) More bad news for the airline business with another expected huge round of losses coming. The second quarter was the worst financial hit in the history of the airline business, and the third quarter won’t be much better. The airlines reported a second quarter combined losses of $12 billion dollars with revenues down 86% for the previous year. Analysts are forecasting a $10 billion dollar lost for the third quarter. The airlines did reduce cost by trimming expenditures, reducing labor as employees took buyouts and early retirement packages. Also, a modest pickup in travel during the summer has help with increased revenues, but forecast are for sales to be down 75% in the third quarter.
2) Oil prices fell the most in a week because the Gulf of Mexico production is set to resume and Libya is reopening its largest oil field. The hurricane had shut down about 92% of oil production in the Gulf, while at the same time Libya’s largest field will reach its daily capacity of almost 300,000 barrels in ten days. World demand for oil crude has dropped with refineries operating near minimum capacity.
3) The third major opioid makers Mallinckrodt Pic has become the third major manufacture of opioid to go bankrupt after being swamped by claims with respect to profiting from the U.S. opioid epidemic. The drug company filed for Chapter 11 after getting creditors and claimants to agree on a restructuring plan. This plan hands over ownership to bondholders, wipes out shareholders and sets aside $1.6 billion dollars to resolve all its opioid litigation. Current shareholders will most likely get nothing, with stock prices in the penny range for most of the year. The Chapter 11 filing estimates liabilities of $1 billion to $10 billion dollars and assets in the same range.
4) Stock market closings for – 12 OCT 20:
Dow 28,837.52 up 250.62 Nasdaq 11,876.26 up 296.32 S&P 500 3,534.22 up 57.09
1) With the recession from the Covid-19 came predictions of waves of bankruptcy filings as businesses, large and small, failed. But that wave of bankruptcy has not materialized, and so far, there’s no sign that it will, indeed bankruptcies are down a little from last year. This is a good sign that companies and households are not as stressed as many economist feared. However, bankruptcy filings aren’t a perfect measure of hardship, with many companies barely hanging on, so bankruptcies may still be coming. Many small businesses and households go bust without ever formally filing for bankruptcy.
2) The four massive high tech companies, Google, Amazon, Apple and Facebook are under investigation at Federal and State levels for antitrust. These investigations are spurred by concerns that competition is being stifled by the domination of these companies, but there are concerns that the big tech is trying to also stifle conservative voices. Google is facing a relatively narrow complaint from the Justice Department that it seeks to disadvantage rivals in search and advertising. The focus on Apple is their apps store with accusations that Apple introduces new products and then put out apps that compete with them. Facebook has raised concerns over how they treat some of their app developers on its platform and therefore engaged in unlawful monopolistic practices. Amazon is suspected of conflict of interest in competition with small sellers on its marketplace platform.
3) Silicon Valley companies are thinking about the future of work taking actions from pay cuts to permanent work-from-home as they strive to cope with the coronavirus crisis. The big tech companies have formed various plans for the future of work. Some companies, (Twitter and Slack), said their employees never need to return to the office, while others, such as Microsoft, are adopting a hybrid model where employees report to the office only a few days a week. Amazon and Salesforce are adopting new benefits to help out working parents, such as subsidized back-up childcare and extended paid leave, while Facebook, employees may work from home permanently. However, if they leave the Bay Area for a less expensive city, they’ll may face a pay cut. Silicon Valley may bear little resemblance to the thriving hub before the pandemic. Tech companies have largely shut down their sprawling campuses and asked employees to work from home — in some cases, forever. When those offices reopen office life is unlikely to resemble the past. Companies may change their real estate plans, opting instead for a new type of office, or none at all.
4) Stock market closings for – 9 OCT 20:
Dow 28,586.90 up 61.39 Nasdaq 11,579.94 up 158.96 S&P 500 3,477.13 up 30.30