14 April 2020

1) The auto industry, already reeling from the new car shutdown and depressed demand, is now concerned about a possible used car price collapse, which could have far reaching effects across the economy. The used vehicle auctions are now virtually paralyzed, the same as the rest of the country, with vehicles piling up at places where buyers and sellers bid on cars and trucks, a situation which cannot go on for months. This is creating a huge level of wholesale supply in the market as inventories continue to expand. This will cause fiscal problems for in-house lending divisions, lease contracts and car rental companies from falling car values. Used car sales fell 64% in the last week of March with prices falling an estimated 10%. The auto makers credit companies are taking huge losses and looking for ways to take advantage of asset backed securities market. With car rentals way down, rental companies are fearful of having to raise cash by selling off inventory when prices are way down.

2) Mr. Neel Kashkari, the head of the Federal Reserve Bank of Minneapolis, was on ‘Face the Nation’ television show last Sunday, considers the U.S. may be facing an 18 month shutdown based on what is happening in other countries. Fearing flare-ups, America may face shutdowns until an effective vaccine or therapy is found.

3) Economists fear poor recovery, with high unemployment through 2021, despite the trillions of dollars in cash and loans from the Federal Reserve. Nevertheless, the massive effort is likely to leave millions of additional Americans unemployed for an extended time with unemployment not just spiking, but remaining for the next year. Unemployment may jump up to 20% in the coming months then coming down into the single digit range. It’s expected that a lot of people will not be getting their jobs back as the economy shifts and reforms itself. The more specialized a design, the more brittle it is.

4) Stock market closings for – 13 APR 20:

Dow 23,390.77 down 328.60
Nasdaq 8,192.42 up 38.85
S&P 500 2,761.63 down 28.19

10 Year Yield: down at 0.75%

Oil: down at $22.71

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