31 December 2019

1) The automaker of electric cars Tesla has made its first deliveries of their Model 3 that were manufactured in China. The gigafactory in Shanghai is Tesla’s first outside the U.S., which is expected to significantly boost Tesla sales in China, which Tesla considers will become its largest market for the Model 3. Production will soon be 1,000 cars a week, eventually reaching an annual production of 150,000 a year.

2) The national average price for gasoline increased by 1.6 cents to $2.57 a gallon. Gas prices had been dropping for seven consecutive weeks prior to the upswing. The price increase is a result of the drop in oil inventories while oil prices are above $61 a barrel. Gas prices are above $3 a gallon in Hawaii, California, Nevada, Alaska and Washington, while Missouri, Oklahoma, Mississippi, Texas and Louisiana are the five states with the lowest priced gas states.

3) Vietnam is switching from producing and selling raw robusta beans on the commodity markets, to producing instant coffee for the burgeoning Asian market. Instant coffee brings more profit with less risk while also bringing protection from large swings in international commodity prices. Vietnam aims to overtake Nestle as Vietnam’s biggest pure instant coffee supplier in the next five years, and doubling its coffee exports to $6 billion dollars a year.

4) Stock market closings for – 30 DEC 19:

Dow              28,462.14    down   183.12
Nasdaq           8,945.99    down     60.62
S&P 500          3,221.29    down     18.73

10 Year Yield:    up   at    1.90%

Oil:    down   at    $61.68

HEDGEFUNDS TO SEE MORE CLOSURES IN 2019 THAN LAUNCHES!!!!!!!!!!!!

By: Economic & Finance Report

2019 was not the year of the hedge fund. Many hedge funds in 2019 were strapped for cash and liquidity was not as readily available, as in previous years.

According to Bloomberg news wire, hedge funds will be reporting more losses and closures for the 5th year in a row. More then 4,000 hedgefunds have liquidated in the past five years (HedgeFund Research Inc).

The reasons have varied on why hedge funds have been closing in recent years, such as investors revolting, or wanting their money earlier from the funds, to simply hedgefund officers getting tired on running their funds and family owned offices.

The profits have not been there as well. There are various reasons of funds closing at rapid paces, but take note this is a trend that may continue until the profits are there.

Credit: Bloomberg.com, Hedgefund Research Inc

30 December 2019

1) China has had another year of record corporate bond defaults, which is by design. Ten years ago, bond defaults almost never happened, not because Chinese businesses were healthy, but rather the government stepped in to prevent default. Companies were often linked to the government and bonds which were largely bought by state owned lenders, making a financial system with little discipline. The government has become more comfortable with defaults and so is stepping out of economic control, to impost more incentive to make careful assessment of companies.

2) This year, more than fifty banks have announced plans to cut 77,780 jobs, the most lost since 91,448 jobs in 2015. The 2019 cuts will bring the total for the last six years to more than 425,000 lost jobs. The European banks are still weak from the ‘o-eight’ financial crisis, and are still struggling to regain their footing, forcing continual cost cutting measures. Job losses are anticipated to continue into 2022.

3) With germs growing more resistant to common antibiotics, many drug companies are hemorrhaging money and going out of business. The effect is reduced efforts to develop new antibiotics just when they are become most needed. Other well established drug companies are abandoning the antibiotic market segment refraining from doing any research on new antibiotic drugs. One marketing problem is antibiotics are prescribed for just days to weeks, so there isn’t the revenue stream as with drugs continually consumed year after year by a patient such as insulin. Presently, drug resistant infections kill 35,000 people each year.

4) Stock market closings for – 27 DEC 19:

Dow                28,645.26         up     23.87
Nasdaq            9,006.62    down    15.77
S&P 500           3,240.02          up         0.11

10 Year Yield:    down   at    1.87%

Oil:    up   at    $61.72

27 December 2019

1) The Permian Basin continues to experience difficulties producing oil, becoming increasingly gassy as drilling slows down. This undercuts profits for producers at a time when investors are demanding better returns. The region has long been plagued with a massive glut of gas which crude producers must sometimes pay to have hauled away or burn in the open air. This problem is intensifying as wells age and fewer new wells are drilled.

2) Oil prices rise to a three month high because of optimism on supply. The stage is set for the biggest monthly gain in almost a year on speculation that supplies are shrinking. Prices are up almost 12% for this month and are now higher since the mid-September high. The U.S. stockpiles have dropped 7.9 million barrels this last week, while Russia cut their crude output with a reduction of 240,000 barrels a day for December. Oil has surged about 36% for this year.

3) American retailers continue to struggle while some are actually thriving. The once giant Sears has fallen into bankruptcy having closed over 3,000 stores. Other major retailers in decline are Blockbuster Video, Radioshack, Victoria’s Secret, the Gap, JCPenny, Toys R Us and Borders Books. Retailers such as TJ Maxx, Amazon, Walmart, Target, Dollar General, Costco and Ross have flourished in the peril waters of American consumerism.

4) Stock market closings for – 26 DEC 19:

Dow                28,621.39    up    105.94
Nasdaq             9,022.39    up      69.51
S&P 500            3,239.91    up      16.53

10 Year Yield:    down   at    1.90%

Oil:    up   at     $61.68

#THECASTPOD EP. #10 feat. Nique @ Nite : Youtuber Nation (Youtube Edition)

24 December 2019

1) The poor showings of two major movies this last weekend shows the risk Hollywood faces with new movie productions. The final installment of Star Wars, The Rise of Skywalker and Cats both have fallen short of predicted first week ticket sales, highlighting the risk associated with cinema productions. The theatrical market is dominated by a few blockbuster movies at the expense of almost everything else, leaving theater owners struggling for productions to draw needed customers.

2) Holiday shopping set records over the weekend with Super Saturday sales reaching $34.4 billion dollars making it the biggest single day in U.S. retail history. Super Saturday topped Black Friday’s $31.2 billion dollars by 10%. This is despite foot traffic in the malls being down, indicating people are spending more. Next question is – will this stellar momentum lead to sustained economic growth in 2020.

3) The internet music downloading site Spotify is expanding into the podcasts market. The company is spending big to lock down exclusive shows and introduce several new features for users. Already a success now making a profit with music, Spotify is determined to be a power player in the world of podcasts, considering podcast to be a great complementary product. Spotify has announced it has acquired Gimlet Media and Anchor production companies to strengthen its podcast abilities.

4) Stock market closings for – 23 DEC 19:

Dow                28,551.53    up    96.44
Nasdaq             8,945.65    up    20.69
S&P 500            3,224.01    up       2.79

10 Year Yield:    up   at    1.94%

Oil:     up   at    $60.58

23 December 2019

1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?3) Steel maker US Steel is closing a mill near Detroit and will lay off 1,500 workers, and in addition will cut its dividend in an attempt to reverse operating losses which is forecasted for the fourth quarter. The Great Lakes Works mill, which rolls slabs into sheets of steel will close, and shift its work to three other mills. Additional cost savings measures will be implemented including a $75 million dollar reduction on capital expenditures and cutting labor cost.1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?

1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?

2) Automaker Fiat-Chrysler Automobiles is making an all out push to clear out tens of thousands of vehicles which their dealerships have not ordered, because their new data driven production strategy has swelled their inventory. The automaker is offering its most aggressive discounts since the financial crisis to sell certain 2019 models under their Dodge, Jeep and Ram brands. Their sales staff is working overtime to sell more than 70,000 unassigned cars in December to their 2,400 dealerships.

3) Steel maker US Steel is closing a mill near Detroit and will lay off 1,500 workers, and in addition will cut its dividend in an attempt to reverse operating losses which is forecasted for the fourth quarter. The Great Lakes Works mill, which rolls slabs into sheets of steel will close, and shift its work to three other mills. Additional cost savings measures will be implemented including a $75 million dollar reduction on capital expenditures and cutting labor cost.

4) Stock market closings for – 20 DEC 19:

Dow                28,455.09    up    78.13
Nasdaq             8,924.96    up    37.74
S&P 500            3,221.22    up     15.85

10 Year Yield:    up   at    1.92%

Oil:    down   at    $60.36

1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?3) Steel maker US Steel is closing a mill near Detroit and will lay off 1,500 workers, and in addition will cut its dividend in an attempt to reverse operating losses which is forecasted for the fourth quarter. The Great Lakes Works mill, which rolls slabs into sheets of steel will close, and shift its work to three other mills. Additional cost savings measures will be implemented including a $75 million dollar reduction on capital expenditures and cutting labor cost.1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?

2) Automaker Fiat-Chrysler Automobiles is making an all out push to clear out tens of thousands of vehicles which their dealerships have not ordered, because their new data driven production strategy has swelled their inventory. The automaker is offering its most aggressive discounts since the financial crisis to sell certain 2019 models under their Dodge, Jeep and Ram brands. Their sales staff is working overtime to sell more than 70,000 unassigned cars in December to their 2,400 dealerships.

3) Steel maker US Steel is closing a mill near Detroit and will lay off 1,500 workers, and in addition will cut its dividend in an attempt to reverse operating losses which is forecasted for the fourth quarter. The Great Lakes Works mill, which rolls slabs into sheets of steel will close, and shift its work to three other mills. Additional cost savings measures will be implemented including a $75 million dollar reduction on capital expenditures and cutting labor cost.

20 December 2019

1) Timothy Litzenburg, a Virginia lawyer involved in litigation over the health risks of Monsanto’s roundup weed killer product, has been arrested. He is charged with interstate intentions to extort an unnamed company into a $200 million dollar consulting fee for his firm. Litzenburg threatened to find people who he would advise to sue companies for exposing them to the chemical, but that he would cease searching for potential plaintiffs in exchange for a multi million dollar consulting agreement.

2) Freddie Mac has offered early retirement to about 25% of its staff in a drive to overhaul its workforce, as a result of the Trump administration’s reforming the housing finance giant. There are 1,650 eligible employees being offer the early out, with about one quarter expected to take the buyout. This will be about 6% of Freddie Mac’s workforce.

3) The number of Americans filing applications for unemployment benefits dropped from more than a two year high, decreasing 18,000 to 234,000. This points to a sustained labor market strength, another sign of a strong American economy. Despite trade tensions and slowing global growth with a weighing down on manufacturing, the economy is on a moderate growth path.

4) Stock market closings for – 19 DEC 19:

Dow                    28,376.96    up   at    137.68
Nasdaq                 8,887.22    up   at      59.48
S&P 500                3,205.37    up   at       14.23

10 Year Yield:     down   at    1.91%

Oil:    up   at    $61.03

19 December 2019

1) New York Life Insurance is buying Cigna business, which sells life and disability insurance, for $6.3 billion dollars. This is just one of several which have bought into the group benefits business. Such businesses are attractive to insurers seeking to diversity, because the units are less capital intensive, don’t rely as much on investment income and also provide cash flow.

2) Auto makers Fiat Chrysler and Peugeot maker PSA have agreed on a binding merger for $50 billion dollars, which paves the way to the creation of the world’s fourth largest automaker. The merger will create a cost savings of $4 billion dollars by combining technologies and through shared purchasing agreements.

3) There are more people being rejected for auto loans according to a Federal Reserve Bank report. Auto loan rejections spiked in October at 8.1% compared to 4.5% a year ago, while for a full year, rejections are up at 7.1% from 6.1% for 2018. A decade of easy auto credit has sparked concerns that U.S. households could be on the verge of another financing bubble. Other segment of consumer credit have reported fewer rejections of credit applications.

4) Stock market closings for – 18 DEC 19:

Dow                28,239.28    down    27.88
Nasdaq             8,827.74          up      4.38
S&P 500            3,191.14    down       1.38

10 Year Yield:    up   at    1.92%

Oil:    up   at    $60.84

18 December 2019

1) Walt Disney’s Star War’s empire has been fading at the box office with many fans finding the new offerings less than anticipated. The last chapter of the Star Wars series, The Rise of Skywalker, is being heavily promoted to halt the financial slide. In playing up the nostalgia aspects and the fact that this will be the last Star Wars release for years, they are trying to reverse the downward slide of the franchise, which Walt Disney purchased from George Lucas for $4 billion dollars in 2012.

2) Ford Motor Company plans to invest more than $1.45 billion dollars in two of its manufacturing facilities in Detroit, to make electric, autonomous and sports-utility vehicles. The new manufacturing will add 3,000 jobs, with Ford saying it will invest $11 billion dollars to make forty new hybrid and fully electric vehicles by 2022.

3) Fears continue that Boeing’s halting of the 737 MAX production could have serious impact on the U.S. economy next year. This production halt is anticipated to go until March and April of next year. Presently, Boeing has 400 airplanes in storage awaiting delivery. The production halt will impact everything from airlines to parts manufacturers, with a supply chain consisting of hundreds of firms and tens of thousands of workers. This widely diversified economic network makes forecasting the total economic impact of Boeing very difficult.

4) Stock market closings for – 17 DEC 19:

Dow                  28,267.16    up    31.27
Nasdaq             8,823.36    up       9.13
S&P 500            3,192.52   up        1.07

10 Year Yield:    unchanged   at    1.89%

Oil:    up   at    $60.54