11 May 2020

1) The Money market mutual funds have traditionally been the ultimate haven for investors wanting to preserve capital, but this is increasingly difficult in a zero interest rate environment. The problem centers on having twice as much cash as typical. The money market funds have soared with assets at a record high of $4.77 trillion dollars because of the flight to safety this year by investors. Of that, about 75% of those assets are in Treasury and other government funds perceived as the lest risky and therefor least likely to actually lose value. The U.S. Treasury has issued in excess of $1.5 trillion dollars to fund the stimulus program and the loss of tax revenues. With interest rates near zero, some fund companies are waving management fees in order to preserve returns for clients, otherwise their clients would actually be losing money.

2) The rural department chain store Stage Stores, who predominantly caters to the rural areas and small to mid-size markets, is also experiencing the crunch on retailing. The company’s owners are preparing for bankruptcy , another casualty of the coronavirus pandemic. The chain has about 700 department stores in small towns and rural communities with about 13,600 full and part time employees. The classic retailer JC Penny is reportedly preparing to also file for bankruptcy including plans to permanently close a quarter of its 850 stores. The company missed a $17 million dollar debt payment and is going into default. The cruise ship line Norwegian Cruise Line in Miami has warned the company could go out of business because of the pandemic. The company has $6 billion dollars in long term debt, plus it’s faced with a huge number of clients demanding their money back for cruises already booked.

3) The U.S. Postal Service is reporting a huge loss, a direct result of the coronavirus crisis. The government owned corporation reported a $4.5 billion dollar loss for the first quarter. The USPS anticipates losses for the next 18 months amid steep declines in revenues. They have warned congress that government assistance is required if they are to continue delivering the mail. The congress has authorized the Treasury Department to lend the USPS up to $10 billion dollars as part of the $2.3 trillion dollar stimulus package, but President Trump has threaten to block that aid.

4) Stock market closings for – 8 MAY 20:

Dow 24,331.32 up 455.43
Nasdaq 9,121.32 up 141.66
S&P 500 2,929.80 up 48.61

10 Year Yield: up 0.68%

Oil: up at $26.04