30 September 2020

1) American businesses have suffered stress that is breaking many, including some in the grocery chains. Like some popular restaurant chains, some grocery chains were filing for bankruptcy before the pandemic, but the virus crisis forced others over the brink. Five specialty and health forward chains have been forced to file for chapter 11. They are Earth Fare, Lucky’s Market, Fairway Market, Kings Food Markets and Balducci’s. The niche marketeers are finding it very difficult to survive in these changing economic hard times.

2) The U.S. guided missile destroyer USS Stout has set a new record for consecutive days at sea when it reached 208 days at sea on the 26th of September. The previous record was 207 days, held by the USS Eisenhower and USS San Jacinto, both records set this year too. The Covid-19 pandemic has forced the Navy to cancel port visits to prevent sailors from being exposed to the virus while ashore. More than 1,000 sailors were infected with the virus on the aircraft carrier USS Theodore Roosevelt at the start of the pandemic, with one sailor dying. Furthermore, the carrier was off line for weeks anchored in Guam until the virus ran its course. While the elimination of port calls and longer sea deployments has arrested the virus, it has put more stress on the crew members.

3) The ‘indoor food grower’ AppHarvest is going public by joining with Novus Capital Corp. (NOVS) and will soon be traded on the Nasdaq exchange. AppHarvest is developing large scale, efficient indoor farming technology, and their first farm is a 60 acre controlled environment in Kentucky. This facility is within a days drive of 70% of the American population and is now producing tomatoes. Right now, 60% of all fresh tomatoes in American are imported. Controlled environment agriculture facilities use far fewer resources to grow far more produce, however this method of agriculture requires far more capital, where conventional farms are themselves capital intensive enterprises.

4) Stock market closings for – 29 SEP 20:

Dow 27,452.66 down 131.40
Nasdaq 11,085.25 down 32.28
S&P 500 3,335.47 down 16.13

10 Year Yield: down at 0.64%

Oil: down at $39.16

29 September 2020

1) A railroad link between Alaska and Canada has been a dream for generations, because such a rail link would reduce Alaska’s costs for goods and services. It would also give Canada’s land locked oil-sands access to ports in Alaska, therefore making for more domestic oil reserves, but such a railroad line faces numerous steep challenges. President Donald Trump has endorsed such a proposal, but several regulatory agencies in both America and Canada must first approve such an undertaking before the first shovel full of dirt can be moved, and this is expected to take years to get permits. The Alaska-Alberta railway Development Corporation (A2A Rail) project would be privately funded costing about $17 billion dollars and would run about 1,600 miles.

2) The plague of wild fires continues in California with several new fires in Northen California consuming thousands of acres a day. The fires are consuming vineyards and destroying the wine business, including grape vineyards that have produced for over a hundred years. The heat wave continues to bring dry air into the conflagration, thus drying out vegetation to make ideal fuel for fires, while strong winds are fanning and spreading the flames. Fires are around the San Francisco area, the Napa-Sonoma wine region and Shasta County which are consuming land at a prodigious rate. Two major fires are the Zogg Fire, which has burned through 15,000 acres and the Glass Fire burning through 11,000 acres. The damage is being created so fast that estimates of dollar losses can not be reliably made.

3) The Congress continues to struggle with a second stimulus bill, the Democrats looking to score at the polls if passed before the election. The big question and holdup is the personal stimulus check to individuals and how much it will be this time. It now appears that $1,200 will be the maximum for individuals, but this time there will be restrictions which will lower the amount for many people based on how much their income is. After nearly two months of relative inactivity, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have agreed to resume negotiations.

4) Stock market closings for – 28 SEP 20:

Dow 27,584.06 up 410.10
Nasdaq 11,117.52 up 203.96
S&P 500 3,351.60 up 53.14 %

10 Year Yield: unchanged at 0.66%

Oil: up at $40.57

28 September 2020

1) Another round of protest against the police was spurred by the grand jury in Kentucky deciding to indict only one of the three officers in the case of the 26 year old medical technician. The case of Breonna Taylor, who was fatally shot by police inside her apartment during a no-knock drug raid on 13 March 2020, is a closely watched case across the nation. The protests which started almost four months ago, seem to be getting more violent with one policemen in Seattle attacked by a protester and struck from behind with a metal baseball bat that cracked the policeman’s helmet. The officer sustained only minor injuries and was checked at the scene by the Seattle Fire Department. A video of the incident instantly went viral.

2) The U.S. Navy is considering expanding the naval force to a maximum of 534 ships by the year 2045, with many of the ships unmanned designs. Currently, the fleet has 355 ships, so this would mean a major construction undertaking that in turn would be a stimulus to the economy for years to come. The plan is to build a new fleet of lightly manned ships that over time can be unmanned. The goal for the unmanned ships is to allow the independently operated robot navigation systems to provide ammunition reloads to attacking vessels. Right now, the Navy is researching and developing the means to deploy the automated systems.

3) Florida is reopening from the coronavirus with Governor Ron DeSantis lifting restrictions on capacity of restaurants and other businesses, vowing not to turn back. This is despite the state reporting hundreds of Covid-19 deaths a week. Furthermore, the Governor is making it harder for local governments to institute their own restrictions that go above and beyond the state’s rules. There is still uncertainty about the consequences of schools reopening and other more relaxed measures. Presently, Florida is experiencing about 700 Covid-19 deaths a week.

4) Stock market closings for – 25 SEP 20:

Dow 27,173.96 up 358.52
Nasdaq 10,913.56 up 241.30
S&P 500 3,298.46 up 51.87

10 Year Yield: down at 0.66%

Oil: down at $40.04

25 September 2020

1) Tim Kendall, former Facebook director of monetization, says that Facebook “took a page from Big Tobacco’s play book, working to make our offering addictive at the outset.” The greater the usage of Facebook by people, the greater Facebook’s revenues, so it behooves the company to make its service as addictive at possible, as soon as possible with new people. But this drive to maximize engagements entails building algorithms that facilitate the spread of misinformation, encourages divisive rhetoric thereby laying the groundwork for a mental health crisis. While met to be a device for entertainment, Facebook is in fact tearing people apart with alarming speed and intensity. He fears that American’s are pushing ourselves to the brink of civil war. Presently, Section 230 is a law that makes social media platforms immune to legal liability for the content of users’ posts. But there are growing number of people calling for reforms.
2) California Governor Gavin Newsom has signed an executive order that bans the sale of all but electric and fuel cell cars by 2035. But legal experts say the order is ‘borderline worthless’, that there isn’t anyway to enforce it. The objective is to do away with the internal combustion engine in California by mandating an increasingly larger percentage of new car sales must be zero emissions machines starting with 2% for 1998, 5% by 2001, 10% for 2003 and etcetera. California auto dealers challenged the order in court and got it somewhat diluted. Nevertheless, it’s another step in the race to electrify California’s cars.
3) Half the people who lost their jobs from the pandemic are still unemployed, while 60% who did return to work have taken a cut in pay. As of 12 September, 12.6 million Americans are receiving unemployment benefits, with an unemployment rate at 8.4%. The lower income workers are more likely to still be unemployed. The bottom line, the virus crisis lead to a unprecedented loss of jobs and six months later, America is still a long ways from recovery. The crisis has caused a split in America’s labor force, the higher earners are going one direction while the lower paid ones are going another.
4) Stock market closings for – 24 SEP 20:
Dow 26,815.44 up 52.31
Nasdaq 10,672.27 up 39.28
S&P 500 3,246.59 up 9.67
10 Year Yield: down at 0.67%
Oil: up at $40.28

24 September 2020

1) California’s annual bout of fires has just added a new dimension to the state’s history. The Creek Fire has become the state’s single most massive wildfire in history by burning 286,519 acres in Fresno and Madera counties. Ignited on September the fourth, it has so far destroyed 855 structures and damaged 71 others. There are now 50 major fires across the West coast this week, so far claiming 26 fatalities, while consuming 2.2 million acres. There are forty crews with 3,100 personnel who are fighting the fires, but only about 32% of the Creek fire blaze has been contained. No estimates yet of just how much monetary damages the state has suffered.
2) As the remnants of Sally continue moving across the southeastern United States, the first estimates are in for the damages. Sally made landfall as a category 2 storm near Gulf Shores, Alabama bringing a storm surge that caused major flooding in places like Pensacola with several feet of water. Damages are expected to cost upwards of $2 billion dollars. NOAA’s aerial imagery is being evaluated to more accurately determine the extent of flooding and damages in Florida and Alabama. Major beach erosion is also apparent too.
3) Tesla’s much touted Battery Day appears to have disappointed most of the average people, with Tesla (TSLA) stock tumbling down 8.6% in midday trading, on track for its lowest close in two weeks. Investors fear that promised new batteries will take years to fully develop and be available for automobiles. Tesla unveiled a new battery design that is 56% cheaper and more efficient for use in automobiles, which should be a big step towards the viability of fully electric cars. Additionally, the company announced a future robot car for $25,000 that will be fully autonomous, and available in the next three years. The new battery technology will enable sleeker affordable cars that can travel much longer distances on a single charge. Investors had expected announcements of two big innovations, the first one is a ‘million mile’ battery that would be good for ten years or more, as well as a cost reduction, a target specified as dollars per kilowatt-hour, which would finally drop the price of an electric vehicle below that of a gasoline car.
4) Stock market closings for – 23 SEP 20:
Dow 26,763.13 down 525.05
Nasdaq 10,632.98 down 330.65
S&P 500 3,236.92 down 78.65
10 Year Yield: up at 0.68%
Oil: up at $39.59

23 September 2020

1) After Amazon’s Prime Day was postponed by the virus in July, it was tentatively reset for the fourth quarter. Amazon didn’t want their Prime Day to overlap with Black Friday, which set an upper limit to the date, so now the company is planning for the 13th and 14th of October. Prime Day is a very big retail day for Amazon, with their 2019 Prime Day grossing about $6 billion dollars in sales.

2) Another round of stimulus still remains on the burner and with the fall elections now closing in, both sides are saying they want a new stimulus bill with a second direct payment to the people. But the bill remains in limbo with no agreement on the details of the bill. The question on everyone’s minds is the direct payment checks to the people and how much they will be. No settlement on that question, but the rumors are this one will be based on each person’s income instead of the single lump sum of last time, with an upper limit of $1,200 per individuals. Only time will tell how much, or even if there is a personal payment, because if not passed before the elections, the possibility of passing will rapidly decrease.

3) The coronavirus has been a big stimulus for e-commerce from the stay at home shopping it stimulated, but surprisingly the home shopping boom has also been a boom for the shipping industry. Those huge ocean going ships stacked high with intermodal containers, their transpacific sea freight shipping rates have been sent to the highest on record, helping the container shipping industry in Asia. Household appliances imports have jumped 51% in August from last year, climbing for a third consecutive month. Shipments of computers, notebooks and other associated electronic gadgets has soared 169%. This increase consumer demand has shipping rates almost triple from this year’s low in March, when the pandemic led to border closures and a near halt in economic activity. With much of the world’s people housebound, the demand for electronic goods and do-it-yourself items has skyrocketed. There is also the coming Christmas holidays and therefore the stocking up in anticipation of sales.

4) Stock market closings for – 22 SEP 20:

Dow 27,288.18 up 140.48
Nasdaq 10,963.64 up 184.84
S&P 500 3,315.57 up 34.51

10 Year Yield: down at 0.66%

Oil: down at $39.55

22 September 2020

1) Bad news from the conronavirus continuing to pile in with a just-released report that 60% of the small businesses that have closed because of the virus, and will never open again. Of nearly 163,700 businesses that have closed since March 1, about 98,000 say they’ve shut their doors for good. This is a 23% increase from July. About 32,100 of these businesses are restaurants, with close to 19,600, or about 61%, closing permanently. The National Restaurant Association says 100,000 restaurants have closed, either permanently or long-term, with a lose of $240 billion in sales this year. Restaurants operate on razor-thin margins even in the best of times, and so are less likely to make it through the disruption. Consumers are spending less on dining-out, while the disposable income for Americans is shrinking. Retail stores are also struggling with about 30,400 shopping and retail establishments closing since March 1, and of these 17,500, or 58% of them are permanent.

2) Many of the workers now working at home, are engaged in day trading to counter boredom for both entertainment and profits, but with growing fears that this trend could end badly. Most of these individual investors do not have the wealth, time or temperament to make money and sustain losses for any period of time. Major companies can have big rallies on the market, only to suddenly turn around with big losses. These casual investors are competing with large investors who have technology that allows them to trade on information before most people have time to read about it. In the long run, small investors, with about 30 stocks, have only a 40% chance of doing as well as the overall market.

3) The incredibly low interest rates have caused a rush of home sales in 2020 as people take advantage of the low interest rate, and in turn all these new mortgages have flooded the bond market as investors scoop them up. But it’s not just home sales, because 69% of the new mortgages are refinances of old mortgages. Many of these mortgages are then sold to government sponsored agencies such as Fannie Mae, Freddie Mac and Ginnie Mae, who then repackage the loans into mortgage backed bonds or securities. These bonds often have higher returns than traditional Treasurys. Additionally, the bonds are often backed by government guarantees meaning there is little risk to the investors.

4) Stock market closings for – 21 SEP 20:
Dow 27,147.70 down 509.72
Nasdaq 10,778.80 down 14.48
S&P 500 3,281.06 down 38.41
10 Year Yield: down at 0.67%
Oil: down at $39.72

21 September 2020

1) Michael Farr of CNBC claims the problem with the U.S. economy is there are too many poor people, that the poor and middle class don’t have enough money. His contention is that until employment and wages increase, the U.S. economy will remain bogged down or worst . . . digging a deeper hole. The American economy is the world’s largest with nearly 70% driven by consumer spending. With the vast majority of consumers in the lower middle class and poor, it stands to reason that with more money in their hands, it would make for a more viable economy. He contends that until their lot is improved by having more money, the economy will remain sluggish. But as is often the case, he ignores the ‘obsolete people’ problem of machines with technology displacing those workers. The pay of people reflects the value of people to society, and as technology continues to lower their real value it makes it hard to increase their wages.

2) Wayfair, the giant on-line home furnishings retailer, has announced they are launching two new credit cards while retiring their Comenity Bank card. There will now be the Wayfair Mastercard and the new Wayfair Credit Card. These cards will have no annual fee and offer the choice of earning rewards on spending or receiving no-interest financing for up to 24 months. Wayfair is partnering with Citi Retail Services for the two credit cards.

3) Facebook, the social media giant, is searching for a director of remote work as part of its plan for a more permanent shift of working from home. The company has been making a major shift towards permanent remote work and now needs management dedicated to permanently establishing this method of work in the corporate structure. Facebook is expecting as much as half of its 48,000 workforce to be working at home in the next ten years. Several other large companies are exploring the work-at-home strategy as a way of reducing cost of labor as well as allowing a larger pool of workers to draw upon, since home workers can be thousands of miles away from the home office. There are many consequences to the economy from a large work force working at home, the first is reducing spending on automobiles and service, plus sales of clothing.

4) Stock market closings for – 18 SEP 20:

Dow 27,657.42 down 244.56
Nasdaq 10,793.28 down 117.00
S&P 500 3,319.47 down 37.54

10 Year Yield: up at 0.69%

Oil: up at $40.98

US SUPREME COURT JUSTICE RUTH BADER GINSBURG HAS DIED……..

By Economic & Finance Report

US Supreme Court Justice Ruth Bader Ginsburg died on Friday, Sept. 18, 2020. She spent much of her legal career advocating for gender equality and equitable rights for all.

Her lengthy legal and judicial career will have an impact on many young girls, boys, women and gentleman; growing up fighting for fairer, more equitable future for themselves and for others. -SB

Image Credit: ScotusBlog.com

18 September 2020

1) The batteries in electric cars don’t last forever, so therefore they must be replaced from time to time. That leaves defunct batteries which must be disposed of. One company engaged in the recovery and recycling of electric vehicle batteries, as well as other lithium-ion batteries and e-waste, is Redwood Materials run by former Tesla executive Mr. Staubel. Amazon is investing in Redwood Materials as part of Amazon’s $2 billion dollar Climate Pledge Fund. The retail giant Amazon is a major consumer of batteries including its own growing fleet of electric logistics vehicles. In recycling, the company is already recovering most of the metal, lithium, nickel and cobalt from batteries.
2) Some are calling for publicly owned companies to include ‘climate related risks’, since climate change will have a major effect on a companies’ profits and the value of their assets. Therefore, investors want companies to publish these factors in their annual financial reports in accordance to the guide lines from the International Accounting Standards Board. Accounting standards play a key role in calculation of a company’s profits, solvency and remunerate senior executives. Therefore, this information is relevant when judging a company’s likely prospects.
3) Commercial properties in the Asia-Pacific arena is suffering as investors flee the market. Global investors have reduced their spending on commercial real estate in the Asia Pacific area disproportionately compared with other world areas. The total volume of commercial property acquisitions, such as office, retail and hotels, is about 65% of levels in the last two years. The shift is due in part from the Convid-19 crisis. Another fear is the increasing troubles from China across the realm, as China strives to dominate the world by 2050.
4) Stock market closings for – 17 SEP 20:
Dow 27,901.98 down 130.40
Nasdaq 10,910.28 down 140.19
S&P 500 3,357.01 down 28.48
10 Year Yield: down at 0.68%
Oil: up at $40.96