12 December 2019

1) The U.S. Federal Reserve elected not to raise interest rates, thereby signaling borrowing cost will most likely remain unchanged, and they expect moderate economic growth and low unemployment to continue into the presidential election year. The Feds left the benchmark overnight lending rate at its current range of 1.5% to 1.75% with 13 of the 17 fed policymakers supporting no change.

2) American consumer prices rose more than expected in November, giving credence to the Fed’s decision not to raise interest rates. The consumer price index increased 0.3% last month, in part from households paying more for gas. In the twelve months through November, the CPI (Consumer Price Index) increased 2.3% after a similar gain in October. Gasoline prices rose 1.1% after rebounding 3.7% in October.

3) China is accused of dumping cheap mattresses which is disrupting the U.S. bedding industry, in an attempt to gain a foothold in American markets. In recent years dozens of Chinese companies have been flooding the market with super low priced mattresses, selling them to retailers for as little as $18 each. In turn, the mattresses are sold under a wide range of labels at national chains, online businesses, local retailers and mattress stores. In recent years the industry has been troubled by disruption including thousands of job losses, multiple bankruptcies and hundreds of store closures. In 2018, about five million mattresses were shipped to the U.S. from China.

4) Stock market closings for – 11 DEC 19:

Dow           27,911.30    up    29.58
Nasdaq       8,654.05    up     37.87
S&P 500      3,141.63    up       9.11

10 Year Yield:    down   at    1.79%

Oil:    down   at    $58.80

11 December 2019

1) Analyst say Netflix, the video streaming service, must lower its prices in 2020 to avoid lost of millions of its U.S. customers because of the rising competition. It is suggested that Netflix must add a second lower priced service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock, otherwise they risk losing four million U.S. subscribers. Since Netflix’s balance sheet cannot withstand lower revenues, the company must create a pricing tier that has lower monthly cost, but still support advertising revenue.

2) Mortgage lenders are warned to brace for a downturn, with Fannie Mae and Freddie Mac pulling back on some mortgages meant to make home ownership more affordable. They are reducing the proportion of loans they back to borrowers with small down payments. This tamping down on risk is to limit their defaults thereby producing greater profits.

3) Morgan Stanley, the investment bank giant, is cutting about 1,500 jobs globally in a year end push for efficiency. The cuts are more in the technology and operations divisions, but include executives in sales, trading and research operations including several managing directors. These reductions amount to about 2% of the firm’s workforce with a charge between $150 to $200 million dollars in its fourth quarter.

4) Stock market closings for – 10 DEC 19:

Dow            27,881.72    down    27.88
Nasdaq         8,616.18    down      5.64
S&P 500        3,132.52    down      3.44

10 Year Yield:    unchanged   at    1.83%

Oil:    up   at    $59.09

10 December 2019

1) Celadon, a truckload carrier and American trucking giant, is slated to declare bankruptcy as early as December the 11 th. This may possibly be the largest truckload bankruptcy in history. Already, fuel cards for truck drivers are getting turned off, leaving truckers stranded in the field unable to get home without using their own money. As many as 3,200 truck drivers may find themselves stranded in addition to being without jobs. In the first half of 2019, about 640 trucking companies went bankrupt, triple the number from last year as freight volumes decline for 11 straight months. Celadon’s stock has gone from $20 a share down to 41 cents.

2) The Federal Government’s liquidity problem hasn’t gone away yet, even with hundreds of billions of dollars in new liquidity created out of thin air. The Feds will not know if there is enough money to cover repos, the short term loaning of money from bank to bank to cover short term cash shortages. If there is insufficient liquidity, then there’s the danger of a ‘lock up’ of American’s financial system.

3) Yes Bank Ltd. is expected to reject an offer of $1.2 billion dollars, more than half its planned $2 billion dollar capital raising. Instead, the company is turning to institutional investors to make up the shortfall. The bank would prefer to have institutions rather than individual investors in their fund raising. Yes Bank needs new investors in order to replenish its capital, which is now down to regulatory minimum as a result of bad loans.

4) Stock market closings for – 9 DEC 19:

Dow           27,909.60    down     105.46
Nasdaq        8,621.83    down       34.70
S&P 500       3,135.96    down         9.95

10 Year Yield:    down   at    1.83%

Oil:    down   at    $58.87

9 December 2019

1) The newly released November jobs report is the best in ten months and blows away expectations as striking GM workers returned to work. The good news confirms the economy remains on a moderate expansion path despite a prolonged manufacturing slump. Even better news is the unemployment rate has falling back to 3.5% damping fears of an up coming recession.

2) The oil cartel OPEC+ (plus) will adjust its output target and redistribute production cuts between its members. Saudi Arabia pressured the decision since they have long carried an outsized share of the burden. The cartel, which pumps more than half the world’s oil, agreed to reduce its output by 500,000 barrels a day. Saudi Arabia is the world’s largest oil exporter and the de facto leader of OPEC.

3) Amazon Business, one unit of the giant Amazon, operating in the business-to-business marketplace, serving a variety of customers from large companies to hospitals, to schools and colleges. Growing faster than their consumer retailing segment, analyst say Amazon Business could be a $31 billion dollar business in four years. Started in 2015, it had over a billion dollars of sales in its first year.

4) Stock market closings for – 6 DEC 19:

Dow            28,015.06    up    337.27
Nasdaq         8,656.53    up      85.83
S&P 500        3,145.91    up      28.48

10 Year Yield:     up   at     1.84%

Oil:    up   at    $59.07

6 December 2019

1) Boeing says significant additional regulatory requirements may cause additional delays in returning Boeing’s 737 MAX to commercial service and in turn may cause the company to cut or even halt production. Boeing does not expect 737 MAX order cancellations to have an impact on revenues or earnings citing the size of 737 backorder.

2) Saudi Arabia has just completed the biggest initial public offering in history, which raised $25.6 billion dollars from sales of shares in its giant state owned oil monopoly. Three billion shares were sold at $8.53 a share. Aramco is valued at roughly $1.7 trillion dollars, making it the most valuable publicly traded company in the world. Saudi Arabia plans to wean their economy off an oil only base.

3) The Dollar General retailer chain is opening almost twenty stores a week, while thousands of other retail stores are expected to close this next year. So far, the retailer has opened 925 stores this year, with 1,000 opened by the end of 2020. Presently, they have 16,000 retail outlets, and estimate that three quarters of the U.S. residents live within five miles of a Dollar General store. Revenues continue to increase with sales rising 8.9% to nearly $7 billion dollars over the last three months compared to the same period last year.

4) Stock market closings for – 5 DEC 19:

Dow           27,677.79    up    28.01
Nasdaq        8,570.70    up      4.03
S&P 500       3,117.43    up      4.67

10 Year Yield:    up   at    1.80%

Oil:    up   at    $58.33

5 December 2019

1) The oil cartel OPEC and their allies are being called on for dramatic action to avert a crash in oil prices. They are being called on to cut production of crude oil to keep oil prices high, while the world is facing a looming flood of oil from American production. If they don’t restrict production, the world faces an oversupply of about 800,000 barrels per day in the first half of 2020.

2) Businesses are under a constant threat of ransomware attacks with increasing consequences of financial loses. Every business or organization from large corporations, health care systems, universities and small businesses are at risk. These targets must use defensive methods, but those costs time, money and resources to do. The FBI estimates there are several thousand ransomware attacks each day.

3) Stock market closings for – 4 DEC 19:

Dow             27,649.78    up    146.97
Nasdaq          8,566.67    up      46.03
S&P 500         3,112.76    up      19.56

10 Year Yield:    up   at    1.78%

Oil:    up   at    $56.32

4 December 2019

1) Volkswagen’s diesel emissions scandal raised it’s ugly head again with the German public prosecutors raiding VW Wolfsburg headquarters looking for documents. The scandal broke in 2015, but there are still questions about newer engines which succeeded the diesel engines with fraudulent testing for emissions. So far, Volkswagen’s cheating test has cost the company about $33 billion dollars in fines, vehicle refits and legal costs.

2) Richmond California is moving to ban the export of coal through their port facilities citing coal dust pollution in parts of the town. Coming from western states such as Wyoming, the coal is shipped to China, India and other far east countries still making heavy use of coal fired electric generation plants. However, the city may be facing legal challenges against the city ban. Richmond, Stockton, Los Angeles and Long Beach are now the only major west coast ports that handle coal.

3) President Trump has suggested that the trade war with China could drag on for some time, that it might be better to wait until after the 2020 election to sign a trade agreement. The next deadline is 15 December when 15% levies on an additional $160 billion dollars in Chinese goods. The news cause another drop in the stock markets, in addition to the drop from news about metal tariffs on Brazil and Argentina.

4) Stock market closings for – 3 DEC 19:

Dow              27,502.81    down    280.23
Nasdaq           8,520.64    down      47.34
S&P 500          3,093.20    down      20.67

10 Year Yield:    down   at    1.71%

Oil:    up   at    $55.99

3 December 2019

1) President Trump has imposed tariffs on metal from Brazil and Argentina in response to currency manipulation which hurt American farmers. The tariffs is on steel and aluminum imports. Additionally, Trump has called on America’s central bank to take action to prevent other countries from devaluing their currencies. Brazil and Argentina had been exempt from tariffs imposed in March 2018.

2) The factory sector in the U.S. shrank again in November, the fourth straight month as new order volumes slid back to around their lowest level since 2012. The index of national factory activity fell to 48.1, a reading below the expectations of 49.2, a reading above 50 indicates expansion while below indicates contraction.

3) The auto makers Nissan Motor Co., Renault SA and Mitsubishi Motors Corp. have formed an alliance in the form of a new company to do research and development of advance automotive technologies. The new venture also aims to strengthen the alliance which has been worn thin since the arrest and ouster of former supremo Carlos Ghosn. The formal plans will be announced in January.

4) Stock market closings for – 2 DEC 19:

Dow           27,783.04    down    268.37
Nasdaq        8,567.99    down      97.48
S&P 500       3,113.87    down      27.11

10 Year Yield:    up   at    1.84%

Oil:    unchanged   at     $55.42

2 December 2019

1) Deere & Co., the famous manufacture of green and yellow tractors, reported lower earnings blaming trade tensions and poor weather in the U.S. farm belt. Last year’s difficult growing and harvesting conditions have made farmers cautious about investing in new farm equipment. Sales of the construction and forestry division are expected to be down by 10% to 15%, while agricultural is down 5% to 10% next year.

2) Texas oil explorers say predictions of shale production isn’t reflecting the industry’s slowdown. Producers are being starved of funding, stocks have plunged and little interest in public offerings, which may cause a downturn to be more enduring. Seeking to cut costs, drillers have laid off 1,000 workers. There are predictions that U.S. oil production growth will flatten as early as 2021. There is a rapid decline of shale well production, partly a result of placing wells too close together.

3) Global manufacturing has been dragging the world economy down this last year. Weak auto sales have added to the problem, with China’s auto market the worst with a 11% decline in sales. Slow auto sales have cut production at auto plants, with Audi cutting 7,500 jobs. U.S. dealerships are struggling to clear inventory for the new year, with a 12% rise in incentive spending in November, compared to a typical 4%.

4) Stock market closings for – 29 NOV 19:

Dow         28,051.41    down    112.59
Nasdaq      8,665.47    down      39.70
S&P 500     3,140.98    down      12.65

10 Year Yield:    up   at    1.78%

Oil:    down   at    $55.42

Obsolete- You and Everyone Else

It’s no longer the hourly factory worker, it’s now the six figure income people and everyone else who’s now at risk.

James Lyman BSAE, BSEE, MSSM

When we speak of obsolete people and jobs being replaced by machines, we always think of the poor factory worker standing on an assembly line, but never about other kinds of jobs, especially our own jobs. Since I was a boy, factory workers have been displace by technology, so it is easy to see why everyone thinks of obsolescence only in terms of the hourly factory worker. But nothing could be further from the truth. That displacement by machines now includes virtually everyone from the highest incomes down to minimum wage, including doctors and lawyers.

No one is immune from obsolescence!

This became glaring apparent with the recession starting in 2008. There were frequent news stories about middle corporate executives, with six figure incomes, who were laid off, who had gone first for months . . . then years without any prospects for rehiring. These were people who previously could find a new job in days to weeks, then suddenly . . . nothing. And none could understand why the sudden change, why suddenly no one wanted them. The answer was technology. They had been displace by new technologies that made them obsolete.

So how could that be? These were people with multiple degrees, high skill levels, talented people who were quite successful in their careers, jobs that were complex and difficult to do. So how could they ever be replaced by machines? Simple. With the onset of the recession, businesses were stressed and sought relief by reorganizing themselves, and they found that by using various technologies, they were able to reorganize with fewer managers and executives needed, but were still able to get the job done. Suddenly, there was a surplus of these people, a large surplus that the job market couldn’t absorbed even after several years.

When faced with the prospects of being replaced with a machine, people think in terms of an iron-man robot sitting down at their desk, as the human is lead off to the front door by security. This is the first type of technology displacement- Direct displacement, but there are two other types. The second is Oblique displacement where a machine is used by a person to do the work of several other workers, while the third is Indirect displacement. This is where many technologies displace capable people who in turn compete for the jobs of those being indirectly displaced.

Bottom line . . . you don’t need some iron-man robot to replace someone with technology.

So just what do obsolete people look like? You’ve seen them, if not in person, then certainly on the news. They are those people living in tents or makeshift shelters in continuous lines on city sidewalks. New York, Austin, Los Angles and San Francisco to name just a few. In the sliding down of the ‘economic hill’, people are being pushed out of the social-economic system, and those tents is where it all ends. As water and sanitation problems become critical for public health, cities are looking for ways to address the problem with their already limited resources. Many are looking at building ‘tiny houses’ of 100 to 200 square feet each, acquiring land areas for the houses, not realizing they are taking the first steps in establishing formal reservations.

A reservation is an artificial environment to warehouse people.

Keep in mind, these ‘tent cities’ of obsolete people are growing, and most likely will continue growing at an even faster rate. With another recession . . . another down turn of the economy, businesses will again look for ways to cut cost, to remain profitable, and that means machines replacing people. With that, more people will slide further down the social economic system with lower paying and less desirable jobs, to finally join those living in tents. There’s no sudden change from being a asset to society to being obsolete, it’s just not as apparent to everyone as you slide down that steep hill of technology, but still you’re obsolete having little to offer in the twenty-first century. The only real difference between the ‘hill sliders’ and the homeless, is the obsolescence becomes readily apparent and so can no longer be denied.

Other obsolete people are the young in groups like ANTIFA and their supposed nemesis of white supremeness right wingers such as the Proud Boys. Neither have a strong well defined political philosophy, rather they are antagonist using each other to lash out at … so to vent their frustrations, angers and resentments on each other without any real objectives. The problem for both is their alienation from failing to advance technologically, and then trying to live in a high technology society they don’t like, often fear, don’t understand and really don’t belong too.

If you want to understand what is happening today, just look back to the nineteenth century and the Native Americans. It’s the exact same thing again. A people too technologically behind to assimilate and become contributors in an advance society. The Indians faced a tsunami from the leading edge of nineteenth century technology as it built up, crested above their heads, and then came crashing down on them. And like a real tsunami they were unable get out of the way and escape!

A Corollary of War- A technologically advance people will displace a lesser people.

This is what you’re seeing today, what you are living through. Their real value to a technological society diminishing and so they are slowly being pushed out to finally become those homeless people living in tents. People who have run out their ‘technology string’ and are left with no other place to go and with no future. Read more at www.peopleobsolete.com