20 January 2020

1) A year ago, Boeing Aircraft had record revenues of over $100 billion dollars, anticipating delivery of record number of aircraft including the 737 MAX jetliner. With the grounding of its 737 MAX, that has been reversed with Boeing posting losses from massive pay outs as well as lost revenues as undelivered aircraft sit waiting in its parking lots. Boeing may ultimately have $20 billion dollars in cost from the 737 MAX problem. Boeing’s problems has been a bonus for China’s airline manufacturing giving them a big advantage to gain market share.

2) India is resisting Amazon’s efforts to expand into India with an investment of $1 billion dollars, fearful of predatory business practices. The investment would bring Amazon India investment up to $6.5 billion dollars. But Amazon is meeting growing resistance, first with an Indian anti-trust investigation by Indian regulators, then protest from a confederation of Indian traders and organizations.

3) As hiring surged in November, the employment market got tighter, job openings plunged to their lowest level in nearly two years. The total vacancies is down by 561,000 to 6.8 million for the month. This is the lowest since February of 2018, the trend telling the economy has finally reached full employment. The biggest drops came in retail and construction.

4) Stock market closings for – 17 JAN 20: All three exchanges closed on record highs.

Dow          29,348.10    up    50.46
Nasdaq       9,388.94    up    31.81
S&P 500      3,329.62    up     12.81

10 Year Yield:    up   at    1.84%

Oil:    up   at    $58.81

Parallels of Joe McCarthy and Today’s Political Climate and McCarthyism

PBS recently aired an interesting two hour documentary on the political career of Senator Joe McCarthy, which has lessons for us today.

James Lyman BSAE, BSEE, MSSM

PBS, the Public Broadcasting Service, aired a very interesting episode of their American Experience detailing the political career of Senator Joseph McCarthy during his tenure as a U.S. Senator. The Senator has become notorious in history for his hunting of communist in the American academia and government during the early cold war years of the 1950’s. A viewer with some knowledge of today’s political environment will see parallels of those political happenings some seventy years ago with the happenings we see daily on the news. In particular, the technique Senator McCarthy used to advance his political career, which became known as McCarthyism.

The technique of McCarthyism is the practice of making defamatory accusations of impropriety without proper regard for evidence. For McCarthy, this was accusations of communist influence or sympathies, even of actually being a member of the communist party. As he used this technique, he grew more careless with his accusations, telling more glaring falsehoods in trying to sustain his publicity. He would make one false charge, and before it could be ‘fact checked’, he was telling another one to distract from the first one. It was something of a ‘pyramid or ponzy scheme’, and like any financial ponzy scheme, there comes a time when it collapses. This is the first parallel we see with today’s news and the American Experience documentary.

The second parallel is the complacency of the news media, the Fourth Estate of our government. For Senator McCarthy, the press was concerned with increased sales of papers and audiences, so they didn’t press for evidence . . . or concern for the tragedy of destroyed lives by public innuendo and implications with groundless charges, which the Fourth Estate also failed to investigate independently. McCarthy was a good draw of public attention (sales), and so the media failed at their principle responsibility in the government of America. Joe McCarthy was left to operate unchecked because the newspapers were more interested in increased revenues than reporting accurately.

Today, the press, both print and electronic, has little concern for its sales. Instead, they are more focused in creating a new world of their own, a world more isolated from technology where they are not the outsiders looking in. But this is a dream world, an illusion. Like all other illusions, constant attention must be given to prop up that image and guard against anything that can crack the facade of a pretend world. This is the heart of the so called ‘fake news’ we’ve hear so much about in the news. Much of the news media is absorbed in creating their own new world, but in a high technology world where they lack the necessary intellectual skills to understand and make real changes, their only option is to create an illusion of that new world.

But in their preoccupations, they are failing at the Fourth Estate’s principle responsibility- being the major check and balance of a modern government.

Being the counterpoise of corruption!

Without the ‘check’ of always questioning what they, the press, is told- those elected are able to do as they please without regard for those who elected them. Today, much of the press has a desire to build that dream world they want, a world they are comfortable in and understand. Like so many average Americans, they just don’t want to face the realities of the modern technology based world, with them the outsiders looking in. Much of the problems we face today are driven by technology which also drives many of today’s political problems, although to the casual observer, the roll of technology isn’t readily apparent. Living in an alien environment, people yearn for a world of their own, that they understand and are comfortable in. A dream world they want and desire to build, with most of the Fourth Estate people falling into this growing category of people.

In not having the ability to create the world they want and dream of, they strive to create an illusion with various images . . . and therefore strongly resist anything which counters any of those images. They want a world of limited or invisible technologies, where they have the benefits of technologies without having to face or acknowledge them. This in turn leads to word games, the sparing with others by using words. Something which those in the news media excel at, trying to protect their world illusion, something where they have to be careful what they see or acknowledge. That means the avoidance of technically based problems, which leads to un-questioning support of those in the political scene who are like-minded . . . who are also instrumental in creating the illusion.

Consequently, reporters are careful not to ask critical or unsettling questions, while those perceived as being on the opposite side with the world of technology are closely scrutinized, often leading first into the word games then into a campaign to discredit. But it’s not just the reluctance from technology, so many of the media simply don’t have the education necessary to ask the right questions in a high technology world. A case of the blind standing in a darken room unable to go anywhere. Without a real education, you don’t have any real understanding of the world you live in, and without that understanding, you have no real control of the world you live in. You have to just take what is being dished out to you.

The net result is members of congress are reverting back seventy years ago to those methods of Senator Joseph McCarthy. They too have turned to the emotionalism of McCarthyism in trying to preserve the image of the world they long for. But what they have actually done is avoid addressing the serious problems of obsolete people and technology displacement . . . and therefore the future for the millennials and generation-Zs.

Read and understand more at my website www.peopleobsolete.com.

17 January 2020

1) The trust funds for Social Security are in trouble and will run dry by 2035. But Social Security is not going bankrupt because the program’s primary source of revenue is payroll taxes, which at present is 12.4% of pay. So even if the trust fund should run out, Social Security still would have the money to largely keep up with benefits. A much greater danger for retirees is high inflation, for historically the first to suffer from a collapsing economy are those on fixed incomes.

2) The recently signed phase one agreement with China made for a cease-fire in the trade, but leaves the tariffs largely in place, with some considering the tariffs to be the new norm in international trade. China has committed to making $200 billion dollars in purchases from America. The agreement does not address the intellectual property issues, both the forced intellectual transfers and out right theft.

3) Claims for unemployment benefits fell more than expected last week, indicating a sustained strong labor market. Claims dropped 10,000 last week to 204,000 with the labor market remaining on a solid footing, the unemployment rate holding near a fifty year low of 3.5% for December. Layoffs were in manufacturing, transportation and warehousing.

4) Stock market closings for – 16 JAN 20:

Dow              29,297.64    up    267.42
Nasdaq          9,357.13    up      98.44
S&P 500         3,316.81    up      27.52

10 Year Yield:    up   at    1.81%

Oil:    up   at    $58.59

16 January 2020

1) Nigeria may become the superpower of Africa, repeating the economic miracle of China and India. While investors are not moving into Nigeria yet, they are watching. Like China and India, Nigeria was once a colony of the west, and like India, was a colony of the British, and just like India its language is English. Right now, Nigeria is economically where China was forty years ago, before Mao Zedong died and Deng Xiaoping deregulated the economy to unleash it. For many other reasons, Nigeria is set to repeat the economic miracle of China.

2) House mortgage applications has soared to its highest level in eleven years, for new homes and refinance. Applications are up 30.2% from last week, and are 109% higher than a year ago. The interest rates are under 4% , combining with a rosy economic outlook and high employment causing home buyers to rush into the market. This is causing a near record low supply of housing across America, pushing prices up.

3) Retailer giant Target didn’t have a strong holiday sales in their toy departments, less than what was expected. This is ringing alarm bells for the entire industry. While Target gained market share in toys, its toy sales were flat over the 2019 holidays compared to last year. Toy makers like Hasbro, Mattel and Spin Master are offering a smaller variety of toys and games, a result in part from the bankruptcy of Toys-R-Us. Increasingly, toy sales is going to online retailers such as Amazon.

4) Stock market closings for – 15 JAN 20:

Dow            29,030.22    up    90.55
Nasdaq         9,258.70    up      7.37
S&P 500        3,289.29    up      6.14

10 Year Yield:    down   at    1.79%

Oil:    down   at    $58.13

15 January 2020

1) J. P. Morgan Chase posted profit and revenue far in excess to analysts’ expectation at the end of 2019. Fourth quarter profit was up 21% to $2.57 a share compared with $2.35 estimates of analysts. The investment bank produced record revenue for the fourth quarter. Citigroup also beat estimates for profit and revenue, their fixed income trading revenue gaining 49%.

2) Consumer prices rose at the fastest pace in eight years, in 2019. The increase was driven by higher gasoline, health care and rent prices in addition to the biggest annual advance in inflation since 2011. The consumer price index rose 0.2% in December, while economist had forecast 0.3%. The cost of living in 2019 rose 2.3% from 2.1%. Price increase for food was mild, while prices fell for used vehicles and airline fares.

3) Three of China’s automakers are considering expanding into Mexico with factories. Car makers Changan, BYD (electric cars) and Anhui Jianghuai or JAC, who already has manufacturing facilities in Mexico, but is considering expanding. The companies are considering expansion sometime this next year. No comments on if and where cars will be exported to.

4) Stock market closings for – 14 JAN 20:

Dow                   28,939.67         up    32.62
Nasdaq                9,251.33    down    22.60
S&P 500               3,283.15    down      4.98

10 Year Yield:    down   at    1.82%

Oil:    up   at    $58.14

14 January 2020

1) Ford Motor Company’s sales in China has declined for the third straight year, falling by 26.1%. The company has been trying to revive sales in China after the decline started in 2017 and plans to introduce thirty new models in the next three years, with a third being electric models. General Motors has also experienced a decline in sales of 15% this last year.

2) One of the largest suppliers of parts to Boeing’s 737 MAX, Spirit AeroSystems, is laying off 2,800 workers. Based in Wichita Kansas, will eliminate 20% of its workforce. Smaller layoffs will happen at its facilities in Tulsa and McAlester, with half its annual sales from parts for the 737 MAX. Since last February, Spirit’s stock has fell from a high of $100 a share to $71.50 on news of the layoffs.

3) Expectations are that the U.S. will remove China from its list of currency manipulators two days before the signing of initial U.S. – China trade agreement. Part of the agreement is that both nations will not devalue its currency to gain a competitive advantages of exports. Labeling China a currency manipulator was viewed largely as a symbolic action.

4) Stock market closings for – 13 JAN 20: Stocks are up 495% in the past decade.

Dow             28,907.05    up    83.28
Nasdaq          9,273.93    up    95.07
S&P 500         3,288.13    up    22.78

10 Year Yield:    up   at    1.85%

Oil:    down   at    $58.12

13 January 2020

1) Several name brand products have decided to withdraw from Amazon for direct sales, the latest being Ikea, who started selling through Amazon in 2018. Other brand names such as Nike, Birkenstock and PopSockets are withdrawing too, considering it isn’t worth the hassle. There are growing fears that more big brands will flee the site, although their products can still be purchased through third party sellers on Amazon.

2) A ransom ware attack on foreign currency exchange company Travelex on New Year’s Eve has disrupted cash deliveries from its network of vaults to world banks. Banks in U.K. such as Barclays PLC, Lloyds Banking Group PLC and Westpac Banking Corp. are unable to take orders from customers in branches relying on Travelex services. Travelex was attacked with a ransom ware software virus called Sodinokibi often called Revil that locks up data via encryption.

3) Half the work force doesn’t expect to retire at age 65, while 13% don’t expect to retire at all. The average worker needs to have three quarters of a million dollars saved for retirement in order to maintain their standard of living. People are just not able to accumulate such wealth with conventional 401K plans, requiring significant additional investments by individuals. This is particularly difficult for middle and lower class American workers who are struggling to meet their basic livelihood expenses.

4) Stock market closings for – 10 JAN 20:

Dow            28,823.77    down    133.13
Nasdaq         9,178.86    down      24.56
S&P 500        3,265.35   down          9.35

10 Year Yield:    down   at    1.82%

Oil:    down   at    $59.11

10 January 2020

1) HP’s board has rejected Xerox’s $33 billion dollar takeover bid, for the same reason as Xerox’s previous offer, that the proposal significantly undervalues HP. Xerox first moved to acquire HP in November, but was rejected because HP stock holders would lose much of their value in the company. HP is a 2015 spinoff of giant Hewlett-Packard who has a market value of $300 billion dollars that dwarfs Xerox’s value of 7.7 billion dollars.

2) Mack Trucks, the manufacturer of large commercial trucks, announced plans to layoff 305 employees, which is about 13% of their payroll. After two years of high volumes of production, marked demand has dropped so the company must adapt to the lower demand. There are expectations of the truck market in America being down 30% this next year.

3) The American consumer continues to shun the traditional big department stores. Despite the monster holiday shopping season, America’s biggest department stores still lost money. This is a trend that has been in progress for several years as typified by Sears’ decline. Department stores such as JCPenny, Kohl’s and Macy’s continue to decline with dropping sales and store closings. Consumers are now going to big box stores and the internet commerce to save money, signaling a fundamental change in American consumerism.

4) Stock market closings for – 9 SEP 20:

Dow              28,956.90    up    211.81
Nasdaq           9,203.43    up      74.18
S&P 500          3,274.70    up      21.65

10 Year Yield:    down   at    1.86%

Oil:    down   at    $59.59

9 January 2020

1) The result of the Iranian missile attack on gas prices is expected to be minimal. Oil prices did briefly surge on Tuesday on news of the attacks fueling fears of a Middle East war between Iran and America, spiking 4% to top oil prices of $65 a barrel, but slipped down to 1.3% early next day. Some are expecting gas prices across the nation to rise five to ten cents per gallon over the next several days.

2) Data for the fourth quarter indicated 2019 will show strong growth, which will most likely lead into a strong growth for 2020. The GDP (Gross Domestic Product) growth for the fourth quarter is estimated to be 2.3%, better than the 2.1% growth for the third quarter. This would close out the GDP growth for 2019 at 2.4%, down from the 2.9% growth of 2018, but still enough to put fears of a recession to rest.

3) Walmart has unveiled its latest technology to counter Amazon and Kroger in the grocery battle- a grocery picking robot. The automated grocery system is called Alphabot and is designed to pick and pack orders as much as ten times faster than a human. The robot will allow Walmart to rapidly expand its capacity to fill orders for ‘demand on online’ grocery shopping. The Alphabot is a 20,000 square foot facility built onto present stores consisting of about 30 small cubic robots inside a giant shelving system, which can pick and pack products from a selection of 4,500 items.

4) Stock market closings for – 8 JAN 20:

Dow               28,745.09    up    161.41
Nasdaq            9,129.24    up      60.66
S&P 500           3,253.05    up      15.87

10 Year Yield:    up   at    1.87%

Oil:    down   at    $59.98

8 January 2020

1) Coal consumption in America dropped sharply last year, reaching its lowest level since 1975, with power plants switching to cheaper natural gas and renewables. This shift has cut greenhouse gas emissions by more than 10%, but other sources also contribute to growing planet warming pollution last year. The U.S. is the second largest emitter of carbon dioxide in the world, as well as other greenhouse warming gases, contributing 14% of all annual greenhouse emissions.

2) The federal government is close to selling a group of nursing homes it took over eighteen months ago, a result of the biggest default in the history of a government mortgage insurance program which provides critical support to the nursing home industry. The previous owner defaulted on $146 million dollar worth of mortgages leaving the government to take possession of the facilities, which they have been working to find new owner-operators.

3) A new pizza making robot was unveiled at this year’s CES (Consumer Electronis Show) in Las Vegas, which attracts 200,000 people across the world. The machine is placed adjacent to the oven so pizzas automatically go in for cooking. The robot can make up to 300 12 inch customized pizzas an hour, while making consistent pies. Several companies are engaged in developing pizza robots including Little Caesar’s and Domino’s. The robots for the fast food industry is growing in response to demands for a minimum wage of $15 an hour for restaurant workers.

4) Stock market closings for – 7 JAN 202:

Dow                28,583.68    down    119.70
Nasdaq            9,068.58    down        2.88
S&P 500           3,237.18    down        9.10

10 Year Yield:    up   at    1.83%

Oil:    up   at    $63.21