25 February 2021

1) Nikola Corp. announced that its long-range fuel-cell semi truck gets as much as 900 miles on a tank of hydrogen gas, and is due to come out in 2024. The Nikola Two fuel-cell vehicle would go at least 750 miles on a tank of hydrogen, while its Tre shorter-range fuel-cell truck, can run 500 miles, and remains on schedule to start production in the second half of 2023. Nikola said that their first Tre FCEV prototypes are scheduled to begin assembly in Arizona and Ulm, Germany, in the second quarter of this year and that testing and validation would continue into 2022. The Nikola 900-mile truck will have a sleeping cabin for drivers and a new chassis designed for North American highways.

2) From California to Indiana, aerospace to appliance manufacturers, American factories are struggling to procure cold-rolled steel. Manufactures are getting hit by a fresh round of disruption in the U.S. steel industry. Steel is in short supply and prices are surging. Unfilled orders for steel in the last quarter were at the highest level in five years, while inventories were near a 3-1/2-year low. The benchmark price for hot-rolled steel hit $1,176 per ton this month, its highest level in at least 13 years. Domestic steel prices have risen more than 160% since last August, leaving steel consumers in a quandary whether to absorb or pass along the increased cost. U.S. steel prices are 68% higher than the global market price and almost double China’s, even with prices in both China and Europe up over 80% from their pandemic-induced lows. But the price gap is so wide that even with a 25% tariff, it would be cheaper to import than buy from domestic mills. The United States imported 18% of its steel needs last year.

3) The global semiconductor shortage will slash earnings of General Motors and Ford Motor Co. by about one-third this year, as supply constraints hamper production and profits. The chip shortage will materially erode margins and could lower expected earnings before interest and taxes by as much as $2 billion for GM and $2.5 billion for Ford. GM’s EBITA margin could fall to 3.4%, while Ford’s could dip as low as 1.8%. Rising demand for the chips needed to build technologically advanced and connected vehicles has introduced a new set of challenges for the North American auto industry, with shortages triggering production cuts and temporary plant closures. Demand from consumer-electronic companies exacerbated the supply shortages amid the coronavirus pandemic.

4) Stock market closings for – 24 FEB 21:

Dow 31,961.86 up by 424.51
Nasdaq 13,597.97 up by 132.77
S&P 500 3,925.43 up by 44.06

10 Year Yield: up at 1.39%

Oil: up at $63.36

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25 January 2021

1) Janet Yellen, the Secretary of the Treasury nominee, has given up her hawkishness on budgets, arguing there’s sufficient wiggle room to keep running fiscal deficits. Therefore, she’s committed to working to pass Biden’s proposed $1.9 trillion dollar bill. Yellen reaffirmed the commitment to flexible exchange rates, that the value of the U.S. dollar and other currencies should be determined by markets. The dollar weakness reflects the success of policy-makers in flooding domestic and foreign markets with liquidity during the COVID-19 panic. The large chunk of foreign firms that borrows and invoices in dollars is benefitting from the current dollar downturn, and the pandemic should reinforce the Fed’s impressive capacity to act as the global lender of last resort. But even with reserve-currency status, the dollar can weaken. And a weak dollar will make it harder to run current-account deficits year-in, year-out.

2) Regulators fear a new and potentially larger wave of defaults that could send banks scrambling to cover losses, where weaker ones might need government help to survive. The European Central Bank has warned that bad loans in the eurozone could soar to 1.4 trillion euros, more than during the aftermath of the financial crisis, especially if the economy contracts more than expected. The oversize exposure of banks by small businesses is part of Europe’s economic fabric. Companies with fewer than 250 employees account for 99.8% of all firms and two-thirds of all private-sector jobs in Europe. Small businesses in the U.S. also have economic weight, but they tend to be bigger. About half of Europe’s workforce is employed by firms with less than 50 people, compared with about a 25 in America.

3) There are reports that the Air Force has secretly designed, built, and flown a brand-new fighter jet. Furthermore, the mysterious new plane is already breaking records, but virtually nothing is known about the new plane … other than it exists. Experts did not expect a new fighter for another decade. The Air Force must now consider how it will buy the new fighter as it struggles to acquire everything from intercontinental ballistic missiles to bombers. The Air Force built the new fighter under its Next Generation Air Dominance (NGAD) program. More amazingly, the Air Force developed the new fighter in about a year, which is a staggeringly short time by modern standards, a process that took 10 years with the F-35.

4) Stock market closings for – 22 JAN 21:
Dow 30,996.98 down by 179.03
Nasdaq 13,543.06 up by 12.15
S&P 500 3,841.47 down by 11.60
10 Year Yield: down at 1.09%
Oil: down at $51.98

20 January 2021

1) There are growing fears of another stimulus package as the national debt grows. One measure of unemployment suggests Biden’s $1.9 trillion dollar stimulus plan may do more harm than good. The U-6 unemployment rate, a less popular reading than the commonly cited U-3, suggests additional fiscal support could be unnecessary. The gauge (which includes those only partially participating in the labor force) currently is at 11.7%. Five of the past six recessions saw higher readings. The coronavirus pandemic initially pushed the U-6 rate to a record-high of 22.9% in April, but easy monetary conditions and the $2.2 trillion dollar stimulus package brought the rate down in a matter of months. Still, there are serious questions about the long term stability of the world economics as nations struggle to pay off these huge national debts.

2) A new Covid-19 variant has been discovered in Brazil adding to the two newly emerged variants from the United Kingdom and South Africa. Brazil is one of the worst affected countries by the virus, where more people have died of the virus than anywhere else outside the United States. An urgent COVID warning says the worst months are still ahead, and is expected to get more people sicker faster. Infections and deaths are expected to continue increasing.

3) President-elect Joe Biden has an ambitious environmental agenda, with a principle goal of transitioning away from using fossil fuels. There are many questions just how this climate plan could affect the oil and gas industry in America. The new requirements include disclosure of climate risks from public companies, a commitment to end new drilling permits for federal lands, and to eliminate tax subsidies for the oil and gas industry. Tougher methane regulations to give incentives for Americans to buy cars that do not run on gasoline. It’s not just the big oil companies which can be hurt, for there are thousands and thousands of small companies making up the supply chain businesses, as well as the small independent wildcatters who are producing oil. But while oil is slowly recovering with prices above $50 a barrel, it is all in jeopardy if these proposals go into effect. Biden’s proposals could face stiff challenges from Texas officials and the oil and gas industry itself.

4) Stock market closings for – 19 JAN 21:

Dow 30,930.52 up by 116.26
Nasdaq 13,197.18 up by 198.68
S&P 500 3,798.91 up by 30.66

10 Year Yield: down at 1.09%

Oil: up at $53.17

13 January 2021

1) Reports are that Biden will unveil plans to spend trillions of dollars in pandemic and economic relief money this next week. Biden is introducing several members of his economic team, after data shows the U.S. economy has lost jobs for the first time in eight months as a resurgent COVID-19 pandemic has again shuttered restaurants and other businesses. Biden is calling for raising the minimum wage to $15, and for sending out $2,000 in direct cash payments. Biden claims that economic research confirms that with today’s crisis, especially with such low interest rates, taking immediate action, even with deficit financing , is going to help the economy. Biden also say they are looking into other economic relief actions that can be taken unilaterally, including extending a pause on repayments of federal student loans.

2) US naval aircraft carrier groups still rule the seas, but both Russia and China have plans to change that as they strive to expand their blue water navies, by developing new weapons that could threaten America’s dominance. For instance, it is reported that China launched two ballistic missiles that hit a moving target ship in the South China Sea thousands of miles from their launch sites. The Russian navy conducted its third test launch of it’s hypersonic anti-ship cruise missile that was launched from a frigate. The missile reached a speed of Mach 8 before hitting a target more than 200 miles away. These tests are the latest indication that American aircraft carriers, long viewed as kings of the seas, may soon face a real threat to their existence.

3) Iran has told South Korea not to politicize the seizure of their vessel, while demanding the release of $7 billion dollars in funds frozen amid U.S. sanctions. Additionally, Iran has denied all allegations that the seizing of South Korea’s tanker and its 20-member crew amounted to hostage taking, claiming instead it was Seoul who was holding Iran’s funds hostage. The vessel was seized based on an Iranian court order for ‘environmental pollution’, however, the ship’s Busan-based operator, said there was nothing to indicate that before the seizure of the vessel that Iranian authorities were probing possible violations of environmental rules.

4) Stock market closings for – 12 JAN 21:

Dow 31,068.69 up by 60.00
Nasdaq 13,072.43 up by 36.00
S&P 500 3,801.19 up by 1.58

10 Year Yield: up at 1.14%

Oil: up at $53.38

8 Janury 2021

1) The price of oil advanced as shrinking U.S. crude inventories added to expectations of a tighter global supply outlook after Saudi Arabia surprised the markets by pledging to reduce production for the next two months. Gasoline demand is falling to its lowest level since late May, spelling trouble for refining margins as a tighter global crude balance and straggling demand crimp profits for processing a barrel of oil. Saudi Arabia has decided to reduce crude output in February and March as part of an OPEC+ supply agreement. With the outlook for crude oil supply suddenly looking tighter, the oil options markets have grown less bearish.

2) A top scientist explains why a more infectious coronavirus variant is a bigger problem than a deadlier strain, with the deadly coronavirus having now mutated. One variant, called B.1.1.7, is more infectious, and has forced the UK into national lock down, with the variant having also been discovered in several US states, as well as other countries around the world. However, the new variant does not appear to be more deadly, so existing vaccines should also work against it. A really severe disease that one person gets won’t necessarily have as much impact as a lesser disease which a huge number of people get. While not any more deadly the new mutant B.1.1.7 is much more infectious, and is to blame for the surging numbers of people infected, filling up UK hospitals that forced the national lock down. It is estimated to have a 71% higher growth rate than other variants.

3) North Korea’s supreme ruler Kim Jong Un has announced a military expansion, but it is unclear if Pyongyang plans to ramp up its nuclear program too. This could put pressure on the incoming Joe Biden administration just when it is most vulnerable. North Korea plans to boost its military capacities in defiance of international sanctions, as well as a new five-year economic plan, admitting the previous program has failed. It’s unclear just what the military expansion will involve.

4) Stock market closings for – 7 JAN 21:

Dow 31,041.13 up by 211.73
Nasdaq 13,067.48 up by 326.69
S&P 500 3,803.79 up by 55.65

10 Year Yield: up at 1.07%

Oil: up at $50.91

Oil: up at $50.48

5 January 2021

1) Because of the very rapid spreading of the new coronavirus variant, England will enter its toughest nationwide lock down since March. For at least six weeks schools will be closed and people can leave home only once a day for exercise. Because of the number of people in hospitals reaching a new height the British threat level has been raised to its highest level of 5. People must now only leave home for work, if it is impossible to work from home, and for essential food and medicine. School study will be online until mid-February. All non-essential retail and hospitality businesses are closed, but restaurants and other premises will continue delivery of takeaway food but not alcohol. Places of worship can remain open, including communal worship, subject to social distancing.

2) The first stimulus payments from new the coronavirus relief bill are now on the way. However, the aid won’t suffice for many. The $300 check additions to unemployment are half the amount of the old Federal Pandemic Unemployment Compensation pay outs, which lapsed in late July. Since then, aid recipients have been getting by on state unemployment assistance, which can pay less than the minimum wage when calculated on an hourly basis. But workers will receive just over a third of last spring’s CARES package, which paid out $600 per week for four months compared to $300 for 11 weeks now.

3) Google workers have formed their first-ever union, a rare step for the tech industry that also represents the biggest and most organized challenge yet to the company’s executive leadership. This is the first union at a major tech company and it’s for and by all tech workers. So far, 226 workers have signed union cards with the Communications Workers of America (CWA), one of the country’s largest labor unions. While the pandemic made it more challenging to hold those meetings face-to-face, the shift to remote work, in some ways, made it easier to organize. The workers could theoretically mount a strike, though that would be a challenge and there are no current plans to do so. The union’s formation comes after years of rising employee tensions over the company’s business and operational decisions, such as work with the defense sector, plans for a censored search engine in China, and the company’s handling of sexual misconduct claims.

4) Stock market closings for – 4 JAN 21

Dow 30,223.89 down by 382.59
Nasdaq 12,698.45 down by 189.83
S&P 500 3,700.65 down by 55.42

10 Year Yield: unchanged at 0.92%

Oil: down at $47.34

31 December 2020

1) President Donald Trump’s efforts for a $2,000 Covid-19 relief check for each American has run into a road block, which the Senate Republicans have made unsurmountable, even as pressure builds to approve the bigger checks. A growing number of Republicans oppose more spending, despite bucking Trump. The showdown over the $2,000 checks has thrown Congress into a chaotic year-end session which is preventing action on overturning Trump’s veto on a sweeping defense bill. McConnell is trying to provide an off ramp for GOP senators to avoid a tough vote. Republicans are split between those who align with Trump’s populist instincts and those who adhere to what had been more traditional conservative views against government spending. New legislation is proposing linking the president’s demand for bigger checks with repealing law suit protections for tech companies like Facebook or Twitter , as well as establishment of a bipartisan commission to review the 2020 presidential election for possible fraud.

2) There is another casualty of the coronavirus pandemic . . . the ringing in of the new year at Times Square in New York, which in the past draws millions of visitors to Midtown, but not this year. This year, the visitors are out, the traditional dropping of the crystal orb will be viewed only on television. There will still be the night performances, with disco diva Gloria Gaynor singing her “I Will Survive”, a rather appropriate anthem for 2020. Other cities across the globe are also curbing their traditional celebrations of the new year.

3) The new strain of Covid-19 virus has been discovered in Colorado and California which alarms scientists because it is a more contagious Covid-19 strain. It is expected that the new strain will quickly spread to other states. In San Diego County a 30-year-old man in the county, with no travel history, has tested positive for the new strain on Tuesday. Because there is no travel history, this is not an isolated case in San Diego County. Furthermore, on Tuesday, Southern California’s Intensive Care Unit availability is now at zero percent. Meanwhile, Colorado reported its first known case of the variant on Tuesday too, and was investigating a second possible case Wednesday. Both of the cases are National Guard soldiers who were deployed to support staffing at a nursing home in Simla, Colorado, outside Denver. While the new variant continues to spread fast in the UK, it is more contagious than previously identified strains but not more severe. The English virus spreads at a rate of 70% compared with other variants in the U.K.

4) Stock market closings for – 30 DEC 20:
Dow 30,409.56 up by 73.89
Nasdaq 12,870.00 up by 19.78
S&P 500 3,732.04 up by 5.00
10 Year Yield: down at 0.93%
Oil: up at $48.30