20 August 2020

1) Boeing Aircraft has received its first 737 MAX orders since 2019, from Enter Air, a Polish charter airline that exclusively uses only Boeing airplanes. They have ordered two 737 MAX with an option to order two more. With the option, this would bring its MAX fleet to ten aircraft. Frzegorz Polaniecki, the general director and board member of Enter Air, said he’s convinced the 737 MAX will be the best aircraft in the world for many years to come. This order for two aircraft pales in comparison to Boeing’s July net negative order of 836 aircraft, but it’s a start in the right direction. Cancellation of Boeing aircraft sales have far outpaced new orders this year because of the pandemic. The last six months, Boeing has faced a combination of problems specific to Boeing and the pandemic.

2) The Federal Reserve is lowering their estimate for economic growth over the second half of the year. The Reserve presents its forecast at the central bank’s eight interest rate committee meetings in a year. The reduced forecast is because they expect the rate of recovery in the Gross Domestic Product and the rate for reducing unemployment to be slower than previously expected. Reduction of the unemployment depends on the reopening of businesses, which in turn is depended on the pandemic.

3) According to Bank of America, moving manufacturing out of China could cost U.S. and European companies $1 trillion dollars over five years. Companies in over 80% of global sectors have experienced supply chain disruptions during the pandemic, so many are widening the scope of their reshoring plans. The shift to return manufacturing back to home countries has been spurred on by the Convid-19 crisis. Supporting companies will also benefit with the increase of economic activity by having manufacturing return.

4) Stock market closings for – 19 AUG 20:

Dow 27,692.88 down 85.19
Nasdaq 11,146.46 down 64.38
S&P 500 3,374.85 down 14.93

10 Year Yield: up at 0.68%

Oil: up at $42.79

11 August 2020

1) Both Japan and China are building up their military forces for possible future contest over Pacific islands. This is another sign of China’s increasing contentious relations with neighbors, in particular Japan over disputes of several islands in the East China Sea. This is necessitating the buildup of military forces to approach, capture and defend islands. So this means a build up of Marine forces, which both countries are in the process of doing. This includes amphibious armored vehicles and self propelled artillery. U.S. intelligence consider the Chinese Marines to be fully amphibious and able to use combined arms tactics and multiple avenues of approach. This includes building a blue water navy with well over 300 vessels. In response, Japan is starting up its first Marine unit since World War II, modeled after the U.S. Marine Corps, to defend its southern islands. This buildup means massive expansions which neither country’s economies are able to tolerate with the worsening world economy.

2) Boeing aircraft manufacture’s troubles continue to get worst with the loss 737 MAX orders now over 400 and stymied shipments of its 787 Dreamliner because of the world pandemic. Last month, Boeing delivered just four jetliners while also booking zero new orders. Their total stockpile of orders was 4,496 aircraft at the end of July, which is down 1.2% from June. There is the risk that Boeing will have to halt 787 production to preserve cash. Most airline companies have grounded a significant portion of their fleets and are operating only a fraction of their pre-pandemic schedules.

3) Instacart, the young food delivery service, is partnering with Walmart, Amazon’s biggest competitor, to bring Walmart one day delivery service. This will make thousands of items, from groceries to home decor and improvement, personal care and electronics go from Walmart stores to customers’ doors as fast as an hour. This is another ratchetting up of the retail business, when many big name retailers are floundering and some going under. A fundamental change in the way Americans are buying things for their everyday lives is occurring.

4) Stock market closings for – 11 AUG 20:

Dow 27,686.91 down 104.53
Nasdaq 10,782.82 down 185.53
S&P 500 3,333.69 down 26.78

10 Year Yield: up at 0.66%

Oil: down at $41.66

5 August 2020

1) The FAA (Federal Aviation Administration) has issued a 36 page document detailing the fixes and training that Boeing needs to implement so the 737 MAX can return to commercial service. The document was in the works before the planes were grounded in the spring of 2019, a result of two air crashes. There were few requirements that Boeing management wasn’t already aware of, and it’s considered a milestone in the certification process. The document only applies to 737 MAX aircraft flying in the U.S., and it is expected the changes will be adopted by aviation regulators around the world. Once done, all 737 MAX jets will undergo an operational readiness flight prior to returning each airplane to service. The European Union Aviation Safety Agency is waiting on doing its flight test as the FAA moves ahead.

2) The oil company giant Exxon Mobil Corp., is seeking the dismissal of a climate change lawsuit brought on by the Massachusetts attorney general. The lawsuit alleges that Exxon defrauded consumers and investors by the company’s public position on climate change, that Exxon hid its early knowledge of climate change and misled investors about the projected financial impact of global warming on its business. Exxon claims the law suit amounts to improper retaliation against the company over its views on climate change. The bases for Exxon’s challenge is the state’s anti-Slapp law which prohibits the use of litigation to punish a defendant for statements on matters that are under consideration by a legislative or judicial body.

3) The Department of Labor has come down hard on social investing or EAG, proposing rules that strongly limit such activities for private pension plans covered by the Employee Retirement Income Security Act of 1974 (ERISA). They consider that pension fund investing is not the place to solve the ills of the world, that it is unlawful for a fiduciary to sacrifice return or accept additional risk to promote a public policy, political or any other nonpecuniary goal.

4) Stock market closings for – 4 AUG 20:

Dow 26,828.47 up 164.07
Nasdaq 10,941.17 up 38.37
S&P 500 3,306.51 up 11.90

10 Year Yield: down at 0.52%

Oil: up at $41.53

9 July 2020

1) In a move that shows just how much troubled the airline industry is, United Airlines is sending out layoff warnings to half of its U.S. staff, or about 36,000 employees. The world’s airline industry has be devastated by the coronavirus crisis, with the prospects for recovery in air travel dimming in just the past two weeks because of a rise in infections. The ‘36,000 people’ is a worst case scenario, with United striving to minimize layoffs through things like early retirement packages. Air travel had plunged 95% from March to April, and has been making a slow recovery. Still air travel is down 70%.

2) After more than fifteen months since being grounded for safety, Boeing’s 737 MAX is finally getting close to winning approval to fly again. But it’s not expected the aircraft will actually start carrying passengers until late this year at the earliest. Now with a history of missed deadlines, neither Boeing or the FAA (Federal Aviation Administration) will say when the airplane will be approved to fly passengers. But after the aircraft is certified, there will still be months of training before the 737 MAX can actually operate. The good news is the test flights signal the certification is nearing its end. Once the U.S. has granted approval, Boeing will start the process of certification in a number of other countries which the 737 will operate out of. Plus, the 400 aircraft built during the grounding will need to be modified and tested before they can be delivered. The biggest question is how much and how long the airline industry will need to recover from the pandemic.

3) President Trump is threatening to cut off funding for schools that do not reopen this fall. It’s unclear just how the federal government could exert significant financial pressure on states and local school systems. The President is also in disagreement with Centers for Disease Control and Prevention’s guidelines for their reopening.

4) Stock market closings for – 8 JUL 20:

Dow 26,067.28 up 177.10
Nasdaq 10,492.50 up 148.61
S&P 500 3,169.94 up 24.62

Year Yield: up at 0.65%

Oil: up at $40.93

30 June 2020

1) The Boeing Aircraft Co. has started it re-certification process for the 737 MAX with the take off of a test aircraft for the first flight. An FAA (Federal Aviation Administration) pilot was on board as test flights begin, to determine if the aircraft is safe for flying with passengers. The first flight test is to fly maneuvers for about three hours, the test craft being fitted with a number of instruments and monitoring equipment to test and record how the aircraft performs. Test include the ‘wind-up turn’ which is a steep turn that essentially approaches a stall, with wings almost at 90 degrees of bank. This maneuver should trigger the Boeing software system that played a role in both crashes, which caused the aircraft design to be grounded. The software caused the aircraft’s nose to be repeatedly pointed downward at the ground until pilots lost control. These certification flights are expected to take approximately three days, and while they are an important milestone, there remains a number of key tasks to be completed.

2) According to the Bureau of Labor Statistics, 47.2% of American adults are now jobless, almost half the adult population. This is a direct result of losing 30 million jobs because of the coronavirus crisis. While there was an unexpected snap back in May, there are now signs of a slowdown in the labor market improvement because of fears of a Convid-19 resurgence increased these last few weeks. The massive loss of jobs is what is now dragging the economy down. Both Texas and Florida have paused plans for further reopening because of a record spike in coronavirus cases.

3) Lending institutions are pulling back sharply on their lending to U.S. consumers during the pandemic, because they can’t tell who is creditworthy anymore. There are millions of Americans out of work and behind on their debts, but many of these missed payments aren’t reflected in credit scores. This is a result of the government’s stimulus package which allows borrowers to defer their debt payments, but credit companies can’t report these late payments to credit reporting companies. For May, there were more than 100 million accounts with deferred debt payments. This is a sign of widespread financial distress.

4) Stock market closings for – 29 JUN 20:

Dow 25,595.80 up 580.25
Nasdaq 9,874.15 up 116.93
S&P 500 3,053.24 up 44.19

10 Year Yield: unchanged at 0.64%

Oil: up at $39.55

29 May 2020

1) Another 2.1 million Americans are unemployed as the economy begins its reopening with restriction on economic activity easing in some parts of the country. One bright spot is the number of continued claims (people remaining on unemployment) dropped slightly from people returning to work. While the number of new claims continues to drop each week, it still remains at a record high, with the drop in new claims remaining higher than anticipated. The continued elevated number of claims isn’t a good sign, showing that we are not through the business shutdowns and possible closures yet, with some furloughs shifting over to permanent layoffs. The unemployment in America is now at 40.7 million workers.

2) Boeing aircraft manufacturer may be starting its recovery announcing the resumption of limited production of its 737 MAX after a five month halt. The 737 MAX has been grounded since March of 2018 because of software problems resulting in two airliners crashing. While the FAA has not cleared the airplane for return to passenger service, Boeing expects the 737 MAX to fly again in mid 2020.

3) The millennials and generation-Z are worst off economically than any previous generation, they are experiencing slower economic growth since entering the workforce than any other generation in U.S. history. It’s not just that it’s a bad recession, or that it’s hitting young people more, but rather that it’s hitting people who have already been hit by the Great Recession. Millennials have experienced slower economic growth since entering the workforce than any other generation in U.S. history, and they will bear these economic scars throughout their lives, with lower earnings, lower wealth and delayed milestones, such as home ownership. The old adage of ‘just work harder, sink or swim by your own effort’ no longer applies, because many millennials are now having to swim upstream against a much stronger current . . . from the forces of automation and technology displacement.

4) Stock market closings for – 28 MAY 20:

Dow 25,400.64 down 147.63
Nasdaq 9,368.99 down 43.37
S&P 500 3,029.73 down 6.40

10 Year Yield: up at 0.70%

Oil: down at $33.68

28 May 2020

1) The aircraft manufacture Boeing is laying off almost 12,000 workers this week, a result of the coronavirus crisis impact on the aircraft company. Boeing, which is the largest exporter in the U.S., is trimming its workforce by about 10% which include international locations. It is anticipated the airline industry will take some years to recover with air travel dropping a whopping 95% because of the virus, and major airlines canceling the majority of their domestic flights while suspending nearly all international flights. The company suffered a major set back with its 737 MAX grounding that resulted in near record number of order cancellations for passenger jets with zero new orders in April. This has been Boeing’s worst year in decades.

2) The discount home goods retailer Tuesday Morning has filed for bankruptcy, a result of the prolong store closings from Covid-19. The lost revenues created an insurmountable financial hurdle in a company that was thriving before the pandemic. The chain is closing 230 of its nearly 700 US stores across America. The first phase of closures of 130 stores will begin this summer. This is in line with another home goods retailer, Pier 1, which filed for bankruptcy in February, another casualty of the virus.

3) More than one in every six young workers have stopped working because of the coronavirus pandemic world wide. There are fears that young workers (15 to 28 years old) could face the inability to get proper training or gain access to jobs long after the pandemic ends, maybe even deep into their careers. Of those still working, about 23% report reduction in the number of hours they work. For 178 million young workers around the world, more than 40% are in the food services and hospitality industries, which is the hardest hit sector from the virus. Three fourths of the young workers are in informal jobs or casual labor. In addition, many companies in the U.S. are cutting salaries of those who still have a job, trying to remain in business, which will reduce discretionary income that will further slow economic recovery.

4) Stock market closings for – 27 MAY 20:

Dow 25,548.27 up 553.16
Nasdaq 9,412.36 up 72.14
S&P 500 3,036.13 up 44.367

10 Year Yield: down at 0.68%

Oil: down at $32.22

15 May 2020

1) There are growing fears of another economic bomb about to go off. A popping of the housing bubble, much like the 2008 bubble collapse of the housing market, may happen as early as July. Last time, the collapse of the housing market played out over four years, but for the pandemic, the rate could be much faster, as is being seen with the stock market. Home sales have been languishing, especially with the treat of the virus and people reluctant to let strangers tour their homes with possible infections. It is estimated that 15% of homeowners will fall behind on their mortgages and this would mean more delinquencies than during the Great Depression. This in turn is causing a tightening of lending standards which could continue even after the crisis subsides. All this makes for a bubble waiting to burst.

2) Delta Air Lines Inc. has announced they plan to retire their fleet of eighteen Boeing 777 jumbo jets, and will replace them with Airbus SE aircraft. This constitutes another major financial blow to the beleaguered aircraft manufacture struggling with their 737 MAX troubles from over a year ago. Delta attributes the early retirement of their 777 fleet to the pandemic impact and the need to economize with newer fuel efficient aircraft.

3) Growing fears of a slow recovery is beginning to show cracks in the markets as investor’s anticipation of a quick recovery of the economy fades. For weeks, the hopes that the massive stimulus of $3 trillion dollars would spur a relatively quick recovery later in the year, coupled with a hot rebound of the stock market despite the massive numbers of layoffs, but now hope is fading. The growing economic uncertainty of just how many people can restart their lives amid the uncertainty of controlling the virus, plus the dangers of opening up too early, is causing investors to rethink their view of how the economy will fair in the next few months, even the next few years.

4) Stock market closings for – 14 MAY 20:

Dow 23,625.34 up 377.37
Nasdaq 8,943.72 up 80.55
S&P 500 2,852.50 up 32.50

10 Year Yield: down at 0.62%

Oil: up at $27.98

20 February 2020

1) The chip maker Intel announced a chip which makes quantum computers smaller and faster, thus bringing the promise of quantum computer to realization. Working with QuTech, Intel has developed a new chip called Horse Ridge that should make quantum computers smaller, faster and requires less deep cooling. The system on a chip uses Intel’s FinFET low power process, having four radio frequency channels that control a total of 128 qubits, which is more than double the 49 qubits from back in 2018. For a quantum computer to be viable it needs over 1 million qubits.

2) The technology innovation company Alphabet has ended its work on Makani, a design to generate power using wind turbines attached to kites. While demonstration flights were successful, the path to commercialization was considered to be longer and riskier than expected. Makani was a seven year project which developed a 20 kilowatt demonstrator kite into a utility scale model generating 600 kilowatts.

3) Boeing Aircraft’s 737 MAX has met with another problem- foreign-object debris in the fuel tanks of several aircraft. Boeing is conducting a voluntary inspection for debris in undelivered aircraft with further action based on its findings, but doesn’t anticipate this problem will delay re-certification of the aircraft and it resumption of deliveries. Furthermore, Boeing plans to inspect the fuel tanks on all undelivered 737 MAX planes.

4) Stock market closings for – 19 FEB 20:

Dow 29,348.03 up 115.84
Nasdaq 9,817.18 up 84.44
S&P 500 3,386.15 up 15.86

10 Year Yield: up at 1.57%

Oil: up at $53.56

12 February 2020

1) The demise of the big box and department stores in malls, has spawned a move to trendy local shops. These are standalone small format stores designed to experiment with new retail strategies and increased foot traffic. These stores tend to be positioned closer to neighborhoods away from the malls. The department stores and big box retailers grew rapidly and over saturated the market, while the small format stores have less investments and lower lease costs.

2) Boeing Aircraft company reported zero new orders for this January, while Airbus tallied 274 orders for commercial airplanes in the same month. The company did deliver 13 new airplanes in January, six were 787 Dreamliners, two 777s, two 767 and three 737NG. Boeing is anticipating re-certification of its 737MAX by the middle of 2020.

3) California is now estimated to have 150,000 homeless people, reaching record numbers, of which two-thirds are living on the streets. There are more than 100 homeless camps across Oakland, in which authorities are in the process of dismantling. The homeless scratch out a living doing odd jobs, focus groups or medial trials. The rising cost of housing is the prime force driving people to homelessness, the number increasing each day despite the soaring stock market and record low unemployment rate.

4) Stock market closings for – 11 FEB 20:

Dow 29,276.34 down 0.48
Nasdaq 9,638.94 up 10.55
S&P 500 3,357.75 up 5.66

10 Year Yield: up at 1.59%

Oil: up at $50.07