15 October 2020

1) The much feared Diablo winds, along with its low humidity, will bring critical fire weather to Northern California through Friday, increasing the risks of wild fires. There are widespread red flag fire warnings for Northen California above San Francisco because of extremely dry, gusty, north to northeast winds which will bring critical fire conditions. With the relative humidity down into the single digits and teens, winds could reach about 45 mph, with gust up to 55 mph, both conditions very conducive to rapidly spread wild fires. The Diablo winds are much like the Santa Ana winds so familiar to Southern Californians.
2) Boeing’s troubles continue with no new orders for jets and more 737 MAX cancellations as the companies crisis continues. There were more orders for the 373 MAX canceled in September with delivery of only 11 total aircraft to customers, which is less than half the number from the same month a year ago. Furthermore, the quality flaws on the 787 Dreamliner continue to hamper efforts to develop an alternative cash cow to the 737 MAX. The major source of Boeing’s problems is the coronavirus pandemic, which continues to hurt the demand for jets, for Boeing as well as its rival Airbus, and this is a factor that neither aircraft manufacture has any control over.
3) The prices for crude oil are rising with the dollar’s decline, which in turn is boosting appeal of commodities priced in dollars. There are signs of oil demand increasing in Asia, which is helping lift the overall outlook for oil consumption. The company Rogsheng Petrochemical of Singapore is buying up oil futures to run its expanded refinery operation in Zhejiang this quarter. The outlook for refineries output remain precarious, with refining margins severely depressed for this time of the year. Refineries typically need a spread of more than $10 a barrel to make it profitable to process crude oil.
4) Stock market closings for – 14 OCT 20:
Dow 28,514.00 down 165.81
Nasdaq 11,768.73 down 95.17
S&P 500 3,488.67 down 23.26
10 Year Yield: unchanged at 0.72%
Oil: up at $41.22

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

30 April 2020

1) Experts are speculating on the interest rates going negative in the near future, something that President Trump wants. Negative interest rates have been a reality in the EU (European Union), with studies showing that investors do not significantly increase their equity holdings as interest rates decline. But when the rates go negative, they start increasing their equity holdings significantly. This in turn is a big boost to the stock market. Interest rates are an excellent predictor of long range growth potential, today’s level reflecting the markets expectation of sustained low future growth.

2) Larry Kudlow, the top White House economist, is calling for stimulate measures before a slowdown of the economy. Measures include tax breaks such as payroll tax holiday and deregulation of small businesses. This is in anticipation of growth in the second quarter worse than in the first, which shrank 4.8%. Additionally, he supports a second stimulus package to create incentives to grow in the medium and long term. Also more investment in infrastructure should be included.

3) After posting a massive first quarter loss, Boeing has announced they will slash staff and production of about 16,000 people or about 10% of its personnel. Demand for air travel evaporated because of the coronavirus, so Boeing is drastically scaling back production of the two widebody passenger jets, its 787 Dreamliner and the 777. Boeing lost $1.7 billion dollars, while shutting down its factories, because of the pandemic, added another $137 million dollar lost.

4) Stock market closings for – 29 APR 20:

Dow 24,633.86 up 532.31
Nasdaq 8,914.71 up 306.98
S&P 500 2,939.51 up 76.12

10 Year Yield: up at 0.63%

Oil: up at $15.35

13 February 2020

1) NASA (National Air and Space Administration) has asked for a 12% increase to give a $25.2 billion dollar budget for next year. Nearly half of this years proposed budget is for NASA’s lunar project with much of the money going to the biggest American space companies. Lockheed Martin, Boeing and Aerojet Rocketdyne will be the primary beneficiaries with $1.4 billion dollars going to the Orion spacecraft and $2.26 billion dollars for the Space Launch System. There is $3.37 billion dollars proposed to fund a crewed lunar lander system.

2) Federal Reserve Chairman Jerome Powell suggest that the central bank may not have the ability to fight the next recession and therefore Congress may need to get ready to help. This is a result of the already low interest rate, one of the prime tools used by the central bank to counter recession trends. Tax cuts and government spending increases may be necessary to fight a downturn, for there is little else the central bank has to counter a recession.

3) The giant aircraft maker Boeing Aircraft is facing bigger problems than just fixing its 737MAX and getting it certified to fly. The company needs to be focused on its next generation of passenger aircraft. Boeing didn’t get any new orders for aircraft in January compared with 45 orders last year, while delivering 13 airliners compared with 46 last January. Boeing is falling behind its rival Airbus and must build its next generation of planes to remain competitive. This means getting its 777X finished and ready for delivery with its other wide body plane, the 787 Dreamliner. In the background is a possible new design concept the 797.

4) Stock market closings for – 12 FEB 20:

Dow 29,551.42 up 275.08
Nasdaq 9,725.96 up 87.02
S&P 500 3,379.45 up 21.70

10 Year Yield: up at 1.63%

Oil: up at $51.69