28 Auguest 2020

1) The decay of the worlds airline industry is reaching out past the airline companies themselves, with jet engine maker Rolls-Royce announcing a $7 billion dollar lost for the first half of 2020. Rolls-Royce gets paid by the hours their engines are flown on airliners, and with the massive drop in air travel from the pandemic, the company’s revenues have drastically dropped leaving its survival in doubt. The company is being forced to sell assets to meet its cash needs, so they are reducing eleven of their locations to just 6, with the loss of 9,000 jobs. Stock dropped 9% on the news of reorganization which was already down 66% since the start of the virus crisis.

2) Not all of the retail industry is bleak news, with Abercombie & Fitch outperforming expectations in the second quarter. While the apparel company did lose ground in the last quarter, it performed better than analyst expected, with sales down by 17%, nevertheless their earnings per share made remarkable gains over last year. This is a result of aggressive costs reductions earlier in the quarter when the company slashed expenses by $200 million dollars by reducing salary expenditures and skipping dividends. Success in their e-commerce operations has also pushed up the revenues and promises to add more as people go to online for more of their shopping.

3) Another small indication that manufacturing is returning to America is Roche Holding AG plans to move its glucose testing strips manufacturing plant from Pueto Rico, where it has operated for about 40 years. The company is streamlining its operations by combining the plant with its other existing facilities. The move will cost 200 jobs in Peuto Rico, which has a number of other drug and medical device manufacturing plants.

4) Stock market closings for – 27 AUG 20:

Dow 8,492.27 up 160.35
Nasdaq 11,625.34 down 39.72
S&P 500 3,484.55 up 5.82

10 Year Yield: up at 0.75%

Oil: down at $42.96

4 August 2020

1) Tailored Brands, who owns Men’s Wearhouse and Jos. A. Bank, has filed for bankruptcy, becoming the latest retailer to succumb to the pandemic. The Covid-19 has wiped out demand for office attire forcing the layoffs of 20% of its workforce and closing up to 500 stores. Lord & Taylor, one of the oldest department stores in America has also filed for bankruptcy. It has started liquidating 19 of its 38 stores. In the first half of 2020, more than 3,600 companies have filed for bankruptcy, with experts predicting that things are only going to get worse. Retail names such as Justice, Ann Taylor, Lane Bryant, Luck Brand, J.C. Penny, Brooks Brothers, Sur La Table, Neiman Marcus, Tuesday Morning, Tailored Brands, GNC and J. Crew have gone into bankruptcy. Such a large number of retailers in trouble can only signal a fundamental change in the American economy.

2) The airline industry in America is facing a round of layoffs in the near future without additional federal aid to save jobs. The airlines received $32 billion dollars in federal payroll support from the CARES Act, with the condition of no layoffs until 30 September, and the anticipation of air traveling increasing by then. But this hasn’t occurred, so as the end of September approaches, layoffs loom. The airline unions have been pushing for an extension in payroll support to preserve the jobs sector of the airlines. American Airlines and United Airlines warn that more than 60,000 employees risk losing heir jobs when the aid terms expire. Other airlines like Alaska, Sprint and Frontier also warn of upcoming layoffs.

3) The owner of 7-Eleven is buying Marathon Petroleum’s Speedway gas stations for $21 billion dollars in cash. This will increase the present 9,800 convenience store chains by another 4,000. Investors were unnerved by the steep price for the deal, with shares falling nearly 9%. Like many other retailers, the chain has also been hit hard by the coronavirus pandemic, with profits down significantly. Another acquisition that finalized is T-Mobile buying Sprint, with the Sprint brand name disappearing from the American business scene.

4) Stock market closings for – 3 AUG 20:

Dow 26,664.40 up 236.08
Nasdaq 10,902.80 up 157.52
S&P 500 3,294.61 up 23.49

10 Year Yield: up at 0.56%

Oil: down at $40.76

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