By: Economic & Finance Report
Technology ride hailing company Uber has sold off its self-driving unit (ATG) to Aurora. Aurora is backed by investors such as Amazon. The sale is an all stock sale, which will make Aurora worth around $10 billion dollars.
ATG (Uber) will be worth around $4 billion dollars from the sale. Collectively ATG and Aurora will have a work force of over 3,000 employees worldwide. Uber sold ATG in order to focus on their core business models and focus on generating profits, which the tech giant has yet to achieve. -SB
1) The pharmaceutical company Moderna Inc. has announced its experimental coronavirus vaccine is 94.5% effective against Covid-19, the second vaccine to hit a key milestone in U.S. testing. The 30,000-subject trial, which is still underway, indicates it is effective at preventing disease that causes symptoms, while also showing signs of being safe. Moderna said it plans to ask federal health authorities to clear the vaccine by early December, and if approved, could go into distribution that month, making it one of the first Covid-19 vaccines to go into distribution in the U.S., where reported coronavirus cases and hospitalizations are surging. Earlier this month two other companies, Pfizer Inc. and BioNTech SE, said their experimental Covid-19 vaccine is more than 90% effective at protecting people from the virus in a large clinical trial.
2) American retail sales rose at a slower-than-expected pace last month, as spending slowed amid steady increases in weekly applications for unemployment benefits as the pandemic continues to accelerate. Retail sales for the month of October rose 0.3% to $553.3 billion, less than the forecasted 0.5% advance. Amazon, the online retail giant, is considered to be nearing its peak retail expansion in selling and delivering hard goods. Their problem is there’s really not much left to sell except maybe automobiles.
3) The spiraling COVID-19 crisis will confront president elect Joe Biden starting on day-one. But so far, there’s no indication he has any real plan and how he will get it done. He has vowed to enact a swift and aggressive national approach to combating COVID-19 with a federal mask mandate and impose similar restrictions at a local level. He wants to expanding testing and contact tracing efforts and use a more evidence-based approach in issuing guidance. But his success will partly hinge on the daunting task of controlling a spiraling pandemic that has constrained the country for nearly a year, and then repairing the economic damage it has wrought.
4) Stock market closings for – 19 NOV 20:
Dow 29,483.23 up by 44.81
Nasdaq 11,904.71 up by 103.11
S&P 500 3,581.87 up by 14.08
10 Year Yield: down at 0.85%
Oil: down at $41.58
1) Biden said he’ll forgive $10,000 in student debt for all borrowers. Will it actually happen? During his campaign, Biden advocated forgiving a large portion of outstanding student loan debt. Now that Biden is the President-elect, the 42 million Americans with education loans may be wondering, will it really happen? Biden’s proposal is a scaled-down version of plans that his rivals to the left in the Democratic primary campaigned on. Sen. Elizabeth Warren, wants to cancel up to $50,000 in student debt for individuals with household incomes under $100,000, while Sen. Bernie Sanders, said he’d erase all of the country’s outstanding education debt.
2) The European Union will impose tariffs on $4 billion dollars of U.S. goods starting Tuesday. This is a tit-for-tat escalation of a transatlantic fight over illegal aid to aircraft manufacturers Boeing Co. and Airbus. The EU tariffs will be on various Boeing models of airliners with a 15% duty, as well as other goods ranging from spirits and nuts to tractors and video games, which will be subject to a 25% levy. The move comes at an awkward moment for the EU, which is contending with a surge of Covid-19 cases and its worsening recession. For the last 13 months, the EU has faced U.S. tariffs on $7.5 billion dollars of European goods after Washington won a WTO (World Trade Organization) case against market-distorting aid. In a parallel lawsuit, the EU received final WTO permission to hit $4 billion dollars of American products with duties because of unfair subsidies to Boeing.
3) EU (European Union) regulators announced antitrust charges against Amazon. The European Commission considers Amazon’s collection of non-public data on its platform is then used to benefit its own retail business because sales of third-party retailers is then used to launch Amazon’s own products and undercut its competition. This complaint is one of the most common charges against Amazon as an anti-competitive outfit. About 2.3 million third-party sellers do business on the Amazon marketplace. The EU also has a second formal investigation which has officially been opened.
4) Stock market closings for – 11 NOV 20:
Dow 29,397.63 down by 23.29
Nasdaq 11,786.43 up by 232.58
S&P 500 3,572.66 up by 27.13
10 Year Yield: down at 0.96%
Oil: down at$41.62
1) After Amazon’s Prime Day was postponed by the virus in July, it was tentatively reset for the fourth quarter. Amazon didn’t want their Prime Day to overlap with Black Friday, which set an upper limit to the date, so now the company is planning for the 13th and 14th of October. Prime Day is a very big retail day for Amazon, with their 2019 Prime Day grossing about $6 billion dollars in sales.
2) Another round of stimulus still remains on the burner and with the fall elections now closing in, both sides are saying they want a new stimulus bill with a second direct payment to the people. But the bill remains in limbo with no agreement on the details of the bill. The question on everyone’s minds is the direct payment checks to the people and how much they will be. No settlement on that question, but the rumors are this one will be based on each person’s income instead of the single lump sum of last time, with an upper limit of $1,200 per individuals. Only time will tell how much, or even if there is a personal payment, because if not passed before the elections, the possibility of passing will rapidly decrease.
3) The coronavirus has been a big stimulus for e-commerce from the stay at home shopping it stimulated, but surprisingly the home shopping boom has also been a boom for the shipping industry. Those huge ocean going ships stacked high with intermodal containers, their transpacific sea freight shipping rates have been sent to the highest on record, helping the container shipping industry in Asia. Household appliances imports have jumped 51% in August from last year, climbing for a third consecutive month. Shipments of computers, notebooks and other associated electronic gadgets has soared 169%. This increase consumer demand has shipping rates almost triple from this year’s low in March, when the pandemic led to border closures and a near halt in economic activity. With much of the world’s people housebound, the demand for electronic goods and do-it-yourself items has skyrocketed. There is also the coming Christmas holidays and therefore the stocking up in anticipation of sales.
4) Stock market closings for – 22 SEP 20:
Dow 27,288.18 up 140.48
Nasdaq 10,963.64 up 184.84
S&P 500 3,315.57 up 34.51
10 Year Yield: down at 0.66%
Oil: down at $39.55
1) The old, almost extinct vinyl record album technology for music has surpassed the newer high technology CD music media this year, by selling $129.9 million compared to $232.1 million dollars for vinyl records. This is the first time vinyl has outsold CDs since the 1980’s. About 8.8 million records were sold with 10.2 million CDs, so number wise CD’s are still ahead. Overall, the music industry now is center on digital downloads, digital subscription and streaming services such as Spotify, Apple Music and YouTube with revenues up 12% overall. The recorded music for the first six months of 2020 was $5.6 billion dollars so combined vinyl and CD’s are just a small fraction of the total business.
2) Amazon is hiring again expecting to fill 100,000 part time and full time openings across the U.S. and Canada. This is in addition to 33,000 technology and corporate jobs announced just a week ago, many paying six figure salaries. The 100,000 labor jobs pay at least $15 an hour with a $1,000 sign up bonuses in some cities. Amazon is opening 100 new buildings this month because of the pandemic fueled sales surge with increase home delivery, as shopping habits shift to e-commerce. Market value for Amazon is now at $1.6 trillion dollars and continues climbing.
3) Oil giant BP (British Petroleum) says the demand for oil may have peaked last year, that global market for crude oil might never recover from the coronavirus pandemic. The company considers there are three scenarios for energy demand, all of which forecast a decline in demand for oil over the next thirty years. 1) ‘Business as usual’ oil demand increases slightly after the pandemic crisis passes, then plateaus around 2025 finally it declines after 2030. 2) Governments take more aggressive steps to curb carbon emissions, 3) there are significant shifts in societal behavior, both leading to a decline in oil demand. All point to a shift in the world economic system with a significant decline in growth for many countries.
4) Stock market closings for – 14 SEP 20:
Dow 27,993.33 up 327.69
Nasdaq 11,056.65 up 203.11
S&P 500 3,383.54 up 42.57
10 Year Yield: unchanged at 0.67%
Oil: down at $37.38
1) With 13 million Americans unemployed and their unemployment benefits running out, many will have only seasonal jobs to turn to. But with such wide spread unemployment, getting hired for seasonal work wont be easy. With the coming holidays, seasonal jobs traditionally mushroom with major companies already hosting hiring events to fulfill their temporary ranks. Companies like Michael’s will hire over 16,000 temporary people, with UPS expecting to hire over 100,000 for holiday package delivery. Retailers doing e-commerce, such as Amazon or Walmart are expected to need many seasonal workers and therefore are good places for job seekers to apply.
2) Fears are growing that the coronavirus crisis could cause a double dip recession, that the recession could end up looking like a roller coaster of ups and downs. The upsurge in virus cases is eroding consumer confidence and leading to renewed limits on certain businesses. Economic recovery can bloom then fade away only to repeat again. Some economic factors point to a recovery, yet others point downwards, with the picture further complicated by the ‘what ifs’ of the coronavirus and just how it will play out, where a second wave of the virus could be just as economically disruptive as the first one, maybe even more so. Additionally, a significant portion of the economy has been destroyed. Half the businesses in America are small businesses and at the start of the crisis, about half of those had cash reserves of just fifteen days or less . . . meaning by now they have gone bust! No one knows what the repercussion from such massive losses of business will ultimately have on the economy in general.
3) Mechanical breakdown insurance, which isn’t an extended warranty, but rather is insurance that pays for mechanical auto repairs of a car’s power train, much as accident insurance pays for the repair of body damage. It will have some amount for a deductible, then pays the remainder of a mechanic’s bill for repair, both labor and parts. Usually, any mechanic can be used. Most major insurance companies who offer auto insurance will also offer breakdown insurance too. Prices range from $20 to $100 a year.
4) Stock market closings for – 11 SEP 20:
Dow 27,665.64 up 131.06
Nasdaq 10,853.54 down 66.05
S&P 500 3,340.97 up 1.78
10 Year Yield: down at 0.67%
Oil: up at $37.39
1) Five American companies make up 24% of the S&P 500 Index, the big high tech companies Apple, Amazon, Microsoft, Facebook and Alphabet. These five companies made up 17% of the index at the start of the year. This makes a significant part of American net worth and security for retirement dependent on just a handful of stocks, which makes some financial advisers nervous having their eggs in too few baskets. One hiccup in the technology sector could mean major losses across the board.
2) Another shooting of a young black man Monday in South Los Angeles has sparked more protest that could lead to more city rioting. The man was stopped for violating vehicle codes, but then ran, with the police in hot pursuit. When police caught up with him, he punched one policeman in the face at which time a semiautomatic pistol dropped out causing both policemen to open fired. Since the victim didn’t have the weapon in hand, nor was it ever pointed at either police officers, so there are questions about the shooting. So far, protests have been peaceful.
3) The U.S. Justice Department is investigating the protest leaders and their funding in Portland and other cities for possible criminal activity. With riots and civil unrest now at a hundred days, and significant monetary loses have been occurred, questions are being raised about who is behind the well organized protesters seemingly intent on violent confrontation. Of especial interest is the loosely organized far left Antifa and the Black Lives Matter, and who is ultimately controlling their operations through funding and why.
4) Stock market closings for – 1 SEP 20:
Dow 28,645.66 up 215.61
Nasdaq 11,939.67 up 164.21
S&P 500 3,526.65 up 26.34
10 Year Yield: down at 0.67%
Oil: up at $43.01