12 March 2020

1) The WHO (World Heath Organization) has declared the coronavirus to be a pandemic, which in turn has cause the markets to make another plunge after its apparent recovery on Tuesday. The number of coronavirus cases world wide is now in excess of 100,000 with more than 1,000 in the U.S. The central banks in other western nations are cutting their interest rates in an attempt to minimize the effects of the virus and avoid a world wide economic slowdown. At present, there doesn’t seem to be an end to the markets volatility.

2) The United Kingdom is levying an additional 2% tax on big high tech companies starting the first of April. Call the ‘digital services tax’, it will levy a tax on the revenues from search engines, social media services and online marketplaces used by British citizens, but it only applies to companies making more than $650 million dollars and derive more than $35 million dollars revenue from UK users. This will encompass companies like Amazon, Apple, facebook and Google. The EU (European Union) is considering a similar tax, but with a 3% rate.

3) Oil production in the U.S. is expected to drop as a result of the dramatic collapse in oil prices. This would be the first decline in output since 2016 as drillers are cutting back on capital spending. Oil prices are below $35 a barrel, well below the breakeven price for most American shale fields. Oil prices have been pushed down by the economic impact of the coronavirus plus Saudi Arabia and Russian failing to agree on limited oil production.

4) Stock market closings for – 11 MAR 20 Stocks down 20% from their high.

Dow 23,553.22 down 1464.94
Nasdaq 7,952.05 down 392.20
S&P 500 2,741.38 down 140.85

10 Year Yield: up at 0.82%

Oil: down at $33.12

10 March 2020

1) Monday markets opened in a steep downward spiral from sell offs, driven by the coronavirus fears, followed by the sharp drop in oil prices. The Dow dropped 2,000 points, with a massive sell off of both the S&P 500 and Nasdaq, which triggered a key market circuit breaker that halted trading for fifteen minutes. There are widespread fears over the economic impact of low oil prices, with some experts fearing oil prices down to $20 a barrel. Gold prices crossed the $1,700 dollar an ounce, hitting the highest since December 2012. The banks are hard pressed as the interest continues to sink, cutting into their margins.

2) Experts speculate that the Feds will cut the interest rate to zero in the next few months in an effort to forestall a downturn of the economy. The entire U.S. yield curve fell below 1% for the first time in history on expectations that the Federal Reserve will cut rates to zero in the next few months. Some speculate the Feds may adopt a negative rate just as some European countries have, such as Germany’s -1%.

3) While checkout-free with cashless supermarkets is now a novelty, Amazon expects this technology to spread to other retailers. Amazon has announced it plans to license its automated checkout technology to other retailers, telling of several other companies that have already signed up for the technology. The technology has been proven with cashless convenience stores across America and with Amazon’s new Go-supermarkets. The technology represents another significant step in retail automation.

4) Stock market closings for – 9 MAR 20: The stock market is like a rectal thermometer- it’s rude and crude, but surprisingly effective in showing a sick economy.

Dow 23,851.02 down 2013.76
Nasdaq 7,950.68 down 624.94
S&P 500 2,746.56 down 225.81

10 Year Yield: down at 0.50%

Oil: down at $30.24

27 February 2020

1) South Carolina has the lowest unemployment rate with 2.3% which ties with Utah and Vermont. But while there’s lots of jobs, they mostly pay low wages making it hard for people to make a living. The state is typical of states across the U.S., with job growth looking strong on the surface, but much of the work is meager wages and few benefits. As automation pushes more people down to the lower paying ranks, they find themselves struggling to acquire the basics of living, even with wages that are above the minimum wage.

2) With the government’s announcement that Americans should prepare for a Covid-19 (coronavirus) crisis, and the continual spread of the virus, prices of hygienic masks have surged upwards. Tracking the product on Amazon shows an immediate rise just twenty-four hours after the announcement. A pack of disposable masks which were $125 surged to $220 in just three days, showing the deep concerns people have to the coronavirus threat.

3) Micro units are small dwellings of about 350 square feet or less, which may be the answer to affordable housing. The micro unit comes complete with a kitchen, bathroom and living or sleeping space comparable to studio apartments in Paris, Tokyo or Rome. This gives everything needed for basic living, but little else. Micro units are approximately 20% to 30% cheaper than conventional sized units, and are most popular with young single working adults, age under 30, who are willing to compromise space for location, amenities and cost savings.

4) Stock market closings for – 26 FEB 20:

Dow 26,957.59 down 123.77
Nasdaq 8,980.78 up 15.16
S&P 500 3,116.39 down 11.82

10 Year Yield: down at 1.31%

Oil: down at $48.65

26 February 2020

1) Global trade experiences its first full-year drop since the financial crisis, with weaker world growth and a manufacturing recession taking their toll. The spread of the coronavirus, with its impact on businesses and households, is increasingly pulling world economics down. While the decline isn’t huge, it is the first since 2009 and follows growth of more than 3% in 2018. The virus has shut off huge areas of China causing the closing of factories and now is spreading internationally.

2) The markets continue to follow the Dow’s thousand point drop with more large loses. To add to the financial worries, bond yields are slipping down, raising concerns that the global economy is slowing significantly because of the spreading coronavirus. There is heavy buying of treasuries in order to shelter money, with the ten year Treasury yield traded at 1.32%, an all time low, with the thirty year bond yield also reaching a record low. Analysts are already cutting their earnings estimates for the first quarter, further dampening hopes for better near term growth.

3) Retail giant Amazon has opened its first Go Grocery store in Seattle. The automated store is cashierless where customers walk in, and get what they want, and on walking out, computer and sensors electronically charging their purchases. The store is over 10,000 square feet and has about 5,000 items including fresh produce, meats and alcohol. This is just another example of the grocery retailers efforts to automate their operations and reduce labor costs.

4) Stock market closings for – 25 FEB 20: Dow is down 1900 points in two days and some experts fear the markets are 500 points away from being a correction.

Dow 27,081.36 down 879.44
Nasdaq 8,965.61 down 255.67
S&P 500 3,128.21 down 97.68

10 Year Yield: down at 1.33%

Oil: down at $50.10

10 February 2020

1) China has announced a 50% cut in its tariffs on $75 billion dollars worth of imports from America. This is in response to last months U.S. tariff cuts on $120 billion dollars on China imports to America. This is all part of the ‘phase one’ trade deal between China and the U.S. to normalize trade between the two nations.

2) The Department of Transportation (DOT) and the National Highway Traffic Safety Administration (NHTSA) have approved a regulatory exemption for Nuro’s next generation of self driving delivery vehicles they call R2. This exemption will allow testing on public roads for deliveries to customer’s homes. The R2 is a zero occupant vehicle. After public road testing, Nuro will begin the first driverless deliveries in Houston with partners Walmar and Domino’s.

3) The internet retail giant Amazon will hire 15,000 new employees in Seattle to work in a new 43 story tower now being planned, with construction expected to be completed by 2024. Amazon now has 789,000 workers in the world, a 23% increase from a year ago. Amazon has also expanded in New York City by leasing 335,000 square feet of office space, and in northen Virginia’s Crystal City they’re building a second headquarters.

4) Stock market closings for – 6 FEB 20: All three markets set record highs as fears of coronavirus fears subside.

Dow 29,379.77 up 88.92
Nasdaq 9,572.15 up 63.47
S&P 500 3,345.78 up 11.09

10 Year Yield: unchanged at 1.64%

Oil: down at $51.09

29 January 2020

1) Amazon it pushing hard to establish its Kuiper broadband internet access satellite system. The planned satellite system will have 3,236 satellites in polar orbits to form a mega-constellation system in low earth orbit that will provide broadband internet service for billions of people around the world who are currently being under served. Amazon is pushing the FCC for expeditious granting of application for system. SpaceX and One Web have also started their planned mega-constellation satellite system.

2) North Korea’s economy is largely hidden from the world because it’s one of the most secretive nations. But it’s known the economy is struggling because of its isolationism, where the average worker makes less than $2,000 a year with much of its population undernourished. Citizens are paying as much as $12,000 to defect.

3) Boeing Aircraft has secured over $12 billion dollars to finance its 737 MAX crisis. Loans from over a dozen banks will shore up Boeing’s balance sheet until deliveries of its 737 MAX can resume with resulting revenues coming in. This is at least $2 billion dollars more than Boeing originally sought, making the loans a vote of confidence of its future. The loan is a delayed-draw loan, meaning the company may not use it immediately.

4) Stock market closings for – 28 JAN 20: Markets rebound from threat of coronavirus.

Dow                      28,722.85    up    187.05
Nasdaq                  9,269.68    up     130.37
S&P 500                 3,276.24    up       32.61

10 Year Yield:    up   at    1.64%

Oil:    up   at    $53.98

20 January 2020

1) A year ago, Boeing Aircraft had record revenues of over $100 billion dollars, anticipating delivery of record number of aircraft including the 737 MAX jetliner. With the grounding of its 737 MAX, that has been reversed with Boeing posting losses from massive pay outs as well as lost revenues as undelivered aircraft sit waiting in its parking lots. Boeing may ultimately have $20 billion dollars in cost from the 737 MAX problem. Boeing’s problems has been a bonus for China’s airline manufacturing giving them a big advantage to gain market share.

2) India is resisting Amazon’s efforts to expand into India with an investment of $1 billion dollars, fearful of predatory business practices. The investment would bring Amazon India investment up to $6.5 billion dollars. But Amazon is meeting growing resistance, first with an Indian anti-trust investigation by Indian regulators, then protest from a confederation of Indian traders and organizations.

3) As hiring surged in November, the employment market got tighter, job openings plunged to their lowest level in nearly two years. The total vacancies is down by 561,000 to 6.8 million for the month. This is the lowest since February of 2018, the trend telling the economy has finally reached full employment. The biggest drops came in retail and construction.

4) Stock market closings for – 17 JAN 20: All three exchanges closed on record highs.

Dow          29,348.10    up    50.46
Nasdaq       9,388.94    up    31.81
S&P 500      3,329.62    up     12.81

10 Year Yield:    up   at    1.84%

Oil:    up   at    $58.81

16 January 2020

1) Nigeria may become the superpower of Africa, repeating the economic miracle of China and India. While investors are not moving into Nigeria yet, they are watching. Like China and India, Nigeria was once a colony of the west, and like India, was a colony of the British, and just like India its language is English. Right now, Nigeria is economically where China was forty years ago, before Mao Zedong died and Deng Xiaoping deregulated the economy to unleash it. For many other reasons, Nigeria is set to repeat the economic miracle of China.

2) House mortgage applications has soared to its highest level in eleven years, for new homes and refinance. Applications are up 30.2% from last week, and are 109% higher than a year ago. The interest rates are under 4% , combining with a rosy economic outlook and high employment causing home buyers to rush into the market. This is causing a near record low supply of housing across America, pushing prices up.

3) Retailer giant Target didn’t have a strong holiday sales in their toy departments, less than what was expected. This is ringing alarm bells for the entire industry. While Target gained market share in toys, its toy sales were flat over the 2019 holidays compared to last year. Toy makers like Hasbro, Mattel and Spin Master are offering a smaller variety of toys and games, a result in part from the bankruptcy of Toys-R-Us. Increasingly, toy sales is going to online retailers such as Amazon.

4) Stock market closings for – 15 JAN 20:

Dow            29,030.22    up    90.55
Nasdaq         9,258.70    up      7.37
S&P 500        3,289.29    up      6.14

10 Year Yield:    down   at    1.79%

Oil:    down   at    $58.13

13 January 2020

1) Several name brand products have decided to withdraw from Amazon for direct sales, the latest being Ikea, who started selling through Amazon in 2018. Other brand names such as Nike, Birkenstock and PopSockets are withdrawing too, considering it isn’t worth the hassle. There are growing fears that more big brands will flee the site, although their products can still be purchased through third party sellers on Amazon.

2) A ransom ware attack on foreign currency exchange company Travelex on New Year’s Eve has disrupted cash deliveries from its network of vaults to world banks. Banks in U.K. such as Barclays PLC, Lloyds Banking Group PLC and Westpac Banking Corp. are unable to take orders from customers in branches relying on Travelex services. Travelex was attacked with a ransom ware software virus called Sodinokibi often called Revil that locks up data via encryption.

3) Half the work force doesn’t expect to retire at age 65, while 13% don’t expect to retire at all. The average worker needs to have three quarters of a million dollars saved for retirement in order to maintain their standard of living. People are just not able to accumulate such wealth with conventional 401K plans, requiring significant additional investments by individuals. This is particularly difficult for middle and lower class American workers who are struggling to meet their basic livelihood expenses.

4) Stock market closings for – 10 JAN 20:

Dow            28,823.77    down    133.13
Nasdaq         9,178.86    down      24.56
S&P 500        3,265.35   down          9.35

10 Year Yield:    down   at    1.82%

Oil:    down   at    $59.11

9 January 2020

1) The result of the Iranian missile attack on gas prices is expected to be minimal. Oil prices did briefly surge on Tuesday on news of the attacks fueling fears of a Middle East war between Iran and America, spiking 4% to top oil prices of $65 a barrel, but slipped down to 1.3% early next day. Some are expecting gas prices across the nation to rise five to ten cents per gallon over the next several days.

2) Data for the fourth quarter indicated 2019 will show strong growth, which will most likely lead into a strong growth for 2020. The GDP (Gross Domestic Product) growth for the fourth quarter is estimated to be 2.3%, better than the 2.1% growth for the third quarter. This would close out the GDP growth for 2019 at 2.4%, down from the 2.9% growth of 2018, but still enough to put fears of a recession to rest.

3) Walmart has unveiled its latest technology to counter Amazon and Kroger in the grocery battle- a grocery picking robot. The automated grocery system is called Alphabot and is designed to pick and pack orders as much as ten times faster than a human. The robot will allow Walmart to rapidly expand its capacity to fill orders for ‘demand on online’ grocery shopping. The Alphabot is a 20,000 square foot facility built onto present stores consisting of about 30 small cubic robots inside a giant shelving system, which can pick and pack products from a selection of 4,500 items.

4) Stock market closings for – 8 JAN 20:

Dow               28,745.09    up    161.41
Nasdaq            9,129.24    up      60.66
S&P 500           3,253.05    up      15.87

10 Year Yield:    up   at    1.87%

Oil:    down   at    $59.98