2 November 2020

1) America’s economy is expanding at a record pace after a historic decline from the Covid-19 crisis. The economy grew at an unprecedented 7.4% pace from the second to the third quarter, which on an annualized basis, would be a growth rate of 33.1%. This would be the highest annualized growth rate on record. While this is undoubtedly positive, it comes with lots of caveats, for the U.S. economy is still in a deep hole with the gross domestic product still about 3.5% below the level recorded in the fourth quarter of 2019. Second, the economy is slowing. Third, there are about 11 million fewer people on payrolls than before the pandemic hit, plus layoffs persist. Finally, the report is a political football with politicians framing the numbers to best serve their individual’s objectives.

2) Cruise ships can begin a phased return to operations starting Nov. 1 under new health protocols. There has been 74 recommendations made for a potential safe return to cruising, including a new focus on “air management”, lower ship capacities, shorter sailing times, required testing and masks, and enhanced cleaning and medical staff on voyages. There are four phases to return to cruising, beginning with cruise ships establishing coronavirus testing of all crew. Phase 2 will be simulated voyages to test the ability to mitigate Covid-19 on cruise ships. Phase 3 is certification by the CDC, and the final phase is a return to passenger voyages.

3) One question this fall is America’s energy future of whether, and to what extent, we should transition from reliable fossil fuels, such as oil and natural gas, to more intermittent sources of energy such as wind and solar power. But arbitrarily halting oil and natural gas development would do serious harm to our economy, and thereby jeopardize post-pandemic recovery. Businesses need reliable, low-cost energy to reopen and return to normal operations, and presently fossil fuels currently accounts for 80 percent of overall American energy production. At the start of this year, the oil and gas industry was responsible for 12.3 million American jobs, while also generating $1.6 trillion dollars in federal and state tax revenue. So if the oil and gas revenue dries up, major public services will be reduced or even cut. The simple fact is that the United States cannot continue on the path of recovery without a thriving oil and natural gas industry because it supports jobs, lowers energy costs for families and businesses, and strengthens our energy and national security.

4) Stock market closings for – 30 OCT 20:

Dow 26,659.11 up 139.16
Nasdaq 11,185.59 up 180.73
S&P 500 3,310.11 up 39.08

10 Year Yield: up at 0.84%

Oil: unchanged at $36.10

9 October 2020

1) The airlines around the world are expected to lose $77 billion dollars in the second half of 2020 as Covid-19 continues to crush air travel demand. There are desperate efforts to cut cost by cutting jobs, grounding aircraft and consolidating work, but all their efforts are not enough. The first half of 2020 has been brutal for airline business and the rest of the year isn’t looking much better despite modest increase in air travel. This translates into losing $13 billion dollars a month or $300,000 a minute. At the start, U.S. airlines were burning about $100 million per day, which they reduced to about $30 to $40 million at the end of the third quarter. The airlines hope to reach zero ‘cash burn’ by year’s end using workforce reductions and operational consolidation. Air travel in America is down roughly 70% from 2019.

2) As another hurricane is approaching through the Gulf of Mexico, oil workers are evacuating oil rigs in the gulf ahead of Hurricane Delta, in turn causing oil prices to rise in anticipation of lower available oil. Oil prices had been falling Wednesday, but started rising as the storm came into the Gulf and the off shore evacuations began. So far, 183 offshore oil facilities have been evacuated which has halted nearly 1.5 million barrels per day of oil output. In July, the Gulf of Mexico produced oil at 1.65 million barrels per day, which is 17% of U.S. crude oil output. The demand for oil at refineries is 13.2% lower than a year earlier, a result of the virus crisis.

3) Electric car maker Elon Musk is pushing his company to boost production to build half a million cars in one year. That means producing 170,000 cars in the fourth quarter, a 17% increase from the third quarter. A half a million cars would be a milestone for Musk’s company, a first in the history of Tesla. So far, Tesla has produced 330,000 cars while also posting profits for its fourth consecutive quarter. Additionally, Tesla is pushing production numbers up by adding more production capacity.

4) Stock market closings for – 8 OCT 20:

Dow 28,425.51 up 122.05
Nasdaq 11,420.98 up 56.38
S&P 500 3,446.83 up 27.38

10 Year Yield: down at 0.76%

Oil: up at $41.27

7 October 2020

1) Ikea, the big Swedish world wide modular furniture manufacture, has experienced a surge in sales from the pandemic as people turned homes into offices and schools. Their online sales are up 45% over the last 12 months to August, with 4 billion visits to their website. Outdoor furniture is the fastest growing category, followed by office furniture. While many of their stores were forced to close from the virus, their online sales remain high even as stores reopen. The furniture retailer has added 6,000 new employees world wide to make a total work force of 217,000. Online sales account for about one fifth of total sales.

2) Job openings in America fell in August for the first time in four months, indicating a moderation in hiring as the crisis continues. Available positions slipped down to 6.49 million from July’s 6.7 million. These numbers do not include recalls from layoffs or positions that are offered only internally. However, layoffs and discharges are at a low for August, although there are still 13.6 million Americans unemployed, which means there are about 2 unemployed competing for each job opening. There are fewer vacancies in construction, retail and health care industries, while vacancies increased for manufacturing, food service and government.

3) Federal reserve Chairman Jerome Powell says America is on the long road to economic recovery from the pandemic induced recession, but still there are other problems on the horizon. There are fears of the economy shifting into reverse once again, especially if a resurgence of the virus comes with cold weather . . . the flue season. Such a resurgence could significantly limit economic activity leaving many unemployed stranded with no jobs for many more months. Powell is calling for the passing of the second stimulus bill presently being debated in the Congress. He considers the risk of pouring too much money into the economy far lower than the risk of not spending enough, despite the already sky high federal budget. While he considers the debt is on an unsustainable path, and has been for some time, but this is not the time to address it.

4) Stock market closings for – 6 OCT 20:

Dow 27,772.76 down 375.88
Nasdaq 11,154.60 down 177.88
S&P 500 3,360.95 down 47.68

10 Year Yield: down at 0.74%

Oil: up at $39.83

16 October 2020

1) There are mounting fears that a surge in Covid-19 this fall and winter could kill 2,900 people a day in America. This is reminiscent of the World War I Spanish Flu pandemic in the fall of 1918 which killed 195,000 Americans in just the month of October. With colder weather, more people gather indoors increasing the risk of coronavirus spread. There are also the risk of catching the flu and Covid-19 at the same time, with makes a person more vulnerable by overwhelming the immune system. Risk of infection spreading has increased with the opening of schools. The increase risk isn’t in just America, with infections spikes in Europe. Paris is closing its bars again trying to arrest the increasing spread of the virus. The city is also banning student parties and putting limitations on outdoor gatherings.

2) The huge movie theater chain Regal Cinemas has announced it is closing all of its locations in the U.S. and U.K. There are 536 stateside Regal Cinemas and 127 Regal and Picturehouse Cinemas in the U.K., all to close down. This is a result of two factors, the first is limited seating and hence reduced revenues in theaters. A further consequence of the pandemic is the limited cinematic offerings for customers because of film release delays. The theater chain will reopen when movie studios resume regular production. The majority of its 45,000 employees will either be furloughed or forced to take unpaid leave until then. AMC, the world’s largest movie theater chain has announced that it is generating almost no revenue and has lost as much as $2.4 billion dollars in the first quarter of 2020 alone.

3) Another result of the coronavirus is the shape increase in drug costs such as cocaine, heroin, marijuana and methamphetamine, which are up 20 to 50% of pre-virus prices. This is largely because of restriction on the U.S. – Mexico boarder, which now restricts non-essential travel across the boarder, where most of the illicit drugs is entering the country. The virus is effecting the drug prices by also interfering with the cultivation of coca and poppies in foreign lands.

4) Stock market closings for – 5 OCT 20:

Dow 28,148.64 up 465.83
Nasdaq 11,332.48 up 257.47
S&P 500 3,408.63 up 60.19

10 Year Yield: up at 0.76%

Oil: up at $39.43

29 September 2020

1) A railroad link between Alaska and Canada has been a dream for generations, because such a rail link would reduce Alaska’s costs for goods and services. It would also give Canada’s land locked oil-sands access to ports in Alaska, therefore making for more domestic oil reserves, but such a railroad line faces numerous steep challenges. President Donald Trump has endorsed such a proposal, but several regulatory agencies in both America and Canada must first approve such an undertaking before the first shovel full of dirt can be moved, and this is expected to take years to get permits. The Alaska-Alberta railway Development Corporation (A2A Rail) project would be privately funded costing about $17 billion dollars and would run about 1,600 miles.

2) The plague of wild fires continues in California with several new fires in Northen California consuming thousands of acres a day. The fires are consuming vineyards and destroying the wine business, including grape vineyards that have produced for over a hundred years. The heat wave continues to bring dry air into the conflagration, thus drying out vegetation to make ideal fuel for fires, while strong winds are fanning and spreading the flames. Fires are around the San Francisco area, the Napa-Sonoma wine region and Shasta County which are consuming land at a prodigious rate. Two major fires are the Zogg Fire, which has burned through 15,000 acres and the Glass Fire burning through 11,000 acres. The damage is being created so fast that estimates of dollar losses can not be reliably made.

3) The Congress continues to struggle with a second stimulus bill, the Democrats looking to score at the polls if passed before the election. The big question and holdup is the personal stimulus check to individuals and how much it will be this time. It now appears that $1,200 will be the maximum for individuals, but this time there will be restrictions which will lower the amount for many people based on how much their income is. After nearly two months of relative inactivity, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have agreed to resume negotiations.

4) Stock market closings for – 28 SEP 20:

Dow 27,584.06 up 410.10
Nasdaq 11,117.52 up 203.96
S&P 500 3,351.60 up 53.14 %

10 Year Yield: unchanged at 0.66%

Oil: up at $40.57

3 September 2020

1) Major American companies are extending their ‘work from home’ policy, such as Google, Uber and Airbnb, until the summer of next year. The companies Zillow, Twitter, Facebook and Square have announce that employees can work from home indefinitely. Some companies are also offering stipends to employees for home office equipment as well as a $500 quarterly credit to use specifically on Airbnbs. This at home work policy remains in effect even after offices start reopening. The work at home is even spreading across the international scene with electronic giant Hitachi having 70% of its employees work permanently from home. Nationwide Insurance plans to downsize from 20 physical offices to just four with the majority of its employees continuing to work permanently from home. It’s looking more and more like working at home is becoming the norm for the future in America.

2) In a bid to counter the competition of e-commerce, the traditional department store giant Macy’s has started opening new, smaller stores away from the malls, reflecting a growing trend in the retail industry. The retail giant will test small-format Macy’s and Bloomingdale’s stores outside of underperforming malls, joining a growing trend in retail. The test stores will begin operation the fourth quarter of 2021 in Dallas, Atlanta and Washington DC. Many other major retailers are turning away from the mall format of retailing, leaving many malls withering on the vine, with foot traffic on the decline even before the Convid-19 crisis. This is another indication of a shift in American culture and society.

3) Fashion retailer Old Navy has announced they will pay their employees to work at polling stations comes election day. Each employee will be paid a full days wages for their poll work. Furthermore, store employees will have up to three hours of paid time-off on election day to vote. Old Navy joins other retailers such as Patagonia, PayPal and Levi Strauss & Co. to help in the national elections.

4) Stock market closings for – 2 SEP 20:

Dow 29,100.50 up 454.84
Nasdaq 12,056.44 up 116.78
S&P 500 3,580.84 up 54.19

10 Year Yield: down at 0.65%

Oil: down at $41.78

27 August 2020

1) Large hurricanes bring economic damage on a large scale when they make landfall. This season’s biggie is Hurricane Laura now expected to make landfall as a category 4 storm this Wednesday evening or early Thursday morning. The National Hurricane Center rates the storm as having an “un-survivable storm surge” with large and destructive waves causing catastrophic damage along the coast of eastern Texas to the eastern part of Louisiana. The surge could penetrate up to 30 miles inland from the coast. Add to this, the catastrophic wind damage, and Laura promises to carry a large price tag economically as the storm continues first up into Arkansas then across the United States for the Atlantic with rains and flooding. This year is forecast to be a very active hurricane season so more economic damage may be in the play book.

2) Walmart is suspending its InHome delivery service, which offered the convenience of having people’s groceries delivered and unpacked by the delivery person in the customer’s kitchens. But because of the Convid-19 crisis and the need for contactless service, Walmart is discontinuing the service in favor of its Doorstep Delivery service, where groceries are delivered to consumers but now is left on the door step. With its other two delivery service, Walmart is becoming a strong contender in the e-commerce business.

3) Two long established regional grocery chains have filed for bankruptcy, another sign of the shifting of retail business in America, as traditional retailers fail to adapt to the new economic world. Balducci’s and Kings Food Markets of the north eastern coast were having financial struggles before the pandemic set in, but even thought both had a boost in sales from the pandemic, it wasn’t enough to save them. All stores will remain open as their holding company seeks a buyer. The two grocery chains date back to the first half of the twentieth century and they prospered through the decades before e-commerce.

4) Stock market closings for – 26 AUG 20:

Dow 28,331.92 up 83.48
Nasdaq 11,665.06 up 198.59
S&P 500 3,478.73 up 35.11

10 Year Yield: unchanged at 0.69

Oil: unchanged at $43.43

17 August 2020

1) Across America, schools are struggling over if and how they should open and operate amidst the Covid-19 crisis while knowing students are infected in growing numbers. Schools are opening their doors only to have to quickly backtrack as soon as infections pop up. Debates rage over using ‘remote learning’ verse ‘in class’, with a mirid of problems with either strategy. Add to this is fears of teachers and bus drivers being exposed to potentially life threatening infections. The main problem is schools just aren’t designed for social distancing, either in the classroom or hallways. There isn’t any federal standards to guide local schools in the opening and operating of schools in the shadow of the pandemic.

2) First class mail volume had declined significantly in America, especially since the pandemic, so the USPS (United States Postal Service) is removing mailboxes in parts of Oregon. The USPS has seen a significant decline in revenue, a decline that has been on going for many years as electronic billing/payment and email has become increasingly popular. This could be portends of things to come in the near future, as the USPS struggles with money to operate.

3) With China’s announcement of its latest combat drills near Taiwan, the democratic island is increasing its defense spending. China’s aggressiveness, both military and economic, in the pacific area is raising fears of surrounding countries about their safety. Japan is also concerned over what China might do with her fast growing military power. Taiwan is increasing their military budget by 10.2%. Since the early days of the cold war, Taiwan has been threatened by China, including direct military attacks, so Taiwan knows that China has to be taken seriously. The island nation is discussing acquiring sea mines to deter amphibious landings as well as cruise missiles for coastal defense. Last year the State Department approved $10 billion dollars in arms sales. Additionally, Taiwan is beginning free trade talks with the U.S., a move that would bring the two countries closer together.

4) Stock market closings for – 14 AUG 20:

Dow 27,931.02 up 34.30
Nasdaq 11,019.30 up 23.20
S&P 500 3,372.85 up 0.58

10 Year Yield: down at 0.71%

Oil: down at $42.23

11 August 2020

1) Online retailer giant Amazon is considering taking over closed department stores in some malls to use as warehouses in their distribution system. Amazon is in talks with Simon Property Group, America’s largest mall owner, to convert J.C. Penny and Sears stores into distribution hubs for package delivery. Simon malls have 63 J.C. Penny and 11 Sears stores available. With many traditional brick-and-mortar stores in collapse, such a deal would make sense for both Amazon and Simon. Amazon is looking for more space closer to where customers live to help with its one day delivery strategy, while Simon needs cash rich tenants to bolster their business.

2) A report that outlines the three potential future movies in the Star Trek franchise has been released. The movies for Star Trek follow-on’s have been in limbo since the 2016’s Star Trek Beyond. There are three potential projects being considered for possible production, including a Tarantino’s Star Trek movie. The first movie by Noah Hawley (Fargo and Legion creator) is centered on a pandemic story line using a brand new cast, but is now on pause. The second is a movie by Tarantino, of Pulp Fiction fame, as writer, but not necessary directing it. Something of a take on of a prior Star Trek episode, it would be largely an earthbound 1930’s gangster setting. The third is a far more traditional Star Trek with the recent stars Chris Pine and Zachary Quinto. The next few weeks is expected to yield the fate of the Star Trek franchise.

3) Latest job numbers show 1.8 million new jobs created last month to give a 10.2% unemployment rate. This is another coming down of the rate, a good sign for the economy. This leaves 43% unemployed of the 22 million people who lost their jobs from the pandemic, so the economy is still a long way from a full recovery. Fears are that it will be a long time before full recovery, what with the large number of small businesses that have succumb to the Covid-19 crisis with subsequent loss of jobs. The continual struggling price of oil indicates a still weak international economy.

4) Stock market closings for – 10 AUG 20:

Dow 27,791.44 up 357.96
Nasdaq 10,968.36 down 42.63
S&P 500 3,360.47 up 9.19

10 Year Yield: up at 0.57%

Oil: up at $41.99

7 August 2020

1) Another drop in applications for unemployment benefits is giving hope for the economy. For the week ending 1 August, there were 1.19 million jobless claims, down by 249,000 claims. Total unemployment is now at 16.1 million, the lowest since April. But even with continual drops, the claims are still five times the pre-crisis levels. More than decreasing claims is needed for the economy to improve, for much more hiring is required. There are fears of conditions improving so sluggishly, that the effects of the crisis become increasingly permanent. With the resurgence of the pandemic, there are signs of the economy stalling in what is already a fragile economy.

2) The Covid-19 crisis is fueling the need for high speed internet access, and rural America is responding with their electric and telephone co-ops using loans from the federal government. Subscribers are getting speeds up to 1 gigabit per second, with some planning for speeds up to 10 gigabits per second. Rural areas have the duel problem of low population densities and long distances, so its not economically feasible for private companies to install systems. The only alternative is satellite internet systems.

3) The Bank of England is warning of the potential risk of what’s called the ‘shadow banks’ in amplifying the volatility of unstable economies. Funds in investments like pension funds, investment funds like real estate investment trusts and money market funds are increasingly absorbing the cash once kept in banks, but are not as secure in times of crisis as traditional banks. This makes it harder for businesses to access their money when needed most. The non-banks impact in a financial turmoil is being assessed, lead by the Bank of England.

4) Stock market closings for – 6 AUG 20:

Dow 27,386.98 up 185.46
Nasdaq 11,108.07 up 109.67
S&P 500 3,349.16 up 21.39

10 Year Yield: down at 0.54%

Oil: down at $41.97