30 March 2020

1) A second virus shock wave is already hitting China’s factories as European factories are delaying orders and asking for delays in payments as the coronavirus sweeps across Europe closing their factories. These are cutting off orders to Chinese factories just as they were beginning to come back to life, a double hammer blow to China’s economy. Estimated April to May sales are expected to be down as much as 40% from last year. This is raising grave doubts about the world’s second largest economy being able to repair damage and return to its pre-virus station.

2) The Index of Consumer Sentiment dropped to 89.1 in March, the lowest level since October 2016, a three year low. It is the fourth largest in nearly 50 years. Further declines is dependent on the success of curtailing the spread of the virus and how soon households receive funds from the government stimulus. To date, there are 540,000 cases of coronavirus with America overtaking China and Italy with the most cases having a total of 85,000.

3) The Department of Justice is investigating the credit scoring firm FICO for possible antitrust violations. There are three other major credit companies: Equifax, Experian and TransUnion. FICO is the only scoring model accredited by mortgage loan companies Fannie Mae and Freddie Mac. The DOJ investigation comes after TransUnion’s antitrust countercase against FICO. The lenders determine which credit scoring system is utilized on a loan application, not the consumer or loan applicant.

4) Stock market closings for – 27 MAR 20:

Dow 21,636.78 down 915.39
Nasdaq 7,502.38 down 295.16
S&P 500 2,541.47 down 88.60

10 Year Yield: down at 0.75%

Oil: down at $21.84

26 March 2020

1) The coronavirus crisis has also crippled the sales of automobiles with March sales down by an expected 35.5% and 15.3% decline expected for 2020. The decline poses the largest threat to the auto industry since the Great Recession which resulted in the bankruptcy of General Motors and Chrysler. Globally, auto sales are expected to drop by 12%, which is greater than the 8% of the Great Recession. Most dealers are keeping their doors open, although some are only allowed to keep their service centers open during the shutdown order.

2) The coronavirus crisis has brought negative rates to the U.S., the first time for negative yields on government debt. The yields on both one-month and three-month Treasury bills have dipped below zero on Wednesday. Negative yields have been a part of European markets for months now, with many expecting the same to come to America.

3) Many entertainment facilities and events have been canceled because of the coronavirus pandemic with the closing of Disneyland and Disney World being the first world renowned closures. A long list of political events, theme parks, sporting events and leagues, cultural and concerns closures has been joined by the announcement that the 2020 Olympics in Tokyo has been postpone for a year. The economic losses, both direct and indirect, are near incalculable to make. This will add to the total economic downturn of the world with innumerable support and supply businesses suffering.

4) Stock market closings for – 25 MAR 20:

Dow 21,200.55 up 495.64
Nasdaq 7,384.30 down 33.56
S&P 500 2,475.56 up 28.23

10 Year Yield: up at 0.86%

Oil: up at $24.31

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

3 March 2020

1) Consumer electronics giant Samsung has started building a $220 million dollar research and development center in Hanoi, Vietnam. The center is to be completed by the end of 2022 and will employ between 2,200 to 3,000 people, and will be the largest of its kind in Southeast Asia. It will do research on subjects like artificial intelligence, internet technology, big data and 5G. Samsung is the single largest foreign investor in Vietnam, with investments totaling $17 billion dollars.

2) Huawei technologies, the controversial 5G supplier, is circumventing the barring of doing business with U.S. suppliers of critically needed electronic chips, by turning to manufacturing their own versions. The strategy appears to be working with Huawie selling more than 50,000 next generation base stations free of U.S. technology in their last quarter. The company is quickly ramping up its HiSilicon division to make more America component free devices, amide accusations that Huawei is stealing the intellectual property in making their own chips.

3) History shows that stocks often rebound quickly from a disease outbreak. Within six months, stocks are usually on the mend from drops caused by disease outbreaks. After the disastrous drops of last week, the markets started surging upward again, giving validity to this hypophysis- ‘Invest with a plan, instead of trying to predict trends.’

4) Stock market closings for – 2 MAR 20: Single greatest-gain in one day ever.

Dow 26,703.32 up 1293.96
Nasdaq 8,952.16 up 384.80
S&P 500 3,090.23 up 136.01

10 Year Yield: down at 1.09%

Oil: up at $47.52

28 February 2020

1) Many on Wall Street are betting the Federal Reserve Bank will again reduce the cost of borrowing in light of the coronavirus economic threat. Futures contract traders consider there is nearly a 60% chance of a rate cut this March, when the Feds meet, in an effort to counter the effects of the virus on America’s economy. While it appears the spread of the pathogen is declining in China, elsewhere in the world it’s on the rise.

2) Oil prices continue its downward spiral with a twelve month low for U.S. crude. The drop in oil prices is in anticipation of slowing of the U.S. and world economies, a direct result of the spreading coronavirus threat. China, a major world importer of oil, has cut back purchases as it containment policies reduces oil consumption from limited travel to and from major cities, as well as travel within those cities.

3) The home food delivery business continues to grow with DoorDash filing the paperwork with the SEC (Security and Exchange Commission) to start the IPO (Initial Public Offering) process to offer stock to the public. The IPO process has met with poor results from unprofitable companies like Lyft Inc. and Uber Technologies Inc. while WeWork was forced to abandon its IPO last year because of a poor showing of its stock. DoorDash faces the same challenges as Lyft and Uber..

4) Stock market closings for – 27 FEB 20: This is the worst point decline ever for the three markets. The Dow has dropped 3,000 points since Monday.

Dow 25,766.64 down 1190.95
Nasdaq 8,566.48 down 414.30
S&P 500 2,978.76 down 137.63

10 Year Yield: down at 1.30%

Oil: down at $46.34

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

4 February 2020

1) All ready shaken by the trade war, China is now being racked by the coronavirus, with fears of the virus pushing the Chinese markets down by $393 billion dollars on the first day of trading since the Lunar New Year. This is an 8% drop on the Shanghai composite index, the biggest drop in more than four years. This is despite the biggest cash injection of China’s financial system since 2004. Additionally, commodities contracts have all posted sharp drops, a strong indication of an economic slowdown.

2) The shopping malls are dying as shopping habits of consumers change over to the internet. It’s estimated that 25% of American malls will shut their doors by 2022, and more of the 9,300 retail stores that closed in 2019 were in malls. Mall owners are searching for ways to halt the trend of shrinking retailing in malls, including buying major retail companies such as Forever 21 and Aeropostale.

3) As traditional brick-and-mortar stores continue its slide downwards, a number of companies are considered at risk of bankruptcy this next year. Stores like Neiman Marcus ply their way in red ink, including J. Crew, Francesca’s, Rite Aid, JCPenny, Pier 1, Dressbarn, Destination Maternity, Men’s Wearhouse and Stein Mart. Companies heavy into cloths and fashion ware are the ones struggling the most to avoid the bankruptcy courts.

4) Stock market closings for – 3 FEB 20:

Dow              28,399.81    up    143.78
Nasdaq          9,273.40    up     122.47
S&P 500         3,248.92    up       23.40

10 Year Yield:    unchanged   at    1.52%

Oil:    down   at    $49.91

31 January 2020

1) Hallmark Greeting Cards is suffering a downturn in the brick-and-mortar retail industry, closing sixteen of its retail outlets across America. Social media is crushing the card business, so it’s no longer a viable business. People use to buy and send cards all the time, but now it’s all online. This is just another indicator of how the retail business is changing, more people doing their shopping on line.

2) Franchise businesses remain a popular strategy for people to start their own business, giving them the benefit of an established brand. About two-thirds of Americans say they want to start a small business, but fears of failure stop most, with good reason. About half the small business startups fail within five years, and two-thirds within ten years. Most businesses do not fail because they don’t make a profit, but rather because of insufficient cash flow problems.

3) Independent grocery stores and regional supermarket chains, who are already facing brutal competition and shrinking profits, now face losing a valuable source of sales- the food stamp recipients. New rules for SNAP (Supplemental Nutrition Assistance Program) could eliminate 700,000 people from eligibility. Loss of sales could result in reduce orders from suppliers, reducing labor in stores or the closing of stores. Grocery stores have a profit margin of only about 1 % to 2% leaving little room for changes in their sales volume.

4) Stock market closings for – 30 JAN 20:

Dow              28,859.44    up    124.99
Nasdaq          9,298.93    up      23.77
S&P 500         3,283.66    up      10.26

10 Year Yield:    down   at    1.56%

Oil:    down   at    $52.87

28 January 2020

1) The threat of coronavirus spreading has caused stock markets to sharply fall over fears of the virus’ impact on the world economy. The death toll in China has risen to 81, and a fifth case has occurred in America. With China the biggest driver of global growth, the virus started in the place where it could have the biggest impact. There are worries that this virus caused market dip could spark a major correction in the markets.

2) General Motors plans to go all electric at its Detroit Hamtramck plant starting next year. GM is committing a $2.2 billion dollar investment in the factory to include $800 million dollars on tooling and projects related to trucks. The plant will be GM’s second builder of plugin models of cars. Only Tesla has sold electric cars in significant volume so far. The Hamtramck plant will employ 2,200 workers.

3) With the Federal Reserve’s bond portfolio swelling at a pace not seen since the 2010s, the Feds are faced with the tricky maneuver of turning the tap off soon. A misstep could have painful consequences, with the risk of what happens when the Feds stops increasing their balance sheet. Questions arise over what will happen to the stock markets when that liquidity spigot closes. This is part of the process called quantitative easing.

4) Stock market closings for – 27 JAN 20: The spread of coronavirus pushes markets down.

Dow               28,535.80    down    453.93
Nasdaq            9,139.31    down    175.60
S&P 500           3,243.63    down      51.84

10 Year Yield:    down   at    1.60%

Oil:    down   at    $52.83

22 January 2020

1) The massive internet retailer Amazon has just been granted a patent for robots that drop off bunches of items on delivery routes. The robot has storage compartments where the customer comes out to the sidewalk, taps in the required security code on their smartphones that opens the door to a compartment so the person can get his package. The robot addresses the last mile or final fifty feet of package deliver. Such a robot also address the problem of porch pirates.

2) The mortgage companies seem to be reverting back to their old ways that triggered the financial crisis in 2008. This is the practice of giving large loans with small down payments to those with low FICO scores. FICO scores as low as 640 are getting mortgages of up to $2 million dollars, scores which were considered sub-prime prior to the 2008 economic near collapse.

3) The stock markets have pulled back from record high levels after the Center for Disease Control announced the first case of conronavirus in America. The highly contagious disease was discovered in a traveler coming from China. Particularly hit were stocks in casino and hotel companies, as well as airline companies and other companies involved with international travel. The Asian markets have also suffered a sudden drop which is blamed on the spreading virus.

4) Stock market closings for – 21 JAN 20:

Dow              29,196.04    down    152.06
Nasdaq          9,370.81    down      18.14
S&P 500         3,320.79    down        8.83

10 Year Yield:    down   at    1.77%

Oil:    down   at    $58.37