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

6 August 2020

1) Rocket Companies Inc., the parent company of Rocket Mortgage and Quicken Loans, is trying to raise $2 billion dollars with an IPO (Initial Public Offering) after an initial capital target of $3.3 billion dollars. The reduction in the number of shares offered is believed to be because of push back from investors, who considered the valuation of the company as to high. This is based on the company being more of a consumer based company rather than a technology based company. The downsizing may signal that the IPO market’s rebound is straining as the coronavirus pandemic deepens in America.

2) Entertainment giant Disney has announced that its streaming service Disney+ (pronounced Disney plus) has surpassed 60 million subscribers, which is well ahead of Disney’s target. Disney forecasted having 60 to 90 million subscribers by 2024, fueling speculation that Disney+ has won the first stage of the streaming wars. Netflix presently has 193 million paying subscribers, but with Disney+, which was just launched last November less than a year ago, it’s clear that Disney is very rapidly gaining on Netflix, and liable to be passed by Disney in the near future. More importantly, Disney should reach profitability very soon too, something hard for new streaming services to do.

3) The ‘Services PMI’ index from the Institute for Supply Management, posted its second monthly gain in July. This indicated that despite the rising number of Covid-19 cases, the services economy keeps recovering. There is a continued weakness in the international component of services with worries of how the international economy will eventually effect America’s recovery. Investors remain focused on earnings and hopes of a vaccine to push the economy upwards more. There is still the looming question of how many of the small businesses will survive the pandemic, and therefore how much of the economy will be changed by their demise.

4) Stock market closings for – 5 AUG 20:

Dow 27,201.52 up 373.05
Nasdaq 10,998.40 up 57.23
S&P 500 3,327.77 up 21.26

10 Year Yield: up at 0.54%

Oil: up at $42.20

29 July 2020

1) The fast food mega-giant McDonald’s is reporting a bigger than expected drop in global restaurant sales across the world. This is a result of the pandemic restricting sales of their drive thru and delivery operations, and in some cases shutting restaurants down completely. With second quarter sales down by 30%, McDonald’s is facing a bumpy and expensive recovery. The franchise chain has 39,000 restaurants worldwide, of which 96% are now open, verses 75% at the start of the second quarter. Store sales were down 39% in April but by June was down only 12%. Net income is down by 68% for $483.8 million dollars. McDonald’s is permanently closing 200 locations in the U.S. amid those losses, more than half located in Walmart stores.

2) The Federal Reserve has announced that its lending programs will be extended until the end of the year. This indicates the feds don’t think the U.S. economy is weathering the pandemic storm very well and needs continued help. The program lends to small and medium sized businesses and was due to expire at the end of September. Continuing the program will provide a critical backstop to help the economy recover. This Thursday will bring the first look at the second quarter gross domestic product, which is the broadest measure of the economy, but it’s expected to show an ailing economy.

3) For the second time, the renowned gun maker Remington Arms is filing for bankruptcy. This is the second time in two years that Remington has filed for Chapter 11 bankruptcy protection. Chronic low sales is blamed for Remington’s decline, despite the overall increase in sales of guns in America because of the pandemic. One by one, American gun manufactures have succumb to imports. Remington reports assets of $100 million dollars compared to $500 million dollars in liabilities.

4) Stock market closings for – 28 JUL 20:

Dow 26,379.28 down 205.49
Nasdaq 10,402.09 down 134.17
S&P 500 3,218.44 down 20.97

10 Year Yield: down at 0.58%

Oil: down at $41.07

23 July 20

1) The business community of America is facing a national coin shortage, making it even more difficult for the retail sector to function. Across the country, restaurants, grocery stores, and retail outlets are posting signs near their cash registers and drive thru windows asking people to pay with credit cards or exact change. This shortage is a result of the spreading coronavirus closing businesses that crippled economic activity in the U.S., so the circulation of coins dropped off significantly. Furthermore, the U.S. Mint who manufactures the nation’s coinage supply, has decreased staffing because of the pandemic, thus reducing the availability of coins.

2) New research has directly connected the explosive growth of passive investing to deteriorating corporate performance over the long haul. Companies with higher passive ownership spent more on stock repurchases, but saw worse financial outcomes. Passive investment can allow opportunistic management behavior with negative effects of future company performance. Companies with high passive ownership are less monitored, therefore allowing management to act unhindered in their own best interest. Passive ownership is a result of investing by mutual and ETF funds who track indexes instead of actively manage counterparts.

3) The government has placed orders for up to 600 million doses of Covid vaccine to Pfizer and BioNTech. The U.S. health officials have agreed to pay $1.95 billion dollars for 100 million doses of a vaccine. Nations around the world have begun ordering vaccines that are still being tested in an effort to halt the spread of the virus. To date, the coronavirus has killed 600,000 people around the world. It is planned the vaccine will be free to U.S. citizens.

4) Stock market closings for – 22 JUL 20:

Dow 27,005.84 up 165.44
Nasdaq 10,706.13 up 25.76
S&P 500 3,276.02 up 18.72

10 Year Yield: down at 0.60%

Oil: up at $41.90

21 July 2020

1) Another major U.S. airline, Southwest Airlines, is facing reduction in staff as the airline business continues to contract with little expectation of returning to its pre-corona days of business. About 24% of Southwest pilots and 33% of flight attendants have agreed to early retirement or long term leaves of absence. This accounts for about 4,400 employees who have decided to leave permanently with another 12,500 for extended emergency time off. Southwest is trying to avoid its first involuntary job cuts in its 49 year history. The company says that passenger numbers will have to triple by year end to eliminate the need for layoffs. There is growing evidence that the airline business is fundamentally changing.

2) The freight truck company TuSimple is building the world’s first network of self driving delivery trucks by 2024. The autonomous semi truck-trailers will operate across the America. TuSimple has partnered with UPS, Penske Truck Leasing, US Xpress and McLane for this autonomous freight network project. TuSimple is creating digital routes, terminals and a monitoring system in three phases that tracks its truck. Phase I is until end of 2021 to bring autonomous trucking services to Phoenix and Tucson in Arizona, plus El Paso, Dallas, Houston and San Antonio in Texas. Phase II, from 2022 till 2023, will expand the network coast to coast with a line from Los Angeles to Jacksonville in Florida. Finally, phase III between 2023 and 2024, will expand service nation wide to 48 states.

3) Both automakers GM and Ford have lost 27% of their market value this year, while electric car maker Tesla continues its unbelievable rise in the market. The reasons for the decline are different for the two companies. Ford sales relied too heavily on the F-150. While GM continues to sell more cars in the U.S. and worldwide, it’s hammered by the pandemic and failure in China, the world’s largest car market.

4) Stock market closings for – 20 JUL 20:

Dow 26,680.87 up 8.92 %
Nasdaq 10,767.09 up 263.90
S&P 500 3,251.84 up 27.11

10 Year Yield: down at 0.62%

Oil: up at $40.70

17 JUL 2020

1) Looming in the wings of the pandemic crisis is another major crisis . . . and epidemic of evictions. With the unemployment rate still more than 10% and eviction protections lapsing across America, housing experts expect millions of Americans to lose their homes in the coming months. For millions of Americans, the housing situation was already precarious before the pandemic. Many are paying large percentages of their monthly incomes toward rent, but don’t have enough to cover an unexpected expense of just a few hundred dollars. With insufficient money from unemployment, people are facing living on the streets during 100 degree plus temperatures, hurricane season and possibly freezing weather if the problem continues. This would also mean increased exposure to the Convid-19 virus.

2) A bright spot in the economy is that retail sales rose again for the second straight month as shoppers slowly trickle back into stores. But with conronavirus cases on the rise, this could be short lived. Sales increased 7.5% for June, from May, better than the 5% estimated by economists. Sales were driven by clothing, electronics and appliances as well as home furnishing. Still, foot traffic through stores is way down, people coming in with specific items to consider buying instead of just browsing. So far this year, 4,000 stores are closing permanently with as many as 25,000 expected by the end of the year. Last year, there were 9,302 store closing.

3) The traditional investing axiom of 60/40 portfolios is coming into question. This is the mix of 60% stocks and 40% bonds, which is generally considered the best risk minimizing strategy for individuals to use in building their fortune. But with Treasury yields now hovering around zero, and expected to stay there for years, those gains are in doubt. For decades, this strategy has given the best returns with the least risk in times of volatile markets. Consequently, investors are scrutinizing the strategy as maybe out of date in a changing economy.

4) Stock market closings for – 16 JUL 20:

Dow 26,734.71 down 135.39
Nasdaq 10,473.83 down 76.66
S&P 500 3,215.57 down 10.99

10 Year Yield: down at 0.61%

Oil: down at $40.80