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

8 January 2020

1) Coal consumption in America dropped sharply last year, reaching its lowest level since 1975, with power plants switching to cheaper natural gas and renewables. This shift has cut greenhouse gas emissions by more than 10%, but other sources also contribute to growing planet warming pollution last year. The U.S. is the second largest emitter of carbon dioxide in the world, as well as other greenhouse warming gases, contributing 14% of all annual greenhouse emissions.

2) The federal government is close to selling a group of nursing homes it took over eighteen months ago, a result of the biggest default in the history of a government mortgage insurance program which provides critical support to the nursing home industry. The previous owner defaulted on $146 million dollar worth of mortgages leaving the government to take possession of the facilities, which they have been working to find new owner-operators.

3) A new pizza making robot was unveiled at this year’s CES (Consumer Electronis Show) in Las Vegas, which attracts 200,000 people across the world. The machine is placed adjacent to the oven so pizzas automatically go in for cooking. The robot can make up to 300 12 inch customized pizzas an hour, while making consistent pies. Several companies are engaged in developing pizza robots including Little Caesar’s and Domino’s. The robots for the fast food industry is growing in response to demands for a minimum wage of $15 an hour for restaurant workers.

4) Stock market closings for – 7 JAN 202:

Dow                28,583.68    down    119.70
Nasdaq            9,068.58    down        2.88
S&P 500           3,237.18    down        9.10

10 Year Yield:    up   at    1.83%

Oil:    up   at    $63.21 

26 November 2019

1) America’s largest manufacturer of truck engines plans to lay off 2,000 workers. Orders for heavy duty trucks is down last year by 51%. This market dip is forcing Cummins Diesel to cut back on its production, reducing its 62,610 workforce by the 2,000. The company is forced to do a more aggressively cost cutting program because the down turn is happening faster than anticipated. Other manufactures of parts and assemblies, such as drivetrains, braking and axles used in large trucks are also forced into layoffs and bankruptcies.

2) The national debt has just passed $23 trillion dollars the first of November. This is a record high for the amount of money owed by the Federal government brought on by the growing budget deficits and is roughly equal to the Chinese, Japanese and German economies combined. Both parties have abandoned fiscal conservative spending and are intent on spending more on the domestic and military fronts, a contest over promises of who will spend more while cutting taxes.

3) The Ford Motor Company has $37 billion dollars in cash and short term assets on its balance sheet , but is strapped for cash. This makes Ford one of the top ten U. S. companies flush with cash. But Ford faces so many future challenges, it must hold onto every penny it can. First is a major multi-year restructuring, principally in Europe and South America. Also, Ford is overdue to refresh its key vehicles, including the company’s best selling F series pickup trucks, which will cost several billion dollars. Finally, Ford’s efforts to join the rush into electric vehicles, with seven new electric models due by the end of 2020.

4) Stock market closings for – 25 NOV 19:

Dow               28,066.47    up    190.85
Nasdaq           8,632.49     up    112.60
S&P 500          3,133.64     up       23.35

10 Year Yield:    down   at    1.76%

Oil:    down   at   $57.91

8 November 2019

1) Bill Gates, the Microsoft co-founder, says he’s happy to pay his share of taxes, but expressed consternation over Elizabeth Warren’s proposals to tax America’s wealthy. He considers the presidential hopeful is not very open minded to consider his concerns. Warren’s wealth tax proposal is 2% annual levy on household wealth above $50 million dollars with an additional 1% tax on wealth above $1 billion dollars. She estimates this would cover 75,000 tax payers raising $2.6 to $2.75 trillion dollars over a ten years.

2) Stores are starting their Black Friday sales earlier this year, in part because the holiday shopping season is six days shorter. Retailer Target will begin online Black Friday sale on Thanksgiving morning, with stores opening their doors at 5 p.m. and remaining open through 1 a.m. the next day. On Black Friday, their stores open at 7 a.m.. Other retailers such as Walmart started their holiday shopping season last October.

3) Xerox is offering HP a takeover bid of $22 per share. The bid consists of 77% cash and 23% stock which would be $17 in cash and 0.137 Xerox shares for each HP share. If accepted, the deal would generate about $2 billion dollars in cost synergies with HP stock holders owning 48% of the company. HP has announced job cuts between 7,000 and 9,000 by the end of fiscal 2022. HP is worth $29 billion dollars and is more than three times the size of Xerox in terms of market cap.

4) Stock market closings for – 7 NOV 19:

Dow                 27,674.80    up    182.24
Nasdaq              8,434.52    up      23.89
S&P 500             3,085.18    up        8.40

10 Year Yield:    up   at    1.93%

Oil:    up   at    $57.07

25 October 2019

1) Another wave of technology displacement is sweeping across America, with 32 stores getting rid of their cashiers and checkout lanes. For the last decade or so, there has been an increasing incident of self checkout facilities appearing in stores. Driven by Amazon’s marketing model, retailers are experimenting with ways and methods to dispense with the labor cost from check out clerks. The ‘one of a kind’ Sam’s Club Now is really an incubator to develop the technologies for automated check out systems in stores. Walmart has its Scan & Go app, Kroger its Scan Bag & Go service and fast food chains such as McDonald’s, Pizza Hut and burger King have kiosk systems for ordering.

2) California is not seeing the expected revenues for legalization of cannabis for personal use. After three years of legalization, the anticipated windfalls have failed to materialize a result of regulations and a robust black market cutting into legal sales. The legal market has produced just a fraction of what the state had anticipated, while legal growers who invested millions to cultivate the product are not seeing any profits. Growers must pay a number of fees to the government annually, which cut heavily into their profits.

3) If China signs a partial trade deal with the U.S., it will buy at least $20 billion dollars of agricultural products in a year. This would take China’s farm goods imports back to the levels of 2017, before U.S. imposed tariffs, which once removed might actually push imports up to as much as $40-$50 billion dollars a year. China has already issued waivers for 10 million tons of soybean purchases this week, and is considering an additional 4-5 million tons of grains.

4) Stock market closings for – 24 OCT 19:

Dow           26,805.53    down    28.42
Nasdaq        8,185.80          up    66.00
S&P 500       3,010.29          up      5.77

10 Year Yield:    up   at    1.77%

Oil:    up   at    $56.15

21 October 2019

1) The mega brewers Anheuser-Busch and MillerCoors, America’s two largest brewers of beer, are embroiled in a legal battle with Anheuser-Busch claiming MillerCoors stole recipes and trade secrets. The legal conflict rose from attack ads in Super Bowl commercials last February. The legal war continues to escalate with suits and counter suits being filed by both companies. During discovery, Anheuser-Busch claims to have uncovered evidence MillerCoors had obtained trade secrets.

2) The very popular SUVs across the world has led to a nearly sixfold increase in the number of SUVs on the road since 2010, which makes them the second biggest contributor to the rise in carbon dioxide emissions. Only the generation of electrical power produces more carbon dioxide, although SUVs account for about a third of the emissions compared to power generation. SUVs are also the reason that oil demand from passenger cars has grown by 3.3 million barrels a day since 2010, while oil use has declined slightly for other kinds of cars.

3) The export of pork from America has hit an all time high. Buyers are stocking up in anticipation of a widening protein gap in China, the result of a pig killing disease in Asia. American exports jumped to 351,000 metric tons as both Mexico and China buy up future pork contracts, as well as sales of soybeans, another prime source of protein in Asia. The African swine fever has devastated pig herds causing domestic pork production to plunge.

4) Stock market closings for – 18 OCT 19:

Dow              26,770.20    down    255.68
Nasdaq           8,089.54    down      67.31
S&P 500          2,986.20    down      11.75

10 Year Yield:    down   at    1.75%

Oil:    down   at    $53.70

10 October 2019

1) PG&E (Pacific Gas & Electric), the massive power supplier of California, has announced they are planning power outages for Northen and Central California which will effect an expected 800,000 customers in 31 counties to reduce the risk of wildfires in windy conditions. The Paradise fire and the 2017 Wind Country fires were ignited when wind blown power lines sparked. It is unknown what the economic impact will be from such a massive loss of electrical power that may last for days on end.

2) The prices for many popular drugs is rising far faster than inflation, more than twice the medical consumer price index since 2017. Prices may not be justified by clinical improvements to the drugs themselves. This is especially important for people with limited income, in particularly the elderly on fixed incomes who are the major consumer of drugs in America. This is at a time when President Trump is vowing to attack high drug prices in America.

3) American Airlines announced extensions of 737 MAX cancellations of flights through January 15, despite Boeing’s promises that the grounded jets would be flying again before year’s end. American said full year profit would be reduced by about $400 million dollars if the jet remained grounded through the second of November, and is likely to spill over into 2020.

4) Stock market closings for – 9 OCT 19:

Dow               26,346.01    up    181.97
Nasdaq            7,903.74    up      79.96
S&P 500           2,919.40    up      26.34

10 Year Yield:    up    1.59%

Oil:    down    $52.65

27 September 2019

1) The first all electric ‘gas station’ has been opened in America in Takoma Park, Maryland. The owner of the gas station, which has been around since 1958, decided to convert to all electric supplier of auto energy because of the difficulties and short comings of business with the oil companies. There are 20,700 registered EVs (Electric Vehicles) in Maryland, and the station has four dispensers that allow four vehicles to charge to 80% battery capacity in 20 to 30 minutes.

2) The market for smartphones is expected to decline by 3.2% for 2019, the largest decline ever. This decline is a result of the market becoming saturated because there’s no longer the innovations in device features plus the life span of devices has increased. Users are reluctant to buy new phones if there isn’t a perception of new abilities and features. The next big push in sales will be from the 5G devices as service areas expand.

3) The e-cigarette industry faces a crisis with Juul Labs potentially being crippled by a ban on most of it’s product. The tobacco giant Altria Group Inc., who owns 35% of Juul Labs, and had been in talks with Philip Morris International for a blockbuster merger, but those talks collapsed in part by the threat of Juul’s potential troubles with federal regulation.

4) Stock market closings for – 26 SEP 19:

Dow                        26,891.12    down    79.59
Nasdaq                     8,030.66    down    46.72
S&P 500                    2,977.62    down      7.25

10 Year Yield:    down   at    1.68%

Oil:    up    $56.54

18 September 2019

1) World oil prices dropped sharply with Saudi Arabian source saying that their oil production could be fully back on line within weeks. This is far sooner than was initially assumed by world markets. Production may be back up in as little as two to three weeks. The attacks resulted in the largest single supply disruption in half a century.

2) Economists say the GM (General Motors) strike no longer has the economic impact that they once did. They assert it will take a lengthy shutdown to make a national impact. This is a result of GM’s market share shrinking while its work force is now smaller, in part because of automation. A prolonged strike could impact the economy by disrupting the supply chain effecting other industries. GM has shifted workers health care cost to the UAW (United Auto Workers) union, increasing pressure on the union for a quick settlement.

3) There are expectations that the Federal Reserve will lower interest rates on Wednesday for the second time in two months with another likely cut later this year. The consensus is the feds will drop the interest rate by about a quarter percent in an attempt to starve off the world economic slowdown from reaching America. Job growth has slowed and the index of manufacturing activity shows contraction, increasing fears that a recession will happen in the near future.

4) Stock market closings for – 17 SEP 19:

Dow                 27,110.80    up    33.98
Nasdaq             8,186.02    up    32.47
S&P 500            3,005.70    up      7.74

10 Year Yield:    down   at    1.81%

Oil:    down   at    $58.81

6 September 2019

1) The Exxon Mobil oil giant agreed to sell its Norwegian oil and gas assets for as much as $4 billion dollars. The U.S. firm is exiting from production in the country after more than a century doing business there. In 2017, Exxon produced 170,000 barrels of oil per day from its Norwegian operations. The shares in Exxon, the world’s biggest publicly traded oil company, rose 1.7% on the news.

2) The announcement that China and America would resume trade talks pushed the price of oil up from optimism of an improving world economy. Chinese trade negotiators will come to Washington in early October for talks. Gasoline and distillate supplies fell, as well as stockpiles in storage.

3) Alan Greenspan, former Federal Reserve Chairman, forecast that negative rates will soon spread to the U.S. Negative rates are now in Belgium, Germany, France and Japan with $16 trillion dollars in negative yielding debt instruments around the world. Ten year sovereign bonds are trading with a negative rate. The thirty year U.S. rate is trading at 1.95% reaching an all time low.

4) Stock market closings for – 5 SEP 19:

Dow                   26,728.15    up    372.68
Nasdaq                8,116.83    up    139.95
S&P 500               2,976.00    up       38.22

10 Year Yield:    up   at    1.56%

Oil:     down   at    $56.17