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

3 January 2020

1) Major drug makers such as Pfizer, GlaxoSmithKline and Sanofi have plans to raise drug prices on more than 200 drugs in the United States. Nearly all of the price increases will be below 10%, with about half in the range of 4 to 6%. With soaring prescription drug prices a central issue in the presidential election, the move promises to bring the issue front and center to the American public.

2) The year’s first five days of stock markets is often an indicator of how the market will go for the year. On the first trading day of 2020, stocks jumped up, and if the next four secession are also upwards, stock traders anticipate another good year for the markets. Last year, 2019, started out the same way, rebounding from the worst December since the Great Depression.

3) OPEC’s output drop last month as several Persian Gulf producers stepped up their implementation of cutbacks. The reduced oil production is aimed at balancing global oil markets by reducing a new surplus forming. Cutbacks started in 2019, will continue in 2020 with more and deeper cuts expected for this year. Next meeting of the oil alliance is early March.

4) Stock market closings for – 2 JAN 20:

Dow            28,868.80    up    330.36
Nasdaq         9,092.19    up    119.59
S&P 500        3,257.85    up      27.07

10 Year Yield:    down   at    1.88%

Oil:    down   at    $61.18

27 December 2019

1) The Permian Basin continues to experience difficulties producing oil, becoming increasingly gassy as drilling slows down. This undercuts profits for producers at a time when investors are demanding better returns. The region has long been plagued with a massive glut of gas which crude producers must sometimes pay to have hauled away or burn in the open air. This problem is intensifying as wells age and fewer new wells are drilled.

2) Oil prices rise to a three month high because of optimism on supply. The stage is set for the biggest monthly gain in almost a year on speculation that supplies are shrinking. Prices are up almost 12% for this month and are now higher since the mid-September high. The U.S. stockpiles have dropped 7.9 million barrels this last week, while Russia cut their crude output with a reduction of 240,000 barrels a day for December. Oil has surged about 36% for this year.

3) American retailers continue to struggle while some are actually thriving. The once giant Sears has fallen into bankruptcy having closed over 3,000 stores. Other major retailers in decline are Blockbuster Video, Radioshack, Victoria’s Secret, the Gap, JCPenny, Toys R Us and Borders Books. Retailers such as TJ Maxx, Amazon, Walmart, Target, Dollar General, Costco and Ross have flourished in the peril waters of American consumerism.

4) Stock market closings for – 26 DEC 19:

Dow                28,621.39    up    105.94
Nasdaq             9,022.39    up      69.51
S&P 500            3,239.91    up      16.53

10 Year Yield:    down   at    1.90%

Oil:    up   at     $61.68

12 December 2019

1) The U.S. Federal Reserve elected not to raise interest rates, thereby signaling borrowing cost will most likely remain unchanged, and they expect moderate economic growth and low unemployment to continue into the presidential election year. The Feds left the benchmark overnight lending rate at its current range of 1.5% to 1.75% with 13 of the 17 fed policymakers supporting no change.

2) American consumer prices rose more than expected in November, giving credence to the Fed’s decision not to raise interest rates. The consumer price index increased 0.3% last month, in part from households paying more for gas. In the twelve months through November, the CPI (Consumer Price Index) increased 2.3% after a similar gain in October. Gasoline prices rose 1.1% after rebounding 3.7% in October.

3) China is accused of dumping cheap mattresses which is disrupting the U.S. bedding industry, in an attempt to gain a foothold in American markets. In recent years dozens of Chinese companies have been flooding the market with super low priced mattresses, selling them to retailers for as little as $18 each. In turn, the mattresses are sold under a wide range of labels at national chains, online businesses, local retailers and mattress stores. In recent years the industry has been troubled by disruption including thousands of job losses, multiple bankruptcies and hundreds of store closures. In 2018, about five million mattresses were shipped to the U.S. from China.

4) Stock market closings for – 11 DEC 19:

Dow           27,911.30    up    29.58
Nasdaq       8,654.05    up     37.87
S&P 500      3,141.63    up       9.11

10 Year Yield:    down   at    1.79%

Oil:    down   at    $58.80

10 December 2019

1) Celadon, a truckload carrier and American trucking giant, is slated to declare bankruptcy as early as December the 11 th. This may possibly be the largest truckload bankruptcy in history. Already, fuel cards for truck drivers are getting turned off, leaving truckers stranded in the field unable to get home without using their own money. As many as 3,200 truck drivers may find themselves stranded in addition to being without jobs. In the first half of 2019, about 640 trucking companies went bankrupt, triple the number from last year as freight volumes decline for 11 straight months. Celadon’s stock has gone from $20 a share down to 41 cents.

2) The Federal Government’s liquidity problem hasn’t gone away yet, even with hundreds of billions of dollars in new liquidity created out of thin air. The Feds will not know if there is enough money to cover repos, the short term loaning of money from bank to bank to cover short term cash shortages. If there is insufficient liquidity, then there’s the danger of a ‘lock up’ of American’s financial system.

3) Yes Bank Ltd. is expected to reject an offer of $1.2 billion dollars, more than half its planned $2 billion dollar capital raising. Instead, the company is turning to institutional investors to make up the shortfall. The bank would prefer to have institutions rather than individual investors in their fund raising. Yes Bank needs new investors in order to replenish its capital, which is now down to regulatory minimum as a result of bad loans.

4) Stock market closings for – 9 DEC 19:

Dow           27,909.60    down     105.46
Nasdaq        8,621.83    down       34.70
S&P 500       3,135.96    down         9.95

10 Year Yield:    down   at    1.83%

Oil:    down   at    $58.87

5 December 2019

1) The oil cartel OPEC and their allies are being called on for dramatic action to avert a crash in oil prices. They are being called on to cut production of crude oil to keep oil prices high, while the world is facing a looming flood of oil from American production. If they don’t restrict production, the world faces an oversupply of about 800,000 barrels per day in the first half of 2020.

2) Businesses are under a constant threat of ransomware attacks with increasing consequences of financial loses. Every business or organization from large corporations, health care systems, universities and small businesses are at risk. These targets must use defensive methods, but those costs time, money and resources to do. The FBI estimates there are several thousand ransomware attacks each day.

3) Stock market closings for – 4 DEC 19:

Dow             27,649.78    up    146.97
Nasdaq          8,566.67    up      46.03
S&P 500         3,112.76    up      19.56

10 Year Yield:    up   at    1.78%

Oil:    up   at    $56.32

25 November 2019

1) American retailers, such as Home Depot are facing a new crime wave driven by drugs and fueled by the opioid crisis. Known as organized retail crime, people steal for crime rings in exchange for cash they can buy drugs with. The stolen merchandise is then resold at pawnshops, online or directly to a buyer. Worst yet, the thieves are using violence against store employees who try to stop the open theft, even using guns and knifes. The store is left to just stand and watch as thieves roll shopping carts of merchandise out the door to sell for drugs.

2) The tuna supplier Bumble Bee Foods announced they are filing for Chapter 11 bankruptcy protection to be purchased by its largest creditor FCF Fishery, for $925 million dollars. Bumble Bee’s debt burden has forced the bankruptcy, which in turn was caused by a $25 million dollar fine for forming a cartel with Chicken of the Sea and Starkist to fix prices. The fine was levied by the Department of Justice. Additionally, the popularity of packaged tuna has been declining with a 42% per capita drop over the last 30 years.

3) There are growing fears that phase one of the China-American trade deal may not get signed before the additional tariffs take effect in mid-December. Phase one would not eliminate tariffs on either side, instead would address issues of intellectual property and financial services access including sizeable purchases by China of American agricultural products. Phase one is considered a starting point for resolving trade differences.

4) Stock market closings for – 22 NOV 19:

Dow          27,875.62    up    109.33
Nasdaq       8,519.88    up      13.67
S&P 500      3,110.29    up         6.75

10 Year Yield:    unchanged   at    1.77%

Oil:    up   at    $57.93

20 November 2019

1) There are fewer international students coming to America, which is hurting American universities and the economy. International student enrollment has been declining since the fall of 2016 which is estimated to cost the economy $11.8 billion dollars and more than 65,000 jobs. There is a perception among students that getting a visa for the United States is more difficult and it’s increasingly unsafe in the U.S.

2) National retailer Kohl’s posted quarterly sales that was lower than analysts’ projections, and has fallen the most in almost three years. This raises further concerns about the future of department stores, a market segment that has been struggling to adapt to broad changes in consumer habits. Kohl’s shares fell as much as 18%, the biggest one day tumble since January of 2017. Other department store chains such as Macy’s and Nordstrom have seen declines too.

3) Home Depot shares fell after reporting a third quarter earnings below Wall Street expectations, and the company cut its full year outlook for the rest of 2019. Like so many other traditional retailers, Home Depot is struggling to adapt to the online market place. While they are spending a lot of money to become a bigger online player, the company hasn’t seen the results they expected. The home improvement retail landscape is getting tougher.

4) Stock market closings for – 19 NOV 19:

Dow                27,934.02   down   102.20
Nasdaq            8,570.66          up     20.72
S&P 500           3,120.18    down        1.85

10 Year Yield:    down   at    1.79%

Oil:     down   at    $55.15

7 November 2019

1) The Oklahoma energy company Chesapeake Energy, who helped pioneer America’s shale natural gas revolution, is now warning that it may not survive the era of cheap gas it helped usher in. In a filing to the Securities and Exchange Commission, the company stated that if depressed prices persist, there is substantial doubt if it can survive. Fracking made it a natural gas powerhouse, at one time the number two natural gas producer, but now it is drowning in $10 billion dollar debt.

2) The U.S. productive has fallen for the first time since 2015. American productivity fell 0.3% in the third quarter, after two quarters of healthy gains, while productivity had increased 1.4% in the past year, about two-thirds of its long run average. Additionally, the low unemployment rate is driving up labor costs by forcing companies to pay more for workers, a trend that could eventually raise inflation. Labor cost rose at 3.6% in the third quarter, up 3.1% for the past year.

3) SoftBank Group Corp. reported an enormous loss from investments in the two money losing startups WeWork and Uber Technologies Inc. SoftBank reported a loss of $6.5 billion dollars after writedowns in WeWork and other investments, the first such loss in 14 years. The massive losses were incurred when WeWork’s IPO failed leaving the startup company cash starved so SoftBank had to extend a $9.5 billion dollar rescue package and take an 80% stake in the company.

4) Stock market closings for – 6 NOV 19:

Dow           27,492.56         up       0.07
Nasdaq        8,410.63    down    24.05
S&P 500       3,076.78          up      2.16

10 Year Yield:    down   at    1.81%

Oil:    down   at    $56.39

7 October 2019

1) As part of its restructuring plan, HP announced they will cut about 7,000 to 9,000 jobs, resulting in an estimated savings of about $1 billion dollars. While HP expects to incur labor and non-labor cost of about $1 billion dollars, they expect to generate at lease $3 billion dollars of free cash flow. As of 31 October 2018, HP had world wide employment of about 55,000 workers.

2) Consumer spending has been the bright spot in an economy showing signs of weakening on multiple fronts, in particular manufacturing. Economists worry if consumer spending will continue to prop up the economy, saying that the up coming Christmas season will be a test. Issues such as trade, interest rates, global risk factors and political rhetoric are where confidence can be eroded by deterioration of these items.

3) The new Costco in Shanghai China reports membership of more than 200,000 as compared to an American average of 68,000 per store. Costco will open a second Shanghai location in early 2021. The first day opening, the store was so swamped with customers, that the doors had to be closed for four hours to limit the number of people inside to safe limits.

4) Stock market closings for – 4 OCT 19:

Dow                  26,573.72    up    372.68
Nasdaq               7,982.47    up    110.21
S&P 500              2,952.01    up      41.38

10 Year Yield:    down   at    1.52%

Oil:    up   at    $53.01