23 March 2020

1) The shutting down of many of American service industries is having an effect on America’s hard pressed trucking industry. Suddenly, there are fewer hauling jobs, a result of the coronavirus control measures. There are 300,000 to 400,000 thousand truck drivers who own their trucks and don’t have much protection if rates or demand for their service falls. Trucking is often considered a leading economic indicator where the rest of the economy is heading, because 71% of the freight in America is moved by trucks. A downturn in freight being hauled indicates the economy is slumping.

2) President Trump says the U.S. may be headed for a recession for the first time in eleven years as the coronavirus cripples the world economies which in turn can pull the U.S. economy down despite it being strong. Experts anticipate America will enter a recession in the upcoming second quarter, from April through June, with a decline of 4% to 8% annual pace. The unemployment rate could zoom up to 6% from its current fifty year low of 3.5%, which would hinder a recovery. Typically, economic hard times opens the way for new technologies to displace workers as business strive for ways to reduce cost and remain profitable.

3) The Department of Labor reported a 30% increase in unemployment claims, which is one of the largest spikes in claims. This signals the start of feared layoffs in response to the coronavirus impact on the economy. As more businesses are vastly reducing or stopping operations, they have no real choice but to lay off workers in the hope of surviving the coming economic storm. America’s oil industry is facing massive layoffs with tens of thousands being laid off in the shale fields like the Permian Basin as oil prices drop to alarming lows. No longer profitable to pump out shale fields and strapped with high levels of debt, the oil companies are facing bankruptcy. Six years ago, a sharp price drop in oil cost 200,000 oil workers their jobs.

4) Stock market closings for – 20 MAR 20: The Dow had its worst month since 1931.

Dow 19,173.98 down 913.21
Nasdaq 6,879.52 down 271.06
S&P 500 2,304.92 down 104.47

10 Year Yield: down at 0.94%

Oil: down at $23.64

20 March 2020

1) Today, more coronavirus concerns have surfaced that most airlines will go bankrupt soon without government bailouts. The virus has shut global aviation down because of virus outbreaks as well as travel restrictions that are intended to contain the virus. Within weeks, many airlines will need government help to avoid bankruptcy. Major U.S. airlines are seeking $50 billion dollars in financial assistance because of the steep falloff in U.S. travel demand. Estimates are for $25 billion dollars in grants, $25 billion dollars in loans and significant tax relief to survive.

2) Monday markets opened with another sharp downfall of all three major markets despite the Federal Reserve embarking on a massive monetary stimulus campaign to curb the slowing economic growth from the coronavirus. Shortly after opening, trading was halted for fifteen minutes from a ‘circuit breaker’ triggered by the S & P 500. The U.S. central bank has launched a massive $700 billion dollar quantitative easing program designed to help cushion the economic downside from the virus. The Dow was down 11% while both the Nasdaq and S & P fell more than 10%.

3) As fears grow of a world economic downturn, which will put economic stress on the U.S. economy, people are becoming concerned about their jobs. American workers may lose their jobs by the millions as the effects of the virus ripple through the financial system, the impact being devastating. The disease has spread rapidly around the world with whole nations shutting down as well as major cities. It’s unknown just what the impact will be for the world economy, when major economic areas isolate themselves from the system, even for a few weeks. Many segments of the economy are reporting significant problems which can lead to further problems across the U.S. and world economy. All this translates into layoffs, at a time when the young people of America have limited opportunities.

4) Stock market closings for – 19 MAR 20:

Dow 20,087.19 up 88.27
Nasdaq 7,150.58 up 160.73
S&P 500 2,409.39 up 11.29

10 Year Yield: down at 1.12%

Oil: up at $25.08

11 March 2020

1) Fully 70% of the American economy is consumer spending. Even through wages and incomes have been stagnant for many households, the consumer has continued to spend. It is not new investment by corporations, tax cuts or big new federal spending programs that stimulate the economy, but rather it’s consumer spending. However, fears of the coronavirus is dampening that spending by curtailing business trips, personal travel, sports and other outings. With the interest rate near zero, the major tool used to combat a recession is now impotent.

2) The collapse of the long standing deal between Saudi Arabia and Russia, to limit oil production, fell through this weekend sending oil prices crashing from oil supplies surplus. The coronavirus has caused China to limit economic activity and therefore reduced China’s oil consumption leading to further oil surpluses. China’s purchase of oil is down 20%. The low oil prices has made the world economy very unstable and therefore volatile. For America, independent oil companies have gone deeply into debt to pay for the shale oil extraction process, who are now threaten by low oil prices making it impossible to pay that debt. Failure of these oil companies could ripple through the American economy to pull other segments down.

3) Airlines across the world continue to sink deeper into crisis from the worsening coronavirus epidemic reducing the number of passengers, who are foregoing travel fearing the virus. The situation is made worst by not being able to predict how long the crisis will likely last and therefore unable to make accommodating plans. The lockdown of Italy has further aggravated world air travel, especially with the interruption of tourism just as the tourist season would be ramping up.

4) Stock market closings for – 10 MAR 20

Dow 25,018.16 up 1,167.14
Nasdaq 8,344.25 up 393.577

S&P 500 2,882.23 up 135.67

10 Year Yield: up at 0.748%

Oil: up at $34.62

3 February 2020

1) Brexit, the exit of Britain from the European Union, has been confirmed by the European Parliament with a vote Wednesday, which ratified the withdrawal agreement. The vote to ratify was 621 to 49 with 13 abstentions. For the EU (European Union) the loss of Britain represents a significant defeat, a loss of size, reach, momentum and permanence akin to the U.S. losing Texas. Potentially, the EU bloc now has less clout, although the remaining 27 countries have been drawn tighter together by the debate. Now comes the negotiations of EU’s future relationship with Britain to try and maintain the single open market.

2) Delta Air Lines and American Airlines announced they are suspending service to mainland China to counter the spread of coronavirus. It is expected that United Airlines is expected to soon follow suit. American will continue service to Hong Kong. Other world air carriers have also announced suspended or reduced services to China.

3) With the decision two years ago by the Supreme Court to widely legalize sports betting, companies are rushing in to expand sports betting operations. U.S. casino operators, fantasy apps and betting grands from Europe and Australia are in a race for American customers now that the way has been cleared for betting outside of Nevada.

4) Stock market closings for – 31 JAN 20: Fears of China’s coronavirus continue to push markets down.

Dow                   28,256.03    down    603.41
Nasdaq               9,150.94     down    148.00
S&P 500              3,225.52     down       58.14

10 Year Yield:    down   at    1.52%

Oil:    down   at    $51.63

27 January 2020

1) Bayer AG is facing a fourth jury trial over its Roundup weed killer causing cancer. Plaintiff’s claim glyphosate, the active ingredient in Roundup, is a carcinogen. In the three previous trials, Bayer was found liable for causing cancer resulting in damages of tens of millions of dollars, which are being appealed. The number of claimants are more than 75,000 although so far less than 50,000 claims have been formally filed.

2) Banks are raising the limit on people’s credit cards, even when they don’t ask for the raise. This is at a time when Americans are drowning in debt, in a effort to further boost their profits. For years Capital One financial Corp. resisted increasing limits of customers who looked vulnerable to getting over their heads in debt, but now have reversed their policy actively seeking more debt from customers.

3) A second coronavirus case has been confirmed in the U.S., a Chicago resident who had traveled to Wuhan in December. Wuhan is the center of virus outbreak in China, having already killed a couple of dozen or more people. China is now shutting down several very large cities in an attempt to stop the spread of the disease. Fears over the economic damage to the American economy has cause a sharp drop in the U.S. markets from news of a second coronavirus case. Presently, the U.S. government is monitoring passengers flying in from China for early signs of the illness hoping to quarantine the sick and prevent spreading of the virus.

4) Stock market closings for – 24 JAN 20:

Dow               28,989.73    down    170.36
Nasdaq            9,314.91    down      87.57
S&P 500           3,295.47    down       30.07

10 Year Yield:    down   at    1.68%

Oil:    down   at    $54.20

23 January 2020

1) Present Trump has renewed his threats to impose tariffs on imported cars from Europe, citing that the European Union is even more difficult to do business with than China. His comments signals he is turning his attention to renegotiating trade deals with the bloc. Automobiles have been at the center of trade tensions for the past couple of years.

2) The millennials own just 4% of American real estate by value, much less than the 32% which baby boomers owned. This comparison is with approximately the same media age of the two groups, meaning the millennials are far behind the baby boomers economically. While millennials may close that gap in the next four years, it’s unlikely they will reach 20% ownership, still far behind the baby boomers.

3) There is a rash of retail store closings after the holiday season, due to sales slump. Fashion retailer Express is closing 91 stores, Bed Bath & Beyond is closing 60 , Schurman Retail Group is closing its Papyrus and American Greeting stores for a total of 254 locations in the next four to six weeks. Express is the latest in a serious of fashion retailers to close, part of the struggle of malls to compete in the new retail arena. Last year, retailers Forever 21 filed for bankruptcy, with Charlotte Russe and Payless ShoeSource going out of business.

4) Stock market closings for – 22 JAN 20:

Dow            29,186.27    down       9.77
Nasdaq         9,383.77          up     12.96
S&P 500        3,321.75          up       0.96

10 Year Yield:       unchanged   at    1.77%

Oil:         down   at    $56.17

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