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

9 September 2019

1) Several state attorney generals will investigate Facebook for possible stifling competition and putting users at risk. This comes after reports that Google will face antitrust investigations from state attorney generals. The investigations will center on actions that endangered consumer data, reduced the quality of consumers’ choices or increased the price of advertising. States investigating include New York, Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee and the District of Columbia.

2) President Trump unhappy at GM for decision to close four of its domestic auto plants. General Motors, which was once the giant automaker in Detroit, is now one of the smallest. GM has gone from 33 plants in the US to 29, but has an additional 27 manufacturing plants in China. Presently, GM sells more cars in China than it does in America. This accounts for $16 billion dollars in profit for GM.

3) The American consumer is carrying the U.S. economy in last quarter. The personal expenditures rose last quarter while business and residential investment, net exports and inventories have declined. There are concerns that consumers may rein in spending from fears of economic future. Global commerce is slowing, partly in response to the trade war, and without strong consumer spending it’s hard to see alternate sources of economic growth.

4) Stock market closings for – 6 SEP 19:

Dow               26,797.46         up     69.31
Nasdaq            8,103.07    down    13.75
S&P 500           2,978.71          up      2.71

10 Year Yield:    down   at    1.55%

Oil:     up   at    $56.73

5 September 2019

1) A federal judge has ruled that investors may sue five big banks for conspiring to rig prices on bonds worth hundreds of billions of dollars issued by Fannie Mae and Freddie Mac for a seven year period. This clears the way for investors to pursue antitrust claims against Bank of America, BNP Paribas SA, Deutsche Bank AG, Goldman Sachs Group and Morgan Stanley. The banks are accused of fixing prices at a specific level before bringing the bonds to the secondary market.

2) The U.S. trade deficit narrowed overall slightly in July, however the gap with China surged to a six-month high. The trade tensions have caused wild swings in the trade deficit as exporters and importers try to stay ahead of the tariff fight between America and China. The Atlanta Federal Reserve is forecasting the economy growing at a 1.7% pace in the third quarter.

3) Oil dependent nations are facing economic troubles because gas and oil production are unsustainable. As oil and gas supplies dwindle and demand decreases, their once lucrative revenues may be decreasing. Nations whose economies are principally oil production face a trouble future as their oils supplies decline in the next few decades, with nothing to replace those revenues. Those nations facing economic troubles are the UAE, Nigeria, Qatar, Libya, Angola, Kuwait, Venezuela, Iraq and Saudi Arabia.

4) Stock market closings for – 4 SEP 19:

Dow            26,355.47    up    237.45
Nasdaq        7,976.88    up    102.72
S&P 500       2,937.78    up    31.51

10 Year Yield:    down   at    1.46%

Oil:    down   at    $55.98

5 June 2019

1) The tech giants Apple, Google, Facebook and Amazon are facing antitrust troubles. The government is stepping up scrutiny of these big four with possible new rules, regulations and law suits. The investigative efforts will be split between the Justice Department and Federal Trade Commission driven by mounting criticism over political bias, disinformation and privacy breaches. This could spell years of troubles and law suits and possible breakup of the companies.

2) The threat of tariffs on Mexican imports has American oil refiners worried, since Mexico is the number two source of foreign oil to the United States. American produced oil is a light oil which is a poor match for Gulf Coast refining facilities, while the Mexican oil is a heavy oil that when blended with the America optimizes the refinery’s output.

3) The Medicaid system is still suffering from the Great recession, so there are fears than another recession could be devastating for the system. This is at a time when state spending on Medicaid is still high with no signs of subsiding. In a recession, payrolls decrease from people unemployed or underemployed, so contributions are down. This means less buildup of reserve funds needed for the future, and a second recession so soon, could seriously deplete those reserves quicker, leaving the future of the system in doubt.

4) Stock market closings for 4 June 2019: Jump in Dow comes from Fed signals flexibility on rates.

Dow               25,332.18    up    512.40
Nasdaq             7,527.12    up    194.10
S&P 500            2,803.27    up      58.82

10 Year Yield:    up   at    2.12%

Oil:    down   at    $52.95