25 March 2021

1) There is a large backup of freighters parked in the San Francisco Bay and in Long Beach, which are awaiting an opening at the Port of Oakland. This is because of a trade bottleneck, a result of the COVID-19 outbreak, thereby leaving U.S. businesses anxiously awaiting goods from Asia. The pandemic has wreaked havoc with the supply chain since early 2020, because it forced the closure of factories throughout China. The problem arose last March, when Americans stayed home, thus dramatically changing their buying habits. Instead of clothes, they bought electronics, fitness equipment and home improvement products. In turn U.S. companies responded by flooding the reopened Asian factories with orders, which then lead to a chain reaction of congestion at ports and freight hubs as the goods began arriving. Ships with as many as 14,000 containers have sat offshore, some of them for over a week, with as many as 40 ships waiting.

2) The manufacturing crisis with automakers continues to grow, with the auto industry bracing for more chip shortages after a fire at a plant owned by Japanese chipmaker Renesas. The company makes chips for Toyota, Nissan and Honda, and expects production at one of the buildings at its Naka Factory in Hitachinaka to be halted for a month. Renesas said the fire started when some equipment overheated and ignited, though it isn’t known what caused it to overheat. Renesas said two-thirds of the products made in the building could be produced elsewhere, although due to the recent increase in demand for semiconductors, the situation does not allow for all products to be immediately produced alternatively. This further reduction in semiconductor production will further reduce production of automobiles worldwide.

3) North Korea tells China they should team up as ‘Hostile Forces’. North Korea’s Supreme Leader Kim Jong Un reportedly praised his country’s close ties with neighboring China, looking to boost their ties to counter the hostile policies of the United States. China and North Korea’s close ties date back to the founding of the People’s Republic in 1949, then the outbreak of the Korean War a year later. In the war, Chinese troops supported North Korean forces with the backing of the Soviet Union, against South Korea and a U.S. led United Nations coalition. However, the fighting ended in a stalemate with an armistice but no official peace, which continues to this day. The North Korea considers that the world is now undergoing transformations rarely seen in a century, which is also overlapped by the ‘once in a century’ pandemic. What this portents for China and North Korea’s future actions . . . only time will tell.

4) Stock market closings for – 24 MAR 21:

Dow Jones 32,420 down by 3.09
NASDAQ 12,962 down by 265.81
S&P 500 3,889 down by 21.38

10 Year Yields: 1.6280

Oil: up at 64.41

16 February 2021

1) General Motors is the latest automaker to report that a global chip shortage is affecting its production. Other automakers include Stellantis, Volkswagen, Ford, Nissan, Subaru, Renault, Honda, Toyota, and Mazda. Chipmakers in Asia are rushing to boost production but say the supply gap will take many months to plug. The chip shortage is expected to cut global output in the first quarter by more than 670,000 vehicles and last into the third quarter, for an estimated total production lost this year reaching 1 million vehicles. When there is a shortage of semiconductors that impacts production, GM intends to build vehicles without certain modules and will complete them as soon as possible. This will help us quickly meet strong customer demand as more semiconductors become available. The shortage is affecting production of automaker’s most profitable cars: the Chevy Equinox, Colorado, GMC Canyon, and Terrain, Ford’s F-150, and Toyota’s Camry and Tundra.

2) The Pentagon has awarded contracts to Lockheed Martin, Northrop Grumman and General Atomics to develop an air-launch, missile-packed drone. The U.S. Defense Advanced Research Projects Agency (DARPA) handed out the contracts for Phase I design work on the LongShot unmanned air vehicle (UAV). The program is designed to use UAVs to deploy multiple air-to-air weapons. LongShot is part of the effort to allow crewed planes to launch drones from a standoff range away from enemy threats and allow the drones to close the gap and take more effective missile shots. Both the Air Force and the Navy consider that UAVs are the future in attempting to broaden their crewless arsenal both to save U.S. service person lives, and to cut costs. LongShot is likely to be designed in such a way that it can be deployed under the wing of a fighter or from the weapons bay of a bomber, which would extend its range well past whatever amount of fuel the drone is able to carry.

3) SpaceX has just crashed another test rocket, the Starship, which is designed to be 100% reusable, thus drastically dropping the cost of entering space. The Starship flew 10 kilometers up into the air, turned sideways, fell 10 kilometers back down, pivoted again to attempt a vertical landing, but failed to stick the landing. Descending too fast, it touched down more diagonal than vertical, exploding in a ball of flame on impact. However, SpaceX already has a clear solution to the problem by firing three engines in the landing burn instead of two.

4) Stock market closings for – 15 FEB 21:

Dow 31,458.40 up by 27.70
Nasdaq 14,095.47 up by 69.70
S&P 500 3,934.83 up by 18.45

10 Year Yield: up at 1.20%

Oil: up at $60.19

9 September 2020

1) General Chuck Yeager, died at age 97, was remembered Monday as America’s greatest Pilot in a tweet attributed to his wife, Victoria Scott D’Angelo. After breaking the sound barrier, Yeager continued to break records and returned to combat. He was a double ace with 11.5 aircraft shot down and became an ‘ace in a day’ by shooting down 5 or more aircraft in a single day. After World War II, in 1947, he became the first man to fly faster than the speed of sound by flying the Bell X-1. In 1953 he flew more than 1,600 mph in the Bell X-1A. He also flew combat missions in both the Korean and Vietnam wars. Chuck Yeager had flown 361 different types of aircraft and flew 10,131.6 hours during his career, retiring from the Air Force in 1975.

2) With just 24 days to make a deal, the Brexit negotiators are finding the situation very gloomy for a trade deal, with talks now on a ‘knife’s edge’ again. The British and European teams are struggling to craft a free-trade agreement so the two sides can continue the orderly movement of goods and services across the English Channel. Otherwise, Britain and Europe will enforce new customs duties, tariffs, border checks, and quotas on goods, therefore increasing prices and fully ending the era of the free and frictionless trade. The major obstacle is the European access to fish in British waters, despite the fisheries accounting for just a small fraction of Britain’s gross domestic product. The Europeans are also pressing to maintain a “level playing field,” to keep Britain from undercutting worker protections or granting large state subsidies to British businesses, thus giving the U.K. firms unfair advantages.

3) Oil prices fell from a 9-month high while the dollar strengthened. Consumption in Asia remains robust, while other markets are soft or declining. Crude oil prices now look to be heavily dependent on how quickly Covid-19 vaccines can be rolled out. OPEC+ is facing more potential supply challenges, with Libya continuing to ramp up production while Iran prepares to raise oil exports with expectations that America will ease some sanctions under a Joe Biden presidency.

4) Stock market closings for – 8 DEC 20:

Dow 30,173.88 up by 104.09
Nasdaq 12,582.77 up by 62.83
S&P 500 3,702.25 up by 10.29

10 Year Yield: down at 0.91%

Oil: down at $45.60

25 November 2020

1) Apple Inc is trying to limit the impact of a bill aimed at fighting child labor in China, having had meetings with government representatives in an attempt to water down the bill. Under the Uyghur Forced Labor Prevention Act, U.S. companies are required to ensure that their products are not made by forced labor in the region of Xinjiang. Many American companies, including Apple, have manufacturing sites that would be effected by this legislation, which would obligate public companies to report to the U.S. Securities and Exchange Commission and could lead to prosecutions over violations. A report by an Australian government body published in March claims that around 1,000-2,000 workers from the Chinese region were involved in Apple’s camera production.

2) Royal Dutch Shell has closed its Convent refinery in Louisiana. Convent is far from obsolete, indeed it is fairly big by U.S. standards and sophisticated. While Convent’s 700 workers are out of a job, the Convent replacement complex in northeast China is starting up. China has at least four projects underway in the country, totaling 1.2 million barrels a day of crude-processing capacity. This is just one example of a seismic shift in the global refining industry as demand for plastics and fuels grows in China and the rest of Asia. America has been the top refiner since the start of the oil age in the mid-nineteenth century, but China will dethrone the U.S. as early as next year. Oil exporters are selling more crude to Asia and less to long-standing customers in North America and Europe. China’s refiners are becoming a growing force in international markets for gasoline, diesel and other fuels.

3) The United States has officially exited the Open Skies Treaty on Sunday, six months after the Trump administration signaled it would. The reason is repeated Russian Federation violations of the treaty designed to allow unarmed aerial surveillance flights by the treaty participants in Europe, Russia, and the U.S. The treaty was negotiated in 1992 and entered into in 2002, and now has 34 participant states after the U.S. exit. Russia has consistently acted as if free to turn its obligations on and off at will by unlawfully denying or restricting Open Skies observation flights whenever it desires. For more than 20 years, Open Skies has been one of the most wide-ranging international arms control efforts to promote openness and transparency in military forces and activities. But Russia has denied flights within 6.2 miles of the Georgia-Russia border, and denying a previously approved flight over a major Russian military exercise. America’s European allies, however, value the treaty as it gives them the ability to collect aerial reconnaissance information, when lacking sophisticated satellite capabilities, that they would not have access to outside of the treaty.

4) Stock market closings for – 24 NOV 20:

Dow 30,046.24 up by 454.97
Nasdaq 12,036.78 up by 156.15
S&P 500 3,635.41 up by 57.82

10 Year Yield: up at 0.88%

Oil: up at $44.81

17 November 2020

1) Because of the worldwide pandemic, Asia has been vastly overstocked with oil distillates this year. In response, China’s biggest refiner is eyeing a creative strategy to ease the persistent diesel glut by using brand new supertankers usually reserved for crude oil. While supertankers are built to transport dirty fuels such as crude oil, they can carry cleaner products like gasoline and diesel on their maiden voyage. Therefore, China’s largest oil refiner has hired a newly-built very large crude carrier to load low-sulfur diesel in Asia for delivery to Europe. China intends to charter brand new vessels on a regular basis to transport more diesel to Europe, thereby clearing out bloated fuel stockpiles in Asia. Oil prices settle lower after a surprise climb in U.S. crude supplies.

2) An adults-only luxury resort in the Maldives is offering guests (two people max) a year’s worth of unlimited stays in 2021 for $30,000. Called the “Unlimited Stays in Paradise” package, which includes an over water bungalow, free breakfast services, discounts on dining experiences at the resort and spa services. The 5-star adult-only resort has multiple restaurants and private dining experiences, an option for private movie screenings, a spa, and offers fun excursions. Since the start of the coronavirus pandemic, many destinations, Bermuda and Barbados for instance, are taking advantage of people wanting to opt-out of quarantining in their homes for an isolated vacation overseas. Three Hawaiian islands, Maui, Kauai, and the Big Island, considered allowing tourists to vacation in a Resort Bubble, which will allow visitors to safely roam.

3) China’s Ruler Xi Jinping has halted Ant’s record-breaking $37 billion IPO after the company’s boss Jack Ma snubbed government leaders. Jack Ma, Ant’s founder, criticized Chinese government leaders, when a week before the Chinese fintech was set to go public, Ma made incendiary comments that didn’t go down well with the president or other government officials. This is another example of how President Xi deals with any threat to his authority, such as Hong Kong, including a low tolerance for big private businesses that accumulate wealth and power. Ma also criticized the regulators who enforce a set of international banking rules as an old people’s club. The fintech had already secured over $3 trillion in orders from individual investors across its dual listings in Hong Kong and Shanghai.

4) Stock market closings for – 16 NOV 20:
Dow 29,950.44 up by 470.63
Nasdaq 11,924.13 up by 94.84
S&P 500 3,626.91 up by 41.76
10 Year Yield: up at 0.91%
Oil: up at $41.47

4 November 2020

1) The peak oil production could come in 2028 due to pandemic, a result of the economic fallout from the COVID-19 pandemic, which suppresses oil demand to such a degree that it will accelerate society’s transition from the fossil fuel. Some analysts predict oil demand will peak at 102 million barrels per day in 2028, two years earlier than predicted before the virus struck. The slow recovery will permanently affect global oil demand levels, lockdowns will stunt economic recovery in the short-term and long-term, while the pandemic will leave a legacy of behavioral changes that will also affect oil use. Right now, global oil demand is averaging about 89.3 million barrels per day, a 10 percent decline from last year, which experts say won’t rebound to those levels until 2023. Despite possible economic fallout governments in Europe and Asia, they are not backing off their clean energy goals. Electric vehicle sales are expected to reach 14 percent of total global car sales by 2025, and reaching 80 percent by mid-century.

2) Norwegian Cruise Line gives up on 2020 with Royal Caribbean, Carnival, and Norwegian Cruise Line Holdings suspended all cruises through the end of November. Resuming cruises have each company installing labs for COVID-19 testing at sea, then put through costly cruising simulations, and then following a number of additional regulations. So getting back to business by next month isn’t feasible anymore, therefore Norwegian Cruise Line became the first of the three giant operators to officially cancel the remainder of its 2020 voyages. Normally, December sailings are lucrative as people seek to leave cold weather behind during the holiday season. The cruise lines may not be able to hold out that long. To survive, companies need protocols that allows them to return to sailing safely, even if there’s a less than ideal experience for customers as well as the companies’ bottom lines. Consumers are already starting to lose faith in this once aspirational mode of leisure travel.

3) This last week, more than 61,000 children in the U.S. were diagnosed with Covid-19, the highest number than any other week. The true number of children with Covid-19 is higher because the illness tends to be mild in kids and because they may not always be tested. A 13-year-old boy has died over the weekend from Covid-19 infection, less than two weeks after he last attended class.

4) Stock market closings for – 3 NOV 20:

Dow 27,480.03 up by 554.98
Nasdaq 11,160.57 up by 202.96
S&P 500 3,369.02 up by 58.78

10 Year Yield: up at 0.88%

Oil: up at $38.15

29 October 2020

1) One major factor in the spread of Covid-19 virus, is the portability of societies, the degree which people are moving about and interacting with each other with ease. This is a major cause of the spread of infectious disease. Now with the surge of coronavirus in Europe, Germany and France, they are planning to restrict movement of people for at least a month, coming close to the stringent lockdowns of the spring as European leaders seek to rein in a resurgent pandemic outbreak. Spain, Italy, the U.K., Greece and Portugal reported record numbers of new cases on Wednesday. Asia, Singapore and Hong Kong could start a planned ‘travel bubble’ as soon as next month. This also means restrictions of travel for migrant workers, which in turn means restricting their ability to make money, where much is sent back home to families to support their subsistence.

2) Boeing Aircraft company, a major manufacture of airliners, will cut 7,000 more jobs amid the pandemic, almost doubling its planned job cuts. The coronavirus pandemic has prolonged the grounding of Boeing’s 737 Max jet, thus dimming prospects for financial recovery. Executives are abandoning their forecast that Boeing will stop burning cash next year and so they are now forced to eliminate an additional 7,000 jobs. That will bring the expected losses from layoffs, retirements and attrition to 30,000 people, or 19% of the pre-pandemic workforce, by the end of 2021.

3) Taiwan’s microcircuit manufacture United Microelectronics Corp. has pledged its assistance to the U.S. in a high-profile trade-secrets prosecution of Chinese chipmaker Fujian Jinhua Integrated Circuit Co. UMC has pleaded guilty Wednesday in federal court as part of a deal with U.S. prosecutors. Prosecutors agreed to drop serious charges of economic espionage and conspiracy for theft of proprietary information from Idaho-based Micron Technology Inc. UMC instead admitted to trade-secret theft and agreed to pay a $60 million dollar fine. Prosecutors haven’t publicly detailed the cooperation they are seeking from UMC against Fujian

4) Stock market closings for – 28 OCT 20:
Dow 26,519.95 down 943.24
Nasdaq 11,004.87 down 426.48
S&P 500 3,271.03 down 119.65

10 Year Yield: unchanged at 0.78%

Oil: down at $37.69

15 October 2020

1) The much feared Diablo winds, along with its low humidity, will bring critical fire weather to Northern California through Friday, increasing the risks of wild fires. There are widespread red flag fire warnings for Northen California above San Francisco because of extremely dry, gusty, north to northeast winds which will bring critical fire conditions. With the relative humidity down into the single digits and teens, winds could reach about 45 mph, with gust up to 55 mph, both conditions very conducive to rapidly spread wild fires. The Diablo winds are much like the Santa Ana winds so familiar to Southern Californians.
2) Boeing’s troubles continue with no new orders for jets and more 737 MAX cancellations as the companies crisis continues. There were more orders for the 373 MAX canceled in September with delivery of only 11 total aircraft to customers, which is less than half the number from the same month a year ago. Furthermore, the quality flaws on the 787 Dreamliner continue to hamper efforts to develop an alternative cash cow to the 737 MAX. The major source of Boeing’s problems is the coronavirus pandemic, which continues to hurt the demand for jets, for Boeing as well as its rival Airbus, and this is a factor that neither aircraft manufacture has any control over.
3) The prices for crude oil are rising with the dollar’s decline, which in turn is boosting appeal of commodities priced in dollars. There are signs of oil demand increasing in Asia, which is helping lift the overall outlook for oil consumption. The company Rogsheng Petrochemical of Singapore is buying up oil futures to run its expanded refinery operation in Zhejiang this quarter. The outlook for refineries output remain precarious, with refining margins severely depressed for this time of the year. Refineries typically need a spread of more than $10 a barrel to make it profitable to process crude oil.
4) Stock market closings for – 14 OCT 20:
Dow 28,514.00 down 165.81
Nasdaq 11,768.73 down 95.17
S&P 500 3,488.67 down 23.26
10 Year Yield: unchanged at 0.72%
Oil: up at $41.22

23 September 2020

1) After Amazon’s Prime Day was postponed by the virus in July, it was tentatively reset for the fourth quarter. Amazon didn’t want their Prime Day to overlap with Black Friday, which set an upper limit to the date, so now the company is planning for the 13th and 14th of October. Prime Day is a very big retail day for Amazon, with their 2019 Prime Day grossing about $6 billion dollars in sales.

2) Another round of stimulus still remains on the burner and with the fall elections now closing in, both sides are saying they want a new stimulus bill with a second direct payment to the people. But the bill remains in limbo with no agreement on the details of the bill. The question on everyone’s minds is the direct payment checks to the people and how much they will be. No settlement on that question, but the rumors are this one will be based on each person’s income instead of the single lump sum of last time, with an upper limit of $1,200 per individuals. Only time will tell how much, or even if there is a personal payment, because if not passed before the elections, the possibility of passing will rapidly decrease.

3) The coronavirus has been a big stimulus for e-commerce from the stay at home shopping it stimulated, but surprisingly the home shopping boom has also been a boom for the shipping industry. Those huge ocean going ships stacked high with intermodal containers, their transpacific sea freight shipping rates have been sent to the highest on record, helping the container shipping industry in Asia. Household appliances imports have jumped 51% in August from last year, climbing for a third consecutive month. Shipments of computers, notebooks and other associated electronic gadgets has soared 169%. This increase consumer demand has shipping rates almost triple from this year’s low in March, when the pandemic led to border closures and a near halt in economic activity. With much of the world’s people housebound, the demand for electronic goods and do-it-yourself items has skyrocketed. There is also the coming Christmas holidays and therefore the stocking up in anticipation of sales.

4) Stock market closings for – 22 SEP 20:

Dow 27,288.18 up 140.48
Nasdaq 10,963.64 up 184.84
S&P 500 3,315.57 up 34.51

10 Year Yield: down at 0.66%

Oil: down at $39.55

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