14 May 2020

1) Jerome Powell, the Federal reserve Chairman, has warned of a possible prolonged recession caused by the economic damaged from the coronavirus crisis. Widespread bankruptcies among small businesses and extended unemployment for many people remain a serious problem for the economy. Furthermore, he considers the proposed $3 trillion dollar aid package to be worthwhile if it averts long term economic damage thereby giving a strong recovery. Almost $3 trillion dollars has already been spent on economic assistance, with the interest rate cut down to near zero. Cutting the interest rate has been the traditional tool used to counter recessions and economic slow downs, but with interest rates almost zero, the feds no longer have this tool. Nothing is being said about the massive increase to the already very large federal debt, nor the impact on the long term economy if it fails to return to healthy growth to pay off that debt. Otherwise, it could become a boat anchor around America’s neck making swimming in the ‘economic lake’ very difficult, or maybe impossible later on. The markets responded to Powell’s remarks with a down turn.

2) Unemployment continues to subside with initial reports of another 2.5 million lost jobs compared to 3.2 million for the previous week. This brings the total unemployed for the past eight weeks to a staggering 36 million people without work. Percent wise, the unemployed numbers are worst than the Great Depression of the 1930’s. Economist anticipate a further, although smaller increase in unemployed people for the next few weeks before the curve bottoms out and employment starts increasing as businesses opens up to resume operations.

3) Automakers are preparing to restart manufacturing with plants in Mexico, which are due to open as soon as Monday. U.S. assembly plants rely heavily on Mexican auto plants for parts and subassemblies used in building cars, and there were fears of U.S. manufacturing being hindered by part shortages. Approximately 39% of auto parts for car manufacturing comes from Mexico.

4) Stock market closings for – 13 MAY 20:

Dow 23,247.97 down 516.81
Nasdaq 8,863.17 down 139.38
S&P 500 2,820.00 down 50.12

10 Year Yield: down at 0.65%

Oil: up at $26.23

1 October 2019

1) The crown prince of Saudi Arabia, Prince Mohammed bin Salman, has warned of astronomical oil prices if tensions escalate in the Persian Gulf. In a ‘60 Minute’ interview, the Prince called for strong and firm action to deter Iran and lessen the threat to world interests, so as to avoid disruptions of oil exports. The attacks on Saudi oil production facilities caused Brent crude to jump 19.5%, the biggest jump on record. The Middle East provides about 30% of the world’s energy supplies constituting about 4% of world GDP (Gross Domestic Product).

2) In order to avoid a quarterly decline in U.S. retail sales, automakers are offering big discounts to maintain sales growth. For the last three months, auto sales have flattened with average incentive spending rising 6% to more than $4,110 per vehicle, which is a third quarter record.

3) The fashion retailer Forever 21 Inc. has filed for bankruptcy protection and is the latest big fashion merchant who, like many other retailer chains, is unable to cope with high rents and heavy competition from e-commerce. The chain has 800 stores across the world, selling affordable but eye-catching designs, but has falling out of favor with the generation-Z consumers who turn to e-commerce. The bankruptcy will allow the company to reorganize and gain additional capital for operations.

4) Stock market closings for – 30 SEP 19:

Dow              26,916.83    up    96.58
Nasdaq           7,999.34    up    59.71
S&P 500          2,976.74    up    14.95

10 Year Yield:    unchanged   at    1.68%

Oil:    $54.29

PRESIDENT TRUMP GOES AFTER GENERAL MOTORS FOR DWINDLING U.S. WORKFORCE!!!!!!!!!

By: Economic & Finance Report

President Trump is not a happy camper. The president recently gave GM a scathing tweet on Friday, about their diminishing workforce presence in the United States.

General Motors (GM), the Detroit based automaker had once been the country’s biggest auto manufacturer, and it has been apparent since 2009, their workforce has constantly been decreasing.

GM has countered those claims of a diminishing workforce, and has insisted they have invested billions of dollars in U.S. based manufacturing operations for the past 10 years. -SB