1) Monday markets opened in a steep downward spiral from sell offs, driven by the coronavirus fears, followed by the sharp drop in oil prices. The Dow dropped 2,000 points, with a massive sell off of both the S&P 500 and Nasdaq, which triggered a key market circuit breaker that halted trading for fifteen minutes. There are widespread fears over the economic impact of low oil prices, with some experts fearing oil prices down to $20 a barrel. Gold prices crossed the $1,700 dollar an ounce, hitting the highest since December 2012. The banks are hard pressed as the interest continues to sink, cutting into their margins.
2) Experts speculate that the Feds will cut the interest rate to zero in the next few months in an effort to forestall a downturn of the economy. The entire U.S. yield curve fell below 1% for the first time in history on expectations that the Federal Reserve will cut rates to zero in the next few months. Some speculate the Feds may adopt a negative rate just as some European countries have, such as Germany’s -1%.
3) While checkout-free with cashless supermarkets is now a novelty, Amazon expects this technology to spread to other retailers. Amazon has announced it plans to license its automated checkout technology to other retailers, telling of several other companies that have already signed up for the technology. The technology has been proven with cashless convenience stores across America and with Amazon’s new Go-supermarkets. The technology represents another significant step in retail automation.
4) Stock market closings for – 9 MAR 20: The stock market is like a rectal thermometer- it’s rude and crude, but surprisingly effective in showing a sick economy.
Dow 23,851.02 down 2013.76 Nasdaq 7,950.68 down 624.94 S&P 500 2,746.56 down 225.81
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
1) As Boeing’s 737 MAX crisis continues, Boeing is talking with banks to borrow $10 billion dollars or more to finance the rising cost from its 737 MAX woes. So far, the company has borrowed $6 billion dollars to cover its cash-sapped operations after having suspended production of the planes this month. The crisis which grounded the 737 MAX is now entering its eleventh month.
2) The global auto industry continues its downward slide into deeper recession with sales down 4%. Automakers are struggling to find buyers in China and India, with the downward trend expected to continue this year. The number of vehicles sold dropped from 94.4 million down to 90.3 million last year, with the record high in 2017 of 95.2 million. The IMF says new autos account for 5.7% of economic output and 8% of the goods exported. Autos are the second largest consumer of steel and aluminum.
3) Because of unrest in Iraq and Libya, oil rose to its highest in more than a week. Oil prices have always been heavily influenced by geopolitical instability, especially those countries heavily involved with oil exports. Lybia has Africa’s largest oil reserves, with their Sharara oil field being Lybia’s largest by pumping 300,000 barrels a day.
4) Stock market closings for – 20 JAN 20:
Dow 29,348.10 up 50.46 Nasdaq 9,388.94 up 31.81 S&P 500 3,329.62 up 12.81
On January 15, 2020 (Wednesday), the USA and China signed the first phase of the US-China Trade Agreement. The first phase of the agreement, has China purchasing 200 billion dollars worth of goods and services, within the next 2 years from the United States .
The United States will then reduce the tariffs of $120 billion dollars worth of Chinese products, which is currently at 15% to be reduced to 7.5%. Chinese exports will then achieve over $260 billion dollars in the 2020 fiscal year.
The agreement provides more and better protection for American companies. American companies have discontent in China stealing intellectual property and trade stipulations. Phase 1, allows US banks to operate in China, while also enabling penalties for bad business and financial practices; instituted by US banks while operating in China.
So far the Phase 1 deal; seems to be a success as global markets have reacted positively to the signing of the USA-China Phase 1 Agreement. -SB
1) China has had another year of record corporate bond defaults, which is by design. Ten years ago, bond defaults almost never happened, not because Chinese businesses were healthy, but rather the government stepped in to prevent default. Companies were often linked to the government and bonds which were largely bought by state owned lenders, making a financial system with little discipline. The government has become more comfortable with defaults and so is stepping out of economic control, to impost more incentive to make careful assessment of companies.
2) This year, more than fifty banks have announced plans to cut 77,780 jobs, the most lost since 91,448 jobs in 2015. The 2019 cuts will bring the total for the last six years to more than 425,000 lost jobs. The European banks are still weak from the ‘o-eight’ financial crisis, and are still struggling to regain their footing, forcing continual cost cutting measures. Job losses are anticipated to continue into 2022.
3) With germs growing more resistant to common antibiotics, many drug companies are hemorrhaging money and going out of business. The effect is reduced efforts to develop new antibiotics just when they are become most needed. Other well established drug companies are abandoning the antibiotic market segment refraining from doing any research on new antibiotic drugs. One marketing problem is antibiotics are prescribed for just days to weeks, so there isn’t the revenue stream as with drugs continually consumed year after year by a patient such as insulin. Presently, drug resistant infections kill 35,000 people each year.
4) Stock market closings for – 27 DEC 19:
Dow 28,645.26 up 23.87 Nasdaq 9,006.62 down 15.77 S&P 500 3,240.02 up 0.11
1) The new streaming service Disney+ has surpassed ten million sign-ups since its launch Tuesday. In response Disney’s stock is up slightly while Netflix shares are down 1%. While there were technical problems connecting at first, that didn’t prevent customers from flooding the sign up page. The initial signup is for a free seven day trial, so it’s unknown how many will continue with the pay service.
2) In October, consumer prices rose the most in seven months as the price for gasoline was higher, along with medical treatment and recreation. But in general, inflation remained low and fairly stable, with consumer price index jumping 0.4%, primary from rising cost of energy. While gas prices surged upwards 3.7% in October, it’s still less than what Americans were paying a year ago.
3) The ever expanding corporate giant Google will offer personal checking accounts next year in partnership with Citigroup Inc and a small credit union at Stanford University. To be called Cache, it is intended to follow Apple Inc. and Facebook Inc into the financial industry. Google’s strategy is to deeply partner with banks and the financial system.
4) Stock market closings for – 13 NOV 19:
Dow 27,783.59 up 92.10 Nasdaq 8,482.10 down 3.99 S&P 500 3,094.04 up 2.20
1) China is growing at its slowest pace in nearly thirty years, with a 6% growth rate down graded to 5.8% growth which was predicted by the IMF (International Monetary Fund) for 2020. China’s economy isn’t looking very good, and what’s worst it’s getting worst. Economist are in disagreement over just what is causing the decline, considering there’s more than just the trade war responsible for China’s down slide. Slowing of global trade is another factor, but still with a 6% growth, China is above the world average of 3%.
2) The major credit card companies are launching a ‘one-click’ checkout button for fast secure online purchases similar to the PayPal. Now available with Cinemark, Movember and Rakuten websites, it will soon be available on BassPro, JoAnn Fabric, Papa John’s, Saks Fifth Avenue, SHOP.com and Tickets.com by the end of the year, with further companies to be added in 2020. Users won’t have to create or log into an account to make a purchase, nor will they need to enter their card info into every new site. The new service is being offered by Visa, Mastercard, Discover and American Express.
3) According to a survey from the consultant firm McKinsey & Co., more than half the world’s banks are too weak to survive a downturn of economies. These banks are not economically viable because of their returns on equity, which are not keeping pace with costs.
4) Stock market closings for – 22 OCT 19:
Dow 26,788.10 down 39.54 Nasdaq 8,104.30 down 58.69 S&P 500 2,995.99 down 10.73
1) The $9 trillion dollar business of financing global trade has become vulnerable to forgers who are so adept at faking documents used by banks that it has become necessary to go paperless. This means going digital which will also make the financing process more efficient.
2) The just purchased newspaper, the New Orleans Times-Picayune, has laid off its entire staff of 161 workers including 65 reporters and editors. Their competitor, the New Orleans Advocate who purchased them, will publish a daily paper using the names of both brands.
3) Two Federal Reserve policymakers have voice concerns about weak inflation. Some bankers see weak inflation as a growing case for a future interest rate cut, even though others are pushing for continued patience.
4) 3 MAY 19 Stock market closings:
Dow 26,504.95 up 197.16 Nasdaq 8,164.00 up 127.22 S&P 500 2,945.64 up 28.12
1) Amazon’s retail sales was lower than expected for the fourth quarter, although their other operations kept profits up.
2) The collapse of Sears just might be the start of a retail apocalypse. As more retailers became troubled, it may signal consumerism is slumping. Even strong retailers had a lackluster Christmas, more economist are fearing a coming recession and more retailers will be in trouble if economic growth slows.
3) Brexit has already spawned economic damages. The largest EU banks are moving out or planning to move in the near future. Britain’s Pound has fallen 10% against the Euro resulting in reduced purchasing power for the British people. There are many other sectors adversely effected.
4) 1 FEB 19 Stock market closings:
Dow 25,063.89 up 64.22 Nasdaq 7,263.87 down 17.87 S&P 500 2,706.53 up 2.43
Mr. Steven Mnuchin was confirmed and sworn in as the new US Treasury Secretary Monday evening, February 13, 2017. Secretary Mnuchin who takes the helm of the Treasury Dept from his predecessor Mr. Jack Lew, was a former executive at Goldman Sach’s (which seems to be a prerequisite in attaining the Treasury post; past Goldman Sach alum who have garnered at the helm of Treasury have been people such as Robert Rubin, and Henry Paulson).
Secretary Mnuchin was also a Hollywood financier in the past, helping to assist in financing big blockbuster movies; as well as taking conservatorship of IndyMac, turning the loan entity, which happened to go bankrupt into a profit, before selling it for billions. -SB