8 May 2020

1) The shutdown orders are being lifted in many states, which also includes the shopping malls, but those malls remain eerily quite, almost void of humans, where once mobs crowded and surged in the hallways. People are electing to do a minimum of shopping or to shop online instead. The change is in part from fears of the virus and in part because of the high unemployment and fears of the economy floundering. There are questions of how much the American shopping ethos will return, or if consumerism is experiencing a fundamental change. The big department stores and big box stores were already suffering from changes in shopping habits and the virus may have accelerated that trend, plus many malls across America had already closed up before the pandemic. With consumerism accounting for half the economy, the future of shopping is a serious question.

2) A second major retailer has filed for bankruptcy during the coronavirus crisis. The 113 year old chain Neiman Marcus Group, which has been struggling with a $5 billion dollar debt much of it from leveraged buyouts in 2005 and 2013. With having to close 43 of its stores and laying off most of its 14,000 worker, the pandemic forced reduction of revenues that made the debt unsustainable. And that’s what broke their financial back. More than 263,000 stores in America have had to closeup leaving them with little to no revenues while their monthly fix cost remained unchanged, so questions abound of how many others will follow in the next few months, particularly if jobs don’t quickly return. On the positive note, restaurants doing takeout service, like Papa John’s Pizza, have done quite well.

3) The number of jobless Americans reached 33 million with the addition of another 3.2 million filings for unemployment benefits. This is over a seven week period, while previously 200,000 a week had once been the norm. There just doesn’t seem to be any letup in unemployment in sight from the virus crisis, with deepening fears a recession could be a long affair. On a positive note, this is the fifth week where the jobless claims have fallen, but still there are worries that the total number may go over 40 million before returning back to normal.

4) Stock market closings for – 7 MAY 20:

Dow 23,875.89 up 211.25
Nasdaq 8,979.66 up 125.27
S&P 500 2,881.19 up 32.77

10 Year Yield: down at 0.63%

Oil: down at $23.81

16 April 2020

1) With many of the big box stores under siege from store closings and bankruptcies, the U.S. retail sales has suffered a record drop in March. In turn, factory outputs have declined by the most since 1946, as part of the coronavirus economic contraction in the first quarter. The drop is the sharpest rate in decades despite the measures taken to prop up the economy. People are now making comparisons to the Great Depression of 1930’s, considering this recession will be as deep if not deeper than that depression. People are losing jobs by the millions, and one question is how many of those jobs will return and how many will be taken by technology displacement. Last month, retail sales plunged 8.7%, the biggest decline since 1992 when government began taking numbers. Restaurants and bars are included in the retail decline with a drop of 26.6% last month, although grocery and health care rose. Consumer spending has dropped sharply with forecast of a 41% decline for second quarter. Consumer spending accounts for more than two thirds of the U.S. economic activity.

2) The price of oil has fallen below $20 per barrel because of predictions of a record slump in world demand. In April, global oil demand is expected to fall by 29 million barrels a day from last year. This is oil demand levels that was last seen in 1995. The U.S. had been oil independent for several years now, because of its domestic shale oil production, but for this oil to be profitable to extract, oil prices must be above $40 a barrel. With oil prices forecast to be low for the foreseeable future, the shale oil industry is in dire straights.

3) Time when companies are under stress, such as during a recession, provides impudence for them to reorganize and streamline their operations. By adapting to a new environment through restructuring of a company, they are able to reduce operating cost, thereby being better able to survive. Recession brings layoffs and furloughs, so companies seek to get work done with fewer people, usually by using new technologies. Consequently, those jobs are gone, never to return, when the economy returns to health.

4) Stock market closings for – 15 APR 20:

Dow 23,504.35 down 445.41
Nasdaq 8,393.18 down 122.56
S&P 500 2,783.36 down 62.70

10 Year Yield: down at 0.64%

Oil: down at $20.15

12 February 2020

1) The demise of the big box and department stores in malls, has spawned a move to trendy local shops. These are standalone small format stores designed to experiment with new retail strategies and increased foot traffic. These stores tend to be positioned closer to neighborhoods away from the malls. The department stores and big box retailers grew rapidly and over saturated the market, while the small format stores have less investments and lower lease costs.

2) Boeing Aircraft company reported zero new orders for this January, while Airbus tallied 274 orders for commercial airplanes in the same month. The company did deliver 13 new airplanes in January, six were 787 Dreamliners, two 777s, two 767 and three 737NG. Boeing is anticipating re-certification of its 737MAX by the middle of 2020.

3) California is now estimated to have 150,000 homeless people, reaching record numbers, of which two-thirds are living on the streets. There are more than 100 homeless camps across Oakland, in which authorities are in the process of dismantling. The homeless scratch out a living doing odd jobs, focus groups or medial trials. The rising cost of housing is the prime force driving people to homelessness, the number increasing each day despite the soaring stock market and record low unemployment rate.

4) Stock market closings for – 11 FEB 20:

Dow 29,276.34 down 0.48
Nasdaq 9,638.94 up 10.55
S&P 500 3,357.75 up 5.66

10 Year Yield: up at 1.59%

Oil: up at $50.07

3 July 2019

1) The U.S. economy has entered its 121st month of economic growth setting a new record. Some experts are saying the real economic recovery may only be in its infancy. It’s just this last year that the gross domestic product caught up with estimates of its potential. Periods when GDP exceed potential are when workers typically enjoy the greatest wage gains. There are concerns of a changing environment with global trade disputes and other risks slowing down the economy.

2) Another daily newspaper has announce it is closing down, in what this year has been a rash of daily newspaper closing as well as massive layoffs. The Vindicator of Youngstown Ohio, which just celebrated its 150th anniversary, will cease publication the end of August, with 144 people losing their jobs. Virtually all daily newspapers have had deep cuts in staff these last couple of years, giving credence to the prediction that all the daily newspapers in America will be gone in ten years, displaced by newer mass media technologies.

3) The Payless ShoeSource is going out of business, closing all of its 2,500 retail stores. Once the largest and most successful family owned business in the country, the chain is succumbing to competition from big-box stores and on-line retailers. Founded in the 1960s, its demise could be the largest retail liquidation in history. Payless strategy uses customer self help allowing a minimal labor force of one manager and a couple of cashiers.

4) Stock market closings for- 2 JUL 19:

Dow               26,556.14    up    19.32
Nasdaq            7,958.05    up    45.06
S&P 500           2,926.73    up    12.95

10 Year Yield:    down   at    1.98%

Oil:    up   at    $56.66