14 January 2020

1) Ford Motor Company’s sales in China has declined for the third straight year, falling by 26.1%. The company has been trying to revive sales in China after the decline started in 2017 and plans to introduce thirty new models in the next three years, with a third being electric models. General Motors has also experienced a decline in sales of 15% this last year.

2) One of the largest suppliers of parts to Boeing’s 737 MAX, Spirit AeroSystems, is laying off 2,800 workers. Based in Wichita Kansas, will eliminate 20% of its workforce. Smaller layoffs will happen at its facilities in Tulsa and McAlester, with half its annual sales from parts for the 737 MAX. Since last February, Spirit’s stock has fell from a high of $100 a share to $71.50 on news of the layoffs.

3) Expectations are that the U.S. will remove China from its list of currency manipulators two days before the signing of initial U.S. – China trade agreement. Part of the agreement is that both nations will not devalue its currency to gain a competitive advantages of exports. Labeling China a currency manipulator was viewed largely as a symbolic action.

4) Stock market closings for – 13 JAN 20: Stocks are up 495% in the past decade.

Dow             28,907.05    up    83.28
Nasdaq          9,273.93    up    95.07
S&P 500         3,288.13    up    22.78

10 Year Yield:    up   at    1.85%

Oil:    down   at    $58.12

18 December 2019

1) Walt Disney’s Star War’s empire has been fading at the box office with many fans finding the new offerings less than anticipated. The last chapter of the Star Wars series, The Rise of Skywalker, is being heavily promoted to halt the financial slide. In playing up the nostalgia aspects and the fact that this will be the last Star Wars release for years, they are trying to reverse the downward slide of the franchise, which Walt Disney purchased from George Lucas for $4 billion dollars in 2012.

2) Ford Motor Company plans to invest more than $1.45 billion dollars in two of its manufacturing facilities in Detroit, to make electric, autonomous and sports-utility vehicles. The new manufacturing will add 3,000 jobs, with Ford saying it will invest $11 billion dollars to make forty new hybrid and fully electric vehicles by 2022.

3) Fears continue that Boeing’s halting of the 737 MAX production could have serious impact on the U.S. economy next year. This production halt is anticipated to go until March and April of next year. Presently, Boeing has 400 airplanes in storage awaiting delivery. The production halt will impact everything from airlines to parts manufacturers, with a supply chain consisting of hundreds of firms and tens of thousands of workers. This widely diversified economic network makes forecasting the total economic impact of Boeing very difficult.

4) Stock market closings for – 17 DEC 19:

Dow                  28,267.16    up    31.27
Nasdaq             8,823.36    up       9.13
S&P 500            3,192.52   up        1.07

10 Year Yield:    unchanged   at    1.89%

Oil:    up   at    $60.54

17 December 2019

1) The aircraft manufacturer Boeing Aircraft has announced it is bringing production of the 737 MAX to a temporary halt the first of January. Boeing is America’s largest manufacturing exporter and the largest component of the Dow Jones industrial average, so there are fears that Boeing’s decision will send shockwaves through the American economy. Boeing will redeploy workers on the MAX production line to other projects therefore avoiding layoffs and furloughs. After the aircraft’s grounding nine months ago, Boeing has continually encountered hurdles with domestic and global regulators.

2) Stocks closed at record highs on Monday, their fourth straight gain, a result of the Phase One trade deal between China and the U.S., clearing the way for Wall Street to end a banner year. A further positive note is strong economic data out of China, topping expectations, with American economic data showing positive signs too.

3) For the last few years, sprits distillers have seen explosive growth, a result of a tax cut from the Craft Beverage Modernization and Tax Reform Act. But this tax cut is due to expire on 31 December, resulting in a 400% increase in Federal liquor tax, which would put the brakes on the distilling business. Renewing the tax break is running into congressional dysfunction and partisan fighting over taxes and spending.

4) Stock market closings for – 16 DEC 19:

Dow              28,235.89    up    100.51
Nasdaq          8,814.23    up      79.35
S&P 500         3,191.45    up       22.65

10 Year Yield:    up   at    1.89%

Oil:    up   at    $60.19

6 December 2019

1) Boeing says significant additional regulatory requirements may cause additional delays in returning Boeing’s 737 MAX to commercial service and in turn may cause the company to cut or even halt production. Boeing does not expect 737 MAX order cancellations to have an impact on revenues or earnings citing the size of 737 backorder.

2) Saudi Arabia has just completed the biggest initial public offering in history, which raised $25.6 billion dollars from sales of shares in its giant state owned oil monopoly. Three billion shares were sold at $8.53 a share. Aramco is valued at roughly $1.7 trillion dollars, making it the most valuable publicly traded company in the world. Saudi Arabia plans to wean their economy off an oil only base.

3) The Dollar General retailer chain is opening almost twenty stores a week, while thousands of other retail stores are expected to close this next year. So far, the retailer has opened 925 stores this year, with 1,000 opened by the end of 2020. Presently, they have 16,000 retail outlets, and estimate that three quarters of the U.S. residents live within five miles of a Dollar General store. Revenues continue to increase with sales rising 8.9% to nearly $7 billion dollars over the last three months compared to the same period last year.

4) Stock market closings for – 5 DEC 19:

Dow           27,677.79    up    28.01
Nasdaq        8,570.70    up      4.03
S&P 500       3,117.43    up      4.67

10 Year Yield:    up   at    1.80%

Oil:    up   at    $58.33

21 November 2019

1) For 80 years Boeing Aircraft has operated as an ‘association of engineers’, but this changed in 2001 when the upper management who came from MacDonnel Douglas (a failed company), elected to move Boeing’s corporate headquarters to Chicago. The rational was upper management shouldn’t be close to a principal business, because the corporate center is inevitably drawn into day to day business operations. With this, Boeing became a financially driven business instead of engineering driven, with decision based on cost cutting instead of safety. This has resulted in the 737 MAX fiasco now being played out.

2) Apple has started construction of its $1 billion dollar campus in Austin Texas, which is beside its new MacBook Pro laptop manufacturing facility. The 3 million square foot campus will have 5,000 employees with capacity to grow to 15,000. Currently, Apply employs 7,000 people in Austin. This is seen as another move by Apple to limit its manufacturing in China.

3) Walmart is redesigning its grocery department in order to counter impending competition to traditional brick-and-mortar from online giant Amazon. Already the country’s largest grocer, Walmart will widen aisles, add low profile displays in the produce departments, an organic shop and update signage throughout its stores. These changes are expected to be improvements for the customers and workers.

4) Stock market closings for – 20 NOV 19:

Dow               27,821.09    down    112.93
Nasdaq           8,526.73    down      43.93
S&P 500          3,108.46    down       11.72

10 Year Yield:    down   at    1.74%

Oil:    up   at    $57.09

13 November 2019

1) An FAA (Federal Aviation Administration) official states that Southwest Airlines should ground 49 of its airliners that had repairs failing to meet legal standards. The official claims there is a high likelihood of a violation of a regulation, order or standard, so the FAA must take immediate action to revoke the certification of the planes. Aircraft in questions is the Boeing 737 NG which were previously owned by foreign carriers, saying inspections should be speeded up, but fall short of grounding the aircraft.

2) Dean Foods, America’s largest milk producer, is filing for bankruptcy. The 94 year old company has struggled in recent years because Americans are drinking less cows milk. In 2019, sales are down 7%, while for the first half of the year, profits are down 14%, with Dean’s stock dropping 80% in a year. The company is straddled with debt and is unable to fully fund its pensions.

3) The retail giant Walmart is experiencing internal strife over its e-commerce operation with the corporate culture of traditional marketing. Apparently, Walmart’s management doesn’t have a real understanding of the complex technology of e-commerce. The impact of Walmart’s plunge into online retailing has reduced Walmart’s already thin profit margins, which are at historic lows. Some high profile acquisitions and other strategic moves have cratered and talented executives on both sides have departed.

4) Stock market closings for – 12 NOV 19:

Dow               27,691.49    unchanged    
Nasdaq            8,486.09      up    21.81
S&P 500           3,091.84      up      4.83

10 Year Yield:    down   at    1.91%

Oil:    up   at    $56.78

15 October 2019

1) There are fears that the manufacturing segment is in trouble and may contract for the third straight month. This in turn could drag down the U.S. GDP (Gross Domestic Product) in the third and fourth quarters. Three factors are causing this down turn- the trade war with China, the GM (General Motors) strike and Boeing’s 737 MAX problems stopping deliveries and slowing production.

2) In the recent past, the online retailer giant Amazon has been unable to compete with traditional retailers when selling single items costing less than a few dollars, because the shipping cost is more than the single item cost such as toothpaste, deodorant or a simple brush. Customers had to buy these items as add-ons to make the $25 minimum for free shipping. But these items are now available for free shipping with Amazon’s Prime shipping. This could make for a significant challenge to other retailers such as Walmart, Target and CVS.

3) GM is attempting to end the month long strike of the UAW (United Auto Workers) by making direct appeal to the workers. The company has lost more than a $1 billion dollars so far, and is making several promises to the workers trying to circumvent the union’s leadership. The UAW has increased strike pay from $250 to $275 per week with union members allowed to hold other jobs as long as it doesn’t interfere with their picket duty.

4) Stock market closings for – 14 OCT 19:

Dow            26,787.36    down    29.23
Nasdaq         8,048.65    down      8.39
S&P 500        2,966.15    down       4.12

10 Year Yield:    down   at    1.73%

Oil:    down   at    $53.50

9 October 2019

1) The pizza giant Domino’s had been the darling of Wall Street, with its soaring sales, but its growth has gone stale. The company’s reported revenue and profit missed Wall Street’s forecast with its stock sagging. The same-store sales grew just 2.4% compared with last years 6.3%. Domino’s operates in 85 countries with 10,000 stores outside of the U.S., which generate half of its revenues.

2) Boeing aircraft has got its first 737 MAX order since the crashes forced grounding of all 737 MAX aircraft. Boeing’s net order tally, including cancellations, was a negative 84 for the first nine months of 2019. In addition, Southwest Airlines’ pilots union has filed a law suit against Boeing for damages caused by the prolonged grounding of its 737 MAX, claiming loss of pay to its pilot from canceled flights and seeing $115 million dollars in compensation.

3) Duke University professor Campbell Harvey, the father of the yield curve and pioneer of the economic forecasting model, says to prepare for a recession. He based his prediction on inverted curves, which happen when short term Treasury yields are higher than those with longer duration, which his research indicates the coming of a recession.

4) Stock market closings for – 8 OCT 19:

Dow                     26,164.04    down    313.98
Nasdaq                  7,823.78    down    132.52
S&P 500                 2,893.06    down      45.73

10 Year Yield:    down   at    1.54%

Oil:    down   at    $52.57

28 August 2019

1) Avia Capital Services, a Russian aircraft leasing company, has filed a law suit against Boeing aircraft to cancel an order for 35 737 MAX jets. The law suit alleges that Boeing failed to disclose safety issues and therefore knowingly sold defective products. The company seeks $115 million dollars in compensation damages. Boeing had a $2.9 billion dollar loss for its second quarter, the biggest loss ever for Boeing.

2) An Oklahoma lawsuit against Johnson & Johnson for $572 million dollars over its marketing of opioid drugs will spur further trials and legal settlements. This ruling will shape negotiations with about 1,500 similar lawsuits across the country. Plaintiffs content that Johnson & Johnson failed to market the drugs responsibly and failed to stop suspicious orders from shipping.

3) Telecommunications provider Sprint announced the next phase of its 5G rollout adding the big cities of New York City, Phoenix and Washington DC to launch service starting 27 August. Atlanta, Chicago, Dallas, Houston and Kansas City already have Sprint’s 5G service, with Sprint saying they now have 2,100 square miles of 5G.

4) Stock market closings for – 27 AUG 19:

Dow              25,777.90    down    120.93
Nasdaq             ,826.95    down      26.79
S&P 500          2,869.16    down        9.22

10 Year Yield:    down   at    1.49%

Oil:    up   at    $55.69

15 August 2019

1) Fears are growing that the world is moving towards an economic crisis, based on signs from Washington and Wall Street, starting with President Trump’s retreat from adding new tariffs. The stock market rose over the news meaning Christmas had been saved for this year’s sales. But the bond market wasn’t as optimistic, the rates dropping indicating a lack of confidence in the future economy. Called an inverted yield curve, it signals investors expect a weak growth and lower inflation over the years.

2) The troubling signals from the bond market caused the stock markets to drop, with the Dow dropping 800 points to erase all of Tuesdays gains. Worried about the state of the economy, investors are rushing to long term safe haven assets, pushing the yield on 30 year Treasury bonds to a new record low. The Cboe Volatility Index jumped to a high of 22.

3) The financial problems plaguing Boeing aircraft from the 737 MAX grounding may delay or even cancel Boeing’s next airliner design, the 797. A mid-size airplane, the aviation industry expected Boeing would go ahead with a new design, but the sever loses from the 737 MAX are now casting doubt on that happening, especially if the world economy does deteriorate. The 797 is expected to be a long range jet seating about 250 passengers. The design would make extensive use of light weight composites giving good fuel economy and range. Additionally, engineering resources are being pulled away from the 797 to work the 737 MAX problem.

4) Stock market closings for – 14 AUG 19:

Dow           25,479.42    down    800.49
Nasdaq        7,773.94    down    242.42
S&P 500       2,840.60    down      85.72

10 Year Yield:    down   at    1.58%

Oil:    down   at    $54.95