16 March 2021

1) The technology known as carbon capture and storage, a concept that has been around for at least a quarter century to reduce the climate damaging emissions from factories, is being pursued by major international oil companies. The idea sounds deceptively simple, just divert pollutants before they can escape into the air, and bury them deep in the ground where they are harmless. But the technology has proved to be hugely expensive, and so has not caught on as quickly as advocates hoped. Exxon Mobil, BP and Royal Dutch Shell plus lesser known Norway’s Equinor, France’s Total, and Italy’s Eni are investors in capture and storage projects.

2) Reports are, that amid all the trillion dollar spending, the White House is now starting to consider how to pay for the programs meant to bolster long term economic growth with investments in infrastructure, clean energy and education. The challenges are twofold: 1) how much of the bill is paid for with tax increases and 2) which policies to finance with more borrowing. The administration hasn’t decided whether to pursue a wealth tax. With interest rates so low, U.S. borrowing costs are manageable right now. The federal government currently collects the biggest chunk of its revenue, about half in 2019, from individual income taxes, which now tops out at 37% of income above $518,000 per year. For now, there are few signs of inflationary spiral or fiscal crisis that policy makers thought would accompany debt levels like today’s. The Congressional Budget Office this month projected that the national debt would double as a proportion of gross domestic product over the next 30 years. But the cost of borrowing is rising for the government and across the economy so the large debt could mean trouble in the future.

3) India’s foreign-exchange reserves has surpassed Russia’s to become the world’s fourth largest, as India central bank continues to hoard dollars to cushion the economy against any sudden outflows. Reserves for both countries have mostly flattened this year after months of rapid increase. India’s reserves, enough to cover roughly 18 months of imports, have been bolstered by a rare current-account surplus, raising inflows into the local stock market and foreign direct investment. India’s foreign currency holdings fell by $4.3 billion to $580.3 billion as of March 5, edging out Russia’s $580.1 billion pile. China has the largest reserves, followed by Japan and Switzerland on the International Monetary Fund table.

4) Stock market closings for – 15 MAR 21:

Dow 32,953.46 up by 174.82
Nasdaq 3,459.71 up by 139.84
S&P 500 3,968.94 up by 25.60

10 Year Yield: down at 1.61%

Oil: down at $65.29

4 March 2021

1) Kelley Aerospace has officially launched the world’s first supersonic unmanned combat aerial vehicle (UCAV), called the ‘Arrow’. The drone is designed with a single shell of lightweight carbon fiber that allows it to reach speeds up to Mach 2.1. The UCAV has reduced radar cross-section and infra-red signatures, and is designed for multiple combat or reconnaissance roles. Kelley has 100 pre-orders for the war machine, which costs between $9 to $16 million dollars each. It’s designed to complement manned aircraft making it a force multiplier in the aerial battlefield. A manned combat aircraft would control multiple Arrow UAVs, tasking each with a different missions.

2) There are about a thousand restaurant closures a month in Texas, a result of the coronavirus pandemic. About 11,000 restaurants have closed in Texas since the start of the pandemic. This is about a fifth of all Texas restaurants with about 150,000 Texans who have lost their jobs. Nine out of 10 of these restaurants are small businesses employing less than 50 people. Restaurants in downtown city centers have been hit particularly hard because business lunches and conventions were suspended almost immediately. Surprisingly, the more expensive restaurants have not fared as well as family dining locations.

3) The American Petroleum Institute is considering throwing its weight behind a government imposed price on carbon dioxide emissions as a way to slow global warming, making for a major policy shift by the oil industry’s top trade group. Supporters of a tax argue that a carbon tax increases the cost of energy derived from oil, natural gas and coal so it would be more effective than regulations at paring U.S. greenhouse gas emissions. Exxon Mobil Corp., ConocoPhillips, BP and Royal Dutch Shell already support a carbon tax-and-rebate plan. The tax has gained momentum as international energy companies make investment decisions based on the assumption that emission limits will be imposed by regulation, tax or other mechanisms. The companies are seeking regulatory certainty on the issue, instead of environmental policies that whipsaw with every presidential election. A carbon tax could benefit producers of natural gas over coal and spur investment in renewables and nuclear power. Some environmentalists who oppose fossil-fuel development criticized the possible move, calling it little more than a public relations ploy by letting producers buy their way out of climate accountability. Several utilities have lobbied Biden administration officials to support a nationwide carbon price.

4) Stock market closings for – 3 MAR 21:

Dow 31,270.09 down by 121.43
Nasdaq 12,997.75 down by 361.03
S&P 500 3,819.72 down by 50.57

10 Year Yield: up at 1.47%

Oil: up at $61.06

4 December 2020

1) Exxon has announced that it will dramatically mark down the value of its natural gas properties, a result of the slow oil price recovery. The plan is to take a non-cash charge of $17 to $20 billion dollars, which is a massive hit for a company who has long opposed to taking writedowns. Exxon erred when it acquired XTO Energy, a natural gas giant, for $41 billion dollars in late 2009. Now, about half of that purchasing value has now been erased. The natural gas market is depressed with the price of gas now less than half of what it was when Exxon purchased XTO Energy. Other oil companies such as Chevron, BP and Shell have also taken massive write downs. This write down also means that Exxon will limit its near term capital spending in gas

2) Failed talks have exposed a dangerous fissure at OPEC’s core, which its partners are quietly working to repair. Diplomatic efforts center around Saudi Arabia and the United Arab Emirates on how much crude oil to pump in the coming new year. OPEC rescued the oil market this year, after an unprecedented slump in oil prices, by slashing production to compensate for the demand decline because of the pandemic. But with oil prices down for so long, many OPEC member countries life blood revenues are down which impairs operations of those governments. This puts a lot of pressure on individual countries to break away and pump without any restrictions or quotas to get the monies they need. Privately, some OPEC members are talking about even leaving the cartel and going their own way with oil.

3) During the Thanksgiving holiday week, fewer Americans applied for unemployment benefits, thereby reversing an uptick in jobless claims over the previous two weeks. But still unemployment claims remain historically high, indicating many companies are continuing to lay off workers, despite the economy recovering from the impact of the coronavirus. Some 712,000 people applied for unemployment benefits, a drop of 75,000 from the week before. Another 288,000 applied for Pandemic Unemployment Assistance, a special program for self-employed and gig workers, as well as others who don’t qualify for regular state unemployment. In addition, millions are struggling to find work during the pandemic. All told, about 20 million people are now receiving some type of jobless aid, with 12 million set to lose their benefits the day after Christmas unless Congress agrees to extend funding.

4) Stock market closings for – 3 DEC 20:

Dow 29,969.52 up by 85.73
Nasdaq 12,377.18 up by 27.82
S&P 500 3,666.72 down by 2.29

10 Year Yield: down at 0.92%

Oil: up at $45.64

15 September 2020

1) The old, almost extinct vinyl record album technology for music has surpassed the newer high technology CD music media this year, by selling $129.9 million compared to $232.1 million dollars for vinyl records. This is the first time vinyl has outsold CDs since the 1980’s. About 8.8 million records were sold with 10.2 million CDs, so number wise CD’s are still ahead. Overall, the music industry now is center on digital downloads, digital subscription and streaming services such as Spotify, Apple Music and YouTube with revenues up 12% overall. The recorded music for the first six months of 2020 was $5.6 billion dollars so combined vinyl and CD’s are just a small fraction of the total business.

2) Amazon is hiring again expecting to fill 100,000 part time and full time openings across the U.S. and Canada. This is in addition to 33,000 technology and corporate jobs announced just a week ago, many paying six figure salaries. The 100,000 labor jobs pay at least $15 an hour with a $1,000 sign up bonuses in some cities. Amazon is opening 100 new buildings this month because of the pandemic fueled sales surge with increase home delivery, as shopping habits shift to e-commerce. Market value for Amazon is now at $1.6 trillion dollars and continues climbing.

3) Oil giant BP (British Petroleum) says the demand for oil may have peaked last year, that global market for crude oil might never recover from the coronavirus pandemic. The company considers there are three scenarios for energy demand, all of which forecast a decline in demand for oil over the next thirty years. 1) ‘Business as usual’ oil demand increases slightly after the pandemic crisis passes, then plateaus around 2025 finally it declines after 2030. 2) Governments take more aggressive steps to curb carbon emissions, 3) there are significant shifts in societal behavior, both leading to a decline in oil demand. All point to a shift in the world economic system with a significant decline in growth for many countries.

4) Stock market closings for – 14 SEP 20:

Dow 27,993.33 up 327.69
Nasdaq 11,056.65 up 203.11
S&P 500 3,383.54 up 42.57

10 Year Yield: unchanged at 0.67%

Oil: down at $37.38

16 June 2020

1) The markets sank Monday, down by 762 points, when the news of the Feds bond-buying plan became known, reversing the selling to buying which raised the Dow up 150 points. The downward slide was from fears of a second round of the Convid-19 virus with the possibility of more economic damage. The plan is for the Federal Reserve to buy individual corporate bonds, on top of the exchange traded funds it is already buying. This is a move to ease credit conditions to further stimulate the economy. The program can buy up to $750 billion dollars worth of corporate credit, which the Feds can buy on the secondary market, individual bonds that have maturities of five or less years. Bonds is how corporations typically fund their operations and expansion using debt, and this program will ease debt for corporations allowing them to grow more and provide jobs.

2) The oil giant BP (British Petroleum) has signaled to investors that the economic shock of the pandemic will reverberate for years. This in turn means less gas and oil needed by the world in the future. The company is expected to write down $17.5 Billion dollars of its oil and gas holdings this next quarter, meaning they are worth less in the future than what they are worth today. The coronavirus pandemic has caused steep declines in demand for gas and oil worldwide, and this is expected to last for a number of years. This write down is in the approximate class of the Deepwater horizon disaster in the Gulf of Mexico, which was $32 billion dollars.

3) Britain’s Brexit, the planned exit of Britain from the European Union, has been overshadowed by the world wide pandemic, but nevertheless Brexit trade talks have continued. But the talks have reached an impasse. Britain left the union at the end of January, but had not reached agreements on traded with the other European countries. Although Britain left the union, the two economies have continued operating as before Brexit, so there has been little changed in trading. But this is only to the end of the year, and with Britain a major trader of goods with Europe, it’s important to reach agreements before that time comes. One major point of contention is how future disagreements will be adjudicated or arbitrated.

4) Stock market closings for – 15 JUN 20:

Dow 25,763.16 up 157.62
Nasdaq 9,726.02 up 137.21
S&P 500 3,066.59 up 25.28

10 Year Yield: unchanged at 0.70%

Oil: up at $37.07