25 January 2021

1) Janet Yellen, the Secretary of the Treasury nominee, has given up her hawkishness on budgets, arguing there’s sufficient wiggle room to keep running fiscal deficits. Therefore, she’s committed to working to pass Biden’s proposed $1.9 trillion dollar bill. Yellen reaffirmed the commitment to flexible exchange rates, that the value of the U.S. dollar and other currencies should be determined by markets. The dollar weakness reflects the success of policy-makers in flooding domestic and foreign markets with liquidity during the COVID-19 panic. The large chunk of foreign firms that borrows and invoices in dollars is benefitting from the current dollar downturn, and the pandemic should reinforce the Fed’s impressive capacity to act as the global lender of last resort. But even with reserve-currency status, the dollar can weaken. And a weak dollar will make it harder to run current-account deficits year-in, year-out.

2) Regulators fear a new and potentially larger wave of defaults that could send banks scrambling to cover losses, where weaker ones might need government help to survive. The European Central Bank has warned that bad loans in the eurozone could soar to 1.4 trillion euros, more than during the aftermath of the financial crisis, especially if the economy contracts more than expected. The oversize exposure of banks by small businesses is part of Europe’s economic fabric. Companies with fewer than 250 employees account for 99.8% of all firms and two-thirds of all private-sector jobs in Europe. Small businesses in the U.S. also have economic weight, but they tend to be bigger. About half of Europe’s workforce is employed by firms with less than 50 people, compared with about a 25 in America.

3) There are reports that the Air Force has secretly designed, built, and flown a brand-new fighter jet. Furthermore, the mysterious new plane is already breaking records, but virtually nothing is known about the new plane … other than it exists. Experts did not expect a new fighter for another decade. The Air Force must now consider how it will buy the new fighter as it struggles to acquire everything from intercontinental ballistic missiles to bombers. The Air Force built the new fighter under its Next Generation Air Dominance (NGAD) program. More amazingly, the Air Force developed the new fighter in about a year, which is a staggeringly short time by modern standards, a process that took 10 years with the F-35.

4) Stock market closings for – 22 JAN 21:
Dow 30,996.98 down by 179.03
Nasdaq 13,543.06 up by 12.15
S&P 500 3,841.47 down by 11.60
10 Year Yield: down at 1.09%
Oil: down at $51.98

5 January 2021

1) Because of the very rapid spreading of the new coronavirus variant, England will enter its toughest nationwide lock down since March. For at least six weeks schools will be closed and people can leave home only once a day for exercise. Because of the number of people in hospitals reaching a new height the British threat level has been raised to its highest level of 5. People must now only leave home for work, if it is impossible to work from home, and for essential food and medicine. School study will be online until mid-February. All non-essential retail and hospitality businesses are closed, but restaurants and other premises will continue delivery of takeaway food but not alcohol. Places of worship can remain open, including communal worship, subject to social distancing.

2) The first stimulus payments from new the coronavirus relief bill are now on the way. However, the aid won’t suffice for many. The $300 check additions to unemployment are half the amount of the old Federal Pandemic Unemployment Compensation pay outs, which lapsed in late July. Since then, aid recipients have been getting by on state unemployment assistance, which can pay less than the minimum wage when calculated on an hourly basis. But workers will receive just over a third of last spring’s CARES package, which paid out $600 per week for four months compared to $300 for 11 weeks now.

3) Google workers have formed their first-ever union, a rare step for the tech industry that also represents the biggest and most organized challenge yet to the company’s executive leadership. This is the first union at a major tech company and it’s for and by all tech workers. So far, 226 workers have signed union cards with the Communications Workers of America (CWA), one of the country’s largest labor unions. While the pandemic made it more challenging to hold those meetings face-to-face, the shift to remote work, in some ways, made it easier to organize. The workers could theoretically mount a strike, though that would be a challenge and there are no current plans to do so. The union’s formation comes after years of rising employee tensions over the company’s business and operational decisions, such as work with the defense sector, plans for a censored search engine in China, and the company’s handling of sexual misconduct claims.

4) Stock market closings for – 4 JAN 21

Dow 30,223.89 down by 382.59
Nasdaq 12,698.45 down by 189.83
S&P 500 3,700.65 down by 55.42

10 Year Yield: unchanged at 0.92%

Oil: down at $47.34

2 December 2020

1) Orders for long-lasting goods, such as computers and military weapons, rose again in October by 1.3%. Additionally business investment increased for the sixth straight month, despite the question if manufacturers will escape the effects of the coronavirus outbreak. The surge in orders was driven by Pentagon spending, so if defense spending is excluded, orders rose a modest 0.2%. The demand for computers and related products has increased during the pandemic, from so many people working from home and needing upgraded equipment. Orders for new cars and trucks declined 3.2%, but new jobless claims rose for the second week in a row to a five-week high, pointing to an increase in layoffs. Manufacturers are less likely to be affected since they have more control over their work environments.

2) The U.S. has added 10,000 ‘budget dollar retail outlets’ since 2001, but some towns and cities are trying to push back. This is becoming a common story. A dollar store opens up in an economically depressed area, with little for healthy and affordable food options, sometimes with the help of local tax incentives. It advertises hard-to-beat low prices but it offers little in terms of fresh produce and nutritious item . . . further trapping residents in a cycle of poverty and ill-health. Since 2001, outlets of Dollar General and Dollar Tree (which bought Family Dollar in 2015) have grown from 20,000 to 30,000 in number, the number of dollar-store outlets nationwide now exceeds Walmart and McDonalds put together, and they’re still growing at a breakneck pace. This raises questions of poor nutrition in neighborhoods with limited full service food retailers. So now, communities are standing up saying that while the dollar stores may be good in the short term, in the long term there are serious disadvantages.

3) American bank profits were significantly higher in the third quarter than the first half of 2020, but still lags behind 2019 levels. Their profits jumped 173% in the third quarter, but that amount is still 10.7% lower than 2019 levels, with about half of banks reporting lower profits than a year prior. The banking industry is well capitalized with ample liquidity and so far has weathered the economic effects of the pandemic. An explosion in bank deposits drove profits up, but that appears to have now slowed.

4) Stock market closings for – 1 DEC 20:
Dow 29,823.92 up by 185.28
Nasdaq 12,355.11 up by 156.37
S&P 500 3,662.45 up by 40.82
10 Year Yield: up at 0.93%
Oil: down at $44.36

23 November 20

1) When Joe Biden takes the presidential oath of office next year, he will need to address the question of his son and brother’s business arrangements with entities of foreign governments. A five-page report, with 65 pages of evidence, confirms the connections between the Biden family and the communist Chinese government, as well as the links between Hunter Biden’s business associates and the Russian government. Bidens’ global web of “consulting” and influence-mongering has created some unsavory question about conflicts of interest. Even if every past, present, or future business arrangement by Hunter and Jim Biden is technically legal, which is still an open question, plenty of difficulties can arise from financial pressure to do the bidding of those adversaries. To maintain public trust in his new administration’s diplomacy, the new president must force his son and brother to divest from many aspects of Biden family business.

2) Earlier this year, Australia was among the first countries to call for an official investigation into the coronavirus origins. China responded angrily which accusations that Australia’s highly irresponsible acts could disrupt international cooperation in fighting the pandemic. In recent months, China has imposed trade tariffs on Australia, targeted Australian journalists, and issued angry missives regarding Australia’s dealings with other regional powers. Chinese diplomats have distributed a document to Australian media listing Beijing’s grievances with Australia. These include unfairly blocking Chinese investment, spreading disinformation about China’s coronavirus response, falsely accusing Beijing of hacking, and engaging in incessant wanton interference in Xinjiang, Taiwan and Hong Kong. Yet while there may be legitimate concerns about China in a number of countries, such as the role of telecoms manufacturer Huawei in 5G networks, Australia has become more hawkish than most, but Australia could look foolish if Biden opens up partnerships with China on climate and pandemic management leaving Australia standing alone.

3) As Congress breaks for Thanksgiving, 12 million Americans may lose their jobless benefits on December 26 unless Congress can agree on a new stimulus deal in the next few weeks. More than half of the 21 million people currently collecting unemployment benefits can be effected. If lawmakers head home for Thanksgiving soon, it is even less likely they will reach a deal before they break for the year in December. As they do, millions of Americans could potentially lose their own residences when the nationwide eviction moratorium also expires at the end of the year. Tens of millions more cannot afford enough food to eat. Additionally, long-term unemployment is on the rise with the share of jobless workers out of work for 27 weeks or more, shot up from 19.1% to 32.5% in October, because there are simply not enough jobs being created to support all of the workers running out of aid before the end of 2020.

4) Stock market closings for – 20 NOV 20:

Dow 29,263.48 down by 219.75
Nasdaq 11,854.97 down by 49.74
S&P 500 3,557.54 down by 24.33

10 Year Yield: down at 0.83%

Oil: up at $42.47

17 November 2020

1) Because of the worldwide pandemic, Asia has been vastly overstocked with oil distillates this year. In response, China’s biggest refiner is eyeing a creative strategy to ease the persistent diesel glut by using brand new supertankers usually reserved for crude oil. While supertankers are built to transport dirty fuels such as crude oil, they can carry cleaner products like gasoline and diesel on their maiden voyage. Therefore, China’s largest oil refiner has hired a newly-built very large crude carrier to load low-sulfur diesel in Asia for delivery to Europe. China intends to charter brand new vessels on a regular basis to transport more diesel to Europe, thereby clearing out bloated fuel stockpiles in Asia. Oil prices settle lower after a surprise climb in U.S. crude supplies.

2) An adults-only luxury resort in the Maldives is offering guests (two people max) a year’s worth of unlimited stays in 2021 for $30,000. Called the “Unlimited Stays in Paradise” package, which includes an over water bungalow, free breakfast services, discounts on dining experiences at the resort and spa services. The 5-star adult-only resort has multiple restaurants and private dining experiences, an option for private movie screenings, a spa, and offers fun excursions. Since the start of the coronavirus pandemic, many destinations, Bermuda and Barbados for instance, are taking advantage of people wanting to opt-out of quarantining in their homes for an isolated vacation overseas. Three Hawaiian islands, Maui, Kauai, and the Big Island, considered allowing tourists to vacation in a Resort Bubble, which will allow visitors to safely roam.

3) China’s Ruler Xi Jinping has halted Ant’s record-breaking $37 billion IPO after the company’s boss Jack Ma snubbed government leaders. Jack Ma, Ant’s founder, criticized Chinese government leaders, when a week before the Chinese fintech was set to go public, Ma made incendiary comments that didn’t go down well with the president or other government officials. This is another example of how President Xi deals with any threat to his authority, such as Hong Kong, including a low tolerance for big private businesses that accumulate wealth and power. Ma also criticized the regulators who enforce a set of international banking rules as an old people’s club. The fintech had already secured over $3 trillion in orders from individual investors across its dual listings in Hong Kong and Shanghai.

4) Stock market closings for – 16 NOV 20:
Dow 29,950.44 up by 470.63
Nasdaq 11,924.13 up by 94.84
S&P 500 3,626.91 up by 41.76
10 Year Yield: up at 0.91%
Oil: up at $41.47

12 November 2020

1) Biden said he’ll forgive $10,000 in student debt for all borrowers. Will it actually happen? During his campaign, Biden advocated forgiving a large portion of outstanding student loan debt. Now that Biden is the President-elect, the 42 million Americans with education loans may be wondering, will it really happen? Biden’s proposal is a scaled-down version of plans that his rivals to the left in the Democratic primary campaigned on. Sen. Elizabeth Warren, wants to cancel up to $50,000 in student debt for individuals with household incomes under $100,000, while Sen. Bernie Sanders, said he’d erase all of the country’s outstanding education debt.

2) The European Union will impose tariffs on $4 billion dollars of U.S. goods starting Tuesday. This is a tit-for-tat escalation of a transatlantic fight over illegal aid to aircraft manufacturers Boeing Co. and Airbus. The EU tariffs will be on various Boeing models of airliners with a 15% duty, as well as other goods ranging from spirits and nuts to tractors and video games, which will be subject to a 25% levy. The move comes at an awkward moment for the EU, which is contending with a surge of Covid-19 cases and its worsening recession. For the last 13 months, the EU has faced U.S. tariffs on $7.5 billion dollars of European goods after Washington won a WTO (World Trade Organization) case against market-distorting aid. In a parallel lawsuit, the EU received final WTO permission to hit $4 billion dollars of American products with duties because of unfair subsidies to Boeing.

3) EU (European Union) regulators announced antitrust charges against Amazon. The European Commission considers Amazon’s collection of non-public data on its platform is then used to benefit its own retail business because sales of third-party retailers is then used to launch Amazon’s own products and undercut its competition. This complaint is one of the most common charges against Amazon as an anti-competitive outfit. About 2.3 million third-party sellers do business on the Amazon marketplace. The EU also has a second formal investigation which has officially been opened.

4) Stock market closings for – 11 NOV 20:

Dow 29,397.63 down by 23.29
Nasdaq 11,786.43 up by 232.58
S&P 500 3,572.66 up by 27.13

10 Year Yield: down at 0.96%

Oil: down at$41.62

2 November 2020

1) America’s economy is expanding at a record pace after a historic decline from the Covid-19 crisis. The economy grew at an unprecedented 7.4% pace from the second to the third quarter, which on an annualized basis, would be a growth rate of 33.1%. This would be the highest annualized growth rate on record. While this is undoubtedly positive, it comes with lots of caveats, for the U.S. economy is still in a deep hole with the gross domestic product still about 3.5% below the level recorded in the fourth quarter of 2019. Second, the economy is slowing. Third, there are about 11 million fewer people on payrolls than before the pandemic hit, plus layoffs persist. Finally, the report is a political football with politicians framing the numbers to best serve their individual’s objectives.

2) Cruise ships can begin a phased return to operations starting Nov. 1 under new health protocols. There has been 74 recommendations made for a potential safe return to cruising, including a new focus on “air management”, lower ship capacities, shorter sailing times, required testing and masks, and enhanced cleaning and medical staff on voyages. There are four phases to return to cruising, beginning with cruise ships establishing coronavirus testing of all crew. Phase 2 will be simulated voyages to test the ability to mitigate Covid-19 on cruise ships. Phase 3 is certification by the CDC, and the final phase is a return to passenger voyages.

3) One question this fall is America’s energy future of whether, and to what extent, we should transition from reliable fossil fuels, such as oil and natural gas, to more intermittent sources of energy such as wind and solar power. But arbitrarily halting oil and natural gas development would do serious harm to our economy, and thereby jeopardize post-pandemic recovery. Businesses need reliable, low-cost energy to reopen and return to normal operations, and presently fossil fuels currently accounts for 80 percent of overall American energy production. At the start of this year, the oil and gas industry was responsible for 12.3 million American jobs, while also generating $1.6 trillion dollars in federal and state tax revenue. So if the oil and gas revenue dries up, major public services will be reduced or even cut. The simple fact is that the United States cannot continue on the path of recovery without a thriving oil and natural gas industry because it supports jobs, lowers energy costs for families and businesses, and strengthens our energy and national security.

4) Stock market closings for – 30 OCT 20:

Dow 26,659.11 up 139.16
Nasdaq 11,185.59 up 180.73
S&P 500 3,310.11 up 39.08

10 Year Yield: up at 0.84%

Oil: unchanged at $36.10

13 October 2020

1) More bad news for the airline business with another expected huge round of losses coming. The second quarter was the worst financial hit in the history of the airline business, and the third quarter won’t be much better. The airlines reported a second quarter combined losses of $12 billion dollars with revenues down 86% for the previous year. Analysts are forecasting a $10 billion dollar lost for the third quarter. The airlines did reduce cost by trimming expenditures, reducing labor as employees took buyouts and early retirement packages. Also, a modest pickup in travel during the summer has help with increased revenues, but forecast are for sales to be down 75% in the third quarter.

2) Oil prices fell the most in a week because the Gulf of Mexico production is set to resume and Libya is reopening its largest oil field. The hurricane had shut down about 92% of oil production in the Gulf, while at the same time Libya’s largest field will reach its daily capacity of almost 300,000 barrels in ten days. World demand for oil crude has dropped with refineries operating near minimum capacity.

3) The third major opioid makers Mallinckrodt Pic has become the third major manufacture of opioid to go bankrupt after being swamped by claims with respect to profiting from the U.S. opioid epidemic. The drug company filed for Chapter 11 after getting creditors and claimants to agree on a restructuring plan. This plan hands over ownership to bondholders, wipes out shareholders and sets aside $1.6 billion dollars to resolve all its opioid litigation. Current shareholders will most likely get nothing, with stock prices in the penny range for most of the year. The Chapter 11 filing estimates liabilities of $1 billion to $10 billion dollars and assets in the same range.

4) Stock market closings for – 12 OCT 20:

Dow 28,837.52 up 250.62
Nasdaq 11,876.26 up 296.32
S&P 500 3,534.22 up 57.09

10 Year Yield: unchanged at 0.78%

Oil: down at $39.44

9 October 2020

1) The airlines around the world are expected to lose $77 billion dollars in the second half of 2020 as Covid-19 continues to crush air travel demand. There are desperate efforts to cut cost by cutting jobs, grounding aircraft and consolidating work, but all their efforts are not enough. The first half of 2020 has been brutal for airline business and the rest of the year isn’t looking much better despite modest increase in air travel. This translates into losing $13 billion dollars a month or $300,000 a minute. At the start, U.S. airlines were burning about $100 million per day, which they reduced to about $30 to $40 million at the end of the third quarter. The airlines hope to reach zero ‘cash burn’ by year’s end using workforce reductions and operational consolidation. Air travel in America is down roughly 70% from 2019.

2) As another hurricane is approaching through the Gulf of Mexico, oil workers are evacuating oil rigs in the gulf ahead of Hurricane Delta, in turn causing oil prices to rise in anticipation of lower available oil. Oil prices had been falling Wednesday, but started rising as the storm came into the Gulf and the off shore evacuations began. So far, 183 offshore oil facilities have been evacuated which has halted nearly 1.5 million barrels per day of oil output. In July, the Gulf of Mexico produced oil at 1.65 million barrels per day, which is 17% of U.S. crude oil output. The demand for oil at refineries is 13.2% lower than a year earlier, a result of the virus crisis.

3) Electric car maker Elon Musk is pushing his company to boost production to build half a million cars in one year. That means producing 170,000 cars in the fourth quarter, a 17% increase from the third quarter. A half a million cars would be a milestone for Musk’s company, a first in the history of Tesla. So far, Tesla has produced 330,000 cars while also posting profits for its fourth consecutive quarter. Additionally, Tesla is pushing production numbers up by adding more production capacity.

4) Stock market closings for – 8 OCT 20:

Dow 28,425.51 up 122.05
Nasdaq 11,420.98 up 56.38
S&P 500 3,446.83 up 27.38

10 Year Yield: down at 0.76%

Oil: up at $41.27