1) The shutting down of many of American service industries is having an effect on America’s hard pressed trucking industry. Suddenly, there are fewer hauling jobs, a result of the coronavirus control measures. There are 300,000 to 400,000 thousand truck drivers who own their trucks and don’t have much protection if rates or demand for their service falls. Trucking is often considered a leading economic indicator where the rest of the economy is heading, because 71% of the freight in America is moved by trucks. A downturn in freight being hauled indicates the economy is slumping.
2) President Trump says the U.S. may be headed for a recession for the first time in eleven years as the coronavirus cripples the world economies which in turn can pull the U.S. economy down despite it being strong. Experts anticipate America will enter a recession in the upcoming second quarter, from April through June, with a decline of 4% to 8% annual pace. The unemployment rate could zoom up to 6% from its current fifty year low of 3.5%, which would hinder a recovery. Typically, economic hard times opens the way for new technologies to displace workers as business strive for ways to reduce cost and remain profitable.
3) The Department of Labor reported a 30% increase in unemployment claims, which is one of the largest spikes in claims. This signals the start of feared layoffs in response to the coronavirus impact on the economy. As more businesses are vastly reducing or stopping operations, they have no real choice but to lay off workers in the hope of surviving the coming economic storm. America’s oil industry is facing massive layoffs with tens of thousands being laid off in the shale fields like the Permian Basin as oil prices drop to alarming lows. No longer profitable to pump out shale fields and strapped with high levels of debt, the oil companies are facing bankruptcy. Six years ago, a sharp price drop in oil cost 200,000 oil workers their jobs.
4) Stock market closings for – 20 MAR 20: The Dow had its worst month since 1931.
Dow 19,173.98 down 913.21
Nasdaq 6,879.52 down 271.06
S&P 500 2,304.92 down 104.47
10 Year Yield: down at 0.94%
Oil: down at $23.64
1) The furniture retailer Wayfair is reducing its workforce by 3% or 500 jobs. The online furniture retailer has more than 17,000 employees globally. The stock for the company has dropped more than 24% in the last twelve months. Wayfair has yet to post a profit and has been criticized for its high costs to run its business. Shipping items like sofas and coffee tables can be expensive, even more so where there’s returns.
2) Newspaper publisher conglomerate McClatchy has filed for bankruptcy. Owner of banner newspapers such as Miami Herald, Kansas City Star, Star-Telegram, News & Observer and Charlotte Observer, a total of thirty newspapers has seen its revenue slide downward for the last six years as readership of newspapers continues to decline, migrating to newer technologies for their news.
3) The U.S. national debt continues to increase at an ever increasing rate. The debt, adjusted for inflation, of 1900-1904 was $65.37 billion dollars. The debt after World War I (1919) was $329.06 billion dollars, a result of paying for the war. Then debt started dropping down to $319.35 billion dollars and by the 1929 stock market crash was down to $253.44 billion dollars, the start of the great depression. By the start of World War II, 1940, it was at $788.68 billion dollars, but at the end of the war (1945) skyrocketed to $3.69 trillion dollars, slowly drifting down to $533.19 billion dollars by 1975. But after that, it started growing again until today its now at $22.72 trillion dollars, 348 times the debt at the start of the twentieth century.
4) Stock market closings for – 13 FEB 20:
Dow 29,423.31 down 128.11
Nasdaq 9,711.97 down 13.99
S&P 500 3,373.94 down 5.51
10 Year Yield: down at 1 .62%
Oil: down at $51.52
By: Economic & Finance Report
Billionaire Democratic presidential candidate Michael Bloomberg, will be unveiling tax proposals and tax plans that will aim at wealthy Americans.
Mr. Bloomberg will be instituting a five percent surtax to incomes of five million and more, while also increasing the capital gains, and corporate gains.
Mr. Bloomberg wants to expand healthcare, public housing, education and infrastructure. The tax plans outlined by Mayor Bloomberg indicates that it could raise over $5 trillion dollars, in over a decade. Estimates have projected to go up and down depending on how reliant the calculations are.
Bloomberg’s plan would bring back the personal income tax to 39.6% (currently reduced to 37%). Capital gains on personal income over $1 million dollars would be tax, and 5% surtax on incomes over $5 million dollar, while also changing the estate tax as well. Corporate taxes will increase from 21% to 28%. -SB
By: Economic & Finance Report
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
By: Economic & Finance Report
2019 was not the year of the hedge fund. Many hedge funds in 2019 were strapped for cash and liquidity was not as readily available, as in previous years.
According to Bloomberg news wire, hedge funds will be reporting more losses and closures for the 5th year in a row. More then 4,000 hedgefunds have liquidated in the past five years (HedgeFund Research Inc).
The reasons have varied on why hedge funds have been closing in recent years, such as investors revolting, or wanting their money earlier from the funds, to simply hedgefund officers getting tired on running their funds and family owned offices.
The profits have not been there as well. There are various reasons of funds closing at rapid paces, but take note this is a trend that may continue until the profits are there.
Credit: Bloomberg.com, Hedgefund Research Inc
1) The oil cartel OPEC and their allies are being called on for dramatic action to avert a crash in oil prices. They are being called on to cut production of crude oil to keep oil prices high, while the world is facing a looming flood of oil from American production. If they don’t restrict production, the world faces an oversupply of about 800,000 barrels per day in the first half of 2020.
2) Businesses are under a constant threat of ransomware attacks with increasing consequences of financial loses. Every business or organization from large corporations, health care systems, universities and small businesses are at risk. These targets must use defensive methods, but those costs time, money and resources to do. The FBI estimates there are several thousand ransomware attacks each day.
3) Stock market closings for – 4 DEC 19:
Dow 27,649.78 up 146.97
Nasdaq 8,566.67 up 46.03
S&P 500 3,112.76 up 19.56
10 Year Yield: up at 1.78%
Oil: up at $56.32