30 September 2020

1) American businesses have suffered stress that is breaking many, including some in the grocery chains. Like some popular restaurant chains, some grocery chains were filing for bankruptcy before the pandemic, but the virus crisis forced others over the brink. Five specialty and health forward chains have been forced to file for chapter 11. They are Earth Fare, Lucky’s Market, Fairway Market, Kings Food Markets and Balducci’s. The niche marketeers are finding it very difficult to survive in these changing economic hard times.

2) The U.S. guided missile destroyer USS Stout has set a new record for consecutive days at sea when it reached 208 days at sea on the 26th of September. The previous record was 207 days, held by the USS Eisenhower and USS San Jacinto, both records set this year too. The Covid-19 pandemic has forced the Navy to cancel port visits to prevent sailors from being exposed to the virus while ashore. More than 1,000 sailors were infected with the virus on the aircraft carrier USS Theodore Roosevelt at the start of the pandemic, with one sailor dying. Furthermore, the carrier was off line for weeks anchored in Guam until the virus ran its course. While the elimination of port calls and longer sea deployments has arrested the virus, it has put more stress on the crew members.

3) The ‘indoor food grower’ AppHarvest is going public by joining with Novus Capital Corp. (NOVS) and will soon be traded on the Nasdaq exchange. AppHarvest is developing large scale, efficient indoor farming technology, and their first farm is a 60 acre controlled environment in Kentucky. This facility is within a days drive of 70% of the American population and is now producing tomatoes. Right now, 60% of all fresh tomatoes in American are imported. Controlled environment agriculture facilities use far fewer resources to grow far more produce, however this method of agriculture requires far more capital, where conventional farms are themselves capital intensive enterprises.

4) Stock market closings for – 29 SEP 20:

Dow 27,452.66 down 131.40
Nasdaq 11,085.25 down 32.28
S&P 500 3,335.47 down 16.13

10 Year Yield: down at 0.64%

Oil: down at $39.16

22 September 2020

1) Bad news from the conronavirus continuing to pile in with a just-released report that 60% of the small businesses that have closed because of the virus, and will never open again. Of nearly 163,700 businesses that have closed since March 1, about 98,000 say they’ve shut their doors for good. This is a 23% increase from July. About 32,100 of these businesses are restaurants, with close to 19,600, or about 61%, closing permanently. The National Restaurant Association says 100,000 restaurants have closed, either permanently or long-term, with a lose of $240 billion in sales this year. Restaurants operate on razor-thin margins even in the best of times, and so are less likely to make it through the disruption. Consumers are spending less on dining-out, while the disposable income for Americans is shrinking. Retail stores are also struggling with about 30,400 shopping and retail establishments closing since March 1, and of these 17,500, or 58% of them are permanent.

2) Many of the workers now working at home, are engaged in day trading to counter boredom for both entertainment and profits, but with growing fears that this trend could end badly. Most of these individual investors do not have the wealth, time or temperament to make money and sustain losses for any period of time. Major companies can have big rallies on the market, only to suddenly turn around with big losses. These casual investors are competing with large investors who have technology that allows them to trade on information before most people have time to read about it. In the long run, small investors, with about 30 stocks, have only a 40% chance of doing as well as the overall market.

3) The incredibly low interest rates have caused a rush of home sales in 2020 as people take advantage of the low interest rate, and in turn all these new mortgages have flooded the bond market as investors scoop them up. But it’s not just home sales, because 69% of the new mortgages are refinances of old mortgages. Many of these mortgages are then sold to government sponsored agencies such as Fannie Mae, Freddie Mac and Ginnie Mae, who then repackage the loans into mortgage backed bonds or securities. These bonds often have higher returns than traditional Treasurys. Additionally, the bonds are often backed by government guarantees meaning there is little risk to the investors.

4) Stock market closings for – 21 SEP 20:
Dow 27,147.70 down 509.72
Nasdaq 10,778.80 down 14.48
S&P 500 3,281.06 down 38.41
10 Year Yield: down at 0.67%
Oil: down at $39.72

16 September 2020

1) A survey by Photonics and Harris Insights and Analytic, a market research company, has found that 35% of Americans would like to avoid traditional in-store shopping, another indication of how American consumerism is fundamentally changing. The traditional in-store sales are becoming less attractive to customers who are now less likely to browse. Retailing is responding by investing in new technologies and creating jobs to meet e-commerce. Now 37% of the fashion retailers are selling more through social media.

2) The aquatic-life theme park SeaWorld is laying off nearly 1,900 furloughed workers because of low attendance from the pandemic. These layoffs include 450 food service attendants, 270 park operation hosts, 121 performers and 18 senior trainers. SeaWorld furloughed 95% of its staff back in March, but long term success of the company has forced less optimistic forecast for the economic recovery time wise.

3) In the last six months, about 100,000 restaurants have had to close permanently as independently owned business struggle to make ends meet during the virus crisis. There are one in six restaurants across America that have closed in just a half a year. Another 40% of owners say it is unlikely their restaurant will still be in business six months from now. Presently, outdoor dining has allows many restaurants to maintain a sustainable revenue stream, but with winter approaching, much of this opportunity will disappear. Coronavirus restrictions limit the in-dinning to as little as 30% normal capacity, which means a drastic cut in sales and revenue to the point that many restaurants are unable to support themselves.

4) Stock market closings for – 15 SEP 20:

Dow 27,995.60 up 2.27
Nasdaq 11,190.32 up 133.67
S&P 500 3,401.20 up 17.66

10 Year Yield: up at 0.68%

Oil: down at $38.51

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

14 September 2020

1) With 13 million Americans unemployed and their unemployment benefits running out, many will have only seasonal jobs to turn to. But with such wide spread unemployment, getting hired for seasonal work wont be easy. With the coming holidays, seasonal jobs traditionally mushroom with major companies already hosting hiring events to fulfill their temporary ranks. Companies like Michael’s will hire over 16,000 temporary people, with UPS expecting to hire over 100,000 for holiday package delivery. Retailers doing e-commerce, such as Amazon or Walmart are expected to need many seasonal workers and therefore are good places for job seekers to apply.

2) Fears are growing that the coronavirus crisis could cause a double dip recession, that the recession could end up looking like a roller coaster of ups and downs. The upsurge in virus cases is eroding consumer confidence and leading to renewed limits on certain businesses. Economic recovery can bloom then fade away only to repeat again. Some economic factors point to a recovery, yet others point downwards, with the picture further complicated by the ‘what ifs’ of the coronavirus and just how it will play out, where a second wave of the virus could be just as economically disruptive as the first one, maybe even more so. Additionally, a significant portion of the economy has been destroyed. Half the businesses in America are small businesses and at the start of the crisis, about half of those had cash reserves of just fifteen days or less . . . meaning by now they have gone bust! No one knows what the repercussion from such massive losses of business will ultimately have on the economy in general.

3) Mechanical breakdown insurance, which isn’t an extended warranty, but rather is insurance that pays for mechanical auto repairs of a car’s power train, much as accident insurance pays for the repair of body damage. It will have some amount for a deductible, then pays the remainder of a mechanic’s bill for repair, both labor and parts. Usually, any mechanic can be used. Most major insurance companies who offer auto insurance will also offer breakdown insurance too. Prices range from $20 to $100 a year.

4) Stock market closings for – 11 SEP 20:

Dow 27,665.64 up 131.06
Nasdaq 10,853.54 down 66.05
S&P 500 3,340.97 up 1.78

10 Year Yield: down at 0.67%

Oil: up at $37.39

9 September 2020

1) It’s not just American businesses who are feeling the effects of the Covid-19 crisis from reduced sales, American charities are also suffering a major drop in revenues for the same reason. With the recession straining household budgets, people are less able to contribute resulting in charities losing billions of dollars since this spring. Furthermore, traditional money raising methods such a concerts, festivals and galas have been canceled or scaled back to a fraction of their previous size. Many charities are now working to make the holiday season productive to make up shortfalls in revenue.

2) The repressiveness of the Hong Kong police was further exposed when police chased down and tackled a 12 year old girl in a shopping mall. Video footage of several police officers pinning the hapless girl down on the floor went viral worldwide with a public outcry over the excess use of force against political dissenters. The incident touched off angry shouts from onlookers. The police tactics are being criticized as an indiscriminate treatment of children who are not taking part in protest. The girl complained she felt targeted because of her age, that being young has become a crime in Hong Kong, further increasing concerns that the regime is targeting their young for repression.

3) The markets continue their decline after a five week winning streak as investors begin to worry about stretched valuations. The decline is being lead by the technology stocks, which has met a heavy decline for the tech-heavy Nasdaq. Remarks by President Donald Trump to decouple the U.S. economy from China further added to the market’s jitters. The high flying technology company Tesla has suffered it worst one day loss since March with an 18% drop in the price of its stock.

4) Stock market closings for – 8 SEP 20:

Dow 27,500.89 down 632.42
Nasdaq 10,847.69 down 465.44
S&P 500 3,331.84 down 95.12

10 Year Yield: down at 0.68%

Oil: oil down $36.62

4 September 2020

1) For first time since World War II the U.S. government’s debt will nearly equal the size of the entire American economy. By the end of 2020, the amount of debt owed by the United States will be about 98% of the nation’s gross domestic product with a debt that is about three times the 2019 level. The huge surge in debt is a result of the Congress spending an additional $3 trillion dollars in emergency funding since March, a result of the economic downturn from the coronavirus crisis. This is why some members of Congress and the White House have balked at approving an additional $2 trillion dollars in spending in view of the weak economy coupled with having little promise of improving soon. Few experts believe the Congress is likely to do something to reduce the deficit in the short term, all the while unemployment remains near 10 percent. Interest rates are low, which makes it less costly for the federal government to borrow. In addition to increase emergency spending, tax revenues fell as business slowed and many people lost their jobs.

2) After a steady increase in the markets, setting new records for highs, the stock markets took a sudden nose dive. This was caused by a massive and sudden sell off of the technology sector. The tech stocks had been on a ten day winning streak then a sudden overnight change which caught everyone by surprise. The Nasdaq dropped almost 600 points while the Dow was down 800 points. Market experts are left wondering what will come next, especially with the next jobs report for August coming out.

3) The pace of rehiring is expected to slow in August, so the economy will likely add fewer jobs than in July, while workers continue to be laid off. Because of the pandemic, America lost about 22 million jobs in March and April. In May through July, about 9.3 million jobs came back, so we are still short about 12 to 13 million jobs. Part of this is a result of so many small businesses having gone bust, so it will take a long time to replace those businesses and therefore replace the jobs they had. Economic turmoil is when technology displacement is prevalent as business seek the means to survive by reducing labor cost (eliminating jobs).

4) Stock market closings for – 3 SEP 20:

Dow 28,292.73 down 807.77
Nasdaq 11,458.10 down 598.34
S&P 500 3,455.06 down 125.78

10 Year Yield: down at 0.62%

Oil: down at $41.03

13 August 2020

1) Another national retail outlet, Stein Mart, is going the way of the brick and mortar retail system announcing they are closing all their stores in bankruptcy amid Covid-19 pandemic. Based in Jacksonville, Florida the company operates 281 stores in 30 states with 9,000 employees. Stein Mart ‘going out of business’ sale is expected to begin in August 14 or 15 with complete liquidation of inventory, with the anticipation of all stores closed by the fourth quarter of 2020. The retailer joins a long list of businesses to file for bankruptcy protection amid the coronavirus crisis.

2) With all the money being pumped into the economy by the government, there were fears of fueling inflation. Those fears were increased with the July consumer price data showing that prices are indeed on the rise. But some are saying these price increases are a result of supply and demand dynamics from the pandemic, and will fall once the supply system becomes stable with production reaching equilibrium again. It’s just a matter of time.

3) Amid suspicion of a rigged election by authoritarian leader Alexander Lukashenko, Germany and Lithuania is calling for renewed sanctions on Belarus. Claiming a landslide victory in his presidential election, Lukashenko has cracked down on protesters and demonstrators. The EU (European Union) has call an extraordinary meeting of foreign ministers to discuss the situation, considering the election was neither free nor fair, and efforts to suppress demonstrations as unacceptable. The EU is considering reinstating sanctions. The protest have been violent with about 1,000 people arrested to add to the 5,000 already being held, and injuries to both protesters and police.

4) Stock market closings for – 12 AUG 20:

Dow 27,976.84 up 289.93
Nasdaq 11,012.24 up 229.42
S&P 500 3,380.35 up 46.66

10 Year Yield: up at 0.67%

Oil: up at $42.56 +0.01

5 August 2020

1) The FAA (Federal Aviation Administration) has issued a 36 page document detailing the fixes and training that Boeing needs to implement so the 737 MAX can return to commercial service. The document was in the works before the planes were grounded in the spring of 2019, a result of two air crashes. There were few requirements that Boeing management wasn’t already aware of, and it’s considered a milestone in the certification process. The document only applies to 737 MAX aircraft flying in the U.S., and it is expected the changes will be adopted by aviation regulators around the world. Once done, all 737 MAX jets will undergo an operational readiness flight prior to returning each airplane to service. The European Union Aviation Safety Agency is waiting on doing its flight test as the FAA moves ahead.

2) The oil company giant Exxon Mobil Corp., is seeking the dismissal of a climate change lawsuit brought on by the Massachusetts attorney general. The lawsuit alleges that Exxon defrauded consumers and investors by the company’s public position on climate change, that Exxon hid its early knowledge of climate change and misled investors about the projected financial impact of global warming on its business. Exxon claims the law suit amounts to improper retaliation against the company over its views on climate change. The bases for Exxon’s challenge is the state’s anti-Slapp law which prohibits the use of litigation to punish a defendant for statements on matters that are under consideration by a legislative or judicial body.

3) The Department of Labor has come down hard on social investing or EAG, proposing rules that strongly limit such activities for private pension plans covered by the Employee Retirement Income Security Act of 1974 (ERISA). They consider that pension fund investing is not the place to solve the ills of the world, that it is unlawful for a fiduciary to sacrifice return or accept additional risk to promote a public policy, political or any other nonpecuniary goal.

4) Stock market closings for – 4 AUG 20:

Dow 26,828.47 up 164.07
Nasdaq 10,941.17 up 38.37
S&P 500 3,306.51 up 11.90

10 Year Yield: down at 0.52%

Oil: up at $41.53

31 July 2020

1) The American economy last quarter is the worst on record, with a 32.9% annual rate contraction (April – June). American business ground to a halt from the pandemic lockdown this spring, leaving the country in its first recession in eleven years. This wipes out five years of economic gains in just months. From January to March, the GDP (Gross Domestic Product) declined by an annualized rate of 5%. While the unemployment is declining as states open up from the shutdown, there are still about 15 million unemployed workers. Americans are spending less money during th lockdown, partly because of lost of jobs. Consumer spending is the biggest driver of the economy, and it declined at an annual rate of 34.6% for the second quarter.

2) While Walmart has posted surging sales for each month, it is still taking cost savings measures. The retailer has laid off hundreds of workers including store planning, logistics, merchandising and real estate. Also, Walmart is reorganizing its 4,750 stores by consolidation of divisions and eliminating some regional manager roles. Walmart is performing well because of high demand and low prices during the pandemic. The company isn’t opening as many new stores in the U.S. anymore, so Walmart doesn’t need as many people to find new locations and so design them.

3) Job postings in technology are 36% down from 2019 levels. This is attributed to increased competition, low priority in hiring and uncertainty over the pandemic. Therefore, the tech industry is also feeling the economic effects of the coronavirus pandemic. Sending a very significant portion of its workers remote to work at home, there were predictions tech jobs would lead the recovery with increase job numbers. The ‘work at home’ was thought to show tech jobs might be available outside the traditional hubs. Neither has proved to be true. In short, the tech jobs are faring worst than the overall economy.

4) Stock market closings for – 30 JUL 20:

Dow 26,313.65 down 225.92
Nasdaq 10,587.81 up 44.87
S&P 500 3,246.22 down 12.22

10 Year Yield: down at 0.54%

Oil: down at $40.45