1) A railroad link between Alaska and Canada has been a dream for generations, because such a rail link would reduce Alaska’s costs for goods and services. It would also give Canada’s land locked oil-sands access to ports in Alaska, therefore making for more domestic oil reserves, but such a railroad line faces numerous steep challenges. President Donald Trump has endorsed such a proposal, but several regulatory agencies in both America and Canada must first approve such an undertaking before the first shovel full of dirt can be moved, and this is expected to take years to get permits. The Alaska-Alberta railway Development Corporation (A2A Rail) project would be privately funded costing about $17 billion dollars and would run about 1,600 miles.
2) The plague of wild fires continues in California with several new fires in Northen California consuming thousands of acres a day. The fires are consuming vineyards and destroying the wine business, including grape vineyards that have produced for over a hundred years. The heat wave continues to bring dry air into the conflagration, thus drying out vegetation to make ideal fuel for fires, while strong winds are fanning and spreading the flames. Fires are around the San Francisco area, the Napa-Sonoma wine region and Shasta County which are consuming land at a prodigious rate. Two major fires are the Zogg Fire, which has burned through 15,000 acres and the Glass Fire burning through 11,000 acres. The damage is being created so fast that estimates of dollar losses can not be reliably made.
3) The Congress continues to struggle with a second stimulus bill, the Democrats looking to score at the polls if passed before the election. The big question and holdup is the personal stimulus check to individuals and how much it will be this time. It now appears that $1,200 will be the maximum for individuals, but this time there will be restrictions which will lower the amount for many people based on how much their income is. After nearly two months of relative inactivity, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have agreed to resume negotiations.
4) Stock market closings for – 28 SEP 20:
Dow 27,584.06 up 410.10
Nasdaq 11,117.52 up 203.96
S&P 500 3,351.60 up 53.14 %
10 Year Yield: unchanged at 0.66%
Oil: up at $40.57
1) A controversy has arisen on the national political scene about removal of mail sorting machines in the USPS (United States Postal Service), some charging this is an attempt to interfere in the up coming national elections. Having already removed hundreds of machines, the USPS is poised to decommission 671 of the massive sorting machines, which is roughly 10% of its inventory. This represents the sorting ability of 21.4 million pieces of paper mail per hour. Presently, the USPS processes up to 500 million items each day. The removal is part of a long range plan, in response to American’s diminishing use of traditional letters.
2) The ride sharing services Uber and Lyft are preparing to shut down in California because of a new law that reclassifies their drivers from contract workers to employees. Under an order issued ten days ago for their drivers to be employees with state mandated pay, benefits and taxes, the two service providers have threaten to suspend services if the order is not resended until an up coming referendum in November to exempt them is held. This is a major case for the growing on-demand economy and what its future in America’s economy will be. Being forced to use employee drives would fundamentally change their business, making them far less competitive with traditional taxi services.
3) The woes of America’s airline industry continues with the announcement that American Airlines is suspending service to 15 U.S. cities this fall. The move comes in response to declining demand and as a federal requirement to service those locations comes to an end. This is the latest step taken by American Airlines to cut costs amid airlines racking up billions in losses during the pandemic. The company will slash 30% of its management and administrative jobs with about 25,000 of their workers furloughed by October. They have reached a deal with their pilots union to offer more leaves and early-retirement packages. Estimates are that domestic airlines will lose more than $20 billion dollars in revenue this year, while globally the industry could lose up to $84 billion dollars this year.
4) Stock market closings for – 20 AUG 20:
Dow 27,739.73 up 46.85
Nasdaq 11,264.95 up +118.49
S&P 500 3,385.51 up +10.66
10 Year Yield: down at 0.64%
Oil: down at $42.78
1) The parent company of Ann Taylor and Lane Bryant clothing chains, the Ascena Retail Group Inc., will close more than half its stores, a total of more than 1,000 stores. The troubled retailer was struggling like many other retailers to remain afloat, but the Covid-19 crisis tipped the scales into bankruptcy. Ascena has about 40,000 employees and there’s the expectation of cutting its 2,800 stores down to just 1,200 with significant losses of jobs. The chapter 11 will erase about $1 billion dollars in debt from its $12.5 billion dollars of liabilities, which includes $1.6 billion dollars of funded debt. Retailers have been among the hardest hit by Covid-19 lockdowns coupled with online shopping, which drained revenues and pushed so many retailers into bankruptcy.
2) Almost 16,000 restaurants have closed permanently from the Covid-19 pandemic, an indication of just how deeply the virus has affected the food industry, especially the restaurants. So far, about 60% of the restaurant closures have been permanent, with the number increasing with time. Restaurants now surpass the retail industry in the highest total business closures since the start of the pandemic. Bars and the night life industry has met the same fate, with 5,454 total business closures of which 2,429 are considered permanent closures, or 44% lost.
3) There is mounting evidence that America’s fragile economic recovery is faltering even as the pandemic seems to be leveling out. Reservations for restaurants are waning, air traffic is leveling off and foot traffic at stores is dwindling again. With rising infections in California, Texas and Florida, there is a growing sense that the recovery is fading. Small businesses have suffered the worst, having limited cash reserves and ability to obtain loans, and therefore are failing at record numbers. To compound the problem, there is weaker spending by consumers. Hopes for a real recovery depend more and more on an effective vaccine being created and available. Until there is one, there appears little hope that the economic will make any real lasting progress towards recovery.
4) Stock market closings for – 23 JUL 20:
Dow 26,652.33 down 353.51
Nasdaq 10,461.42 down 244.71
S&P 500 3,235.66 down 40.36
10 Year Yield: down at 0.58%
Oil: down at $41.21
1) The markets took a sharp drop over fears of another shutdown as the number of Convid-19 cases began rising from states starting to opening up for business. The Dow Jones dropped over 1,800 points, closing on the worst day sell-off since March. It appears that this pandemic is going to linger longer than was anticipated. Texas has reported three consecutive days of record breaking Covid-19 hospitalizations. Nine counties in California are reporting spikes in hospital admissions from the virus. The U.S. now has topped 2 million cases in this pandemic. Also, oil prices have taken a sharp downward slide.
2) Inventories of unsold diamonds are increasing, with the five largest diamond producers having stockpiled excess inventories of about $3.5 billion dollars and could go as high as $4.5 billion dollars. World wide demand for diamonds has plummeted, with the renowned diamond supplier De Beers reporting diamond sales in May of about $35 million dollars, compared to last year’s $400 million dollars. The world wide lock down has closed jewelry stores across the world thereby reducing sales to a small fraction of normal. The diamond market resembles the diamond slump of the 2008 financial crisis.
3) More than 1.5 million Americans filed new jobless claims for the first week of June, again decreasing from the previous week of 1.9 million. This is in contrast to the 6.9 million claims in April, with a stead decline each week since then. There was 2.5 million jobs added to the American economy, largely due to 2.7 million workers returning from furloughs. Still, more than 40 million Americans have lost their jobs because of the pandemic forcing shutdowns of so many businesses across America. But the gradual improvement of employment is boosting hopes for a quick economic recovery, however, there remains the problem of technology displacement of jobs. In times of economic stress, businesses are seeking ways and means to cut operating cost, and that gives a niche for entry of new technologies that eliminate the human. Experts in Artificial Intelligence estimate that as much as 50% of the jobs will disappear in 15 to 25 years.
4) Stock market closings for – 11 JUN 20: The stock market is like a rectal thermometer- it’s rude and crude but surprisingly effective at showing sickness.
Dow 25,128.17 down 1861.82
Nasdaq 9,492.73 down 527.62
S&P 500 3,002.10 down 188.04
10 Year Yield: down at 0.65%
Oil: down at $36.17
1) Economic advisers are urging the reopening of the economy as quickly as possible to reduce unemployment rates, which they fear are already above 20%. But despite the risk of permanent economic damage, public health experts warn that reopening nonessential businesses could lead to a flare up of the pandemic. This could mean unemployment worst than the 1930’s great depression with a true unemployment rate reaching 25%. However, there are early reports that China is experiencing a recurrence of the coronavirus after they’ve started their reopening process, so the warnings of health experts isn’t to be taken lightly. While some officials state that 80% of the unemployment is from furloughs and expect very rapid re-employment with the ending of the shutdown, there remains the very real problem of how fast they can be rehired. With a large portion of businesses now strapped for cash, they will have to restart slowly as money permits. No doubt, many will have gone bust during the shutdown, having already run out of money, while many more will be cash starved for weeks, months or even years, teetering on the brink of bankruptcy.
2) Toyota Motor company plans to cut North American production by about a third before October, with expectations that it will be some time before production is restored to present levels. The company will build about 800,000 vehicles in the United States, Canada and Mexico, a number which is down 29% from the same time last year.
3) The electric automaker Tesla, controlled by Elon Musk, has filed a federal lawsuit Saturday against Alameda County in California to reverse the closing of the auto plant. The Tesla’s plant in Fremont, California was closed by health orders from the county and remain closed for social distancing reasons. Additionally, Musk is threatening to move the manufacturing plant to a more business friendly state such as Texas or Nevada, considering the regulation to be the last straw. In the last few years, California has faced a ‘business drain’ as significant number of businesses and skilled/educated workers move out of California for states offering more opportunity.
4) Stock market closings for – 11 MAY 20:
Dow 24,221.99 down 109.33
Nasdaq 9,192.34 up 71.02
S&P 500 2,930.32 up 0.52
10 Year Yield: up at 0.73%
Oil: at up at $25.38