13 March 2020

1) The popular theme parks Disneyland and Disney World have been closed until April because of the threat of coronavirus. The closure commences on 14 March, but the hotel resort will remaining open until 16 March to allow guess to make travel arrangements for returning home. Walt Disney Co. will continue to pay cast members during the closure. Disney Cruise Line will suspend all new departures beginning Saturday until the end of the month. At this time, it is uncertain how adversely this will financially effect Walt Disney Co.

2) A global recession, driven by the coronavirus pandemic, may result because of the flow of goods, services and people becoming more restricted. In the past day, President Trump has restricted travel from Europe, Italy has closed almost every shop, India suspended most visas and Ireland partially shut down. Many sporting events have been closed to public spectators with major lost of revenues. Many nations fear a contraction, with China the first in decades, thus ending the 11 year expansion. The Federal Reserve’s emergency interest rate cut of March 3 failed to boost investor’s confidence.

3) The Federal Reserve has announced its plan to ease market strain and halt its downward spiral. The Feds will offer a huge injection of liquidity to the Treasury market to counter market dysfunction. Government bonds are liquid assets making them the easiest thing to sell in turbulent times when investors need to raise cash. The New York Feds have been buying Treasury bills in what is called repurchase agreements or repos. This added liquidity is intended to bring stability to the markets and arrest the downward movements.

4) Stock market closings for – 12 MAR 20: The markets continue their drastic downward spiral.

Dow 21,200.62 down 2,352.60
Nasdaq 7,201.80 down 750.25
S&P 500 2,480.64 down 260.74

10 Year Yield: up at 0.85%

Oil: down at $30.88

18 February 2020

1) In order to help contain the Chinese coronavirus outbreak, China’s central bank has started deep cleaning and destroying potentially infected cash. The virus appears able to survive on surfaces for many hours which is why buildings in affected areas are regularly disinfecting elevator buttons, door handles and other commonly touched surfaces. Since cash money changes hands multiple times in a day, it too is a potential media to transmit the virus. The cash is disinfected with ultraviolet light and high temperatures, then stored for seven to fourteen days before returning to circulation.

2) The price of wine is expected to drop to its lowest levels in five years, in part because of a surplus of grapes in California. Additionally, there is a decreased demand for wine, with the lower prices lasting up to three years. Vineyards began planting thousands of acres of new vines in 2016, plus more efficient harvesting methods have combined to increase the supply of grapes.

3) GM (General Motors) has decided to pull out of Australia, New Zealand and Thailand as part of their strategy to exit markets that don’t produce adequate returns on investments. The car maker has 828 employees in Australia and New Zealand and another 1,500 in Thailand which will be eliminated.

4) Stock market closings for – 17 FEB 20:

Dow 29,398.08 down 25.23
Nasdaq 9,731.18 up 19.21
S&P 500 3,380.16 up 6.22

10 Year Yield: down at 1.59%

Oil: down at $51.92

26 November 2019

1) America’s largest manufacturer of truck engines plans to lay off 2,000 workers. Orders for heavy duty trucks is down last year by 51%. This market dip is forcing Cummins Diesel to cut back on its production, reducing its 62,610 workforce by the 2,000. The company is forced to do a more aggressively cost cutting program because the down turn is happening faster than anticipated. Other manufactures of parts and assemblies, such as drivetrains, braking and axles used in large trucks are also forced into layoffs and bankruptcies.

2) The national debt has just passed $23 trillion dollars the first of November. This is a record high for the amount of money owed by the Federal government brought on by the growing budget deficits and is roughly equal to the Chinese, Japanese and German economies combined. Both parties have abandoned fiscal conservative spending and are intent on spending more on the domestic and military fronts, a contest over promises of who will spend more while cutting taxes.

3) The Ford Motor Company has $37 billion dollars in cash and short term assets on its balance sheet , but is strapped for cash. This makes Ford one of the top ten U. S. companies flush with cash. But Ford faces so many future challenges, it must hold onto every penny it can. First is a major multi-year restructuring, principally in Europe and South America. Also, Ford is overdue to refresh its key vehicles, including the company’s best selling F series pickup trucks, which will cost several billion dollars. Finally, Ford’s efforts to join the rush into electric vehicles, with seven new electric models due by the end of 2020.

4) Stock market closings for – 25 NOV 19:

Dow               28,066.47    up    190.85
Nasdaq           8,632.49     up    112.60
S&P 500          3,133.64     up       23.35

10 Year Yield:    down   at    1.76%

Oil:    down   at   $57.91

8 November 2019

1) Bill Gates, the Microsoft co-founder, says he’s happy to pay his share of taxes, but expressed consternation over Elizabeth Warren’s proposals to tax America’s wealthy. He considers the presidential hopeful is not very open minded to consider his concerns. Warren’s wealth tax proposal is 2% annual levy on household wealth above $50 million dollars with an additional 1% tax on wealth above $1 billion dollars. She estimates this would cover 75,000 tax payers raising $2.6 to $2.75 trillion dollars over a ten years.

2) Stores are starting their Black Friday sales earlier this year, in part because the holiday shopping season is six days shorter. Retailer Target will begin online Black Friday sale on Thanksgiving morning, with stores opening their doors at 5 p.m. and remaining open through 1 a.m. the next day. On Black Friday, their stores open at 7 a.m.. Other retailers such as Walmart started their holiday shopping season last October.

3) Xerox is offering HP a takeover bid of $22 per share. The bid consists of 77% cash and 23% stock which would be $17 in cash and 0.137 Xerox shares for each HP share. If accepted, the deal would generate about $2 billion dollars in cost synergies with HP stock holders owning 48% of the company. HP has announced job cuts between 7,000 and 9,000 by the end of fiscal 2022. HP is worth $29 billion dollars and is more than three times the size of Xerox in terms of market cap.

4) Stock market closings for – 7 NOV 19:

Dow                 27,674.80    up    182.24
Nasdaq              8,434.52    up      23.89
S&P 500             3,085.18    up        8.40

10 Year Yield:    up   at    1.93%

Oil:    up   at    $57.07

6 November 2019

1) The money-markets have about $3.4 trillion dollars invested, and the large pile of cash could push the already soaring markets higher. The money-markets have grown by $1 trillion dollars over the last three years because of higher money-market rates, concerns of the ten year economic expansion and the ageing of the bull market. But despite the double digit gains this year, that cash remains in the money-markets amid concerns of an economic slowdown, investors wanting the safe bet of having a large cash reserve. Many fear the markets are at an unstable high and a reversal could occur at any time.

2) The U.S. trade deficit for September has falling to its lowest level in five months with imports dropping more sharply than exports. America has a rare surplus of petroleum, which has traditionally been a major source of imports. The import-export difference shrank 4.7% to $52.5 billion dollars, down from the August deficit of $55 billion dollars, with the deficit with China creeping down 0.6% to $31.6 billion dollars.

3) The Bank of America announced it will pay a $20 dollar minimum wage in 2020, a year earlier than planned. This will raise wages for more than 208,000 of its U.S. employees. The higher pay for retail bankers is becoming crucial with the increasingly competitive job market. Other main street banks have also raised their minimum wage, such as Citigroup and JP Morgan Chase. Other major companies including Amazon, Walmart, Target and McDonald’s have also increased their minimum pay.

4) Stock market closings for – 5 NOV 19:

Dow              27,492.63         up    30.52
Nasdaq           8,434.68         up      1.48
S&P 500          3,074.62    down      3.65

10 Year Yield:    up   at    1.87%

Oil:    up   at    $57.27

25 July 2019

1) Boeing Aircraft, the manufacture of the now grounded 737 MAX, has not ruled out further reductions or even shutting down production of its 737 MAX. Boeing had cut production of its best selling jet from 52 per month to 42, a 20% reduction. For its second quarter, Boeing has expended $1.01 billion dollars in cash as a result of the grounding, compared to the $4.3 billion dollars of free cash it had on hand last year. With deliveries on hold, Boeing isn’t receiving payments while also footing the cost of aircraft being stored waiting for re-certification.

2) With the commodity prices of coffee bottomed out and depressed incomes, coffee growers in Guatemala are facing a crisis. This crisis is made worse with threats of tariffs on Guatemala over undocumented migrants. Additional remittance fees and sanctions could spell disaster for Guatemala’s principle export if implemented, which in turn may actually exacerbate the flow of migration as small growers are forced out of business and head north.

3) The food giant Kraft Heinz, faced with a large corporate debt, has been exploring methods to pay down that debt by selling off some of its brands, so it can focus on its staple brands such as Heinz ketchup. But the sale of Maxwell House coffee, Breakstone’s sour cream and cottage cheese and Plasmon baby food, has glean lukewarm response from potential buyers. For years, the giant has been run by a ‘cost focused’ management team, but now management considers the company should be driven more by growth. The soup giant Campbell soup faced the same problems earlier this year.

4) Stock market closings for – 24 JUL 19:

Dow              27,269.97    down    79.22
Nasdaq           8,321.50          up    70.10
S&P 500          3,019.56          up    14.09

10 Year Yield:    down   at    2.05%

Oil:    up   at    $55.94

21 June 2019

1) Boeing has landed a$24 billion dollar contract from IAG SA, the owner of British Airways, to purchase 737 MAX airliners. Rival builder Airbus has vowed to fight the agreement since they never received an RFP (Request For Proposal) for making a bid on the contract. The secret negotiations between Boeing and IAG was the bomb shell surprise coming out of the Paris air show this week. This sale comes as a major endorsement to Boeing’s 737 MAX to reestablish Boeing as a major supplier of airliners.

2) The price of crude oil shot up 5% over news that Iran has shot down a American drone aircraft, fueling additional fears of a US-Iran military confrontation. The drone was shot down by a surface to air missile while flying over international airspace of the Strait of Hormuz. This is another move by Iran to control the seaway and thus control the flow of oil in an effort to force the U.S. to abandon its crippling economic sanctions.

3) The cost of opening a major fast food franchise in terms of liquid assets can be as much as a million dollars or more. You must have $500,000 cash to open a McDonald’s, $750,000 to open a Taco Bell and $2 million dollars to open a Wendy’s. Startup costs exceed a million dollars for most major fast food chains in America, with additional monthly fees for royalties, advertising and services, which can add up to 10% of gross sales.

4) Stock market closings for- 20 JUN 19:

Dow            26,753.17    up    249.17
Nasdaq         8,051.34    up      64.02
S&P 500        2,954.18    up      27.72

10 Year Yield:     down   at    2.00%

Oil:    up   at    $57.16

22 January 2019

1) The new Congress may have profound future economic impact for America. New members of the Financial Services Committee includes members of the radical left of the democratic party, with very little experience in fiscal matters, but having a strong socialist agenda for reforms to the banking system. Fears for the impact are growing as these members expound on their desire to eliminate big banks in America.

2) Brexit is having an effect on British consumer spending. Reduce retail spending with retail sales falling 0.9% over concerns for consequence of Brexit uncertainty. Consumer spending had been strong during the summer of 2018.

3) Netflix is burning through its cash at a staggering rate to pay for their blockbuster original hits, having spent $3 billion dollars for productions in 2018. Their negative cash flow is expected to accelerate in 2019, but they are still adding new subscribers. All this to remain competitive with the other subscribers of Amazon, Hulu and Google with Apple, Disney and Warner Media also entering the market.

4) 18 JAN 19 Stock market closings:    China announced spending spree of America products, bumping the markets upward.

Dow                    24,706.35      up    336.25
Nasdaq                 7,157.23      up      72.77
S&P 500                2,670.71      up      34.75

10 Year Yield:    up   at   2.78%

Oil:      down   at    $53.76

NIGERIA STOCKS PRESENTED 12% RETURNS… LARGEST % PCT IN GLOBAL INDICES FOR 2017

By: Economic & Finance Report

It seems that Nigeria has been on a roll this year, as far as stock indexes are concerned. Nigerian stocks returned 12% to investors in 2017. The largest percent ratio in global stock indices for 2017.

Nigeria recently got out of an economic recession, a recession  that has not occurred in the country in the last twenty five years, so for stocks to be hitting record highs while also climbing out of a recession is a plausible feat.

2018 has begun, so will Nigeria markets continue to flourish? This may be the beginning. -SB

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