1) The aircraft manufacturer Boeing Aircraft is discontinuing production of it’s iconic 747 jumbo jet after a fifty year run. The last 747-8 will be completed in two years. This marks the end of an era of giant airliners with Airbus also discontinuing its A380 production. The number of routes in the world which requires a jumbo jet are few, with airline companies preferring the twin engine aircraft for long range flights. The 747 made its debut in 1970, and went on to rack up 1,571 orders over its production life, a record seconded only by the wide body 777. Boeing has lost 40$ million dollars for each 747 since 2016, with production down to just 6 units a year. The last 747 for passenger service was Air Force One. With air travel curtailed by the Covid-19 crisis, air carriers don’t expect air travel to recover fully until the mid decade, so airlines are culling out aging jetliners and four engine jumbos from their fleets to limit spending.
2) With interest rates near zero, the most used tool for the Feds to stimulate a sagging economy is becoming ineffective in reversing the pandemic induced recession. Therefore, the Feds are considering using quantitative easing or large scale assets purchases. This is where the U.S. central bank buys hundreds of billions of dollars in assets, most of which are U.S. Treasury and mortgage backed securities. By taking bonds (mostly 2 and 10 year Treasuries) off the market it replaces them with cash in the system, meaning there is now more cash available for lending to consumers, businesses and municipalities.
3) The Senate is considering a bill which would punish retailers for refusing cash payments. Retailers have been pushing for electronic payments to reduce the risk of virus contamination from contact of paying cash. The objective of the bill is to prevent disenfranchise of minorities who have limited to no banking access.
4) Stock market closings for – 2 JUL 20:
Dow 25,827.36 up 92.39 Nasdaq 10,207.63 up 53.00 S&P 500 3,130.01 up 14.15
1) Today, more coronavirus concerns have surfaced that most airlines will go bankrupt soon without government bailouts. The virus has shut global aviation down because of virus outbreaks as well as travel restrictions that are intended to contain the virus. Within weeks, many airlines will need government help to avoid bankruptcy. Major U.S. airlines are seeking $50 billion dollars in financial assistance because of the steep falloff in U.S. travel demand. Estimates are for $25 billion dollars in grants, $25 billion dollars in loans and significant tax relief to survive.
2) Monday markets opened with another sharp downfall of all three major markets despite the Federal Reserve embarking on a massive monetary stimulus campaign to curb the slowing economic growth from the coronavirus. Shortly after opening, trading was halted for fifteen minutes from a ‘circuit breaker’ triggered by the S & P 500. The U.S. central bank has launched a massive $700 billion dollar quantitative easing program designed to help cushion the economic downside from the virus. The Dow was down 11% while both the Nasdaq and S & P fell more than 10%.
3) As fears grow of a world economic downturn, which will put economic stress on the U.S. economy, people are becoming concerned about their jobs. American workers may lose their jobs by the millions as the effects of the virus ripple through the financial system, the impact being devastating. The disease has spread rapidly around the world with whole nations shutting down as well as major cities. It’s unknown just what the impact will be for the world economy, when major economic areas isolate themselves from the system, even for a few weeks. Many segments of the economy are reporting significant problems which can lead to further problems across the U.S. and world economy. All this translates into layoffs, at a time when the young people of America have limited opportunities.
4) Stock market closings for – 19 MAR 20:
Dow 20,087.19 up 88.27 Nasdaq 7,150.58 up 160.73 S&P 500 2,409.39 up 11.29
1) NASA (National Air and Space Administration) has asked for a 12% increase to give a $25.2 billion dollar budget for next year. Nearly half of this years proposed budget is for NASA’s lunar project with much of the money going to the biggest American space companies. Lockheed Martin, Boeing and Aerojet Rocketdyne will be the primary beneficiaries with $1.4 billion dollars going to the Orion spacecraft and $2.26 billion dollars for the Space Launch System. There is $3.37 billion dollars proposed to fund a crewed lunar lander system.
2) Federal Reserve Chairman Jerome Powell suggest that the central bank may not have the ability to fight the next recession and therefore Congress may need to get ready to help. This is a result of the already low interest rate, one of the prime tools used by the central bank to counter recession trends. Tax cuts and government spending increases may be necessary to fight a downturn, for there is little else the central bank has to counter a recession.
3) The giant aircraft maker Boeing Aircraft is facing bigger problems than just fixing its 737MAX and getting it certified to fly. The company needs to be focused on its next generation of passenger aircraft. Boeing didn’t get any new orders for aircraft in January compared with 45 orders last year, while delivering 13 airliners compared with 46 last January. Boeing is falling behind its rival Airbus and must build its next generation of planes to remain competitive. This means getting its 777X finished and ready for delivery with its other wide body plane, the 787 Dreamliner. In the background is a possible new design concept the 797.
4) Stock market closings for – 12 FEB 20:
Dow 29,551.42 up 275.08 Nasdaq 9,725.96 up 87.02 S&P 500 3,379.45 up 21.70
1) President Trump has imposed tariffs on metal from Brazil and Argentina in response to currency manipulation which hurt American farmers. The tariffs is on steel and aluminum imports. Additionally, Trump has called on America’s central bank to take action to prevent other countries from devaluing their currencies. Brazil and Argentina had been exempt from tariffs imposed in March 2018.
2) The factory sector in the U.S. shrank again in November, the fourth straight month as new order volumes slid back to around their lowest level since 2012. The index of national factory activity fell to 48.1, a reading below the expectations of 49.2, a reading above 50 indicates expansion while below indicates contraction.
3) The auto makers Nissan Motor Co., Renault SA and Mitsubishi Motors Corp. have formed an alliance in the form of a new company to do research and development of advance automotive technologies. The new venture also aims to strengthen the alliance which has been worn thin since the arrest and ouster of former supremo Carlos Ghosn. The formal plans will be announced in January.
4) Stock market closings for – 2 DEC 19:
Dow 27,783.04 down 268.37 Nasdaq 8,567.99 down 97.48 S&P 500 3,113.87 down 27.11
The Central Bank of China instituted key interest rate reforms on Saturday, August 17, 2019. The China’s Central Bank did this to help companies and corporations with borrowing costs.
China has been suffering from the trade war with the US. The lower interest rates could help companies with lowering their borrowing costs. The central bank will be trying to improve thier interest rates, which will then assist these companies in borrowing costs that would be minimal.
China’s State Council indicated they want the country to focus on market based reformation, which will then lower real interest rates significantly. -SB
1) General Electric suffered a loss last quarter despite two previous profitable quarters, a result of the restructuring cost of its electric power division and the grounding of Boeing’s 737 MAX. GE provides the jet engines used on the 737, which Boeing has reduced production of. The grounding of Boeing has drained off more cash than expected, but General Electric forecast a profitable year for 2019.
2) President Trump has fulfilled his campaign promise to lower drug prices by creating a pathway to allow Americans to legally and safely import lower cost prescription drugs from Canada. This reverses the opposition from federal health authorities, despite the public outcry over high prices for drugs in America. It’s uncertain when imports can start as the plan has to go through the time consuming regulatory approval and possible court challenges from drug makers. The opening of the door for cheaper drugs and keeping it open still faces an up hill battle with the political organizations of the pharmaceutical industry.
3) In an effort to keep the American economy on track, the Federal Reserve has reduced the benchmark interest rate by a quarter point to about 2.25%. This is a modest and widely expected move intended to keep the economy healthy in face of the trade war with China and the slowing economic growth overseas. In addition, the feds signaled that the cental bank is ready to make more cuts to stimulate the economy if necessary. A higher interest rate makes for a stronger dollar, a disadvantage for international trade. Wall Street anticipates as many as three more cuts this year, while in addition to the rate reduction, the feds will stop selling off assets this August, two months earlier than expected.
4) Stock market closings for – 31 JUL 19:
Dow 26,864.27 down 333.75 Nasdaq 8,175.42 down 98.19 S&P 500 2,980.38 down 32.80
1) Venezuela has 1,700,000% inflation rate, its money now so worthless that the people are now using the Columbia Peso to do business such as paying for labor and buying goods. This has come about because so many Venezuelans are buying what supplies they can get from Colombia.
2) Wal-mart announced they will no longer employ store greeters. This was a job that many handicapped people could do, and there are thousands of disabled workers whose jobs will be lost with limited prospects of re-employment. No reason was given, but the slump in big box retailing was most likely a significant factor.
3) The Central Bank Chief warns that dangers are brewing ahead, the bank closely watching the situation. While the current economy is heathy, fears of the impact of China’s and Europe’s economic future are of particular concern from effects of Brexit and trade negotiations. Also considers the Federal debt making an unstable economic environment.
4) 26 FEB 19 Stock market closings:
Dow 26,057.98 down 33.97 Nasdaq 7,549.30 down 5.16 S&P 500 2,793.90 down 2.21
Malaysia is attaining strong risk because of the slowing down of the global economy, and the Central Bank of Malaysia is monitoring the situation. Malaysia Central Bank Governor Zeti Akhtar Aziz, indicated the risk ahead for the country as far as growth and economic progress. The GDP of the southeast Asian country will increase to 5% for the year, as well as for next year also (2016).
It has been difficult for Malaysia to improve their economy and financials, since oil revenues have fell rapidly. Also, the political climate has not been great as well, as the Prime Minister Najib Razak has been subject to corruption. Allegations that political donations had been disbursed into his personal bank account.
Ms. Aziz has indicated though, that the economical & montary policies set forth by the Central Bank will continue, regardless of the political climate within the county. -SB
The Nigerian Central Bank has made strong indications that they would not devalue the Nigerian Naira. They have maintained over the last 4-5 months that they will be monitoring speculation and stabilizing the Naira against currency fluctuations.
The Central Bank has indicated it sees no reason currently to devalue the currency, and the effect seems to be holding up… The question many analyst have indicated, is how long will this go forward????? The Naira has been flat since March 2015. It has hovered around$198-$199 to $1 USD. Time will tell what will eventually occur. -SB
It seems Asian currencies are free falling, as the Chinese Yuan is being devalued. The Chinese central bank devalued the Yuan Monday, August 10, 2015. The Central Bank of The Federal Republic of China devalued the currency so it will be more market adaptable., some analysts have indicated.
The Yuan is currently now weaker then the U.S. Dollar, by about 2%. Equitable markets will be focused now on the moves of Central Banks around the world, as currency inflation seems to be constantly changing. Much of the change was also affected by the market trading information that came out over the weekend in China, which was highly negative in reporting. A weaker Yuan will definitely demobilize and create instability in the Asian markets going forward. -SB