1) China has announced they are ending caps to foreign financial ownership, allowing foreign firms to have full ownership of financial services companies. Starting in 2020, overseas institutions can apply for total control of onshore ventures. China has been opening its financial sector at an unprecedented pace to lure financial giants such as Goldman Sachs, JP Morgan Chase and Morgan Stanley into greater participation in China’s economy.
2) Investors are retracting the fastest since the collapse of Lehman Brothers. In the past six months, money market funds have attracted billions of dollars of inflows, the largest flight to safe assets since the second half of 2008, with investors raising their cash holdings despite falling interest rates. This is being driven by unresolved issues of the trade war, Brexit and the domestic political turmoil mixed with fears of a recession.
3) The U.S. and China have reached a partial agreement Friday which would broker a truce in the trade war. This will lay the groundwork for a broader deal later with Presidents Trump and Xi Jinping. News to the agreement cause the markets to shoot up over 300 points. Part of the agreement is for China to make agricultural concessions and the U.S. provide some tariff relief.
4) Stock market closings for – 11 OCT 19:
Dow 26,816.59 up 319.92
Nasdaq 8,057.04 up 106.26
S&P 500 2,970.27 up 32.14
1) Social Security recipients will receive a 1.6% cost of living increase in 2020, up from the average of 1.4%. This is less than the pervious two years, 2.8% for 2019 and 2.0% for 2018, but still it’s better than the zero increases of 2010, 2011 and 2016.
2) Because of a pig killing disease in China, the U.S. could see tightening supplies of pork products this next year. With China’s supply of pork decreasing, the Chinese may be forced to import significant pork supplies from the U.S. because pork is a major source of protein in the Chinese diet. This is despite the high tariffs China has imposed on U.S. pork imports. American pork exports to China will see about a 12% increase for 2019 and 13% for 2020.
3) Democratic presidential candidate Elizabeth Warren is causing concerns among businessmen with her promises to remake capitalism from the ground up. Now in the front ranks of Democratic contenders, her plans are now viewed with more concern. Warren would drastically cut back on the amount and influence of big business, push private companies from parts of the economy altogether and shift power to government and labor. The presidential contender has blamed big business for a wide range of social problems.
4) Stock market closings for – 10 OCT 19:
Dow 26,496.67 up 150.66 Nasdaq 7,950.78 up 47.04 S&P 500 2,938.13 up 18.73
1) As part of its restructuring plan, HP announced they will cut about 7,000 to 9,000 jobs, resulting in an estimated savings of about $1 billion dollars. While HP expects to incur labor and non-labor cost of about $1 billion dollars, they expect to generate at lease $3 billion dollars of free cash flow. As of 31 October 2018, HP had world wide employment of about 55,000 workers.
2) Consumer spending has been the bright spot in an economy showing signs of weakening on multiple fronts, in particular manufacturing. Economists worry if consumer spending will continue to prop up the economy, saying that the up coming Christmas season will be a test. Issues such as trade, interest rates, global risk factors and political rhetoric are where confidence can be eroded by deterioration of these items.
3) The new Costco in Shanghai China reports membership of more than 200,000 as compared to an American average of 68,000 per store. Costco will open a second Shanghai location in early 2021. The first day opening, the store was so swamped with customers, that the doors had to be closed for four hours to limit the number of people inside to safe limits.
4) Stock market closings for – 4 OCT 19:
Dow 26,573.72 up 372.68 Nasdaq 7,982.47 up 110.21 S&P 500 2,952.01 up 41.38
1) The White House is considering putting limits on U.S. investment in China, which would aggravate the protracted trade dispute between the two largest economies in the world. Advisers are discussing ways to limit U.S. investors’ portfolio flows into China, including limiting all U.S. investment in China. One possible method being considered is to delist Chinese companies on the U.S. stock exchanges thereby limiting American’s exposure to the Chinese market.
2) Alexandria Ocasio-Cortex, the New York Representative, announced a comprehensive anti-poverty bill that would provide new protections for tenants, children, immigrants and other Americans who are increasingly vulnerable to the high cost of inequality. One part of the bill is a tenant rights bill which would significantly expand federal housing policy. This would include a cap on annual rent increases or rent control.
3) General Motors has reversed itself and reinstated health care benefits to its striking workers, as a result of sever criticism from politicians and social media. Normal procedure in strikes is for the cost of health care to shift from the company to the union. The strike of 49,000 GM workers has shut down 30 GM plants across the nation for nearly two weeks. The GM plant in Mexico has been forced to close due to parts shortages as a result of the strike.
4) Stock market closings for – 27 SEP 19:
Dow 26,820.25 down 70.87 Nasdaq 7,939.63 down 91.03 S&P 500 2,961.79 down 15.83
10 Year Yield: down at 1.68%
1) There are expectations that global growth will slow this year to a rate that can become a financial crisis. The Organization for Economic Cooperation and Development claims new data showing the US-China trade dispute is increasingly threatening the outlook of the two largest economies as well as others. Furthermore, the uncertainty from the Brexit and a possible crash out would further aggravate economic growth in the European sector.
2) Saudi Arabia is avoiding a global oil crisis by using the crude it holds in reserve until production can be fully restored. The Saudi’s claim necessary repairs will be completed in two to three weeks, thus restoring production levels prior to the attack. However, oil experts are skeptical that these repairs can be done in such a short period of time. This uncertainty is due in part from Saudi Arabia’s lack of transparence of their oil operations.
3) Good news for home owners, sales of used homes rose to its highest in more than a year, with the median price up 4.7% from last year to $278,200. This home sale bonanza is fueled in part by the low interest rates now available and by income gains. However, there are fears of a global economic slow down darkening this rosy picture in the near future. Presently, it would take 4.1 months to sell all the available houses, with realtors considering anything below a five month supply a tight market.
4) Stock market closings for – 19 SEP 19:
Dow 27,094.79 down 52.29 Nasdaq 8,182.88 up 5.49 S&P 500 3,006.79 up 0.06
1) Two of the largest Wall Street banks are trying to create an index to track the market impact of President Trumps’s tweets. J.P. Morgan Chase and Company has created an index to quantify the effects on U.S. bond yields. Citigroup Inc.’s foreign exchange team consider Trump’s tweets increasingly relevant to foreign exchange moves. Approximately 10% of the president’s tweets since his election in 2016 pertain to subjects of importance to U.S. markets.
2) The Elliott Management Corp. offers a plan to boost the share price of AT&T by more than 50% through asset sales and cost cutting. The four part plan calls for the company to divest assets including satellite-TV provider DirecTV, Mexican wireless operations, parts of its land line business and other assets. The bases for the plan is for AT%T to exit businesses that don’t fit its strategy as well as running more efficient operations, plus stop making major acquisitions.
3) China has added almost 100 tons of gold to its reserves since resuming buying in December. Bullion is near a six year high as central banks including the Federal Reserve cut interest rates. Trade war restrictions as with China, or sanctions as with Russia, gives an incentive for central banks to diversify, with gold providing an ideal hedge with increasing political and economic uncertainty. Spot gold was $1,510.27 an ounce on Monday, and is expected to rise to $1,600 an ounce in the coming months.
4) Stock market closings for – 13 SEP 19:
Dow 27,219.52 up 37.07 Nasdaq 8,176.71 down 17.75 S&P 500 3,007.39 down 2.18
1) Several state attorney generals will investigate Facebook for possible stifling competition and putting users at risk. This comes after reports that Google will face antitrust investigations from state attorney generals. The investigations will center on actions that endangered consumer data, reduced the quality of consumers’ choices or increased the price of advertising. States investigating include New York, Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee and the District of Columbia.
2) President Trump unhappy at GM for decision to close four of its domestic auto plants. General Motors, which was once the giant automaker in Detroit, is now one of the smallest. GM has gone from 33 plants in the US to 29, but has an additional 27 manufacturing plants in China. Presently, GM sells more cars in China than it does in America. This accounts for $16 billion dollars in profit for GM.
3) The American consumer is carrying the U.S. economy in last quarter. The personal expenditures rose last quarter while business and residential investment, net exports and inventories have declined. There are concerns that consumers may rein in spending from fears of economic future. Global commerce is slowing, partly in response to the trade war, and without strong consumer spending it’s hard to see alternate sources of economic growth.
4) Stock market closings for – 6 SEP 19:
Dow 26,797.46 up 69.31 Nasdaq 8,103.07 down 13.75 S&P 500 2,978.71 up 2.71
1) The Exxon Mobil oil giant agreed to sell its Norwegian oil and gas assets for as much as $4 billion dollars. The U.S. firm is exiting from production in the country after more than a century doing business there. In 2017, Exxon produced 170,000 barrels of oil per day from its Norwegian operations. The shares in Exxon, the world’s biggest publicly traded oil company, rose 1.7% on the news.
2) The announcement that China and America would resume trade talks pushed the price of oil up from optimism of an improving world economy. Chinese trade negotiators will come to Washington in early October for talks. Gasoline and distillate supplies fell, as well as stockpiles in storage.
3) Alan Greenspan, former Federal Reserve Chairman, forecast that negative rates will soon spread to the U.S. Negative rates are now in Belgium, Germany, France and Japan with $16 trillion dollars in negative yielding debt instruments around the world. Ten year sovereign bonds are trading with a negative rate. The thirty year U.S. rate is trading at 1.95% reaching an all time low.
4) Stock market closings for – 5 SEP 19:
Dow 26,728.15 up 372.68 Nasdaq 8,116.83 up 139.95 S&P 500 2,976.00 up 38.22
1) A federal judge has ruled that investors may sue five big banks for conspiring to rig prices on bonds worth hundreds of billions of dollars issued by Fannie Mae and Freddie Mac for a seven year period. This clears the way for investors to pursue antitrust claims against Bank of America, BNP Paribas SA, Deutsche Bank AG, Goldman Sachs Group and Morgan Stanley. The banks are accused of fixing prices at a specific level before bringing the bonds to the secondary market.
2) The U.S. trade deficit narrowed overall slightly in July, however the gap with China surged to a six-month high. The trade tensions have caused wild swings in the trade deficit as exporters and importers try to stay ahead of the tariff fight between America and China. The Atlanta Federal Reserve is forecasting the economy growing at a 1.7% pace in the third quarter.
3) Oil dependent nations are facing economic troubles because gas and oil production are unsustainable. As oil and gas supplies dwindle and demand decreases, their once lucrative revenues may be decreasing. Nations whose economies are principally oil production face a trouble future as their oils supplies decline in the next few decades, with nothing to replace those revenues. Those nations facing economic troubles are the UAE, Nigeria, Qatar, Libya, Angola, Kuwait, Venezuela, Iraq and Saudi Arabia.
4) Stock market closings for – 4 SEP 19:
Dow 26,355.47 up 237.45 Nasdaq 7,976.88 up 102.72 S&P 500 2,937.78 up 31.51
1) Gold is renowned for being a panic investment, something that investors move their money into when fearing that sever financial troubles are coming. Investors are worried about political uncertainty that plagues world markets, and are pushing gold prices up to record highs. Real yields in the US have fallen to about zero which makes gold especially appealing as a safe haven.
2) The Price of oil falls as the trade war deepens stoking concerns over growth. Principal cause for concern is the trade war and the deterioration of manufacturing in China. Oil prices is considered a gage of economic health because slower growth means there will be less demand for oil, so prices drop. Furthermore, since oil is bought and sold as futures commodities, the price reflects anticipation of near future economic state of the world.
3) Owners of 98,000 Volkswagen AG U.S. vehicles which had fuel economy labels overstating efficiency will ask a U.S. judge for $26 million dollars. The EPA said the German automaker must forfeit greenhouse gas emissions credits and lower the fuel economy ratings on these vehicles after using software to falsify fuel efficiency ratings.