13 July 2020

1) Robert De Niro, the world famous actor, has had his personal finance’s badly hit by the coronavirus pandemic. He’s been forced to cut the credit limit of his ex-wife from $100,000 to $50,000 a month because of his cash flow problems. His restaurant and hotel chain, the Nobu and The Greenwich Hotel, have had huge losses over the past few months. Additionally, his earnings from the movie “The Irishman” have almost dried up. It’s reported that the actor will be lucky to make $7.5 million this year. Both the restaurant chain and hotel have been closed or partially closed for months with next to no income. The Nobu lost $3 million in April and $1.87 million in May, with De Niro forced to borrow money to pay investors $500,000 on a capital call.

2) The online retailer giant Amazon is requiring employees to remove the Tik Tok application from their phones if their device accesses Amazon email because of security concerns. Tik Tok is a video sharing app which has become the most popular social media apps in the world. But government officials and business leaders are becoming wary of the Chinese owned company. The U.S. military has already banned using Tik Tok because of threat of spying by the Chinese. A new privacy feature in iOS 14 revealed Tik Tok was accessing users’ clipboard content despite promises by the Chinese to discontinue the practice last year.

3) An underwater or upside-down mortgage occurs when the home value is lower than the mortgage. While not common, this occurs when home values decline leading to owing more than the current house value and therefore having negative equity. Factors which cause home values to rise and fall are interest rates, high rates of foreclosures and short sales in your area, and natural disasters. Underwater mortgages usually occur during an economic downturn where home values fall off. One way to become up-side down is when secondary financing (home equality loan) equals more than 100% of the home value.

4) Stock market closings for – 10 JUL 20:

Dow 26,075.30 up 369.21
Nasdaq 10,617.44 up 69.69
S&P 500 3,185.04 up 32.99

10 Year Yield: up at 0.63%

Oil: up at $40.62

20 April 2020

1) The coronavirus pandemic and subsequent ‘sheltering in place’ is changing the American supermarkets. Online shopping of groceries had been somewhat of an awkward luxury service, that was growing ever so slowly, despite efforts of retailers to promote the new service. But the lockdown, stay at home orders have catapulted the service forward by up to a fifty times (not percent) increase in usage. Stores have been left struggling to meet the demand with many unable to keep up with that demand. When the pandemic ends, it will have forever changed the supermarket for many Americans, for once customers have used and got use to the service, then they will most likely continue using online grocery shopping, at least in part. But online shopping eliminates one of the big mainstays of modern supermarkets, the psychology of shopping with the browsing and impulse buying. The counter to this is automation which reduces the staff and labor cost of traditional retail stores, just as Amazon has done with dry goods.

2) The Chinese maker of driverless cars, Pony.ai, has launched a delivery service in Irvine California using its robot cars to deliver to people stuck at home from the virus. Teaming up with the e-commerce site Yamibuy, orders from Yamibuy get delivered to the customers homes. Each car can deliver between 500 to 700 packages a day. A year ago the company launched a robo-taxi service in Irvine, but with the ‘shelter in place’ order, their taxis were repurposed for deliveries.

3) Everyone is baffled over how the stock market continues to hold, even climbing, with what is happening today. For example-
a) Unemployment is now at 22 million and still climbing
b) Threat of large numbers of businesses going bankrupt
c) Recession starting, which most expect will last at least 12 months
d) Automation expected to eliminate up to 50% of jobs in 15 to 25 years
e) Global coronavirus cases surpass 1.5 million and continue growing
At a time when the markets would normally be crashing down from all the uncertainty, what is holding them up? Experts think because of the quick reaction of the government in passing the $2.2 trillion dollar economic stimulus waylaid market fears by showing something is being done. Also, Warren Buffett’s axiom, “Be fearful when others are greedy, and be greedy only when others are fearful.” Finally, the ‘social distancing’ measures seems to be controlling the virus, thereby lessening its economic effects in the long run.

4) Stock market closings for – 17 APR 20:

Dow 24,242.49 up 704.81
Nasdaq 8,650.14 up 117.78
S&P 500 2,874.56 up 75.01

10 Year Yield: up at 0.65%

Oil: down at $18.12

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

12 November 2019

1) The KKR & Co. is offering a deal to take the drugstore giant Walgreens Boots Alliance private in what could be the biggest ever leveraged buyout. The New York private equity firm is proposing to buy out shareholders of Walgreens Boots, but there are no details on the proposed transaction. Walgreens Boots has a market value of $53 billion dollars and debt of $16.8 billion dollars. A buyout would give Walgreens Boots time to adapt to a fast changing retail landscape.

2) Some U.S. oil and natural gas production companies are planning to pump less petroleum thereby reducing production for this next year. Several producers, including EQT Corp and Chesapeake Energy Corp have announced their intention to alsoreduce production thereby reining in spending and forecasting slower growth, while other fracking companies like Diamondback Energy Inc., Cimarex Energy Co. and Callon Petroleum Co. plan to hold next year’s spending the same.

3) The Chinese e-commerce giant Alibaba has shattered their single day sales from last year. Alibaba had $33.9 billion dollars in sales, which eclipsed last year’s numbers of $30.8 billion dollars in sales for 24 hours. Alibaba’s annual shopping extravaganza is equivalent to Black Friday or Cyber Monday in the US. The eleventh of November was originally created as a student holiday in China to celebrate single people, but has been transformed into a massive day of sales on Alibaba.

4) Stock market closings for – 11 NOV 19:

Dow               27,691.49         up     10.25
Nasdaq            8,464.28    down    11.03
S&P 500           3,087.01    down       6.07

10 Year Yield:    up   at    1.94%

Oil:    down   at    $56.63

4 September 2019

1) The ever present problem of growing student debt is being aggravated by the ever rising cost of college. This rise in cost is fueled by decreasing funding by governments, a lack of cost controls by college administrations and an emphases on plush facilities instead of real education support.

2) Manufacturing shrank in August for the first time since August 2016. The manufacturing index slid to 49.1 from 51.2 in July, where an index below 50 signals a contraction. Production declined by 1.3 percent while employment fell by 4.3 percent with new orders falling by 3.6 percent. With the trade war increasing the cost of Chinese manufactured imports, it would be expected that American manufacturing would be increasing.

3) The United Auto Workers union is targeting GM for contract talks, with the UAW approving a strike. The UAW represents nearly 150,000 hourly workers at Ford, General Motors and Fiat Chrysler with 96% of it’s workers OKing a strike. Leaders of the UAW are under investigation for corruption by the FBI who have conducted raids on key leadership members recently for mis use of monies. The union is angry at GM for layoffs and the closing of plants, plus production plants in Mexico.

4) Stock market closings for – 3 SEP 19:

Dow              26,118.02    down    285.26
Nasdaq           7,874.16    down      88.72
S&P 500          2,906.27    down       20.19

10 Year Yield:    down   at    1.47%

Oil:    down   at    $53.90

20 August 2019

1) Fears of a possible recession were dampened as stocks rose while Treaasury yields rebounded. The U.S. decision to extend a temporary reprieve to the Chinese telecom giant Huawein is credited with the change in markets. The Treasury notes appears to have broken out of the yield-curve inversion , which is a potential signal that a recession may be coming in the near future.

2) Delivery platforms like DoorDash, Uber Eats, Postmates and Grubhub have open new opportunities for America’s fast food industries. Previously, the only fast food delivered was pizza, but these new delivery services allows a wide range of foods to be delivered to customers at home or office. While it does open new opportunities for increased sales, the down side is the service could eat into restaurant’s profits and erode customer loyalty.

3) The retail giant Target, known for being the master of private label brands, is launching it’s own new food brand called ‘Good & Gather’. Due to start on the 15th of September, it will initially have 650 products, but will eventually expand to about 2,000 products, such as coffee, milk and eggs. Target describes their product line to be affordable and will replace present brands such as Simply Balanced and Archer Farms brands, while also reducing its Market Pantry line. For Target, using private label brands have been a way to boost profit margins while maintaining affordable prices. They’re a big asset in driving traffic to their stores.

4) Stock market closings for – 19 AUG 19:

Dow           26,135.79    up    249.78
Nasdaq        8,002.81    up    106.82
S&P 500       2,923.65    up      34.97

10 Year Yield:     up   at    1.60%

Oil:    down   a   t $56.08

13 August 2019

1) Royal Dutch Shell is building a 386 acre chemical plant to make bulk plastic. The construction project is one of the largest active construction projects in America employing over 5,000 people. The plant has hundreds of miles of pipelines to feed it petroleum and will have its own rail system with 3,300 freight cars. The new plant is expected to produce a million tons of plastic pellets each year.

2) Saudi oil company Aramco is buying a 20% share in Reliance Industries Ltd of India an oil to chemicals business. This will include the 1.24 million barrels a day Jamnagar refining complex. This is part of Aramco plan for refinery investments to double its processing network and handle as much as 10 million barrels of oil a day by 2030. Reliance has agreed to purchase 500,000 barrels of crude a day over the long term.

3) The IMF (International Monetary Fund) has warned that addition tariffs in the trade war will sharply cut Chinese growth. The IMF has already forecast a 6.2% decline in China’s growth for this year, which assumes no new tariffs. They forecast a sharp cut in China’s growth if the additional tariffs threaten are imposed on the first of September. President Trump has cast doubts on a trade deal, and indicated he might cancel the trade talks scheduled for September.

4) Stock market closings for – 12 AUG 19:

Dow               25,897.71             down    389.73
Nasdaq            7,863.41   unchanged        0.00
S&P 500           2,883.09              down     35.56

10 Year Yield:     down   at    1.64%

Oil:    down   at    $54.78

12 August 2019

1) The electric car company Tesla Inc is being sued claiming the company limited battery range of its older vehicles using software updates. The alleged intent was for Tesla to avoid costly fixes to defective batteries. The lawsuit is seeking class action status for thousands of Model S and X owners. The suit claims that older generation batteries had their range curtailed by an automatic software update. As a result of a battery fire, Tesla claims they are revising charge and thermal management settings via the software to further protect the battery and improve battery longevity.

2) The Chinese-American trade war hasn’t been bad for all nations, other nations are experiencing increase trade as a result of the war. Australia is the biggest beneficiary with exports to China of natural resources. Second is Switzerland, the third is Mexico which has replaced China as U.S. largest exporter. Fourth is Brazil who is benefitting from agricultural export to China and the fifth is Canada.

3) Malaysia is expanding its efforts to prosecute seventeen Goldman Sachs executives, who were allegedly involved in misleading investors in a $6.5 billion dollar bond sale. The bonds were for the state investment fund, 1 Malaysia Development Bhd or 1MDB. Charges include executives knowing that funds would be siphon off so Malaysia is also seeking to recoup funds and fees.

4) Stock market closings for – 9 AUG 19:

Dow             26,287.44    down    90.75
Nasdaq          7,959.14    down    80.02
S&P 500         2,918.65    down    19.44

10 Year Yield:    up   at    1.73%

Oil:    down   at    $54.27

31 July 2019

1) One of the nations largest credit card companies Capital One announced a massive data breach which affects tens of millions of customers. This news has sent its stock down 7%. Most of the data lost to hackers was personal information such as names, addresses, phone numbers and income of consumers and small businesses from 2005 to 2019. About 140,000 Social Security numbers of customers was comprised with 80,000 bank links. This breach is one of the largest yet.

2) China and America have resumed trade talks in Shanghai after a three month suspension. President Trump has criticized China for it’s reluctance to buy U.S. agricultural products, the Chinese using this as a pressure point on Trump with many farmers having previously supported Trump. There are low expectations for a breakthrough in trade talks because the two sides are further apart now than three months ago.

3) American consumer confidence is at the highest level since November negating its June drop. The index rose from June’s 124.3 to 135.7. The index measures consumers’ assessment of the current economic conditions and their expectations for the next six months. Consumers have little concern for trade tensions with China or a slowing economy. This should translate into robust spending in the near future.

4) Stock market closings for – 30 JUL 19:

Dow               ,198.02    down    23.33
Nasdaq       8,273.61    down    19.72
S&P 500      3,013.18    down      7.79

10 Year Yield:    up   at    2.06%

Oil:    up   at    $58.34

18 June 2019

1) Traditional retail stores, who have been suffering the ravages of e-commerce, are worried about another coming blow. The new tariffs on Chinese imports, which President Trump threatens to impost, could have a disastrous effect on retailers such as Walmart and Target. These next round of tariffs will be specific to consumer goods, which these retailers sell, and will start to force price increases and so most likely will result in decline of sales revenue.

2) While President Trump has been pressing for a cut in the interest rate, the U.S. Federal Reserve is expected to defer and leave the interest rates unchanged. However, the board may possibly lay the groundwork for a rate cut later this year. While the economic outlook has become less clear, there still isn’t sufficient indication of a slow down to warrant cutting interest rates yet.

3) The Pfizer pharmaceutical company is buying Array BioPharma for $10.6 billion dollars for a price 62% above the company’s closing price this last Friday. Pfizer will gain medical technology for new drugs to treat cancer that limit or suppress the effects of chemotherapy. The drugs target a mutation that’s found across many tumor types in those patients who carry the mutation. Two of Array BioPharma drugs have been FDA approved for use in advanced melanoma. There are other drugs which are in the development pipeline.

4) Stock market closings for- 17 JUN 19:

Dow               26,112.53    up    22.92
Nasdaq             7,845.02    up    48.37
S&P 500            2,889.67    up      2.69

10 Year Yield:    down   at    2.09%

Oil:    down   at    $51.90