3 November 2020

1) With the pandemic, working at home became the sudden norm, but now companies are starting to think ‘remote work’ isn’t that great after all. Companies are finding that projects take longer, collaboration is harder, and the training of new workers is a struggle. While many companies thought remote working would be the future, giving many cost savings, they now say this is not going to be sustainable. Some companies had even decided to give up their physical office spaces entirely, which would be a big savings in operating cost. The early productivity gains that companies witnessed with remote work has peaked and leveled off. Few companies expect remote work to go away in the near term, though the evolving thinking among many CEOs reflects a significant shift from the early days of the pandemic.

2) As oil prices continue to tumble, there are world wide concerns about oil and its effect on economies. Global oil inventories fell at a rate of about 2 million barrels a day in September and October, and that trend will probably continue, as demand unexpectedly fell from the lockdown measures. The European Union is accelerating the transition away from fossil fuels, one of its members still sees its own small oil industry continuing for a decade or more.

3) From the start, all electric automobiles have been plagued by their high cost, but now Ford motor company says they have an affordable $20,000 electric car in the mix. This gives a cost on price parity with traditional vehicles using an internal-combustion engine. Ford is returning to its roots with cars for the common working man, having costs for buyers that will range between $20,000 to $70,000 avoiding the sky-high price tags of other electric cars. Ford is expecting future EVs to account for over 10% of the company’s revenue in the future. The Ford Mustang Mach-E was introduce this year, while the electric F-150 EV pickup is set for a debut in 2022. Ford expects to offer a full lineup of electric commercial vehicles in the future, but a $20,000 EV could be just the ticket to get battery-powered cars into the mainstream.

4) Stock market closings for – 2 NOV 20:
Dow 26,925.05 up by 423.45
Nasdaq 10,957.61 up by 46.02
S&P 500 3,310.24 up by 40.28
10 Year Yield: down at 0.85%
Oil: up at $37.09

12 October 2020

1) With the recession from the Covid-19 came predictions of waves of bankruptcy filings as businesses, large and small, failed. But that wave of bankruptcy has not materialized, and so far, there’s no sign that it will, indeed bankruptcies are down a little from last year. This is a good sign that companies and households are not as stressed as many economist feared. However, bankruptcy filings aren’t a perfect measure of hardship, with many companies barely hanging on, so bankruptcies may still be coming. Many small businesses and households go bust without ever formally filing for bankruptcy.

2) The four massive high tech companies, Google, Amazon, Apple and Facebook are under investigation at Federal and State levels for antitrust. These investigations are spurred by concerns that competition is being stifled by the domination of these companies, but there are concerns that the big tech is trying to also stifle conservative voices. Google is facing a relatively narrow complaint from the Justice Department that it seeks to disadvantage rivals in search and advertising. The focus on Apple is their apps store with accusations that Apple introduces new products and then put out apps that compete with them. Facebook has raised concerns over how they treat some of their app developers on its platform and therefore engaged in unlawful monopolistic practices. Amazon is suspected of conflict of interest in competition with small sellers on its marketplace platform.

3) Silicon Valley companies are thinking about the future of work taking actions from pay cuts to permanent work-from-home as they strive to cope with the coronavirus crisis. The big tech companies have formed various plans for the future of work. Some companies, (Twitter and Slack), said their employees never need to return to the office, while others, such as Microsoft, are adopting a hybrid model where employees report to the office only a few days a week. Amazon and Salesforce are adopting new benefits to help out working parents, such as subsidized back-up childcare and extended paid leave, while Facebook, employees may work from home permanently. However, if they leave the Bay Area for a less expensive city, they’ll may face a pay cut. Silicon Valley may bear little resemblance to the thriving hub before the pandemic. Tech companies have largely shut down their sprawling campuses and asked employees to work from home — in some cases, forever. When those offices reopen office life is unlikely to resemble the past. Companies may change their real estate plans, opting instead for a new type of office, or none at all.

4) Stock market closings for – 9 OCT 20:

Dow 28,586.90 up 61.39
Nasdaq 11,579.94 up 158.96
S&P 500 3,477.13 up 30.30

10 Year Yield: up at 0.78%

Oil: down at $40.52

7 August 2020

1) Another drop in applications for unemployment benefits is giving hope for the economy. For the week ending 1 August, there were 1.19 million jobless claims, down by 249,000 claims. Total unemployment is now at 16.1 million, the lowest since April. But even with continual drops, the claims are still five times the pre-crisis levels. More than decreasing claims is needed for the economy to improve, for much more hiring is required. There are fears of conditions improving so sluggishly, that the effects of the crisis become increasingly permanent. With the resurgence of the pandemic, there are signs of the economy stalling in what is already a fragile economy.

2) The Covid-19 crisis is fueling the need for high speed internet access, and rural America is responding with their electric and telephone co-ops using loans from the federal government. Subscribers are getting speeds up to 1 gigabit per second, with some planning for speeds up to 10 gigabits per second. Rural areas have the duel problem of low population densities and long distances, so its not economically feasible for private companies to install systems. The only alternative is satellite internet systems.

3) The Bank of England is warning of the potential risk of what’s called the ‘shadow banks’ in amplifying the volatility of unstable economies. Funds in investments like pension funds, investment funds like real estate investment trusts and money market funds are increasingly absorbing the cash once kept in banks, but are not as secure in times of crisis as traditional banks. This makes it harder for businesses to access their money when needed most. The non-banks impact in a financial turmoil is being assessed, lead by the Bank of England.

4) Stock market closings for – 6 AUG 20:

Dow 27,386.98 up 185.46
Nasdaq 11,108.07 up 109.67
S&P 500 3,349.16 up 21.39

10 Year Yield: down at 0.54%

Oil: down at $41.97

8 July 2020

1) Online grocery shopping continues to reach higher numbers, as Americans show little inclination to return to the stores. Grocery sales hit a record $7.2 billion dollars in June, up 9% from May. There are now 45.6 million households using online grocery pickup and delivery services for a larger portion of their grocery needs. The coronavirus crisis has cause drastic increases in grocery shopping online. People are now using online for buying a few items instead of just for their major shopping trips.

2) Seattle has passed a payroll tax which targets large businesses, called the JumpStart Tax. This tax is a tiered system of taxation with the highest tax levels for companies with annual payroll expenses of more than $1 billion dollars. The tax also is grated for individual income levels starting at amounts over $150,000. The prime target for the tax is Amazon, who is expected to accelerate its move to secure office space outside of Seattle. Amazon has an expansive Seattle footprint, but in recent years has moved to establish a presence in areas outside of the city. There are fears that the tax will pin Seattle’s economic future on local businesses remaining strong.

3) New York City plans to invest $157 million dollars to expand high speed internet service to low income residents as part of its plan to offer universal broadband service to New Yorkers. To pay for the expansion, the internet service providers would be charged for using the city’s infrastructure. The financially strapped city would fund the expansion by diverting $87 million from the police budget, which is being cut. But for the long run, the city is seeking state legislation to require internet service companies to pay for the use of the infrastructure they used to do business.

4) Stock market closings for – 7 JUL 20:

Dow 25,890.18 down 396.85
Nasdaq 10,343.89 down 89.76
S&P 500 3,145.32 down 34.40

10 Year Yield: down at 0.65%

Oil: down at $40.49

25 June 2020

1) There are ten companies that may not make it through the summer. These are high brand names of Hertz, J.C. Penney, Pier 1 Imports, Tuesday Morning, J. Crew, Neiman Marcus, Gold’s Gym, Tailored Brands (Men’s Warehouse and Jos. A. Banks) and Diamond Offshore Drilling, which are all in bankruptcy now. The high number of retailers shows the ongoing retail apocalypse with the retail sector, which had already hit before the pandemic by falling sales, lower costumer traffic and too many stores. Retail was near the edge of collapsed with last years Christmas holiday shopping doing little to boost business, especially those located in malls. Last year, 9,500 retail stores closed, with estimates of 15,000 stores closing for good in 2020. This may indicated a fundamental shift in America’s economy, a shift away from hyper-consumerism to something else besides a service based economy. Shopper visits to stores are about half of last year’s numbers, and that’s with businesses reopening after more than two months on lockdown.

2) Fears continue to grow that we are not finished with the Convid-19 crisis yet, as the number of new cases continues to increase. This is happening with states and cities easing their shutdown measures to reopen the economy to start a recovery. The seven day average of new virus cases has swung up 30% from a week ago. It was hoped the warm weather would suppress the virus spread as it does with the flu, but if the virus is resurrecting, then the shutdown may need to returned with the resulting economic impact.

3) The Ford Motor Co., who is in the process of its global restructuring plan and paying off debt related to the coronavirus pandemic, is betting its future on its new line of pickups. Ford is offering its popular F-150 model in traditional internal combustion engines, new hybrids and all electric versions. The Ford F-150 has been the country’s top selling truck for more than 40 years, the best selling for the last consecutive 38 years. Their F-150 is a key part in Ford’s plans to profitably grow their business, to help in the $11 billion restructuring cost and pay off the $20 billion dollars in new debt.

4) Stock market closings for – 24 JUN 20:

Dow 25,445.94 down 710.16
Nasdaq 9,909.17 down 222.20
S&P 500 3,050.33 down 0.96

10 Year Yield: down at 0.68%

Oil: down at $38.07


By: Economic & Finance Report

Major technology companies such as Spotify, Apple, BarStool Sports, and Amazon, are racking up their check books in investing in podcast shows and networks.

Amazon is utilizing Audible to attain podcast shows, while Apple is using its Apple TV shows and other Apple products for podcasting viability. BarStools Sports which began as a sporting blog, has utilized its strong sports platform in the podcasting space.

Over 100 million people in the United States listen to podcast shows, one way or another. The number seems to be increasing on rolling average basis according to analysts estimates. The way that traditional radio has been digressing, don’t be surprised as podcasting surpassing the new normal. -SB

_Listen to the #EFRPodcast & #TheCastPodcast shows on the cloud, soundcloud.com/Economic-FinanceReport


Photo Image Credit: Wikipedia

By: Economic & Finance Report

Vice chairman of Berkshire Hathaway, Charlie Munger has indicated that the recession that has been displayed because of the Coronavirus; has had drastic effect on the US and global economy as a whole.

Vice chair Munger has indicated executives from top S&P 500 companies are not seeking a government bailout aka “government intervention”, because in his opinion they are “too frozen” to do so. He has spoken that the airline industry has done very little to bring increase scrutiny on where they lie ahead of their financial stats and balance sheets. -SB

30 December 2019

1) China has had another year of record corporate bond defaults, which is by design. Ten years ago, bond defaults almost never happened, not because Chinese businesses were healthy, but rather the government stepped in to prevent default. Companies were often linked to the government and bonds which were largely bought by state owned lenders, making a financial system with little discipline. The government has become more comfortable with defaults and so is stepping out of economic control, to impost more incentive to make careful assessment of companies.

2) This year, more than fifty banks have announced plans to cut 77,780 jobs, the most lost since 91,448 jobs in 2015. The 2019 cuts will bring the total for the last six years to more than 425,000 lost jobs. The European banks are still weak from the ‘o-eight’ financial crisis, and are still struggling to regain their footing, forcing continual cost cutting measures. Job losses are anticipated to continue into 2022.

3) With germs growing more resistant to common antibiotics, many drug companies are hemorrhaging money and going out of business. The effect is reduced efforts to develop new antibiotics just when they are become most needed. Other well established drug companies are abandoning the antibiotic market segment refraining from doing any research on new antibiotic drugs. One marketing problem is antibiotics are prescribed for just days to weeks, so there isn’t the revenue stream as with drugs continually consumed year after year by a patient such as insulin. Presently, drug resistant infections kill 35,000 people each year.

4) Stock market closings for – 27 DEC 19:

Dow                28,645.26         up     23.87
Nasdaq            9,006.62    down    15.77
S&P 500           3,240.02          up         0.11

10 Year Yield:    down   at    1.87%

Oil:    up   at    $61.72


By: Economic & Finance Report

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

The Changing World For Millennials: The New Axiom Of Modern America

NTEs (Non Thinking Entities) lead to UDSs (Useless Dumb S_ _ts).

By: James Lyman BSAE, BSEE, MSSM

Economic & Finance Report

Today, half the science major graduates and half the engineering graduates never work in the field of their studies. It’s not that they can’t find jobs, for they certainly do . . . and they are much sought after by American business. This is because studies of the sciences and engineering give people more than just technical knowledge- it gives them the intellectual skills of analysis, organization and problem solving that companies realize they must have if they are to survive and prosper in the twenty-first century. Consequently, more and more there is the ‘invisible’ sign to the right, hung out by companies looking for new people to build their business on. Unknowingly, unwittingly companies are seeking out people with the intellectual skills that come from university studies in the sciences and engineering. By the same token, they are avoiding those from the traditional liberal arts curriculums.

When I was first starting out, getting a college degree, any college degree was your ticket to the good life. You could expect to get a good well paying job. That changed rather quickly, actually in something like just a decade. As manufacturing in America declined, as computers became more prevalent in the economy, jobs for college graduates began to shrink. Companies started becoming more selective, and those with the least rigorous degrees began finding jobs difficult to find, and paying little more than minimum. This is a result from the decline in the creation of new jobs as the turn of the century approached, until by the start of the twentieth-first century, creation of new jobs reached zero where it remains to this day. Before the 2008 economy crash, the unemployment-underemployment for new college graduates was about 9%.

Since then, it jumped to and remains at about 20 to 25%. New college graduates now hold low paying jobs once held by highschool dropouts, while at the same time are also struggling to pay off student loans.

For the last several centuries, technology has doubled every fifteen years (computers, medical and genetics as little as three to five years), consequently technology has grown immensely and continues at an unbelievable rate. Lets consider the rate of growth for technology in 1855 when many of the technologies that make up our modern world were coming into being. If technology had grown at that 1855 rate, a constant even rate year after year (linear growth), then it be almost the year 30,000 AD to reach the level of technology we have today. Looking the other way, it’s about 6,000 years back to the stone age. That’s how huge the technology gap is for most Americans. Today, so many American’s are closer to the stone age than to today’s technology and the world they are living in. That’s how far so many Americans are behind. With the liberal arts degrees little different from a century ago, it’s easy to see why companies feel they need the engineering and science graduates if they are to survive in the twenty-first century. They know they must have people trained for this century, not the century when the Declaration of Independence was signed.

This is why, unknowingly, not really realizing it, so many American companies have hung that invisible sign of ‘NTE’s need not apply’ on their front door. While BA college graduates still can go in, still fill out job applications, still leave off resumes, and still strive to gain a decent job to make a living at, they have already been rejected the same as if that NTE sign was very large and acutely visible for all the world to see.

And there is absolutely no indication that it will ever improve!

One of the great tragedies I see being acted out today, is so many of today’s young people are preparing themselves for the world of their parents . . . a world that has already faded away and died. A world that no longer exists, leaving them with little to nothing.

Consequently, the ideal career path for a millennial or Z-generation person is to take as stiff a degree program in science or engineering that they can possible choke down, then get an MBA (Masters of Business Administration) from as good a school as they can get in. That’s the ticket to success in American business, the ticket that the youth of America needs to build a good solid, well paying career that can end in a retirement. This is what more and more young people are doing, thereby leaving less opportunity for those who don’t.

Getting a job that can end in the pot of gold at the end of the rainbow!