16 March 2021

1) The technology known as carbon capture and storage, a concept that has been around for at least a quarter century to reduce the climate damaging emissions from factories, is being pursued by major international oil companies. The idea sounds deceptively simple, just divert pollutants before they can escape into the air, and bury them deep in the ground where they are harmless. But the technology has proved to be hugely expensive, and so has not caught on as quickly as advocates hoped. Exxon Mobil, BP and Royal Dutch Shell plus lesser known Norway’s Equinor, France’s Total, and Italy’s Eni are investors in capture and storage projects.

2) Reports are, that amid all the trillion dollar spending, the White House is now starting to consider how to pay for the programs meant to bolster long term economic growth with investments in infrastructure, clean energy and education. The challenges are twofold: 1) how much of the bill is paid for with tax increases and 2) which policies to finance with more borrowing. The administration hasn’t decided whether to pursue a wealth tax. With interest rates so low, U.S. borrowing costs are manageable right now. The federal government currently collects the biggest chunk of its revenue, about half in 2019, from individual income taxes, which now tops out at 37% of income above $518,000 per year. For now, there are few signs of inflationary spiral or fiscal crisis that policy makers thought would accompany debt levels like today’s. The Congressional Budget Office this month projected that the national debt would double as a proportion of gross domestic product over the next 30 years. But the cost of borrowing is rising for the government and across the economy so the large debt could mean trouble in the future.

3) India’s foreign-exchange reserves has surpassed Russia’s to become the world’s fourth largest, as India central bank continues to hoard dollars to cushion the economy against any sudden outflows. Reserves for both countries have mostly flattened this year after months of rapid increase. India’s reserves, enough to cover roughly 18 months of imports, have been bolstered by a rare current-account surplus, raising inflows into the local stock market and foreign direct investment. India’s foreign currency holdings fell by $4.3 billion to $580.3 billion as of March 5, edging out Russia’s $580.1 billion pile. China has the largest reserves, followed by Japan and Switzerland on the International Monetary Fund table.

4) Stock market closings for – 15 MAR 21:

Dow 32,953.46 up by 174.82
Nasdaq 3,459.71 up by 139.84
S&P 500 3,968.94 up by 25.60

10 Year Yield: down at 1.61%

Oil: down at $65.29

30 November 2020

1) Dr. Anthony Fauci, Director of the National Institute of Allergy and Infectious Diseases, warns that Americans should ‘double down’ on COVID-19 precautions as we reach the final stretch before the first vaccines. Over the past two weeks, Pfizer, BioNTech, and Moderna have released promising results from their phase 3 testing of Covid-19 vaccine candidates, so now there is the light at the end of the tunnel. Test show the vaccines are 90 to 95% effective against the Covid-19 virus. But while trials give reason for hope, case numbers and deaths from this week have been more sobering with 166,272 new cases per day plus an average of about 1,200 deaths per day. Dr. Fauci warns that across the globe, people were feeling ‘covid fatigue,’, and after months of quarantine, they are becoming tired of social distancing and other public health measures.

2) An internal government analysis warns that the U.S. government stands to lose more than $400 billion dollars from the federal student loan program, approaching the size of losses incurred by banks during the subprime-mortgage crisis. The Education Department, looked at $1.37 trillion dollars in student loans held by the government at the start of the year, then concluded that students will pay back $935 billion dollars in principal and interest, but this will still leave the American taxpayers stuck for $435 billion dollars. The losses are far steeper than prior government projections. Last year the Congressional Budget Office estimated that the student-loan program would cost taxpayers $31.5 billion dollars, including administrative costs. After decades of ‘no questions asked lending’, the government has piled up a toxic debt. By comparison, private lenders lost $535 billion dollars from subprime-mortgages of the 2008 financial crisis.

3) Metals stocks are rising with shares of United States Steel leading the sector with a 21.3% gain and steelmaker Cleveland-Cliffs up 10.1%, while Aluminum Corporation of China is up 11.3%. The rise is driven by an expected resurgence of car demand in the U.S. causing a global steel price surge at the same time as the U.S. steel market is enduring acute shortages in supply. Aluminum is a metal that automakers have been known to employ as an alternative and hence why Aluminum makers are also on the rise. Currently neither U.S. Steel nor Cleveland-Cliffs are a cash-generating enterprise, while Aluminum Corporation of China has generated a cool $1 billion dollars in real cash profit over the past year.

4) Stock market closings for – 27 Nov 20:
Dow 29,910.37 up by 37.90
Nasdaq 12,205.85 up by 111.44
S&P 500 3,638.35 up by 8.70
10 Year Yield: down at 0.84%
Oil: down at $45.29