7 October 2020

1) Ikea, the big Swedish world wide modular furniture manufacture, has experienced a surge in sales from the pandemic as people turned homes into offices and schools. Their online sales are up 45% over the last 12 months to August, with 4 billion visits to their website. Outdoor furniture is the fastest growing category, followed by office furniture. While many of their stores were forced to close from the virus, their online sales remain high even as stores reopen. The furniture retailer has added 6,000 new employees world wide to make a total work force of 217,000. Online sales account for about one fifth of total sales.

2) Job openings in America fell in August for the first time in four months, indicating a moderation in hiring as the crisis continues. Available positions slipped down to 6.49 million from July’s 6.7 million. These numbers do not include recalls from layoffs or positions that are offered only internally. However, layoffs and discharges are at a low for August, although there are still 13.6 million Americans unemployed, which means there are about 2 unemployed competing for each job opening. There are fewer vacancies in construction, retail and health care industries, while vacancies increased for manufacturing, food service and government.

3) Federal reserve Chairman Jerome Powell says America is on the long road to economic recovery from the pandemic induced recession, but still there are other problems on the horizon. There are fears of the economy shifting into reverse once again, especially if a resurgence of the virus comes with cold weather . . . the flue season. Such a resurgence could significantly limit economic activity leaving many unemployed stranded with no jobs for many more months. Powell is calling for the passing of the second stimulus bill presently being debated in the Congress. He considers the risk of pouring too much money into the economy far lower than the risk of not spending enough, despite the already sky high federal budget. While he considers the debt is on an unsustainable path, and has been for some time, but this is not the time to address it.

4) Stock market closings for – 6 OCT 20:

Dow 27,772.76 down 375.88
Nasdaq 11,154.60 down 177.88
S&P 500 3,360.95 down 47.68

10 Year Yield: down at 0.74%

Oil: up at $39.83

3 June 2020

1) The economic activity for the second quarter is down, while more than half the GDP (Gross Domestic Product) is now showing a 52.8% drop. Consequently, the personal consumption expenditures is expected to fall 58.1%, which makes up 68% of the nation’s GDP. The current recession is unique in that it was lead by the services sector instead of the traditional manufacturing or construction sectors.

2) Because of the Convid-19 shutdown, the retail industry has a mountain of apparel stock piling up in stores, distribution centers, warehouses and shipping containers. Those retailers now face the difficult decisions of what is best to do with this overstock and choked supple chain. Their options are to keep it in storage, hold sales, offload to ‘off price’ retailers who then sell at deep discounts or move it to online resale sites. None of these options are ideal, but they do limit the damage to company’s bottom line. For apparel that isn’t so fashion sensitive, such as underwear, t-shirts and chinos, warehousing for a short time to wait for demand to return is a viable option. But storing inventory cost money. The opposite strategy is to hold sales and sell stock to the off-price retailers. The ‘in store’ sales is usually better because dumping in bulk to the discounters usually brings only pennies on the dollar for retailers. This amounts to huge losses for the retailer. The most lucrative option is moving merchandise to online re-sellers who take a commission on sales, however this is largely only open for high end brands. No matter what options a retailer takes, it all spells out large losses for them because of the pandemic.

3) Southwest Airlines is offering buyout packages and temporary paid leaves to employees in an attempt to ensure survival, in anticipation of a slow recovery. The airline company has not imposed any layoffs or furloughs in its 49 year history, and while overstaffing isn’t tied to 100% capacity levels, it has never faced the drastic drop in passenger service as now seen with the pandemic. Therefore, Southwest if seeking to voluntarily reduce workforce as softly as possible.

4) Stock market closings for – 2 JUN 20:

Dow 25,742.65 up 267.63
Nasdaq 9,608.38 up 56.33
S&P 500 3,080.82 up 25.09

10 Year Yield: up at 0.68%

Oil: up at $36.90

21 May 2020

1) The Federal government is moving to address the record deficits that America has amassed. One method is to stretch out the time over which the deficit is paid off. Part of that plan is the reinstating of the 20 year bond, which was last issued in 1986. The Feds will auction off $20 billion dollars worth of bonds Wednesday, with an expected return of 1.21% verses 0.70% for the 10 year bonds and 1.42% for the 30 year bonds. The government is also considering 50 and 100 year bonds, but there doesn’t seem to be any demand for such financial instruments. It’s expected that the deficit will be $3.4 trillion dollars for fiscal 2020 and $2 trillion dollars for 2021.

2) The CBO (Congressional Budget Office) estimates the nation’s unemployment rate will exceed 15% through September then remain above 11% for the rest of the year. For 2021, they estimate an average of 9.3%. For the second quarter of 2020, the labor market is projected to see the steepest declines since the 1930’s. These high unemployment rates are expected to persist despite lawmakers’ efforts to counter with injections of cash into the economy. Further layoffs are expected despite the $660 billion dollar Paycheck Protection Program, but a partial rebound is possible in the last three months of the year, with as much as 30% of laid off workers being rehired.

3) Housing sales are way down, the lack of inventory has propped up prices with bidding wars from the limited availability of properties. The health guidelines have made it more difficult to market homes, another fallout of the pandemic. Since the pandemic began, the demand has fallen off, with the number of sellers also contracting, therefore the limited availability of properties. Despite the economic uncertainty, the supply shortage prior to the Covid-19 crisis still remains. Nevertheless, the housing market has cooled, with sales of existing homes projected to fall 20% in April compared to March, which had a 8.5% drop. Construction of new houses is down as contractors wait out the virus. While loan interest rates are low, lending institutions have tightened up their loan standards.

4) Stock market closings for – 20 MAY 20:

Dow 24,575.90 up 369.04
Nasdaq 9,375.78 up 190.67
S&P 500 2,971.61 up 48.67

10 Year Yield: down at 0.68%

Oil: up at $33.52

20 January 2020

1) A year ago, Boeing Aircraft had record revenues of over $100 billion dollars, anticipating delivery of record number of aircraft including the 737 MAX jetliner. With the grounding of its 737 MAX, that has been reversed with Boeing posting losses from massive pay outs as well as lost revenues as undelivered aircraft sit waiting in its parking lots. Boeing may ultimately have $20 billion dollars in cost from the 737 MAX problem. Boeing’s problems has been a bonus for China’s airline manufacturing giving them a big advantage to gain market share.

2) India is resisting Amazon’s efforts to expand into India with an investment of $1 billion dollars, fearful of predatory business practices. The investment would bring Amazon India investment up to $6.5 billion dollars. But Amazon is meeting growing resistance, first with an Indian anti-trust investigation by Indian regulators, then protest from a confederation of Indian traders and organizations.

3) As hiring surged in November, the employment market got tighter, job openings plunged to their lowest level in nearly two years. The total vacancies is down by 561,000 to 6.8 million for the month. This is the lowest since February of 2018, the trend telling the economy has finally reached full employment. The biggest drops came in retail and construction.

4) Stock market closings for – 17 JAN 20: All three exchanges closed on record highs.

Dow          29,348.10    up    50.46
Nasdaq       9,388.94    up    31.81
S&P 500      3,329.62    up     12.81

10 Year Yield:    up   at    1.84%

Oil:    up   at    $58.81

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

WTC ABUJA…WORLD TRADE CENTER ABUJA.. COMING IN 2016

WTC Abuja

By: Economic & Finance Report

Nigeria will be opening up their first World Trade Center structure. It will be located in the capital in Abuja, Nigeria. WTC Abuja as it will be regarded as, was funded by international and national private investors and financial entities.

There are currently 323 locations, along with 89 countries that have  World Trade Centers (WTC) for economic development, business resources and trade infrastructure. Nigeria will be the 90th country, as Abuja will be the epicenter for trade and business along with Lagos the business capital of Nigeria. The WTC Abuja is expected to be the biggest business hub in West Africa and leading business trade mobilization on the African continent.

WTC Abuja, has finished the first phase of development, which houses residential and commercial real estate.  Being constructed by the Churchgate Group, WTC Abuja will offer luxury condos and apartments. The Commercial Tower will be the tallest office building in Abuja, while the Residential Tower will be the tallest residential building in the country. There are plans to build a sophisticated shopping mall in the near future which is predicted to be the tallest within Africa. -SB