8 April 20

1) The dizzying swings in the stock market has made a mockery of efforts to forecast the market. This phenomena graphically reveals the high degree of uncertainty prevalent in the world today. One day, markets are up by one or two thousand points, next day down by the same amount as people are unable to decide if the economy will grow or contract. Market experts are unable to decide if the economic downturn is a short impulse from the coronavirus, or a long term event covering months or even years. One major component in seeing the economic future is the question of how many small businesses will fail during the shutdown, most from lack of cash. A high number of failures could drag the rest of businesses down.

2) American colleges and universities are also suffering financial problems from the coronavirus shutdown. Institutions are scrambling to close deep budget holes from loss of tuition and fees, refunds for student housing, dining and parking from students forced to leave school. Some have had a huge share of their reserves wiped out with some schools are facing financial collapse. Some face a double loss with their reserves in the stock market. To add to college’s worry, is the question of how many students will return this fall if the shut down is over. Furthermore, surveys show significant number of highschool seniors planning to take a year off before continuing their education, another loss of revenues for colleges.

3) Because of the virus shut down, demand for gasoline in America has collapsed. Sales are down 46.5% from last year. The same sharp decline in gasoline sales has been seen in Europe with demand for gasoline down as much as 85%. With big box retailers slowing and automakers shutting down, a slowdown is expected in the next few weeks.

4) Stock market closings for – 7 APR 20:

Dow 22,653.86 down 26.13
Nasdaq 7,887.26 down 25.98
S&P 500 2,659.41 down 4.27

10 Year Yield: up at 0.74%

Oil: down at $24.26

7 April 2020

1) Ten million people have rushed to file unemployment claims only to find a system swamped to the point of being nonfunctional. State websites are buckling, their phone lines jammed with backlogs mounting from jobless people seeking benefits, needing help. To make matters worst, the federal government has not dispersed all the necessary monies to states so there isn’t enough money for benefits. While the coronavirus is concentrated in a few areas of the country, the economic havoc has been nation wide.

2) Wells Fargo bank is bowing out of the new federal program aimed at helping small businesses retain workers and pay bills. The bank is no longer accepting new loan applications under the Paycheck Protection Program, which is part of the $2.2 trillion dollar economic relief package. The bank had committed $10 billion dollars to the loan program, but has already reached more than that amount in applications. Last year, Wells Fargo arranged more small business loans than any other lender. The Paycheck Protection Program offers 1% interest loans to business with fewer than 500 workers, and if borrowers don’t lay off workers in the next eight weeks, they will have their loans and interest forgiven. The program allots $350 billion dollars, but as of Friday only 17,000 loans have been approved for a total of $5.4 billion dollars.

3) Jamie Dimon, CEO for JP Morgan Chase, predicts a ‘bad recession’ as a result of the coronavirus, where the GDP (Gross Domestic Product) could plunge as much as 35% annual rate in the second quarter with a down turn lasting the rest of the year. Furthermore, the unemployment rate could spike as high as 14% during this recession. Because of the extension of new credit, a major recession means we are exposing the bank to billions of dollars of additional credit losses in helping businesses through this setback.

4) Stock market closings for – 6 APR 20:

Dow 22,679.99 up 1627.46
Nasdaq 7,913.24 up 540.16
S&P 500 2,663.68 up 175.03

10 Year Yield: up at 0.68%

Oil: down at $26.73

3 April 2020

1) Unemployment claims have jumped twice the previous week’s numbers, with 6.6 million Americans filing for benefits. This brings the last two weeks total of new unemployed to 10 million. The speed and scale of job losses are unprecedented. The record for loses in a month had been 695,000 in 1982. The coronavirus has wiped out more jobs in two weeks than were lost in the worst months of the last recession. Companies based on white-collar workers, have been able to keep their people working with work at home, but as revenues dry up, it’s questionable how long before they too will be forced to start layoffs. The growing number of laid off workers unable to pay their bills could well lead to a cascade of further layoffs and business failures.

2) While the price of oil has always had an effect on the equities, the recent plunged has had a more profound effect and therefore causing the roller-coaster volatility of the markets. This dramatized how very central oil is to the entire modern world. Stabilizing the oil prices would greatly help stabilizing the markets, and therefore the whole world economic system. Central to this is for Russia and Saudi Arabia to end their price war and resume limiting production. But central to this is Russia’s desire to damage American domestic oil production by destroying the shale oil companies, which would reduced American’s influence in the world especially in the middle east where Russia is very active.

3) Already wracked by fiscal problems from decline of the milk product markets, dairymen now suffer a further decrease in their market as a result of the coronavirus crisis. This is a result of restaurants, schools and other food service outlets reduced to stopping operations and therefore not needing milk products. The dairy industry is still producing, but doesn’t have anyplace to sell their milk, so the industry is asking the government to increase its purchases of dry milk, butter and cheese.

4) Stock market closings for – 2 APR 20:

Dow 21,413.44 up 469.93
Nasdaq 7,487.31 up 126.73
S&P 500 2,526.90 up 56.40

10 Year Yield: down at 0.63%

Oil: up at $24.90

2 April 2020

1) One developing economic crisis from the coronavirus is non-payment of rents. Renters tend to have less cash reserves than home owners, and for those renters not working, a large number will not be able to pay their monthly rent. Many are calling for the federal government to suspend rent payments until the crises is over, while others are calling for a rent boycotts to force landlords into accommodations. A wave of evictions could cause large numbers of people to fall below the poverty line, and worst yet greatly increase the number of homeless Americans.

2) Tuesday, President Trump warned of a very painful next two weeks, with projections of 100,000 to as much as 240,000 coronavirus deaths in the U.S. The news caused another shock to the markets with stocks again dropping shapely. With tremendous uncertainty, the markets are very unstable and therefore subject to sharp up and down swings. Both the Dow and S & P have had their worst first quarter in history. Oil too, continues with its low prices making for its worst month and quarter in history from both the coronavirus shutdown and the Saudi Arabia-Russia price war.

3) With the sudden surge in coronavirus patients, hospitals around America are running low on drugs needed to treat those patients. Some of the drugs are officially in shortage, with use of others skyrocketing and expected to quickly become into short supply. Also in short supply are antibiotics like azithromycind and antivirals like chloroquine and hydroxychloroquine. Other drugs associated with patients using ventilators are quickly becoming scarce. Non prescription drugs such as vitamin C have seen a sharp increase in purchases.

4) Stock market closings for – 1 APR 20:

Dow 20,943.51 down 973.65
Nasdaq 7,360.58 down 339.52
S&P 500 2,470.50 down 114.09

10 Year Yield: down at 0.64%

Oil: up at $21.20

1 April 2020

1) To aid in economic recovery, President Trump is calling for a $2 trillion dollar spending plan to update the country’s infrastructure. Monies would be used to update the country’s roads, bridges and other parts of the physical infrastructure. This would be part of Phase 4 response to the coronavirus crisis. The President said that with interest rates at zero, this is the ideal time to address our declining infrastructure.

2) There are growing fears of the devastation that the coronavirus has and continues to wrought on America’s economy. Layoffs are coming faster than unemployment offices can accommodate, increasing fears about making mortgage and loan payments, malls and shopping centers devoid of people with only the essential commerce. Economist are now forecasting a real GDP growth of negative 9% for the first quarter and minus 34% for the second. There is expected to be 4.5 million filings for jobless benefits this week, which will be the highest in history. While there are hopes for a quick turn around, the damage may be too great to quickly return to the economic boom prior to the virus.

3) Founders of the European Union (EU) have always feared that Italy’s proliferate borrowing would ultimately become the EU’s problem. Now with Italy’s coronavirus problems, the country is having to borrow again to care for its people, in turn pushing up its debt to dangerous levels which the EU will have to cover. This is made doubly critical with other EU member’s economies shaken by the shutdowns from the virus. Presently, Italy’s debt level is approaching 150% of its gross domestic product and may well surpass that.

4) Stock market closings for – 31 MAR 20:

Dow 21,917.16 down 410.32
Nasdaq 7,700.10 down 74.05
S&P 500 2,584.59 down 42.06

10 Year Yield: up at 0.70%

Oil: down at $20.10

31 March 2020

1) Oil prices have crashed to an eighteen year low as coronavirus lockdowns cascaded through the world economies, which have drastically cut oil demand. The surplus in oil stocks is ballooning amid the Saudi Arabia and Russia’s dispute over struggle for oil control. The slump in petroleum based products has shut down refineries around the world. Prices are on track for the worst quarter on record. There are no signs of Saudi Arabia and Russia’s dispute being resolved as Saudi Arabia increases its production to further increase surpluses of oil thereby dropping oil prices more.

2) The coronavirus pandemic is expected to drive March auto sales off a cliff, from consumer confidence dropping and shuttered dealerships across much of the country. It’s expected that April may be as bad as or worst than March. Sales forecast for March has dropped 37% and April could be off between 50% and 60%. States under ‘stay at home’ orders have seen an 80% drop in auto sales.

3) With millions of Americans already laid off, fears among experts that job losses could be as high as 47 million to give an unemployment rate of 32%. The loses are a result of government induced economic freeze to contain the spread of the virus. A record 3.3 million Americans have filed initial jobless claims for the week ending 21 March of this year, with an estimated 66.8 million workers consider to be in jobs at high risk for layoff. With a loss of 47 million jobs, the unemployment rolls would rise to 52.8 million, or more than three times the peak number of unemployment in the 2008 Great Recession.

4) Stock market closings for – 30 MAR 20:

Dow 22,327.48 up 690.70
Nasdaq 7,774.15 up 271.77
S&P 500 2,626.65 up 85.18

10 Year Yield: down at 0.67%

Oil: down at $20.28

30 March 2020

1) A second virus shock wave is already hitting China’s factories as European factories are delaying orders and asking for delays in payments as the coronavirus sweeps across Europe closing their factories. These are cutting off orders to Chinese factories just as they were beginning to come back to life, a double hammer blow to China’s economy. Estimated April to May sales are expected to be down as much as 40% from last year. This is raising grave doubts about the world’s second largest economy being able to repair damage and return to its pre-virus station.

2) The Index of Consumer Sentiment dropped to 89.1 in March, the lowest level since October 2016, a three year low. It is the fourth largest in nearly 50 years. Further declines is dependent on the success of curtailing the spread of the virus and how soon households receive funds from the government stimulus. To date, there are 540,000 cases of coronavirus with America overtaking China and Italy with the most cases having a total of 85,000.

3) The Department of Justice is investigating the credit scoring firm FICO for possible antitrust violations. There are three other major credit companies: Equifax, Experian and TransUnion. FICO is the only scoring model accredited by mortgage loan companies Fannie Mae and Freddie Mac. The DOJ investigation comes after TransUnion’s antitrust countercase against FICO. The lenders determine which credit scoring system is utilized on a loan application, not the consumer or loan applicant.

4) Stock market closings for – 27 MAR 20:

Dow 21,636.78 down 915.39
Nasdaq 7,502.38 down 295.16
S&P 500 2,541.47 down 88.60

10 Year Yield: down at 0.75%

Oil: down at $21.84

OVER 3 MILLION AMERICANS ARE UNEMPLOYED BECAUSE OF THE CORONAVIRUS PANDEMIC!!!!!!!!!

image: nytimes.com

By: Economic & Finance Report

Over 3.3 million Americans have claimed unemployment benefits because of the coronavirus, the U.S. Labor Dept has indicated this past week. The virus has taken a toll on businesses, income wages and society’s everyday way of living.

These numbers reflect a growing number of Americans who are currently unemployed and are seeking financial relief; because of what the COVID-19 virus has done to their working wages. Many people have insisted that the impact has burdened them into massive financial debt.

It also has to be noted, that the United States has now surpassed all other countries with the most infected individuals who have tested positive for COVID-19. Over 85,000 people in the USA have the coronavirus, as presented by data by John Hopkins University on March 26, 2020 (US infections 85,840). SB

Sources: US Labor Dept; John Hopkins University Covid-19 Data

27 March 2020

1) The $2 trillion dollar coronavirus relief bill has been passed and Treasury Secretary Steven Mnuchin said the people should receive cash payments within three weeks. The IRS has been tasked with distributing the monies, but the agency is hobbled by obsolete technologies such as 1960’s era computers, limited staff and a small budget. So there are questions if the agency can get the job done in a timely manner, let alone in three weeks. Experts say its more like a matter of months rather than weeks for Americans to receive their check.

2) Almost 3.3 million Americans have applied for unemployment benefits this last week, more than quadruple the previous record set in 1982. This is a result of the wide spread economic shutdown from the coronavirus pandemic. This rate of layoffs is expected to accelerate as the U.S. economy sinks into a recession with the collapse of revenues for a wide range of businesses. Economist predict the nation’s unemployment rate could approach 13% by May.

3) Gold has traditionally been a panic investment which people and nations buy to protect the value of their money. The worldwide panic over the coronavirus coupled with a flood of stimulus by central banks has ignited demand for gold to store wealth. But the gold market is running into difficulties in buying. Stored in high security vaults, government mandated shut downs have left access iffy. Also, refiners of gold have been forced to close because of the virus. Transporting gold is done via airlines, but the sharp drop in air service has also made transport of the metal difficult. All these factors have put a squeeze on gold futures.

4) Stock market closings for – 26 MAR 20:

Dow 22,552.17 up 1351.62
Nasdaq 7,797.54 up 413.24
S&P 500 2,630.07 up 154.51

10 Year Yield: down at 0.81%

Oil: down at $23.18

26 March 2020

1) The coronavirus crisis has also crippled the sales of automobiles with March sales down by an expected 35.5% and 15.3% decline expected for 2020. The decline poses the largest threat to the auto industry since the Great Recession which resulted in the bankruptcy of General Motors and Chrysler. Globally, auto sales are expected to drop by 12%, which is greater than the 8% of the Great Recession. Most dealers are keeping their doors open, although some are only allowed to keep their service centers open during the shutdown order.

2) The coronavirus crisis has brought negative rates to the U.S., the first time for negative yields on government debt. The yields on both one-month and three-month Treasury bills have dipped below zero on Wednesday. Negative yields have been a part of European markets for months now, with many expecting the same to come to America.

3) Many entertainment facilities and events have been canceled because of the coronavirus pandemic with the closing of Disneyland and Disney World being the first world renowned closures. A long list of political events, theme parks, sporting events and leagues, cultural and concerns closures has been joined by the announcement that the 2020 Olympics in Tokyo has been postpone for a year. The economic losses, both direct and indirect, are near incalculable to make. This will add to the total economic downturn of the world with innumerable support and supply businesses suffering.

4) Stock market closings for – 25 MAR 20:

Dow 21,200.55 up 495.64
Nasdaq 7,384.30 down 33.56
S&P 500 2,475.56 up 28.23

10 Year Yield: up at 0.86%

Oil: up at $24.31