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

9 July 2020

1) In a move that shows just how much troubled the airline industry is, United Airlines is sending out layoff warnings to half of its U.S. staff, or about 36,000 employees. The world’s airline industry has be devastated by the coronavirus crisis, with the prospects for recovery in air travel dimming in just the past two weeks because of a rise in infections. The ‘36,000 people’ is a worst case scenario, with United striving to minimize layoffs through things like early retirement packages. Air travel had plunged 95% from March to April, and has been making a slow recovery. Still air travel is down 70%.

2) After more than fifteen months since being grounded for safety, Boeing’s 737 MAX is finally getting close to winning approval to fly again. But it’s not expected the aircraft will actually start carrying passengers until late this year at the earliest. Now with a history of missed deadlines, neither Boeing or the FAA (Federal Aviation Administration) will say when the airplane will be approved to fly passengers. But after the aircraft is certified, there will still be months of training before the 737 MAX can actually operate. The good news is the test flights signal the certification is nearing its end. Once the U.S. has granted approval, Boeing will start the process of certification in a number of other countries which the 737 will operate out of. Plus, the 400 aircraft built during the grounding will need to be modified and tested before they can be delivered. The biggest question is how much and how long the airline industry will need to recover from the pandemic.

3) President Trump is threatening to cut off funding for schools that do not reopen this fall. It’s unclear just how the federal government could exert significant financial pressure on states and local school systems. The President is also in disagreement with Centers for Disease Control and Prevention’s guidelines for their reopening.

4) Stock market closings for – 8 JUL 20:

Dow 26,067.28 up 177.10
Nasdaq 10,492.50 up 148.61
S&P 500 3,169.94 up 24.62

Year Yield: up at 0.65%

Oil: up at $40.93

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

7 July 2020

1) Research by the Wall Street firm UBS, predicts that as many as 100,000 brick and mortar retail stores in the U.S. will close by 2025. Because of the pandemic, retailers are closing store locations permanently at an un-precedent rate. But this closure was going on before the coronavirus shutdown, with shoppers embracing other ways to buy such as e-commerce and picking up products at stores purchased online. This is in addition to large traditional retailers going into bankruptcy. This prediction is in keeping with the 9,800 stores already closed this year, with 25,000 stores predicted to close by the end of 2020. The retail sector has already lost 1.2 million jobs between March and June. This opens questions if the present hyper-consumerism economy can continue.

2) With the continued threat of the pandemic and a slowdown of reopening of economies in states, evictions are likely to skyrocket as jobs remain scarce. This is because a backlog of eviction cases is beginning to move through the court system. Millions of people had been counting on federal aid and eviction moratoriums to remain in their homes, but now fear of being thrown out is mounting. This situation is further aggravated as the enhanced unemployment benefits run out at the end of July. The enhanced unemployment and $1,200 stimulus payment had been supporting households this spring. There are 110 million people living in rental households with 20% at risk of eviction by the end of September.

3) The food delivery service Uber has acquired rival Postmates, despite Uber not having become a profitable enterprise yet. This should make Uber a stronger competitor to its main rival Doordash. The food delivery sector is undergoing a major consolidation this year, people jumping from service to service to find the best deal. With this acquisition, Uber gets a bigger share of the market with 31% of the business with DoorDash the largest at 44%.

4) Stock market closings for – 6 JUL 20:

Dow 26,287.03 up
Nasdaq 10,433.65 up
S&P 500 3,179.72 up

10 Year Yield: 0.68%

Oil: up at $40.59

2 July 2020

1) The airline industry is one of the hardest hit segments of the economy from the pandemic, with an estimated 36% drop in traffic this year. But the International Air Transport Association is warning that it could worsen with a 53% drop if boarder curbs on emerging market countries and the U.S. remain in place. The U.S. – EU (European Union) air travel market generates $29 billion dollars a year is threaten by the ban on non essential flights from the U.S. as the EU attempts to avoid an resurgence of the virus. Air travel was down over 90% for April and May, with little prospects for improvement in the near future, leaving the future of air carriers in doubt too.

2) The maker of electric automobiles Tesla has become the world’s most valuable automaker, surpassing Toyota’s for the first time on record. Tesla’s valuation is roughly $206.5 billion dollars compared with Toyota’s valuation of about $202 billion dollars. This underscores the vast investor enthusiasm for the automaker, which has yet to turn a profit on an annual basis. While it’s valuation exceeds Toyota, its car production of 103,000 cars lags far behind Toyota’s production of 2.4 million vehicles. The valuation comes from the stock in the company, with investors piling money in since there aren’t any other electric vehicles investments available, with Tesla stock soaring to $1,135 per share.

3) Electricity bills are set to surge this summer because of millions of Americans sheltering in place. This added demand will mean higher electricity costs for months to come. This will mean an additional $30 to $40 per month on electric bills in cities like New York and Philadelphia. Increases are anticipated to be highest for the northeast area of the country, decreasing when going westward. This comes when people’s finances are already stretched tight because of the coronavirus crisis.

4) Stock market closings for – 1 JUL 20:

Dow 25,734.97 down 77.91
Nasdaq 10,154.63 up 95.86
S&P 500 3,115.86 up 15.57

10 Year Yield: up at 0.68%

Oil: down at $39.71

30 June 2020

1) The Boeing Aircraft Co. has started it re-certification process for the 737 MAX with the take off of a test aircraft for the first flight. An FAA (Federal Aviation Administration) pilot was on board as test flights begin, to determine if the aircraft is safe for flying with passengers. The first flight test is to fly maneuvers for about three hours, the test craft being fitted with a number of instruments and monitoring equipment to test and record how the aircraft performs. Test include the ‘wind-up turn’ which is a steep turn that essentially approaches a stall, with wings almost at 90 degrees of bank. This maneuver should trigger the Boeing software system that played a role in both crashes, which caused the aircraft design to be grounded. The software caused the aircraft’s nose to be repeatedly pointed downward at the ground until pilots lost control. These certification flights are expected to take approximately three days, and while they are an important milestone, there remains a number of key tasks to be completed.

2) According to the Bureau of Labor Statistics, 47.2% of American adults are now jobless, almost half the adult population. This is a direct result of losing 30 million jobs because of the coronavirus crisis. While there was an unexpected snap back in May, there are now signs of a slowdown in the labor market improvement because of fears of a Convid-19 resurgence increased these last few weeks. The massive loss of jobs is what is now dragging the economy down. Both Texas and Florida have paused plans for further reopening because of a record spike in coronavirus cases.

3) Lending institutions are pulling back sharply on their lending to U.S. consumers during the pandemic, because they can’t tell who is creditworthy anymore. There are millions of Americans out of work and behind on their debts, but many of these missed payments aren’t reflected in credit scores. This is a result of the government’s stimulus package which allows borrowers to defer their debt payments, but credit companies can’t report these late payments to credit reporting companies. For May, there were more than 100 million accounts with deferred debt payments. This is a sign of widespread financial distress.

4) Stock market closings for – 29 JUN 20:

Dow 25,595.80 up 580.25
Nasdaq 9,874.15 up 116.93
S&P 500 3,053.24 up 44.19

10 Year Yield: unchanged at 0.64%

Oil: up at $39.55

29 June 2020

1) Microsoft is permanently closing almost all of its stores across the nation and world. Just like other retail outlets, Microsoft had to shutter all its stores due to the coronavirus pandemic. There are 83 stores worldwide of which 72 are in the U.S., however only four will remain open in the world. The stores allowed people to try out software and hardware offered by Microsoft including laptop computers. No news if there will be any layoffs or how many, the stores are moving to the digital realm, which will absorb many of the store employees. The physical stores generated negligible retail revenue for Microsoft.

2) As oil prices reach the magic $40 a barrel, shale fracking is starting to reawaken to pump oil. The number of fracking crews had bottomed out at 45 last month, but is now back up to 78 this last week. There had been roughly 400 fracking crews before the decline in oil prices started. The drilling of new oil wells remains on hold with a 70% slump, making for the lowest number of active drilling rigs since 2011.

3) Nike is warning its employees of coming layoffs, but these layoffs will not effect store employees. The layoffs are expected to come in two waves, the first this July followed in the fall with a the second wave. These layoffs come amid reports of poor earnings, with sales down 38% giving a net loss of $790 million dollars when the Convid-19 virus forced closing of most of its stores. This compares with nearly a billion dollars in earnings for the same time last year. Nike has 76,700 employees, but it’s not know yet how many will lose their jobs. All wasn’t bad for Nike, with their online sales skyrocketing 75%, with e-sales accounting for 30% of Nike’s total business.

4) Stock market closings for – 26 JUN 20:

Dow 25,015.55 down 730.05
Nasdaq 9,757.22 down 259.78
S&P 500 3,009.05 down 74.71

10 Year Yield: down at 0.64%

Oil: down at $38.16

26 June 2020

1) General Motors is eliminating 700 factory jobs in Tennessee as a result of low sales, which they are blaming on the Convid-19 crisis. This is the third shift at their Spring Hill assembly plant, leaving 3,000 workers still employed. This plant makes Cadillac XT5 and XT6 SUVs plus the GMC Acadia. This is another sign of the weakness in auto demand, a result of record job loss coupled with people working at home and therefore putting less wear on their old cars. The GM plant for building truck engines remains unchanged, since they were working just two shifts to start with.

2) The nation wide retailer Macy’s is cutting nearly 4,000 corporate jobs, about 3% of its overall workforce. The pandemic has taken a toll on the department store chain, just like so many other traditional chain retailers. This move will save the company about $630 million dollars per year, amid a quarterly net loss of $652 million dollars. Macy’s was struggling long before the pandemic because of competition from lower priced retailers such as Walmart, T.J. Maxx and Target.

3) The U.S. GDP (Gross Domestic Product) shrank by 5% for the first quarter, compared to an increase in the previous quarter of 2.1%, prior to the coronavirus pandemic onset. This drop is attributed to a decrease in personal consumption expenditures (PCE) because people are spending less. The real gross domestic income decreased 4.4% as compared to a 3.1% increase in the fourth quarter of last year.

4) Stock market closings for – 25 JUN 20:

Dow 25,745.60 up 299.66
Nasdaq 10,017.00 up 107.84
S&P 500 3,083.76 up 33.43

10 Year Yield: down at 0.67%

Oil: up at $39.18