18 November 2020

1) Crude oil prices and energy stocks aren’t the only things that have fallen during this oil downturn, land prices with potential oil shale have also plummeted. The average price of U.S. oil shale acreage has fallen by more than 70 percent in two years, falling from $17,000 per acre in 2018 to $5,000 per acre in 2020. The value of oil and gas assets has plunged because of the coronavirus pandemic sending crude oil demand down globally, consequently most energy companies are slashing their costs instead of purchasing new land for oil and gas drilling. Oil and gas companies are forced to sell assets to make up money lost on deals.

2) On January the first of next year, President Trump’s pause on student loan payments for 33 million Americans is set to expire, just three weeks before President-elect Joe Biden is slated to take over. The Education Department is warning borrowers this week that their monthly payments will resume. For the incoming president, the economic and administrative mess could take months to untangle, consuming the early days of his Education Department. The student loan system was not designed to start and stop at any time for 30 million borrowers. This became apparent in March when loan payments were suspending and problems for borrowers quickly arose. This is just one facet of the economic problems facing the new president in just a few months, that not only must be addressed, but addressed correcting if problems are not to get worst.

3) The United States has surpassed 11 million coronavirus cases , that’s 1 million new infections in just one week, or 2 million since the beginning of the month. Consequently, hospitals are reaching a breaking point trying to treat nearly 70,000 Covid-19 patients. Medical workers are tired . . . mentally, physically and emotionally exhausted. The stress is being felt around the nation, with the virus spreading like wildfire and the medical system having no backup. If you act early, you can save lives, but if you don’t, you’ll be swamped by a tsunami of this virus. But a Covid-19 vaccine may be in the making with Moderna announcing it has developed a vaccine that’s nearly 95% effective, capable of preventing severe illness, and it could start giving vaccinations to high-risk patients and health care workers as soon as December. A week before, drugmaker, Pfizer announced that its human trials suggest its coronavirus vaccine is more than 90% effective.

4) Stock market closings for – 17 NOV 20:

Dow 29,783.35 down 167.09
Nasdaq 11,899.34 down 24.79
S&P 500 3,609.53 down 17.38

10 Year Yield: down at 0.87%

Oil: down at $41.40

17 November 2020

1) Because of the worldwide pandemic, Asia has been vastly overstocked with oil distillates this year. In response, China’s biggest refiner is eyeing a creative strategy to ease the persistent diesel glut by using brand new supertankers usually reserved for crude oil. While supertankers are built to transport dirty fuels such as crude oil, they can carry cleaner products like gasoline and diesel on their maiden voyage. Therefore, China’s largest oil refiner has hired a newly-built very large crude carrier to load low-sulfur diesel in Asia for delivery to Europe. China intends to charter brand new vessels on a regular basis to transport more diesel to Europe, thereby clearing out bloated fuel stockpiles in Asia. Oil prices settle lower after a surprise climb in U.S. crude supplies.

2) An adults-only luxury resort in the Maldives is offering guests (two people max) a year’s worth of unlimited stays in 2021 for $30,000. Called the “Unlimited Stays in Paradise” package, which includes an over water bungalow, free breakfast services, discounts on dining experiences at the resort and spa services. The 5-star adult-only resort has multiple restaurants and private dining experiences, an option for private movie screenings, a spa, and offers fun excursions. Since the start of the coronavirus pandemic, many destinations, Bermuda and Barbados for instance, are taking advantage of people wanting to opt-out of quarantining in their homes for an isolated vacation overseas. Three Hawaiian islands, Maui, Kauai, and the Big Island, considered allowing tourists to vacation in a Resort Bubble, which will allow visitors to safely roam.

3) China’s Ruler Xi Jinping has halted Ant’s record-breaking $37 billion IPO after the company’s boss Jack Ma snubbed government leaders. Jack Ma, Ant’s founder, criticized Chinese government leaders, when a week before the Chinese fintech was set to go public, Ma made incendiary comments that didn’t go down well with the president or other government officials. This is another example of how President Xi deals with any threat to his authority, such as Hong Kong, including a low tolerance for big private businesses that accumulate wealth and power. Ma also criticized the regulators who enforce a set of international banking rules as an old people’s club. The fintech had already secured over $3 trillion in orders from individual investors across its dual listings in Hong Kong and Shanghai.

4) Stock market closings for – 16 NOV 20:
Dow 29,950.44 up by 470.63
Nasdaq 11,924.13 up by 94.84
S&P 500 3,626.91 up by 41.76
10 Year Yield: up at 0.91%
Oil: up at $41.47

15 October 2020

1) The much feared Diablo winds, along with its low humidity, will bring critical fire weather to Northern California through Friday, increasing the risks of wild fires. There are widespread red flag fire warnings for Northen California above San Francisco because of extremely dry, gusty, north to northeast winds which will bring critical fire conditions. With the relative humidity down into the single digits and teens, winds could reach about 45 mph, with gust up to 55 mph, both conditions very conducive to rapidly spread wild fires. The Diablo winds are much like the Santa Ana winds so familiar to Southern Californians.
2) Boeing’s troubles continue with no new orders for jets and more 737 MAX cancellations as the companies crisis continues. There were more orders for the 373 MAX canceled in September with delivery of only 11 total aircraft to customers, which is less than half the number from the same month a year ago. Furthermore, the quality flaws on the 787 Dreamliner continue to hamper efforts to develop an alternative cash cow to the 737 MAX. The major source of Boeing’s problems is the coronavirus pandemic, which continues to hurt the demand for jets, for Boeing as well as its rival Airbus, and this is a factor that neither aircraft manufacture has any control over.
3) The prices for crude oil are rising with the dollar’s decline, which in turn is boosting appeal of commodities priced in dollars. There are signs of oil demand increasing in Asia, which is helping lift the overall outlook for oil consumption. The company Rogsheng Petrochemical of Singapore is buying up oil futures to run its expanded refinery operation in Zhejiang this quarter. The outlook for refineries output remain precarious, with refining margins severely depressed for this time of the year. Refineries typically need a spread of more than $10 a barrel to make it profitable to process crude oil.
4) Stock market closings for – 14 OCT 20:
Dow 28,514.00 down 165.81
Nasdaq 11,768.73 down 95.17
S&P 500 3,488.67 down 23.26
10 Year Yield: unchanged at 0.72%
Oil: up at $41.22

15 September 2020

1) The old, almost extinct vinyl record album technology for music has surpassed the newer high technology CD music media this year, by selling $129.9 million compared to $232.1 million dollars for vinyl records. This is the first time vinyl has outsold CDs since the 1980’s. About 8.8 million records were sold with 10.2 million CDs, so number wise CD’s are still ahead. Overall, the music industry now is center on digital downloads, digital subscription and streaming services such as Spotify, Apple Music and YouTube with revenues up 12% overall. The recorded music for the first six months of 2020 was $5.6 billion dollars so combined vinyl and CD’s are just a small fraction of the total business.

2) Amazon is hiring again expecting to fill 100,000 part time and full time openings across the U.S. and Canada. This is in addition to 33,000 technology and corporate jobs announced just a week ago, many paying six figure salaries. The 100,000 labor jobs pay at least $15 an hour with a $1,000 sign up bonuses in some cities. Amazon is opening 100 new buildings this month because of the pandemic fueled sales surge with increase home delivery, as shopping habits shift to e-commerce. Market value for Amazon is now at $1.6 trillion dollars and continues climbing.

3) Oil giant BP (British Petroleum) says the demand for oil may have peaked last year, that global market for crude oil might never recover from the coronavirus pandemic. The company considers there are three scenarios for energy demand, all of which forecast a decline in demand for oil over the next thirty years. 1) ‘Business as usual’ oil demand increases slightly after the pandemic crisis passes, then plateaus around 2025 finally it declines after 2030. 2) Governments take more aggressive steps to curb carbon emissions, 3) there are significant shifts in societal behavior, both leading to a decline in oil demand. All point to a shift in the world economic system with a significant decline in growth for many countries.

4) Stock market closings for – 14 SEP 20:

Dow 27,993.33 up 327.69
Nasdaq 11,056.65 up 203.11
S&P 500 3,383.54 up 42.57

10 Year Yield: unchanged at 0.67%

Oil: down at $37.38

25 August 2020

1) With the two storms in the Gulf of Mexico, off shore oil production rigs have been forced to suspend operations and evacuate their crews until the bad weather passes. This curtailment in oil production has caused oil futures to rise as much as 1.3%. The shutdown has closed 58% of crude oil output, or more than 1 million barrels a day. Additionally, oil refineries along the Gulf coast have shut down their operations until the oil returns. But still, the storms are anticipated to have little real damage to onshore and offshore oil production facilities, and so a quick recovery in the markets is anticipated.

2) About one third of companies are anticipating having half or more of their employees work remotely after the Convid-19 crisis ends. While previously, 1 in 30 companies had anticipated continuing work at home after the crisis passed, surveys now show it’s 1 in 3. The pandemic has forced companies across the world to rethink how they do business, with 72% saying they offer flexibility around hours and work scheduling. While 49% have implemented flexible policies on how work is done and what technology is used.

3) The Covid-19 pandemic has accelerated the shift to e-commerce by five years. In many ways, the pandemic has reshaped our world, with our shopping habits being one of the prime ways. The fears of contracting the virus is forcing more people to shop online in the safety of their homes instead of going out into crowds of people to the traditional brick and mortar stores. This is causing the department stores to accelerate their decline. Sales of stores have declined by 25% in the first quarter of 2020, which grew to a 75% decline in the second quarter. Department stores are expected to decline by over 60% for the full year, while e-commerce is expected to grow by nearly 20%.

4) Stock market closings for – 24 AUG 20:

Dow 28,308.46 up 378.13
Nasdaq 11,379.72 up 67.92
S&P 500 3,431.28 up 34.12

10 Year Yield: up at 0.65%

Oil: down at$42.39

16 July 2020

1) Delta Airlines is expecting to spend up to $3.3 billion dollars on buyouts and early retirements in an effort to slash their labor cost. So far, 17,000 employees have signed up to leave the company because there is little in sight for the pandemic’s impact to end soon. The company is prohibited from laying off workers through 30 September under the terms of the $25 billion federal aid package met to support employee payroll. Delta has roughly 91,000 employees so this is a 19% reduction in their work force. The separation packages include cash severance, extended health care benefits and free flights. Other airlines are offering similar packages in an effort to reduce their work force.

2) Heritage Brands, an anchor of outlet malls across American, is closing all of its 162 stores starting next year. PVH Corp, which owns such brand names as Calvin Klein and Tommy Hilfiger, blames the closure on a combination of changing shopping habits of people and the Covid-19 pandemic. This will result in a 12% reduction in jobs or about 450 employees, saving the company $80 million dollars annually. The company had a 43% drop in revenue because of the impact of the coronavirus.

3) There are growing fears of an environmental disaster erupting in the Red Sea on the coast of Yeman. An abandoned oil tanker with 1.1 million barrels of crude oil, is beached on the coast of Yeman, with the potential to explode or rupture causing major environmental and humanitarian damage in the area. UN officials are trying to gain access to the ship to assess the tanker’s condition, conduct any possible urgent repairs and make recommendations for extraction of the oil, but the area is controlled by Houthi rebels. The danger is from sea water entering the ship’s interior causing rust and loss of structural integrity plus the inert gas that prevents the tanks from gathering inflammable gases has leaked out, so there is the threat of an explosion. To start with, an oil spill could result in 126,000 Yemeni fishermen losing their source of income.

4) Stock market closings for – 15 JUL 20:

Dow 26,870.10 up 227.51
Nasdaq 10,550.49 up 61.92
S&P 500 3,226.56 up 29.04

10 Year Yield: up at 0.63%

Oil: up at $41.04

7 May 2020

1) The bust in the Texas oil fields is the worst in memory, says the billionaire Russell Gordy. The coronavirus pandemic has triggered an unbelievable collapse in crude oil prices that is sinking fortunes across Texas, with no clear way out visible in the near future. Texas accounts for 9% of the nations GDP (Gross Domestic Product), so as oil pulls Texas’ economy down, it will undoubtably pull the nations down too. In the past, declining energy prices have helped the U.S. economy, but this time its likely to cut into investment and employment. Texas may lose 1.3 million jobs by June, as the virus puts an end to the U.S. shale oil revolution, which may spill into a broader downturn for Texas, that will also drag the rest of the country down too. Furthermore, Americans are driving and flying much less, which has reduced the demand for oil, bringing on a crisis in storage for the oil surplus. There are expectations that home prices will decline during the remainder of this year and into the next. This in turn will impact the construction industry.

2) As a result of the pandemic, the mortgage industry is implementing reforms that will be long lasting in terms of how lenders operate and how consumers obtain financing. It’s anticipated that digital mortgage processing will become more prevalent as people seek to minimize contact with others. Relators are seeing as much as a 500% increase in home video tours. Reports are that many people are seeing involuntary credit reductions and even terminations of their credit cards as banks seek to reduce their exposure to risk in a troubled economy where jobs are at risk of elimination. This means a further reduction on consumer spending.

3) Disney has seen a 91% plunged of it profits last quarter, a direct result of the coronavirus crisis. The operating profits in Disney’s parks lost about $1 billion dollars to add to a total loss of $1.4 billion dollars in total operating income. Disney has had to close its Walt Disney World and Disneyland theme parks, plus its Disney Stores and the suspension of its cruises and disruptions of its supply chain . However, its new video streaming service Disney Plus grew 26% to 33.5 million subscribers last quarter with revenues up 260%

4) Stock market closings for – 6 MAY 20:

Dow 23,664.64 down 218.45
Nasdaq 8,854.39 up 45.27
S&P 500 2,848.42 down 20.02

10 Year Yield: up at 0.71%

Oil: down at $24.35

24 September 2019

1) Saudi Arabia has restored 75% of its crude oil output and will have restored full production by next week. The September 14 attacks had reduced crude production to half, but promises that production will be fully restored by the end of September. The Saudis have managed to avoid a world wide oil crisis by drawing upon their stockpiles to continue supplying their customers at near pre-attack levels of crude.

2) The retailer giant Amazon plans to purchase 100,000 electric delivery vans from the company Rivian as part of its carbon neutral plan. Furthermore, Amazon announced plans to up its present 40% renewable energy to 100% by 2030. Rivian will design a custom electric delivery van for Amazon to be delivered between 2021 and 2024, who also has an agreement with Ford to develop an electric F-150 pickup truck. Amazon is also working to halt its support of the fossil fuel industry, stopping donations to climate denying politicians and think tanks, and stopping the oppression of climate refugees.

3) The British travel firm Thomas Cook has collapsed with bankruptcy, leaving about 600,000 customers stranded. The 178 year old group, which is debt plagued and struggling against fierce online competition for some time, is blaming Brexit uncertainty for the recent drop in bookings, and thus its inability to secure $250 million dollar loan to prevent collapse. This also leaves 22,000 staff members unemployed, with the British government chartering airlines to fly stranded passengers home.

4) Stock market closings for – 23 SEP 19:

Dow             26,949.99         up   14.92
Nasdaq          8,112.46    down     5.21
S&P 500         2,991.78    down     0.29

10 Year Yield:    down   at    1.71%

Oil:    $58.49

21 June 2019

1) Boeing has landed a$24 billion dollar contract from IAG SA, the owner of British Airways, to purchase 737 MAX airliners. Rival builder Airbus has vowed to fight the agreement since they never received an RFP (Request For Proposal) for making a bid on the contract. The secret negotiations between Boeing and IAG was the bomb shell surprise coming out of the Paris air show this week. This sale comes as a major endorsement to Boeing’s 737 MAX to reestablish Boeing as a major supplier of airliners.

2) The price of crude oil shot up 5% over news that Iran has shot down a American drone aircraft, fueling additional fears of a US-Iran military confrontation. The drone was shot down by a surface to air missile while flying over international airspace of the Strait of Hormuz. This is another move by Iran to control the seaway and thus control the flow of oil in an effort to force the U.S. to abandon its crippling economic sanctions.

3) The cost of opening a major fast food franchise in terms of liquid assets can be as much as a million dollars or more. You must have $500,000 cash to open a McDonald’s, $750,000 to open a Taco Bell and $2 million dollars to open a Wendy’s. Startup costs exceed a million dollars for most major fast food chains in America, with additional monthly fees for royalties, advertising and services, which can add up to 10% of gross sales.

4) Stock market closings for- 20 JUN 19:

Dow            26,753.17    up    249.17
Nasdaq         8,051.34    up      64.02
S&P 500        2,954.18    up      27.72

10 Year Yield:     down   at    2.00%

Oil:    up   at    $57.16

5 April 2019

1) German economic forecast for growth has been reduced as foreign industrial orders fall. Last year, Germany narrowly skirted a recession. The forecast for economic growth was reduced from 1.8% down to 1.0% due to slower global economic growth and the uncertainties from Brexit.

2) There are about 54,000 bridges in America which need urgent repair, and it’s estimated it will take 80 years to rebuild them. The report by the American Road and Transportation Builders Association says that about 9% of the highway bridges are deficient with 174 million vehicles crossing each day. On a rating scale of 0 to 9, a rating of 4 or below is considered deficient.

3) Oil prices briefly topped $70 for the best grade of crude oil, but was unable to hold because of signs of tightening global supplies plus uncertainty over world economic outlook. Prices were pushed up by forecast of declining OPEC exports.

4) 4 APR 19 Stock market closings:

Dow           26,384.63          up     166.50
Nasdaq        7,891.78     down        3.77
S&P 500       2,879.39           up        5.99

10 Year Yield:    down   at    2.51%

Oil:    up   at    $62.18