16 September 2020

1) A survey by Photonics and Harris Insights and Analytic, a market research company, has found that 35% of Americans would like to avoid traditional in-store shopping, another indication of how American consumerism is fundamentally changing. The traditional in-store sales are becoming less attractive to customers who are now less likely to browse. Retailing is responding by investing in new technologies and creating jobs to meet e-commerce. Now 37% of the fashion retailers are selling more through social media.

2) The aquatic-life theme park SeaWorld is laying off nearly 1,900 furloughed workers because of low attendance from the pandemic. These layoffs include 450 food service attendants, 270 park operation hosts, 121 performers and 18 senior trainers. SeaWorld furloughed 95% of its staff back in March, but long term success of the company has forced less optimistic forecast for the economic recovery time wise.

3) In the last six months, about 100,000 restaurants have had to close permanently as independently owned business struggle to make ends meet during the virus crisis. There are one in six restaurants across America that have closed in just a half a year. Another 40% of owners say it is unlikely their restaurant will still be in business six months from now. Presently, outdoor dining has allows many restaurants to maintain a sustainable revenue stream, but with winter approaching, much of this opportunity will disappear. Coronavirus restrictions limit the in-dinning to as little as 30% normal capacity, which means a drastic cut in sales and revenue to the point that many restaurants are unable to support themselves.

4) Stock market closings for – 15 SEP 20:

Dow 27,995.60 up 2.27
Nasdaq 11,190.32 up 133.67
S&P 500 3,401.20 up 17.66

10 Year Yield: up at 0.68%

Oil: down at $38.51

1 September 2020

1) In its quest to deliver packages to customers, Amazon has received FAA (Federal Aviation Administration) approval for its Amazon’s Prime Air, an aerial package delivery system using drones. This allows Amazon to operate unmanned aerial drones in the US on a trial basis. This means the aerial robots can deliver packages outside the operator’s visual line of sight. Amazon announced it’s aerial drone plans in 2013, but hardware and safety issues have been major challenges for the company, with the first successful drone delivery in 2016. The robot aircraft are helicopter like machines that can hover and fly forward powered by electricity with a range of 15 miles. They can deliver packages weighing under five pounds in 30 minutes or less.

2) United Airlines is abandoning its domestic flight change fees forever, so if you have to change your plans and need to change your flights, it no longer will cost you. Previously, a change fee cost the consumer $200 for all economy and premium cabin tickets within the U.S. Furthermore, there’s no limit on how many times you can adjust your flight for free. Additionally, customers can get same day standby for free, which had cost $75, starting on January 2021.

3) As trade relations with China worsen, large companies are pulling out of Red China. These are big name companies known to virtually everyone such as Hasbro, Nike, Apple, Google/Alphabet, Dell, HP, Samsung, LG Electronics, Stanley Black & Decker, Zoom, Intel, Old Navy/Gap, Sharp, Adidas, Puma, Kia Motors, Sony, Nintendo and Hyundia Motors as well as lesser know companies. Reasons cited are the disrupted supply chains, the ongoing US-China trade war with little resolution in the near future, tariffs on Chinese exports so companies are moving to other Asian countries to export from there under a different country name. Also fears of inadvertently using slave labor (political reeducation inmates) leaving a company embroiled in political controversy domestically, with adverse effects on their sales.

4) Stock market closings for – 31 AUG 20:

Dow 28,430.05 down 223.82
Nasdaq 11,775.46 up 79.82
S&P 500 3,500.31 down 7.70

10 Year Yield: down at 0.69%

Oil: down at $42.82

18 May 2020

1) The federal government has warned that the financial sector faces significant vulnerabilities because of the coronavirus pandemic. Both businesses and households are struggling with fragile finances and will be for the foreseeable future. So far, the banking system has withstood the initial downturn, but there are significant risk if the virus crisis proves to be lengthy and/or more sever than hoped for. The financial stress will continue to build if the crisis persists from households and businesses being deprived of wages and revenues. No sectors would be immune from the risk they face from default on debt, being forced to sell off assets, bankruptcy or having value of assets dwindled. Forceful early interventions have been effective in resolving liquidity stresses. There are fears that what might start out as a cash crunch could spiral into something worse, that few if any parts of the economy are safe.

2) The retail industry has been devastated by the coronavirus crisis with April sales diving down 16.4% (Manufacturing is also down by 13.7%) with major retailers such as J.C. Penny, J Crew and Neiman Marcus filing for bankruptcy recently. However, discount retail chains such as Dollar General and Aldi seem to be thriving as consumers cut back on discretionary spending while continuing to spend on food and household essentials. The Dollar style stores are gaining because of their low prices and close proximity to customers, with people buying things they have run out of between their larger routine shopping trips. In recent years, the Dollar style stores have significantly increased their number of stores thereby enabling them to capture more retail sales from the traditional retailers.

3) Some are predicting that the pandemic has permanently changed the auto industry, with some automakers made stronger while others are left too weak to survive. The pressure from the electric automobiles will become stronger with fewer conventional automakers able to make the transition. There are fears that people have discovered they need to travel much less, that they can get a surprisingly amount done from home. This translates into lower demand for automobiles. Demand for new cars was expected to be low before the pandemic, now things are expected to get very brutal for survival of some automakers.

4) Stock market closings for – 15 MAY 20:

Dow 23,685.42 up 60.08
Nasdaq 9,014.56 up 70.84
S&P 500 2,863.70 up 11.20

10 Year Yield: up at 0.64%

Oil: up at $29.78

21 April 2020

1) The second wave of unemployment is coming after an unprecedented spike in layoffs from the cornonavirus ‘stay at home’ orders. But while businesses will soon start rehiring workers, many will take the opportunity to replace their workers with cheaper and more contingent labor. The crisis will accelerate trends towards industry consolidation that reduces potential employers, automation, which replaces human labor, and worker precarity when convenience of employers and customers entirely overrides the well being of workers. Further aggravating employment will be the large number of small businesses expected to succumb to the recession leaving fewer employment opportunities. Also, the force isolation is changing people’s buying habits with more online shopping, delivery services and self service kiosks. These methods of automation also represent cost cutting methods, which companies will cultivate to make more wide spread. All this promises to make the second round even harsher.

2) Oil prices continue their downward spiral, with futures at record lows as investors worry about lack of storage and the world economy. German and Japanese data indicates a bleak global economy, which will in turn pull America’s down. Despite measures being taken to reduce the supply, the glut will continue for the foreseeable future. Numerous statistics and prices point to a continual crisis for the world and American economies.

3) Restaurants are particularly hard hit by the coronavirus economy, with more than 8 million workers having lost their jobs, about two-thirds of the restaurant labor force. About four in ten restaurants have closed, while many others struggle to stay afloat by providing curbside service. The National Restaurant Association is asking for more monies to support survival of restaurants during this period of government enforced business closure. Like so many other small businesses, the future for many restaurants is looking very doubtful.

4) Stock market closings for – 20 APR 20: Oil drops from $18.12 for Friday to -$16.10, almost a complete inversion in price.

Dow 23,650.44 down 592.05
Nasdaq 8,560.73 down 89.41
S&P 500 2,823.16 down 51.40

10 Year Yield: down at 0.63%

Oil: down at -$16.10

24 December 2019

1) The poor showings of two major movies this last weekend shows the risk Hollywood faces with new movie productions. The final installment of Star Wars, The Rise of Skywalker and Cats both have fallen short of predicted first week ticket sales, highlighting the risk associated with cinema productions. The theatrical market is dominated by a few blockbuster movies at the expense of almost everything else, leaving theater owners struggling for productions to draw needed customers.

2) Holiday shopping set records over the weekend with Super Saturday sales reaching $34.4 billion dollars making it the biggest single day in U.S. retail history. Super Saturday topped Black Friday’s $31.2 billion dollars by 10%. This is despite foot traffic in the malls being down, indicating people are spending more. Next question is – will this stellar momentum lead to sustained economic growth in 2020.

3) The internet music downloading site Spotify is expanding into the podcasts market. The company is spending big to lock down exclusive shows and introduce several new features for users. Already a success now making a profit with music, Spotify is determined to be a power player in the world of podcasts, considering podcast to be a great complementary product. Spotify has announced it has acquired Gimlet Media and Anchor production companies to strengthen its podcast abilities.

4) Stock market closings for – 23 DEC 19:

Dow                28,551.53    up    96.44
Nasdaq             8,945.65    up    20.69
S&P 500            3,224.01    up       2.79

10 Year Yield:    up   at    1.94%

Oil:     up   at    $60.58

11 December 2019

1) Analyst say Netflix, the video streaming service, must lower its prices in 2020 to avoid lost of millions of its U.S. customers because of the rising competition. It is suggested that Netflix must add a second lower priced service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock, otherwise they risk losing four million U.S. subscribers. Since Netflix’s balance sheet cannot withstand lower revenues, the company must create a pricing tier that has lower monthly cost, but still support advertising revenue.

2) Mortgage lenders are warned to brace for a downturn, with Fannie Mae and Freddie Mac pulling back on some mortgages meant to make home ownership more affordable. They are reducing the proportion of loans they back to borrowers with small down payments. This tamping down on risk is to limit their defaults thereby producing greater profits.

3) Morgan Stanley, the investment bank giant, is cutting about 1,500 jobs globally in a year end push for efficiency. The cuts are more in the technology and operations divisions, but include executives in sales, trading and research operations including several managing directors. These reductions amount to about 2% of the firm’s workforce with a charge between $150 to $200 million dollars in its fourth quarter.

4) Stock market closings for – 10 DEC 19:

Dow            27,881.72    down    27.88
Nasdaq         8,616.18    down      5.64
S&P 500        3,132.52    down      3.44

10 Year Yield:    unchanged   at    1.83%

Oil:    up   at    $59.09

9 December 2019

1) The newly released November jobs report is the best in ten months and blows away expectations as striking GM workers returned to work. The good news confirms the economy remains on a moderate expansion path despite a prolonged manufacturing slump. Even better news is the unemployment rate has falling back to 3.5% damping fears of an up coming recession.

2) The oil cartel OPEC+ (plus) will adjust its output target and redistribute production cuts between its members. Saudi Arabia pressured the decision since they have long carried an outsized share of the burden. The cartel, which pumps more than half the world’s oil, agreed to reduce its output by 500,000 barrels a day. Saudi Arabia is the world’s largest oil exporter and the de facto leader of OPEC.

3) Amazon Business, one unit of the giant Amazon, operating in the business-to-business marketplace, serving a variety of customers from large companies to hospitals, to schools and colleges. Growing faster than their consumer retailing segment, analyst say Amazon Business could be a $31 billion dollar business in four years. Started in 2015, it had over a billion dollars of sales in its first year.

4) Stock market closings for – 6 DEC 19:

Dow            28,015.06    up    337.27
Nasdaq         8,656.53    up      85.83
S&P 500        3,145.91    up      28.48

10 Year Yield:     up   at     1.84%

Oil:    up   at    $59.07

21 November 2019

1) For 80 years Boeing Aircraft has operated as an ‘association of engineers’, but this changed in 2001 when the upper management who came from MacDonnel Douglas (a failed company), elected to move Boeing’s corporate headquarters to Chicago. The rational was upper management shouldn’t be close to a principal business, because the corporate center is inevitably drawn into day to day business operations. With this, Boeing became a financially driven business instead of engineering driven, with decision based on cost cutting instead of safety. This has resulted in the 737 MAX fiasco now being played out.

2) Apple has started construction of its $1 billion dollar campus in Austin Texas, which is beside its new MacBook Pro laptop manufacturing facility. The 3 million square foot campus will have 5,000 employees with capacity to grow to 15,000. Currently, Apply employs 7,000 people in Austin. This is seen as another move by Apple to limit its manufacturing in China.

3) Walmart is redesigning its grocery department in order to counter impending competition to traditional brick-and-mortar from online giant Amazon. Already the country’s largest grocer, Walmart will widen aisles, add low profile displays in the produce departments, an organic shop and update signage throughout its stores. These changes are expected to be improvements for the customers and workers.

4) Stock market closings for – 20 NOV 19:

Dow               27,821.09    down    112.93
Nasdaq           8,526.73    down      43.93
S&P 500          3,108.46    down       11.72

10 Year Yield:    down   at    1.74%

Oil:    up   at    $57.09

14 November 2019

1) The new streaming service Disney+ has surpassed ten million sign-ups since its launch Tuesday. In response Disney’s stock is up slightly while Netflix shares are down 1%. While there were technical problems connecting at first, that didn’t prevent customers from flooding the sign up page. The initial signup is for a free seven day trial, so it’s unknown how many will continue with the pay service.

2) In October, consumer prices rose the most in seven months as the price for gasoline was higher, along with medical treatment and recreation. But in general, inflation remained low and fairly stable, with consumer price index jumping 0.4%, primary from rising cost of energy. While gas prices surged upwards 3.7% in October, it’s still less than what Americans were paying a year ago.

3) The ever expanding corporate giant Google will offer personal checking accounts next year in partnership with Citigroup Inc and a small credit union at Stanford University. To be called Cache, it is intended to follow Apple Inc. and Facebook Inc into the financial industry. Google’s strategy is to deeply partner with banks and the financial system.

4) Stock market closings for – 13 NOV 19:

Dow                   27,783.59         up    92.10
Nasdaq               8,482.10    down      3.99
S&P 500              3,094.04         up      2.20

10 Year Yield:    down   at    1.87%

Oil:    up   at    $57.38