22 February 2021

1) There have been many reports about the crumbling weakness of American infrastructure, something that became apparent to many people with the recent hard freeze across the country. Example- in two hours Texas’s electric grid almost came crashing down. Electric demand for heat was soaring, then three coal plants followed quickly by a gas plant dropped out. If insufficient power came in, the grid wouldn’t be able to support the energy demand from customers and the other power plants that supply them, causing a cycle of dysfunction. As many as 5 million homes and businesses were abruptly thrust into frigid darkness for nearly four straight days as the crisis continued, ensnaring more than a dozen other states as far as away as California. Wind power was the first to go, as dense fog settled over turbine fleets, freezing on contact. Their blades iced over, so wind farms completely ceased. Then gas generation began declining. As the cold deepened, demand climbed sharply, hitting and then exceeding the state’s all-time winter peak. Gas well shut-ins in West Texas caused gas supplies to dip, reducing pressure at gas plants and forcing them offline, so virtually all of the generation falling off the grid came from coal or gas plants. In the span of 30 minutes, 2.6 gigawatts of capacity had disappeared from Texas’s power grid, enough to power half a million homes. Demand kept climbing, and plants kept falling offline. To stem the plunge, operators started shedding load. Operators removed 10 gigawatts of demand, essentially cutting power to 2 million homes in one fell swoop. As blackouts spread across the state, power was cut not only to homes and businesses but to the compressor stations that drive natural gas pipelines further cutting off the flow of gas supplies to power plants.

2) Now Maersk , the world’s largest shipping line, is taking a historic step toward not using fossil fuels for propulsion. About half of Maersk’s 200 biggest customers have set science-based or zero-carbon targets for their supply chains, or are in the process of doing so. The firm wants to have net-zero emissions from its operations by 2050, and helped found a research center focused on decarbonizing the industry. Getting hold of enough carbon-neutral fuel will be Maersk’s biggest challenge, given the current lack of availability.

3) Some experts are predicting that because of the rare convergence of three economic triggers, we are about to see a massive buying frenzy into the technology sector of the stock market. No details were shared.

4) Stock market closings for – 19 FEB 21:

Dow 31,494.32 up by 0.98
Nasdaq 13,874.46 up by 9.11
S&P 500 3,906.71 down by 7.26

10 Year Yield: up at 1.34%

Oil: down at $59.01

18 February 2021

1) Demand for natural gas is currently at an unprecedented level according to Atmos Energy, because of freezing rain, snow, ice and dangerous travel conditions. Atmos Energy is asking all of its customers and businesses to conserve as much energy as possible. The Dallas-based natural-gas-only company is one of the nation’s largest distributors, serving about three million customers in more than 1,400 communities in nine states. This request comes after a new Winter Storm Warning was issued for all of North Texas while millions in the state remain without power. Atmos Energy has offered their customers a number of suggestions on how they can limit their energy usage.

2) Texas produces more energy than any other state, yet in the midst of the arctic freeze gripping the central U.S., Texas is faced with insufficient energy for its citizens. The arctic freeze gripping the central U.S. is raising the specter of power outages in Texas. The deep freeze this week in the Lone Star state, is causing power demand to skyrocket. The people of Texas relies on electricity to heat many homes, while at the same time, natural gas, coal, wind and nuclear facilities in Texas have been knocked offline by the unthinkably low temperatures. This situation could have wide-reaching implications as the US power industry attempts to slash carbon emissions in response to the climate crisis and move away from fossil fuels. Texas has been hit with life-threatening blackouts. More than 4 million people in the state were without power early Tuesday. Authorities defended the controlled outages, called rolling blackouts, which kept the grid from collapsing. The situation raises the question that if a state like Texas is now having trouble meeting its energy requirements, then how will the other states fare as America moves to a green energy environment.

3) Motorola Solutions has consolidated its video security and AI video analytics production into a newly renovated manufacturing facility in Richardson Texas, with plans to expand staffing in the coming year. The new facility opened in January housing 250 employees, with plans to expand by at least another 50 this year. Motorola acquired the camera and analytics company Avigilon, for a reported $1 billion in February 2018 and the Fort Worth based license plate recognition camera and software maker Vigilant Solutions in January for $445 million. In March 2019, it bought voice-over IP dispatch console maker Avtec, then Watchguard, which designs and sells in-car video systems and police body cameras to law enforcement agencies. Two additional California-based companies Pelco and Scotland-based IndigoVision were also added to Motorola’s growing security abilities.

4) Stock market closings for – 17 FEB 21:

Dow 31,613.02 up by 90.27
Nasdaq 13,965.50 down by 82.00
S&P 500 3,931.33 down by 1.26

10 Year Yield: unchanged at 1.30%

Oil: up at $61.66

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

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