8 May 2020

1) The shutdown orders are being lifted in many states, which also includes the shopping malls, but those malls remain eerily quite, almost void of humans, where once mobs crowded and surged in the hallways. People are electing to do a minimum of shopping or to shop online instead. The change is in part from fears of the virus and in part because of the high unemployment and fears of the economy floundering. There are questions of how much the American shopping ethos will return, or if consumerism is experiencing a fundamental change. The big department stores and big box stores were already suffering from changes in shopping habits and the virus may have accelerated that trend, plus many malls across America had already closed up before the pandemic. With consumerism accounting for half the economy, the future of shopping is a serious question.

2) A second major retailer has filed for bankruptcy during the coronavirus crisis. The 113 year old chain Neiman Marcus Group, which has been struggling with a $5 billion dollar debt much of it from leveraged buyouts in 2005 and 2013. With having to close 43 of its stores and laying off most of its 14,000 worker, the pandemic forced reduction of revenues that made the debt unsustainable. And that’s what broke their financial back. More than 263,000 stores in America have had to closeup leaving them with little to no revenues while their monthly fix cost remained unchanged, so questions abound of how many others will follow in the next few months, particularly if jobs don’t quickly return. On the positive note, restaurants doing takeout service, like Papa John’s Pizza, have done quite well.

3) The number of jobless Americans reached 33 million with the addition of another 3.2 million filings for unemployment benefits. This is over a seven week period, while previously 200,000 a week had once been the norm. There just doesn’t seem to be any letup in unemployment in sight from the virus crisis, with deepening fears a recession could be a long affair. On a positive note, this is the fifth week where the jobless claims have fallen, but still there are worries that the total number may go over 40 million before returning back to normal.

4) Stock market closings for – 7 MAY 20:

Dow 23,875.89 up 211.25
Nasdaq 8,979.66 up 125.27
S&P 500 2,881.19 up 32.77

10 Year Yield: down at 0.63%

Oil: down at $23.81

12 February 2020

1) The demise of the big box and department stores in malls, has spawned a move to trendy local shops. These are standalone small format stores designed to experiment with new retail strategies and increased foot traffic. These stores tend to be positioned closer to neighborhoods away from the malls. The department stores and big box retailers grew rapidly and over saturated the market, while the small format stores have less investments and lower lease costs.

2) Boeing Aircraft company reported zero new orders for this January, while Airbus tallied 274 orders for commercial airplanes in the same month. The company did deliver 13 new airplanes in January, six were 787 Dreamliners, two 777s, two 767 and three 737NG. Boeing is anticipating re-certification of its 737MAX by the middle of 2020.

3) California is now estimated to have 150,000 homeless people, reaching record numbers, of which two-thirds are living on the streets. There are more than 100 homeless camps across Oakland, in which authorities are in the process of dismantling. The homeless scratch out a living doing odd jobs, focus groups or medial trials. The rising cost of housing is the prime force driving people to homelessness, the number increasing each day despite the soaring stock market and record low unemployment rate.

4) Stock market closings for – 11 FEB 20:

Dow 29,276.34 down 0.48
Nasdaq 9,638.94 up 10.55
S&P 500 3,357.75 up 5.66

10 Year Yield: up at 1.59%

Oil: up at $50.07

10 January 2020

1) HP’s board has rejected Xerox’s $33 billion dollar takeover bid, for the same reason as Xerox’s previous offer, that the proposal significantly undervalues HP. Xerox first moved to acquire HP in November, but was rejected because HP stock holders would lose much of their value in the company. HP is a 2015 spinoff of giant Hewlett-Packard who has a market value of $300 billion dollars that dwarfs Xerox’s value of 7.7 billion dollars.

2) Mack Trucks, the manufacturer of large commercial trucks, announced plans to layoff 305 employees, which is about 13% of their payroll. After two years of high volumes of production, marked demand has dropped so the company must adapt to the lower demand. There are expectations of the truck market in America being down 30% this next year.

3) The American consumer continues to shun the traditional big department stores. Despite the monster holiday shopping season, America’s biggest department stores still lost money. This is a trend that has been in progress for several years as typified by Sears’ decline. Department stores such as JCPenny, Kohl’s and Macy’s continue to decline with dropping sales and store closings. Consumers are now going to big box stores and the internet commerce to save money, signaling a fundamental change in American consumerism.

4) Stock market closings for – 9 SEP 20:

Dow              28,956.90    up    211.81
Nasdaq           9,203.43    up      74.18
S&P 500          3,274.70    up      21.65

10 Year Yield:    down   at    1.86%

Oil:    down   at    $59.59

20 November 2019

1) There are fewer international students coming to America, which is hurting American universities and the economy. International student enrollment has been declining since the fall of 2016 which is estimated to cost the economy $11.8 billion dollars and more than 65,000 jobs. There is a perception among students that getting a visa for the United States is more difficult and it’s increasingly unsafe in the U.S.

2) National retailer Kohl’s posted quarterly sales that was lower than analysts’ projections, and has fallen the most in almost three years. This raises further concerns about the future of department stores, a market segment that has been struggling to adapt to broad changes in consumer habits. Kohl’s shares fell as much as 18%, the biggest one day tumble since January of 2017. Other department store chains such as Macy’s and Nordstrom have seen declines too.

3) Home Depot shares fell after reporting a third quarter earnings below Wall Street expectations, and the company cut its full year outlook for the rest of 2019. Like so many other traditional retailers, Home Depot is struggling to adapt to the online market place. While they are spending a lot of money to become a bigger online player, the company hasn’t seen the results they expected. The home improvement retail landscape is getting tougher.

4) Stock market closings for – 19 NOV 19:

Dow                27,934.02   down   102.20
Nasdaq            8,570.66          up     20.72
S&P 500           3,120.18    down        1.85

10 Year Yield:    down   at    1.79%

Oil:     down   at    $55.15