25 January 2021

1) Janet Yellen, the Secretary of the Treasury nominee, has given up her hawkishness on budgets, arguing there’s sufficient wiggle room to keep running fiscal deficits. Therefore, she’s committed to working to pass Biden’s proposed $1.9 trillion dollar bill. Yellen reaffirmed the commitment to flexible exchange rates, that the value of the U.S. dollar and other currencies should be determined by markets. The dollar weakness reflects the success of policy-makers in flooding domestic and foreign markets with liquidity during the COVID-19 panic. The large chunk of foreign firms that borrows and invoices in dollars is benefitting from the current dollar downturn, and the pandemic should reinforce the Fed’s impressive capacity to act as the global lender of last resort. But even with reserve-currency status, the dollar can weaken. And a weak dollar will make it harder to run current-account deficits year-in, year-out.

2) Regulators fear a new and potentially larger wave of defaults that could send banks scrambling to cover losses, where weaker ones might need government help to survive. The European Central Bank has warned that bad loans in the eurozone could soar to 1.4 trillion euros, more than during the aftermath of the financial crisis, especially if the economy contracts more than expected. The oversize exposure of banks by small businesses is part of Europe’s economic fabric. Companies with fewer than 250 employees account for 99.8% of all firms and two-thirds of all private-sector jobs in Europe. Small businesses in the U.S. also have economic weight, but they tend to be bigger. About half of Europe’s workforce is employed by firms with less than 50 people, compared with about a 25 in America.

3) There are reports that the Air Force has secretly designed, built, and flown a brand-new fighter jet. Furthermore, the mysterious new plane is already breaking records, but virtually nothing is known about the new plane … other than it exists. Experts did not expect a new fighter for another decade. The Air Force must now consider how it will buy the new fighter as it struggles to acquire everything from intercontinental ballistic missiles to bombers. The Air Force built the new fighter under its Next Generation Air Dominance (NGAD) program. More amazingly, the Air Force developed the new fighter in about a year, which is a staggeringly short time by modern standards, a process that took 10 years with the F-35.

4) Stock market closings for – 22 JAN 21:
Dow 30,996.98 down by 179.03
Nasdaq 13,543.06 up by 12.15
S&P 500 3,841.47 down by 11.60
10 Year Yield: down at 1.09%
Oil: down at $51.98

22 January 2021

1) President Biden is asking Congress for $1,400 stimulus checks, but economists advise caution before spending, because economists who have looked at what happens when people have time to mull over a financial windfall, found that they spend less of the money, rather they save more of it. With less spending, there is less stimulus to the economy, therefor the stimulus fails to do the intended purpose. For the first stimulus checks in April people generally spent between one-quarter and one-third of the check in the first 10 days. Bottom line, the longer payment delays make it more likely that households will save their stimulus checks, which undermines the goal of stimulating the economy by boosting consumption.

2) The Treasury Secretary nominee Janet Yellen will be part of the Senate Finance Committee process of vetting President Joe Biden’s $1.9 trillion dollar Covid-19 relief plan. She will say that low borrowing costs means it’s time to act big. The new package includes a minimum-wage hike and substantial expansion in family and medical leave, social safety-network of programs that have already triggered Republican opposition. There are still almost 11 million unemployed Americans in an economy still being battered by the pandemic. Declines in both payrolls and retail sales in December left the nation’s economy limping into the new year. Additionally, more than 17 million people say they have little to no confidence in their ability to pay their rent next month. However, Yellen will also be asked what the safe debt limit is, since it is already on the verge of surpassing 100% of the GDP. There is also the question of the pros and cons of strengthening the dollar among fears that a stronger dollar will weaken the U.S. economy.

3) The U.S. government has approved routes for a system of pipelines that will move carbon dioxide across Wyoming for disposal. The greenhouse gas is captured from coal-fired power plants, to keep it out of the atmosphere where it causes global warming. The captured CO2 is then pumped underground to add pressure to and boost production of oil fields. The pipeline is about 1,100 miles of federal land through the Wyoming Pipeline Corridor Initiative. This project is a way to boost the state’s struggling coal mining industry.

4) Stock market closings for – 21 JAN 21:

Dow 31,176.01 down by 12.37
Nasdaq 13,530.92 up by 73.67
S&P 500 3,853.07 up by 1.22

10 Year Yield: up at 1.11%

Oil: up at $53.03

12 January 2021

1) The cryptocurrency Bitcoin plummets the most since March as a stronger dollar and investor nerves strip off nearly $140 billion in the cryptocurrency market cap, renewing fears that Bitcoin may be a bubble waiting to burst. But Bitcoin is still up roughly 89% over the past month. Other cryptocurrency coins, such as XRP and Litecoin, have shed about 18% each. Bitcoin hit a record high last week above $41,000, driven by the combination a weaker dollar, economic optimism, and a wave of bullish sentiment toward cryptocurrencies as big-name investors and investment banks touted a potential for huge gains this year, with the stronger dollar and higher bond yields triggering a plunge in Bitcoin and gold prices.

2) Trump has been permanently barred from the platform Twitter, resulting in$5 billion dollars in losses in market value, with Twitter stock dropping after the barring of the President. Twitter stated they permanently suspended the account due to the risk of further incitement of violence. Trump, who had about 88 million followers, generated enormous publicity for the platform with his controversial and incendiary tweets over the past six years. As a result, Twitter’s stock fell as much as 12% on Monday thus the decline of $5 billion dollars from Twitter’s market capitalization. Investors are worried that the Trump ban will erode interest in the platform and lead to boycotts among those who see the decision as politically motivated and a way to silence a major conservative voice.

3) Fears are growing that a bigger stimulus may be seen as the ‘peak of this bubble’ resulting in a market correction or worst. Some think that with the Democrats set to take control of both the House and Senate, perhaps President-elect Joe Biden will be less likely to spook markets with tax ambitions. Biden has promised $2,000 stimulus checks if the Senate turned blue, so now the question is what will happen? For millions of Americans, it’s been a painful waiting game already, they having subsisted with minimum money since losing their jobs from the pandemic. Joe Biden made the promise that if Jon Ossoff and Raphael Warnock turned the senate blue that would end the block in Washington and allow the $2,000 stimulus checks to immediately go out the door to people who are in real trouble.

4) Stock market closings for – 11 JAN 21:

Dow 31,008.69 down by 89.28
Nasdaq 13,036.43 down by 165.54
S&P 500 3,799.61 down by 25.07

10 Year Yield: up at 1.13%

Oil: down at $52.18

18 December 2020

1) American drivers are facing the highest gasoline prices in two months, a result of the rising cost of crude oil used to make the gas. Presently, retail gasoline prices average $2.19 a gallon, up about 5 cents so far this month. Benchmark futures in the U.S. are the most expensive in months, following a rally, fueled in part by optimism around the impending circulation of Covid-19 vaccines, with the price of oil possibly rising further, and so pushing up gas prices. The crude oil needed to produce gasoline is climbing because of availability of the vaccination and anticipation that distribution will be more widely available in 2021.

2) Rep. Rashida Tlaib (D. Mich.) has proposed that the U.S. funding for another round of $1,200 stimulus checks for Americans can be had by reversing President Trump’s $1.5 trillion tax cuts passed in 2017. A point of contention in the negotiations has been another round of stimulus checks. The bipartisan $908 billion dollar proposal unveiled on Dec. 9 and then split into two parts, but did not include stimulus payments. Tlaib has criticized Amazon’s CEO Jeff Bezos and wants him and other billionaire CEOs to pay more in taxes by reversing Trump’s signature tax cuts. Amazon paid no U.S. federal income taxes in 2017 and 2018 despite incomes of $3.03 billion and $10.07 billion dollars.

3) The U.S. dollar fell sharply relative to other major currencies, spurred by the Federal Reserve’s reassurance that it won’t be reducing its bond purchases, which is a green light to sell American currency. The Fed has vowed not to change its policy even if the outlook for the U.S. economy brightens as is now expected. The dollar weakening also comes from rising expectations that Washington lawmakers will finally agree on an economic rescue package that’s seen as necessary to shore up a sagging recovery. A falling dollar is typically seen as positive for American and global equities as well as the world economy. Other central banks are also employing extraordinary measures aimed at supporting their economies. And while a weaker dollar is viewed generally as positive for the U.S. and the global economy, it’s been a source of consternation for some rivals, including the European Central Bank.

4) Stock market closings for – 17 DEC 20:
Dow 30,303.37 148.83 up by 0.49%
Nasdaq 12,764.74 106.56 up by 0.84%
S&P 500 3,722.48 21.31 up by 0.58%
10 Year Yield: up at 0.93%
Oil: up at $48.40

9 September 2020

1) General Chuck Yeager, died at age 97, was remembered Monday as America’s greatest Pilot in a tweet attributed to his wife, Victoria Scott D’Angelo. After breaking the sound barrier, Yeager continued to break records and returned to combat. He was a double ace with 11.5 aircraft shot down and became an ‘ace in a day’ by shooting down 5 or more aircraft in a single day. After World War II, in 1947, he became the first man to fly faster than the speed of sound by flying the Bell X-1. In 1953 he flew more than 1,600 mph in the Bell X-1A. He also flew combat missions in both the Korean and Vietnam wars. Chuck Yeager had flown 361 different types of aircraft and flew 10,131.6 hours during his career, retiring from the Air Force in 1975.

2) With just 24 days to make a deal, the Brexit negotiators are finding the situation very gloomy for a trade deal, with talks now on a ‘knife’s edge’ again. The British and European teams are struggling to craft a free-trade agreement so the two sides can continue the orderly movement of goods and services across the English Channel. Otherwise, Britain and Europe will enforce new customs duties, tariffs, border checks, and quotas on goods, therefore increasing prices and fully ending the era of the free and frictionless trade. The major obstacle is the European access to fish in British waters, despite the fisheries accounting for just a small fraction of Britain’s gross domestic product. The Europeans are also pressing to maintain a “level playing field,” to keep Britain from undercutting worker protections or granting large state subsidies to British businesses, thus giving the U.K. firms unfair advantages.

3) Oil prices fell from a 9-month high while the dollar strengthened. Consumption in Asia remains robust, while other markets are soft or declining. Crude oil prices now look to be heavily dependent on how quickly Covid-19 vaccines can be rolled out. OPEC+ is facing more potential supply challenges, with Libya continuing to ramp up production while Iran prepares to raise oil exports with expectations that America will ease some sanctions under a Joe Biden presidency.

4) Stock market closings for – 8 DEC 20:

Dow 30,173.88 up by 104.09
Nasdaq 12,582.77 up by 62.83
S&P 500 3,702.25 up by 10.29

10 Year Yield: down at 0.91%

Oil: down at $45.60

8 December 2020

1) Experts forecast that a rising stock market and a weak dollar will keep going hand in hand in the near future. The movements of the past month are consistent with movements between equities and the dollar observed this year, which is at its strongest level since before the global financial crisis. Additionally, the seesaw relationship between the dollar and equities is getting more intense, so a rapidly falling currency serves as fodder for stock-market bulls, who are expecting this pattern to endure for some time. Stocks saw a historic rise in November, with the Dow Jones Industrial Average logging its biggest monthly rise since January 1987, as major indexes hit all-time highs. At the same time, the dollar fell 2.3%, its worst month since a 4.2% fall in July and its worst November since 2006. A weaker dollar is often seen as supportive to equities.

2) Boeing Aircraft Co. is considering an equity sale and other ways to ease its debt burden that has soared to $61 billion this year, a result of the worst slump in aviation history. Additionally, Boeing will cut back on production of its 787 Dreamliner from six down to five planes a month by mid-2021. The company has sufficient reserves to see it through months of tumult until coronavirus vaccines are widely distributed. Boeing is prepared to speed up deliveries of 450 of its 737 MAX planes that it built but couldn’t deliver during the global grounding. Therefore undelivered aircraft are starting to stack up around Boeing’s factories and in a storage lot in the California desert, and so it will take the manufacture through 2021 to clear them from its inventory.

3) Negotiations for Britain to exit the European Union continue as the dead line nears. The fundamental differences between the two sides remain over a ‘level playing field’ of the standards the U.K. must meet to export into the bloc, how future disputes are resolved and the fishing rights for EU trawlers in U.K. waters. Ireland finds itself in a difficult place with the most to lose from a no-deal exit. Speed is now of the essence since the 27 EU member states have to unanimously support any deal. Both sides will suffer economically from a failure to secure a trade deal, but most economists think the British economy would take a greater hit. The main problem is how Britain wrests itself free of EU rules with the bloc’s insistence that no country, should get easy access to EU’s market by undercutting its high environmental and social standards.

4) Stock market closings for – 7 DEC 20:

Dow 30,069.79 down by 148.47
Nasdaq 12,519.95 up by 55.71
S&P 500 3,691.96 down by 7.16

10 Year Yield: down at 0.93%

Oil: down at $45.66

9 November 2020

1) Missouri, in what some are calling the lawsuit heard round the world, is suing China, to hold the global heavyweight responsible for the losses of life and commerce from the COVID-19, which originated in Wuhan, China. Other states are also filing class action suits in U.S. federal courts, but Beijing is aware that sovereign nations, including the U.S., have wide immunity from such claims. Experts warn that a potential decoupling of the world’s largest economies, the United States and China, is causing further concern. Even before the pandemic, there were concerns as China took dramatic steps in recent decades to grow its reach in the world. China is part of massive shifts in the balance of global powers, with some countries reasserting themselves and others finding it difficult to keep up with technological advancements and reap their economic rewards.

2) The giant ExxonMobil has low debt, high yield, and commitment to its dividend. Chevron is like ExxonMobile having a relatively low leverage (in the industry), and long histories of annual dividend increases behind them. But then the pandemic upended the supply/demand dynamics of the oil industry which sent company’s shares tumbling. This has brought the two oil companies dividends into question, and therefore the desirability of the stock as an investment. Major foreign oil companies are facing the same dilemma. Royal Dutch Shell and BP (British Petroleum) have both said they plan to also cut their dividends because of the shift. The dividends can be supported as long as the average oil price sticks around the $40 level.

3) US government has seized a $1 billion dollars in bitcoin as the cryptocurrency rockets past $15,000 per coin, the highest value since January 2018. The organization Silk Road was the most notorious online criminal marketplace of its day, until its founder was prosecuted in 2015 leaving a billion-dollar question of where did all the money go? It remained in the digital wallet for many years before a unit within the Internal Revenue Service, that tracks digital currencies, noticed 54 new transactions from the wallet, prompting the seizure of currency. Analysts noted the movement of more than 69,000 bitcoins in a single transaction from a digital wallet tied to Silk Road founder Ross Ulbricht, which held the fourth-highest bitcoin balance of any in the world. But the Silk Road founder is serving two consecutive life sentences in a maximum-security federal prison, which prompted the government to seized the money, however, the government must prove its case before it can keep the forfeited assets.

4) Stock market closings for – 6 NOV 20:

Dow 28,323.40 down by 66.78
Nasdaq 11,895.23 up by 4.30
S&P 500 3,509.44 down by 1.01

10 Year Yield: up at 0.82%

Oil: down at $37.49

JACK MA’S ANT GROUP DOES NOT GET PUBLIC IPO… YET..STOPPED BY CHINA

By: Economic & Finance Report

Jack Ma’s Ant Group IPO was supposed to be going public on the Shanghai Stock Exchange recently, but has been halted by the Chinese government for disagreements between the Chinese government and Jack Ma (AliBaba/Ant Group’s co founder).

The IPO was listed to raise over $37 billion dollars USD, making it the biggest share sale in the history of the global stock markets. Saudi Arabia’s Aramco holds the biggest share offering title; currently with its share offering last December 2019, raking 29.4 billion dollars USD. The spectators will have to wait and see, if or when the IPO will go public -SB

Image Credit: MoneyControl.com

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

29 September 2020

1) A railroad link between Alaska and Canada has been a dream for generations, because such a rail link would reduce Alaska’s costs for goods and services. It would also give Canada’s land locked oil-sands access to ports in Alaska, therefore making for more domestic oil reserves, but such a railroad line faces numerous steep challenges. President Donald Trump has endorsed such a proposal, but several regulatory agencies in both America and Canada must first approve such an undertaking before the first shovel full of dirt can be moved, and this is expected to take years to get permits. The Alaska-Alberta railway Development Corporation (A2A Rail) project would be privately funded costing about $17 billion dollars and would run about 1,600 miles.

2) The plague of wild fires continues in California with several new fires in Northen California consuming thousands of acres a day. The fires are consuming vineyards and destroying the wine business, including grape vineyards that have produced for over a hundred years. The heat wave continues to bring dry air into the conflagration, thus drying out vegetation to make ideal fuel for fires, while strong winds are fanning and spreading the flames. Fires are around the San Francisco area, the Napa-Sonoma wine region and Shasta County which are consuming land at a prodigious rate. Two major fires are the Zogg Fire, which has burned through 15,000 acres and the Glass Fire burning through 11,000 acres. The damage is being created so fast that estimates of dollar losses can not be reliably made.

3) The Congress continues to struggle with a second stimulus bill, the Democrats looking to score at the polls if passed before the election. The big question and holdup is the personal stimulus check to individuals and how much it will be this time. It now appears that $1,200 will be the maximum for individuals, but this time there will be restrictions which will lower the amount for many people based on how much their income is. After nearly two months of relative inactivity, House Speaker Nancy Pelosi and Treasury Secretary Steven Mnuchin have agreed to resume negotiations.

4) Stock market closings for – 28 SEP 20:

Dow 27,584.06 up 410.10
Nasdaq 11,117.52 up 203.96
S&P 500 3,351.60 up 53.14 %

10 Year Yield: unchanged at 0.66%

Oil: up at $40.57