1) The fast food mega-giant McDonald’s is reporting a bigger than expected drop in global restaurant sales across the world. This is a result of the pandemic restricting sales of their drive thru and delivery operations, and in some cases shutting restaurants down completely. With second quarter sales down by 30%, McDonald’s is facing a bumpy and expensive recovery. The franchise chain has 39,000 restaurants worldwide, of which 96% are now open, verses 75% at the start of the second quarter. Store sales were down 39% in April but by June was down only 12%. Net income is down by 68% for $483.8 million dollars. McDonald’s is permanently closing 200 locations in the U.S. amid those losses, more than half located in Walmart stores.
2) The Federal Reserve has announced that its lending programs will be extended until the end of the year. This indicates the feds don’t think the U.S. economy is weathering the pandemic storm very well and needs continued help. The program lends to small and medium sized businesses and was due to expire at the end of September. Continuing the program will provide a critical backstop to help the economy recover. This Thursday will bring the first look at the second quarter gross domestic product, which is the broadest measure of the economy, but it’s expected to show an ailing economy.
3) For the second time, the renowned gun maker Remington Arms is filing for bankruptcy. This is the second time in two years that Remington has filed for Chapter 11 bankruptcy protection. Chronic low sales is blamed for Remington’s decline, despite the overall increase in sales of guns in America because of the pandemic. One by one, American gun manufactures have succumb to imports. Remington reports assets of $100 million dollars compared to $500 million dollars in liabilities.
4) Stock market closings for – 28 JUL 20:
Dow 26,379.28 down 205.49 Nasdaq 10,402.09 down 134.17 S&P 500 3,218.44 down 20.97
1) President Trump is slipping in the polls, and this may pose a risk to the markets. Even though the wild swings of the markets have subsided and then surged upwards, with the Democrat Joe Biden gaining in the polls, there is concerns that the markets will take a down turn as Biden becomes stronger. The President is facing criticism over his handling of the coronavirus pandemic and the protest from the killing of George Floyd by the police. A victory by Joe Biden and a Democratic sweep are considered more ‘market unfriendly’ outcomes. Taxes are one major area of contrast between the candidates, with taxes a major concern for American businesses. These fears are fueled by the Dow sliding downwards for the first time this month as the rally pauses.
2) Borrowing by the British government to pay for the coronavirus shutdown is soaring to levels not seen since World War II. This is on top of the financial problems from Brexit with Britain’s debt jumping five-fold to a 300 billion pound deficit ($380 billion dollars) . This could leave Britain with a 2.2 trillion pound debt and the need to raise taxes with an impact on economic growth. Britain is funding this expenditure with sales of bonds, but have fears of a Greece style loss of confidence among investors. The government is hoping for a fast recovery after restrictions are lifted, allowing the debt to quickly be paid down.
3) There are fears that the U.S. dollar is entering a bear market so may no longer be the safe haven for investors. This bear market could go for five to ten years. This would occur if the global economy really is bottoming out and thereby rebound again, while U.S. interest rates are at zero, with potential growth lower than the merging markets. The U.S. dollar is depreciating against many international peer currencies these last few days.
4) Stock market closings for – 9 JUN 20:
Dow 27,272.30 down 300.14 Nasdaq 9,953.75 up 29.01 S&P 500 3,207.18 down 25.21
1) In their Friday report the U.S. economy added 128,000 jobs in October, a report considered to be very strong when many economist expected a gain of 75,000 jobs. Furthermore, job growth for September was revised upwards to 180,000 from 136,000 and August jobs up from 168,000 to 219,000 new jobs. The good news has spurred the stock markets up.
2) Alphabet, the parent company for Google, is acquiring Fitbit in an attempt to strengthen the search giant’s lineup of hardware and move further into the health market. The $2.1 billion dollar sale will strengthen Fitbit to complete against Apple. Fitbit has slowed since Apple introduced its smartwatch.
3) The U.S. dollar may be weakening with Citi latest projections that the dollar index could fall to as low as 85 as the Federal Reserve increases its balance sheet by purchasing more bond assets. The dollar usually weakens when bond yields fall. If the dollar index were to weaken to 85, the euro could strengthen to 1.21 which helps emerging market equities. Additionally, capital could flow to the Hong Kong market if the dollar weakens, making a lot of stocks very attractive.
4) Stock market closings for – 1 NOV 19:
Dow 27,347.36 up 301.13 Nasdaq 8,386.40 up 94.04 S&P 500 3,066.91 up 29.35
1) Threat of a ‘no deal’ Brexit has the British pound falling relative to the US dollar and euro. The new British prime minister Boris Johnson announced the annual suspension of Parliament would be extended until 14 October, just two weeks before the UK is set to leave the European Union. This suspension is considered a move to block a no-deal Brexit within the UK parliament.
2) If General Motor exits from China, it will mean billions of dollars of profit lost. President Trump’s threatening order for American business to leave China would leave GM the hardest hit of the big three American automakers. While most of GM’s profits comes from North America, it makes about 43% of it annual auto sales in China. This would also mean the loss of all future growth potential, leaving it almost a North American only company, since GM has sold off its European operations.
3) The international gold market is falling prey to a forgery crisis. Gold bars are being stamped with logos of major refineries which makes them of questionable purity. These fake bars are being used as a means to launder cash money or trafficking illegally mined gold. The fakes became apparent when gold bars were found with identical serial numbers. In 2017 and 2018 there were 655 forged bars reported. Gold Kilobars are the most common form of gold in circulation and are worth about $50,000 each
4) Stock market closings for – 28 AUG 19:
Dow 26,036.10 up 258.20 Nasdaq 7,856.88 up 29.94 S&P 500 2,887.94 up 18.78
1) The Dollar has hit its highest value for 2019, as measured by the Bloomberg Dollar Index. This is when President Trump wants the Dollar value lowered to position America better in international trade. The President claims that the Dollar is so strong now, that it is hurting other parts of the world. He is even suggesting that the U.S. should actually weaken the Dollar, although this could turn the trade conflict into a currency war. Presently, the U.S. economy is doing much better than global peers, so it is unlikely to deteriorate faster than other countries and therefore is unlikely for the Dollar to weaken on its own accord.
2) The millennials are turning away from the large elaborate houses of the baby boomers in the sun belt. Houses built before 2012 are being sold at a deep discount, sometimes as much as a half, so owners are not making a profit. Large homes are receiving 12% to 45% fewer views on the internet and are selling up to 73% slower.
3) America’s steel giant, U.S. Steel announced layoffs of hundreds of its workers in Michigan. The layoffs are expected to be temporary because of a halt in production at the Michigan facility, while also idling two blast furnaces. The reason for production cutbacks is lower steel prices and softening demand. The layoffs are anticipated to last about six months. U.S. Steel’s stock has dropped 73% since March of 2018.
4) Stock market closings for – 20 AUG 19:
Dow 25,962.44 down 173.35 Nasdaq 7,948.56 down 54.25 S&P 500 2,900.51 down 23.14
Financial investment power house Goldman Sach (GS); is in negotiations to aquire B&B Hotels and all its subsidiary chains. They will be acquiring the chain from PAI Partners (French hospitality investment firm).
The purchase will happen in the latter part of 2019. The deal is supposed to be worth around $2.2 billion (USD). B&B Hotels has over 486 hotels (in total). The company was founded in 1990 and operates in the hospitality market in countries such as Brazil, Morrocco, and many Euro countries.
GS merchant banking division will be pursuing the close of the transaction, which is supposedly going to happen later this year (2019). -SB
US trade deficit widened as imported products from China helped to increase the deficit further along. The deficit widened about $ 4 billion dollars (US) from the previous months of May and June 2016. In May 2016 the deficit rose to over $41 billion dollars compared to $37.5 billion in April 2016.
Insiders are calling it one of the biggest, if not the biggest trade imbalances since the beginning of 2016. Computers and cellphones imported from China were the main products that added an increase to the trade deficit.
2016 exports have not faring well because of the strength of the dollar against other currencies. The dollar has become more intuitive as of late and the steam does not seem to be slowing down, analyst predict the dollar to remain strong for the remainder of the year. –SB
The Nigerian Central Bank has placed currency traders in a tough position. As the Nigerian currency (Naira) slides, the Central Bank of Nigeria has indicated that currency traders will have to buy or sell their position in the Naira within the next couple of days, or be forced to sell it at the rate set forth by the Central Bank. CBN (Central Bank) has also restricted some currency trading in efforts to boost the Naira. Tough sanctions will be followed if noone adheres to the rules set by the CBN (Central Bank of Nigeria) as well.
Many currency traders, analysts, researchers and speculaters are seething to the tune of the declination fo the Naira, betting that the Naira will continue to derail against the US dollar. The Naira has been devalued to 168 to the dollar but it continues to slide none the less.
The Nigerian economy is set to grow 5.5% this year set from the revision of 6.4% previously. This revision was set by the Nigerian finance ministry led by finance minister and renowned global economist Ngozi Okonjo-Iweala.