16 June 2020

1) The markets sank Monday, down by 762 points, when the news of the Feds bond-buying plan became known, reversing the selling to buying which raised the Dow up 150 points. The downward slide was from fears of a second round of the Convid-19 virus with the possibility of more economic damage. The plan is for the Federal Reserve to buy individual corporate bonds, on top of the exchange traded funds it is already buying. This is a move to ease credit conditions to further stimulate the economy. The program can buy up to $750 billion dollars worth of corporate credit, which the Feds can buy on the secondary market, individual bonds that have maturities of five or less years. Bonds is how corporations typically fund their operations and expansion using debt, and this program will ease debt for corporations allowing them to grow more and provide jobs.

2) The oil giant BP (British Petroleum) has signaled to investors that the economic shock of the pandemic will reverberate for years. This in turn means less gas and oil needed by the world in the future. The company is expected to write down $17.5 Billion dollars of its oil and gas holdings this next quarter, meaning they are worth less in the future than what they are worth today. The coronavirus pandemic has caused steep declines in demand for gas and oil worldwide, and this is expected to last for a number of years. This write down is in the approximate class of the Deepwater horizon disaster in the Gulf of Mexico, which was $32 billion dollars.

3) Britain’s Brexit, the planned exit of Britain from the European Union, has been overshadowed by the world wide pandemic, but nevertheless Brexit trade talks have continued. But the talks have reached an impasse. Britain left the union at the end of January, but had not reached agreements on traded with the other European countries. Although Britain left the union, the two economies have continued operating as before Brexit, so there has been little changed in trading. But this is only to the end of the year, and with Britain a major trader of goods with Europe, it’s important to reach agreements before that time comes. One major point of contention is how future disagreements will be adjudicated or arbitrated.

4) Stock market closings for – 15 JUN 20:

Dow 25,763.16 up 157.62
Nasdaq 9,726.02 up 137.21
S&P 500 3,066.59 up 25.28

10 Year Yield: unchanged at 0.70%

Oil: up at $37.07

10 June 2020

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

10 Year Yield: down at 0.83%

Oil: down at $38.39

2 April 2020

1) One developing economic crisis from the coronavirus is non-payment of rents. Renters tend to have less cash reserves than home owners, and for those renters not working, a large number will not be able to pay their monthly rent. Many are calling for the federal government to suspend rent payments until the crises is over, while others are calling for a rent boycotts to force landlords into accommodations. A wave of evictions could cause large numbers of people to fall below the poverty line, and worst yet greatly increase the number of homeless Americans.

2) Tuesday, President Trump warned of a very painful next two weeks, with projections of 100,000 to as much as 240,000 coronavirus deaths in the U.S. The news caused another shock to the markets with stocks again dropping shapely. With tremendous uncertainty, the markets are very unstable and therefore subject to sharp up and down swings. Both the Dow and S & P have had their worst first quarter in history. Oil too, continues with its low prices making for its worst month and quarter in history from both the coronavirus shutdown and the Saudi Arabia-Russia price war.

3) With the sudden surge in coronavirus patients, hospitals around America are running low on drugs needed to treat those patients. Some of the drugs are officially in shortage, with use of others skyrocketing and expected to quickly become into short supply. Also in short supply are antibiotics like azithromycind and antivirals like chloroquine and hydroxychloroquine. Other drugs associated with patients using ventilators are quickly becoming scarce. Non prescription drugs such as vitamin C have seen a sharp increase in purchases.

4) Stock market closings for – 1 APR 20:

Dow 20,943.51 down 973.65
Nasdaq 7,360.58 down 339.52
S&P 500 2,470.50 down 114.09

10 Year Yield: down at 0.64%

Oil: up at $21.20

20 March 2020

1) Today, more coronavirus concerns have surfaced that most airlines will go bankrupt soon without government bailouts. The virus has shut global aviation down because of virus outbreaks as well as travel restrictions that are intended to contain the virus. Within weeks, many airlines will need government help to avoid bankruptcy. Major U.S. airlines are seeking $50 billion dollars in financial assistance because of the steep falloff in U.S. travel demand. Estimates are for $25 billion dollars in grants, $25 billion dollars in loans and significant tax relief to survive.

2) Monday markets opened with another sharp downfall of all three major markets despite the Federal Reserve embarking on a massive monetary stimulus campaign to curb the slowing economic growth from the coronavirus. Shortly after opening, trading was halted for fifteen minutes from a ‘circuit breaker’ triggered by the S & P 500. The U.S. central bank has launched a massive $700 billion dollar quantitative easing program designed to help cushion the economic downside from the virus. The Dow was down 11% while both the Nasdaq and S & P fell more than 10%.

3) As fears grow of a world economic downturn, which will put economic stress on the U.S. economy, people are becoming concerned about their jobs. American workers may lose their jobs by the millions as the effects of the virus ripple through the financial system, the impact being devastating. The disease has spread rapidly around the world with whole nations shutting down as well as major cities. It’s unknown just what the impact will be for the world economy, when major economic areas isolate themselves from the system, even for a few weeks. Many segments of the economy are reporting significant problems which can lead to further problems across the U.S. and world economy. All this translates into layoffs, at a time when the young people of America have limited opportunities.

4) Stock market closings for – 19 MAR 20:

Dow 20,087.19 up 88.27
Nasdaq 7,150.58 up 160.73
S&P 500 2,409.39 up 11.29

10 Year Yield: down at 1.12%

Oil: up at $25.08

10 March 2020

1) Monday markets opened in a steep downward spiral from sell offs, driven by the coronavirus fears, followed by the sharp drop in oil prices. The Dow dropped 2,000 points, with a massive sell off of both the S&P 500 and Nasdaq, which triggered a key market circuit breaker that halted trading for fifteen minutes. There are widespread fears over the economic impact of low oil prices, with some experts fearing oil prices down to $20 a barrel. Gold prices crossed the $1,700 dollar an ounce, hitting the highest since December 2012. The banks are hard pressed as the interest continues to sink, cutting into their margins.

2) Experts speculate that the Feds will cut the interest rate to zero in the next few months in an effort to forestall a downturn of the economy. The entire U.S. yield curve fell below 1% for the first time in history on expectations that the Federal Reserve will cut rates to zero in the next few months. Some speculate the Feds may adopt a negative rate just as some European countries have, such as Germany’s -1%.

3) While checkout-free with cashless supermarkets is now a novelty, Amazon expects this technology to spread to other retailers. Amazon has announced it plans to license its automated checkout technology to other retailers, telling of several other companies that have already signed up for the technology. The technology has been proven with cashless convenience stores across America and with Amazon’s new Go-supermarkets. The technology represents another significant step in retail automation.

4) Stock market closings for – 9 MAR 20: The stock market is like a rectal thermometer- it’s rude and crude, but surprisingly effective in showing a sick economy.

Dow 23,851.02 down 2013.76
Nasdaq 7,950.68 down 624.94
S&P 500 2,746.56 down 225.81

10 Year Yield: down at 0.50%

Oil: down at $30.24

26 February 2020

1) Global trade experiences its first full-year drop since the financial crisis, with weaker world growth and a manufacturing recession taking their toll. The spread of the coronavirus, with its impact on businesses and households, is increasingly pulling world economics down. While the decline isn’t huge, it is the first since 2009 and follows growth of more than 3% in 2018. The virus has shut off huge areas of China causing the closing of factories and now is spreading internationally.

2) The markets continue to follow the Dow’s thousand point drop with more large loses. To add to the financial worries, bond yields are slipping down, raising concerns that the global economy is slowing significantly because of the spreading coronavirus. There is heavy buying of treasuries in order to shelter money, with the ten year Treasury yield traded at 1.32%, an all time low, with the thirty year bond yield also reaching a record low. Analysts are already cutting their earnings estimates for the first quarter, further dampening hopes for better near term growth.

3) Retail giant Amazon has opened its first Go Grocery store in Seattle. The automated store is cashierless where customers walk in, and get what they want, and on walking out, computer and sensors electronically charging their purchases. The store is over 10,000 square feet and has about 5,000 items including fresh produce, meats and alcohol. This is just another example of the grocery retailers efforts to automate their operations and reduce labor costs.

4) Stock market closings for – 25 FEB 20: Dow is down 1900 points in two days and some experts fear the markets are 500 points away from being a correction.

Dow 27,081.36 down 879.44
Nasdaq 8,965.61 down 255.67
S&P 500 3,128.21 down 97.68

10 Year Yield: down at 1.33%

Oil: down at $50.10

3 October 2019

1) Despite positive last quarters, both General Motors and Ford Motor company’s are concerned about the U.S. auto market taking a turn for the worse. Shares for the two automakers, as well as Fiat Chrysler, fell because of smaller figures for the quarter, although smaller than market analysis projected. There are also concerns of the overall impact from a slowing U.S. and international economies with the impact it would have on new car sales.

2) For the second day, the stock markets nose dived with the Dow losing more than 800 points these last two days. Fears of an economic recession cause the Dow to lose 490 points on Wednesday, with indications that manufacturing is slowing down, and even though manufacturing accounts for only 10% of the economy, investors see this as an indication that the economy is contracting soon with a possible recession in the near future.

3) With the markets in decline, there is a lot riding on the up coming job numbers this Friday. Fears of a coming recession could be reinforced with poor job numbers signaling that a recession is nearing. So far, there is little evidence of layoffs on the rise despite scattered reports that more companies are cutting jobs.

4) Stock market closings for – 2 OCT 19:

Dow           26,078.62    down    494.42
Nasdaq        7,785.25    down   123.44
S&P 500       2,887.61    down     52.64

10 Year Yield:    down   at    1.60%

Oil:    down   at    $52.47

6 August 2019

1) Stock markets fell sharply over new trade war moves with the Dow dropping over 700 points and the S&P and Nasdaq also sharply dropping too. Troubles renewed with China devaluating its currency, opening at seven yuan to the U.S. dollar. In return President Trump accused China of manipulating its currency which suggests the Chinese have abandoned all hopes of resolving the trade war with America, and instead are moving in another direction for the future. Reports are that China has asked state owned companies to suspend U.S. agriculture imports. A weaker Chinese currency gives them an unfair export advantage, and so can be used as a potent weapon in the trade war.

2) Fears continue to increase over a near future recession, with bond yields giving the highest alert since 2007. The 10-year notes sank on Monday to 1.74% with fears of it sinking to a low of 1.5%. This is further pressure for the feds to further cut interest rates to starve off a recession. There are further concerns about the trade war with China that America will move to let the dollar weaken to counter China’s devaluation. Wall Street’s VIX volatility index, also know as their ‘fear gage’ rose to 21.48, its highest level since May 9, with Asian markets also plummeting.

3) Huawei, China’s manufacture of smart phones, might release a phone running the HongMeng OS by the end of the year. HongMeng OS is a competitor to Google’s Android OS, which would free Huawie paying licensing fees for other’s operating systems, allowing Huawei to undercut competition in the low end smart phone market. This is a response to President Trump’s executive order banning Google and Qualcomm from Huawei over security risks. The HongMeng OS is considered part of a long term strategy.

4) Stock market closings for – 5 AUG 19:

Dow             25,717.74    down    767.27
Nasdaq           7,726.04    down    278.03
S&P 500          2,844.74    down       87.31

10 Year Yield:     down   at    1.74%

Oil:    up   at    $55.01

12 July 2019

1) The production of the Volkswagen Beetle, probably the most recognized automobile in the world, is coming to an end at their Puebla, Mexico plant on Wednesday. The demand for the iconic automobile has been squashed by years of low gasoline prices and the market shift to SUVs and pickups. In its place, VW is manufacturing a version of the Chinese SUV, the Tharu, but will be a beefed up version to be called the Tarek.

2) The Consumer Price Index edged upwards while the inflation rate remains steady. The index rose 0.1% in June with low gas prices being offset by higher rents and auto cost. However, core inflation rose 0.3%, which is the largest increase in eighteen months. This persistently low inflation is justification for lowering the short term interest rates. Usually, a low jobless rate forces employers to increase pay to get workers, and in turn they must raise their prices to pay the extra labor cost.

3) Dollar General is changing its marketing strategy to attract wealthier customers by expanding into home furnishings, kitchenware and party supplies. Their strategy, which built the highly successful retailer, had been to focus on selling cheap consumables such as food, cleaning and household supplies and personal care products, which have a low margin. Dollar General will now carry products with higher margin such a pillows, candles, home decorations, gift bags and wrapping paper.

4) Stock market closings for – 11 JUL 19: Oil prices jump as approaching a storm shuts down energy operations in the Gulf. The Dow broke the 27,000 mark for the first time.

Dow            27,088.08         up   227.88
Nasdaq         8,196.04    down       6.49
S&P 500        2,999.91         up        6.84

Year Yield:    up   at    2.12%

Oil:    up   at    $60.43

28 December 2018

1) Weekly jobless claims fell to a near 49 year low, with 216,000 claims.

2) The Dow’s 1000 point surge failed to stimulate the European markets, which fell as well as the China markets.

3) Apple’s top of the line iPhones are to be manufactured in India, spurred by fears of continuation of the trade war.

4) 27 DEC 18 Stock market closings: Dow has a wild swing of 800 points.

  Dow 23,138.82 up 260.37
Nasdaq 6,579.49 up 25.14
S&P 500   2,488.83 up 21.13

10 Year Yield: down at 2.74%

Oil: up at $45.39