13 October 2020

1) More bad news for the airline business with another expected huge round of losses coming. The second quarter was the worst financial hit in the history of the airline business, and the third quarter won’t be much better. The airlines reported a second quarter combined losses of $12 billion dollars with revenues down 86% for the previous year. Analysts are forecasting a $10 billion dollar lost for the third quarter. The airlines did reduce cost by trimming expenditures, reducing labor as employees took buyouts and early retirement packages. Also, a modest pickup in travel during the summer has help with increased revenues, but forecast are for sales to be down 75% in the third quarter.

2) Oil prices fell the most in a week because the Gulf of Mexico production is set to resume and Libya is reopening its largest oil field. The hurricane had shut down about 92% of oil production in the Gulf, while at the same time Libya’s largest field will reach its daily capacity of almost 300,000 barrels in ten days. World demand for oil crude has dropped with refineries operating near minimum capacity.

3) The third major opioid makers Mallinckrodt Pic has become the third major manufacture of opioid to go bankrupt after being swamped by claims with respect to profiting from the U.S. opioid epidemic. The drug company filed for Chapter 11 after getting creditors and claimants to agree on a restructuring plan. This plan hands over ownership to bondholders, wipes out shareholders and sets aside $1.6 billion dollars to resolve all its opioid litigation. Current shareholders will most likely get nothing, with stock prices in the penny range for most of the year. The Chapter 11 filing estimates liabilities of $1 billion to $10 billion dollars and assets in the same range.

4) Stock market closings for – 12 OCT 20:

Dow 28,837.52 up 250.62
Nasdaq 11,876.26 up 296.32
S&P 500 3,534.22 up 57.09

10 Year Yield: unchanged at 0.78%

Oil: down at $39.44

16 October 2020

1) There are mounting fears that a surge in Covid-19 this fall and winter could kill 2,900 people a day in America. This is reminiscent of the World War I Spanish Flu pandemic in the fall of 1918 which killed 195,000 Americans in just the month of October. With colder weather, more people gather indoors increasing the risk of coronavirus spread. There are also the risk of catching the flu and Covid-19 at the same time, with makes a person more vulnerable by overwhelming the immune system. Risk of infection spreading has increased with the opening of schools. The increase risk isn’t in just America, with infections spikes in Europe. Paris is closing its bars again trying to arrest the increasing spread of the virus. The city is also banning student parties and putting limitations on outdoor gatherings.

2) The huge movie theater chain Regal Cinemas has announced it is closing all of its locations in the U.S. and U.K. There are 536 stateside Regal Cinemas and 127 Regal and Picturehouse Cinemas in the U.K., all to close down. This is a result of two factors, the first is limited seating and hence reduced revenues in theaters. A further consequence of the pandemic is the limited cinematic offerings for customers because of film release delays. The theater chain will reopen when movie studios resume regular production. The majority of its 45,000 employees will either be furloughed or forced to take unpaid leave until then. AMC, the world’s largest movie theater chain has announced that it is generating almost no revenue and has lost as much as $2.4 billion dollars in the first quarter of 2020 alone.

3) Another result of the coronavirus is the shape increase in drug costs such as cocaine, heroin, marijuana and methamphetamine, which are up 20 to 50% of pre-virus prices. This is largely because of restriction on the U.S. – Mexico boarder, which now restricts non-essential travel across the boarder, where most of the illicit drugs is entering the country. The virus is effecting the drug prices by also interfering with the cultivation of coca and poppies in foreign lands.

4) Stock market closings for – 5 OCT 20:

Dow 28,148.64 up 465.83
Nasdaq 11,332.48 up 257.47
S&P 500 3,408.63 up 60.19

10 Year Yield: up at 0.76%

Oil: up at $39.43

28 Auguest 2020

1) The decay of the worlds airline industry is reaching out past the airline companies themselves, with jet engine maker Rolls-Royce announcing a $7 billion dollar lost for the first half of 2020. Rolls-Royce gets paid by the hours their engines are flown on airliners, and with the massive drop in air travel from the pandemic, the company’s revenues have drastically dropped leaving its survival in doubt. The company is being forced to sell assets to meet its cash needs, so they are reducing eleven of their locations to just 6, with the loss of 9,000 jobs. Stock dropped 9% on the news of reorganization which was already down 66% since the start of the virus crisis.

2) Not all of the retail industry is bleak news, with Abercombie & Fitch outperforming expectations in the second quarter. While the apparel company did lose ground in the last quarter, it performed better than analyst expected, with sales down by 17%, nevertheless their earnings per share made remarkable gains over last year. This is a result of aggressive costs reductions earlier in the quarter when the company slashed expenses by $200 million dollars by reducing salary expenditures and skipping dividends. Success in their e-commerce operations has also pushed up the revenues and promises to add more as people go to online for more of their shopping.

3) Another small indication that manufacturing is returning to America is Roche Holding AG plans to move its glucose testing strips manufacturing plant from Pueto Rico, where it has operated for about 40 years. The company is streamlining its operations by combining the plant with its other existing facilities. The move will cost 200 jobs in Peuto Rico, which has a number of other drug and medical device manufacturing plants.

4) Stock market closings for – 27 AUG 20:

Dow 8,492.27 up 160.35
Nasdaq 11,625.34 down 39.72
S&P 500 3,484.55 up 5.82

10 Year Yield: up at 0.75%

Oil: down at $42.96

25 February 2020

1) The drug maker Moderna Inc. has shipped its first batch of coronavirus vaccine to U.S. government researchers for human testing. The government will test if the experimental shot can help suppress the epidemic that originated in China. Test are expected to start by the end of April on 20 to 25 healthy volunteers to see if two doses are safe and can induce an immune response that protects against infection. Using the virus’ genetic sequence, Moderna was able to make a fast response in developing a vaccine.

2) The United States Supreme Court has ruled on a decade long legal battle against Apple. The decision against Apple leaves the company open to paying $440 million dollars to the technology licensing company VirnetX for violations of its patents. The legal battle has been on going since 2010 for violations of VirnetX four patents. With the ruling against Apple, the case will be sent back to the district court in Texas to enforce the $440 million damages.

3) Canada’s oil sands industry may have built its last big mine. The cancellation of Teck Resources Ltd.’s Frontier project in northen Alberta, which was expected to produce more crude than OPEC member Gabon, has seen most of it’s foreign investors fall out. Other proposed mines may not be able to clear the hurdles that foil the Frontier project, thus ending an era of mega-projects that had made Canada the largest importer of crude to the United States. The dropping of crude oil prices has had a detrimental effect on the industry.

4) Stock market closings for – 24 FEB 20: The Dow closes down 1,000 points wiping out a year’s gains.

Dow 27,960.80 down 1031.61
Nasdaq 9,221.28 down 355.31
S&P 500 3,225.89 down 111.86

10 Year Yield: down at 1.38%

Oil: down at $51.34

22 October 2019

1) Oil prices are falling over fears of global demand declining. Fears that global economic growth is shrinking coupled with ample global supplies of oil are pushing oil prices down. Additionally, there are fears that an economically damaging no-deal Brexit may cause further economic slowdown internationally. Oil prices serve as an economic bellwether of overall world economic health, higher prices indicating strong economies causing increase demand for oil world wide.

2) Four drug companies have reached a settlement to avoid a trial. The litigation stemmed from claims that the four companies fueled the opioid crisis, but details of the settlement have not be announced yet. The drug companies are McKesson Corp., Cardinal Health Inc., AmerisourceBergen Corp. and Teva Pharmaceutical Industries Ltd.

3) Bank of America announced that any customer of its retail banking loyalty program will now get unlimited free trades for stocks, ETFs and options. The banking giant joins others in a brokerage war of unlimited free trades for preferred members, which include Robinhood, J.P. Morgan Chase, Charles Schwab, E-Trade and TD Ameritrade.

4) Stock market closings for – 21 OCT 19:

Dow           26,827.64    up    57.44
Nasdaq        8,162.99    up    73.44
S&P 500       3,006.72    up    20.52

10 Year Yield:    up   at    1.79%

Oil:    down   at    $53.56

30 July 2019

1) The once high flying German Deutsche Bank has run aground rapidly slashing jobs and losing a ton of money. Stock for Germany’s biggest lender is trading at a near all time low. This is a result of poor management and failing to fully clean up its crisis era balance sheet. The banks restructuring efforts have fell short coupled with countless legal black eyes that have all contributed to the bank’s financial woes.

2) The pharmaceutical companies Pfizer and Mylan have announced they are combining to create a global powerhouse in the low price drug market. Pfizer will gain most control of the company with 57% ownership, with Mylan shareholders owning the rest. Both companies lost exclusive manufacture rights from patent expirations, that were big money makers for the companies. Mylan, is the manufacturer of the emergency treatment for allergic reactions, the EpiPen. Mylan has recently been in the news for raising the price of EpiPens by 400%.

3) J.C. Penney, the 117 year old department store chain, is at risk of being de-listed from the New York Stock Exchange. To counter its downward spiral, the company has hired advisers to explore debt restructuring. Penney has $4 billion dollars in debt coming due in the next few years, while its revenues are increasingly being lost to sales on the internet and niche brands. Revenue has fallen over the last three years. The retail giant Sears has suffered similar troubles.

4) Stock market closings for – 29 JUL 19:

Dow                 27,221.35        up   28.90
Nasdaq               8,293.33   down   36.88
S&P 500              3,020.97   down     4.89

10 Year Yield:    down   at    2.06%

Oil:    up   at    $57.13