30 September 2020

1) American businesses have suffered stress that is breaking many, including some in the grocery chains. Like some popular restaurant chains, some grocery chains were filing for bankruptcy before the pandemic, but the virus crisis forced others over the brink. Five specialty and health forward chains have been forced to file for chapter 11. They are Earth Fare, Lucky’s Market, Fairway Market, Kings Food Markets and Balducci’s. The niche marketeers are finding it very difficult to survive in these changing economic hard times.

2) The U.S. guided missile destroyer USS Stout has set a new record for consecutive days at sea when it reached 208 days at sea on the 26th of September. The previous record was 207 days, held by the USS Eisenhower and USS San Jacinto, both records set this year too. The Covid-19 pandemic has forced the Navy to cancel port visits to prevent sailors from being exposed to the virus while ashore. More than 1,000 sailors were infected with the virus on the aircraft carrier USS Theodore Roosevelt at the start of the pandemic, with one sailor dying. Furthermore, the carrier was off line for weeks anchored in Guam until the virus ran its course. While the elimination of port calls and longer sea deployments has arrested the virus, it has put more stress on the crew members.

3) The ‘indoor food grower’ AppHarvest is going public by joining with Novus Capital Corp. (NOVS) and will soon be traded on the Nasdaq exchange. AppHarvest is developing large scale, efficient indoor farming technology, and their first farm is a 60 acre controlled environment in Kentucky. This facility is within a days drive of 70% of the American population and is now producing tomatoes. Right now, 60% of all fresh tomatoes in American are imported. Controlled environment agriculture facilities use far fewer resources to grow far more produce, however this method of agriculture requires far more capital, where conventional farms are themselves capital intensive enterprises.

4) Stock market closings for – 29 SEP 20:

Dow 27,452.66 down 131.40
Nasdaq 11,085.25 down 32.28
S&P 500 3,335.47 down 16.13

10 Year Yield: down at 0.64%

Oil: down at $39.16

17 September 2020

1) The Federal Reserve announced it is keeping its key policy rate unchanged and it intended to keep interest rates near zero for a least the next three years. This is a time period that is much longer than analysts had expected and reflects the concern for near future economic growth. The Feds will continue to purchase additional assets, principally government and corporate bonds, to support its monetary stance. Their goal is to achieve a maximum employment while keeping inflation at 2% over the long term. The prime interest rate will remain between 0% and 0.25% until at least the end of 2023. Their actions essentially acknowledge they were a bit behind the curve with their forecast on the economy.

2) Fox News is beginning a round of layoffs, the hair and makeup department being particularly hard hit. None of the network’s on-air talent is being let go, but now only the news anchors will receive hair and makeup services, while their guess will not. This is, in part, because since the pandemic more and more of interviews are being done remotely. The job cuts are expected to affect less than 3% of the overall staff, with the intent to streamline operations. TV news services are shifting from traditional TV broadcast to on-demand outlets streaming video services. Fox News is the most watched cable news network with 3.28 million viewers, that’s more than CNN and MSNBC combined. A time of economic stress causes changes to the economic environment, which opens the way for new technologies to emerge that reduce labor cost.

3) As hurricane Sally continues its journey into the interior of America, the next question on people’s minds is the ‘dollar amount for damages?’, a question that follows every hurricane which makes landfall on the continental United States. Sally dumped heavy rains and has brought historic flooding to the Gulf Coast, leaving much of Alabama and Florida coast lands under water. There were forecast of some areas receiving over three feet of rain, but as the storm system travels north and east, inundating land with water that runs off into rivers, more flooding is feared down river from the runoff. The flooding is a result of Sally moving so slow, slower than the average person walks, turning heavy rains into heavy flooding.

4) Stock market closings for – 16 SEP 20:

Dow 28,032.38 up 36.78
Nasdaq 11,050.47 down 139.86
S&P 500 3,385.49 up 15.71

10 Year Yield: up at 0.69%

Oil: up at $40.18

14 September 2020

1) With 13 million Americans unemployed and their unemployment benefits running out, many will have only seasonal jobs to turn to. But with such wide spread unemployment, getting hired for seasonal work wont be easy. With the coming holidays, seasonal jobs traditionally mushroom with major companies already hosting hiring events to fulfill their temporary ranks. Companies like Michael’s will hire over 16,000 temporary people, with UPS expecting to hire over 100,000 for holiday package delivery. Retailers doing e-commerce, such as Amazon or Walmart are expected to need many seasonal workers and therefore are good places for job seekers to apply.

2) Fears are growing that the coronavirus crisis could cause a double dip recession, that the recession could end up looking like a roller coaster of ups and downs. The upsurge in virus cases is eroding consumer confidence and leading to renewed limits on certain businesses. Economic recovery can bloom then fade away only to repeat again. Some economic factors point to a recovery, yet others point downwards, with the picture further complicated by the ‘what ifs’ of the coronavirus and just how it will play out, where a second wave of the virus could be just as economically disruptive as the first one, maybe even more so. Additionally, a significant portion of the economy has been destroyed. Half the businesses in America are small businesses and at the start of the crisis, about half of those had cash reserves of just fifteen days or less . . . meaning by now they have gone bust! No one knows what the repercussion from such massive losses of business will ultimately have on the economy in general.

3) Mechanical breakdown insurance, which isn’t an extended warranty, but rather is insurance that pays for mechanical auto repairs of a car’s power train, much as accident insurance pays for the repair of body damage. It will have some amount for a deductible, then pays the remainder of a mechanic’s bill for repair, both labor and parts. Usually, any mechanic can be used. Most major insurance companies who offer auto insurance will also offer breakdown insurance too. Prices range from $20 to $100 a year.

4) Stock market closings for – 11 SEP 20:

Dow 27,665.64 up 131.06
Nasdaq 10,853.54 down 66.05
S&P 500 3,340.97 up 1.78

10 Year Yield: down at 0.67%

Oil: up at $37.39

31 August 2020

1) The dreaded coronavirus seems to be on the rise again in Europe, with some European countries experiencing an increase of new cases, but this time with fewer deaths. This resurgence of recent weeks, has not forced as many people into medical wards as last spring. However, the increase of Convid-19 is widespread, unsettling people who hoped the worst was behind them. So far, the rise in cases is in France, Germany and Spain, with Spain hit particularly hard. Europe had just started their schools for the new academic year.

2) The E-commerce giant Amazon has just opened its first ‘shop-in-person’ grocery store under its own name. The new store in the Los Angeles suburb of Woodland Hills, is a traditional physical store open from 7 a.m. to 10 p.m. PST. But the store has lots of high-tech touches such as a new feature called Dash Cart which allows you to use Alexa. This allows the customer to create a shopping list in advance then be guided around the store to those items on the list. The store uses cashierless checkout, so there isn’t any line to wait in. The customer has the option of using their Amazon account and Prime membership to order and get free delivery. Amazon is soon opening additional stores in other cities.

3) One of the most powerful storms to ever hit the US Gulf Coast, Hurricane Laura has left the usual damage and destruction, but having missed the Houston and New Orleans areas, caused far less damage than it could have. The death toll was six people and monetary damages are estimated to be between $8 billion and $12 billion dollars, most of the loss in Louisiana with only about $500 million dollars in Texas. The total economic cost from damaged structures and closed businesses is estimated to be about $20 billion dollars.

4) Stock market closings for – 28 AUG 20:

Dow 28,653.87 up 161.60
Nasdaq 11,695.63 up 70.30
S&P 500 3,508.01 up 23.46

10 Year Yield: down at 0.73%

Oil: down at $42.93

27 August 2020

1) Large hurricanes bring economic damage on a large scale when they make landfall. This season’s biggie is Hurricane Laura now expected to make landfall as a category 4 storm this Wednesday evening or early Thursday morning. The National Hurricane Center rates the storm as having an “un-survivable storm surge” with large and destructive waves causing catastrophic damage along the coast of eastern Texas to the eastern part of Louisiana. The surge could penetrate up to 30 miles inland from the coast. Add to this, the catastrophic wind damage, and Laura promises to carry a large price tag economically as the storm continues first up into Arkansas then across the United States for the Atlantic with rains and flooding. This year is forecast to be a very active hurricane season so more economic damage may be in the play book.

2) Walmart is suspending its InHome delivery service, which offered the convenience of having people’s groceries delivered and unpacked by the delivery person in the customer’s kitchens. But because of the Convid-19 crisis and the need for contactless service, Walmart is discontinuing the service in favor of its Doorstep Delivery service, where groceries are delivered to consumers but now is left on the door step. With its other two delivery service, Walmart is becoming a strong contender in the e-commerce business.

3) Two long established regional grocery chains have filed for bankruptcy, another sign of the shifting of retail business in America, as traditional retailers fail to adapt to the new economic world. Balducci’s and Kings Food Markets of the north eastern coast were having financial struggles before the pandemic set in, but even thought both had a boost in sales from the pandemic, it wasn’t enough to save them. All stores will remain open as their holding company seeks a buyer. The two grocery chains date back to the first half of the twentieth century and they prospered through the decades before e-commerce.

4) Stock market closings for – 26 AUG 20:

Dow 28,331.92 up 83.48
Nasdaq 11,665.06 up 198.59
S&P 500 3,478.73 up 35.11

10 Year Yield: unchanged at 0.69

Oil: unchanged at $43.43

20 August 2020

1) Boeing Aircraft has received its first 737 MAX orders since 2019, from Enter Air, a Polish charter airline that exclusively uses only Boeing airplanes. They have ordered two 737 MAX with an option to order two more. With the option, this would bring its MAX fleet to ten aircraft. Frzegorz Polaniecki, the general director and board member of Enter Air, said he’s convinced the 737 MAX will be the best aircraft in the world for many years to come. This order for two aircraft pales in comparison to Boeing’s July net negative order of 836 aircraft, but it’s a start in the right direction. Cancellation of Boeing aircraft sales have far outpaced new orders this year because of the pandemic. The last six months, Boeing has faced a combination of problems specific to Boeing and the pandemic.

2) The Federal Reserve is lowering their estimate for economic growth over the second half of the year. The Reserve presents its forecast at the central bank’s eight interest rate committee meetings in a year. The reduced forecast is because they expect the rate of recovery in the Gross Domestic Product and the rate for reducing unemployment to be slower than previously expected. Reduction of the unemployment depends on the reopening of businesses, which in turn is depended on the pandemic.

3) According to Bank of America, moving manufacturing out of China could cost U.S. and European companies $1 trillion dollars over five years. Companies in over 80% of global sectors have experienced supply chain disruptions during the pandemic, so many are widening the scope of their reshoring plans. The shift to return manufacturing back to home countries has been spurred on by the Convid-19 crisis. Supporting companies will also benefit with the increase of economic activity by having manufacturing return.

4) Stock market closings for – 19 AUG 20:

Dow 27,692.88 down 85.19
Nasdaq 11,146.46 down 64.38
S&P 500 3,374.85 down 14.93

10 Year Yield: up at 0.68%

Oil: up at $42.79

14 August 2020

1) This year’s hurricane season was already forecast to be a very active season, but now is going from bad to worst because of La Nina. The hurricane season was already on a record making pace, with the peak of the season coming in just a few more weeks. The possibility of the pacific having a La Nina, a state where the sea surface temperature becomes cooler than usual, is increasing in probability. This change in pacific weather patterns decreases the hurricane killing wind shear across the Atlantic, thus allowing more storms to form and strengthen. The Atlantic has already had 10 storms, which is the earliest number to occur by this date. Predictions are for as many as 25 storms forming, compared with the 2005 record of 28 storms including Hurricane Katrine. Additionally, a La Nina can spell cooler temperatures and storms across the north, with drier weather in the southern U.S., all having significant economic impact on America.

2) Again, the first time jobless claims have dropped, this time it’s the first time below 1 million since last March. Last week, 963,000 people filed for first time unemployment benefits, the first time in five months claims were below 1 million. Although the decline is a positive sign, the economic job situation still remains critical with 15.5 million people still unemployed, but still people are returning back to work. The employment problem still remains worst than for the Great Recession just a decade ago, which had lower jobless claims. It took nearly five years for the peak in 2009 until 2014 to return to what they were before the Great Recession.

3) Oil prices dropped as a result of IEA’s (International Energy Agency) forecasts for global oil demand. This reduction is in part a result of the slowdown in air travel. Price of oil has been creeping up coming to a five month high on Wednesday, but then fell as much as 1.3%, from the forecast of a drop in consumption for every quarter to the end of the year. The forecast also signals a shift in the recovery toward a stalling of economic growth. There remains an inventory overhang that persists, which the oil industry continues to work down.

4) Stock market closings for – 13 AUG 20:

Dow 27,896.72 down 80.12
Nasdaq 11,042.50 up 30.27
S&P 500 3,373.43 down 6.92

10 Year Yield: up at 0.72%

Oil: down at $42.34

31 July 2020

1) The American economy last quarter is the worst on record, with a 32.9% annual rate contraction (April – June). American business ground to a halt from the pandemic lockdown this spring, leaving the country in its first recession in eleven years. This wipes out five years of economic gains in just months. From January to March, the GDP (Gross Domestic Product) declined by an annualized rate of 5%. While the unemployment is declining as states open up from the shutdown, there are still about 15 million unemployed workers. Americans are spending less money during th lockdown, partly because of lost of jobs. Consumer spending is the biggest driver of the economy, and it declined at an annual rate of 34.6% for the second quarter.

2) While Walmart has posted surging sales for each month, it is still taking cost savings measures. The retailer has laid off hundreds of workers including store planning, logistics, merchandising and real estate. Also, Walmart is reorganizing its 4,750 stores by consolidation of divisions and eliminating some regional manager roles. Walmart is performing well because of high demand and low prices during the pandemic. The company isn’t opening as many new stores in the U.S. anymore, so Walmart doesn’t need as many people to find new locations and so design them.

3) Job postings in technology are 36% down from 2019 levels. This is attributed to increased competition, low priority in hiring and uncertainty over the pandemic. Therefore, the tech industry is also feeling the economic effects of the coronavirus pandemic. Sending a very significant portion of its workers remote to work at home, there were predictions tech jobs would lead the recovery with increase job numbers. The ‘work at home’ was thought to show tech jobs might be available outside the traditional hubs. Neither has proved to be true. In short, the tech jobs are faring worst than the overall economy.

4) Stock market closings for – 30 JUL 20:

Dow 26,313.65 down 225.92
Nasdaq 10,587.81 up 44.87
S&P 500 3,246.22 down 12.22

10 Year Yield: down at 0.54%

Oil: down at $40.45

23 July 20

1) The business community of America is facing a national coin shortage, making it even more difficult for the retail sector to function. Across the country, restaurants, grocery stores, and retail outlets are posting signs near their cash registers and drive thru windows asking people to pay with credit cards or exact change. This shortage is a result of the spreading coronavirus closing businesses that crippled economic activity in the U.S., so the circulation of coins dropped off significantly. Furthermore, the U.S. Mint who manufactures the nation’s coinage supply, has decreased staffing because of the pandemic, thus reducing the availability of coins.

2) New research has directly connected the explosive growth of passive investing to deteriorating corporate performance over the long haul. Companies with higher passive ownership spent more on stock repurchases, but saw worse financial outcomes. Passive investment can allow opportunistic management behavior with negative effects of future company performance. Companies with high passive ownership are less monitored, therefore allowing management to act unhindered in their own best interest. Passive ownership is a result of investing by mutual and ETF funds who track indexes instead of actively manage counterparts.

3) The government has placed orders for up to 600 million doses of Covid vaccine to Pfizer and BioNTech. The U.S. health officials have agreed to pay $1.95 billion dollars for 100 million doses of a vaccine. Nations around the world have begun ordering vaccines that are still being tested in an effort to halt the spread of the virus. To date, the coronavirus has killed 600,000 people around the world. It is planned the vaccine will be free to U.S. citizens.

4) Stock market closings for – 22 JUL 20:

Dow 27,005.84 up 165.44
Nasdaq 10,706.13 up 25.76
S&P 500 3,276.02 up 18.72

10 Year Yield: down at 0.60%

Oil: up at $41.90

10 July 2020

1) There are predictions of a relentless heat wave to blanket the U.S. for the next several weeks. This heat wave is just starting in the South, but is expected to move north and east with 100 degree plus temperatures across Ohio Valley and into the Mid-Atlantic areas. The National Weather Service forecast record high temperatures from Friday to Tuesday with as much as 75 record highs broken. But the question isn’t how high the temperatures will get, but for how long? It is expected temperatures during the multiple week span will have only a few days of normal temperatures. These high temperatures are caused by heat domes, sprawling areas of high pressure bringing hot and dry conditions for days. Such phenomena have economic impacts such as high electricity consumption.

2) Walmart is reportedly close to launching Walmart+ in July, a membership program that closely resembles Amazon Prime. The service cost $98 per year and includes same-day delivery, fuel discounts and other perks. Originally to open this last spring, it was delayed because of the pandemic. Walmart has nearly 3,300 store pickup locations and more than 1,850 stores offer same day grocery delivery.

3) The Supreme Court ruled that the eastern half of Oklahoma can be considered Native American territory. The case originated from a conviction of Jimcy McGirt, a Native American, who claims his state conviction in 1997 for rape, should be overturned because Oklahoma lacks jurisdiction, that the Indian reservation had not been properly terminated by the Congress. This would mean the federal government would have jurisdiction, so McGirt would be subject to federal criminal laws instead of Oklahoma. The ruling effects half of Oklahoma and 1.8 million residents. Oklahoma fears the decision will create civil, criminal and regulatory turmoil.

4) Stock market closings for – 9 JUL 20:

Dow 25,706.09 down 361.19
Nasdaq 10,547.75 up 55.25
S&P 500 3,152.05 down 17.89

10 Year Yield: down at 0.60%

Oil: up at $39.59