1) Even though U.S. employers slowed their hiring in July, there was 164,000 jobs added to the economy. The unemployment rate remained at 3.7% for a second month with average hourly earnings rising 3.2% which was up from June. The unemployment is near a half century low, and with the U.S. economy on a firm footing, the GDP (Gross Domestic Product) is growing 2.1%.
2) The price of oil declined the most in over four years with President Trump’s latest tariff threat. Oil plunged 8%, for the steepest one day drop, from concerns of a global slowdown. A slowdown results in less consumption of oil, and therefore less demand. For months, the stalled China-U.S. trade negotiations is fueling concerns for the future of world economies.
3) Online delivery of prepared food is surging with people able to order a full restaurant meal from home using smart phones, and have them delivered much as a pizza is. By 2020, it’s forecast that more than half of restaurant spending will be off premise from deliveries, drive-thoughs and takeaway meals. More than 80% of the restaurants industry growth will be off premise sales, with Americans spending more on restaurants than at grocery stores.
4) Stock market closings for – 2 AUG 19:
Dow 26,485.01 down 98.41 Nasdaq 8,004.07 down 107.05 S&P 500 2,932.05 down 21.51
1) General Electric suffered a loss last quarter despite two previous profitable quarters, a result of the restructuring cost of its electric power division and the grounding of Boeing’s 737 MAX. GE provides the jet engines used on the 737, which Boeing has reduced production of. The grounding of Boeing has drained off more cash than expected, but General Electric forecast a profitable year for 2019.
2) President Trump has fulfilled his campaign promise to lower drug prices by creating a pathway to allow Americans to legally and safely import lower cost prescription drugs from Canada. This reverses the opposition from federal health authorities, despite the public outcry over high prices for drugs in America. It’s uncertain when imports can start as the plan has to go through the time consuming regulatory approval and possible court challenges from drug makers. The opening of the door for cheaper drugs and keeping it open still faces an up hill battle with the political organizations of the pharmaceutical industry.
3) In an effort to keep the American economy on track, the Federal Reserve has reduced the benchmark interest rate by a quarter point to about 2.25%. This is a modest and widely expected move intended to keep the economy healthy in face of the trade war with China and the slowing economic growth overseas. In addition, the feds signaled that the cental bank is ready to make more cuts to stimulate the economy if necessary. A higher interest rate makes for a stronger dollar, a disadvantage for international trade. Wall Street anticipates as many as three more cuts this year, while in addition to the rate reduction, the feds will stop selling off assets this August, two months earlier than expected.
4) Stock market closings for – 31 JUL 19:
Dow 26,864.27 down 333.75 Nasdaq 8,175.42 down 98.19 S&P 500 2,980.38 down 32.80
1) Tesla, the manufacture of all-electric automobiles, has suffered a worse than expected loss. Additionally, there has been another major management shakeup, all of which is casting doubts on the future of the unique automaker. While Tesla delivered a record number of cars in its second quarter, its stock dropped 14% with a loss of $1.12 per share. Nevertheless, Tesla has opened twenty-five new stores and service centers.
2) Concerns grow that the trade tensions may be pushing U.S. economic growth downwards. Fears that the gross domestic product figures due out this Friday will show business investment has weakened. Additional factors stem from slow global growth and falling oil prices. The gains in jobs and wages are preventing growth from sinking. It’s anticipated that the Federal Reserve will lower interest rates by a quarter point to check softening of the economy.
3) Nissan, the world automobile manufacture, has announced the layoff of 12,500 employees worldwide, or about 10% of its work force. Nissan is striving to rein in the costs increases incurred during the former CEO Carlos Ghosn tenure and alleged financial misconduct. Japan’s number two automaker has suffered a collapse in its quarterly profits, a result of sluggish sales and rising cost. This is another indication of the world’s depressed auto market with other renowned automakers like Ford suffering similar major financial problems.
4) Stock market closings for – 25 JUL 19:
Dow 27,140.98 down 128.99 Nasdaq 8,238.54 down 82.96 S&P 500 3,003.67 down 15.89
1) Despite the world wide forces that normally pushes oil prices higher, the oil markets remain surprisingly flat. Available oil has dropped with the embargos on Venezuela and Iran, plus tensions over the Strait of Hormuz which would have normally pushed oil prices up. But at the same time, consumption has dropped with China leading the way, plus U.S. oil production continues to creep up. The International Energy Agency recently cut its expectations for global demand for 2019 and 2020.
2) Ford Motor Company stumbles in its attempt for global growth, in particular in trying to expand its market in China. Ford’s auto sales in China are down 27% for the first six months. Ford is being threatened by much improved Chinese’s domestic brands, resulting in a speedy and deep decline in Ford’s sales in China. So Ford is now counting on introducing new-models to revive its sales. Auto sales in China are softening as the Chinese economy slows and with the uncertainty over trade relations with America.
3) American farmers now facing a third obstacle to profits with a stifling heat wave spreading across the continent this summer. First, farmers faced the trade war with China imposing counter tariffs which dropped the demand for food products from one of their biggest customers. Then torrential rains flooded farmland delaying planting of crops and harvesting. Now droughts threaten to severely limit production and harvests. Many farmers may be facing financial disaster by the end of this year, not having the monetary resources to hold out for a better next year.
4) Stock market closings for – 22 JUL 19:
Dow 27,154.20 down 68.77 Nasdaq 8,146.49 down 60.75 S&P 500 2,976.61 down 18.50
1) The U.S. economy has entered its 121st month of economic growth setting a new record. Some experts are saying the real economic recovery may only be in its infancy. It’s just this last year that the gross domestic product caught up with estimates of its potential. Periods when GDP exceed potential are when workers typically enjoy the greatest wage gains. There are concerns of a changing environment with global trade disputes and other risks slowing down the economy.
2) Another daily newspaper has announce it is closing down, in what this year has been a rash of daily newspaper closing as well as massive layoffs. The Vindicator of Youngstown Ohio, which just celebrated its 150th anniversary, will cease publication the end of August, with 144 people losing their jobs. Virtually all daily newspapers have had deep cuts in staff these last couple of years, giving credence to the prediction that all the daily newspapers in America will be gone in ten years, displaced by newer mass media technologies.
3) The Payless ShoeSource is going out of business, closing all of its 2,500 retail stores. Once the largest and most successful family owned business in the country, the chain is succumbing to competition from big-box stores and on-line retailers. Founded in the 1960s, its demise could be the largest retail liquidation in history. Payless strategy uses customer self help allowing a minimal labor force of one manager and a couple of cashiers.
4) Stock market closings for- 2 JUL 19:
Dow 26,556.14 up 19.32 Nasdaq 7,958.05 up 45.06 S&P 500 2,926.73 up 12.95
1) Ikea, the pioneer of inexpensive self-assembled home furniture is adapting its manufacturing and marketing methods to inexpensive housing. Sections for homes will be built in factories, then quickly assemble into ready to move-in houses. Bringing the factory manufacturing techniques to homes would significantly reduce the cost as compared to the hand built housing techniques now used. This could open the way to home ownership by the younger generations.
2) Despite the continual upsurge of the markets, Americans aren’t convinced the economy is doing well. A survey shows 39% of U.S. consumers believe the economy is ‘not so good’ or even poor. Lower income Americans are not doing as well as macro indicators would suggest, despite getting more raises recently. These gains don’t offset years of high unemployment and stagnant wages.
3) A huge drop in U.S. crude oil inventories and the outlook for demand has pushed oil futures prices up to near $60 dollars a barrel. Domestic stockpiles fell by 12.8 million barrels last week, the biggest drop in supplies since September 2016. In the past week, oil futures have jumped 10%, with the traditional expected increase in oil demand with summer driving. Gasoline reserves are further aggravated by the fire at Philadelphia Energy Solutions, the East Coast’s largest refinery.
4) Stock market closings for- 26 JUN 19:
Dow 26,536.82 down 11.40 Nasdaq 7,909.97 up 25.25 S&P 500 2,913.78 down 3.60
1) The problem of student loan debt is becoming more acuate. The effects of the $1.6 trillion dollar student loan debt, which represents about 8% of national income, is a massive burden, which has doubled since the mid 2000s. The consequences for massive student loans is that young people are delaying marriage and family formation, hampering the growth of small businesses, delaying the purchases of first homes, saving for retirement and in general reducing the discretionary income of young people. For a consumer based economy, all these spell an adverse overall effect on America’s economy.
2) The consumer confidence has fallen to its lowest level in 21 months with people more pessimistic about business and labor market conditions. Worries about recent increase in trade tensions between China and the United States further erodes consumer confidence. The consumer confidence index dropped 9.8 points to 121.5 for this month, the lowest since September 2017. While the index remains high, the drop has fueled fears of a continual downward slide reflecting a reluctance for consumers to make purchases other than essentials.
3) The British fund manager H2O, which had stellar returns with surging assets from clients buying in, last week clients starting pulling their money out. The investment manager lost $3.4 billion dollars in just three days. H2O is fighting back taking measures to assure investors the company can meet redemptions, but also making it more adverse for getting out. Their goal is to avoid fund freeze that has thrown other fund managers into chaos.
4) Stock market closings for- 25 JUN 19: Stocks decline after weak consumer confidence report.
Dow 26,548.22 down 179.32 Nasdaq 7,884.72 down 120.98 S&P 500 2,917.38 down 27.97
1) Demand for oil is shrinking as the trade war causes the world economies to retract. China’s economy is slowing faster than experts had expected, with the EU and US also not growing in oil demand. Fears that oil prices will drop below $40 a barrel fuel fears of a continual global slowing of economies. The U.S. boom in domestic oil production using fracking is dependent on high oil prices, and with American petroleum stocks at an all time high, it may not be feasible to continue fracking.
2) With mortgage rates dropping to their lowest level in nearly two years, there has been a surge in refinancing applications. In just one week, applications increased 26.8%, which is 41% greater than a year ago. Refinance mortgages are the most rate-sensitive because when low, people rush to refinance while they can get the lower rates.
3) For the second straight month, Boeing aircraft reports no new aircraft sales. The drop isn’t just because of the 737 MAX grounding, but the company already has a massive 5,000 aircraft backorder to fill, so many customers don’t need to place additional orders. With the airline Jet Airways halting operations, their pending sales contracts have been canceled, which totaled 71 aircraft.
4) Stock market closings for- 12 JUN 19:
Dow 26,004.83 down 43.68 Nasdaq 7,792.72 down 29.85 S&P 500 2,879.84 down 5.88
1) The outlook for retailers continues to get grimmer with earning reports shrinking. Three major retailers, Michaels, Home Group and Zales have shown a slowdown in their sales, and these companies sell very different products, indicating this slowdown is not market specific, but rather a general economic slowdown. There is an emerging trend of decline for consumer based companies despite record unemployment.
2) Job cuts soar to 46% in May, worst than last year’s May. The tech sector and retail suffer significantly, with retail cutting more jobs than any other sector. The auto segment is also suffering as a result of lower new car sales. Since the tech sector accounts for the highest paying jobs and from some of the most sought after jobs, this doesn’t bode well for America’s economic outlook.
3) The expanding trade war may result in an 1970’s style supply shock as reliable supplies of cheap imports of manufactured goods are suddenly curtailed. In the 1970’s it was the supply of cheap oil curtailed from the 1973 oil embargo that cause a drastic economic decline. A similar sharp drop in consumer and industrial goods could have the same effect to America’s economy today.
4) Stock market closings for 6 JUN 19:
Dow 25,720.66 up 181.09 Nasdaq 7,615.55 up 40.08 S&P 500 2,843.49 up 17.34