9 October 2020

1) The airlines around the world are expected to lose $77 billion dollars in the second half of 2020 as Covid-19 continues to crush air travel demand. There are desperate efforts to cut cost by cutting jobs, grounding aircraft and consolidating work, but all their efforts are not enough. The first half of 2020 has been brutal for airline business and the rest of the year isn’t looking much better despite modest increase in air travel. This translates into losing $13 billion dollars a month or $300,000 a minute. At the start, U.S. airlines were burning about $100 million per day, which they reduced to about $30 to $40 million at the end of the third quarter. The airlines hope to reach zero ‘cash burn’ by year’s end using workforce reductions and operational consolidation. Air travel in America is down roughly 70% from 2019.

2) As another hurricane is approaching through the Gulf of Mexico, oil workers are evacuating oil rigs in the gulf ahead of Hurricane Delta, in turn causing oil prices to rise in anticipation of lower available oil. Oil prices had been falling Wednesday, but started rising as the storm came into the Gulf and the off shore evacuations began. So far, 183 offshore oil facilities have been evacuated which has halted nearly 1.5 million barrels per day of oil output. In July, the Gulf of Mexico produced oil at 1.65 million barrels per day, which is 17% of U.S. crude oil output. The demand for oil at refineries is 13.2% lower than a year earlier, a result of the virus crisis.

3) Electric car maker Elon Musk is pushing his company to boost production to build half a million cars in one year. That means producing 170,000 cars in the fourth quarter, a 17% increase from the third quarter. A half a million cars would be a milestone for Musk’s company, a first in the history of Tesla. So far, Tesla has produced 330,000 cars while also posting profits for its fourth consecutive quarter. Additionally, Tesla is pushing production numbers up by adding more production capacity.

4) Stock market closings for – 8 OCT 20:

Dow 28,425.51 up 122.05
Nasdaq 11,420.98 up 56.38
S&P 500 3,446.83 up 27.38

10 Year Yield: down at 0.76%

Oil: up at $41.27

20 July 2020

1) The international British Airways has announced they are retiring their entire fleet of Boeing 747 jets, a direct result of the Convid-19 crisis. Once one of the biggest airlines using the iconic jumbo jet, the contraction of the airline industry and the likelihood that air travel will not return to its previous size is forcing all airlines to abandon their jumbo jets early. They are going to the more modern fuel efficient Airbus A350 and Boeing 787 in their place. British Airways now has 31 Boeing 747s, about 10% of its total fleet, with an average age of 23 years.

2) What appears to be a massive attempt to embezzle monies from the general public has come to light with the social media Twitter confirming that 130 accounts were targeted in a hack. The accounts of a handful of prominent users were compromised that allowed criminals to gain access to prominent users such as Joe Biden, Barack Obama, Elon Musk, Bill Gates and Kanye West to post solicitations for money. The attackers were able to gain control of accounts then send Tweets from those accounts asking to send money via Bitcoin to commit cryptocurrency fraud. Wire fraud is a federal felony crime, so the FBI immediately began an investigation of who and how the fraud was perpetrated.

3) Delta Airlines is proposing a 15% cut to minimum pay for pilots to avoid furloughs for a year. This would have to come after the first of October when federal aid terms expire. This is in view that a quick recovery in air travel is becoming increasingly remote because of the rise in new coronavirus cases. More than 60,000 airline employees across several carriers have been warned that their jobs are at risk, including more than 2,500 of Delta’s 14,000 pilots. As financial losses pile up, employees are urge to take early retirements, buyouts and other forms of leave in a attempt to slash cost as financial losses pile up. So far, more than 1,700 pilots have signed up for early retirements. This is just another indicator how the air travel business is probably fundamentally changing.

4) Stock market closings for – 17 JUL 20:

Dow 26,671.95 down 62.76
Nasdaq 10,503.19 up 29.36
S&P 500 3,224.73 up 9.16

Year Yield: up at 0.63%

Oil: down at $40.57

12 May 20:

1) Economic advisers are urging the reopening of the economy as quickly as possible to reduce unemployment rates, which they fear are already above 20%. But despite the risk of permanent economic damage, public health experts warn that reopening nonessential businesses could lead to a flare up of the pandemic. This could mean unemployment worst than the 1930’s great depression with a true unemployment rate reaching 25%. However, there are early reports that China is experiencing a recurrence of the coronavirus after they’ve started their reopening process, so the warnings of health experts isn’t to be taken lightly. While some officials state that 80% of the unemployment is from furloughs and expect very rapid re-employment with the ending of the shutdown, there remains the very real problem of how fast they can be rehired. With a large portion of businesses now strapped for cash, they will have to restart slowly as money permits. No doubt, many will have gone bust during the shutdown, having already run out of money, while many more will be cash starved for weeks, months or even years, teetering on the brink of bankruptcy.

2) Toyota Motor company plans to cut North American production by about a third before October, with expectations that it will be some time before production is restored to present levels. The company will build about 800,000 vehicles in the United States, Canada and Mexico, a number which is down 29% from the same time last year.

3) The electric automaker Tesla, controlled by Elon Musk, has filed a federal lawsuit Saturday against Alameda County in California to reverse the closing of the auto plant. The Tesla’s plant in Fremont, California was closed by health orders from the county and remain closed for social distancing reasons. Additionally, Musk is threatening to move the manufacturing plant to a more business friendly state such as Texas or Nevada, considering the regulation to be the last straw. In the last few years, California has faced a ‘business drain’ as significant number of businesses and skilled/educated workers move out of California for states offering more opportunity.

4) Stock market closings for – 11 MAY 20:

Dow 24,221.99 down 109.33
Nasdaq 9,192.34 up 71.02
S&P 500 2,930.32 up 0.52

10 Year Yield: up at 0.73%

Oil: at up at $25.38