18 November 2020

1) Crude oil prices and energy stocks aren’t the only things that have fallen during this oil downturn, land prices with potential oil shale have also plummeted. The average price of U.S. oil shale acreage has fallen by more than 70 percent in two years, falling from $17,000 per acre in 2018 to $5,000 per acre in 2020. The value of oil and gas assets has plunged because of the coronavirus pandemic sending crude oil demand down globally, consequently most energy companies are slashing their costs instead of purchasing new land for oil and gas drilling. Oil and gas companies are forced to sell assets to make up money lost on deals.

2) On January the first of next year, President Trump’s pause on student loan payments for 33 million Americans is set to expire, just three weeks before President-elect Joe Biden is slated to take over. The Education Department is warning borrowers this week that their monthly payments will resume. For the incoming president, the economic and administrative mess could take months to untangle, consuming the early days of his Education Department. The student loan system was not designed to start and stop at any time for 30 million borrowers. This became apparent in March when loan payments were suspending and problems for borrowers quickly arose. This is just one facet of the economic problems facing the new president in just a few months, that not only must be addressed, but addressed correcting if problems are not to get worst.

3) The United States has surpassed 11 million coronavirus cases , that’s 1 million new infections in just one week, or 2 million since the beginning of the month. Consequently, hospitals are reaching a breaking point trying to treat nearly 70,000 Covid-19 patients. Medical workers are tired . . . mentally, physically and emotionally exhausted. The stress is being felt around the nation, with the virus spreading like wildfire and the medical system having no backup. If you act early, you can save lives, but if you don’t, you’ll be swamped by a tsunami of this virus. But a Covid-19 vaccine may be in the making with Moderna announcing it has developed a vaccine that’s nearly 95% effective, capable of preventing severe illness, and it could start giving vaccinations to high-risk patients and health care workers as soon as December. A week before, drugmaker, Pfizer announced that its human trials suggest its coronavirus vaccine is more than 90% effective.

4) Stock market closings for – 17 NOV 20:

Dow 29,783.35 down 167.09
Nasdaq 11,899.34 down 24.79
S&P 500 3,609.53 down 17.38

10 Year Yield: down at 0.87%

Oil: down at $41.40

11 November 2020

1) President Trump’s administration is readying new sanctions against Iran as the clock runs out before Joe Biden’s inauguration, who has said he wants to return the U.S. to the 2015 nuclear deal. These planned sanctions are being worked out in conjunction with Israeli high government officials. These sanctions make it more difficult to return to the 2015 nuclear agreement. Reportedly, these sanctions are separate from the Iranian nuclear program, instead they are linked to its ballistic missile program, assistance to terror organizations and human rights violations. Joe Biden said he would rejoin the deal if Iran returns to holding up its end of the deal following Tehran’s departure from the agreement rules after Trump pulled out and instituted sanctions on the country.

2) Some are forecasting the US economy could be set for a significant surge in growth as consumers start to spend the money they saved during the COVID-19 pandemic. In the past, when the personal-savings rate has been this high, economic growth has surged. There is more than $2.5 trillion dollars of sidelined savings that is the fuel for explosive growth. The savings rate spiked to 35% earlier this year, as the economy went into a recession, and now sits at 15%, which is above the historic average. The surge in housing has led to a shortage of common consumer goods, so inventories are the lowest ever. Therefore, the economic recovery won’t be entirely reliant on another round of fiscal stimulus. It only takes a bit more confidence to produce a healthy advance in the economy.

3) Biden’s victory could end up reshaping the U.S. energy sector in years to come, although the president-elect may have limited room to maneuver given that the control of the Senate remains unclear. The president-elect has pledged to spend trillions of dollars to speed up the transition from fossil fuels, slash emissions and curb climate change. Biden has also promised to ban new fracking on federal lands, which he may try to achieve via an executive order. Such a move would limit shale companies’ operations in several states. Biden is expected to block new drilling permits on federal lands, something he could do via an executive order. Moved to clamp down on the oil industry’s emissions by reversing Trump’s relaxation of environmental regulation, which most likely increases the cost of producing, transporting and processing hydrocarbons. America’s energy future may mean less LNG exports, increase emphasis on renewables, decline of coal usage, impact on USMCA, use of fuel ethanol, and the goal to eliminate carbon emissions from the power sector by 2035.

4) Stock market closings for – 10 NOV 20:
Dow 29,420.92 up by 62.95
Nasdaq 11,553.86 down by 159.93
S&P 500 3,545.53 down by 4.97
10 Year Yield: up at 0.97%
Oil: up at $41.86

2 November 2020

1) America’s economy is expanding at a record pace after a historic decline from the Covid-19 crisis. The economy grew at an unprecedented 7.4% pace from the second to the third quarter, which on an annualized basis, would be a growth rate of 33.1%. This would be the highest annualized growth rate on record. While this is undoubtedly positive, it comes with lots of caveats, for the U.S. economy is still in a deep hole with the gross domestic product still about 3.5% below the level recorded in the fourth quarter of 2019. Second, the economy is slowing. Third, there are about 11 million fewer people on payrolls than before the pandemic hit, plus layoffs persist. Finally, the report is a political football with politicians framing the numbers to best serve their individual’s objectives.

2) Cruise ships can begin a phased return to operations starting Nov. 1 under new health protocols. There has been 74 recommendations made for a potential safe return to cruising, including a new focus on “air management”, lower ship capacities, shorter sailing times, required testing and masks, and enhanced cleaning and medical staff on voyages. There are four phases to return to cruising, beginning with cruise ships establishing coronavirus testing of all crew. Phase 2 will be simulated voyages to test the ability to mitigate Covid-19 on cruise ships. Phase 3 is certification by the CDC, and the final phase is a return to passenger voyages.

3) One question this fall is America’s energy future of whether, and to what extent, we should transition from reliable fossil fuels, such as oil and natural gas, to more intermittent sources of energy such as wind and solar power. But arbitrarily halting oil and natural gas development would do serious harm to our economy, and thereby jeopardize post-pandemic recovery. Businesses need reliable, low-cost energy to reopen and return to normal operations, and presently fossil fuels currently accounts for 80 percent of overall American energy production. At the start of this year, the oil and gas industry was responsible for 12.3 million American jobs, while also generating $1.6 trillion dollars in federal and state tax revenue. So if the oil and gas revenue dries up, major public services will be reduced or even cut. The simple fact is that the United States cannot continue on the path of recovery without a thriving oil and natural gas industry because it supports jobs, lowers energy costs for families and businesses, and strengthens our energy and national security.

4) Stock market closings for – 30 OCT 20:

Dow 26,659.11 up 139.16
Nasdaq 11,185.59 up 180.73
S&P 500 3,310.11 up 39.08

10 Year Yield: up at 0.84%

Oil: unchanged at $36.10

30 October 2020

1) The Boeing Aircraft Co. is selling new bonds to help repay its nearly $3 billion dollars of debt. Boeing announced the sale just minutes after a downgrade to the company’s credit rating. Fitch Ratings put out a report reducing Boeing’s credit rating down to BBB-, the lowest investment-grade rating, with a negative outlook. The company has burned through about $22 billion dollars of its free cash since March 2019, when the company’s best-selling jet, the 737 MAX, was grounded. It is anticipated that it will take two years until Boeing’s financial metrics return to that of a credit rating one level higher.

2) The Philippines has removed a major hurdle in advancing oil exploration with Beijing in the South China Sea, but the two nations will have to navigate their overlapping claims in the area to reach a deal. The island nation has lifted a six-year ban on oil exploration to stop activities that might annoy China. The Philippines has recently toughened its stance against China and is leaning back towards the U.S. It is estimated that 4 trillion cubic feet of gas reserves, that’s worth billions of dollars, could be found in South China Sea areas that is claimed by the Philippines and disputed by China. However an international arbitration court has ruled in favor of the Philippines in 2016. The two nations could set aside the ownership issue and proceed with joint development.

3) Exxon announces additional job cuts, that it intends to reduce its U.S. staff by around 1,900 employees. These reductions will be both voluntary and involuntary, a result of COVID-19 on the demand for oil aimed at improving efficiency and reducing costs. Amid declining oil prices, energy companies are taking drastic measures to improve their balance sheets, including reducing staff and in some cases suspending dividends, with the company’s fourth quarter dividend at 87 cents per share, although this is the first time since 1982 that it didn’t raise its dividend.

4) Stock market closings for – 29 OCT 20:

Dow 26,659.11 up 139.16
Nasdaq 11,185.59 up 180.73
S&P 500 3,310.11 up 39.08

10 Year Yield: up at 0.84%

Oil: down at $36.10

7 May 2020

1) The bust in the Texas oil fields is the worst in memory, says the billionaire Russell Gordy. The coronavirus pandemic has triggered an unbelievable collapse in crude oil prices that is sinking fortunes across Texas, with no clear way out visible in the near future. Texas accounts for 9% of the nations GDP (Gross Domestic Product), so as oil pulls Texas’ economy down, it will undoubtably pull the nations down too. In the past, declining energy prices have helped the U.S. economy, but this time its likely to cut into investment and employment. Texas may lose 1.3 million jobs by June, as the virus puts an end to the U.S. shale oil revolution, which may spill into a broader downturn for Texas, that will also drag the rest of the country down too. Furthermore, Americans are driving and flying much less, which has reduced the demand for oil, bringing on a crisis in storage for the oil surplus. There are expectations that home prices will decline during the remainder of this year and into the next. This in turn will impact the construction industry.

2) As a result of the pandemic, the mortgage industry is implementing reforms that will be long lasting in terms of how lenders operate and how consumers obtain financing. It’s anticipated that digital mortgage processing will become more prevalent as people seek to minimize contact with others. Relators are seeing as much as a 500% increase in home video tours. Reports are that many people are seeing involuntary credit reductions and even terminations of their credit cards as banks seek to reduce their exposure to risk in a troubled economy where jobs are at risk of elimination. This means a further reduction on consumer spending.

3) Disney has seen a 91% plunged of it profits last quarter, a direct result of the coronavirus crisis. The operating profits in Disney’s parks lost about $1 billion dollars to add to a total loss of $1.4 billion dollars in total operating income. Disney has had to close its Walt Disney World and Disneyland theme parks, plus its Disney Stores and the suspension of its cruises and disruptions of its supply chain . However, its new video streaming service Disney Plus grew 26% to 33.5 million subscribers last quarter with revenues up 260%

4) Stock market closings for – 6 MAY 20:

Dow 23,664.64 down 218.45
Nasdaq 8,854.39 up 45.27
S&P 500 2,848.42 down 20.02

10 Year Yield: up at 0.71%

Oil: down at $24.35

28 April 2020

1) The economic woes of the coronavirus may not be over yet. Forecast are that the U.S. economy later this year could contract at a faster rate than for the Great Depression, with a 30% contraction of the second quarter. Durable goods have plunged 14.4% in March as the economy came to a near halt, while the unemployment rate for the same time rose 4.4%. The number of people losing jobs in the last five weeks is 26.4 million, which has wiped out all the job gains made after the Great Recession.

2) Oil continues its troubles, sliding down in price with fears of it reaching zero again. There remains a critical shortage of storage for bulk oil, so there’s no place to put new oil pumped up, and that drives the price of futures down. Oil prices plunged nearly 25% at the start of the week amid fears of limited storage. Global energy demand has fallen drastically from the pandemic shutting factories and putting limits on travel around the world, leaving a glut of oil. With the world economy down, there isn’t any light at the end of the tunnel, and therefore not much hope that the oil glut will ease significantly in the foreseeable future.

3) Fannie Mae and Freddie Mac have announced that borrowers who skip mortgage payments (called forbearance status) due to the coronavirus pandemic won’t have to make lump-sum repayments when the crisis is over. The administration is encouraging other mortgage lenders to adopt similar policies to avoid undue stress to the people and economy during a recovery. Almost 6% of borrowers have delayed making mortgage payments as of April 12, up from 3.7% a week earlier. It’s still not clear just when or how forbearance status will be granted to a borrower, thus allowing the deferment of payments to a later date.

4) Stock market closings for – 27 APR 20:

Dow 24,133.78 up 358.51
Nasdaq 8,730.16 up 95.64
S&P 500 2,878.48 up 41.74

10 Year Yield: up at 0.66%

Oil: down at $12.93

13 April 2020

1) As the administration considers efforts to restart the economy, economist are considering what a recovery will look like. Although there are widely differing opinions, most consider it will be a long slow process. While it was a great shock with the sudden stopping of businesses followed by the sudden massive unemployment, few consider that there will be a quick ‘snap back’ like with a light switch being snapped back on. The shutdown is causing fundamental shifts in the social-economic system. People’s shopping and ‘going-out’ habits such as restaurants, movies and sporting events is changing, which is also a change in spending habits. People are more reluctant to travel in high density such as airliners or cruise ships. Many small businesses will not survive this recession, and with half the businesses in America classed as small, there will be a significant change in the business environment, plus it will be a long time to reabsorb the massive unemployed, since automation will move in to fill the void. Finally, America’s economy is subject to being pulled down by the world economies, which few are expecting a strong comeback from, since so many were already weak before the coronavirus.

2) Consumer prices fell 0.4% in March, the largest monthly decline in five years. This is from the cost of things like traveling, gasoline, airfares and hotel rooms plunging. Energy cost is down 5.8% with gasoline prices down 10.5%. Food prices did continue rising. There are fears that the GDP will drop 30% or more adding to the economic bad news.

3) The wild gyrations of the stock market is leaving investors confused over what is happening. Stocks are going up when the future is filled with doubts and uncertainty, not a time when investors buy equities. The unemployment is quickly approaching, and may surpass 15% amidst fears of a huge economic contraction with a long term recession- a time when normally only fools would buy into the markets.

4) Stock market closings for – 10 APR 20:

Markets closed for Good Friday

14 November 2019

1) The new streaming service Disney+ has surpassed ten million sign-ups since its launch Tuesday. In response Disney’s stock is up slightly while Netflix shares are down 1%. While there were technical problems connecting at first, that didn’t prevent customers from flooding the sign up page. The initial signup is for a free seven day trial, so it’s unknown how many will continue with the pay service.

2) In October, consumer prices rose the most in seven months as the price for gasoline was higher, along with medical treatment and recreation. But in general, inflation remained low and fairly stable, with consumer price index jumping 0.4%, primary from rising cost of energy. While gas prices surged upwards 3.7% in October, it’s still less than what Americans were paying a year ago.

3) The ever expanding corporate giant Google will offer personal checking accounts next year in partnership with Citigroup Inc and a small credit union at Stanford University. To be called Cache, it is intended to follow Apple Inc. and Facebook Inc into the financial industry. Google’s strategy is to deeply partner with banks and the financial system.

4) Stock market closings for – 13 NOV 19:

Dow                   27,783.59         up    92.10
Nasdaq               8,482.10    down      3.99
S&P 500              3,094.04         up      2.20

10 Year Yield:    down   at    1.87%

Oil:    up   at    $57.38

7 November 2019

1) The Oklahoma energy company Chesapeake Energy, who helped pioneer America’s shale natural gas revolution, is now warning that it may not survive the era of cheap gas it helped usher in. In a filing to the Securities and Exchange Commission, the company stated that if depressed prices persist, there is substantial doubt if it can survive. Fracking made it a natural gas powerhouse, at one time the number two natural gas producer, but now it is drowning in $10 billion dollar debt.

2) The U.S. productive has fallen for the first time since 2015. American productivity fell 0.3% in the third quarter, after two quarters of healthy gains, while productivity had increased 1.4% in the past year, about two-thirds of its long run average. Additionally, the low unemployment rate is driving up labor costs by forcing companies to pay more for workers, a trend that could eventually raise inflation. Labor cost rose at 3.6% in the third quarter, up 3.1% for the past year.

3) SoftBank Group Corp. reported an enormous loss from investments in the two money losing startups WeWork and Uber Technologies Inc. SoftBank reported a loss of $6.5 billion dollars after writedowns in WeWork and other investments, the first such loss in 14 years. The massive losses were incurred when WeWork’s IPO failed leaving the startup company cash starved so SoftBank had to extend a $9.5 billion dollar rescue package and take an 80% stake in the company.

4) Stock market closings for – 6 NOV 19:

Dow           27,492.56         up       0.07
Nasdaq        8,410.63    down    24.05
S&P 500       3,076.78          up      2.16

10 Year Yield:    down   at    1.81%

Oil:    down   at    $56.39

NAWAH COMPANY & EDF SIGNS PACT TO CONSTRUCT FIRST ENERGY PLANT IN THE UNITED ARAB EMIRATES (UAE)……

*Photo Image: ArabianBusiness.com*

By: Economic & Finance Report

Nawah Energy Company (unit/ENEC), a unit  of the Emirates Nuclear Energy Corporation , has signed a long term joint agreement with middle east nuclear powerhouse EDF Abu Dhabi.

Nawah will operate and maintain the Barakah Nuclear Energy Plant, that is being established in Abu Dhabi, UAE. The Barakah Nuclear Energy Plant will be the first nuclear energy plant in the Arab region.

The agreement strengthens both parties; in that allows EDF to be one of the few, if not only firms to build and maintain in the energy sector, within the UAE. For Nawah it provides it strengthened position, in being allowed to continue to maintain, monitor, and operate the Barakh Nuclear Energy plant on day to day basis.  -SB