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.
1) Unemployment claims have jumped twice the previous week’s numbers, with 6.6 million Americans filing for benefits. This brings the last two weeks total of new unemployed to 10 million. The speed and scale of job losses are unprecedented. The record for loses in a month had been 695,000 in 1982. The coronavirus has wiped out more jobs in two weeks than were lost in the worst months of the last recession. Companies based on white-collar workers, have been able to keep their people working with work at home, but as revenues dry up, it’s questionable how long before they too will be forced to start layoffs. The growing number of laid off workers unable to pay their bills could well lead to a cascade of further layoffs and business failures.
2) While the price of oil has always had an effect on the equities, the recent plunged has had a more profound effect and therefore causing the roller-coaster volatility of the markets. This dramatized how very central oil is to the entire modern world. Stabilizing the oil prices would greatly help stabilizing the markets, and therefore the whole world economic system. Central to this is for Russia and Saudi Arabia to end their price war and resume limiting production. But central to this is Russia’s desire to damage American domestic oil production by destroying the shale oil companies, which would reduced American’s influence in the world especially in the middle east where Russia is very active.
3) Already wracked by fiscal problems from decline of the milk product markets, dairymen now suffer a further decrease in their market as a result of the coronavirus crisis. This is a result of restaurants, schools and other food service outlets reduced to stopping operations and therefore not needing milk products. The dairy industry is still producing, but doesn’t have anyplace to sell their milk, so the industry is asking the government to increase its purchases of dry milk, butter and cheese.
4) Stock market closings for – 2 APR 20:
Dow 21,413.44 up 469.93 Nasdaq 7,487.31 up 126.73 S&P 500 2,526.90 up 56.40
Online stock brokers TD Ameritrade, E*Trade & Charles Schwab have officially cut their online broker commissions to zero. Charles Schwab was the first brokerage, Interactive Brokers followed suit in cutting their commission rates, then came along TD Ameritrade and E*Trade.
Many online brokers are cutting their commissions to nil (0 zero), because of the climate that brokerages such as Robin Hood has had on the industry, allowing free trades of equities to their clients.
Since then other brokers have also cut their commissions to incur more of fairer playing field for their investors, traders and account holders. Many have speculated this was bound to happen at some point. Well, it looks like it has finally arrived. -SB
Las Vegas gambling icon, Billy Walters has been convicted by a jury for insider stock trading. Mr. Walters had earned more then $43 million dollars from an insider trading tips over several years, from former chairman of Dean Food Company, Tom C. Davis. Davis testified against Walters stating that he made the $43 million dollars off of Dean Food’s over the course of approx six years.
Davis had been Walter’s best friend for over 20 years, and he was also the prosecution’s star witness against Billy Walters. Walters considered one of the greatest gamblers in the world, mainly betting on sports game, was also proactive in equities trading. His dominance as a multi millionaire, started in the gambling circut, then escalating his winning streak into the equities markets.
Mr. Walter’s businesses span from car rentals, golf clubs, real estate and car dealerships in Las Vegas, Nevada. His business empire is said to be worth $500 million dollars. He was convicted of all ten counts presented by the prosecutors and his sentencing is to July 14, 2017. -SB
Nigerian stocks took advantage for another day of upswings because of the outcome of this past weekends Presidential and Congressional elections. This is the indexes longest winning streak since 2012. Global equities jumped 8% percent on Wednesday impacting other equitable sectors to increase upward as well.
Nigerian stock indexes is up some 16% for the week of the Presidential elections and the impact is being noticed across the board. President Elect Muhammadu Buhari will have to make inroads with the economy nigerian markets because of the losses it has accrued this past year because of the decline of oil revenues. –SB