25 September 2020

1) Tim Kendall, former Facebook director of monetization, says that Facebook “took a page from Big Tobacco’s play book, working to make our offering addictive at the outset.” The greater the usage of Facebook by people, the greater Facebook’s revenues, so it behooves the company to make its service as addictive at possible, as soon as possible with new people. But this drive to maximize engagements entails building algorithms that facilitate the spread of misinformation, encourages divisive rhetoric thereby laying the groundwork for a mental health crisis. While met to be a device for entertainment, Facebook is in fact tearing people apart with alarming speed and intensity. He fears that American’s are pushing ourselves to the brink of civil war. Presently, Section 230 is a law that makes social media platforms immune to legal liability for the content of users’ posts. But there are growing number of people calling for reforms.
2) California Governor Gavin Newsom has signed an executive order that bans the sale of all but electric and fuel cell cars by 2035. But legal experts say the order is ‘borderline worthless’, that there isn’t anyway to enforce it. The objective is to do away with the internal combustion engine in California by mandating an increasingly larger percentage of new car sales must be zero emissions machines starting with 2% for 1998, 5% by 2001, 10% for 2003 and etcetera. California auto dealers challenged the order in court and got it somewhat diluted. Nevertheless, it’s another step in the race to electrify California’s cars.
3) Half the people who lost their jobs from the pandemic are still unemployed, while 60% who did return to work have taken a cut in pay. As of 12 September, 12.6 million Americans are receiving unemployment benefits, with an unemployment rate at 8.4%. The lower income workers are more likely to still be unemployed. The bottom line, the virus crisis lead to a unprecedented loss of jobs and six months later, America is still a long ways from recovery. The crisis has caused a split in America’s labor force, the higher earners are going one direction while the lower paid ones are going another.
4) Stock market closings for – 24 SEP 20:
Dow 26,815.44 up 52.31
Nasdaq 10,672.27 up 39.28
S&P 500 3,246.59 up 9.67
10 Year Yield: down at 0.67%
Oil: up at $40.28

21 September 2020

1) Michael Farr of CNBC claims the problem with the U.S. economy is there are too many poor people, that the poor and middle class don’t have enough money. His contention is that until employment and wages increase, the U.S. economy will remain bogged down or worst . . . digging a deeper hole. The American economy is the world’s largest with nearly 70% driven by consumer spending. With the vast majority of consumers in the lower middle class and poor, it stands to reason that with more money in their hands, it would make for a more viable economy. He contends that until their lot is improved by having more money, the economy will remain sluggish. But as is often the case, he ignores the ‘obsolete people’ problem of machines with technology displacing those workers. The pay of people reflects the value of people to society, and as technology continues to lower their real value it makes it hard to increase their wages.

2) Wayfair, the giant on-line home furnishings retailer, has announced they are launching two new credit cards while retiring their Comenity Bank card. There will now be the Wayfair Mastercard and the new Wayfair Credit Card. These cards will have no annual fee and offer the choice of earning rewards on spending or receiving no-interest financing for up to 24 months. Wayfair is partnering with Citi Retail Services for the two credit cards.

3) Facebook, the social media giant, is searching for a director of remote work as part of its plan for a more permanent shift of working from home. The company has been making a major shift towards permanent remote work and now needs management dedicated to permanently establishing this method of work in the corporate structure. Facebook is expecting as much as half of its 48,000 workforce to be working at home in the next ten years. Several other large companies are exploring the work-at-home strategy as a way of reducing cost of labor as well as allowing a larger pool of workers to draw upon, since home workers can be thousands of miles away from the home office. There are many consequences to the economy from a large work force working at home, the first is reducing spending on automobiles and service, plus sales of clothing.

4) Stock market closings for – 18 SEP 20:

Dow 27,657.42 down 244.56
Nasdaq 10,793.28 down 117.00
S&P 500 3,319.47 down 37.54

10 Year Yield: up at 0.69%

Oil: up at $40.98

3 September 2020

1) Major American companies are extending their ‘work from home’ policy, such as Google, Uber and Airbnb, until the summer of next year. The companies Zillow, Twitter, Facebook and Square have announce that employees can work from home indefinitely. Some companies are also offering stipends to employees for home office equipment as well as a $500 quarterly credit to use specifically on Airbnbs. This at home work policy remains in effect even after offices start reopening. The work at home is even spreading across the international scene with electronic giant Hitachi having 70% of its employees work permanently from home. Nationwide Insurance plans to downsize from 20 physical offices to just four with the majority of its employees continuing to work permanently from home. It’s looking more and more like working at home is becoming the norm for the future in America.

2) In a bid to counter the competition of e-commerce, the traditional department store giant Macy’s has started opening new, smaller stores away from the malls, reflecting a growing trend in the retail industry. The retail giant will test small-format Macy’s and Bloomingdale’s stores outside of underperforming malls, joining a growing trend in retail. The test stores will begin operation the fourth quarter of 2021 in Dallas, Atlanta and Washington DC. Many other major retailers are turning away from the mall format of retailing, leaving many malls withering on the vine, with foot traffic on the decline even before the Convid-19 crisis. This is another indication of a shift in American culture and society.

3) Fashion retailer Old Navy has announced they will pay their employees to work at polling stations comes election day. Each employee will be paid a full days wages for their poll work. Furthermore, store employees will have up to three hours of paid time-off on election day to vote. Old Navy joins other retailers such as Patagonia, PayPal and Levi Strauss & Co. to help in the national elections.

4) Stock market closings for – 2 SEP 20:

Dow 29,100.50 up 454.84
Nasdaq 12,056.44 up 116.78
S&P 500 3,580.84 up 54.19

10 Year Yield: down at 0.65%

Oil: down at $41.78

2 September 2020

1) Five American companies make up 24% of the S&P 500 Index, the big high tech companies Apple, Amazon, Microsoft, Facebook and Alphabet. These five companies made up 17% of the index at the start of the year. This makes a significant part of American net worth and security for retirement dependent on just a handful of stocks, which makes some financial advisers nervous having their eggs in too few baskets. One hiccup in the technology sector could mean major losses across the board.

2) Another shooting of a young black man Monday in South Los Angeles has sparked more protest that could lead to more city rioting. The man was stopped for violating vehicle codes, but then ran, with the police in hot pursuit. When police caught up with him, he punched one policeman in the face at which time a semiautomatic pistol dropped out causing both policemen to open fired. Since the victim didn’t have the weapon in hand, nor was it ever pointed at either police officers, so there are questions about the shooting. So far, protests have been peaceful.

3) The U.S. Justice Department is investigating the protest leaders and their funding in Portland and other cities for possible criminal activity. With riots and civil unrest now at a hundred days, and significant monetary loses have been occurred, questions are being raised about who is behind the well organized protesters seemingly intent on violent confrontation. Of especial interest is the loosely organized far left Antifa and the Black Lives Matter, and who is ultimately controlling their operations through funding and why.

4) Stock market closings for – 1 SEP 20:

Dow 28,645.66 up 215.61
Nasdaq 11,939.67 up 164.21
S&P 500 3,526.65 up 26.34

10 Year Yield: down at 0.67%

Oil: up at $43.01

4 June 2020

1) The stock market continues to climb, with some saying this signals the end of the recession. The S&P 500 has a return of 37.7% over the past 50 trading days, which is the largest 50 day rally in history. This rally is attributed to the quick response of the Federal Reserve, with a record $2 trillion dollar federal stimulus package. Another factor is the unlimited asset purchases by the Federal Reserve. While the shutdown depressed retail and airlines businesses, other parts of the economy saw a boost, such as Netflix, Amazon and Facebook. But there is still the record high of over 40 million workers idled by the pandemic, while the weakening in the Chinese’s economy coupled with the tensions between China and America could have a telling effect to the economic recovery.

2) There are fears of another round of layoffs in the later part of 2020, amid questions of where the economy will go in the next six to twelve months. Businesses are now reluctant to expand and hire new people, and may decide to contract thus being better able to weather economic hard times. There is also the unspoken problem of continued automation taking jobs as AI (Artificial Intelligence) and automation that experts predict will continual to sap jobs for the next decade. Automation gives companies an added advantage in surviving when the economy slows down, but a second wave of layoffs may trigger that slowdown.

3) The giant movie theater chain AMC has announced they doubt they can remain in business after the effects of the coronavirus shutdown. The company has problems with their liquidity, their ability to generate revenue and the timeline for reopening its theaters. The chain expects to lose $2.1 to $2.4 billion dollars for the first quarter, with the second quarter to be even worst. With all its theaters closed down, AMC is generating zero revenues. The major problem in reopening is having enough cash for operations until cash starts coming in again, and there is still questions of when theaters will be able to open again, especially if there are flare-ups of the virus.

4) Stock market closings for – 3 JUN 20:

Dow 26,269.89 up 527.24
Nasdaq 9,682.91 up 74.54
S&P 500 3,122.87 up 42.05

10 Year Yield: up at 0.76%

Oil: down at $36.75

12 March 2020

1) The WHO (World Heath Organization) has declared the coronavirus to be a pandemic, which in turn has cause the markets to make another plunge after its apparent recovery on Tuesday. The number of coronavirus cases world wide is now in excess of 100,000 with more than 1,000 in the U.S. The central banks in other western nations are cutting their interest rates in an attempt to minimize the effects of the virus and avoid a world wide economic slowdown. At present, there doesn’t seem to be an end to the markets volatility.

2) The United Kingdom is levying an additional 2% tax on big high tech companies starting the first of April. Call the ‘digital services tax’, it will levy a tax on the revenues from search engines, social media services and online marketplaces used by British citizens, but it only applies to companies making more than $650 million dollars and derive more than $35 million dollars revenue from UK users. This will encompass companies like Amazon, Apple, facebook and Google. The EU (European Union) is considering a similar tax, but with a 3% rate.

3) Oil production in the U.S. is expected to drop as a result of the dramatic collapse in oil prices. This would be the first decline in output since 2016 as drillers are cutting back on capital spending. Oil prices are below $35 a barrel, well below the breakeven price for most American shale fields. Oil prices have been pushed down by the economic impact of the coronavirus plus Saudi Arabia and Russian failing to agree on limited oil production.

4) Stock market closings for – 11 MAR 20 Stocks down 20% from their high.

Dow 23,553.22 down 1464.94
Nasdaq 7,952.05 down 392.20
S&P 500 2,741.38 down 140.85

10 Year Yield: up at 0.82%

Oil: down at $33.12

24 February 2020

1) To settle its civil law suit over fake accounts, Wells Fargo, America’s fourth largest bank, is paying $3 billion dollars. In order to meet sales quotas, employees opened millions of savings and checking accounts using the names of actual customers. Wells Fargo is accountable for tolerating fraudulent conduct, which was remarkable for its duration and scope. The bank company took several steps to conceal the accounts from customers, such as forging signatures and preventing other bank departments from contacting customers to survey their accounts.

2) John Deere, a manufacturer of farm and construction equipment, has experience a first quarter profit, signs that the U.S. farm market is stabilizing. The manufacturer has been buffeted for the last two years by the U.S. – China trade war, which has pushed agriculture business down leaving farmers struggling to turn a profit.

3) Facebook will stop listening to and transcribing messenger voice for its speech recognition technology development. But the company still needs the voice recordings to improve its speech recognition, so the company will pay selected users to record snippets of audio using a development program called ‘Pronunciations’. Test subjects will have phrases recorded, which Facebook will specify, and in turn will receive compensation.

4) Stock market closings for – 21 FEB 20:

Dow 28,992.41 down 227.57
Nasdaq 9,576.59 down 174.38
S&P 500 3,337.75 down 35.48

10 Year Yield: down at 1.47%

Oil: down at $53.46

15 November 2019

1) Sears is laying off a little less than 300 people in their corporate headquarters in Hoffman Estates, Illinois and company offices in San Francisco, many being informed in a company meeting. The last round of layoffs was 250 employees in September. Restructuring plans include closing 96 more Sears and Kmart stores by February leaving about 180 stores remaining.

2) Wikipedia co-founder Jimmy Wales is starting a social networking and news sharing site as an alternative to Facebook and Twitter. Called WT:Social, it will show the newest links first instead of using algorithms to bump posts with the most comments or likes to the top. Unlike Facebook and Twitter, the service will be funded by advertising. Just a month old, and it already has 50,000 users.

3) Interest in tiny houses continues with Amazon now offering prefabs from 100 square feet up to 1,500 square feet and prices from $5,000 to over $100,000. These style of houses are becoming popular with the young just starting life who don’t have the resources to buy a conventional home. However, their small size, while more friendly to the environment, set constraints on peoples lifestyles, by limiting what they can own or the number of friends they can have over at any one time. Nevertheless, tiny house continue to grow in popularity.

4) Stock market closings for – 14 NOV 19:

Dow              27,781.96     down    1.63
Nasdaq           8,479.02     down    3.08
S&P 500          3,096.63           up    2.58

10 Year Yield:    down   at    1.82%

Oil:    down   at    $56.86

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

9 September 2019

1) Several state attorney generals will investigate Facebook for possible stifling competition and putting users at risk. This comes after reports that Google will face antitrust investigations from state attorney generals. The investigations will center on actions that endangered consumer data, reduced the quality of consumers’ choices or increased the price of advertising. States investigating include New York, Colorado, Florida, Iowa, Nebraska, North Carolina, Ohio, Tennessee and the District of Columbia.

2) President Trump unhappy at GM for decision to close four of its domestic auto plants. General Motors, which was once the giant automaker in Detroit, is now one of the smallest. GM has gone from 33 plants in the US to 29, but has an additional 27 manufacturing plants in China. Presently, GM sells more cars in China than it does in America. This accounts for $16 billion dollars in profit for GM.

3) The American consumer is carrying the U.S. economy in last quarter. The personal expenditures rose last quarter while business and residential investment, net exports and inventories have declined. There are concerns that consumers may rein in spending from fears of economic future. Global commerce is slowing, partly in response to the trade war, and without strong consumer spending it’s hard to see alternate sources of economic growth.

4) Stock market closings for – 6 SEP 19:

Dow               26,797.46         up     69.31
Nasdaq            8,103.07    down    13.75
S&P 500           2,978.71          up      2.71

10 Year Yield:    down   at    1.55%

Oil:     up   at    $56.73