6 July 2020

1) Newest job report is out with America gaining 4.8 million jobs as people return from the shutdown to work again. This gives an unemployment rate of 11.1%, which is still in the recession category, but is coming down over time. These returning jobs were mostly in the restaurant, hotel and retail sectors. There remains the question of how many restaurant jobs will finally return, with significant numbers of privately own businesses failing financially because of the shutdown.

2) The cornerstone of Ford’s reorganization, its F series Ford pickups, has dropped 22% in sales. Most of these are the F-150 full size pickups, with a new version just recently released. Total Ford sales are down 33.3%, with Ford executives making it clear just how critical the F-150 is to the future of Ford. Before the pandemic crisis set in, Ford had implemented a major restructuring of its operations intent on remaining a strong profitable company, and had expected to pay for this plan in part with the strong sales of the F-150. The F series models have been a part of Ford’s product line since 1948.

3) It’s reported that the developing world loses billions of dollars in money from migrant workers. These migrant workers range from Polish farmhands in the fields of southern France, to Filipino workers on cruise ships in the Caribbean, almost all of them losing their jobs because of the pandemic shutdown. These workers routinely sent cash home, so the third world economy is suffering too. Migrant workers comprise tens of millions of Indians, Filipinos, Mexicans and others from the developing countries, who sent a record $554 billion dollars back home last year. This is more than three times the development aid from foreign governments. Family members depend on this cash to pay for food, fuel and medical care. This drop in money sent home is four times the fall in the 2008 Great Recession.

4) Stock market closings for – 3 JUL 20:

Dow 25,827.36 up 92.39
Nasdaq 10,207.63 up 53.00
S&P 500 3,130.01 up 14.15

10 Year Yield: down at 0.67%

Oil: unchanged $40.32 back home

25 June 2020

1) There are ten companies that may not make it through the summer. These are high brand names of Hertz, J.C. Penney, Pier 1 Imports, Tuesday Morning, J. Crew, Neiman Marcus, Gold’s Gym, Tailored Brands (Men’s Warehouse and Jos. A. Banks) and Diamond Offshore Drilling, which are all in bankruptcy now. The high number of retailers shows the ongoing retail apocalypse with the retail sector, which had already hit before the pandemic by falling sales, lower costumer traffic and too many stores. Retail was near the edge of collapsed with last years Christmas holiday shopping doing little to boost business, especially those located in malls. Last year, 9,500 retail stores closed, with estimates of 15,000 stores closing for good in 2020. This may indicated a fundamental shift in America’s economy, a shift away from hyper-consumerism to something else besides a service based economy. Shopper visits to stores are about half of last year’s numbers, and that’s with businesses reopening after more than two months on lockdown.

2) Fears continue to grow that we are not finished with the Convid-19 crisis yet, as the number of new cases continues to increase. This is happening with states and cities easing their shutdown measures to reopen the economy to start a recovery. The seven day average of new virus cases has swung up 30% from a week ago. It was hoped the warm weather would suppress the virus spread as it does with the flu, but if the virus is resurrecting, then the shutdown may need to returned with the resulting economic impact.

3) The Ford Motor Co., who is in the process of its global restructuring plan and paying off debt related to the coronavirus pandemic, is betting its future on its new line of pickups. Ford is offering its popular F-150 model in traditional internal combustion engines, new hybrids and all electric versions. The Ford F-150 has been the country’s top selling truck for more than 40 years, the best selling for the last consecutive 38 years. Their F-150 is a key part in Ford’s plans to profitably grow their business, to help in the $11 billion restructuring cost and pay off the $20 billion dollars in new debt.

4) Stock market closings for – 24 JUN 20:

Dow 25,445.94 down 710.16
Nasdaq 9,909.17 down 222.20
S&P 500 3,050.33 down 0.96

10 Year Yield: down at 0.68%

Oil: down at $38.07

23 April 2020

1) The present unemployment rate is thought to be higher than anytime during the Great Depression, raising the question if the present day recession will last as long as the Depression, which was almost ten years. While some sever recessions have been short lived, usually they are long affairs. Lowering the interest rates is a traditional tool used by the government to counter a recession and stimulate the economy, but interest rates are already near zero when the coronavirus hit, so the government didn’t have its primary tool. Many economist are considering the strategy ‘America is back open for business’ as unlikely to create a huge surge in growth. There are three other major factors to consider- 1) the other world economies are continually pulling America’s down 2) the big mess that oil is in and 3) predictions from several different experts that in the next 15 to 25 years as much as 50% of the jobs will disappear to technology. It will be difficult for employment to return to pre-coronavirus levels if jobs are continually disappearing faster than people are being rehired. One interesting point, a financial analyst is predicting that Disney World, Disneyland and their overseas parks will not be able to reopen until January 2021, and if such a cash rich company is having so much difficulty reopening, how about the multitude of smaller companies with much more limited resources?

2) U.S. automakers are taking the first steps to bring workers back and start manufacturing operations again, but are finding it easier said than done. There are negotiations with the United Auto Workers union, for the manufactures to provide protective gear, frequently sanitize equipment and take worker temperatures to prevent infection of the virus to the union members. As much as workers want to return to a paycheck, there are real fears of catching the virus. Fiat Chrysler has announced May 4 as the gradual restart date, with General Motors and Ford expected to quickly follow.

3) Reports are building that the coronavirus may cause lasting damage to some organs such as the kidneys. There are fears from reports that the virus may cause damage to the heart, lungs and possibly the liver. Furthermore, the blood from Covid-19 patients is having unprecedented blood clotting, evident by blood clots forming while trying to insert IVs or taking blood samples. Internal blood clots can be life threatening, and autopsies are finding such internal blood clots.

4) Stock market closings for – 22 APR 20:

Dow 23,475.82 up 456.94
Nasdaq 8,495.38 up 232.15
S&P 500 2,799.31 up 62.75

10 Year Yield: up at 0.62%

Oil: up at $14.23

5 February 2020

1) As the coronavirus continues the slowing of China’s economy, coupled with a general slow down in world economies, world oil prices are dropping. China is the world’s largest oil importer, with speculation that if oil continues to drop, America can expect a drop in gasoline prices, possibly going below $2 a gallon.

2) The credit card company Visa is planning major changes to the rates U.S. merchants pay to accept its cards. These changes are the biggest changes in a decade, with Visa hoping to encourage people to abandon checks and cash. Higher rates are coming for transactions on e-commerce sites, while certain retailers such as real estate and education will see lower rates. Retailers have long complained about the $100 billion plus dollars they spend each year to accept electronic payments.

3) Ford Motor Co. has posted a fourth quarter loss and provided weaker than expected 2020 forecast due to continued higher warranty cost, lower vehicle volumes, lower results from Ford Credit branch, and higher investment in future transportation. This is coming at a time when Ford and other automakers are making huge investments in producing a line of electric cars and trucks. For the fourth quarter, Ford is reporting a net loss of $1.7 billion dollars, or 42 cents a share. Revenue for the fourth quarter was down 5% to $39.7 billion dollars.

4) Stock market closings for – 4 FEB 20:

Dow                   28,807.63    up    407.82
Nasdaq                9,467.97    up    194.57
S&P 500               3,297.59    up      48.67

10 Year Yield:    up   at    1.60%

Oil:    down   at    $49.45

TESLA’S MARKET VALUE SURPASSES FORD MOTORS & GENERAL MOTORS MARKET SHARE VALUE COMBINED!

Image Credit: NBCNews.com

By: Economic & Finance Report

Breaking News: Tesla Inc market value has now surpassed both legendary Ford Motors and General Motors company market values combined.

January 8, 2020 (Wednesday) Tesla Inc had a market cap of $89 billion, approx 2 more billion dollars then Ford Motors ($50 billion) and General Motors ($37 billion) combined.

Many of Tesla Inc’s attributes for rising market cap has to be with a profitable 3rd quarter the electrical auto maker had; also surpassing auto deliveries in the Chinese market, while also having its stock more then double over the past few months. These all seem to be contributing factors to its increased market cap currently.

With all the accolades Tesla has achieved, there are skeptics in the investment community who believe the company will not able to sustain cash flow nor provide more profitability in the next few years.

All this remains to be seen...SB

26 November 2019

1) America’s largest manufacturer of truck engines plans to lay off 2,000 workers. Orders for heavy duty trucks is down last year by 51%. This market dip is forcing Cummins Diesel to cut back on its production, reducing its 62,610 workforce by the 2,000. The company is forced to do a more aggressively cost cutting program because the down turn is happening faster than anticipated. Other manufactures of parts and assemblies, such as drivetrains, braking and axles used in large trucks are also forced into layoffs and bankruptcies.

2) The national debt has just passed $23 trillion dollars the first of November. This is a record high for the amount of money owed by the Federal government brought on by the growing budget deficits and is roughly equal to the Chinese, Japanese and German economies combined. Both parties have abandoned fiscal conservative spending and are intent on spending more on the domestic and military fronts, a contest over promises of who will spend more while cutting taxes.

3) The Ford Motor Company has $37 billion dollars in cash and short term assets on its balance sheet , but is strapped for cash. This makes Ford one of the top ten U. S. companies flush with cash. But Ford faces so many future challenges, it must hold onto every penny it can. First is a major multi-year restructuring, principally in Europe and South America. Also, Ford is overdue to refresh its key vehicles, including the company’s best selling F series pickup trucks, which will cost several billion dollars. Finally, Ford’s efforts to join the rush into electric vehicles, with seven new electric models due by the end of 2020.

4) Stock market closings for – 25 NOV 19:

Dow               28,066.47    up    190.85
Nasdaq           8,632.49     up    112.60
S&P 500          3,133.64     up       23.35

10 Year Yield:    down   at    1.76%

Oil:    down   at   $57.91

4 September 2019

1) The ever present problem of growing student debt is being aggravated by the ever rising cost of college. This rise in cost is fueled by decreasing funding by governments, a lack of cost controls by college administrations and an emphases on plush facilities instead of real education support.

2) Manufacturing shrank in August for the first time since August 2016. The manufacturing index slid to 49.1 from 51.2 in July, where an index below 50 signals a contraction. Production declined by 1.3 percent while employment fell by 4.3 percent with new orders falling by 3.6 percent. With the trade war increasing the cost of Chinese manufactured imports, it would be expected that American manufacturing would be increasing.

3) The United Auto Workers union is targeting GM for contract talks, with the UAW approving a strike. The UAW represents nearly 150,000 hourly workers at Ford, General Motors and Fiat Chrysler with 96% of it’s workers OKing a strike. Leaders of the UAW are under investigation for corruption by the FBI who have conducted raids on key leadership members recently for mis use of monies. The union is angry at GM for layoffs and the closing of plants, plus production plants in Mexico.

4) Stock market closings for – 3 SEP 19:

Dow              26,118.02    down    285.26
Nasdaq           7,874.16    down      88.72
S&P 500          2,906.27    down       20.19

10 Year Yield:    down   at    1.47%

Oil:    down   at    $53.90

26 July 2019

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

10 Year Yield:    up   at    2.07%

Oil:    down   at    $55.91

23 July 2019

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

10 Year Yield:    up   at    2.05%

Oil:    up   at    $55.74

4 July 2019

1) Estimates for National Employment Report forecast 140,000 new jobs, but private employers added just 102,000. This compares to 41,000 new jobs for the pervious month. This report comes ahead of the U.S. Labor Departments’s more comprehensive non-farm payrolls which includes both public and private sector employment.

2) Renown former Chrysler CEO Lee Iacocca, the man who put the Mustang in Ford’s lineup, has died at 94. Mr. Iacocca is also noted for creating the minivan and Chrysler K-cars in his 32 year career in Detroit. He’s best noted for his turn around of Chrysler corporation when in 1979 the company was floundering with $5 billion dollar debt turning out gas guzzler cars that people didn’t want. To save the company, he secured $1.5 billion dollar loan guarantees from the Federal Government which kept the company afloat until new fuel efficient cars could be produced.

3) The U.S. trade deficient surges to a five month high in May as imports of goods increased with businesses building up stock supplies to avoid tariffs. The trade deficit increased 8.4% to $55.5 billion dollars. The widening trade deficit adds to weak housing, manufacturing, business investment and slow consumer spending which may spell a lowering of the American economy. The trade deficit may be further aggravated with the suspension of Boeing’s 737 MAX deliveries.

4) Stock market closings for- 3 JUL 19: Stocks surged up on news of new U.S.- China talks.

Dow              26,966.00    up     179.32
Nasdaq            8,170.23    up       61.14
S&P 500           2,995.82    up       22.81

10 Year Yield:    down   at    1.95%

Oil:     up   at    $57.40