13 May 2019

1) Trump’s tariffs went into effect today, at first driving the markets down, but then they recovered to all close high. Trumps statement that talks with China will continue pushed the markets up, while also leaving open the possibility that the tariffs may be soon removed. The tariffs went from 10% to 25% on $200 billion dollars of Chinese imports.

2) With the new tariffs on China, there are concerns for the U.S. economy and that the threat of an increased trade war between China and U.S. will cause a drop in both China’s and American’s GDP (Gross Domestic Product). Declines in GDP is not expected to be limited to America and China, but the global GDP could also suffer too.

3) The apparent contraction of consumerism continues with more than 6,200 stores to close this year. For the last couple of years, the retail industry has been rocked by the number of store closures. The list of retailers include such big names as Payless ShoeSource, Family Dollar, Gap, Victoria’s Secret, Office Depot and OfficeMax, Kmart, CVS, Pier 1 Imports, Bed and Bath, Lowe’s, JC Penny’s and even Walmart.

4) 10 MAY 19 Stock market closings:

Dow               25,942.37    up    114.01
Nasdaq           7,916.94    up        6.35
S&P 500          2,881.40    up      10.68

10 Year Yield:    unchanged   at    2.46%

Oil:    up   at    $61.71

8 May 2019

1) Tomato prices could raise 40% from U.S. withdrawing from trade pact with Mexico, called the Tomato Suspension Agreement which expires this Tuesday. This will trigger duties of more than 17% on tomatoes coming from Mexico. Tomatoes from Mexico are selling below domestic production cost.

2) The Dow Jones slid down 648 points, before rising to 473 points on closing, over news that America will impose higher tariffs on Chinese goods late this week. The Nasdaq and S&P 500 also experienced similar significant drops over fears of a full blown trade war with a down turn in global growth and a drop in China’s GDP.

3) Analyst say that a breakdown in the semiconductor field is a warning sign that a trade war with China is coming. This industry is more sensitive to U.S. – Chinese trade tensions. Watch the Philadelphia Semiconductors SOX index, for if the index falls below about the 1,430 level, that indicates trouble.

4) 7 MAY 19 Stock market closings:

Dow             25,965.09    down    473.39
Nasdaq         7,963.76    down    159.53
S&P 500        2,884.05    down      48.42

10 Year Yield:    down   at    2.45%

Oil:    up   at    $61.44

9 April 2019

1) In ten years, the US debt to GDP ratio will be equal (100%). The debt to GDP ratio is presently 78%, the highest since the end of World War II, but it’s anticipated to be 96% by 2028. To bring this into perspective, countries with sever economic problems such as Greece have a ratio of 188%, Italy 130%, Portugal at 120% and Spain with 97%. On the positive side, Germany has a ratio of 59%. The IMF is warning of the problem for America if the ratio is left to continue as is. A high ratio hinders a government’s ability to counter any economic downturn. America’s entitlements is the principle cause for the increase, because when Social Security was started, there were 16 workers to support each retiree, now there are just 2.6 workers.

2) European Union borrowers are eager to see how a Brexit extension will effect markets, by possibly reducing the uncertainty that Brexit has brought on. This spring, the IMF and World Bank will be meeting for their annual conference on world economic matters.

3) Tesla, the maker of electric automobiles, is starting its new quarter with another round of cuts of sales staff following poor deliveries. The company is closing some of it’s show rooms in favor of online sales. These actions are rattling investors by stoking confusion.

4) 8 APR 19 Stock market closing:

Dow                          26,341.02     down     83.97
Nasdaq                       7,953.88           up     15.19
S&P 500                      2,895.77           up       3.03

10 Year Yield:    up   at    2.52%

Oil:    up   at    $64.46

21 March 2019

1) Fears of climate change is causing some retired seniors to pull up and move out of Florida, which for many years has drawn the ‘sixty plus year olds’ demographics for a life of peaceful retirement with its low cost of living, no income tax and nice warm weather. But the threat of hurricane damage from flooding and rising sea levels is also making the associated insurance cost soar, in turn causing retirees to reconsider and move more inland, the result some are claiming from global warming.

2) Losses from the flooding in Nebraska is estimated to be over one billion dollars with more flooding forecasted. But even worst is the anticipated impact on farmers. Last year, 19% of Nebraskan farms filed for bankruptcy, and many more are now anticipated to file as the consequence of the flooding pushes more farmers under.

3) The Feds have elected to not raise interest rates again this year, expecting an economic slowdown ahead. There isn’t any need to guard against inflation coupled with indicators of slower growth from household spending and business fixed investment. The GDP was 2.1% instead of the expected 2.3%.

4) 20 MAR 19 Stock market closings:

Dow                25,745.67    down     141.71
Nasdaq             7,728.97          up         5.02
S&P 500            2,824.23     down         8.34

10 Year Yield:    down   at    2.54%

Oil:     down   at     $59.99

16 January 2019

1) China releases data showing a further slowdown of their economy, with consumer spending retreating as people buy less. They reduced their forecast for their 2019 GDP.

2) The British parliament voted to reject the Brexit plan by 432 to 202. With just ten weeks before Britain exits the EU, concerns for the British economy are growing. Britain exits the EU on 29th of March, with the exit agreement having taken two and a half years to negociate. Prime Minister May’s future is in doubt with an upcoming no confidence vote likely soon.

3) It’s estimated there is a 0.1% drop in the economy for every week of government shutdown. Job expansion is threaten as workers are dropped off the payrolls.

4) 15 JAN 19 Stock market closings: Netflix pushed the markets up with their announcement they are raising their rates.

 Dow                      24,065.59   up   155.75
Nasdaq                    7,023.83   up   117.92
S&P 500                   2,610.30   up      27.69

10 Year Yield:   up   at   2.71%

Oil:   down   at   $51.91

BECAUSE OF NIGERIA’S RECESSION… THE COUNTRY WILL NEED TO FOCUS ON NON OIL SECTORS!!!!!!!!!!!!!!!!!!

Nigeria economy

By: Economic & Finance Report

One of the biggest economies in Africa has recently hit recession.  The GDP fell over 2% in the second quarter of 2016. The International Monetary Fund believes Nigeria will see negative -1.8% in its real GDP for the rest of the 2016 year.

The recession in Nigeria may be the very worst to hit the country since the 1980s, probably as bad as 1987.  Nigeria Finance Ministry has indicated that Nigeria will borrow close to 10 billion dollars USD, which over $5 billion dollars USD being borrowed from foreign lenders.  The government has indicated the money borrowed will be used on domestic projects such as power, agriculture, mineral and infrastructure development.

It is also to be noted, that Nigeria’s service sectors represents about 50% of the country’s GDP to date. The service sector in Nigeria will have to take the lead in developing jobs and other attributable assets, to get Nigeria growing and prospering from its recession. -SB

Book Report for Millenniums Gordon’s “The Rise and Fall of American Growth”- Why Millenniums Can Expect No Future!

Figure

By: James Lyman BSAE, BSEE, MSSM

Economic & Finance Report

I’ve just finished reading Robert Gordon’s newly published book titled, “The Rise and Fall of American Growth”1, which has been a real eye opener for me in understanding the economic problems now facing America.  Although a long book, 650+ pages and written by an economist for economists, plus it’s filled with page after page of economic statistics, I nevertheless found it very interesting with a history of technological development in America and its impact on our society.  But that’s not all, for he also projects the growth for the near future to 2035 … and it doesn’t bode well for the millenniums.

America experienced incredible growth from 1870 to 1970 because of what Gordon calls the “Great Inventions”. These are the major inventions or technologies which made our modern world as we know it today, such as electricity, running water and sewer systems, internal combustion engines (automobiles and trucks), modern medicine, central heating, food preparation and transportation, consumer credit and communications (telegraph, telephone, radio, movies).  These are the building blocks of our modern world and it was this building of our modern world that created the unprecedented growth of America’s economy.

Gordon’s basic premise is that GDP (Gross Domestic Product) is a measure of the standard of living, but the effects of the Great Inventions are not fully reflected in the GDP data, and so GDP is greatly understated.  In other words, the economic growth was larger than what the numbers say it was.  This 1870-1970 growth spawned huge job opportunities, which in turn resulted in demand for labor that caused a massive influx of immigrants in the late 19th and early 20th century.  In that century, American’s came to expect plentiful jobs and good pay.  They assumed this is the way the world is suppose to be, and hence would always be.

However after 1970, the first signs of slowing down appeared, which except for the dot.com bubble of the late nineties, had growth declining until finally near zero growth.  With our usual short time span of perception, we think of this slow down, with its limited job opportunity, as a result of the near economic collapse of 2007, but in fact it goes back to when I was first starting

my career.  This lack of growth translates directly into the limited job opportunities of today’s youth and why 20% to 25% of recent college graduates are under or unemployed.  But more importantly, Gordon says that this 1870-1970 century of growth is not to be repeated again, that we can expect little to no growth for the next several decades or more.

Without another dose of great inventions, such as those that spurred the impressive growth of the last century, there is little to nothing to force growth in the future.  At best, our standard of living will remain the same, but as we are already seeing with the millenniums, it’s actually sliding downwards.  More importantly, Gordon shows just how very little real understanding the sixteen election candidates have of the problems of employment, that all their talk of creating new jobs for American and revitalizing the economy is just so much groundless rhetoric.  Without the great inventions being repeated, there is nothing they or the legislators can do to bring back that era of high growth.

While Gordon does touch on the problem of technology displacement, what I think he’s missed is the increasing high cost to keep an individual in a high technology society, coupled with not appreciating the increasing effects of technology displacement.  The growth in technology is exponential which means the displacement rate of people is increasing, thus the number of obsolete people continues to increase with no end in sight.  And none of those we elect to govern us seems to understated the significant of obsolete people and technology displacement to the growth problem of the economy.  Obsolete people in turn causes an increase in the burden society must carry, which then means fewer resources available to grow an economy. 

As a technologist this doesn’t surprise me, however economists have very little understanding of the technological world they live in, not having a technical foundation.  In a world made up of dry statistics and graphs, it’s hard for them to see the constant falling away of career fields, usually replaced by new career fields paying less.  Whenever you lower the intellectual-skill level of a job, you reduce the cost of labor simply because more people are able to do that job, which in turn lowers the compensation to individuals.  Unfortunately, Gordon doesn’t account for the impact of this continual decreasing of skills and the result it’s having on economic growth. While in the last century, technology was creating jobs and growth, this century it is now strangling growth by leaving more and more people with low end, low paying jobs, and consequently no growth in America.  After identifying the causes (forcing functions) for growth in America, Gordon then shows how lack of these forces means little to no growth for the next thirty-five years, which is the new reality and world for the millenniums.  And no growth means the millenniums will not have the opportunities of their parents and grandparents.

I consider this book to be must reading for anyone with any interest in economics, finance and the plight of millenniums and their future.  The detail history of how our economy and society grew and changed is fascinating onto itself, how everyday life was in the mid-nineteenth century and how it evolved into the modern world we now consider the norm and unthinkable to be any other way.  It’s amazing how that century from 1870 to 1970 was filled with so many new technologies that interacted with each other to profoundly change the world we live in, and sobering to know that such a century of change will most likely never occur again.

This book clearly shows how the future opportunity for the millenniums will be so very different from the world of their parents and grandparents.

1) “The Rise and Fall of American Growth, The U.S. Standard of Living since the Civil War”, Robert J. Gordon, Princeton University Press, 41 William Street, Princeton, New Jersey, 08540, 2016.

 

 

 

 

ECONOMIC DEVELOPMENT IN DOMINICAN REPUBLIC, MAKES IT A LEADER IN CARIBE & LATIN AMERICA!!!!!!!!!!!!

 

dominican-republic

By: Economic & Finance Report

Dominican Republic economic development is booming and the island/country has alot to be proud of in its economic accomplishments.  Tourism has played a key factor in Dominican Republic’s emergence and dominance.  The last couple years the island has seen a 7% percent increase in its GDP. 

Dominican Republic’s GDP figures show an evasive increase in industries such as construction, tourism,  hospitality, and banking.  Revenue coming into Dominican Republic has topped $23 billion and much of that has to be accounted from foreign investors who are heavily pouring in capital to this progressive country.  

 Economic and financial hardships still plaque this diverse island, just like many other countries, such as economic and employment and less increases for wages for private employees and government employees, still Dominican Republic are making progresses by putting in place tools and structures to help everday dominicanos and dominicanas respectively. -SB

TFTA CREATED BY AFRICA NATIONS… EMBARK INTRA-TRADE WITHIN AFRICA….

Africa Open For Business pic

By: Economic & Finance Report

The TFTA pact allows member African countries to trade goods amongst themselves. 26 African nations signed the trade agreeement in Cairo, Egypt. Three different trade organizations collectively bonded together to make the TFTA happen.  The organizations that participated in consolidating to make,the Tripartite Free Trade Area (TFTA), are the Southern African Development Community (SADC); the East African Community (EAC) and the Common Market for Eastern and Southern Africa (COMESA).

The countries agreed to  minimize and even get rid of their respective trade zones, to allow trading and commerce be established set up easily then the past. Analysts who have followed the development of the TFTA and commerce within Africa, indicate this a monumental step within Africa, since the countries represented make up about 1 trillion dollars of GDP in African. -SB

 

Africa’s Growth Potential Spurring Rapidly….

By: Economic & Finance Report

Africa home to abundant resources and young potential growth force, that will make it the next frontier of expansive of growth if not already… *Africa will see GDP growth of 5 %  by year’s end.*

 Africa is growing at 1.1 billion people currently and the region will be growing faster then most other countries trajectories in the next decade or so. *Inflation has fallen to 6%.  The Debt GDP has fallen to 20% on a whole throughout the continent*

Africa does seem to hold promise it is just a matter of timing…. Eventually Africa will be sought as a mundane middle class economy. This will indeed happen.

*statistical chart from Morningstar*

statistics Africa