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

11 February 2020

1) Senator Josh Hawley (R) aims to overhaul the Federal Trade Commission to counter the power wielded by big tech companies like Google and Facebook. He proposes dismantling the current agency tasked with protecting US consumers and place it under the Department of Justice. The Missouri senator says the current FTC lacks the teeth needed to hold high tech companies accountable for data breaches or lost of consumer information as well as privacy issues.

2) The genetic testing business for consumers, which has been growing over the past decade, now seems to be slowing because of concerns for privacy and market saturation. One major company announced a 6% layoff of employees with another laying off 14% as a result of slowdown of demand over the last eighteen months. Cost for testing is becoming another factor, especially for amateur genealogical researchers.

3) The U.S. is using technologies such as drones to scout for potential rare-earths reserves at home and aborad. Presently, America is almost 100% dependent on foreign supplies for the critically needed natural resource, most coming from China. Rare-earths are used in applications such as cellphones, wind turbines and missiles. While the U.S. does mine some rare-earths, it all must be shipped overseas, principally China, to be processed. America doesn’t have any processing plants of her own.

4) Stock market closings for – 10 FEB 20:

Dow 29,276.82 up 174.31
Nasdaq 9,628.39 up 107.88
S&P 500 3,352.09 up 24.38

10 Year Yield: down at 1.55%

Oil: down at $49.65

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

4 November 2019

1) In their Friday report the U.S. economy added 128,000 jobs in October, a report considered to be very strong when many economist expected a gain of 75,000 jobs. Furthermore, job growth for September was revised upwards to 180,000 from 136,000 and August jobs up from 168,000 to 219,000 new jobs. The good news has spurred the stock markets up.

2) Alphabet, the parent company for Google, is acquiring Fitbit in an attempt to strengthen the search giant’s lineup of hardware and move further into the health market. The $2.1 billion dollar sale will strengthen Fitbit to complete against Apple. Fitbit has slowed since Apple introduced its smartwatch.

3) The U.S. dollar may be weakening with Citi latest projections that the dollar index could fall to as low as 85 as the Federal Reserve increases its balance sheet by purchasing more bond assets. The dollar usually weakens when bond yields fall. If the dollar index were to weaken to 85, the euro could strengthen to 1.21 which helps emerging market equities. Additionally, capital could flow to the Hong Kong market if the dollar weakens, making a lot of stocks very attractive.

4) Stock market closings for – 1 NOV 19:

Dow             27,347.36    up    301.13
Nasdaq          8,386.40    up      94.04
S&P 500         3,066.91    up      29.35

10 Year Yield:    up   at    1.73%

Oil:    up   at    $56.23

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

6 August 2019

1) Stock markets fell sharply over new trade war moves with the Dow dropping over 700 points and the S&P and Nasdaq also sharply dropping too. Troubles renewed with China devaluating its currency, opening at seven yuan to the U.S. dollar. In return President Trump accused China of manipulating its currency which suggests the Chinese have abandoned all hopes of resolving the trade war with America, and instead are moving in another direction for the future. Reports are that China has asked state owned companies to suspend U.S. agriculture imports. A weaker Chinese currency gives them an unfair export advantage, and so can be used as a potent weapon in the trade war.

2) Fears continue to increase over a near future recession, with bond yields giving the highest alert since 2007. The 10-year notes sank on Monday to 1.74% with fears of it sinking to a low of 1.5%. This is further pressure for the feds to further cut interest rates to starve off a recession. There are further concerns about the trade war with China that America will move to let the dollar weaken to counter China’s devaluation. Wall Street’s VIX volatility index, also know as their ‘fear gage’ rose to 21.48, its highest level since May 9, with Asian markets also plummeting.

3) Huawei, China’s manufacture of smart phones, might release a phone running the HongMeng OS by the end of the year. HongMeng OS is a competitor to Google’s Android OS, which would free Huawie paying licensing fees for other’s operating systems, allowing Huawei to undercut competition in the low end smart phone market. This is a response to President Trump’s executive order banning Google and Qualcomm from Huawei over security risks. The HongMeng OS is considered part of a long term strategy.

4) Stock market closings for – 5 AUG 19:

Dow             25,717.74    down    767.27
Nasdaq           7,726.04    down    278.03
S&P 500          2,844.74    down       87.31

10 Year Yield:     down   at    1.74%

Oil:    up   at    $55.01

5 June 2019

1) The tech giants Apple, Google, Facebook and Amazon are facing antitrust troubles. The government is stepping up scrutiny of these big four with possible new rules, regulations and law suits. The investigative efforts will be split between the Justice Department and Federal Trade Commission driven by mounting criticism over political bias, disinformation and privacy breaches. This could spell years of troubles and law suits and possible breakup of the companies.

2) The threat of tariffs on Mexican imports has American oil refiners worried, since Mexico is the number two source of foreign oil to the United States. American produced oil is a light oil which is a poor match for Gulf Coast refining facilities, while the Mexican oil is a heavy oil that when blended with the America optimizes the refinery’s output.

3) The Medicaid system is still suffering from the Great recession, so there are fears than another recession could be devastating for the system. This is at a time when state spending on Medicaid is still high with no signs of subsiding. In a recession, payrolls decrease from people unemployed or underemployed, so contributions are down. This means less buildup of reserve funds needed for the future, and a second recession so soon, could seriously deplete those reserves quicker, leaving the future of the system in doubt.

4) Stock market closings for 4 June 2019: Jump in Dow comes from Fed signals flexibility on rates.

Dow               25,332.18    up    512.40
Nasdaq             7,527.12    up    194.10
S&P 500            2,803.27    up      58.82

10 Year Yield:    up   at    2.12%

Oil:    down   at    $52.95

11 March 2019

1) Netflix has a problem that could have a very major impact on its financial future. There is a debate in the movie industry, if Netflix movies should qualify for Oscars awards, that Netflix movie productions are really just television and so don’t qualify for Oscars. If works could not qualify for Oscars, then big name producers will be less inclined to produce blockbuster movies for Netflix. Netflix has been making multi-billion dollar investments for their content trying to bring high quality productions to its subscribers.

2) Household net worth has fallen by the largest amount since the 2008 Great Recession. The net worth is the measure of total assets such as homes, bank accounts and stocks minus the debts. Net worth declined 3.5% last quarter, driven in part by the poor performance of stock markets.

3) Elizabeth Warren wants to break up ‘Big Tech Companies’, specifically Amazon, Google, Facebook and Apple. She says ‘Big is bad, small is beautiful’ and is calling for major changes to the anti-trust laws.

4) 8 FEB 19 Stock market closings:

Dow               25,450.24    down    22.99
Nasdaq            7,408.14    down    13.32
S&P 500           2,743.07    down      5.86

10 Year Yield:    down   at    2.62%

Oil:    down   at    $56.04

26 January 2019

1) Boeing is testing a small self flying car, to compete in the budding autonomous air taxi market or electric Vertical Take Off and Landing (eVTOL) vehicles. Airbus and Google, plus several smaller companies are vying to pioneer the untapped market of electric flying machines carrying people.

2) Microsoft is expanding the number of different devices able to use their new software NewsGuard, software which can detect and root out fake news from the internet.

3) China has partially lifted its ban on Microsoft’s search engine Bing, allowing some access by its citizens. The ban is part of a very concerted effort by China to control their citizens criticism of the Chinese regime.

4) 24 JAN 19    Stock market closings:

Dow                 24,553.24       down       22.38
Nasdaq              7,073.46             up       47.70
S&P 500             2,642.33             up         3.63

10 Year Yield:     down   at    2.71%

Oil:     down   at     $53.11

22 January 2019

1) The new Congress may have profound future economic impact for America. New members of the Financial Services Committee includes members of the radical left of the democratic party, with very little experience in fiscal matters, but having a strong socialist agenda for reforms to the banking system. Fears for the impact are growing as these members expound on their desire to eliminate big banks in America.

2) Brexit is having an effect on British consumer spending. Reduce retail spending with retail sales falling 0.9% over concerns for consequence of Brexit uncertainty. Consumer spending had been strong during the summer of 2018.

3) Netflix is burning through its cash at a staggering rate to pay for their blockbuster original hits, having spent $3 billion dollars for productions in 2018. Their negative cash flow is expected to accelerate in 2019, but they are still adding new subscribers. All this to remain competitive with the other subscribers of Amazon, Hulu and Google with Apple, Disney and Warner Media also entering the market.

4) 18 JAN 19 Stock market closings:    China announced spending spree of America products, bumping the markets upward.

Dow                    24,706.35      up    336.25
Nasdaq                 7,157.23      up      72.77
S&P 500                2,670.71      up      34.75

10 Year Yield:    up   at   2.78%

Oil:      down   at    $53.76