30 December 2019

1) China has had another year of record corporate bond defaults, which is by design. Ten years ago, bond defaults almost never happened, not because Chinese businesses were healthy, but rather the government stepped in to prevent default. Companies were often linked to the government and bonds which were largely bought by state owned lenders, making a financial system with little discipline. The government has become more comfortable with defaults and so is stepping out of economic control, to impost more incentive to make careful assessment of companies.

2) This year, more than fifty banks have announced plans to cut 77,780 jobs, the most lost since 91,448 jobs in 2015. The 2019 cuts will bring the total for the last six years to more than 425,000 lost jobs. The European banks are still weak from the ‘o-eight’ financial crisis, and are still struggling to regain their footing, forcing continual cost cutting measures. Job losses are anticipated to continue into 2022.

3) With germs growing more resistant to common antibiotics, many drug companies are hemorrhaging money and going out of business. The effect is reduced efforts to develop new antibiotics just when they are become most needed. Other well established drug companies are abandoning the antibiotic market segment refraining from doing any research on new antibiotic drugs. One marketing problem is antibiotics are prescribed for just days to weeks, so there isn’t the revenue stream as with drugs continually consumed year after year by a patient such as insulin. Presently, drug resistant infections kill 35,000 people each year.

4) Stock market closings for – 27 DEC 19:

Dow                28,645.26         up     23.87
Nasdaq            9,006.62    down    15.77
S&P 500           3,240.02          up         0.11

10 Year Yield:    down   at    1.87%

Oil:    up   at    $61.72

22 November 2019

1) After HP rejected Xerox’s offer of $22 per share, Xerox is now threatening to go hostile with its $33.5 billion dollar buyout if HP does not agree to a friendly discussion before November the 25 th. Goldman Sachs & Co. set a $14 target price , the median price target on HP stock by 15 analysts is $20. HP had rejected Xerox first offer considering the combined companies would be saddled with outsized debt, and therefore not in the best interest of the shareholders.

2) The world economy is predicted to expand just 2.9% next year. The global economy is stuck in a rut which it wont exit unless governments revolutionize policies and how they invest, rather than just hope for a cyclical upswing. The biggest concern is that the deterioration of the outlook continues unabated, reflecting unaddressed structural changes. The risk of further escalation of world tensions is a serious concern.

3) General Motors and Fiat Chrysler are embroiled in a law suit with GM alleging that fiat Chrysler got an unfair business advantage by bribing officials of the United Auto Workers union. The suit alleges racketeering by paying millions in bribes to get concessions and gain advantages in three labor agreements with the UAW union. Details of the racketeering have been exposed in a federal probe of corruption in the union which resulted in multiple arrests starting in 2017.

4) Stock market closings for – 21 NOV 19:

Dow             27,766.29    down    54.80
Nasdaq          8,506.21    down    20.52
S&P 500         3,103.54    down      4.92

10 Year Yield:    up   at    1.77%

Oil:    unchanged   at    $57.09

28 October 2019

1) The telecommunications giant AT&T is making its belated entry into the streaming video business to compete with Netflix, Apple and Disney. AT&T plans to reach about 80 million subscribers globally, 50 million in the United States by 2025. HBO Max is expanding its customer base into the streaming market through AT&T wireless. AT&T also owns the satellite service DirecTV.

2) The UAW (United Auto Workers) has approved a new contract with GM (General Motors) which ends the six week strike. GM is calling back technicians to prepare the plants to resume production, with production resuming as early as Monday at some plants. The new contract gives workers a series of wage increases and a path for temporary workers to become permanent employees. Permanent workers can earn as much as $32 an hour.

3) The U.S. government has ended its 2019 fiscal year with the largest deficit since 2012. Gains in tax receipts were offset by higher spending and growing debt service payments. The budget deficit has widened to $984 billion dollars, which was 4.6% of the nation’s gross domestic product. Last years deficit was $779 billion dollars and 3.8% of the GDP. Defense, healthcare and social security programs are a major source for driving the deficit, with worries that these expenditures will not be sustainable.

4) Stock market closings for – 25 OCT 19:

Dow             26,958.06    up    152.53
Nasdaq          8,243.12    up      57.32
S&P 500         3,022.55    up      12.26

10 Year Yield:    up   at    1.80%

Oil:    up   at   $56.63

11 October 2019

1) Social Security recipients will receive a 1.6% cost of living increase in 2020, up from the average of 1.4%. This is less than the pervious two years, 2.8% for 2019 and 2.0% for 2018, but still it’s better than the zero increases of 2010, 2011 and 2016.

2) Because of a pig killing disease in China, the U.S. could see tightening supplies of pork products this next year. With China’s supply of pork decreasing, the Chinese may be forced to import significant pork supplies from the U.S. because pork is a major source of protein in the Chinese diet. This is despite the high tariffs China has imposed on U.S. pork imports. American pork exports to China will see about a 12% increase for 2019 and 13% for 2020.

3) Democratic presidential candidate Elizabeth Warren is causing concerns among businessmen with her promises to remake capitalism from the ground up. Now in the front ranks of Democratic contenders, her plans are now viewed with more concern. Warren would drastically cut back on the amount and influence of big business, push private companies from parts of the economy altogether and shift power to government and labor. The presidential contender has blamed big business for a wide range of social problems.

4) Stock market closings for – 10 OCT 19:

Dow             26,496.67    up    150.66
Nasdaq         7,950.78     up      47.04
S&P 500        2,938.13    up       18.73

10 Year Yield:    up   at    1.66%

Oil:    up   at    $53.94

14 June 2019

1) Two tankers have been attacked near the Iran coast, which has caused oil prices to surge with fears that Iran may try to close the Gulf of Oman, which transports oil out of the Middle East. The choke point of the Strait of Hormuz is only 21 miles wide and handles 80% of the oil destined for Asia. Last month four other tankers were attacked near Fujairah using sabotage, which further fueled fears that Iran may become very aggressive in the region and against exports of oil.

2) With voters no longer showing a strong concern for the federal debt, the political support for reining in Federal spending and controlling the growing national debt is melting away with Republicans willing to accept a large deficit in exchange for tax cuts and Democrats making big spending promises in the 2020 campaigns. Some experts, who had once augured against the government growing debt, now say it may not be as critical a problem as they once thought.

3) The mega-retailer Target is upping the ante for e-commerce by offering same-day delivery on thousands of items for just $9.99. Using the delivery startup Shipt, which Target purchased nearly two years ago, the retailer is positioning itself to compete against Walmart and Amazon in what is becoming a ‘delivery time’ war of the major maga-retailers. The one day service will cover 65,000 items from 1,500 stores out of 1,800 stores in 47 states.

4) Stock market closings for- 13 JUN 19:

Dow               26,106.77    up    101.94
Nasdaq            7,837.13    up      44.41
S&P 500           2,891.64    up      11.80

10 Year Yield:    down   at    2.09%

Oil:    down   at    $52.11

7 December 2018

1) The arrest of a top Chinese executive of Huawei, a major Chinese high technology company, caused world markets, including the Dow, to fall.  The Dow dropped 777 points before news that the Feds planned to slow down on increasing the interest rate was announced.

2) Research finds that millennials don’t have the money to spend that previous generations had.  The assumption has been a shift in spending habits, but with a millennial male making $6,600 dollars less than 1978 men, it appears they just don’t have the disposable income.  Working women haven’t made up the difference, opening the question about the future viability of our hyper-consumerism economy.

3) The EPA is expected to rollback back emission standards allowing coal fire powerplants to operate again without having to remove the carbon dioxide from burning coal.

4) 6 DEC 18     Stock market closings:

Dow                24,947.67         down      79.40
Nasdaq             7,188.26               up      29.83
S&P 500            2,695.95          down        4.11

10 Year Yield:     down   at   2.88%

Oil:    up   at     $51.52

6 December 2018

1) President Trump continues to play hardball with China to hammer out a trade agreement more favorable and equitable to the United States.  But he did praise China for taking new measures to control addictive drugs into America.

2) Facebook finds itself under the gun for giving personal data to select users. New documents have surfaced showing that Facebook intended for these select users to have wide spread access to data in exchange for advertising on Facebook. Facebook is adamant they didn’t sell any personal data to any third parties, but nevertheless, they profited from providing data.

3) Price increases are spreading broadly through the economy, driven by tariffs and the trade war.  Furthermore, the interest rate is expected to rise again in December, which may put further pressure to raise prices.  Chinese tariffs have had a very adverse effects on American agriculture.

4) 4 DEC 18     Stock market closings:     Markets closed.

5 December 2018

1) World stock markets fell dramatically, the Dow down 800 points, a result of uncertainty about China and American trade war.  There wasn’t any signing of agreements at G20, nor has China made any public statements about resolving the conflict since then, adding to the uncertainty.  Also contributing are fears of the American economy sliding downward in the near future.

2) A recall of 12 million pounds of beef because of salmonella outbreak, has stretched across the country.  So far, there has been 240 cases of infection in 6 states.

3) New carbon taxes in France aimed at reducing global warming effects has resulted in extensive riots forcing France to back off the taxes.

4) 4 DEC 18    Stock market closings:    The stock market is like a rectal thermometer- rude and crude, but surprisingly effective in showing sickness.

Dow                           25,027.07          down       799.36
Nasdaq                        7,158.43          down       283.09
S&P 500                       2,700.06          down          90.31

10 Year Yield:     down   at    2.92%

Oil:      down   at    $52.61

3 December 2018

1) President Trump has signed USMCA, the new trade agreement with Mexico which will replace the NAFTA, the current agreement.

2) Microsoft has been awarded a $480 million dollar contract from the military to adapt their HoloLens for virtual reality training and combat.  This could mean sales of up to 100,000 units.

3) Microsoft surpassed Apple as the most valuable publicly traded company, closing with a total stock value of $851.2 billion compared to Apple’s value of $847.4 billion.  Apple’s stock dropped 20% last month.

4) 30 NOV 18    Stock market closings:    Ninety day truce of American-China trade war is expected to boost markets.

Dow                     25,538.46      up      199.62
Nasdaq                  7,330.54      up        57.45
S&P 500                 2,760.17      up        22.41

10 Year Yield:    down    at    3.01%

Oil:    down    at    $50.72

30 November 2018

1) President Trump goes to G20 conference amid concerns for the near and far future of world economies, as countries are withdrawing into nationalism and protectionism.  While flying to the conference, Trump tweeted his cancellation of meeting Putin because of Russia’s recent aggressive actions against Ukraine.

2) Because of sever shortages of pork, a result of widespread disease in Chinese hog herds, China has resumed buying pork from America despite the trade war.

3) The pharmaceutical company Bayer announced plans to cut 12,000 jobs as a result of the Monsanto takeover.  This action is a result of restructuring because of losing a massive lawsuit over the weedkiller Roundup.

4) 29 NOV 18    Stock market closings:   The three day market rally ends.

Dow                           25,338.84       down          27.59
Nasdaq                        7,273.08       down          18.51
S&P 500                       2,737.76       down            6.03

10 Year Yield:      down   at    3.04%

Oil:         down   at    $51.33