9 September 2020

1) It’s not just American businesses who are feeling the effects of the Covid-19 crisis from reduced sales, American charities are also suffering a major drop in revenues for the same reason. With the recession straining household budgets, people are less able to contribute resulting in charities losing billions of dollars since this spring. Furthermore, traditional money raising methods such a concerts, festivals and galas have been canceled or scaled back to a fraction of their previous size. Many charities are now working to make the holiday season productive to make up shortfalls in revenue.

2) The repressiveness of the Hong Kong police was further exposed when police chased down and tackled a 12 year old girl in a shopping mall. Video footage of several police officers pinning the hapless girl down on the floor went viral worldwide with a public outcry over the excess use of force against political dissenters. The incident touched off angry shouts from onlookers. The police tactics are being criticized as an indiscriminate treatment of children who are not taking part in protest. The girl complained she felt targeted because of her age, that being young has become a crime in Hong Kong, further increasing concerns that the regime is targeting their young for repression.

3) The markets continue their decline after a five week winning streak as investors begin to worry about stretched valuations. The decline is being lead by the technology stocks, which has met a heavy decline for the tech-heavy Nasdaq. Remarks by President Donald Trump to decouple the U.S. economy from China further added to the market’s jitters. The high flying technology company Tesla has suffered it worst one day loss since March with an 18% drop in the price of its stock.

4) Stock market closings for – 8 SEP 20:

Dow 27,500.89 down 632.42
Nasdaq 10,847.69 down 465.44
S&P 500 3,331.84 down 95.12

10 Year Yield: down at 0.68%

Oil: oil down $36.62

1 July 2020

1) The credit worthiness of automakers has been lowered by Moody’s Investors Service, downgrading about $130 billion dollars in global automakers’ debt. Nine out of 22 global car makers have had their ratings lowered. General Motors Co. has a Baa3 rating for unsecured notes, the lowest investment grade rating and has a negative outlook. Ford Motor Co.’s senior unsecured debt is rated at Ba2, which it two notches below investment grade and also has a negative outlook. Thirteen of the automakers were not downgraded because of their better operating profiles and liquidity, but 75% have a negative outlook. World automakers were having troubles before the pandemic, but now are facing more declining auto sales and low prospects for near term improvement.

2) China has adopted a national security law that allows Beijing to override Hong Kong’s judicial system. The intent of China is to strangle and suppress political opponents in Hong Kong and subjugate the freedom of its citizens. This is another example of the re-emergence of Red China as a totalitarian state, and therefore represents a threat to surrounding nations. It strips the territory of autonomy promised under the handover agreement with Britain, with possible retaliation from America. The move by China has resulted in visa restrictions on officials from both sides, and a threat of future retaliation measures coming.

3) Fears of another virus pandemic have surface with the discovery of a new swine flu virus in Chinese pigs. The new strain, called G4 H1N1 has many of the same characteristics of H1N1 that caused the 2009 global pandemic, and can bind to, infect and replicated in tissue cells located in human airways. While not an immediate threat, the virus bears watching, but on top of the Covid-19 pandemic, the problem of controlling either outbreaks would be multiplied, especially with the now overstretched health care and hospital systems.

4) Stock market closings for – 30 JUN 20:

Dow 25,812.88 up 217.08
Nasdaq 10,058.76 up 184.61
S&P 500 3,100.29 up 47.05

10 Year Yield: up at 0.65%

Oil: up at $39.86

2 June 2020

1) Experts say it could take as much as a decade for America’s economy to fully recover from the coronavirus and the subsequent massive shutdown of businesses. Presently, it’s expected that the GDP (Gross Domestic Product) will decrease about 3% from 2020 to 2030 or about $7.9 trillion dollars. It’s expected that the measures to counter the virus, the business closures and social distancing measures, will reduce consumer spending, which in turn will cool the economy. With 41 million people now unemployed, more layoffs are expected for the next week with an unemployment rate of 19.6%. Furthermore, it’s expected that the coronavirus will cost the economic about $7.9 trillion dollars.

2) The reopening of America from the lockdown was going to be difficult enough, but now the growing violence of protest is threatening to hamper that recovery. Stores in the protest areas are closing for the protection of its employees such as CVS and Target, with doubts mounting if some of the stores will ever reopen. Mayor Lightfood of Chicago said the continuing violence is making the city reconsider the opening of Chicago’s businesses. Also, the wireless carriers T-Mobile has closed Metro and Sprint stores over the same consideration of possible violence.

3) China has stopped some imports of U.S. farm products such as soybeans and pork meat. This is the latest sign that the January phase one trade deal between the world’s two largest economies is unraveling. The halts come after President Trump’s criticism of China’s efforts to bring Hong Kong under the firm control of the communist. The president is threatening to strip Hong Kong of some of it’s special privileges, which in turn would make Hong Kong less valuable economically to China. Further aggravating U.S. and Chinese relations is the charges that China shares some responsibility for the Convid-19 pandemic.

4) Stock market closings for – 1 JUN 20:

Dow 25,475.02 up 91.91
Nasdaq 9,552.05 up 62.18
S&P 500 3,055.73 up 11.42

10 Year Yield: up at 0.66%

Oil: up at $35.56

3 February 2020

1) Brexit, the exit of Britain from the European Union, has been confirmed by the European Parliament with a vote Wednesday, which ratified the withdrawal agreement. The vote to ratify was 621 to 49 with 13 abstentions. For the EU (European Union) the loss of Britain represents a significant defeat, a loss of size, reach, momentum and permanence akin to the U.S. losing Texas. Potentially, the EU bloc now has less clout, although the remaining 27 countries have been drawn tighter together by the debate. Now comes the negotiations of EU’s future relationship with Britain to try and maintain the single open market.

2) Delta Air Lines and American Airlines announced they are suspending service to mainland China to counter the spread of coronavirus. It is expected that United Airlines is expected to soon follow suit. American will continue service to Hong Kong. Other world air carriers have also announced suspended or reduced services to China.

3) With the decision two years ago by the Supreme Court to widely legalize sports betting, companies are rushing in to expand sports betting operations. U.S. casino operators, fantasy apps and betting grands from Europe and Australia are in a race for American customers now that the way has been cleared for betting outside of Nevada.

4) Stock market closings for – 31 JAN 20: Fears of China’s coronavirus continue to push markets down.

Dow                   28,256.03    down    603.41
Nasdaq               9,150.94     down    148.00
S&P 500              3,225.52     down       58.14

10 Year Yield:    down   at    1.52%

Oil:    down   at    $51.63

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

1 November 2019

1) The international auto makers Fiat-Chrysler and Peugeot, which is owned by PSA group of France, have agreed to merge. This deal will create one of the world’s largest auto makers by volume, having a market value of $48.4 billion dollars. The focus on the Jeep sport-utility vehicles and RAM trucks account for the majority of Fiat-Chrysler’s profit, helping to offset the Fiat brand.

2) New data shows that low income people are more likely to shop at Family Dollar and Dollar General than at Walmart, the traditional retailer for the poor. Low income is considered those with household incomes below $50 thousand dollars. The data was obtained by measuring location data from 50 million mobile devices. The Dollar General chain has 16,000 stores in 44 states and the Dollar Tree has 15,115 stores in the U.S. and Canada, while Walmart has 4,700 stores.

3) Five months of protests has brought Hong Kong’s economy into a recession with a sharp contraction in the third quarter. The economy is being driven completely by social events, so traditional economic measures to reverse a recession, such as cutting interest rates, should have little effect. So far, the city hasn’t seen significant capital outflow from the unrest, something many feared when protest demonstrations started. One major factor in determining if Hong Kong will recover is how soon mainland Chinese tourist will return. There is no signs of the protest coming to an end.

4) Stock market closings for – 31 OCT 19:

Dow            27,046.23    down    140.46 
Nasdaq         8,292.36    down      11.61
S&P 500        3,037.56    down        9.21

10 Year Yield:    down   at    1.69%

Oil:    down   at    $54.16

14 August 2019

1) Boeing aircraft has not received any new orders for their 737 MAX in six months. This could give Boeing’s competitor Airbus a major market advantage having made 389 commercial plane deliveries in the same six months, making Airbus the largest supplier of this market segment with its A320 design. The grounding of the 737 MAX has forced Boeing to park completed aircraft to await its air worthiness to be restored.

2) Signs of inflation are increasing as U.S. consumer prices increased broadly in July. Expectations are for the Federal Reserve to again cut interest rates next month as much as half a percentage point in September. Continue trade tensions between China and America out weight fears of inflation so interest rates will continue to remain low, if not go lower.

3) Fears grow that protests in Hong Kong, which have persisted for the last two months, could have a lasting detrimental effect on U.S. and global markets. Hong Kong operates with a high degree of autonomy from China, having its own currency and judiciary system. This is fueling the rising concerns of investors of a major violent eruption of conflict between Hong Kong and main line China, coupled with concerns over U.S. – China trade war and the total impact on the world markets. With Hong Kong a financial hub, an invasion by Chinese troops with sever repressive measures on the people could disrupt other markets across the world. Furthermore, violence with loss of life could make it impossible for President Trump to resolve differences with China.

4) Stock market closings for – 13 AUG 19:

Dow              26,279.91    up    382.20
Nasdaq           8,016.36    up    152.95
S&P 500          2,926.32    up      43.23

10 Year Yield:    up   at    1.68%
Oil:    down   at    $56.73

17 June 2019

1) Citizens of Hong Kong have started moving assets offshore amid fears of a China takeover. China’s demand to extradite criminal suspects to face trial in China is seen as a political move to be able to more tightly control the population politically, by eliminating dissidents and political opposition. People of money are also fearing that China will clamp down on moving money out of the reach of the Chinese government. This move is heightening the tensions of China and western nations.

2) As a result of its legal entanglements from lawsuits alleging Roundup herbicide is a carcinogen, Bayer AG plans to invest almost $6 billion dollars in developing new chemical products to combat weeds over the next decade. Roundup is a product inherited by Bayer in its takeover of Monsanto Co. last year, which has driven its stock down by 50%.

3) The trade war between China and U.S. is having unexpected results of other countries taking up the manufacturing slack. This runs the risk of China permanently losing market share to America as well as China failing to archive its goal of becoming the worlds top global manufacturing base. This decreases China’s chances of becoming a technologically advance and innovative economy. China’s loss of their once famed ‘low pay for unskilled labor’ is further increasing the flight of factories to other countries.

4) Stock market closings for- 14 JUN 19:

Dow               26,089.61    down    17.16
Nasdaq            7,796.66    down    40.47
S&P 500           2,886.98    down      4.66

10 Year Yield:    unchanged   at    2.09%

Oil:    unchanged   at    $52.51

HONG KONG IS CONSIDERED THE WORLD’S FREEST ECONOMY!!!!!!!!!!!!!!!!!!!!!

Honk Kong economy pic

By: Economic & Finance Report

Hong Kong is the world’s “freest economy”  for the 22nd time in a row. This being determined by global think tank, The Economic Freedom Index. Hong Kong is one of the major global financial epicenters, and for it to be ranked “back to back” (in the words of rap superstar Drake). This has to be quite an accomplishment. 

Hong Kong received the accolade because of its attribute in giving higher then normal working wages, the people in Hong Kong live longer and prosper toward achievable goals; as well as taking care of the environment that they live in. Many of the “freest economies” came from the Asian continent, such as Singapore which followed behind Hong Kong as the # 2 “freest economy”, by the index.

The top 5 freest economies according to Economic Freedom Index, were 1)Hong Kong 2) Singapore 3) New Zealand 4) Switzerland 5) Australia… -SB