11 November 2020

1) President Trump’s administration is readying new sanctions against Iran as the clock runs out before Joe Biden’s inauguration, who has said he wants to return the U.S. to the 2015 nuclear deal. These planned sanctions are being worked out in conjunction with Israeli high government officials. These sanctions make it more difficult to return to the 2015 nuclear agreement. Reportedly, these sanctions are separate from the Iranian nuclear program, instead they are linked to its ballistic missile program, assistance to terror organizations and human rights violations. Joe Biden said he would rejoin the deal if Iran returns to holding up its end of the deal following Tehran’s departure from the agreement rules after Trump pulled out and instituted sanctions on the country.

2) Some are forecasting the US economy could be set for a significant surge in growth as consumers start to spend the money they saved during the COVID-19 pandemic. In the past, when the personal-savings rate has been this high, economic growth has surged. There is more than $2.5 trillion dollars of sidelined savings that is the fuel for explosive growth. The savings rate spiked to 35% earlier this year, as the economy went into a recession, and now sits at 15%, which is above the historic average. The surge in housing has led to a shortage of common consumer goods, so inventories are the lowest ever. Therefore, the economic recovery won’t be entirely reliant on another round of fiscal stimulus. It only takes a bit more confidence to produce a healthy advance in the economy.

3) Biden’s victory could end up reshaping the U.S. energy sector in years to come, although the president-elect may have limited room to maneuver given that the control of the Senate remains unclear. The president-elect has pledged to spend trillions of dollars to speed up the transition from fossil fuels, slash emissions and curb climate change. Biden has also promised to ban new fracking on federal lands, which he may try to achieve via an executive order. Such a move would limit shale companies’ operations in several states. Biden is expected to block new drilling permits on federal lands, something he could do via an executive order. Moved to clamp down on the oil industry’s emissions by reversing Trump’s relaxation of environmental regulation, which most likely increases the cost of producing, transporting and processing hydrocarbons. America’s energy future may mean less LNG exports, increase emphasis on renewables, decline of coal usage, impact on USMCA, use of fuel ethanol, and the goal to eliminate carbon emissions from the power sector by 2035.

4) Stock market closings for – 10 NOV 20:
Dow 29,420.92 up by 62.95
Nasdaq 11,553.86 down by 159.93
S&P 500 3,545.53 down by 4.97
10 Year Yield: up at 0.97%
Oil: up at $41.86

17 JUL 2020

1) Looming in the wings of the pandemic crisis is another major crisis . . . and epidemic of evictions. With the unemployment rate still more than 10% and eviction protections lapsing across America, housing experts expect millions of Americans to lose their homes in the coming months. For millions of Americans, the housing situation was already precarious before the pandemic. Many are paying large percentages of their monthly incomes toward rent, but don’t have enough to cover an unexpected expense of just a few hundred dollars. With insufficient money from unemployment, people are facing living on the streets during 100 degree plus temperatures, hurricane season and possibly freezing weather if the problem continues. This would also mean increased exposure to the Convid-19 virus.

2) A bright spot in the economy is that retail sales rose again for the second straight month as shoppers slowly trickle back into stores. But with conronavirus cases on the rise, this could be short lived. Sales increased 7.5% for June, from May, better than the 5% estimated by economists. Sales were driven by clothing, electronics and appliances as well as home furnishing. Still, foot traffic through stores is way down, people coming in with specific items to consider buying instead of just browsing. So far this year, 4,000 stores are closing permanently with as many as 25,000 expected by the end of the year. Last year, there were 9,302 store closing.

3) The traditional investing axiom of 60/40 portfolios is coming into question. This is the mix of 60% stocks and 40% bonds, which is generally considered the best risk minimizing strategy for individuals to use in building their fortune. But with Treasury yields now hovering around zero, and expected to stay there for years, those gains are in doubt. For decades, this strategy has given the best returns with the least risk in times of volatile markets. Consequently, investors are scrutinizing the strategy as maybe out of date in a changing economy.

4) Stock market closings for – 16 JUL 20:

Dow 26,734.71 down 135.39
Nasdaq 10,473.83 down 76.66
S&P 500 3,215.57 down 10.99

10 Year Yield: down at 0.61%

Oil: down at $40.80

23 June 2020

1) Speculation abounds over what the next stimulus package will have, such as extended income support for the unemployed and underemployed. New temporary subsidies for low wage workers. Cheap loans for small and medium size businesses with additional support for state and local governments. Cost estimates for a second stimulus program range from one to two trillion dollars. But like the first stimulus package, no one is offering ideas how this money will be paid off, especially if economic expansion doesn’t materialize.

2) The worlds fastest super computer is now Japan’s Fugaku supercomputer developed by Riken and Fujitsu with backing from the Japanese government. It has a speed of roughly 415.53 petaflops, which is 2.8 times faster than the US Summit supercomputers at 148.6 petaflops. The Fugaku was under development for six years and will start full time operation by April 2021, although it has been pressed into service in the coronavirus crisis, running simulations on how droplets would spread in office spaces with partitions. Previously, the fastest supercomputers have belong to America and China.

3) The sales of existing homes has dropped in May, a result of the coronavirus impact on the economy. The sales of existing homes in May fell 9.7% compared with April, which makes for an annual decline of 26.6%. This is the largest decline since 1982 when interest rates were 18%. There remains a shortage of housing which is helping to uplift the market, and therefore the economy as soon as the crisis has subsided.

4) Stock market closings for – 22 JUN 20:

Dow 26,024.96 up 153.50
Nasdaq 10,056.48 up 110.35
S&P 500 3,117.86 up 20.12

10 Year Yield: up at 0.70%

Oil: up at $41.13

27 February 2020

1) South Carolina has the lowest unemployment rate with 2.3% which ties with Utah and Vermont. But while there’s lots of jobs, they mostly pay low wages making it hard for people to make a living. The state is typical of states across the U.S., with job growth looking strong on the surface, but much of the work is meager wages and few benefits. As automation pushes more people down to the lower paying ranks, they find themselves struggling to acquire the basics of living, even with wages that are above the minimum wage.

2) With the government’s announcement that Americans should prepare for a Covid-19 (coronavirus) crisis, and the continual spread of the virus, prices of hygienic masks have surged upwards. Tracking the product on Amazon shows an immediate rise just twenty-four hours after the announcement. A pack of disposable masks which were $125 surged to $220 in just three days, showing the deep concerns people have to the coronavirus threat.

3) Micro units are small dwellings of about 350 square feet or less, which may be the answer to affordable housing. The micro unit comes complete with a kitchen, bathroom and living or sleeping space comparable to studio apartments in Paris, Tokyo or Rome. This gives everything needed for basic living, but little else. Micro units are approximately 20% to 30% cheaper than conventional sized units, and are most popular with young single working adults, age under 30, who are willing to compromise space for location, amenities and cost savings.

4) Stock market closings for – 26 FEB 20:

Dow 26,957.59 down 123.77
Nasdaq 8,980.78 up 15.16
S&P 500 3,116.39 down 11.82

10 Year Yield: down at 1.31%

Oil: down at $48.65

16 October 2019

1) The IMF (International Monetary Fund) has made another cut to its 2019 global growth forecast, the fifth in a row. The reason given is a broad deceleration of the world’s largest economies with trade tensions undermining the expansion. Their projections of world economic growth has gone from a high of 3.9%, down to 3.5%, then to 3.4%, to 3.2% and finally to 3%.

2) The low mortgage rates has caused an epic housing shortage. The average mortgage rate for 30 year fixed was over 5% last November and stayed above 4.5%, but now is around 3.5%. Inventory trends in the mid-market indicate lower levels of inventory in early 2020. Housing starts have been moving up slowly, but mostly in the higher end homes, leaving the ‘starter home’ market depleted.

3) The production and delivery of Harley-Davidson’s new LiveWire electric motorcycle has been halted with the discovery of a problem with its charging mechanism. There was a non-standard condition in the final quality check, which halted deliveries of LiveWire bikes, however customers can continue riding their LiveWare motor cycles. Additional testing and analysis is progressing well.

4) Stock market closings for – 15 OCT 19:

Dow         27,024.80    up    237.44
Nasdaq      8,148.71    up    100.06
S&P 500     2,995.68    up       29.53

10 Year Yield:     up   at    1.77%

Oil:    down   at    $52.93

27 June 2019

1) Ikea, the pioneer of inexpensive self-assembled home furniture is adapting its manufacturing and marketing methods to inexpensive housing. Sections for homes will be built in factories, then quickly assemble into ready to move-in houses. Bringing the factory manufacturing techniques to homes would significantly reduce the cost as compared to the hand built housing techniques now used. This could open the way to home ownership by the younger generations.

2) Despite the continual upsurge of the markets, Americans aren’t convinced the economy is doing well. A survey shows 39% of U.S. consumers believe the economy is ‘not so good’ or even poor. Lower income Americans are not doing as well as macro indicators would suggest, despite getting more raises recently. These gains don’t offset years of high unemployment and stagnant wages.

3) A huge drop in U.S. crude oil inventories and the outlook for demand has pushed oil futures prices up to near $60 dollars a barrel. Domestic stockpiles fell by 12.8 million barrels last week, the biggest drop in supplies since September 2016. In the past week, oil futures have jumped 10%, with the traditional expected increase in oil demand with summer driving. Gasoline reserves are further aggravated by the fire at Philadelphia Energy Solutions, the East Coast’s largest refinery.

4) Stock market closings for- 26 JUN 19:

Dow                    26,536.82    down    11.40
Nasdaq                  7,909.97          up    25.25
S&P 500                 2,913.78     down      3.60

10 Year Yield:    up   at    2.05%

Oil:    down   at    $59.21

IN THE NEXT DECADE MILLENNIALS & GEN Z WILL SURGE THE REAL ESTATE RENTAL MARKET……..

Image Source: Money.com

By: Economic & Finance Report

According to Yahoo Finance, Morgan Stanley real estate analysts have predicted that millenials and generation Z will account for a seven percent increase, in home ownership within the next ten years.

Lookout Gen Y’ers and Baby Boomers, Millennials and Gen Z will be outpacing you guys when it comes to real estate rentals, over the next decade.

Morgan Stanley analysts have indicated that millennials and gen Z will increase the rental market by an extra two million units within the same ten years.

Although millennials and generation z are still approx. eight percent lower in homeownership, then baby boomers and generation y; when both groups were at the same age, times are changing. -SB.

Source: Yahoo Finance, Urban Institute (2018 Housing & Finance Study)


28 March 2019

1) Eviction crisis is starting to look a lot like the sub-prime mortgage crisis. Housing is increasingly out of reach for many Americans, which is resulting in increased incidents of evictions. This is an indicator of housing being priced out of reach for many people.

2) There has been another incident with Boeing’s 737 bringing further doubts to the design. Soon after a 737 MAX-8 took off, it developed an engine problem forcing it to return. Boeing announced that they were completing a software fix for the MAX-8 series, and are close to submitting it to the FAA sometime this week. The new software is reported to now use the inputs from two different sensors, which must agree before the program will accept the input.

3) Prime Minister May has announced her willingness to step down if Parliament will past her Brexit plan, but didn’t give a specific date. Parliament considered eight proposed strategies and voted on each one, with all eight being voted down. This leaves Britain right where she started, with time quickly running out.

4) 27 MAR 19 Stock market closings:

 Dow                25,625.59    down    32.14
Nasdaq              7,643.38    down    48.14
S&P 500             2,805.37    down    13.09

10 Year Yield:     down   at    2.37%

Oil:    down   at    $59.35