24 January 2020

1) After two friendly attempts to merge with HP, Xerox is launching a hostile takeover bid. Xerox will nominate eleven new directors to replace all of HP board members, thus leaving Xerox in control of the company. HP claims that Xerox’s proposal significantly undervalues HP and creates risk for the HP shareholders, while Xerox claims combining the similar companies will create significant cost savings.

2) The number of claims for unemployment benefits for mid January rose slightly, but layoffs remain near a fifty year low. There are no signs of the strongest U.S. labor market in decades deteriorating. The number of people actually collecting unemployment benefits has fallen by a small amount. The U.S. economy is still growing but at a slower rate.

3) Fair Isaac Corp. announced changes on their scoring of consumer credit, the making of their FICO score. Soon, they will start scoring consumers with rising debt levels and those who fall behind on loan payments with lower scores. The changes will create a bigger gap between consumers considered good and bad credit risks. Also, scores are considering bank account balances and utilities payments. The new FICO changes reflect a shift in U.S. lenders’ confidence in the economy.

4) Stock market closings for – 23 JAN 20:

Dow              29,160.09    down    26.18
Nasdaq           9,402.48          up    18.71
S&P 500          3,325.54          up      3.79

10 Year Yield:    down   at    1.74%

Oil:    down   at    $55.66

10 January 2020

1) HP’s board has rejected Xerox’s $33 billion dollar takeover bid, for the same reason as Xerox’s previous offer, that the proposal significantly undervalues HP. Xerox first moved to acquire HP in November, but was rejected because HP stock holders would lose much of their value in the company. HP is a 2015 spinoff of giant Hewlett-Packard who has a market value of $300 billion dollars that dwarfs Xerox’s value of 7.7 billion dollars.

2) Mack Trucks, the manufacturer of large commercial trucks, announced plans to layoff 305 employees, which is about 13% of their payroll. After two years of high volumes of production, marked demand has dropped so the company must adapt to the lower demand. There are expectations of the truck market in America being down 30% this next year.

3) The American consumer continues to shun the traditional big department stores. Despite the monster holiday shopping season, America’s biggest department stores still lost money. This is a trend that has been in progress for several years as typified by Sears’ decline. Department stores such as JCPenny, Kohl’s and Macy’s continue to decline with dropping sales and store closings. Consumers are now going to big box stores and the internet commerce to save money, signaling a fundamental change in American consumerism.

4) Stock market closings for – 9 SEP 20:

Dow              28,956.90    up    211.81
Nasdaq           9,203.43    up      74.18
S&P 500          3,274.70    up      21.65

10 Year Yield:    down   at    1.86%

Oil:    down   at    $59.59

8 November 2019

1) Bill Gates, the Microsoft co-founder, says he’s happy to pay his share of taxes, but expressed consternation over Elizabeth Warren’s proposals to tax America’s wealthy. He considers the presidential hopeful is not very open minded to consider his concerns. Warren’s wealth tax proposal is 2% annual levy on household wealth above $50 million dollars with an additional 1% tax on wealth above $1 billion dollars. She estimates this would cover 75,000 tax payers raising $2.6 to $2.75 trillion dollars over a ten years.

2) Stores are starting their Black Friday sales earlier this year, in part because the holiday shopping season is six days shorter. Retailer Target will begin online Black Friday sale on Thanksgiving morning, with stores opening their doors at 5 p.m. and remaining open through 1 a.m. the next day. On Black Friday, their stores open at 7 a.m.. Other retailers such as Walmart started their holiday shopping season last October.

3) Xerox is offering HP a takeover bid of $22 per share. The bid consists of 77% cash and 23% stock which would be $17 in cash and 0.137 Xerox shares for each HP share. If accepted, the deal would generate about $2 billion dollars in cost synergies with HP stock holders owning 48% of the company. HP has announced job cuts between 7,000 and 9,000 by the end of fiscal 2022. HP is worth $29 billion dollars and is more than three times the size of Xerox in terms of market cap.

4) Stock market closings for – 7 NOV 19:

Dow                 27,674.80    up    182.24
Nasdaq              8,434.52    up      23.89
S&P 500             3,085.18    up        8.40

10 Year Yield:    up   at    1.93%

Oil:    up   at    $57.07

7 October 2019

1) As part of its restructuring plan, HP announced they will cut about 7,000 to 9,000 jobs, resulting in an estimated savings of about $1 billion dollars. While HP expects to incur labor and non-labor cost of about $1 billion dollars, they expect to generate at lease $3 billion dollars of free cash flow. As of 31 October 2018, HP had world wide employment of about 55,000 workers.

2) Consumer spending has been the bright spot in an economy showing signs of weakening on multiple fronts, in particular manufacturing. Economists worry if consumer spending will continue to prop up the economy, saying that the up coming Christmas season will be a test. Issues such as trade, interest rates, global risk factors and political rhetoric are where confidence can be eroded by deterioration of these items.

3) The new Costco in Shanghai China reports membership of more than 200,000 as compared to an American average of 68,000 per store. Costco will open a second Shanghai location in early 2021. The first day opening, the store was so swamped with customers, that the doors had to be closed for four hours to limit the number of people inside to safe limits.

4) Stock market closings for – 4 OCT 19:

Dow                  26,573.72    up    372.68
Nasdaq               7,982.47    up    110.21
S&P 500              2,952.01    up      41.38

10 Year Yield:    down   at    1.52%

Oil:    up   at    $53.01

20 May 2019

1 ) Hewlett Packard is buying the supercomputer maker Cray for $1.4 billion dollars. HP is intent on strengthening it position against IBM by expanding its high end computer line, expanding into AI (Artificial Intelligence), Internet of things and distributed computing offerings, and is expecting to see a return on investment in the next two years.

2) There are reports that the U.S. China trade talks have been put on hold, causing a reversal of the markets. The holdup is the increased scrutiny of Chinese telecom companies. This scrutiny is making it harder for Chinese companies such as Huawei to do business with U.S. companies.

3) Airline baggage fees is becoming an increasingly lucrative source of income. The U.S. airlines brought in $4.9 billion dollars from luggage fees, an 80% increase from 2009. Typical fees is $30 for the first bag, $40 for the second and $150 for the third. There are also expensive payments for heavy or oversize bags.

4) 17 MAY 19 Stock markets closing:

Dow                  25,764.00     down    98.68
Nasdaq              7,816.28      down    81.76
S&P 500             2,859.53 down 16.79

10 Year Yield:    down   at    2.39%

Oil:    down   at    $62.71