10 February 2020

1) China has announced a 50% cut in its tariffs on $75 billion dollars worth of imports from America. This is in response to last months U.S. tariff cuts on $120 billion dollars on China imports to America. This is all part of the ‘phase one’ trade deal between China and the U.S. to normalize trade between the two nations.

2) The Department of Transportation (DOT) and the National Highway Traffic Safety Administration (NHTSA) have approved a regulatory exemption for Nuro’s next generation of self driving delivery vehicles they call R2. This exemption will allow testing on public roads for deliveries to customer’s homes. The R2 is a zero occupant vehicle. After public road testing, Nuro will begin the first driverless deliveries in Houston with partners Walmar and Domino’s.

3) The internet retail giant Amazon will hire 15,000 new employees in Seattle to work in a new 43 story tower now being planned, with construction expected to be completed by 2024. Amazon now has 789,000 workers in the world, a 23% increase from a year ago. Amazon has also expanded in New York City by leasing 335,000 square feet of office space, and in northen Virginia’s Crystal City they’re building a second headquarters.

4) Stock market closings for – 6 FEB 20: All three markets set record highs as fears of coronavirus fears subside.

Dow 29,379.77 up 88.92
Nasdaq 9,572.15 up 63.47
S&P 500 3,345.78 up 11.09

10 Year Yield: unchanged at 1.64%

Oil: down at $51.09

6 February 2020

1) For the first time in six years, the U.S. trade deficit fell as the White House’s trade war with China curbed imports. The trade deficit dropped 1.7% to $616.8 billion dollars last year with steep decline in industrial materials and supplies, consumer goods and other goods. The trade deficit for goods with Mexico jumped to a record high of $101.8 billion dollars last year, with the European Union reaching an all time high of $177.9 billion dollars.

2) The Ford Motor Company is posting a$1.7 billion dollar loss and anticipates a weak forecast for 2020. General Motors is also reporting poor performance for 2019 and anticipates flat profits for 2020. Both Ford and GM’s troubles are in part from slaking sales in China, in particular with the economic slowdown in China from the coronavirus pandemic. The major competitor to the duet auto makers, Tesla, is suffering from the coronavirus closing of its Shanghai factory which builds its Model 3 sedans.

3) Macy’s, another major world renowned retailer, is experiencing the brick-and-mortar decline of other major traditional retailers. The chain is closing 125 of its stores, in addition to the 100 stores it has already closed, and cutting about 2,000 corporate jobs. Their strategy is to exit weaker shopping malls and focus towards opening smaller format stores in strip centers. But even with these changes, the future of Macy’s is abysmal. The company has lost market share in core categories such as apparel, as fewer shoppers take trips to malls, preferring on line shopping.

4) Stock market closings for – 5 FEB 20:

Dow                 29,290.85    up    483.22
Nasdaq             9,508.68    up      40.71
S&P 500            3,334.69    up      37.10

10 Year Yield:    up   at    1.65%

Oil:    up   at    $51.17

US-CHINA PHASE 1 TRADE AGREEMENT : SIGNED……

By: Economic & Finance Report

On January 15, 2020 (Wednesday), the USA and China signed the first phase of the US-China Trade Agreement. The first phase of the agreement, has China purchasing 200 billion dollars worth of goods and services, within the next 2 years from the United States .

The United States will then reduce the tariffs of $120 billion dollars worth of Chinese products, which is currently at 15% to be reduced to 7.5%. Chinese exports will then achieve over $260 billion dollars in the 2020 fiscal year.

The agreement provides more and better protection for American companies. American companies have discontent in China stealing intellectual property and trade stipulations. Phase 1, allows US banks to operate in China, while also enabling penalties for bad business and financial practices; instituted by US banks while operating in China.

So far the Phase 1 deal; seems to be a success as global markets have reacted positively to the signing of the USA-China Phase 1 Agreement. -SB

6 November 2019

1) The money-markets have about $3.4 trillion dollars invested, and the large pile of cash could push the already soaring markets higher. The money-markets have grown by $1 trillion dollars over the last three years because of higher money-market rates, concerns of the ten year economic expansion and the ageing of the bull market. But despite the double digit gains this year, that cash remains in the money-markets amid concerns of an economic slowdown, investors wanting the safe bet of having a large cash reserve. Many fear the markets are at an unstable high and a reversal could occur at any time.

2) The U.S. trade deficit for September has falling to its lowest level in five months with imports dropping more sharply than exports. America has a rare surplus of petroleum, which has traditionally been a major source of imports. The import-export difference shrank 4.7% to $52.5 billion dollars, down from the August deficit of $55 billion dollars, with the deficit with China creeping down 0.6% to $31.6 billion dollars.

3) The Bank of America announced it will pay a $20 dollar minimum wage in 2020, a year earlier than planned. This will raise wages for more than 208,000 of its U.S. employees. The higher pay for retail bankers is becoming crucial with the increasingly competitive job market. Other main street banks have also raised their minimum wage, such as Citigroup and JP Morgan Chase. Other major companies including Amazon, Walmart, Target and McDonald’s have also increased their minimum pay.

4) Stock market closings for – 5 NOV 19:

Dow              27,492.63         up    30.52
Nasdaq           8,434.68         up      1.48
S&P 500          3,074.62    down      3.65

10 Year Yield:    up   at    1.87%

Oil:    up   at    $57.27

25 October 2019

1) Another wave of technology displacement is sweeping across America, with 32 stores getting rid of their cashiers and checkout lanes. For the last decade or so, there has been an increasing incident of self checkout facilities appearing in stores. Driven by Amazon’s marketing model, retailers are experimenting with ways and methods to dispense with the labor cost from check out clerks. The ‘one of a kind’ Sam’s Club Now is really an incubator to develop the technologies for automated check out systems in stores. Walmart has its Scan & Go app, Kroger its Scan Bag & Go service and fast food chains such as McDonald’s, Pizza Hut and burger King have kiosk systems for ordering.

2) California is not seeing the expected revenues for legalization of cannabis for personal use. After three years of legalization, the anticipated windfalls have failed to materialize a result of regulations and a robust black market cutting into legal sales. The legal market has produced just a fraction of what the state had anticipated, while legal growers who invested millions to cultivate the product are not seeing any profits. Growers must pay a number of fees to the government annually, which cut heavily into their profits.

3) If China signs a partial trade deal with the U.S., it will buy at least $20 billion dollars of agricultural products in a year. This would take China’s farm goods imports back to the levels of 2017, before U.S. imposed tariffs, which once removed might actually push imports up to as much as $40-$50 billion dollars a year. China has already issued waivers for 10 million tons of soybean purchases this week, and is considering an additional 4-5 million tons of grains.

4) Stock market closings for – 24 OCT 19:

Dow           26,805.53    down    28.42
Nasdaq        8,185.80          up    66.00
S&P 500       3,010.29          up      5.77

10 Year Yield:    up   at    1.77%

Oil:    up   at    $56.15

4 October 2019

1) MGM Resorts has reached agreement with families of victims who were killed in the October 2017 mass shooting in Las Vegas. The settlement for the 2,500 family victims will be almost $800 million dollars with the agreement that all pending litigation against MGM will be dismissed. The shooting left 58 dead while wounding hundreds of others.

2) Soon to be implemented, tariffs will make imports more expensive for Americans, such as Scotch and Irish whiskies, Parmesan cheese and French wine. The tariffs will be on $7.5 billion dollars of European imports. Further tariffs are threaten over aircraft subsidies by the European Union, coming at a time when economies have been hurt by the US-China trade war. The World Trade Organization has ruled America can impose tariffs because the European Union has failed to abide by earlier ruling of Airbus subsidies.

3) The service-sector activity in the U.S. slowed to its weakest pace in three years this September. This is another sign that the U.S. economy may be weakening where the services sector accounts for more than two thirds of economic activity. The non-manufacturing index fell to 52.6 last month, which was the lowest reading since August 2016 and far below the 55.3 expectations.

4) Stock market closings for – 3 OCT 19:

Dow                 26,201.04    up    122.42
Nasdaq              7,872.26    up      87.02
S&P 500             2,910.63    up      23.02

10 Year Yield:    down   at    1.54%

Oil:    down   at    $52.34

4 September 2019

1) The ever present problem of growing student debt is being aggravated by the ever rising cost of college. This rise in cost is fueled by decreasing funding by governments, a lack of cost controls by college administrations and an emphases on plush facilities instead of real education support.

2) Manufacturing shrank in August for the first time since August 2016. The manufacturing index slid to 49.1 from 51.2 in July, where an index below 50 signals a contraction. Production declined by 1.3 percent while employment fell by 4.3 percent with new orders falling by 3.6 percent. With the trade war increasing the cost of Chinese manufactured imports, it would be expected that American manufacturing would be increasing.

3) The United Auto Workers union is targeting GM for contract talks, with the UAW approving a strike. The UAW represents nearly 150,000 hourly workers at Ford, General Motors and Fiat Chrysler with 96% of it’s workers OKing a strike. Leaders of the UAW are under investigation for corruption by the FBI who have conducted raids on key leadership members recently for mis use of monies. The union is angry at GM for layoffs and the closing of plants, plus production plants in Mexico.

4) Stock market closings for – 3 SEP 19:

Dow              26,118.02    down    285.26
Nasdaq           7,874.16    down      88.72
S&P 500          2,906.27    down       20.19

10 Year Yield:    down   at    1.47%

Oil:    down   at    $53.90

26 August 2019

1) The industrialist David Koch and political activists dies at age 79. The billionaire is noted for using his fortune to support right wing political movements thereby reshaping American politics. Brother to Charles Koch, the pair were one of the richest people in the world. Mr. Koch die Friday in Manhattan after a long battle with cancer.

2) China is retaliating in the trade war by imposing a tariff on $75 billion dollar on imports from China. It’s a 10% addition on top of existing rates pushing the trade war up another notch, in retaliation for the tariff imposed on $300 billion dollars of Chinese imports. China is also reinstating tariffs on cars and auto parts originating from America.

3) The race for the next internet revolution is on with Bezos and Musk planning to use low orbiting satellites to provide broad band world wide service. Jeff Bezos’ Project Kuiper’ will used a constellation of 3,236 satellites for broad band internet communications with service costing lower than today’s high speed internet service, allowing Americans to save more than $30 billion dollars a year. While testing is now in progress, there are tentative plans to begin serving customers as early as next year.

4) Stock market closings for – 23 AUG 19:

Dow              25,628.90    down    623.34
Nasdaq           7,751.77    down    239.62
S&P 500          2,847.11    down      75.84

10 Year Yield:    down   at    1.53%

Oil:    down   at    $53.97

15 July 2019

1) It appears the oil boom in the Permian basins is slowing down as producers dial back growth plans in face of numerous problems. These problems include pipeline limits, reduced flow from wells drilled too close together, low natural gas prices and high land cost. Most serious is that the shale-well oil production is falling off at such a high rate (as much as 70% in first year) that producers are forced to keep spending additional money on new wells in order to maintain production output.

2) Imports from China to U.S. are down by 31% as a result of the trade war. Trade has weakened since the trade war started, with tariffs and counter tariffs and with suppliers looking for alternative countries to fill their orders. This has put pressure on the Chinese government to shore up economic growth and avoid politically dangerous job losses. Nevertheless, Chinese leaders are confident they can survive the tariff fight.

3) The Argyle diamond mine in Western Australia, world’s largest diamond mine, is closing at the end of the next year as diamond supples are exhausted. The mine is famed for the coveted pink and red diamonds it produced, rather than the quantity of lower quality gems it has produced for almost forty years. A glut of cheap and small diamonds has eroded profits worldwide with other diamond mines scheduled to also close operations.

4) Stock market closings for – 12 JUL 19: All three markets closed with record setting highs. Also Standard & Poors broke the 3,000 mark.

Dow               27,332.03    up    243.95
Nasdaq            8,244.14    up     48.10
S&P 500           3,013.77    up     13.86

10 Year Yield:    down   at    2.11%

Oil:    up   at    $60.39

4 July 2019

1) Estimates for National Employment Report forecast 140,000 new jobs, but private employers added just 102,000. This compares to 41,000 new jobs for the pervious month. This report comes ahead of the U.S. Labor Departments’s more comprehensive non-farm payrolls which includes both public and private sector employment.

2) Renown former Chrysler CEO Lee Iacocca, the man who put the Mustang in Ford’s lineup, has died at 94. Mr. Iacocca is also noted for creating the minivan and Chrysler K-cars in his 32 year career in Detroit. He’s best noted for his turn around of Chrysler corporation when in 1979 the company was floundering with $5 billion dollar debt turning out gas guzzler cars that people didn’t want. To save the company, he secured $1.5 billion dollar loan guarantees from the Federal Government which kept the company afloat until new fuel efficient cars could be produced.

3) The U.S. trade deficient surges to a five month high in May as imports of goods increased with businesses building up stock supplies to avoid tariffs. The trade deficit increased 8.4% to $55.5 billion dollars. The widening trade deficit adds to weak housing, manufacturing, business investment and slow consumer spending which may spell a lowering of the American economy. The trade deficit may be further aggravated with the suspension of Boeing’s 737 MAX deliveries.

4) Stock market closings for- 3 JUL 19: Stocks surged up on news of new U.S.- China talks.

Dow              26,966.00    up     179.32
Nasdaq            8,170.23    up       61.14
S&P 500           2,995.82    up       22.81

10 Year Yield:    down   at    1.95%

Oil:     up   at    $57.40