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
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
1) Traditional retail stores, who have been suffering the ravages of e-commerce, are worried about another coming blow. The new tariffs on Chinese imports, which President Trump threatens to impost, could have a disastrous effect on retailers such as Walmart and Target. These next round of tariffs will be specific to consumer goods, which these retailers sell, and will start to force price increases and so most likely will result in decline of sales revenue.
2) While President Trump has been pressing for a cut in the interest rate, the U.S. Federal Reserve is expected to defer and leave the interest rates unchanged. However, the board may possibly lay the groundwork for a rate cut later this year. While the economic outlook has become less clear, there still isn’t sufficient indication of a slow down to warrant cutting interest rates yet.
3) The Pfizer pharmaceutical company is buying Array BioPharma for $10.6 billion dollars for a price 62% above the company’s closing price this last Friday. Pfizer will gain medical technology for new drugs to treat cancer that limit or suppress the effects of chemotherapy. The drugs target a mutation that’s found across many tumor types in those patients who carry the mutation. Two of Array BioPharma drugs have been FDA approved for use in advanced melanoma. There are other drugs which are in the development pipeline.
4) Stock market closings for- 17 JUN 19:
Dow 26,112.53 up 22.92 Nasdaq 7,845.02 up 48.37 S&P 500 2,889.67 up 2.69
1) The outlook for retailers continues to get grimmer with earning reports shrinking. Three major retailers, Michaels, Home Group and Zales have shown a slowdown in their sales, and these companies sell very different products, indicating this slowdown is not market specific, but rather a general economic slowdown. There is an emerging trend of decline for consumer based companies despite record unemployment.
2) Job cuts soar to 46% in May, worst than last year’s May. The tech sector and retail suffer significantly, with retail cutting more jobs than any other sector. The auto segment is also suffering as a result of lower new car sales. Since the tech sector accounts for the highest paying jobs and from some of the most sought after jobs, this doesn’t bode well for America’s economic outlook.
3) The expanding trade war may result in an 1970’s style supply shock as reliable supplies of cheap imports of manufactured goods are suddenly curtailed. In the 1970’s it was the supply of cheap oil curtailed from the 1973 oil embargo that cause a drastic economic decline. A similar sharp drop in consumer and industrial goods could have the same effect to America’s economy today.
4) Stock market closings for 6 JUN 19:
Dow 25,720.66 up 181.09 Nasdaq 7,615.55 up 40.08 S&P 500 2,843.49 up 17.34
1) Tensions increase in U.S. – China trade war with increasing fears that the war could be long and painful. In response to China’s new tariffs on $60 billion dollars President Trump is threatening to impose additional tariffs on $300 billion dollars worth of imports. While just a couple of weeks ago, it seemed that China and America were close to reaching an agreement, now it seems both sides have dug in their heels.
2) One military contractor is reportedly making 9,400% profit on a replacement part, a half-inch drive pin. This part should have cost $46 but the government is being charged $4,361 each. Legislation is being considered that would give contracting officers the power to demand data that would back-up billings.
3) Tensions are increasing in the middle east with Saudi Arabia claims of a terrorist drone attacks on pipeline pumping stations. The reports caused a surged in oil prices with fears of possible oil shortages if attacks on Saudi’s oil production continue.
4) 14 MAY 19 Stock market closings:
Dow 25,532.05 up 207.06 Nasdaq 7,734.49 up 87.47 S&P 500 2,834.41 up 22.54
1) China has countered U.S. tariffs imposed last Friday with tariffs on $60 billion dollars of U.S. imports to China. About 10 to 15% of America’s import revenues come from China, and while the trade war is high stakes and risky, it’s the only real tool America has to deal with China, because China ignores the world trade organization rulings.
2) Fears are increasing that China may not buy as many U.S. treasury notes as she has in the past, which would force America to increase the prime interest rate. There are even fears that China might not buy any bonds at all, or even start selling off bonds she now holds in retaliation for the tariffs. It’s reported that China is also buying up gold.
3) Boeing aircraft is fearful of being a target for tariff reprisals, who holds substantial orders from China. Apple, who gets 20% of its revenues from China, and Caterpillar are also facing business downturns if China places tariffs on imports of their products.
1) Trump’s tariffs went into effect today, at first driving the markets down, but then they recovered to all close high. Trumps statement that talks with China will continue pushed the markets up, while also leaving open the possibility that the tariffs may be soon removed. The tariffs went from 10% to 25% on $200 billion dollars of Chinese imports.
2) With the new tariffs on China, there are concerns for the U.S. economy and that the threat of an increased trade war between China and U.S. will cause a drop in both China’s and American’s GDP (Gross Domestic Product). Declines in GDP is not expected to be limited to America and China, but the global GDP could also suffer too.
3) The apparent contraction of consumerism continues with more than 6,200 stores to close this year. For the last couple of years, the retail industry has been rocked by the number of store closures. The list of retailers include such big names as Payless ShoeSource, Family Dollar, Gap, Victoria’s Secret, Office Depot and OfficeMax, Kmart, CVS, Pier 1 Imports, Bed and Bath, Lowe’s, JC Penny’s and even Walmart.
4) 10 MAY 19 Stock market closings:
Dow 25,942.37 up 114.01 Nasdaq 7,916.94 up 6.35 S&P 500 2,881.40 up 10.68
1) American trade deficient continues to fall, now down to $49.3 billion dollars. This is a decline of 11.5% from last October’s $55.7 billion dollars. American exports fell, but imports fell even fast to give a net decline of the trade deficient.
2) Daimler has experienced a financial downturn while Toyota’s improved. Daimler’s fourth quarter net profit fell 49% even though revenue is up 7%. Sales are down for their luxury automobiles because of trade wars and bottle necks such as environmental certifications.
3) Boeing Aircraft is being sued for a wildfire that devastated Malibu California. The suit alleges that Boeing was negligent in the management of vegetation which allow the fire to spread. The fire resulted in three deaths, burned 100,000 acres while destroying 1,500 structures.
4) 6 FEB 19 Stock market closings:
Dow 25,390.30 down 21.22 Nasdaq 7,375.28 down 26.80 S&P 500 2,731.61 down 6.09
Could a possible “trade war” be on the horizon, over Pres. Trump’s aluminum & steel tariffs? It could be the case says economic and international business negotiators.
Many economists have indicated that the tariffs imposed could be detrimental to the US economy, while others believe that the impact is minimal, because the tariffs Trump is planning to issue, will only cost American taxpayers a few cents more on the dollar, to support home grown/home based manufacturers, in the steel and aluminum industries.
Gary Cohen, White House director of the National Economic Council is against imposing a tariff on steel and aluminum, while Commerce Secretary Wilbur Ross and White House National Trade Council Director Peter Navarro, are for imposing the tariffs on steel and aluminum goods & products. –SB