13 March 2020

1) The popular theme parks Disneyland and Disney World have been closed until April because of the threat of coronavirus. The closure commences on 14 March, but the hotel resort will remaining open until 16 March to allow guess to make travel arrangements for returning home. Walt Disney Co. will continue to pay cast members during the closure. Disney Cruise Line will suspend all new departures beginning Saturday until the end of the month. At this time, it is uncertain how adversely this will financially effect Walt Disney Co.

2) A global recession, driven by the coronavirus pandemic, may result because of the flow of goods, services and people becoming more restricted. In the past day, President Trump has restricted travel from Europe, Italy has closed almost every shop, India suspended most visas and Ireland partially shut down. Many sporting events have been closed to public spectators with major lost of revenues. Many nations fear a contraction, with China the first in decades, thus ending the 11 year expansion. The Federal Reserve’s emergency interest rate cut of March 3 failed to boost investor’s confidence.

3) The Federal Reserve has announced its plan to ease market strain and halt its downward spiral. The Feds will offer a huge injection of liquidity to the Treasury market to counter market dysfunction. Government bonds are liquid assets making them the easiest thing to sell in turbulent times when investors need to raise cash. The New York Feds have been buying Treasury bills in what is called repurchase agreements or repos. This added liquidity is intended to bring stability to the markets and arrest the downward movements.

4) Stock market closings for – 12 MAR 20: The markets continue their drastic downward spiral.

Dow 21,200.62 down 2,352.60
Nasdaq 7,201.80 down 750.25
S&P 500 2,480.64 down 260.74

10 Year Yield: up at 0.85%

Oil: down at $30.88

21 January 2020

1) As Boeing’s 737 MAX crisis continues, Boeing is talking with banks to borrow $10 billion dollars or more to finance the rising cost from its 737 MAX woes. So far, the company has borrowed $6 billion dollars to cover its cash-sapped operations after having suspended production of the planes this month. The crisis which grounded the 737 MAX is now entering its eleventh month.

2) The global auto industry continues its downward slide into deeper recession with sales down 4%. Automakers are struggling to find buyers in China and India, with the downward trend expected to continue this year. The number of vehicles sold dropped from 94.4 million down to 90.3 million last year, with the record high in 2017 of 95.2 million. The IMF says new autos account for 5.7% of economic output and 8% of the goods exported. Autos are the second largest consumer of steel and aluminum.

3) Because of unrest in Iraq and Libya, oil rose to its highest in more than a week. Oil prices have always been heavily influenced by geopolitical instability, especially those countries heavily involved with oil exports. Lybia has Africa’s largest oil reserves, with their Sharara oil field being Lybia’s largest by pumping 300,000 barrels a day.

4) Stock market closings for – 20 JAN 20:

Dow              29,348.10    up    50.46
Nasdaq          9,388.94    up     31.81
S&P 500         3,329.62    up    12.81

10 Year Yield:    up   at    1.84%

Oil:    down   at    $58.70

20 January 2020

1) A year ago, Boeing Aircraft had record revenues of over $100 billion dollars, anticipating delivery of record number of aircraft including the 737 MAX jetliner. With the grounding of its 737 MAX, that has been reversed with Boeing posting losses from massive pay outs as well as lost revenues as undelivered aircraft sit waiting in its parking lots. Boeing may ultimately have $20 billion dollars in cost from the 737 MAX problem. Boeing’s problems has been a bonus for China’s airline manufacturing giving them a big advantage to gain market share.

2) India is resisting Amazon’s efforts to expand into India with an investment of $1 billion dollars, fearful of predatory business practices. The investment would bring Amazon India investment up to $6.5 billion dollars. But Amazon is meeting growing resistance, first with an Indian anti-trust investigation by Indian regulators, then protest from a confederation of Indian traders and organizations.

3) As hiring surged in November, the employment market got tighter, job openings plunged to their lowest level in nearly two years. The total vacancies is down by 561,000 to 6.8 million for the month. This is the lowest since February of 2018, the trend telling the economy has finally reached full employment. The biggest drops came in retail and construction.

4) Stock market closings for – 17 JAN 20: All three exchanges closed on record highs.

Dow          29,348.10    up    50.46
Nasdaq       9,388.94    up    31.81
S&P 500      3,329.62    up     12.81

10 Year Yield:    up   at    1.84%

Oil:    up   at    $58.81

16 January 2020

1) Nigeria may become the superpower of Africa, repeating the economic miracle of China and India. While investors are not moving into Nigeria yet, they are watching. Like China and India, Nigeria was once a colony of the west, and like India, was a colony of the British, and just like India its language is English. Right now, Nigeria is economically where China was forty years ago, before Mao Zedong died and Deng Xiaoping deregulated the economy to unleash it. For many other reasons, Nigeria is set to repeat the economic miracle of China.

2) House mortgage applications has soared to its highest level in eleven years, for new homes and refinance. Applications are up 30.2% from last week, and are 109% higher than a year ago. The interest rates are under 4% , combining with a rosy economic outlook and high employment causing home buyers to rush into the market. This is causing a near record low supply of housing across America, pushing prices up.

3) Retailer giant Target didn’t have a strong holiday sales in their toy departments, less than what was expected. This is ringing alarm bells for the entire industry. While Target gained market share in toys, its toy sales were flat over the 2019 holidays compared to last year. Toy makers like Hasbro, Mattel and Spin Master are offering a smaller variety of toys and games, a result in part from the bankruptcy of Toys-R-Us. Increasingly, toy sales is going to online retailers such as Amazon.

4) Stock market closings for – 15 JAN 20:

Dow            29,030.22    up    90.55
Nasdaq         9,258.70    up      7.37
S&P 500        3,289.29    up      6.14

10 Year Yield:    down   at    1.79%

Oil:    down   at    $58.13

4 December 2019

1) Volkswagen’s diesel emissions scandal raised it’s ugly head again with the German public prosecutors raiding VW Wolfsburg headquarters looking for documents. The scandal broke in 2015, but there are still questions about newer engines which succeeded the diesel engines with fraudulent testing for emissions. So far, Volkswagen’s cheating test has cost the company about $33 billion dollars in fines, vehicle refits and legal costs.

2) Richmond California is moving to ban the export of coal through their port facilities citing coal dust pollution in parts of the town. Coming from western states such as Wyoming, the coal is shipped to China, India and other far east countries still making heavy use of coal fired electric generation plants. However, the city may be facing legal challenges against the city ban. Richmond, Stockton, Los Angeles and Long Beach are now the only major west coast ports that handle coal.

3) President Trump has suggested that the trade war with China could drag on for some time, that it might be better to wait until after the 2020 election to sign a trade agreement. The next deadline is 15 December when 15% levies on an additional $160 billion dollars in Chinese goods. The news cause another drop in the stock markets, in addition to the drop from news about metal tariffs on Brazil and Argentina.

4) Stock market closings for – 3 DEC 19:

Dow              27,502.81    down    280.23
Nasdaq           8,520.64    down      47.34
S&P 500          3,093.20    down      20.67

10 Year Yield:    down   at    1.71%

Oil:    up   at    $55.99

13 August 2019

1) Royal Dutch Shell is building a 386 acre chemical plant to make bulk plastic. The construction project is one of the largest active construction projects in America employing over 5,000 people. The plant has hundreds of miles of pipelines to feed it petroleum and will have its own rail system with 3,300 freight cars. The new plant is expected to produce a million tons of plastic pellets each year.

2) Saudi oil company Aramco is buying a 20% share in Reliance Industries Ltd of India an oil to chemicals business. This will include the 1.24 million barrels a day Jamnagar refining complex. This is part of Aramco plan for refinery investments to double its processing network and handle as much as 10 million barrels of oil a day by 2030. Reliance has agreed to purchase 500,000 barrels of crude a day over the long term.

3) The IMF (International Monetary Fund) has warned that addition tariffs in the trade war will sharply cut Chinese growth. The IMF has already forecast a 6.2% decline in China’s growth for this year, which assumes no new tariffs. They forecast a sharp cut in China’s growth if the additional tariffs threaten are imposed on the first of September. President Trump has cast doubts on a trade deal, and indicated he might cancel the trade talks scheduled for September.

4) Stock market closings for – 12 AUG 19:

Dow               25,897.71             down    389.73
Nasdaq            7,863.41   unchanged        0.00
S&P 500           2,883.09              down     35.56

10 Year Yield:     down   at    1.64%

Oil:    down   at    $54.78

23 April 2019

1) The United States announced that economic exemptions for Iran oil will be invalid starting the second of May. There are eight countries with exemptions, Asian nations who would suffered hardships from the oil sanctions, but some have already foregone their exemption status. China and India will be the hardest hit from no longer being exempt from Iranian oil sanctions.

2) The Trump administration is cracking down on zero-down home loans from the national affordable housing programs. Fears are mounting over the $1.3 trillion dollar Federally insured home mortgages, stemming from the 2008 housing crash which cost $17 billion dollars from defaults.

3) Executives of automotive manufactures are very concerned about new car sales, considering that at best, stagnation will occur in 2019. For the first three months, new auto sales have been down, they considering that the auto industry having reached a plateau. With half the new auto sales being SUV’s and crossovers, verses only one third for traditional sedans with many models being phase out, there are concerns over the typical new auto costing $34,000 to $35,000. Rising high prices are increasing putting new cars out of the reach of the average American.

4) 22 APR 19 Stock market closings:

Dow              26,511.05    down    48.49
Nasdaq           8,015.27         up    17.20
S&P 500          2,907.97         up      2.94

10 Year Yield:    up   at    2.59%

Oil:    up   at    $64.00

6 March 2019

1) The Green New Deal is bringing out proposals for financing the single payer health care proposals. There is a big problem with providing enough health care people such as doctors and nurses to care for the increase numbers of people. Suggestions for finance is an overhaul of present payroll tax combining social security, unemployment and medicare into one flat tax for all of a person’s income. However, apparently there has been no modeling of this strategy to determine its viability.

2) President Trump proposes to drop the preferential trade treatment for India. Presently, there are $5.6 billion dollars worth of Indian goods imported each year into America duty free, while India is imposing high tariffs on US goods imported into India.

3)  As Brexit nears, British people and companies are stockpiling goods at an increasing rate, fearful of shortages if a ‘no-deal’ exit occurs. Both business and households are fearful of shortages especially food items first, then things like toilet paper and medicine.

4) 5 MAR 19 Stock market closings:

Dow           25,806.63     down     13.02
Nasdaq        7,576.36     down       1.21
S&P 500       2,789.65     down       3.16

10 Year Yield:    unchanged   at    2.72%

Oil:    down   at    $56.28

7 November 2018

1) Ford Motor Co. is making great inroads in the Indian auto market after investing $2 billion dollars in India, such as opening 100 new dealerships in the last 18 months.  This has resulted in profits for the first time in a decade.

2) Chinese stocks are sending warning signals about China’s economy with stocks closing lower.  In a trade war, China was counting on its powerful domestic-consumption engine to provide protection for investors in the nation’s stocks, but that’s not working out so well.  China’s domestic consumer suppliers are reporting lower earnings than expected.  China’s consumers just aren’t spending as they had been.

3) 6 NOV 18     Stock market closings:

Dow                    25,635.01    up    173.31
Nasdaq                 7,375.96    up      47.11
S&P 500                2,755.45    up      17.14

10 Year Yield:    up   at    3.21%

Oil:     down   at    $61.78

LATEST TRADE WARS: INDIA ISSUES RETALIATARY TARIFFS ON USA PRODUCTS……

*image source: Shutterstock*

By: Economic & Finance Report

India has struck back on retaliatary tariffs on USA made products. They issued a petition to the WTO (World Trade Organization) on Thursday, June 14, 2018.

The tariffs are in retaliation of products the USA placed on aluminum and steel approx. a month or so ago.

India tariffs will be placed on certain USA, fruits, vegetables, motorcycle parts and steel/aluminum products. -SB