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
1) Devin Wenig, the president and CEO for eBay is stepping down as the company moves forward with potential sale of assets. EBay’s board of directors considers that a new CEO is best for the company at this time. Scott Schenkel, eBay’s senior vice president and chief financial officer has been appointed as interim CEO.
2) Inspired Brands, a restaurant chain holding company, announced it is adding Jimmy John’s Gourmet Sandwiches to its portfolio. Other restaurant chains owned by Inspired Brands is Arby’s, Sonic, Buffalo Wild Wings and Rusty Taco. This acquisition will make Inspired Brands the fourth largest restaurant company in the U.S., with over $14 billion dollars in annual sales from 11,200 restaurants in 16 countries.
3) The number of mortgage applications has fallen 10.1% this last week, as interest rates rise. However, the volume is still 46% higher than a year ago when interest rates were higher. Applications for refinancing home loans, which are very sensitive to interest rates, fell 15%, but again is still 104% higher than a year ago.
4) Stock market closings for – 25 SEP 19:
Dow 26,970.71 up 162.94 Nasdaq 8,077.38 up 83.76 S&P 500 2,984.87 up 18.27
1) There are fears that the repo (repurchase agreements) market or short term funding, where banks lend to each other, is looking like it did on the 2007 market crash. The Federal Reserve Bank injected hundreds of billions of dollars into the repo system after it seized up last week when the interest rates quadruple. This has been coming about for the last several years after the Fed ended the policy of quantitative easing (QE) in order to increase liquidity to encourage banks to lend more. The squeeze like last week’s indicates there isn’t enough reserves in the financial system for the repo markets to operate. This means the government is having to buy back treasury securities.
2) Presidential candidate Bernie Sanders has propose a tax that would cut billionaires’s net worth in half. This wealth tax takes Elizabeth Warren’s idea and pushes it even further, with Sanders goal to cut American billionaires’ fortunes in half over 15 years. This wealth tax would raise an estimated $4.35 trillion dollars over the next decade by targeting 0.1% of U.S. households.
3) The consumer confidence index has declined by the most in nine months. Americans’ expectations for the economy and the job market deteriorated posing a risk to the household spending that is key to growth. The index dropped from 134.2 to 125.1, the lowest level since January. The overall measure remains elevated suggesting consumers will continue to support the record long U.S. expansion via spending.
4) Stock market closings for – 24 SEP 19:
Dow 26,807.77 down 142.22 Nasdaq 7,993.63 down 118.84 S&P 500 2,966.60 down 25.18
1) The drone attacks on two Saudi oil refineries has caused a jump in world oil prices. The strikes wiped out half of Saudi Arabia’s output capacity leading to fears of de-stabilization of the world’s crude producing region and therefore to the world’s economy. Prices for oil leaped with the opening of markets on Monday, the biggest jump in prices ever. President Trump claims that Iran was behind the attacks and that a coalition should be formed to counter the threat of Iran. The strike was made using 10 drones with the disruption surpassing the Kuwaiti invasion by Saddam Hussein in 1990.
2) UAW (United Auto Workers) workers at GM (General Motors) have gone on strike which has shut down the automakers highly profitable U.S. operations. Lost production is expected to cost GM $40 to $50 million dollars a day. There are a number of issues which GM and union officials said must be resolved before a new contract can be signed. The UAW wants to block the closing of plants engaged in manufacturing of sedans, which the company and other manufactures are discontinuing as the market goes to SUVs and crossover automobiles.
3) Gold and silver prices have surged from the global turmoil of Saudi oil attacks. Gold and silver are the traditional safe haven for investors in times of uncertainty. This gives further impetus to lower the interest rates by a quarter point to counter a slide into a recession.
4) Stock market closings for – 16 SEP 19:
Dow 27,076.82 down 142.70 Nasdaq 8,153.54 down 23.17 S&P 500 2,997.96 down 9.43
1) Stock markets fell sharply over new trade war moves with the Dow dropping over 700 points and the S&P and Nasdaq also sharply dropping too. Troubles renewed with China devaluating its currency, opening at seven yuan to the U.S. dollar. In return President Trump accused China of manipulating its currency which suggests the Chinese have abandoned all hopes of resolving the trade war with America, and instead are moving in another direction for the future. Reports are that China has asked state owned companies to suspend U.S. agriculture imports. A weaker Chinese currency gives them an unfair export advantage, and so can be used as a potent weapon in the trade war.
2) Fears continue to increase over a near future recession, with bond yields giving the highest alert since 2007. The 10-year notes sank on Monday to 1.74% with fears of it sinking to a low of 1.5%. This is further pressure for the feds to further cut interest rates to starve off a recession. There are further concerns about the trade war with China that America will move to let the dollar weaken to counter China’s devaluation. Wall Street’s VIX volatility index, also know as their ‘fear gage’ rose to 21.48, its highest level since May 9, with Asian markets also plummeting.
3) Huawei, China’s manufacture of smart phones, might release a phone running the HongMeng OS by the end of the year. HongMeng OS is a competitor to Google’s Android OS, which would free Huawie paying licensing fees for other’s operating systems, allowing Huawei to undercut competition in the low end smart phone market. This is a response to President Trump’s executive order banning Google and Qualcomm from Huawei over security risks. The HongMeng OS is considered part of a long term strategy.
4) Stock market closings for – 5 AUG 19:
Dow 25,717.74 down 767.27 Nasdaq 7,726.04 down 278.03 S&P 500 2,844.74 down 87.31
1) Many consider that it is no longer a question if the Fed will cut interest rates, but rather when. With the apparent softening of the job market, many investors firmly believe the Federal Reserve will move to cut interest rates this year possible as soon as this July. The markets bounced up on the expectation.
2) The job numbers are in for May, with job creation slowing dramatically. There were just 75,000 new jobs added to the economy, about 100,000 less than economist expected. Both March and April job numbers were lower than expected leading experts to conclude a downward trend in the American economy is beginning. There are fears that we may see a recession as early as next year.
3) The book seller Barnes & Noble has closed a deal to sell itself to Elliott Management Corp, a hedge fund based in New York. The news sent Barnes & Noble stock surging upward as much as 36%. Like many other retailers, Barnes & Noble has struggled with little success to counter the power house e-commerce giant Amazon. It’s Nook e-book device was a bust, which the company had heavily invested in. Barnes & Noble has 600 brick and mortar retail stores.
4) Stock market closings for 7 JUN 19: The Dow has had its best week since November.
Dow 25,983.94 up 263.28 Nasdaq 7,742.10 up 126.55 S&P 500 2,873.34 up 29.85
1) Boeing has not received any new orders for its 737 since its grounding, in addition, Boeing has had 100 cancellations of orders. Its stock is down 19%, but worst its stockholders have filed a law suit against Boeing claiming the company has defrauded its investors because Boeing failed to disclosed safety issues concerning their 737 MAX-8.
2) British Prime Minister May has asked the EU (European Union) for a second extension. Britain will be leaving the EU this Friday if an extension is not granted, so the EU held an emergency summit to consider warnings that a crash-out might cause a recession. Last reports are that the EU will grant an extension to 31 October this year.
3) The ECB (European Central Bank) will leave interest rates steady, forecasting no change for 2019. The ECB is being forced to backtrack on its tightening monetary policy as signs of a world economic slowdown are increasing.
4) 10 APR 19 Stock market closing:
Dow 26,157.16 up 6.58 Nasdaq 7,964.24 up 54.97 S&P 500 2,888.21 up 10.01
President Trump is set to nominate Herman Cain for the US Federal Reserve Board of Governors.
Herman Cain was a former presidential candidate in 2012. He also served as chairman of the Kansas City Federal Reserve Board. His business background includes being the President/CEO of Godfather Pizza, CEO of National Restaurant Association, and being on boards such as Nabisco, Whirlpool, & Reader’s Digest.
Mr. Cain to be on the Fed Board, would have to pass an extensive background check and Senate confirmation process.-SB
1) PG&E (Pacific Gas and Electric) stock has tumbled down with the announcement that its credit rating has been reduced to junk rating because of large possible liabilities from massive claims expected as a result of the wildfires. There are threats of further credit rating reductions.
2) The American budget deficient is expected to top $1 trillion dollars this coming year. This debt could become a serious problem if interest rates rise. It’s unknown what the impact to world economies might be, although other nations and their debts could be adversely affected.
3) There are fears that a prolong government shut down may cause the food stamp program to run out of money in February.
4) 8 JAN 18 Stock market closings: China talks spur markets.
Dow 23,787.45 up 256.10
Nasdaq 6,897.00 up 73.53
S&P 500 2,574.41 up 24.72
US Federal Reserve may be raising interest rates as early as the first week of September. The Federal Reserve just completed their annual retreat in Jackson Hole, Wyoming. The interest rate hike coming, has seen a surge of the dollar against it’s Asian market counterparts.
The Financial sector has been the leading sector leading the stock market, and probability of an interest rate hike sooner then later, seems to be paramount. This seems to have a very formal effect on how the 3rd quarter will develop. Stocks have been rebounding and gaining in the last couple of weeks, because of a possibility of a interest rate hike, and it certainly seems to be heading in that direction… -SB