11 January 2021

1) Boeing Aircraft Co. has reached a $2.5 billion dollar agreement to settle the criminal charge that it defrauded the U.S. government by concealing information about the troubled 737 MAX. This is the ill-fated jet airliner involved in two fatal crashes that killed 346 people. The airline manufacturer entered into a deferred prosecution agreement and in turn, the Justice Department will dismiss the charge against Boeing. This settlement caps a two-year criminal investigation into the two MAX crashes. This settlement will have no bearing on any pending civil litigation. In addition, Boeing will pay a $243.6 million criminal penalty. With the penalty and the fund for relatives, Boeing says it expects to pay an additional $743.6 million dollars for the fourth quarter of 2020.

2) The cryptocurrency Bitcoin is at an all-time high in 2021, one coin now worth $36,000. It has doubled its value in 30 days. Bitcoin is the first and biggest cryptocurrency, which started up in January 2009, and eleven years after its invention, the total value of all Bitcoins in the world is around $359 billion. The Bitcoins are long, unbreakable codes stored in clouds or computers. Bitcoins were invented at the height of the 2008-9 financial crisis. The idea is a type of money that didn’t depend on the traditional banking systems. Cryptocurrency is popular in countries with inflation.

3) Venture capital backed companies in the United States raised nearly $130 billion dollars last year, setting a record despite the COVID-19 pandemic, up 14% from 2019, while the number of deals is down 9% to 6,022. The so-called mega-rounds, which are deals that are $100 million dollars or higher, also hit a record amount and number, with $63 billion dollars raised in 318 deals. However, there is a big drop in the very early stage investment called the seed money stage. The trend of big investments doesn’t look like it will slow in 2021 as there is a lot of capital chasing investments. It’s expected that 2021 is going to be a banner year for many tech companies.

4) Stock market closings for – 8 JAN 21:

Dow 31,097.97 up by 56.84
Nasdaq 13,201.98 up by 134.50
S&P 500 3,824.68 up by 20.89

10 Year Yield: up at 1.10%

Oil: up at $52.73

17 December 2020

1) North Dakota, a state with an early shale oil boom, expects oil production growth to stall in the next two years because of the market crash and higher environmental standards. The problem is investment money because Wall Street is showing no signs to invest in a shale boom. Investors have grown wary of the poor cash flow even before the crash, and institutional investors are shunning oil because of climate change concerns. North Dakota has limited excessive natural gas flaring from oil wells, intending to control greenhouse emissions at the expense of production. The state is expecting output to decline in November and December because of a lack of oil well completions. Oil markets are shrinking due to the loss of demand, while growth in shale oil depends on investments to replace wells that decline rapidly.

2) The Federal Reserve shifts its focus to fighting climate change, with average temperatures climbing and severe weather events happening more frequently. The Fed’s recent financial stability report includes a section on climate change, signaling a risk that climate change could pose to the financial system. Federal Reserve supervisors expect banks to identify, measure, control, and monitor all material risks, which for many banks are likely to extend to climate risks. Therefore if those dangers aren’t considered, hazards such as storms, floods, droughts or wildfires could change the value of assets suddenly, causing a shock to the system.

3) The more a person understands interest rates, inflation, risk diversification and other financial concepts, the less likely they show signs of financial fear and distraught at times of serious economic troubles. At the start of the pandemic in March, 40% of households was making under $40,000 per year lost their jobs. By April, the jobless rate had soared to 14.7% while the $1,200 direct checks and supplemental $600 federal-unemployment benefits started. Researchers asked people if they could cover a $2,000 unexpected emergency expense, and18.9% said they couldn’t meet the expense. In a test, the survey of ‘at risks participants’ correctly answered about half of the three questions about how interest rates are calculated, inflation and risk, while people in better money condition answered almost all three (2.5 on average) correctly.

4) Stock market closings for – 16 DEC 20:
Dow 30,154.54 down by 44.77
Nasdaq 12,658.19 up by 63.13
S&P 500 3,701.17 up by 6.55
10 Year Yield: down at 0.92%
Oil: up at $47.88

11 December 2020

1) The minerals called ‘rare earths’, is used in a wide range of products central to the American economy, and therefore is a disaster waiting to happen. Already, voices in China and the Chinese Communist Party are suggesting that supplies of rare earths to America should be curtailed to gain diplomatic and economic leverage. In 2010, China made a similar threat to Japan, then temporarily cutting off supplies over a minor diplomatic dispute. China holds 35 percent of the world’s entire rare earth supply, but has been turbocharging production, and so now accounts for 70 percent of global production. Furthermore, China supplies 80 percent of the U.S.’s rare earth imports. The rare earth minerals are a class of 17 different mineable natural elements, which can be extracted from the earth’s crust. These minerals make up crucial components of many modern technological innovations, from electric cars and solar panels to fighter jets and satellites. The permitting process in the U.S. is ridiculously long, taking up to three decades where Australia and Canada’s only require two years, thus precluding much-needed investment from taking place.

2) Entrepreneur Elon Musk has announced his intention to relocate his business center to Texas. He joins the massive migration of Californians to Texas, with 687,000 California citizens having moved to Texas in the last decade, and in addition, Texas is the number one state for corporate moves. Other major technology companies have also abandon their ‘mother state’, leaving California for Texas. Major companies such as Hewlett Packard Enterprise Co. have left. Toyota moved its North American headquarters, and about 4,000 jobs, from California to Plano Texas in 2017. Musk has also moved some major operations, picking Austin as the site for Tesla’s largest U.S. assembly plant, a $1.1 billion dollar investment that’ll employ at least 5,000 workers.

3) There are suggestions that the FCC has massively overstated the availability of gigabit coverage of internet service in the U.S. The FCC reported that gigabit internet was available to 84% of Americans, but independent numbers show it’s closer to 56% and possibly even less. This discrepancy is a result of the method used by FCC research, by counting all houses as having the gigabit service in an area when only some number of houses actually have the service. The larger issue is limited access to high-speed broadband internet for those households located in rural areas and low-income urban areas.

4) Stock market closings for – 10 DEC 20:
Dow 29,999.26 down by 69.55
Nasdaq 12,405.81 up by 66.86
S&P 500 3,668.10 down by 4.72
10 Year Yield: down at 0.91%
Oil: up at $46.97

2 December 2020

1) Orders for long-lasting goods, such as computers and military weapons, rose again in October by 1.3%. Additionally business investment increased for the sixth straight month, despite the question if manufacturers will escape the effects of the coronavirus outbreak. The surge in orders was driven by Pentagon spending, so if defense spending is excluded, orders rose a modest 0.2%. The demand for computers and related products has increased during the pandemic, from so many people working from home and needing upgraded equipment. Orders for new cars and trucks declined 3.2%, but new jobless claims rose for the second week in a row to a five-week high, pointing to an increase in layoffs. Manufacturers are less likely to be affected since they have more control over their work environments.

2) The U.S. has added 10,000 ‘budget dollar retail outlets’ since 2001, but some towns and cities are trying to push back. This is becoming a common story. A dollar store opens up in an economically depressed area, with little for healthy and affordable food options, sometimes with the help of local tax incentives. It advertises hard-to-beat low prices but it offers little in terms of fresh produce and nutritious item . . . further trapping residents in a cycle of poverty and ill-health. Since 2001, outlets of Dollar General and Dollar Tree (which bought Family Dollar in 2015) have grown from 20,000 to 30,000 in number, the number of dollar-store outlets nationwide now exceeds Walmart and McDonalds put together, and they’re still growing at a breakneck pace. This raises questions of poor nutrition in neighborhoods with limited full service food retailers. So now, communities are standing up saying that while the dollar stores may be good in the short term, in the long term there are serious disadvantages.

3) American bank profits were significantly higher in the third quarter than the first half of 2020, but still lags behind 2019 levels. Their profits jumped 173% in the third quarter, but that amount is still 10.7% lower than 2019 levels, with about half of banks reporting lower profits than a year prior. The banking industry is well capitalized with ample liquidity and so far has weathered the economic effects of the pandemic. An explosion in bank deposits drove profits up, but that appears to have now slowed.

4) Stock market closings for – 1 DEC 20:
Dow 29,823.92 up by 185.28
Nasdaq 12,355.11 up by 156.37
S&P 500 3,662.45 up by 40.82
10 Year Yield: up at 0.93%
Oil: down at $44.36

1 July 2020

1) The credit worthiness of automakers has been lowered by Moody’s Investors Service, downgrading about $130 billion dollars in global automakers’ debt. Nine out of 22 global car makers have had their ratings lowered. General Motors Co. has a Baa3 rating for unsecured notes, the lowest investment grade rating and has a negative outlook. Ford Motor Co.’s senior unsecured debt is rated at Ba2, which it two notches below investment grade and also has a negative outlook. Thirteen of the automakers were not downgraded because of their better operating profiles and liquidity, but 75% have a negative outlook. World automakers were having troubles before the pandemic, but now are facing more declining auto sales and low prospects for near term improvement.

2) China has adopted a national security law that allows Beijing to override Hong Kong’s judicial system. The intent of China is to strangle and suppress political opponents in Hong Kong and subjugate the freedom of its citizens. This is another example of the re-emergence of Red China as a totalitarian state, and therefore represents a threat to surrounding nations. It strips the territory of autonomy promised under the handover agreement with Britain, with possible retaliation from America. The move by China has resulted in visa restrictions on officials from both sides, and a threat of future retaliation measures coming.

3) Fears of another virus pandemic have surface with the discovery of a new swine flu virus in Chinese pigs. The new strain, called G4 H1N1 has many of the same characteristics of H1N1 that caused the 2009 global pandemic, and can bind to, infect and replicated in tissue cells located in human airways. While not an immediate threat, the virus bears watching, but on top of the Covid-19 pandemic, the problem of controlling either outbreaks would be multiplied, especially with the now overstretched health care and hospital systems.

4) Stock market closings for – 30 JUN 20:

Dow 25,812.88 up 217.08
Nasdaq 10,058.76 up 184.61
S&P 500 3,100.29 up 47.05

10 Year Yield: up at 0.65%

Oil: up at $39.86

27 March 2020

1) The $2 trillion dollar coronavirus relief bill has been passed and Treasury Secretary Steven Mnuchin said the people should receive cash payments within three weeks. The IRS has been tasked with distributing the monies, but the agency is hobbled by obsolete technologies such as 1960’s era computers, limited staff and a small budget. So there are questions if the agency can get the job done in a timely manner, let alone in three weeks. Experts say its more like a matter of months rather than weeks for Americans to receive their check.

2) Almost 3.3 million Americans have applied for unemployment benefits this last week, more than quadruple the previous record set in 1982. This is a result of the wide spread economic shutdown from the coronavirus pandemic. This rate of layoffs is expected to accelerate as the U.S. economy sinks into a recession with the collapse of revenues for a wide range of businesses. Economist predict the nation’s unemployment rate could approach 13% by May.

3) Gold has traditionally been a panic investment which people and nations buy to protect the value of their money. The worldwide panic over the coronavirus coupled with a flood of stimulus by central banks has ignited demand for gold to store wealth. But the gold market is running into difficulties in buying. Stored in high security vaults, government mandated shut downs have left access iffy. Also, refiners of gold have been forced to close because of the virus. Transporting gold is done via airlines, but the sharp drop in air service has also made transport of the metal difficult. All these factors have put a squeeze on gold futures.

4) Stock market closings for – 26 MAR 20:

Dow 22,552.17 up 1351.62
Nasdaq 7,797.54 up 413.24
S&P 500 2,630.07 up 154.51

10 Year Yield: down at 0.81%

Oil: down at $23.18

19 February 20

1) Negative yielding debt are bonds with an interest rate below 0%. Since the peaking of the U.S.- China trade dispute, a third of all investment grade bonds have rates below 0%, for a total of $17 trillion dollars. This forces portfolio managers into riskier assets to deliver returns. But because the global economy is not growing any more, the bonds may not be saleable.

2) The Boy Scouts of America filed for bankruptcy protection under Chapter 11 in the face of 275 abuse lawsuits and another 1,400 potential cases to come. The organization has already paid out more than $150 million dollars in settlements and legal cost. Its strategy is to contain financial damage of abuse scandals and emerge as a more sustainable organization.

3) The luxury automaker JLR (Jaguar Land Rover) is facing halts in their UK production plants because of supply chain problems from the deadly coronavirus in China. The company is racing to prevent plant closures by the end of the month, going to such extreme measures as flying critical parts out of China in suitcases. Fiat Chrysler’s European plants are facing similar closures from parts shortages.

4) Stock market closings for – 18 FEB 20:

Dow 29,232.19 down 165.89
Nasdaq 9,732.74 up 1.57
S&P 500 3,370.29 down 9.87

10 Year Yield: down at 1.56%

Oil: up at $52.10

18 February 2020

1) In order to help contain the Chinese coronavirus outbreak, China’s central bank has started deep cleaning and destroying potentially infected cash. The virus appears able to survive on surfaces for many hours which is why buildings in affected areas are regularly disinfecting elevator buttons, door handles and other commonly touched surfaces. Since cash money changes hands multiple times in a day, it too is a potential media to transmit the virus. The cash is disinfected with ultraviolet light and high temperatures, then stored for seven to fourteen days before returning to circulation.

2) The price of wine is expected to drop to its lowest levels in five years, in part because of a surplus of grapes in California. Additionally, there is a decreased demand for wine, with the lower prices lasting up to three years. Vineyards began planting thousands of acres of new vines in 2016, plus more efficient harvesting methods have combined to increase the supply of grapes.

3) GM (General Motors) has decided to pull out of Australia, New Zealand and Thailand as part of their strategy to exit markets that don’t produce adequate returns on investments. The car maker has 828 employees in Australia and New Zealand and another 1,500 in Thailand which will be eliminated.

4) Stock market closings for – 17 FEB 20:

Dow 29,398.08 down 25.23
Nasdaq 9,731.18 up 19.21
S&P 500 3,380.16 up 6.22

10 Year Yield: down at 1.59%

Oil: down at $51.92

5 February 2020

1) As the coronavirus continues the slowing of China’s economy, coupled with a general slow down in world economies, world oil prices are dropping. China is the world’s largest oil importer, with speculation that if oil continues to drop, America can expect a drop in gasoline prices, possibly going below $2 a gallon.

2) The credit card company Visa is planning major changes to the rates U.S. merchants pay to accept its cards. These changes are the biggest changes in a decade, with Visa hoping to encourage people to abandon checks and cash. Higher rates are coming for transactions on e-commerce sites, while certain retailers such as real estate and education will see lower rates. Retailers have long complained about the $100 billion plus dollars they spend each year to accept electronic payments.

3) Ford Motor Co. has posted a fourth quarter loss and provided weaker than expected 2020 forecast due to continued higher warranty cost, lower vehicle volumes, lower results from Ford Credit branch, and higher investment in future transportation. This is coming at a time when Ford and other automakers are making huge investments in producing a line of electric cars and trucks. For the fourth quarter, Ford is reporting a net loss of $1.7 billion dollars, or 42 cents a share. Revenue for the fourth quarter was down 5% to $39.7 billion dollars.

4) Stock market closings for – 4 FEB 20:

Dow                   28,807.63    up    407.82
Nasdaq                9,467.97    up    194.57
S&P 500               3,297.59    up      48.67

10 Year Yield:    up   at    1.60%

Oil:    down   at    $49.45