27 April 2020

1) People are tantalized by the incredibly low oil prices, thinking only of lower gas prices. But economically, there is much more to oil and its low price. First, there is the destruction of America’s shale oil (fracking) industry, which has made us independent of foreign oil. There are fears that if oil doesn’t pick up, then the world could see a major shift in global power. The economies of several nations are very dependent on oil sales, the revenue being the bulk of their GDP. For instance, Saudi Arabia’s oil revenues account for 60 percent of its GDP (Gross Domestic Product), two-thirds of its budget, and nearly three-quarters of its exports. For Russia, one-third of its GDP is petroleum, half its budget, and two-thirds of its exports. The turbulent Middle East has states with greater dependence on oil: including Iran, Iraq, Qatar, and Kuwait. For America, oil accounts for only 8% of our GDP. The coronavirus pandemic has drastically reduce oil consumption world wide, and if it’s slow in returning to pre-pandemic levels, some countries could find themselves in serious financial and geopolitical trouble, with their influence waning and other nations displacing them in the world pecking order. It’s anyone guess how things could settle out and in whose favor.

2) Amazon has been using data about independent sellers on its platform to develop competing products, which their stated policies forbid. Such practices would give the online retailer tremendous advantage in competing against similar products, but is using proprietary information. Information includes total sales, vendor cost for Amazon’s marketing and shipping, and how much Amazon made on each sale, and other non-public information.

3) President Trump stated he would veto an emergency loan for the U.S. Postal Service if the USPS didn’t immediately raise its prices for package delivery. The President considers package delivery prices need to be four times the present charges. He has been critical of the USPS for years, considering the postal service problems are a result of mismanagement.

4) Stock market closings for – 24 APR 20:

Dow 23,775.27 up 260.01
Nasdaq 8,634.52 up 139.77
S&P 500 2,836.74 up 38.94

10 Year Yield: down at 0.60%

Oil: up at $17.18

9 January 2020

1) The result of the Iranian missile attack on gas prices is expected to be minimal. Oil prices did briefly surge on Tuesday on news of the attacks fueling fears of a Middle East war between Iran and America, spiking 4% to top oil prices of $65 a barrel, but slipped down to 1.3% early next day. Some are expecting gas prices across the nation to rise five to ten cents per gallon over the next several days.

2) Data for the fourth quarter indicated 2019 will show strong growth, which will most likely lead into a strong growth for 2020. The GDP (Gross Domestic Product) growth for the fourth quarter is estimated to be 2.3%, better than the 2.1% growth for the third quarter. This would close out the GDP growth for 2019 at 2.4%, down from the 2.9% growth of 2018, but still enough to put fears of a recession to rest.

3) Walmart has unveiled its latest technology to counter Amazon and Kroger in the grocery battle- a grocery picking robot. The automated grocery system is called Alphabot and is designed to pick and pack orders as much as ten times faster than a human. The robot will allow Walmart to rapidly expand its capacity to fill orders for ‘demand on online’ grocery shopping. The Alphabot is a 20,000 square foot facility built onto present stores consisting of about 30 small cubic robots inside a giant shelving system, which can pick and pack products from a selection of 4,500 items.

4) Stock market closings for – 8 JAN 20:

Dow               28,745.09    up    161.41
Nasdaq            9,129.24    up      60.66
S&P 500           3,253.05    up      15.87

10 Year Yield:    up   at    1.87%

Oil:    down   at    $59.98

1 October 2019

1) The crown prince of Saudi Arabia, Prince Mohammed bin Salman, has warned of astronomical oil prices if tensions escalate in the Persian Gulf. In a ‘60 Minute’ interview, the Prince called for strong and firm action to deter Iran and lessen the threat to world interests, so as to avoid disruptions of oil exports. The attacks on Saudi oil production facilities caused Brent crude to jump 19.5%, the biggest jump on record. The Middle East provides about 30% of the world’s energy supplies constituting about 4% of world GDP (Gross Domestic Product).

2) In order to avoid a quarterly decline in U.S. retail sales, automakers are offering big discounts to maintain sales growth. For the last three months, auto sales have flattened with average incentive spending rising 6% to more than $4,110 per vehicle, which is a third quarter record.

3) The fashion retailer Forever 21 Inc. has filed for bankruptcy protection and is the latest big fashion merchant who, like many other retailer chains, is unable to cope with high rents and heavy competition from e-commerce. The chain has 800 stores across the world, selling affordable but eye-catching designs, but has falling out of favor with the generation-Z consumers who turn to e-commerce. The bankruptcy will allow the company to reorganize and gain additional capital for operations.

4) Stock market closings for – 30 SEP 19:

Dow              26,916.83    up    96.58
Nasdaq           7,999.34    up    59.71
S&P 500          2,976.74    up    14.95

10 Year Yield:    unchanged   at    1.68%

Oil:    $54.29

17 September 2019

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

10 Year Yield:    down   at    1.84%

Oil:    down   at    $61.90

21 June 2019

1) Boeing has landed a$24 billion dollar contract from IAG SA, the owner of British Airways, to purchase 737 MAX airliners. Rival builder Airbus has vowed to fight the agreement since they never received an RFP (Request For Proposal) for making a bid on the contract. The secret negotiations between Boeing and IAG was the bomb shell surprise coming out of the Paris air show this week. This sale comes as a major endorsement to Boeing’s 737 MAX to reestablish Boeing as a major supplier of airliners.

2) The price of crude oil shot up 5% over news that Iran has shot down a American drone aircraft, fueling additional fears of a US-Iran military confrontation. The drone was shot down by a surface to air missile while flying over international airspace of the Strait of Hormuz. This is another move by Iran to control the seaway and thus control the flow of oil in an effort to force the U.S. to abandon its crippling economic sanctions.

3) The cost of opening a major fast food franchise in terms of liquid assets can be as much as a million dollars or more. You must have $500,000 cash to open a McDonald’s, $750,000 to open a Taco Bell and $2 million dollars to open a Wendy’s. Startup costs exceed a million dollars for most major fast food chains in America, with additional monthly fees for royalties, advertising and services, which can add up to 10% of gross sales.

4) Stock market closings for- 20 JUN 19:

Dow            26,753.17    up    249.17
Nasdaq         8,051.34    up      64.02
S&P 500        2,954.18    up      27.72

10 Year Yield:     down   at    2.00%

Oil:    up   at    $57.16

14 June 2019

1) Two tankers have been attacked near the Iran coast, which has caused oil prices to surge with fears that Iran may try to close the Gulf of Oman, which transports oil out of the Middle East. The choke point of the Strait of Hormuz is only 21 miles wide and handles 80% of the oil destined for Asia. Last month four other tankers were attacked near Fujairah using sabotage, which further fueled fears that Iran may become very aggressive in the region and against exports of oil.

2) With voters no longer showing a strong concern for the federal debt, the political support for reining in Federal spending and controlling the growing national debt is melting away with Republicans willing to accept a large deficit in exchange for tax cuts and Democrats making big spending promises in the 2020 campaigns. Some experts, who had once augured against the government growing debt, now say it may not be as critical a problem as they once thought.

3) The mega-retailer Target is upping the ante for e-commerce by offering same-day delivery on thousands of items for just $9.99. Using the delivery startup Shipt, which Target purchased nearly two years ago, the retailer is positioning itself to compete against Walmart and Amazon in what is becoming a ‘delivery time’ war of the major maga-retailers. The one day service will cover 65,000 items from 1,500 stores out of 1,800 stores in 47 states.

4) Stock market closings for- 13 JUN 19:

Dow               26,106.77    up    101.94
Nasdaq            7,837.13    up      44.41
S&P 500           2,891.64    up      11.80

10 Year Yield:    down   at    2.09%

Oil:    down   at    $52.11

2 May 2019

1) Wall Street is expecting another surge upwards of the markets, which they are terming a ‘melt up’ and analysts are recommending call options contracts which pay off in a move higher. Call option contracts give the investor the option to buy in at an agree price, but are not obligated to buy.

2) Pork prices are expected to jump this year because African swine fever is ravaging the hog population of China, a big consumer of pork. Because there still isn’t any containment of the disease, analysts estimate it will be at least twenty months of elevated pork prices. Non-domestic pork demand will continue into 2020 at a minimum.

3) With U.S. crude stockpiles rising, traders are fearing oil prices will slide despite bullish forces traditionally pushing oil prices up. The tightening sanctions on Iran, the unstable state of Venezuela and OPEC’s desired to reduce production, are all forces that push oil prices up, but U.S. domestic production and rising stockpiles may counter these forces.

4) 1 MAY 19 Stock market closings:

Dow              26,430.14    down    162.77
Nasdaq           8,049.64    down      45.75
S&P 500          2,923.73    down      22.10

10 Year Yield:     up   at   2.51%

Oil:    up   at    $63.62

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

2 April 2019

1) Oil hits its highest for 2019 as demand outlook improves, spurred on by positive manufacture PMI numbers for China and US, both the worlds largest economies. This caused US stocks to rally, in addition to China-US trade talks continuing. Additionally, OPEC has cut it’s production while sanctions on Iran and Venezuela add to pushing oil prices up.

2) The breakfast cereal company Kellogg is selling several of its brands for $1.3 billion dollars, divesting itself of its cookies and sweet brands as sugary fast foods seemed to be on the decline. Brands being sold include Keebler cookies as well as Mother’s and Famous Amos cookies. The Italian confectionary company Ferrero will acquire six manufacturing plants in the US from the deal.

3) The low cost Iceland air carrier WOW Airline, which started up in 2012, suddenly collapsed fiscally leaving an estimated 10,000 people stranded. The airline abruptly ceased operations by repeatedly delaying flights for hours on end, until finally announcing that all flights were canceled and customers would have to make other arrangements on their own. There had been rumors for the last several months of a possible sale of WOW Airline.

4) 1 APR 19 Stock market closings:

Dow           26,258.42     up    329.74
Nasdaq        7,828.91     up      99.59
S&P 500       2,867.19     up      32.79

10 Year Yield:    up   at    2.50%

Oil:    up   at    $61.77