1) The technology known as carbon capture and storage, a concept that has been around for at least a quarter century to reduce the climate damaging emissions from factories, is being pursued by major international oil companies. The idea sounds deceptively simple, just divert pollutants before they can escape into the air, and bury them deep in the ground where they are harmless. But the technology has proved to be hugely expensive, and so has not caught on as quickly as advocates hoped. Exxon Mobil, BP and Royal Dutch Shell plus lesser known Norway’s Equinor, France’s Total, and Italy’s Eni are investors in capture and storage projects.
2) Reports are, that amid all the trillion dollar spending, the White House is now starting to consider how to pay for the programs meant to bolster long term economic growth with investments in infrastructure, clean energy and education. The challenges are twofold: 1) how much of the bill is paid for with tax increases and 2) which policies to finance with more borrowing. The administration hasn’t decided whether to pursue a wealth tax. With interest rates so low, U.S. borrowing costs are manageable right now. The federal government currently collects the biggest chunk of its revenue, about half in 2019, from individual income taxes, which now tops out at 37% of income above $518,000 per year. For now, there are few signs of inflationary spiral or fiscal crisis that policy makers thought would accompany debt levels like today’s. The Congressional Budget Office this month projected that the national debt would double as a proportion of gross domestic product over the next 30 years. But the cost of borrowing is rising for the government and across the economy so the large debt could mean trouble in the future.
3) India’s foreign-exchange reserves has surpassed Russia’s to become the world’s fourth largest, as India central bank continues to hoard dollars to cushion the economy against any sudden outflows. Reserves for both countries have mostly flattened this year after months of rapid increase. India’s reserves, enough to cover roughly 18 months of imports, have been bolstered by a rare current-account surplus, raising inflows into the local stock market and foreign direct investment. India’s foreign currency holdings fell by $4.3 billion to $580.3 billion as of March 5, edging out Russia’s $580.1 billion pile. China has the largest reserves, followed by Japan and Switzerland on the International Monetary Fund table.
4) Stock market closings for – 15 MAR 21:
Dow 32,953.46 up by 174.82 Nasdaq 3,459.71 up by 139.84 S&P 500 3,968.94 up by 25.60
1) To aid in economic recovery, President Trump is calling for a $2 trillion dollar spending plan to update the country’s infrastructure. Monies would be used to update the country’s roads, bridges and other parts of the physical infrastructure. This would be part of Phase 4 response to the coronavirus crisis. The President said that with interest rates at zero, this is the ideal time to address our declining infrastructure.
2) There are growing fears of the devastation that the coronavirus has and continues to wrought on America’s economy. Layoffs are coming faster than unemployment offices can accommodate, increasing fears about making mortgage and loan payments, malls and shopping centers devoid of people with only the essential commerce. Economist are now forecasting a real GDP growth of negative 9% for the first quarter and minus 34% for the second. There is expected to be 4.5 million filings for jobless benefits this week, which will be the highest in history. While there are hopes for a quick turn around, the damage may be too great to quickly return to the economic boom prior to the virus.
3) Founders of the European Union (EU) have always feared that Italy’s proliferate borrowing would ultimately become the EU’s problem. Now with Italy’s coronavirus problems, the country is having to borrow again to care for its people, in turn pushing up its debt to dangerous levels which the EU will have to cover. This is made doubly critical with other EU member’s economies shaken by the shutdowns from the virus. Presently, Italy’s debt level is approaching 150% of its gross domestic product and may well surpass that.
4) Stock market closings for – 31 MAR 20:
Dow 21,917.16 down 410.32 Nasdaq 7,700.10 down 74.05 S&P 500 2,584.59 down 42.06
1) A second virus shock wave is already hitting China’s factories as European factories are delaying orders and asking for delays in payments as the coronavirus sweeps across Europe closing their factories. These are cutting off orders to Chinese factories just as they were beginning to come back to life, a double hammer blow to China’s economy. Estimated April to May sales are expected to be down as much as 40% from last year. This is raising grave doubts about the world’s second largest economy being able to repair damage and return to its pre-virus station.
2) The Index of Consumer Sentiment dropped to 89.1 in March, the lowest level since October 2016, a three year low. It is the fourth largest in nearly 50 years. Further declines is dependent on the success of curtailing the spread of the virus and how soon households receive funds from the government stimulus. To date, there are 540,000 cases of coronavirus with America overtaking China and Italy with the most cases having a total of 85,000.
3) The Department of Justice is investigating the credit scoring firm FICO for possible antitrust violations. There are three other major credit companies: Equifax, Experian and TransUnion. FICO is the only scoring model accredited by mortgage loan companies Fannie Mae and Freddie Mac. The DOJ investigation comes after TransUnion’s antitrust countercase against FICO. The lenders determine which credit scoring system is utilized on a loan application, not the consumer or loan applicant.
4) Stock market closings for – 27 MAR 20:
Dow 21,636.78 down 915.39 Nasdaq 7,502.38 down 295.16 S&P 500 2,541.47 down 88.60
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
1) Fully 70% of the American economy is consumer spending. Even through wages and incomes have been stagnant for many households, the consumer has continued to spend. It is not new investment by corporations, tax cuts or big new federal spending programs that stimulate the economy, but rather it’s consumer spending. However, fears of the coronavirus is dampening that spending by curtailing business trips, personal travel, sports and other outings. With the interest rate near zero, the major tool used to combat a recession is now impotent.
2) The collapse of the long standing deal between Saudi Arabia and Russia, to limit oil production, fell through this weekend sending oil prices crashing from oil supplies surplus. The coronavirus has caused China to limit economic activity and therefore reduced China’s oil consumption leading to further oil surpluses. China’s purchase of oil is down 20%. The low oil prices has made the world economy very unstable and therefore volatile. For America, independent oil companies have gone deeply into debt to pay for the shale oil extraction process, who are now threaten by low oil prices making it impossible to pay that debt. Failure of these oil companies could ripple through the American economy to pull other segments down.
3) Airlines across the world continue to sink deeper into crisis from the worsening coronavirus epidemic reducing the number of passengers, who are foregoing travel fearing the virus. The situation is made worst by not being able to predict how long the crisis will likely last and therefore unable to make accommodating plans. The lockdown of Italy has further aggravated world air travel, especially with the interruption of tourism just as the tourist season would be ramping up.
4) Stock market closings for – 10 MAR 20
Dow 25,018.16 up 1,167.14 Nasdaq 8,344.25 up 393.577
1) In ten years, the US debt to GDP ratio will be equal (100%). The debt to GDP ratio is presently 78%, the highest since the end of World War II, but it’s anticipated to be 96% by 2028. To bring this into perspective, countries with sever economic problems such as Greece have a ratio of 188%, Italy 130%, Portugal at 120% and Spain with 97%. On the positive side, Germany has a ratio of 59%. The IMF is warning of the problem for America if the ratio is left to continue as is. A high ratio hinders a government’s ability to counter any economic downturn. America’s entitlements is the principle cause for the increase, because when Social Security was started, there were 16 workers to support each retiree, now there are just 2.6 workers.
2) European Union borrowers are eager to see how a Brexit extension will effect markets, by possibly reducing the uncertainty that Brexit has brought on. This spring, the IMF and World Bank will be meeting for their annual conference on world economic matters.
3) Tesla, the maker of electric automobiles, is starting its new quarter with another round of cuts of sales staff following poor deliveries. The company is closing some of it’s show rooms in favor of online sales. These actions are rattling investors by stoking confusion.
4) 8 APR 19 Stock market closing:
Dow 26,341.02 down 83.97 Nasdaq 7,953.88 up 15.19 S&P 500 2,895.77 up 3.03
1) The economic balance in US trade deficient soared last year to $621 billion dollars, the highest level in ten years. Exports from the US fell 1.9% while imports rose 2.1%. The deficient with China was $419 billion dollars. The strong US economy is considered a factor in the increase of the imbalance.
2) Italy’s experiment with Universal Basic Income is having dismal results, with Italy’s poverty and unemployment rising. The intent of the program was to alleviate poverty and address it’s high unemployment, for Italy has the highest unemployment rate in Europe. Finland tried the same scheme, but scraped it’s program after two years. The European Union is taking exception to Italy’s spending habits.
3) The General Motor’s Lordstown plant is shutting down with the loss of 5,400 jobs. This shows that despite the booming job market in America, the economy is still leaving people behind. Major problem is the workers are older and lack the computer and technical knowledge to retrain for other job fields.
4) 6 MAR 19 Stock market closings:
Dow 25,673.46 down 133.17 Nasdaq 7,505.92 down 70.44 S&P 500 2,771.45 down 18.20
New article posted below titled, “Failings of the Fourth Estate!”
1) Civil unrest continues to spread across Europe, from France, to Italy and Serbia. The yellow vest protesters in France tried to cross from France into Italy to join with the Italian protesters. Also, the protest by the separatist continues in Spain.
2) Generation-Z is doing the least preparations financially of the previous generations, only 16% doing any financial planning what so ever. They have higher credit card debt, spend big on nonessential things and have little savings.
3) The Chinese stated that trade talks are going remarkably well, giving hope that the trade war may yet be alleviated. Presently, there is a 10% tariff on $200 billion dollars, nearly half of China’s imports to the US, which will increase to 20% next week.
4) 11 FEB 19 Stock market closings:
Dow 25,053.11 down 53.22 Nasdaq 7,307.90 up 9.71 S&P 500 2,709.80 up 1.92
1) Trump’s Venezuela oil sanctions has put Russia’s massive loans at risk. With loans of over $7 billion dollars from Russia, which were to be repaid in crude oil delivers instead of currency, Russia faces ‘no payment’ until the sanctions are lifted.
2) Because of the increased production of oil in the US and imports from Canada, the use of oil carrying trains is increasing after having declined. Pipe lines are unable to carry the increasing volumes of oil to refineries.
3) Italy is now in negative economic growth for the second quarter, with no prospects of reversal in the near future.
4) 31 JAN 19 Stock market closings:
Dow 24,999.67 down 15.19 Nasdaq 7,281.74 up 98.66 S&P 500 2,704.10 up 23.05