7 October 2020

1) Ikea, the big Swedish world wide modular furniture manufacture, has experienced a surge in sales from the pandemic as people turned homes into offices and schools. Their online sales are up 45% over the last 12 months to August, with 4 billion visits to their website. Outdoor furniture is the fastest growing category, followed by office furniture. While many of their stores were forced to close from the virus, their online sales remain high even as stores reopen. The furniture retailer has added 6,000 new employees world wide to make a total work force of 217,000. Online sales account for about one fifth of total sales.

2) Job openings in America fell in August for the first time in four months, indicating a moderation in hiring as the crisis continues. Available positions slipped down to 6.49 million from July’s 6.7 million. These numbers do not include recalls from layoffs or positions that are offered only internally. However, layoffs and discharges are at a low for August, although there are still 13.6 million Americans unemployed, which means there are about 2 unemployed competing for each job opening. There are fewer vacancies in construction, retail and health care industries, while vacancies increased for manufacturing, food service and government.

3) Federal reserve Chairman Jerome Powell says America is on the long road to economic recovery from the pandemic induced recession, but still there are other problems on the horizon. There are fears of the economy shifting into reverse once again, especially if a resurgence of the virus comes with cold weather . . . the flue season. Such a resurgence could significantly limit economic activity leaving many unemployed stranded with no jobs for many more months. Powell is calling for the passing of the second stimulus bill presently being debated in the Congress. He considers the risk of pouring too much money into the economy far lower than the risk of not spending enough, despite the already sky high federal budget. While he considers the debt is on an unsustainable path, and has been for some time, but this is not the time to address it.

4) Stock market closings for – 6 OCT 20:

Dow 27,772.76 down 375.88
Nasdaq 11,154.60 down 177.88
S&P 500 3,360.95 down 47.68

10 Year Yield: down at 0.74%

Oil: up at $39.83

14 May 2020

1) Jerome Powell, the Federal reserve Chairman, has warned of a possible prolonged recession caused by the economic damaged from the coronavirus crisis. Widespread bankruptcies among small businesses and extended unemployment for many people remain a serious problem for the economy. Furthermore, he considers the proposed $3 trillion dollar aid package to be worthwhile if it averts long term economic damage thereby giving a strong recovery. Almost $3 trillion dollars has already been spent on economic assistance, with the interest rate cut down to near zero. Cutting the interest rate has been the traditional tool used to counter recessions and economic slow downs, but with interest rates almost zero, the feds no longer have this tool. Nothing is being said about the massive increase to the already very large federal debt, nor the impact on the long term economy if it fails to return to healthy growth to pay off that debt. Otherwise, it could become a boat anchor around America’s neck making swimming in the ‘economic lake’ very difficult, or maybe impossible later on. The markets responded to Powell’s remarks with a down turn.

2) Unemployment continues to subside with initial reports of another 2.5 million lost jobs compared to 3.2 million for the previous week. This brings the total unemployed for the past eight weeks to a staggering 36 million people without work. Percent wise, the unemployed numbers are worst than the Great Depression of the 1930’s. Economist anticipate a further, although smaller increase in unemployed people for the next few weeks before the curve bottoms out and employment starts increasing as businesses opens up to resume operations.

3) Automakers are preparing to restart manufacturing with plants in Mexico, which are due to open as soon as Monday. U.S. assembly plants rely heavily on Mexican auto plants for parts and subassemblies used in building cars, and there were fears of U.S. manufacturing being hindered by part shortages. Approximately 39% of auto parts for car manufacturing comes from Mexico.

4) Stock market closings for – 13 MAY 20:

Dow 23,247.97 down 516.81
Nasdaq 8,863.17 down 139.38
S&P 500 2,820.00 down 50.12

10 Year Yield: down at 0.65%

Oil: up at $26.23

13 February 2020

1) NASA (National Air and Space Administration) has asked for a 12% increase to give a $25.2 billion dollar budget for next year. Nearly half of this years proposed budget is for NASA’s lunar project with much of the money going to the biggest American space companies. Lockheed Martin, Boeing and Aerojet Rocketdyne will be the primary beneficiaries with $1.4 billion dollars going to the Orion spacecraft and $2.26 billion dollars for the Space Launch System. There is $3.37 billion dollars proposed to fund a crewed lunar lander system.

2) Federal Reserve Chairman Jerome Powell suggest that the central bank may not have the ability to fight the next recession and therefore Congress may need to get ready to help. This is a result of the already low interest rate, one of the prime tools used by the central bank to counter recession trends. Tax cuts and government spending increases may be necessary to fight a downturn, for there is little else the central bank has to counter a recession.

3) The giant aircraft maker Boeing Aircraft is facing bigger problems than just fixing its 737MAX and getting it certified to fly. The company needs to be focused on its next generation of passenger aircraft. Boeing didn’t get any new orders for aircraft in January compared with 45 orders last year, while delivering 13 airliners compared with 46 last January. Boeing is falling behind its rival Airbus and must build its next generation of planes to remain competitive. This means getting its 777X finished and ready for delivery with its other wide body plane, the 787 Dreamliner. In the background is a possible new design concept the 797.

4) Stock market closings for – 12 FEB 20:

Dow 29,551.42 up 275.08
Nasdaq 9,725.96 up 87.02
S&P 500 3,379.45 up 21.70

10 Year Yield: up at 1.63%

Oil: up at $51.69