9 October 2020

1) The airlines around the world are expected to lose $77 billion dollars in the second half of 2020 as Covid-19 continues to crush air travel demand. There are desperate efforts to cut cost by cutting jobs, grounding aircraft and consolidating work, but all their efforts are not enough. The first half of 2020 has been brutal for airline business and the rest of the year isn’t looking much better despite modest increase in air travel. This translates into losing $13 billion dollars a month or $300,000 a minute. At the start, U.S. airlines were burning about $100 million per day, which they reduced to about $30 to $40 million at the end of the third quarter. The airlines hope to reach zero ‘cash burn’ by year’s end using workforce reductions and operational consolidation. Air travel in America is down roughly 70% from 2019.

2) As another hurricane is approaching through the Gulf of Mexico, oil workers are evacuating oil rigs in the gulf ahead of Hurricane Delta, in turn causing oil prices to rise in anticipation of lower available oil. Oil prices had been falling Wednesday, but started rising as the storm came into the Gulf and the off shore evacuations began. So far, 183 offshore oil facilities have been evacuated which has halted nearly 1.5 million barrels per day of oil output. In July, the Gulf of Mexico produced oil at 1.65 million barrels per day, which is 17% of U.S. crude oil output. The demand for oil at refineries is 13.2% lower than a year earlier, a result of the virus crisis.

3) Electric car maker Elon Musk is pushing his company to boost production to build half a million cars in one year. That means producing 170,000 cars in the fourth quarter, a 17% increase from the third quarter. A half a million cars would be a milestone for Musk’s company, a first in the history of Tesla. So far, Tesla has produced 330,000 cars while also posting profits for its fourth consecutive quarter. Additionally, Tesla is pushing production numbers up by adding more production capacity.

4) Stock market closings for – 8 OCT 20:

Dow 28,425.51 up 122.05
Nasdaq 11,420.98 up 56.38
S&P 500 3,446.83 up 27.38

10 Year Yield: down at 0.76%

Oil: up at $41.27

25 September 2020

1) Tim Kendall, former Facebook director of monetization, says that Facebook “took a page from Big Tobacco’s play book, working to make our offering addictive at the outset.” The greater the usage of Facebook by people, the greater Facebook’s revenues, so it behooves the company to make its service as addictive at possible, as soon as possible with new people. But this drive to maximize engagements entails building algorithms that facilitate the spread of misinformation, encourages divisive rhetoric thereby laying the groundwork for a mental health crisis. While met to be a device for entertainment, Facebook is in fact tearing people apart with alarming speed and intensity. He fears that American’s are pushing ourselves to the brink of civil war. Presently, Section 230 is a law that makes social media platforms immune to legal liability for the content of users’ posts. But there are growing number of people calling for reforms.
2) California Governor Gavin Newsom has signed an executive order that bans the sale of all but electric and fuel cell cars by 2035. But legal experts say the order is ‘borderline worthless’, that there isn’t anyway to enforce it. The objective is to do away with the internal combustion engine in California by mandating an increasingly larger percentage of new car sales must be zero emissions machines starting with 2% for 1998, 5% by 2001, 10% for 2003 and etcetera. California auto dealers challenged the order in court and got it somewhat diluted. Nevertheless, it’s another step in the race to electrify California’s cars.
3) Half the people who lost their jobs from the pandemic are still unemployed, while 60% who did return to work have taken a cut in pay. As of 12 September, 12.6 million Americans are receiving unemployment benefits, with an unemployment rate at 8.4%. The lower income workers are more likely to still be unemployed. The bottom line, the virus crisis lead to a unprecedented loss of jobs and six months later, America is still a long ways from recovery. The crisis has caused a split in America’s labor force, the higher earners are going one direction while the lower paid ones are going another.
4) Stock market closings for – 24 SEP 20:
Dow 26,815.44 up 52.31
Nasdaq 10,672.27 up 39.28
S&P 500 3,246.59 up 9.67
10 Year Yield: down at 0.67%
Oil: up at $40.28

15 September 2020

1) The old, almost extinct vinyl record album technology for music has surpassed the newer high technology CD music media this year, by selling $129.9 million compared to $232.1 million dollars for vinyl records. This is the first time vinyl has outsold CDs since the 1980’s. About 8.8 million records were sold with 10.2 million CDs, so number wise CD’s are still ahead. Overall, the music industry now is center on digital downloads, digital subscription and streaming services such as Spotify, Apple Music and YouTube with revenues up 12% overall. The recorded music for the first six months of 2020 was $5.6 billion dollars so combined vinyl and CD’s are just a small fraction of the total business.

2) Amazon is hiring again expecting to fill 100,000 part time and full time openings across the U.S. and Canada. This is in addition to 33,000 technology and corporate jobs announced just a week ago, many paying six figure salaries. The 100,000 labor jobs pay at least $15 an hour with a $1,000 sign up bonuses in some cities. Amazon is opening 100 new buildings this month because of the pandemic fueled sales surge with increase home delivery, as shopping habits shift to e-commerce. Market value for Amazon is now at $1.6 trillion dollars and continues climbing.

3) Oil giant BP (British Petroleum) says the demand for oil may have peaked last year, that global market for crude oil might never recover from the coronavirus pandemic. The company considers there are three scenarios for energy demand, all of which forecast a decline in demand for oil over the next thirty years. 1) ‘Business as usual’ oil demand increases slightly after the pandemic crisis passes, then plateaus around 2025 finally it declines after 2030. 2) Governments take more aggressive steps to curb carbon emissions, 3) there are significant shifts in societal behavior, both leading to a decline in oil demand. All point to a shift in the world economic system with a significant decline in growth for many countries.

4) Stock market closings for – 14 SEP 20:

Dow 27,993.33 up 327.69
Nasdaq 11,056.65 up 203.11
S&P 500 3,383.54 up 42.57

10 Year Yield: unchanged at 0.67%

Oil: down at $37.38

14 September 2020

1) With 13 million Americans unemployed and their unemployment benefits running out, many will have only seasonal jobs to turn to. But with such wide spread unemployment, getting hired for seasonal work wont be easy. With the coming holidays, seasonal jobs traditionally mushroom with major companies already hosting hiring events to fulfill their temporary ranks. Companies like Michael’s will hire over 16,000 temporary people, with UPS expecting to hire over 100,000 for holiday package delivery. Retailers doing e-commerce, such as Amazon or Walmart are expected to need many seasonal workers and therefore are good places for job seekers to apply.

2) Fears are growing that the coronavirus crisis could cause a double dip recession, that the recession could end up looking like a roller coaster of ups and downs. The upsurge in virus cases is eroding consumer confidence and leading to renewed limits on certain businesses. Economic recovery can bloom then fade away only to repeat again. Some economic factors point to a recovery, yet others point downwards, with the picture further complicated by the ‘what ifs’ of the coronavirus and just how it will play out, where a second wave of the virus could be just as economically disruptive as the first one, maybe even more so. Additionally, a significant portion of the economy has been destroyed. Half the businesses in America are small businesses and at the start of the crisis, about half of those had cash reserves of just fifteen days or less . . . meaning by now they have gone bust! No one knows what the repercussion from such massive losses of business will ultimately have on the economy in general.

3) Mechanical breakdown insurance, which isn’t an extended warranty, but rather is insurance that pays for mechanical auto repairs of a car’s power train, much as accident insurance pays for the repair of body damage. It will have some amount for a deductible, then pays the remainder of a mechanic’s bill for repair, both labor and parts. Usually, any mechanic can be used. Most major insurance companies who offer auto insurance will also offer breakdown insurance too. Prices range from $20 to $100 a year.

4) Stock market closings for – 11 SEP 20:

Dow 27,665.64 up 131.06
Nasdaq 10,853.54 down 66.05
S&P 500 3,340.97 up 1.78

10 Year Yield: down at 0.67%

Oil: up at $37.39

11 September 2020

1) The new jobless numbers indicate the U.S. job losses persist with claims higher than was forecasts. Jobless claims were unchanged at 884,000 for last week, with the total number of people on unemployment rising by 93,000 to a total of 13.4 million people. Prior to the pandemic, new claims were about 212,000 a week with 1.7 million people on unemployment. What is concerning is the pace of layoffs has not slowed with the economy opening up, adding to fears of a second round of Convid-19 outbreaks. It appears that millions of Americans are heading for long term unemployment with most running out of unemployment benefits after 26 weeks.

2) Quantafuel AS, a Norwegian company established in 2014, who makes diesel fuel from plastic waste, is a success having tripled its value, which is now at $1 billion dollars. This is a time when the world is struggling over what to do with the monumental qualitites of plastic waste that continues to grow at an alarming rate. Even more welcomed is Quantafuel addressing the demand for fuel oils. Their process is more environmentally friendly than incineration of plastic. The company is increasing the production of its present plant and has plans to build additional plants with the goal of boosting production 100 fold in the next decade. No doubt, the Chinese will be showing great interest in this process because of their very limited oil resources.

3) One side effect of the coronavirus pandemic is limiting efforts to root out slavery across the world, because companies and investors are unable to visit factory floors in many countries. Even before the pandemic started, there was an estimated 40 million people working in slave like conditions, with the economic shock of the virus making people more vulnerable to exploitation. Companies are facing increasing legal obligations to ensure their supply chain doesn’t include slave labor.

4) Stock market closings for – 10 SEP 20:

Dow 27,534.58 down 405.89
Nasdaq 10,919.59 down 221.97
S&P 500 3,339.19 down 59.77

10 Year Yield: down at 0.68%

Oil: down at $37.00

4 September 2020

1) For first time since World War II the U.S. government’s debt will nearly equal the size of the entire American economy. By the end of 2020, the amount of debt owed by the United States will be about 98% of the nation’s gross domestic product with a debt that is about three times the 2019 level. The huge surge in debt is a result of the Congress spending an additional $3 trillion dollars in emergency funding since March, a result of the economic downturn from the coronavirus crisis. This is why some members of Congress and the White House have balked at approving an additional $2 trillion dollars in spending in view of the weak economy coupled with having little promise of improving soon. Few experts believe the Congress is likely to do something to reduce the deficit in the short term, all the while unemployment remains near 10 percent. Interest rates are low, which makes it less costly for the federal government to borrow. In addition to increase emergency spending, tax revenues fell as business slowed and many people lost their jobs.

2) After a steady increase in the markets, setting new records for highs, the stock markets took a sudden nose dive. This was caused by a massive and sudden sell off of the technology sector. The tech stocks had been on a ten day winning streak then a sudden overnight change which caught everyone by surprise. The Nasdaq dropped almost 600 points while the Dow was down 800 points. Market experts are left wondering what will come next, especially with the next jobs report for August coming out.

3) The pace of rehiring is expected to slow in August, so the economy will likely add fewer jobs than in July, while workers continue to be laid off. Because of the pandemic, America lost about 22 million jobs in March and April. In May through July, about 9.3 million jobs came back, so we are still short about 12 to 13 million jobs. Part of this is a result of so many small businesses having gone bust, so it will take a long time to replace those businesses and therefore replace the jobs they had. Economic turmoil is when technology displacement is prevalent as business seek the means to survive by reducing labor cost (eliminating jobs).

4) Stock market closings for – 3 SEP 20:

Dow 28,292.73 down 807.77
Nasdaq 11,458.10 down 598.34
S&P 500 3,455.06 down 125.78

10 Year Yield: down at 0.62%

Oil: down at $41.03

11 August 2020

1) Online retailer giant Amazon is considering taking over closed department stores in some malls to use as warehouses in their distribution system. Amazon is in talks with Simon Property Group, America’s largest mall owner, to convert J.C. Penny and Sears stores into distribution hubs for package delivery. Simon malls have 63 J.C. Penny and 11 Sears stores available. With many traditional brick-and-mortar stores in collapse, such a deal would make sense for both Amazon and Simon. Amazon is looking for more space closer to where customers live to help with its one day delivery strategy, while Simon needs cash rich tenants to bolster their business.

2) A report that outlines the three potential future movies in the Star Trek franchise has been released. The movies for Star Trek follow-on’s have been in limbo since the 2016’s Star Trek Beyond. There are three potential projects being considered for possible production, including a Tarantino’s Star Trek movie. The first movie by Noah Hawley (Fargo and Legion creator) is centered on a pandemic story line using a brand new cast, but is now on pause. The second is a movie by Tarantino, of Pulp Fiction fame, as writer, but not necessary directing it. Something of a take on of a prior Star Trek episode, it would be largely an earthbound 1930’s gangster setting. The third is a far more traditional Star Trek with the recent stars Chris Pine and Zachary Quinto. The next few weeks is expected to yield the fate of the Star Trek franchise.

3) Latest job numbers show 1.8 million new jobs created last month to give a 10.2% unemployment rate. This is another coming down of the rate, a good sign for the economy. This leaves 43% unemployed of the 22 million people who lost their jobs from the pandemic, so the economy is still a long way from a full recovery. Fears are that it will be a long time before full recovery, what with the large number of small businesses that have succumb to the Covid-19 crisis with subsequent loss of jobs. The continual struggling price of oil indicates a still weak international economy.

4) Stock market closings for – 10 AUG 20:

Dow 27,791.44 up 357.96
Nasdaq 10,968.36 down 42.63
S&P 500 3,360.47 up 9.19

10 Year Yield: up at 0.57%

Oil: up at $41.99

16 July 2020

1) Delta Airlines is expecting to spend up to $3.3 billion dollars on buyouts and early retirements in an effort to slash their labor cost. So far, 17,000 employees have signed up to leave the company because there is little in sight for the pandemic’s impact to end soon. The company is prohibited from laying off workers through 30 September under the terms of the $25 billion federal aid package met to support employee payroll. Delta has roughly 91,000 employees so this is a 19% reduction in their work force. The separation packages include cash severance, extended health care benefits and free flights. Other airlines are offering similar packages in an effort to reduce their work force.

2) Heritage Brands, an anchor of outlet malls across American, is closing all of its 162 stores starting next year. PVH Corp, which owns such brand names as Calvin Klein and Tommy Hilfiger, blames the closure on a combination of changing shopping habits of people and the Covid-19 pandemic. This will result in a 12% reduction in jobs or about 450 employees, saving the company $80 million dollars annually. The company had a 43% drop in revenue because of the impact of the coronavirus.

3) There are growing fears of an environmental disaster erupting in the Red Sea on the coast of Yeman. An abandoned oil tanker with 1.1 million barrels of crude oil, is beached on the coast of Yeman, with the potential to explode or rupture causing major environmental and humanitarian damage in the area. UN officials are trying to gain access to the ship to assess the tanker’s condition, conduct any possible urgent repairs and make recommendations for extraction of the oil, but the area is controlled by Houthi rebels. The danger is from sea water entering the ship’s interior causing rust and loss of structural integrity plus the inert gas that prevents the tanks from gathering inflammable gases has leaked out, so there is the threat of an explosion. To start with, an oil spill could result in 126,000 Yemeni fishermen losing their source of income.

4) Stock market closings for – 15 JUL 20:

Dow 26,870.10 up 227.51
Nasdaq 10,550.49 up 61.92
S&P 500 3,226.56 up 29.04

10 Year Yield: up at 0.63%

Oil: up at $41.04

6 July 2020

1) Newest job report is out with America gaining 4.8 million jobs as people return from the shutdown to work again. This gives an unemployment rate of 11.1%, which is still in the recession category, but is coming down over time. These returning jobs were mostly in the restaurant, hotel and retail sectors. There remains the question of how many restaurant jobs will finally return, with significant numbers of privately own businesses failing financially because of the shutdown.

2) The cornerstone of Ford’s reorganization, its F series Ford pickups, has dropped 22% in sales. Most of these are the F-150 full size pickups, with a new version just recently released. Total Ford sales are down 33.3%, with Ford executives making it clear just how critical the F-150 is to the future of Ford. Before the pandemic crisis set in, Ford had implemented a major restructuring of its operations intent on remaining a strong profitable company, and had expected to pay for this plan in part with the strong sales of the F-150. The F series models have been a part of Ford’s product line since 1948.

3) It’s reported that the developing world loses billions of dollars in money from migrant workers. These migrant workers range from Polish farmhands in the fields of southern France, to Filipino workers on cruise ships in the Caribbean, almost all of them losing their jobs because of the pandemic shutdown. These workers routinely sent cash home, so the third world economy is suffering too. Migrant workers comprise tens of millions of Indians, Filipinos, Mexicans and others from the developing countries, who sent a record $554 billion dollars back home last year. This is more than three times the development aid from foreign governments. Family members depend on this cash to pay for food, fuel and medical care. This drop in money sent home is four times the fall in the 2008 Great Recession.

4) Stock market closings for – 3 JUL 20:

Dow 25,827.36 up 92.39
Nasdaq 10,207.63 up 53.00
S&P 500 3,130.01 up 14.15

10 Year Yield: down at 0.67%

Oil: unchanged $40.32 back home

27 May 2020

1) The local economies of oil country are being hit hard by the shale oil bust as royalties from oil pumped have shrank to near insignificance. While the oil bust has erased tens of thousands of jobs, while drying up local tax revenues, it has also greatly reduced the inflow of money to local economies from the royalties being paid out. There are about 12 million U.S. mineral owners collecting royalties for oil and gas extracted from their land. Royalties range from 12.5% to 25% of the value of gas and oil pumped, with the average oil land owner collecting about $500 dollars a month.

2) The coronavirus pandemic is causing more economic troubles with increased prices at supermarkets. The virus caused unprecedented demand, the shutdown of some food manufacturing facilities and the need for more labor to assemble orders for pickup and delivery are adding to costs of the grocery business. Since supermarket’s get all their money from the checkout lanes, this translates into higher grocery prices. Some say the grocery business will never be the same again. Furthermore, with demand driven so high by the pandemic, stores have no need to offer incentives and sales. This demand has been felt up the supply chain further increasing cost. One note, the pickup and delivery business of groceries has been catapulted ahead bringing automation to the grocery business closer.

3) The New York Stock Exchange has started a phased reopening of its trading floor, having been closed for two months because of the pandemic crisis. The NYSE has been limited to all electronic trading since March 23 in a measure to prevent the spread of the virus. But there will be fewer floor brokers, and they will wear face masks and do social distancing. Nevertheless, many brokers will continue to do their jobs remotely with electronics, and stay away from the trading floor. Another example of how American business has been changed by the need to keep people spaced apart, even isolated in order to halt the spread of the virus.

4) Stock market closings for – 26 MAY 20:

Dow 24,995.11 up 529.95
Nasdaq 9,340.22 up 15.63
S&P 500 2,991.77 up 36.32

10 Year Yield: up at 0.70%

Oil: up at $34.18