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
1) Retail giant Target has announced it is raising the minimum wage they pay to store and warehouse workers to $15 an hour, a $2 increase. Target had 350,000 workers employed in 1,900 stores across America. The company is also extending the benefits it started offering during the pandemic, including a new one of free visits to a virtual doctor. All this increases Target’s operating cost by more than $1 billion dollars a year. The company’s margins have been under pressure from pandemic related expenses, in addition to selling fewer high margin items such as apparel and accessories, as well as customers shifting to online shopping. Rival Walmart has announced they are testing a totally cashierless store as a way of limiting human contact because of the Convid-19 threat, but a cashierless store also means reduce labor cost, a goal long sought after by retailers.
2) There is a spike in mortgage demand driven by the record low interest rates. There is a 21% increase in mortgage applications from this time last year. The easing of the pandemic is releasing the pent up demand caused by the shutdown. A 30 year mortgage with 20% down fixed rate has an interest rate now of 3.3%. Refinancing continues to play a significant part in the home mortgage market.
3) Hilton Hotels is laying off 22% of its corporate workforce of 2,100 employees as a result of the coronavirus, while also extending furloughs for many of its corporate staff for an additional 90 days. The virus crisis has brought the hotel business to a near complete halt. The industry has lost about 7.7 million jobs, although occupancy has started to increase, signaling the worst may be coming to an end.
4) Stock market closings for – 17 JUN 20:
Dow 26,119.61 down 170.37
Nasdaq 9,910.53 up 14.66
S&P 500 3,113.49 down 11.25
10 Year Yield: down at 0.73%
Oil: down at $37.65
1) Again, there is additional unemployment this week with 2.4 million people filing for unemployment benefits this last week. This brings the total U.S. unemployment during the pandemic up to 38 million, with continuing claims at 25.07 million, the highest level on record. The good news is the filings continue to decline from previous weeks. So far, there’s no indications that the easing of the lockdowns is having any effect on the unemployment dilemma.
2) The apparel retailer chain ‘The Gap’ is accelerating its implementation of robots in warehouses to assemble online orders, thus avoiding the use of human contact during the pandemic. The Gap is tripling the number of item picking robots in use to 106 by the fall. With the pandemic forcing the closure of its stores nationwide, their online sales shot up just when social distancing rules reduced their staff. Each robot does the work of four humans in a warehoused that was already highly automated. This is an example of increased automation occurring during times of economic shock, leaving fewer jobs for when the economy improves. These are times when employers shed less skilled workers by replacing them with technology and higher skilled workers thereby reducing their labor cost.
3) The second crisis for the American economy is arriving. The pandemic is having sever consequence for state and local governments with lockdowns eviscerating their finances. Monies needed to pay for public services and infrastructure have withered leaving governments to do triage of the services they provide. Basic services such as police, fire fighting, health, trash and water/sewer services are threatened with curtailment for lack of monies to pay salaries and supplies such as gasoline. Such actions is politically dangerous which can fuel political extremism that threatens democracy. Losses of state and local revenues are estimated to be 15 to 45 percent, or an overall loss of $1.75 trillion dollars a year. With growing doubts of re-employment after the crisis passes, this economic crisis is long term.
4) Stock market closings for – 21 MAY 20:
Dow 24,474.12 down 101.78
Nasdaq 9,284.88 down 90.90
S&P 500 2,948.51 down 23.10
10 Year Yield: down at 0.68%
Oil: up at $33.82
1) The Federal government is moving to address the record deficits that America has amassed. One method is to stretch out the time over which the deficit is paid off. Part of that plan is the reinstating of the 20 year bond, which was last issued in 1986. The Feds will auction off $20 billion dollars worth of bonds Wednesday, with an expected return of 1.21% verses 0.70% for the 10 year bonds and 1.42% for the 30 year bonds. The government is also considering 50 and 100 year bonds, but there doesn’t seem to be any demand for such financial instruments. It’s expected that the deficit will be $3.4 trillion dollars for fiscal 2020 and $2 trillion dollars for 2021.
2) The CBO (Congressional Budget Office) estimates the nation’s unemployment rate will exceed 15% through September then remain above 11% for the rest of the year. For 2021, they estimate an average of 9.3%. For the second quarter of 2020, the labor market is projected to see the steepest declines since the 1930’s. These high unemployment rates are expected to persist despite lawmakers’ efforts to counter with injections of cash into the economy. Further layoffs are expected despite the $660 billion dollar Paycheck Protection Program, but a partial rebound is possible in the last three months of the year, with as much as 30% of laid off workers being rehired.
3) Housing sales are way down, the lack of inventory has propped up prices with bidding wars from the limited availability of properties. The health guidelines have made it more difficult to market homes, another fallout of the pandemic. Since the pandemic began, the demand has fallen off, with the number of sellers also contracting, therefore the limited availability of properties. Despite the economic uncertainty, the supply shortage prior to the Covid-19 crisis still remains. Nevertheless, the housing market has cooled, with sales of existing homes projected to fall 20% in April compared to March, which had a 8.5% drop. Construction of new houses is down as contractors wait out the virus. While loan interest rates are low, lending institutions have tightened up their loan standards.
4) Stock market closings for – 20 MAY 20:
Dow 24,575.90 up 369.04
Nasdaq 9,375.78 up 190.67
S&P 500 2,971.61 up 48.67
10 Year Yield: down at 0.68%
Oil: up at $33.52
1) The U.S. consumer prices has declined for the second straight month as the shutdown continues with people spending less. Prices have fallen 0.8% on a seasonally adjusted basis in April, which makes it the largest drop since December 2008. The prices are being forced down by the falling cost of gasoline and energy prices. While falling prices might at first seem like a good thing, economist say that deflation, the opposite of inflation, would be very bad news. This starts a chain reaction spurred by people not buying things, which means manufactures and producers often can’t charge enough to make the product they are trying to sell, so then they stop making products and layoff people. But food prices are climbing, with the biggest increase since February 1976 by 2.6%. The Federal Reserve tries to keep inflation at around 2%, which is considered ideal, but core inflation is likely to be below 1% for the coming year. Normally, it’s expected that a large release of money into the economy, such as the recent stimulus program, would cause inflation to increase.
2) Tim Hortons of Restaurant Brands International, says the food service industry needs to change for the near future, and possibly forever. The company is increasing its digital ordering capabilities by adding to restaurants smartphone apps with enhancements to its drive-thrus and curb service. Restaurant brands using delivery services such as pizza have seen an increase in revenues during the shutdown. The delivery service industries such as GrubHub were growing before the virus crisis, but have been given a real boost which will most likely be sustained when restrictions are lifted. Some restaurant chains are even experimenting with ‘kitchen only’ restaurants with multiple brands under the same roof providing delivery only. This could be an answer to the ‘living wage’ problem with restaurant systems using less labor thereby making a greater surplus of labor which keeps wages low.
3) The economic damage to the economy may not be over with yet, indeed there are fears that the economic crisis could still get worst. The provisions from Congress has done a fair job of sheltering the most vulnerable citizens, whose provisions will run out at the end of July. It’s unlikely that the labor market will be restored by July, so if the Congress doesn’t act, the economy could slide downward even more.
4) Stock market closings for – 12 MAY 20:
Dow 23,764.78 down 457.21
Nasdaq 9,002.55 down 189.79
S&P 500 2,870.12 down 60.20
10 Year Yield: down at 0.68%
Oil: up at $25.83
1) The second wave of unemployment is coming after an unprecedented spike in layoffs from the cornonavirus ‘stay at home’ orders. But while businesses will soon start rehiring workers, many will take the opportunity to replace their workers with cheaper and more contingent labor. The crisis will accelerate trends towards industry consolidation that reduces potential employers, automation, which replaces human labor, and worker precarity when convenience of employers and customers entirely overrides the well being of workers. Further aggravating employment will be the large number of small businesses expected to succumb to the recession leaving fewer employment opportunities. Also, the force isolation is changing people’s buying habits with more online shopping, delivery services and self service kiosks. These methods of automation also represent cost cutting methods, which companies will cultivate to make more wide spread. All this promises to make the second round even harsher.
2) Oil prices continue their downward spiral, with futures at record lows as investors worry about lack of storage and the world economy. German and Japanese data indicates a bleak global economy, which will in turn pull America’s down. Despite measures being taken to reduce the supply, the glut will continue for the foreseeable future. Numerous statistics and prices point to a continual crisis for the world and American economies.
3) Restaurants are particularly hard hit by the coronavirus economy, with more than 8 million workers having lost their jobs, about two-thirds of the restaurant labor force. About four in ten restaurants have closed, while many others struggle to stay afloat by providing curbside service. The National Restaurant Association is asking for more monies to support survival of restaurants during this period of government enforced business closure. Like so many other small businesses, the future for many restaurants is looking very doubtful.
4) Stock market closings for – 20 APR 20: Oil drops from $18.12 for Friday to -$16.10, almost a complete inversion in price.
Dow 23,650.44 down 592.05
Nasdaq 8,560.73 down 89.41
S&P 500 2,823.16 down 51.40
10 Year Yield: down at 0.63%
Oil: down at -$16.10
1) A second round of layoffs is starting, the first being workers at restaurants, malls and hotels, most of them lower skill levels, but now it’s higher skilled jobs threatened. Those higher skilled jobs had seemed secure, however the ‘work at home’ people are seeing layoffs and furloughs to add to the unemployed numbers. Jobs such as corporate lawyers, government workers and managers are seeing the pink slip with a threat of a prolonged labor downturn in 2007-09 recession. Economist anticipated that 14.4 million jobs will be lost in coming months, raising the unemployment rate to 13% for June. Already, 17 million Americans have been laid off, with estimates of 27.9 million jobs to be lost. The information businesses are being hit, with revenues not sufficient to pay electric bills for servers and computers to host web sites. Even large law firms catering to the corporate world are having significant layoffs. State and local governments employ 20 million people, but as tax revenues drop, they too are faced with reducing employees. Analysts consider it will take 5 1/2 years for the labor market to recover.
2) Boeing, the airline manufacture, is further suffering business setbacks with the cancellation of orders for 150 jets in March. This is a result of a near total halt in demand for air travel because of the coronavirus pandemic. There are now nearly 14,000 jets parked by airlines around the world. Boeing did report new orders for 31 aircraft in March. While Boeing still has a backlog of orders for about 5,000 jets, there are fears that delivery will be deferred which will further add to Boeing’s financial woes.
3) The IMF (International Monetary Fund) is predicting that the Great Lockdown recession will be the worst in almost a century, warning the world economy’s contraction and recovery will be worst than anticipated. The IMF estimates the global gross domestic product will shrink 3% this year, compared to a 3.3% growth in January. This will dwarf the 0.1% contraction in the 2009 financial crisis. These forecast dashing any hopes for a V-shaped economic rebound after the virus subsides, with a commutative loss of global GDP of this and next year, of about $9 trillion dollars. Economic damage is driven by how long the virus remains a major threat.
4) Stock market closings for – 14 APR 20:
Dow 23,949.76 up 558.99
Nasdaq 8,515.74 up 323.32
S&P 500 2,846.06 up 84.43
10 Year Yield: unchanged at 0.75%
Oil: down at $20.82
By: Economic & Finance Report
Over 3.3 million Americans have claimed unemployment benefits because of the coronavirus, the U.S. Labor Dept has indicated this past week. The virus has taken a toll on businesses, income wages and society’s everyday way of living.
These numbers reflect a growing number of Americans who are currently unemployed and are seeking financial relief; because of what the COVID-19 virus has done to their working wages. Many people have insisted that the impact has burdened them into massive financial debt.
It also has to be noted, that the United States has now surpassed all other countries with the most infected individuals who have tested positive for COVID-19. Over 85,000 people in the USA have the coronavirus, as presented by data by John Hopkins University on March 26, 2020 (US infections 85,840). SB
Sources: US Labor Dept; John Hopkins University Covid-19 Data
1) Hallmark Greeting Cards is suffering a downturn in the brick-and-mortar retail industry, closing sixteen of its retail outlets across America. Social media is crushing the card business, so it’s no longer a viable business. People use to buy and send cards all the time, but now it’s all online. This is just another indicator of how the retail business is changing, more people doing their shopping on line.
2) Franchise businesses remain a popular strategy for people to start their own business, giving them the benefit of an established brand. About two-thirds of Americans say they want to start a small business, but fears of failure stop most, with good reason. About half the small business startups fail within five years, and two-thirds within ten years. Most businesses do not fail because they don’t make a profit, but rather because of insufficient cash flow problems.
3) Independent grocery stores and regional supermarket chains, who are already facing brutal competition and shrinking profits, now face losing a valuable source of sales- the food stamp recipients. New rules for SNAP (Supplemental Nutrition Assistance Program) could eliminate 700,000 people from eligibility. Loss of sales could result in reduce orders from suppliers, reducing labor in stores or the closing of stores. Grocery stores have a profit margin of only about 1 % to 2% leaving little room for changes in their sales volume.
4) Stock market closings for – 30 JAN 20:
Dow 28,859.44 up 124.99
Nasdaq 9,298.93 up 23.77
S&P 500 3,283.66 up 10.26
10 Year Yield: down at 1.56%
Oil: down at $52.87