21 January 2021

1) More automation is entering the American economy in an unexpected segment of business- the recycling sorting of trash . . . a dirty, low-paying, mind-numbing job that is hard to fill simply because so few people are willing to do that kind of work. The 300-pound robot sorts through an unending line of trash. It uses artificial intelligence and computer vision to detect recyclables, and is able to pluck a hunk of plastic off a conveyor belt, then place those bits into sorting bins using a vacuum gripper. The robot sorts glass, plastic and paper into the appropriate bins, leaving metal on a conveyor. It is designed and built by AMP Robotics. There are 600-plus recycling facilities in America, which process some 67 million tons of waste, which is a labor intensive, and therefore costly endeavor, but the $300,000 robot, which can work 24/7, will lower cost by eliminating the human sorters. The Louisville, Colorado based company has sold or leased a100 of its robots since 2017 to more than 40 recycling facilities in North America, Europe and Japan.

2) The civilian space transportation company, SpaceX has purchased two floating deepwater oil rigs to convert into floating launchpads for its Starship rocket. Each were purchased for just $3.5 million dollars. These two rigs have been renamed Deimos and Phobos, presumably in homage to the Martian moons. The Starship is the enormous rocket that SpaceX is developing to meet the goal of launching cargo and as many as 100 people at a time on missions to the moon and Mars. SpaceX has been publicly hiring for offshore operations positions since last year, when the company posted that it was building a team of engineers and technicians to design and build an operational offshore rocket launch facility.

3) The Israeli company StoreDot has announced a new design for an electric-car battery that can be charged as fast as filling up your gas tank. This faster-charging capability will make EVs more accessible to the general public. The new battery is a lithium-ion battery that will be manufactured by Eve Energy in China. The company has produced 1,000 sample batteries compliant with Li-ion battery certifications. Current electric-car batteries can take anywhere from 30 minutes to 12 hours to charge, with a typical EV taking about 8 hours to charge from empty to full.

4) Stock market closings for – 20 JAN 21:

Dow 31,188.38 up by 257.86
Nasdaq 13,457.25 up by 260.07
S&P 500 3,851.85 up by 52.94

10 Year Yield: down at 1.09%

Oil: down at $52.96

20 January 2021

1) There are growing fears of another stimulus package as the national debt grows. One measure of unemployment suggests Biden’s $1.9 trillion dollar stimulus plan may do more harm than good. The U-6 unemployment rate, a less popular reading than the commonly cited U-3, suggests additional fiscal support could be unnecessary. The gauge (which includes those only partially participating in the labor force) currently is at 11.7%. Five of the past six recessions saw higher readings. The coronavirus pandemic initially pushed the U-6 rate to a record-high of 22.9% in April, but easy monetary conditions and the $2.2 trillion dollar stimulus package brought the rate down in a matter of months. Still, there are serious questions about the long term stability of the world economics as nations struggle to pay off these huge national debts.

2) A new Covid-19 variant has been discovered in Brazil adding to the two newly emerged variants from the United Kingdom and South Africa. Brazil is one of the worst affected countries by the virus, where more people have died of the virus than anywhere else outside the United States. An urgent COVID warning says the worst months are still ahead, and is expected to get more people sicker faster. Infections and deaths are expected to continue increasing.

3) President-elect Joe Biden has an ambitious environmental agenda, with a principle goal of transitioning away from using fossil fuels. There are many questions just how this climate plan could affect the oil and gas industry in America. The new requirements include disclosure of climate risks from public companies, a commitment to end new drilling permits for federal lands, and to eliminate tax subsidies for the oil and gas industry. Tougher methane regulations to give incentives for Americans to buy cars that do not run on gasoline. It’s not just the big oil companies which can be hurt, for there are thousands and thousands of small companies making up the supply chain businesses, as well as the small independent wildcatters who are producing oil. But while oil is slowly recovering with prices above $50 a barrel, it is all in jeopardy if these proposals go into effect. Biden’s proposals could face stiff challenges from Texas officials and the oil and gas industry itself.

4) Stock market closings for – 19 JAN 21:

Dow 30,930.52 up by 116.26
Nasdaq 13,197.18 up by 198.68
S&P 500 3,798.91 up by 30.66

10 Year Yield: down at 1.09%

Oil: up at $53.17

24 December 2020

1) Just went everyone thought the second stimulus was a done deal, President Trump has made vague threats not to pass it. The President is asking Congress to amend the bill that has passed both chambers, with Trump decrying the bill’s $600 payments and its failure to properly support small businesses. He is now urging lawmakers to boost the $600 check to $2,000 for every American earning less than $75,000 per year. Furthermore, a veto would leave the threat of a government shutdown and expiring Covid-19 protections looming over the holiday season. The President said the bill contains too many provisions unrelated to the pandemic.

2) Threats of a second stimulus bill veto was reinforced with Trump’s veto of the defense bill, in part because of the requirement for renaming bases honoring Confederates and restrictions on the executive’s ability to bring troops home from overseas. Both the House and the Senate are already making plans for a post-Christmas session during which lawmakers plan to override the veto. Congress has until noon on January 3 to do so.

3) There are emerging new signs of economic distress. With the fate of a federal aid package suddenly thrown into doubt by President Trump, economic data on Wednesday shows why the help is so desperately needed. Personal income fell in November for the second straight month, and consumer spending declined for the first time since April, with a worsening pandemic continuing to take a toll on the U.S. economy. Applications for unemployment benefits remained high last week and have risen since early November. Experts know that things are going to get worse, the question is how much more worse. Many economists view direct payments to people as among the least effective measures, because much of the money goes to households that don’t need it. Spending on restaurants and hotels fell with transportation, clothing and gasoline also in declined. The decline in spending is spilling over into the labor market, with about 869,000 people filing new claims for state jobless benefits last week. The relief bill is smaller than many economists say is needed to carry the economy through the pandemic and ensure a robust recovery.

4) Stock market closings for – 23 DEC 20:

Dow 30,129.83 up by 114.32
Nasdaq 12,771.11 down by 36.80
S&P 500 3,690.01 up by 2.75

10 Year Yield: 0.96%

Oil: up at $48.06

10 November 2020

1) The United States became the first nation to surpass 10 million coronavirus infections since the worldwide pandemic started. This is the feared third wave of the Covid-19 virus now surging across the nation. America has reported about a million cases in the past 10 days, the highest rate of infections since the first reporting, while worldwide, coronavirus cases now exceeds 50 million. In the United States the daily average of new deaths account for 1 in every 11 deaths worldwide. The Midwest remains the hardest-hit region based on the most cases per capital with the top five worst-affected states being North Dakota, South Dakota, Wisconsin, Iowa and Nebraska.

2) With Joe Biden now expected to enter the Oval Office, the American workplace is going to look much different. Biden has four decades of union leaders behind him, making him potentially the most labor-friendly president of the U.S., who won the endorsement of almost every major union in the country. Labor reform is a fundamental part of his administration with at least one union leader to be named to his Cabinet. As the coronavirus pandemic continues to drive permanent job losses and compromise worker safety, the case for structural change may be stronger than ever. A sharp turn from the Trump White House on labor policy is expected with the Democrats to reverse the present labor policies. Worker safety enforcement, progressive labor policy with a federal minimum wage of $15 per hour, boost manufacturing via trade, and a more labor-friendly National Labor Relations Board are just some of the areas for major changes to be made. Bill Clinton and Barack Obama push through a wide range of policies, only to have their plans overtaken by other agenda items like health care. But the most important factor being overlooked is AI (Artificial Intelligence) experts are predicting that up to 50% of American jobs will disappear in the next 15 to 25 years. Also, any time you raise the cost of labor, then those jobs will be replaced by automation.

3) Japan moves to reduce its fossil fuel emissions, with Japan being the fifth largest polluter, by using hydrogen fuel for its energy needs. Hydrogen offers the greatest potential to decarbonize industries like steel, cement and heavy duty transport, to achieve net-zero emissions.

4) Stock market closings for – 9 NOV 20: The Dow surged to 1,500 points on news of an effective Covid-19 vaccine trials by Pfizer with early results showing at 90% effectiveness. The Dow was briefly over 30,000.

Dow 29,157.97 up by 834.57
Nasdaq 11,713.78 down by 181.45
S&P 500 3,550.50 up at 41.06

10 Year Yield: up at 0.96%

Oil: up at $39.84

13 October 2020

1) More bad news for the airline business with another expected huge round of losses coming. The second quarter was the worst financial hit in the history of the airline business, and the third quarter won’t be much better. The airlines reported a second quarter combined losses of $12 billion dollars with revenues down 86% for the previous year. Analysts are forecasting a $10 billion dollar lost for the third quarter. The airlines did reduce cost by trimming expenditures, reducing labor as employees took buyouts and early retirement packages. Also, a modest pickup in travel during the summer has help with increased revenues, but forecast are for sales to be down 75% in the third quarter.

2) Oil prices fell the most in a week because the Gulf of Mexico production is set to resume and Libya is reopening its largest oil field. The hurricane had shut down about 92% of oil production in the Gulf, while at the same time Libya’s largest field will reach its daily capacity of almost 300,000 barrels in ten days. World demand for oil crude has dropped with refineries operating near minimum capacity.

3) The third major opioid makers Mallinckrodt Pic has become the third major manufacture of opioid to go bankrupt after being swamped by claims with respect to profiting from the U.S. opioid epidemic. The drug company filed for Chapter 11 after getting creditors and claimants to agree on a restructuring plan. This plan hands over ownership to bondholders, wipes out shareholders and sets aside $1.6 billion dollars to resolve all its opioid litigation. Current shareholders will most likely get nothing, with stock prices in the penny range for most of the year. The Chapter 11 filing estimates liabilities of $1 billion to $10 billion dollars and assets in the same range.

4) Stock market closings for – 12 OCT 20:

Dow 28,837.52 up 250.62
Nasdaq 11,876.26 up 296.32
S&P 500 3,534.22 up 57.09

10 Year Yield: unchanged at 0.78%

Oil: down at $39.44

5 October 2020

1) Economic watchers were disappointed with the job reports for last month, with just 661,000 jobs added and the unemployment rate down to 7.9% from 8.4% in August. But this is because the labor force shrank by about 700,000. The job report is the last before the November elections and it shows a slowing recovery, thereby raising the specter of a gap that could take several years to close. The Nation has recovered a little over half the 22.1 million jobs lost at the start of the virus crisis. The job numbers fell short of the economic forecast of 850,000 new jobs and was the first month since April with a net job growth dropping below 1 million. September is the seventh month of the pandemic and the resulting crisis in American labor.
2) Some good news for California and its plague of wild fires- two of the largest fires are now fully contained. But still, several others threaten life and property, with weather forecast into next week not providing much hope from the threat of fires. The heat is expected to continue in Southern California with strong winds and dry conditions making for elevated fire conditions. The two, now contained wild fires, have burned for more than six weeks charring an area about the size of Rhode Island. Mega fires have become the norm in California with today 10 fires that are 100,000 acres plus in size and one that is over 850,000 acres. Northen California, with its wine country, continues to struggle with large fires, with the Glass Fire in Napa County being only about 5% contained and the Zogg Fire in Shasta County at 26% contained. All of California is fighting 24 major fires burning in California.
3) There is growing evidence that nearly 4 million American jobs have vanished forever because of the pandemic. This means that many initially lost jobs, which were hoped to be furloughs or temporary job losses, are becoming permanent as businesses shut down and cut costs. Technology displacement plays a major part in permanently shedding jobs by allowing combining job functions or outright replacement of people with machines. Each week, more companies announce thousands of layoffs as they struggle to survive in an ever changing business world and hostile economic environment. Those able to integrate technology and AI (Artificial Intelligence) into their operations are the ones most likely to survive, and that translates into permanently lost jobs.
4) Stock market closings for – 2 OCT 20:
Dow 27,682.81 down 134.09
Nasdaq 11,075.02 down 251.49
S&P 500 3,348.44 down 32.36
10 Year Yield: up at 0.70%
Oil: down at $37.01

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

18 June 2020

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

22 May 2020

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