9 July 2020

1) In a move that shows just how much troubled the airline industry is, United Airlines is sending out layoff warnings to half of its U.S. staff, or about 36,000 employees. The world’s airline industry has be devastated by the coronavirus crisis, with the prospects for recovery in air travel dimming in just the past two weeks because of a rise in infections. The ‘36,000 people’ is a worst case scenario, with United striving to minimize layoffs through things like early retirement packages. Air travel had plunged 95% from March to April, and has been making a slow recovery. Still air travel is down 70%.

2) After more than fifteen months since being grounded for safety, Boeing’s 737 MAX is finally getting close to winning approval to fly again. But it’s not expected the aircraft will actually start carrying passengers until late this year at the earliest. Now with a history of missed deadlines, neither Boeing or the FAA (Federal Aviation Administration) will say when the airplane will be approved to fly passengers. But after the aircraft is certified, there will still be months of training before the 737 MAX can actually operate. The good news is the test flights signal the certification is nearing its end. Once the U.S. has granted approval, Boeing will start the process of certification in a number of other countries which the 737 will operate out of. Plus, the 400 aircraft built during the grounding will need to be modified and tested before they can be delivered. The biggest question is how much and how long the airline industry will need to recover from the pandemic.

3) President Trump is threatening to cut off funding for schools that do not reopen this fall. It’s unclear just how the federal government could exert significant financial pressure on states and local school systems. The President is also in disagreement with Centers for Disease Control and Prevention’s guidelines for their reopening.

4) Stock market closings for – 8 JUL 20:

Dow 26,067.28 up 177.10
Nasdaq 10,492.50 up 148.61
S&P 500 3,169.94 up 24.62

Year Yield: up at 0.65%

Oil: up at $40.93

9 June 2020

1) The worst U.S. economic downturn since the Great Depression has been officially declared a recession by the National Bureau of Economic Research. While the recession had been a foregone conclusion for most people since the coronavirus outbreak shut the economy down, the NBER declaration makes it a fact, adding that the different characteristics and dynamics makes this recession different from previous recessions. The recession is officially to have started in February.

2) The child care businesses are the hardest hit by the Covid-19 pandemic shutdown with a third of the child care workers laid off or furloughed nation wide. Only the hotel and restaurant industries were hit harder, but because child care providers operate on such thin margins, many are going out of business. With parents unable to find day care for their children, they are unable to return to work, as much as they would like to. So this in turn is another hindrance to economic recovery for America. Therefore, Congress is proposing as much as $100 billion dollars for the child care industry in the next stimulus package.

3) A ten year long treasure hunt has come to an end with the finding of a treasure chest filled with jewels and gold coins worth a reported million dollars. An estimated 350,000 treasure hunters have been searching in the Rocky Mountains since 2010, a ten year long treasure hunt. Hidden by Forrest Fenn, an 89 year old art dealer, who confirmed the treasure was found by an anonymous person from the east. Thousands have spent considerable time and resources searching for the treasure, some even giving up their jobs to search full time. Some have claimed the entire enterprise is an elaborate hoax and have filed lawsuits. Clues to the treasure’s location were in a cryptic 24 line poem that Fenn wrote and published in his book, “The thrill of the Chase”, published in 2010.

4) Stock market closings for – 8 JUN 20:

Dow 27,572.44 up 461.46
Nasdaq 9,924.74 up 110.66
S&P 500 3,232.39 up 38.46

10 Year Yield: down at 0.88%

Oil: down at $38.51

29 May 2020

1) Another 2.1 million Americans are unemployed as the economy begins its reopening with restriction on economic activity easing in some parts of the country. One bright spot is the number of continued claims (people remaining on unemployment) dropped slightly from people returning to work. While the number of new claims continues to drop each week, it still remains at a record high, with the drop in new claims remaining higher than anticipated. The continued elevated number of claims isn’t a good sign, showing that we are not through the business shutdowns and possible closures yet, with some furloughs shifting over to permanent layoffs. The unemployment in America is now at 40.7 million workers.

2) Boeing aircraft manufacturer may be starting its recovery announcing the resumption of limited production of its 737 MAX after a five month halt. The 737 MAX has been grounded since March of 2018 because of software problems resulting in two airliners crashing. While the FAA has not cleared the airplane for return to passenger service, Boeing expects the 737 MAX to fly again in mid 2020.

3) The millennials and generation-Z are worst off economically than any previous generation, they are experiencing slower economic growth since entering the workforce than any other generation in U.S. history. It’s not just that it’s a bad recession, or that it’s hitting young people more, but rather that it’s hitting people who have already been hit by the Great Recession. Millennials have experienced slower economic growth since entering the workforce than any other generation in U.S. history, and they will bear these economic scars throughout their lives, with lower earnings, lower wealth and delayed milestones, such as home ownership. The old adage of ‘just work harder, sink or swim by your own effort’ no longer applies, because many millennials are now having to swim upstream against a much stronger current . . . from the forces of automation and technology displacement.

4) Stock market closings for – 28 MAY 20:

Dow 25,400.64 down 147.63
Nasdaq 9,368.99 down 43.37
S&P 500 3,029.73 down 6.40

10 Year Yield: up at 0.70%

Oil: down at $33.68

28 May 2020

1) The aircraft manufacture Boeing is laying off almost 12,000 workers this week, a result of the coronavirus crisis impact on the aircraft company. Boeing, which is the largest exporter in the U.S., is trimming its workforce by about 10% which include international locations. It is anticipated the airline industry will take some years to recover with air travel dropping a whopping 95% because of the virus, and major airlines canceling the majority of their domestic flights while suspending nearly all international flights. The company suffered a major set back with its 737 MAX grounding that resulted in near record number of order cancellations for passenger jets with zero new orders in April. This has been Boeing’s worst year in decades.

2) The discount home goods retailer Tuesday Morning has filed for bankruptcy, a result of the prolong store closings from Covid-19. The lost revenues created an insurmountable financial hurdle in a company that was thriving before the pandemic. The chain is closing 230 of its nearly 700 US stores across America. The first phase of closures of 130 stores will begin this summer. This is in line with another home goods retailer, Pier 1, which filed for bankruptcy in February, another casualty of the virus.

3) More than one in every six young workers have stopped working because of the coronavirus pandemic world wide. There are fears that young workers (15 to 28 years old) could face the inability to get proper training or gain access to jobs long after the pandemic ends, maybe even deep into their careers. Of those still working, about 23% report reduction in the number of hours they work. For 178 million young workers around the world, more than 40% are in the food services and hospitality industries, which is the hardest hit sector from the virus. Three fourths of the young workers are in informal jobs or casual labor. In addition, many companies in the U.S. are cutting salaries of those who still have a job, trying to remain in business, which will reduce discretionary income that will further slow economic recovery.

4) Stock market closings for – 27 MAY 20:

Dow 25,548.27 up 553.16
Nasdaq 9,412.36 up 72.14
S&P 500 3,036.13 up 44.367

10 Year Yield: down at 0.68%

Oil: down at $32.22

13 May 2020

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

16 April 2020

1) With many of the big box stores under siege from store closings and bankruptcies, the U.S. retail sales has suffered a record drop in March. In turn, factory outputs have declined by the most since 1946, as part of the coronavirus economic contraction in the first quarter. The drop is the sharpest rate in decades despite the measures taken to prop up the economy. People are now making comparisons to the Great Depression of 1930’s, considering this recession will be as deep if not deeper than that depression. People are losing jobs by the millions, and one question is how many of those jobs will return and how many will be taken by technology displacement. Last month, retail sales plunged 8.7%, the biggest decline since 1992 when government began taking numbers. Restaurants and bars are included in the retail decline with a drop of 26.6% last month, although grocery and health care rose. Consumer spending has dropped sharply with forecast of a 41% decline for second quarter. Consumer spending accounts for more than two thirds of the U.S. economic activity.

2) The price of oil has fallen below $20 per barrel because of predictions of a record slump in world demand. In April, global oil demand is expected to fall by 29 million barrels a day from last year. This is oil demand levels that was last seen in 1995. The U.S. had been oil independent for several years now, because of its domestic shale oil production, but for this oil to be profitable to extract, oil prices must be above $40 a barrel. With oil prices forecast to be low for the foreseeable future, the shale oil industry is in dire straights.

3) Time when companies are under stress, such as during a recession, provides impudence for them to reorganize and streamline their operations. By adapting to a new environment through restructuring of a company, they are able to reduce operating cost, thereby being better able to survive. Recession brings layoffs and furloughs, so companies seek to get work done with fewer people, usually by using new technologies. Consequently, those jobs are gone, never to return, when the economy returns to health.

4) Stock market closings for – 15 APR 20:

Dow 23,504.35 down 445.41
Nasdaq 8,393.18 down 122.56
S&P 500 2,783.36 down 62.70

10 Year Yield: down at 0.64%

Oil: down at $20.15

15 April 2020

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

31 March 2020

1) Oil prices have crashed to an eighteen year low as coronavirus lockdowns cascaded through the world economies, which have drastically cut oil demand. The surplus in oil stocks is ballooning amid the Saudi Arabia and Russia’s dispute over struggle for oil control. The slump in petroleum based products has shut down refineries around the world. Prices are on track for the worst quarter on record. There are no signs of Saudi Arabia and Russia’s dispute being resolved as Saudi Arabia increases its production to further increase surpluses of oil thereby dropping oil prices more.

2) The coronavirus pandemic is expected to drive March auto sales off a cliff, from consumer confidence dropping and shuttered dealerships across much of the country. It’s expected that April may be as bad as or worst than March. Sales forecast for March has dropped 37% and April could be off between 50% and 60%. States under ‘stay at home’ orders have seen an 80% drop in auto sales.

3) With millions of Americans already laid off, fears among experts that job losses could be as high as 47 million to give an unemployment rate of 32%. The loses are a result of government induced economic freeze to contain the spread of the virus. A record 3.3 million Americans have filed initial jobless claims for the week ending 21 March of this year, with an estimated 66.8 million workers consider to be in jobs at high risk for layoff. With a loss of 47 million jobs, the unemployment rolls would rise to 52.8 million, or more than three times the peak number of unemployment in the 2008 Great Recession.

4) Stock market closings for – 30 MAR 20:

Dow 22,327.48 up 690.70
Nasdaq 7,774.15 up 271.77
S&P 500 2,626.65 up 85.18

10 Year Yield: down at 0.67%

Oil: down at $20.28

10 January 2020

1) HP’s board has rejected Xerox’s $33 billion dollar takeover bid, for the same reason as Xerox’s previous offer, that the proposal significantly undervalues HP. Xerox first moved to acquire HP in November, but was rejected because HP stock holders would lose much of their value in the company. HP is a 2015 spinoff of giant Hewlett-Packard who has a market value of $300 billion dollars that dwarfs Xerox’s value of 7.7 billion dollars.

2) Mack Trucks, the manufacturer of large commercial trucks, announced plans to layoff 305 employees, which is about 13% of their payroll. After two years of high volumes of production, marked demand has dropped so the company must adapt to the lower demand. There are expectations of the truck market in America being down 30% this next year.

3) The American consumer continues to shun the traditional big department stores. Despite the monster holiday shopping season, America’s biggest department stores still lost money. This is a trend that has been in progress for several years as typified by Sears’ decline. Department stores such as JCPenny, Kohl’s and Macy’s continue to decline with dropping sales and store closings. Consumers are now going to big box stores and the internet commerce to save money, signaling a fundamental change in American consumerism.

4) Stock market closings for – 9 SEP 20:

Dow              28,956.90    up    211.81
Nasdaq           9,203.43    up      74.18
S&P 500          3,274.70    up      21.65

10 Year Yield:    down   at    1.86%

Oil:    down   at    $59.59

23 December 2019

1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?3) Steel maker US Steel is closing a mill near Detroit and will lay off 1,500 workers, and in addition will cut its dividend in an attempt to reverse operating losses which is forecasted for the fourth quarter. The Great Lakes Works mill, which rolls slabs into sheets of steel will close, and shift its work to three other mills. Additional cost savings measures will be implemented including a $75 million dollar reduction on capital expenditures and cutting labor cost.1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?

1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?

2) Automaker Fiat-Chrysler Automobiles is making an all out push to clear out tens of thousands of vehicles which their dealerships have not ordered, because their new data driven production strategy has swelled their inventory. The automaker is offering its most aggressive discounts since the financial crisis to sell certain 2019 models under their Dodge, Jeep and Ram brands. Their sales staff is working overtime to sell more than 70,000 unassigned cars in December to their 2,400 dealerships.

3) Steel maker US Steel is closing a mill near Detroit and will lay off 1,500 workers, and in addition will cut its dividend in an attempt to reverse operating losses which is forecasted for the fourth quarter. The Great Lakes Works mill, which rolls slabs into sheets of steel will close, and shift its work to three other mills. Additional cost savings measures will be implemented including a $75 million dollar reduction on capital expenditures and cutting labor cost.

4) Stock market closings for – 20 DEC 19:

Dow                28,455.09    up    78.13
Nasdaq             8,924.96    up    37.74
S&P 500            3,221.22    up     15.85

10 Year Yield:    up   at    1.92%

Oil:    down   at    $60.36

1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?3) Steel maker US Steel is closing a mill near Detroit and will lay off 1,500 workers, and in addition will cut its dividend in an attempt to reverse operating losses which is forecasted for the fourth quarter. The Great Lakes Works mill, which rolls slabs into sheets of steel will close, and shift its work to three other mills. Additional cost savings measures will be implemented including a $75 million dollar reduction on capital expenditures and cutting labor cost.1) Stock markets ended at record highs this last week, coming closer to what may well be a blockbuster year. This rally now covers four weeks, with one record closing after another, driven by easing of geopolitical worries. Trade worries have kept investors on the edge for most of 2019. The questions is, will this rally continue into next year?

2) Automaker Fiat-Chrysler Automobiles is making an all out push to clear out tens of thousands of vehicles which their dealerships have not ordered, because their new data driven production strategy has swelled their inventory. The automaker is offering its most aggressive discounts since the financial crisis to sell certain 2019 models under their Dodge, Jeep and Ram brands. Their sales staff is working overtime to sell more than 70,000 unassigned cars in December to their 2,400 dealerships.

3) Steel maker US Steel is closing a mill near Detroit and will lay off 1,500 workers, and in addition will cut its dividend in an attempt to reverse operating losses which is forecasted for the fourth quarter. The Great Lakes Works mill, which rolls slabs into sheets of steel will close, and shift its work to three other mills. Additional cost savings measures will be implemented including a $75 million dollar reduction on capital expenditures and cutting labor cost.