31 July 2020

1) The American economy last quarter is the worst on record, with a 32.9% annual rate contraction (April – June). American business ground to a halt from the pandemic lockdown this spring, leaving the country in its first recession in eleven years. This wipes out five years of economic gains in just months. From January to March, the GDP (Gross Domestic Product) declined by an annualized rate of 5%. While the unemployment is declining as states open up from the shutdown, there are still about 15 million unemployed workers. Americans are spending less money during th lockdown, partly because of lost of jobs. Consumer spending is the biggest driver of the economy, and it declined at an annual rate of 34.6% for the second quarter.

2) While Walmart has posted surging sales for each month, it is still taking cost savings measures. The retailer has laid off hundreds of workers including store planning, logistics, merchandising and real estate. Also, Walmart is reorganizing its 4,750 stores by consolidation of divisions and eliminating some regional manager roles. Walmart is performing well because of high demand and low prices during the pandemic. The company isn’t opening as many new stores in the U.S. anymore, so Walmart doesn’t need as many people to find new locations and so design them.

3) Job postings in technology are 36% down from 2019 levels. This is attributed to increased competition, low priority in hiring and uncertainty over the pandemic. Therefore, the tech industry is also feeling the economic effects of the coronavirus pandemic. Sending a very significant portion of its workers remote to work at home, there were predictions tech jobs would lead the recovery with increase job numbers. The ‘work at home’ was thought to show tech jobs might be available outside the traditional hubs. Neither has proved to be true. In short, the tech jobs are faring worst than the overall economy.

4) Stock market closings for – 30 JUL 20:

Dow 26,313.65 down 225.92
Nasdaq 10,587.81 up 44.87
S&P 500 3,246.22 down 12.22

10 Year Yield: down at 0.54%

Oil: down at $40.45

17 June 2020

1) As restaurants start to reopen, they are finding a serious problem- it takes cash to reopen again, cash that many don’t have in the bank. The cost of food, staff, cleaning and training for new sanitary protocols is proving daunting, with one independent owner calculating he needs $80,000 cash to reopen. The suppliers are facing a similar problem since many of their restaurant customers still own them money, but need supplies on credit to reopen, so many suppliers are threatened with bankruptcy too. And if that’s not enough, restaurants that had opened in some major cities are threatened with another shutdown as the virus pandemic re-emerges again, and so not only face another loss of sales revenue, just when they need the money the most, but also have additional cash outlays for reopening. The closing of restaurants has shed more than 8 million jobs.

2) In a month filled with economic bad news, retail sales have posted their largest monthly jump upwards ever. With the cornonavirus lockdown coming to an end, consumers are out shopping again making a 17.7% headline gain including food sales, which beat the previous record of October 2001. Clothing and accessories were the biggest gains of 188%. This gain reverses the 16.4% plunged from a month ago. While very encouraging, the economy still has a lot to regain.

3) There is a faster than expected turnaround in home buyer demand, after a sharp drop-off at the start of the coronavirus pandemic. The National Association of Home Builders/Wells Fargo Housing Market Index jumped 21 points in June to 58, where above 50 indicates a positive market. In April, the index dropped a record 42 points to 30. Builders report increase demand for families seeking single family homes in inner and outer suburbs featuring lower density neighborhoods.

4) Stock market closings for – 16 JUN 20:

Dow 26,289.98 up 526.82
Nasdaq 9,895.87 up 169.84
S&P 500 3,124.74 up 58.15

10 Year Yield: up at 0.76%

Oil: up at $37.76

2 June 2020

1) Experts say it could take as much as a decade for America’s economy to fully recover from the coronavirus and the subsequent massive shutdown of businesses. Presently, it’s expected that the GDP (Gross Domestic Product) will decrease about 3% from 2020 to 2030 or about $7.9 trillion dollars. It’s expected that the measures to counter the virus, the business closures and social distancing measures, will reduce consumer spending, which in turn will cool the economy. With 41 million people now unemployed, more layoffs are expected for the next week with an unemployment rate of 19.6%. Furthermore, it’s expected that the coronavirus will cost the economic about $7.9 trillion dollars.

2) The reopening of America from the lockdown was going to be difficult enough, but now the growing violence of protest is threatening to hamper that recovery. Stores in the protest areas are closing for the protection of its employees such as CVS and Target, with doubts mounting if some of the stores will ever reopen. Mayor Lightfood of Chicago said the continuing violence is making the city reconsider the opening of Chicago’s businesses. Also, the wireless carriers T-Mobile has closed Metro and Sprint stores over the same consideration of possible violence.

3) China has stopped some imports of U.S. farm products such as soybeans and pork meat. This is the latest sign that the January phase one trade deal between the world’s two largest economies is unraveling. The halts come after President Trump’s criticism of China’s efforts to bring Hong Kong under the firm control of the communist. The president is threatening to strip Hong Kong of some of it’s special privileges, which in turn would make Hong Kong less valuable economically to China. Further aggravating U.S. and Chinese relations is the charges that China shares some responsibility for the Convid-19 pandemic.

4) Stock market closings for – 1 JUN 20:

Dow 25,475.02 up 91.91
Nasdaq 9,552.05 up 62.18
S&P 500 3,055.73 up 11.42

10 Year Yield: up at 0.66%

Oil: up at $35.56

20 April 2020

1) The coronavirus pandemic and subsequent ‘sheltering in place’ is changing the American supermarkets. Online shopping of groceries had been somewhat of an awkward luxury service, that was growing ever so slowly, despite efforts of retailers to promote the new service. But the lockdown, stay at home orders have catapulted the service forward by up to a fifty times (not percent) increase in usage. Stores have been left struggling to meet the demand with many unable to keep up with that demand. When the pandemic ends, it will have forever changed the supermarket for many Americans, for once customers have used and got use to the service, then they will most likely continue using online grocery shopping, at least in part. But online shopping eliminates one of the big mainstays of modern supermarkets, the psychology of shopping with the browsing and impulse buying. The counter to this is automation which reduces the staff and labor cost of traditional retail stores, just as Amazon has done with dry goods.

2) The Chinese maker of driverless cars, Pony.ai, has launched a delivery service in Irvine California using its robot cars to deliver to people stuck at home from the virus. Teaming up with the e-commerce site Yamibuy, orders from Yamibuy get delivered to the customers homes. Each car can deliver between 500 to 700 packages a day. A year ago the company launched a robo-taxi service in Irvine, but with the ‘shelter in place’ order, their taxis were repurposed for deliveries.

3) Everyone is baffled over how the stock market continues to hold, even climbing, with what is happening today. For example-
a) Unemployment is now at 22 million and still climbing
b) Threat of large numbers of businesses going bankrupt
c) Recession starting, which most expect will last at least 12 months
d) Automation expected to eliminate up to 50% of jobs in 15 to 25 years
e) Global coronavirus cases surpass 1.5 million and continue growing
At a time when the markets would normally be crashing down from all the uncertainty, what is holding them up? Experts think because of the quick reaction of the government in passing the $2.2 trillion dollar economic stimulus waylaid market fears by showing something is being done. Also, Warren Buffett’s axiom, “Be fearful when others are greedy, and be greedy only when others are fearful.” Finally, the ‘social distancing’ measures seems to be controlling the virus, thereby lessening its economic effects in the long run.

4) Stock market closings for – 17 APR 20:

Dow 24,242.49 up 704.81
Nasdaq 8,650.14 up 117.78
S&P 500 2,874.56 up 75.01

10 Year Yield: up at 0.65%

Oil: down at $18.12