12 January 2021

1) The cryptocurrency Bitcoin plummets the most since March as a stronger dollar and investor nerves strip off nearly $140 billion in the cryptocurrency market cap, renewing fears that Bitcoin may be a bubble waiting to burst. But Bitcoin is still up roughly 89% over the past month. Other cryptocurrency coins, such as XRP and Litecoin, have shed about 18% each. Bitcoin hit a record high last week above $41,000, driven by the combination a weaker dollar, economic optimism, and a wave of bullish sentiment toward cryptocurrencies as big-name investors and investment banks touted a potential for huge gains this year, with the stronger dollar and higher bond yields triggering a plunge in Bitcoin and gold prices.

2) Trump has been permanently barred from the platform Twitter, resulting in$5 billion dollars in losses in market value, with Twitter stock dropping after the barring of the President. Twitter stated they permanently suspended the account due to the risk of further incitement of violence. Trump, who had about 88 million followers, generated enormous publicity for the platform with his controversial and incendiary tweets over the past six years. As a result, Twitter’s stock fell as much as 12% on Monday thus the decline of $5 billion dollars from Twitter’s market capitalization. Investors are worried that the Trump ban will erode interest in the platform and lead to boycotts among those who see the decision as politically motivated and a way to silence a major conservative voice.

3) Fears are growing that a bigger stimulus may be seen as the ‘peak of this bubble’ resulting in a market correction or worst. Some think that with the Democrats set to take control of both the House and Senate, perhaps President-elect Joe Biden will be less likely to spook markets with tax ambitions. Biden has promised $2,000 stimulus checks if the Senate turned blue, so now the question is what will happen? For millions of Americans, it’s been a painful waiting game already, they having subsisted with minimum money since losing their jobs from the pandemic. Joe Biden made the promise that if Jon Ossoff and Raphael Warnock turned the senate blue that would end the block in Washington and allow the $2,000 stimulus checks to immediately go out the door to people who are in real trouble.

4) Stock market closings for – 11 JAN 21:

Dow 31,008.69 down by 89.28
Nasdaq 13,036.43 down by 165.54
S&P 500 3,799.61 down by 25.07

10 Year Yield: up at 1.13%

Oil: down at $52.18

11 January 2021

1) Boeing Aircraft Co. has reached a $2.5 billion dollar agreement to settle the criminal charge that it defrauded the U.S. government by concealing information about the troubled 737 MAX. This is the ill-fated jet airliner involved in two fatal crashes that killed 346 people. The airline manufacturer entered into a deferred prosecution agreement and in turn, the Justice Department will dismiss the charge against Boeing. This settlement caps a two-year criminal investigation into the two MAX crashes. This settlement will have no bearing on any pending civil litigation. In addition, Boeing will pay a $243.6 million criminal penalty. With the penalty and the fund for relatives, Boeing says it expects to pay an additional $743.6 million dollars for the fourth quarter of 2020.

2) The cryptocurrency Bitcoin is at an all-time high in 2021, one coin now worth $36,000. It has doubled its value in 30 days. Bitcoin is the first and biggest cryptocurrency, which started up in January 2009, and eleven years after its invention, the total value of all Bitcoins in the world is around $359 billion. The Bitcoins are long, unbreakable codes stored in clouds or computers. Bitcoins were invented at the height of the 2008-9 financial crisis. The idea is a type of money that didn’t depend on the traditional banking systems. Cryptocurrency is popular in countries with inflation.

3) Venture capital backed companies in the United States raised nearly $130 billion dollars last year, setting a record despite the COVID-19 pandemic, up 14% from 2019, while the number of deals is down 9% to 6,022. The so-called mega-rounds, which are deals that are $100 million dollars or higher, also hit a record amount and number, with $63 billion dollars raised in 318 deals. However, there is a big drop in the very early stage investment called the seed money stage. The trend of big investments doesn’t look like it will slow in 2021 as there is a lot of capital chasing investments. It’s expected that 2021 is going to be a banner year for many tech companies.

4) Stock market closings for – 8 JAN 21:

Dow 31,097.97 up by 56.84
Nasdaq 13,201.98 up by 134.50
S&P 500 3,824.68 up by 20.89

10 Year Yield: up at 1.10%

Oil: up at $52.73

17 December 2020

1) North Dakota, a state with an early shale oil boom, expects oil production growth to stall in the next two years because of the market crash and higher environmental standards. The problem is investment money because Wall Street is showing no signs to invest in a shale boom. Investors have grown wary of the poor cash flow even before the crash, and institutional investors are shunning oil because of climate change concerns. North Dakota has limited excessive natural gas flaring from oil wells, intending to control greenhouse emissions at the expense of production. The state is expecting output to decline in November and December because of a lack of oil well completions. Oil markets are shrinking due to the loss of demand, while growth in shale oil depends on investments to replace wells that decline rapidly.

2) The Federal Reserve shifts its focus to fighting climate change, with average temperatures climbing and severe weather events happening more frequently. The Fed’s recent financial stability report includes a section on climate change, signaling a risk that climate change could pose to the financial system. Federal Reserve supervisors expect banks to identify, measure, control, and monitor all material risks, which for many banks are likely to extend to climate risks. Therefore if those dangers aren’t considered, hazards such as storms, floods, droughts or wildfires could change the value of assets suddenly, causing a shock to the system.

3) The more a person understands interest rates, inflation, risk diversification and other financial concepts, the less likely they show signs of financial fear and distraught at times of serious economic troubles. At the start of the pandemic in March, 40% of households was making under $40,000 per year lost their jobs. By April, the jobless rate had soared to 14.7% while the $1,200 direct checks and supplemental $600 federal-unemployment benefits started. Researchers asked people if they could cover a $2,000 unexpected emergency expense, and18.9% said they couldn’t meet the expense. In a test, the survey of ‘at risks participants’ correctly answered about half of the three questions about how interest rates are calculated, inflation and risk, while people in better money condition answered almost all three (2.5 on average) correctly.

4) Stock market closings for – 16 DEC 20:
Dow 30,154.54 down by 44.77
Nasdaq 12,658.19 up by 63.13
S&P 500 3,701.17 up by 6.55
10 Year Yield: down at 0.92%
Oil: up at $47.88

4 December 2020

1) Exxon has announced that it will dramatically mark down the value of its natural gas properties, a result of the slow oil price recovery. The plan is to take a non-cash charge of $17 to $20 billion dollars, which is a massive hit for a company who has long opposed to taking writedowns. Exxon erred when it acquired XTO Energy, a natural gas giant, for $41 billion dollars in late 2009. Now, about half of that purchasing value has now been erased. The natural gas market is depressed with the price of gas now less than half of what it was when Exxon purchased XTO Energy. Other oil companies such as Chevron, BP and Shell have also taken massive write downs. This write down also means that Exxon will limit its near term capital spending in gas

2) Failed talks have exposed a dangerous fissure at OPEC’s core, which its partners are quietly working to repair. Diplomatic efforts center around Saudi Arabia and the United Arab Emirates on how much crude oil to pump in the coming new year. OPEC rescued the oil market this year, after an unprecedented slump in oil prices, by slashing production to compensate for the demand decline because of the pandemic. But with oil prices down for so long, many OPEC member countries life blood revenues are down which impairs operations of those governments. This puts a lot of pressure on individual countries to break away and pump without any restrictions or quotas to get the monies they need. Privately, some OPEC members are talking about even leaving the cartel and going their own way with oil.

3) During the Thanksgiving holiday week, fewer Americans applied for unemployment benefits, thereby reversing an uptick in jobless claims over the previous two weeks. But still unemployment claims remain historically high, indicating many companies are continuing to lay off workers, despite the economy recovering from the impact of the coronavirus. Some 712,000 people applied for unemployment benefits, a drop of 75,000 from the week before. Another 288,000 applied for Pandemic Unemployment Assistance, a special program for self-employed and gig workers, as well as others who don’t qualify for regular state unemployment. In addition, millions are struggling to find work during the pandemic. All told, about 20 million people are now receiving some type of jobless aid, with 12 million set to lose their benefits the day after Christmas unless Congress agrees to extend funding.

4) Stock market closings for – 3 DEC 20:

Dow 29,969.52 up by 85.73
Nasdaq 12,377.18 up by 27.82
S&P 500 3,666.72 down by 2.29

10 Year Yield: down at 0.92%

Oil: up at $45.64

11 November 2020

1) President Trump’s administration is readying new sanctions against Iran as the clock runs out before Joe Biden’s inauguration, who has said he wants to return the U.S. to the 2015 nuclear deal. These planned sanctions are being worked out in conjunction with Israeli high government officials. These sanctions make it more difficult to return to the 2015 nuclear agreement. Reportedly, these sanctions are separate from the Iranian nuclear program, instead they are linked to its ballistic missile program, assistance to terror organizations and human rights violations. Joe Biden said he would rejoin the deal if Iran returns to holding up its end of the deal following Tehran’s departure from the agreement rules after Trump pulled out and instituted sanctions on the country.

2) Some are forecasting the US economy could be set for a significant surge in growth as consumers start to spend the money they saved during the COVID-19 pandemic. In the past, when the personal-savings rate has been this high, economic growth has surged. There is more than $2.5 trillion dollars of sidelined savings that is the fuel for explosive growth. The savings rate spiked to 35% earlier this year, as the economy went into a recession, and now sits at 15%, which is above the historic average. The surge in housing has led to a shortage of common consumer goods, so inventories are the lowest ever. Therefore, the economic recovery won’t be entirely reliant on another round of fiscal stimulus. It only takes a bit more confidence to produce a healthy advance in the economy.

3) Biden’s victory could end up reshaping the U.S. energy sector in years to come, although the president-elect may have limited room to maneuver given that the control of the Senate remains unclear. The president-elect has pledged to spend trillions of dollars to speed up the transition from fossil fuels, slash emissions and curb climate change. Biden has also promised to ban new fracking on federal lands, which he may try to achieve via an executive order. Such a move would limit shale companies’ operations in several states. Biden is expected to block new drilling permits on federal lands, something he could do via an executive order. Moved to clamp down on the oil industry’s emissions by reversing Trump’s relaxation of environmental regulation, which most likely increases the cost of producing, transporting and processing hydrocarbons. America’s energy future may mean less LNG exports, increase emphasis on renewables, decline of coal usage, impact on USMCA, use of fuel ethanol, and the goal to eliminate carbon emissions from the power sector by 2035.

4) Stock market closings for – 10 NOV 20:
Dow 29,420.92 up by 62.95
Nasdaq 11,553.86 down by 159.93
S&P 500 3,545.53 down by 4.97
10 Year Yield: up at 0.97%
Oil: up at $41.86

9 November 2020

1) Missouri, in what some are calling the lawsuit heard round the world, is suing China, to hold the global heavyweight responsible for the losses of life and commerce from the COVID-19, which originated in Wuhan, China. Other states are also filing class action suits in U.S. federal courts, but Beijing is aware that sovereign nations, including the U.S., have wide immunity from such claims. Experts warn that a potential decoupling of the world’s largest economies, the United States and China, is causing further concern. Even before the pandemic, there were concerns as China took dramatic steps in recent decades to grow its reach in the world. China is part of massive shifts in the balance of global powers, with some countries reasserting themselves and others finding it difficult to keep up with technological advancements and reap their economic rewards.

2) The giant ExxonMobil has low debt, high yield, and commitment to its dividend. Chevron is like ExxonMobile having a relatively low leverage (in the industry), and long histories of annual dividend increases behind them. But then the pandemic upended the supply/demand dynamics of the oil industry which sent company’s shares tumbling. This has brought the two oil companies dividends into question, and therefore the desirability of the stock as an investment. Major foreign oil companies are facing the same dilemma. Royal Dutch Shell and BP (British Petroleum) have both said they plan to also cut their dividends because of the shift. The dividends can be supported as long as the average oil price sticks around the $40 level.

3) US government has seized a $1 billion dollars in bitcoin as the cryptocurrency rockets past $15,000 per coin, the highest value since January 2018. The organization Silk Road was the most notorious online criminal marketplace of its day, until its founder was prosecuted in 2015 leaving a billion-dollar question of where did all the money go? It remained in the digital wallet for many years before a unit within the Internal Revenue Service, that tracks digital currencies, noticed 54 new transactions from the wallet, prompting the seizure of currency. Analysts noted the movement of more than 69,000 bitcoins in a single transaction from a digital wallet tied to Silk Road founder Ross Ulbricht, which held the fourth-highest bitcoin balance of any in the world. But the Silk Road founder is serving two consecutive life sentences in a maximum-security federal prison, which prompted the government to seized the money, however, the government must prove its case before it can keep the forfeited assets.

4) Stock market closings for – 6 NOV 20:

Dow 28,323.40 down by 66.78
Nasdaq 11,895.23 up by 4.30
S&P 500 3,509.44 down by 1.01

10 Year Yield: up at 0.82%

Oil: down at $37.49

23 October 2020

1) Police in all 50 states are using secret tools to break into locked smart phones, not for just major felony crimes, but for cases such as low-level shoplifting. Police are using phone-cracking technology far more often than was previously known, often without any warrants. The police can use this technology to extract all of a person’s information, including photos, text messages, contacts, web browsing history and even where a person has been including at what times. These software tools are sold by firms such at Grayshift, Cellebrite, and AccessData, with police spending from $9,000 to more than $20,000 to buy and license the tools.

2) The Muslim fundamentalist attacker, who beheaded a French school teacher, is reported to have paid students to identify the teacher before the beheading, says the French prosecutor. The Chechen teenager beheaded the French teacher for showing caricatures of the Prophet Mohammad in class. It has also been confirmed that contact has been established between the teenager and an angry parent at the school, who had called on social media for the teacher to be fired.

3) The internet app Quibi, mostly a mobile streaming service that struggled to keep up with its own hype, is shutting down, a move coming less than seven months after it launched. Although the company has enough money to keep operating for a significant period of time, it has decided to make a graceful exit. The company will shop around to see if anyone wants to buy its assets over the coming months, and then it will return cash to its shareholders. Quibi launched in the US and Canada this last April as a service for watching videos on the go, just when the lock-down for the COVID pandemic started. The timing was a misfortune, and flawed strategies kept the service from reaching its ambitious growth goals, plus they underestimated the number of viewers interest in watching on TVs. The service competed with YouTube, the short-video specialist that is already drawing in more than 2 billion viewers every month.

4) Stock market closings for – 22 OCT 20:

Dow 28,363.66 up 152.84
Nasdaq 11,506.01 up 21.31
S&P 500 3,453.49 up 17.93

10 Year Yield: up at 0.85%

Oil: up at $40.61

21 September 2020

1) Michael Farr of CNBC claims the problem with the U.S. economy is there are too many poor people, that the poor and middle class don’t have enough money. His contention is that until employment and wages increase, the U.S. economy will remain bogged down or worst . . . digging a deeper hole. The American economy is the world’s largest with nearly 70% driven by consumer spending. With the vast majority of consumers in the lower middle class and poor, it stands to reason that with more money in their hands, it would make for a more viable economy. He contends that until their lot is improved by having more money, the economy will remain sluggish. But as is often the case, he ignores the ‘obsolete people’ problem of machines with technology displacing those workers. The pay of people reflects the value of people to society, and as technology continues to lower their real value it makes it hard to increase their wages.

2) Wayfair, the giant on-line home furnishings retailer, has announced they are launching two new credit cards while retiring their Comenity Bank card. There will now be the Wayfair Mastercard and the new Wayfair Credit Card. These cards will have no annual fee and offer the choice of earning rewards on spending or receiving no-interest financing for up to 24 months. Wayfair is partnering with Citi Retail Services for the two credit cards.

3) Facebook, the social media giant, is searching for a director of remote work as part of its plan for a more permanent shift of working from home. The company has been making a major shift towards permanent remote work and now needs management dedicated to permanently establishing this method of work in the corporate structure. Facebook is expecting as much as half of its 48,000 workforce to be working at home in the next ten years. Several other large companies are exploring the work-at-home strategy as a way of reducing cost of labor as well as allowing a larger pool of workers to draw upon, since home workers can be thousands of miles away from the home office. There are many consequences to the economy from a large work force working at home, the first is reducing spending on automobiles and service, plus sales of clothing.

4) Stock market closings for – 18 SEP 20:

Dow 27,657.42 down 244.56
Nasdaq 10,793.28 down 117.00
S&P 500 3,319.47 down 37.54

10 Year Yield: up at 0.69%

Oil: up at $40.98

AMERICANS THAT ARE WEALTHY; ARE CLOSELY MONITORING THEIR FINANCES UNDER TRUMP PRESIDENCY OR BIDEN PRESIDENCY

By: Economic & Finance Report

Wealthy Americans are monitoring their finances and tax proposals from both candidates as the 2020 presidential election gets closer.

Money managers, financial advisors and accountants across the United States spectrum, have been advising their wealthy clients about what they may expect from either a Trump reelection presidency or a Biden presidency.

Some experts have advised their clients on what they will be paying in taxes under a Biden Democratic Presidency and Congress; what to expect with the current Trump Presidency and a full Republican Congress.

Things may be mightly different in comparison, opposed to exemptions and what the rich/wealthy will have to shell out and what they will save in either presidency. -SB

SPECULATION:CHINA MAY DUMP U.S. TREASURIES BECAUSE OF CURRENT TENSIONS WITH U.S.

By: Economic & Finance Report

It is speculated that China may dump more of its U.S. treasuries because of the current tensions between China and the United States. China currently holds $1.07 trillion dollars worth of U.S. treasuries.

China has been unloading some of their treasuries throughout the 2020 year, but that does not necessarily mean that they will unload their “whole deck of cards”. If China were to use the “nuclear option” in unloading their treasuries; the global markets would react haphazardly to such a scenario. -SB

Image Credit: Sott.net