16 March 2020

1) Bill Gates, the co-founder of Microsoft is stepping down from the company’s board of directors, which makes it the biggest boardroom departure in the tech industry, since the death of Apple’s Steve Jobs. Additionally, Mr. Gates is vacating his board seat at Berkshire Hathaway Inc., intending to devote his time to his philanthropic efforts. He will continue serving as a technical advisor to Microsoft.

2) Oil prices climbed up 5% on the announcement by President Trump that the Department of Energy would purchase crude for the nations’ strategic petroleum reserve. The objective is to boost oil prices to keep shale producers in business, because oil needs to be $40 or more a barrel to break even, depending on the particulars of an oil field. The shale oil companies are further in trouble because they are carrying a high debt level. Shale oil production is very capital intensive and therefore very sensitive to oil prices if companies aren’t to go bankrupt. Some suggest that the Russians engineered the rupture of the Saudi Arabia – Russian agreement to limit production levels as a means to cripple the U.S. shale oil production and thereby make America dependent on foreign oil again.

3) President Trump and the Congress have agreed on several provisions of a package, but have been far apart on others. Their discussions center on ways to minimize the economic impact of the coronavirus fears. One point is to ensure that every American can receive a virus test without consideration of money.

4) Stock market closings for – 13 MAR 20:

Dow 23,185.62 up 1985.00
Nasdaq 7,874.88 up 673.07
S&P 500 2,711.02 up 230.38
10 Year Yield: up at 0.95%
Oil: up at $32.93

12 March 2020

1) The WHO (World Heath Organization) has declared the coronavirus to be a pandemic, which in turn has cause the markets to make another plunge after its apparent recovery on Tuesday. The number of coronavirus cases world wide is now in excess of 100,000 with more than 1,000 in the U.S. The central banks in other western nations are cutting their interest rates in an attempt to minimize the effects of the virus and avoid a world wide economic slowdown. At present, there doesn’t seem to be an end to the markets volatility.

2) The United Kingdom is levying an additional 2% tax on big high tech companies starting the first of April. Call the ‘digital services tax’, it will levy a tax on the revenues from search engines, social media services and online marketplaces used by British citizens, but it only applies to companies making more than $650 million dollars and derive more than $35 million dollars revenue from UK users. This will encompass companies like Amazon, Apple, facebook and Google. The EU (European Union) is considering a similar tax, but with a 3% rate.

3) Oil production in the U.S. is expected to drop as a result of the dramatic collapse in oil prices. This would be the first decline in output since 2016 as drillers are cutting back on capital spending. Oil prices are below $35 a barrel, well below the breakeven price for most American shale fields. Oil prices have been pushed down by the economic impact of the coronavirus plus Saudi Arabia and Russian failing to agree on limited oil production.

4) Stock market closings for – 11 MAR 20 Stocks down 20% from their high.

Dow 23,553.22 down 1464.94
Nasdaq 7,952.05 down 392.20
S&P 500 2,741.38 down 140.85

10 Year Yield: up at 0.82%

Oil: down at $33.12

10 March 2020

1) Monday markets opened in a steep downward spiral from sell offs, driven by the coronavirus fears, followed by the sharp drop in oil prices. The Dow dropped 2,000 points, with a massive sell off of both the S&P 500 and Nasdaq, which triggered a key market circuit breaker that halted trading for fifteen minutes. There are widespread fears over the economic impact of low oil prices, with some experts fearing oil prices down to $20 a barrel. Gold prices crossed the $1,700 dollar an ounce, hitting the highest since December 2012. The banks are hard pressed as the interest continues to sink, cutting into their margins.

2) Experts speculate that the Feds will cut the interest rate to zero in the next few months in an effort to forestall a downturn of the economy. The entire U.S. yield curve fell below 1% for the first time in history on expectations that the Federal Reserve will cut rates to zero in the next few months. Some speculate the Feds may adopt a negative rate just as some European countries have, such as Germany’s -1%.

3) While checkout-free with cashless supermarkets is now a novelty, Amazon expects this technology to spread to other retailers. Amazon has announced it plans to license its automated checkout technology to other retailers, telling of several other companies that have already signed up for the technology. The technology has been proven with cashless convenience stores across America and with Amazon’s new Go-supermarkets. The technology represents another significant step in retail automation.

4) Stock market closings for – 9 MAR 20: The stock market is like a rectal thermometer- it’s rude and crude, but surprisingly effective in showing a sick economy.

Dow 23,851.02 down 2013.76
Nasdaq 7,950.68 down 624.94
S&P 500 2,746.56 down 225.81

10 Year Yield: down at 0.50%

Oil: down at $30.24

5 March 2020

1) The newest supercomputer called El Capitan, which will become operational in 2023, is being built in Lawrence Livermore National Laboratory at a cost of $600 million dollars. The new computer will perform 2 exaflops or 2,000,000,000,000,000,000 floating point calculations per second. If the world population was to perform one such calculation per second it would take everybody eight years to do what El Capitan does in one second. The computer will be used to do simulations of nuclear explosions, genetics research, astrophysical modeling, aircraft/automotive design and climate change. It’s the size of two tennis courts, and will use 30 megawatts of power, enough for 12,000 homes.

2) The long time publishing giant Simon & Schuster, founded in1924, is up for sale by its present owner ViacomCBS. In the last few decades, the traditional publishers have been devastated by technologies and the internet, in particular publishing on demand services. Although Simon & Schuster is not losing money, the publishing industry is no longer a growth industry. The company will most likely be sold to another publisher seeking to reduce cost by merging assets.

3) Oil prices have plunged in response to demand caused by flight cancellations, factory shutdowns and slowdowns in passenger traffic, all caused by fears of the coronavirus crisis. Natural gas prices are also down at a near four year low. The oil and gas companies, who have piled on debt to capitalize on the shale boom, are facing serious fiscal problems and may not survive. The markets for energy have dropped seriously, both stocks and bonds, which in the past, have had a detrimental ripple effect on the rest of the economy.

4) Stock market closings for – 4 MAR 20: The Dow jumped more than 1,000 points after Biden Victories.

Dow 27,090.86 up 1173.45
Nasdaq 9,018.09 up 334.00
S&P 500 3,130.12 up 126.75

10 Year Yield: down at 0.99%

Oil: up at $47.20

28 February 2020

1) Many on Wall Street are betting the Federal Reserve Bank will again reduce the cost of borrowing in light of the coronavirus economic threat. Futures contract traders consider there is nearly a 60% chance of a rate cut this March, when the Feds meet, in an effort to counter the effects of the virus on America’s economy. While it appears the spread of the pathogen is declining in China, elsewhere in the world it’s on the rise.

2) Oil prices continue its downward spiral with a twelve month low for U.S. crude. The drop in oil prices is in anticipation of slowing of the U.S. and world economies, a direct result of the spreading coronavirus threat. China, a major world importer of oil, has cut back purchases as it containment policies reduces oil consumption from limited travel to and from major cities, as well as travel within those cities.

3) The home food delivery business continues to grow with DoorDash filing the paperwork with the SEC (Security and Exchange Commission) to start the IPO (Initial Public Offering) process to offer stock to the public. The IPO process has met with poor results from unprofitable companies like Lyft Inc. and Uber Technologies Inc. while WeWork was forced to abandon its IPO last year because of a poor showing of its stock. DoorDash faces the same challenges as Lyft and Uber..

4) Stock market closings for – 27 FEB 20: This is the worst point decline ever for the three markets. The Dow has dropped 3,000 points since Monday.

Dow 25,766.64 down 1190.95
Nasdaq 8,566.48 down 414.30
S&P 500 2,978.76 down 137.63

10 Year Yield: down at 1.30%

Oil: down at $46.34

5 February 2020

1) As the coronavirus continues the slowing of China’s economy, coupled with a general slow down in world economies, world oil prices are dropping. China is the world’s largest oil importer, with speculation that if oil continues to drop, America can expect a drop in gasoline prices, possibly going below $2 a gallon.

2) The credit card company Visa is planning major changes to the rates U.S. merchants pay to accept its cards. These changes are the biggest changes in a decade, with Visa hoping to encourage people to abandon checks and cash. Higher rates are coming for transactions on e-commerce sites, while certain retailers such as real estate and education will see lower rates. Retailers have long complained about the $100 billion plus dollars they spend each year to accept electronic payments.

3) Ford Motor Co. has posted a fourth quarter loss and provided weaker than expected 2020 forecast due to continued higher warranty cost, lower vehicle volumes, lower results from Ford Credit branch, and higher investment in future transportation. This is coming at a time when Ford and other automakers are making huge investments in producing a line of electric cars and trucks. For the fourth quarter, Ford is reporting a net loss of $1.7 billion dollars, or 42 cents a share. Revenue for the fourth quarter was down 5% to $39.7 billion dollars.

4) Stock market closings for – 4 FEB 20:

Dow                   28,807.63    up    407.82
Nasdaq                9,467.97    up    194.57
S&P 500               3,297.59    up      48.67

10 Year Yield:    up   at    1.60%

Oil:    down   at    $49.45

9 January 2020

1) The result of the Iranian missile attack on gas prices is expected to be minimal. Oil prices did briefly surge on Tuesday on news of the attacks fueling fears of a Middle East war between Iran and America, spiking 4% to top oil prices of $65 a barrel, but slipped down to 1.3% early next day. Some are expecting gas prices across the nation to rise five to ten cents per gallon over the next several days.

2) Data for the fourth quarter indicated 2019 will show strong growth, which will most likely lead into a strong growth for 2020. The GDP (Gross Domestic Product) growth for the fourth quarter is estimated to be 2.3%, better than the 2.1% growth for the third quarter. This would close out the GDP growth for 2019 at 2.4%, down from the 2.9% growth of 2018, but still enough to put fears of a recession to rest.

3) Walmart has unveiled its latest technology to counter Amazon and Kroger in the grocery battle- a grocery picking robot. The automated grocery system is called Alphabot and is designed to pick and pack orders as much as ten times faster than a human. The robot will allow Walmart to rapidly expand its capacity to fill orders for ‘demand on online’ grocery shopping. The Alphabot is a 20,000 square foot facility built onto present stores consisting of about 30 small cubic robots inside a giant shelving system, which can pick and pack products from a selection of 4,500 items.

4) Stock market closings for – 8 JAN 20:

Dow               28,745.09    up    161.41
Nasdaq            9,129.24    up      60.66
S&P 500           3,253.05    up      15.87

10 Year Yield:    up   at    1.87%

Oil:    down   at    $59.98

6 January 2020

1) The U.S. manufacturing sector contracted the most in December, more than for a decade. Order volumes crashed to a near eleven year low with factory employment falling for a fifth straight month. The index of national factory activity fell to 47.2 last month from 48.1 for November and is the lowest reading since June 2009. A value of 50 or above indicates expansion, while below is contraction.

2) The electric auto maker Tesla sold more cars in 2019 than the two previous years combined. Tesla sold 367,500 cars in 2019, although its on the low end of the 360,000 to 400,000 cars the company estimated at the beginning of 2019. Its newly opened plant in China will sell its Model 3 automobile in China thus avoiding transport and import cost. China promises to be a major increase in Tesla sales for next year.

3) Despite worries by experts expecting a decline of spending by American consumers, many consider the consumer will keep the economy humming through the next year. This Christmas shopping season appears it will set new records in spending, despite trade tensions, Washington being absorbed in impeachment and oil prices creeping up. With the economy always on the minds of voters, a good economy bodes well for incumbents with 2020 being a presidential election year.

4) Stock market closings for – 3 JAN 20:

Dow              28,634.88    down    233.92
Nasdaq            9,020.77    down       71.42
S&P 500         3,234.85    down      23.00

10 Year Yield:    down   at    1.79%

Oil:    up   at    $63.04

27 December 2019

1) The Permian Basin continues to experience difficulties producing oil, becoming increasingly gassy as drilling slows down. This undercuts profits for producers at a time when investors are demanding better returns. The region has long been plagued with a massive glut of gas which crude producers must sometimes pay to have hauled away or burn in the open air. This problem is intensifying as wells age and fewer new wells are drilled.

2) Oil prices rise to a three month high because of optimism on supply. The stage is set for the biggest monthly gain in almost a year on speculation that supplies are shrinking. Prices are up almost 12% for this month and are now higher since the mid-September high. The U.S. stockpiles have dropped 7.9 million barrels this last week, while Russia cut their crude output with a reduction of 240,000 barrels a day for December. Oil has surged about 36% for this year.

3) American retailers continue to struggle while some are actually thriving. The once giant Sears has fallen into bankruptcy having closed over 3,000 stores. Other major retailers in decline are Blockbuster Video, Radioshack, Victoria’s Secret, the Gap, JCPenny, Toys R Us and Borders Books. Retailers such as TJ Maxx, Amazon, Walmart, Target, Dollar General, Costco and Ross have flourished in the peril waters of American consumerism.

4) Stock market closings for – 26 DEC 19:

Dow                28,621.39    up    105.94
Nasdaq             9,022.39    up      69.51
S&P 500            3,239.91    up      16.53

10 Year Yield:    down   at    1.90%

Oil:    up   at     $61.68

5 December 2019

1) The oil cartel OPEC and their allies are being called on for dramatic action to avert a crash in oil prices. They are being called on to cut production of crude oil to keep oil prices high, while the world is facing a looming flood of oil from American production. If they don’t restrict production, the world faces an oversupply of about 800,000 barrels per day in the first half of 2020.

2) Businesses are under a constant threat of ransomware attacks with increasing consequences of financial loses. Every business or organization from large corporations, health care systems, universities and small businesses are at risk. These targets must use defensive methods, but those costs time, money and resources to do. The FBI estimates there are several thousand ransomware attacks each day.

3) Stock market closings for – 4 DEC 19:

Dow             27,649.78    up    146.97
Nasdaq          8,566.67    up      46.03
S&P 500         3,112.76    up      19.56

10 Year Yield:    up   at    1.78%

Oil:    up   at    $56.32