4 March 2021

1) Kelley Aerospace has officially launched the world’s first supersonic unmanned combat aerial vehicle (UCAV), called the ‘Arrow’. The drone is designed with a single shell of lightweight carbon fiber that allows it to reach speeds up to Mach 2.1. The UCAV has reduced radar cross-section and infra-red signatures, and is designed for multiple combat or reconnaissance roles. Kelley has 100 pre-orders for the war machine, which costs between $9 to $16 million dollars each. It’s designed to complement manned aircraft making it a force multiplier in the aerial battlefield. A manned combat aircraft would control multiple Arrow UAVs, tasking each with a different missions.

2) There are about a thousand restaurant closures a month in Texas, a result of the coronavirus pandemic. About 11,000 restaurants have closed in Texas since the start of the pandemic. This is about a fifth of all Texas restaurants with about 150,000 Texans who have lost their jobs. Nine out of 10 of these restaurants are small businesses employing less than 50 people. Restaurants in downtown city centers have been hit particularly hard because business lunches and conventions were suspended almost immediately. Surprisingly, the more expensive restaurants have not fared as well as family dining locations.

3) The American Petroleum Institute is considering throwing its weight behind a government imposed price on carbon dioxide emissions as a way to slow global warming, making for a major policy shift by the oil industry’s top trade group. Supporters of a tax argue that a carbon tax increases the cost of energy derived from oil, natural gas and coal so it would be more effective than regulations at paring U.S. greenhouse gas emissions. Exxon Mobil Corp., ConocoPhillips, BP and Royal Dutch Shell already support a carbon tax-and-rebate plan. The tax has gained momentum as international energy companies make investment decisions based on the assumption that emission limits will be imposed by regulation, tax or other mechanisms. The companies are seeking regulatory certainty on the issue, instead of environmental policies that whipsaw with every presidential election. A carbon tax could benefit producers of natural gas over coal and spur investment in renewables and nuclear power. Some environmentalists who oppose fossil-fuel development criticized the possible move, calling it little more than a public relations ploy by letting producers buy their way out of climate accountability. Several utilities have lobbied Biden administration officials to support a nationwide carbon price.

4) Stock market closings for – 3 MAR 21:

Dow 31,270.09 down by 121.43
Nasdaq 12,997.75 down by 361.03
S&P 500 3,819.72 down by 50.57

10 Year Yield: up at 1.47%

Oil: up at $61.06

2 March 2021

1) The electronics giant Best Buy, has laid off 5,000 full time staff in a move the electronic retailer says was caused by changing consumer patterns because of the coronavirus, and the result of online sales growth in the Amazon race. Driven by the pandemic, their online sales has grown by almost 90 percent in the fourth quarter compared with the previous year. With many Americans stuck at home, there has been a surge in demand for items ranging from computers, gaming consoles to kitchen appliances. But the retailer said that owing to a spike in online sales, which have more than doubled so far in 2021 compared with the same time last year, the retailer needs fewer full-time staff and so plans to add 2,000 part-time workers to their staff.

2) Newport News Shipbuilding, the largest industrial employer in Virginia, has announced the layoffs for 314 employees. In addition, they are moving about 120 managers to lower-level positions. These changes are necessary cost controls to help ensure the shipyard’s future and the afford ability of the ships it builds, while also reducing the number of management layers. The Newport News Shipbuilding company designs, builds and refuels nuclear-powered aircraft carriers and designs and builds nuclear-powered submarines, while employing roughly 26,000 workers.

3) The badly mauled U.S. shale industry is finding a resurgence in one of the most unlikely places . . . private operators that most investors have never heard of. For instance, the case of little known and closely held DoublePoint Energy. It is now running more rigs in the Permian Basin than the giant Chevron Corp. The family owned Mewbourne Oil Co. has about the same number of rigs as Exxon Mobil Corp does. Once minor players, private drillers hold half the horizontal rig count as of December. It’s the first time in the modern shale era that they have risen to the level of the supermajors. This is the result from the big guys starting to show restraint. They’ve dialed back drilling after the pandemic sent oil prices into collapse. Now that the market is on the rise again, the majors and publicly-traded counterparts are mostly sticking to the mantra of discipline, all but ending shale’s decade-long assault on OPEC for market share. But if private drillers keep expanding at their current pace, it could eventually mean that U.S. production ends up on the higher end of analyst forecasts. And that, of course, could weigh on prices. Oil’s dizzying collapse last year is still fresh in the minds of many, and shareholders are quick to punish the producers they think are getting too aggressive.

4) Stock market closings for – 1 MAR 21:

Dow 31,535.51 up by 603.14
Nasdaq 13,588.83 up by 396.48
S&P 500 3,901.82 up by 90.67

10 Year Yield: down at 1.45%

Oil: down at $60.34

26 February 2021

1) The pandemic has been especially hard on small business, who don’t have the cash reserves of large corporations. They face a number of challenges they need to meet in order to survive. Here is a brief list of challenges they face- 1) The Ability to Transition to a Digital First World 2) Lack of In-Person Networking Events 3) Forward Planning is Difficult 4) Leaving Brick and Mortar Stores. 5) Lacking Work Life Balance 6) Increased Shipping Costs 7) Lacking Creativity 8) Blips in Production 9) Pressure to Perform 10) Long Term vs. Short Term Content

2) More than 4 million barrels of daily oil output, which is almost 40% of the nation’s crude production, is now offline because of the deep freeze weather. One of the world’s biggest oil refining centers has seen its output drastically cut back. Experts say the market is underestimating the amount of oil production lost in Texas due to the bad weather. Crude oil briefly surged above $65 a barrel, a level not seen since last January. Supply tightness has also soared, where just ten months ago, the price slumped below $16 because of a demand shock caused by Covid-19. Estimates for how long the outages may last have gotten progressively longer as analysts try to figure out the time span involved in thawing out infrastructure, especially in those areas where freezing weather isn’t the norm. That means ever more barrels are being removed from the global market, resulting in a surge in price of crude in other parts of the world.

3) Another long time retailer chain has filed for bankruptcy, as the Covid-19 pandemic makes the retail industry the site of regular closures and financial woes. Now, regional department store Belk, the nation’s largest privately owned department store, can be added to the ‘dead’ list, with the closing of all its stores. The bankruptcy filing for the 133 year old retailer comes about half a decade after the founding Belk family sold the company to its current owners for $3 billion dollars. The pandemic directly resulted in the drastic declines in the retailer’s sales, revenue, and liquidity. Unfortunately, Belk is far from the only shopping mainstay to struggle under the pressures of the pandemic. The company’s bankruptcy plan was filed in a Houston courtroom on Feb. 23, which relieves Belk of $450 million worth of debt and create an infusion of capital for the business.

4) Stock market closings for – 25 FEB 21:

Dow 31,402.01 down by 559.85
Nasdaq 13,119.43 down by 478.53
S&P 500 3,829.34 down by 96.09

10 Year Yield: up at 1.52%

Oil: down at $63.31

25 February 2021

1) Nikola Corp. announced that its long-range fuel-cell semi truck gets as much as 900 miles on a tank of hydrogen gas, and is due to come out in 2024. The Nikola Two fuel-cell vehicle would go at least 750 miles on a tank of hydrogen, while its Tre shorter-range fuel-cell truck, can run 500 miles, and remains on schedule to start production in the second half of 2023. Nikola said that their first Tre FCEV prototypes are scheduled to begin assembly in Arizona and Ulm, Germany, in the second quarter of this year and that testing and validation would continue into 2022. The Nikola 900-mile truck will have a sleeping cabin for drivers and a new chassis designed for North American highways.

2) From California to Indiana, aerospace to appliance manufacturers, American factories are struggling to procure cold-rolled steel. Manufactures are getting hit by a fresh round of disruption in the U.S. steel industry. Steel is in short supply and prices are surging. Unfilled orders for steel in the last quarter were at the highest level in five years, while inventories were near a 3-1/2-year low. The benchmark price for hot-rolled steel hit $1,176 per ton this month, its highest level in at least 13 years. Domestic steel prices have risen more than 160% since last August, leaving steel consumers in a quandary whether to absorb or pass along the increased cost. U.S. steel prices are 68% higher than the global market price and almost double China’s, even with prices in both China and Europe up over 80% from their pandemic-induced lows. But the price gap is so wide that even with a 25% tariff, it would be cheaper to import than buy from domestic mills. The United States imported 18% of its steel needs last year.

3) The global semiconductor shortage will slash earnings of General Motors and Ford Motor Co. by about one-third this year, as supply constraints hamper production and profits. The chip shortage will materially erode margins and could lower expected earnings before interest and taxes by as much as $2 billion for GM and $2.5 billion for Ford. GM’s EBITA margin could fall to 3.4%, while Ford’s could dip as low as 1.8%. Rising demand for the chips needed to build technologically advanced and connected vehicles has introduced a new set of challenges for the North American auto industry, with shortages triggering production cuts and temporary plant closures. Demand from consumer-electronic companies exacerbated the supply shortages amid the coronavirus pandemic.

4) Stock market closings for – 24 FEB 21:

Dow 31,961.86 up by 424.51
Nasdaq 13,597.97 up by 132.77
S&P 500 3,925.43 up by 44.06

10 Year Yield: up at 1.39%

Oil: up at $63.36

23 February 2021

1) IBM and Delta have expanded a multi-year services agreement to migrate the airline’s applications to the cloud. Delta will move to a hybrid cloud architecture built on Red Hat OpenShift, and has been retooling during the COVID-19 pandemic with the aim of rebounding in 2021 and 2022 as travel picks up. Like other businesses, Delta has had to accelerate its digital transformation plans, by utilizing IBM’s services, hybrid cloud architecture and roadmaps to migrate its applications. In addition, Delta will also leverage IBM software such as CloudPaks and co-create applications.

2) The relentless rise in lumber prices shows no signs of subsiding as the pandemic keeps people at home, thereby spurring a home renovation boom. Prices have climbed almost 40% this year, fueling concerns for home builders. Surge in lumber prices is adding thousands of dollars to the cost of a new home and causing some builders to abruptly halt projects at a time when inventories are down. This demand has handicapped producers’ abilities to restock inventories quickly, further pushing prices up. There are fears that the rise in lumber will spark inflation bleeding into the home-buying market.

3) It appears that robots will soon have a big role in the construction industry, but until these machines can automatically prioritize tasks, project managers will still need to manually assess and appraise how the project is progressing. The construction industry’s productivity has trailed that of other economic sectors for decades, and there is a $1.6 trillion dollar opportunity to close the gap. AI and deep learning can make robotics useful across the construction industry. Now, AI startup Buildots has been taking its first steps to make this happen. Buildots attaches 360-degree cameras onto project managers’ hardhats to collect footage inside the construction site and analyze the image-data. On a typical site, there are tens of thousands of different construction activities. Tasks can be as small as installing a door handle, or as big as laying a brick wall. The Buildots platform automatically captures data using the cameras, and compares it to the designs and project schedule. It analyzes every electrical outlet, wall, or window, separately to determine its exact state relative to that expected on the plans. Deep learning models and algorithms such as the AI-based image stabilization engine, person data removal which removes people, phone/tablet screens, and paper notes and status classification can transform the visual data into insights. The AI system is able to assess if each item is completed or behind schedule and notify managers of what needs to be done.

4) Stock market closings for – 22 FEB 21:

Dow 31,521.69 up by 27.37
Nasdaq 13,533.05 down by 341.41
S&P 500 3,876.50 down by 30.21

10 Year Yield: up at 1.37%

Oil: up at $62.19

15 February 2021

1) The Colt Manufacturing Company is ending 175 years as an American gunmaker with the purchase by the Czech firearms company CZG. Colt, a financially troubled company, that with its new Czech owner, is now expected to generate $500 million in revenue. Colt was an early innovator of interchangeable parts on the assembly line, and helped to define the growth of precision manufacturing. In addition to guns, Colt made gauges, sewing machines, printing presses and other products. The manufacture became the first school of applied mechanics in the United States, and was a fountainhead of mass production. But Colt filed for bankruptcy protection in June 2015, despite the booming sales in small arms. Like so many other manufactures, Colt was plagued by the high cost of capitalization and low return on investment that is systemic to all types of manufacturing. CZG acquires significant production capacity in the United States and Canada and substantially expand its global customer base.

2) American steelmakers’ reluctance to resume full production after pandemic shutdowns are threatening to undercut President Biden’s push to reshoring domestic industries. Producers shut furnaces down in response to falling demand from the coronavirus and now are operating well below pre-pandemic levels, even as recovering economies and tight supplies drive prices higher. The benchmark price for American steel is at an all-time high. Companies have kept blast furnaces idled on expectations that prices are likely to recede at some point, which would squeeze margins and potentially force expensive shutdowns again at those furnaces. But customers in industries from automobiles to appliances to machinery say they can’t get enough metal. This undermines the idea of supporting U.S. manufacturing. American plants are running at about 75% of their maximum potential, well down from the peak of 83% in 2019.

3) President Biden has ambitious plans when it comes to addressing climate change, by eliminating net carbon emissions from the energy sector by 2035, and the entire U.S. economy by 2050. Such a big shift away from the burning of oil, gas and coal will put many Americans out of work. Biden claims the net effect of switching from fossil fuels to clean energy in the coming years will result in more jobs, not fewer. In his first few weeks in office, Biden has taken a number of actions on climate change such as rejoining the Paris climate agreement and directing agencies to procure zero-emission vehicles, while pausing on existing leases for fossil fuel development on public lands. The Trump administration had promised to bring back jobs in areas reliant on fossil, but jobs still declined.

4) Stock market closings for – 12 FEB 21:

Dow 31,458.40 up by 27.70
Nasdaq 14,095.47 up by 69.70
S&P 500 3,934.83 up by 18.45

10 Year Yield: up at 1.20%

Oil: up at $59.73

10 February 2021

1) Fear in American society is apparent with the soaring gun sales for this last year. Measuring, by using the Federal background checks, there have been 4.3 million checks for 2021 vs. 2.7 million for 2020. About 60% of these buyers are new buyers of guns, and about 40% are women. Sales have been so heavy that gun shops are closing because they don’t have any inventory, with people buying two and three guns at a time. The high sales are driven by fear of social unrest, rioting in major cities across the country lasting weeks on end, and fears of suppression of gun ownership by the new administration. Also, people don’t feel they can rely or trust the police to protect them anymore. Additionally, ammunition of all types has been sold out across the land.

2) The global microchip shortage for automobiles continues to spread with the next victim being Ford’s most profitable truck, the F-150 pickup. Many companies have scaled back car production because of the computer chip shortage. Ford is temporarily cutting the number of shifts in its truck production plants in half. Microchip shortages has Volkswagen production limited, and Honda and GM have also had to cut back. Nissan and Toyota have had to slow their truck production lines as well. Ford has already limited production of other models, the Escapes and Lincoln Corsairs. Modern cars have computer systems for almost every component these days, from digital speedometers to vital vehicle functions like controlling emissions and emergency brake systems. The microchip shortages isn’t confined to automobiles with manufactures of telephones, computers, appliances and home entertainment systems feeling the pinch too.

3) Unemployment agencies across the country were flooded with so many claims during the pandemic that many struggled to distinguish the correct from the criminal. Some Americans are receiving tax forms saying they owe money on unemployment benefits they never received. This is an indication of the extent of identity theft in the nation’s state run unemployment systems. Unemployment benefits are taxable, so government agencies must send a tax form to people who received them, and some Americans are receiving tax forms saying they owe money on unemployment benefits they never received. State run unemployment offices are lucrative targets for fraud particularly when the agencies are swamped with applications and not having the time and resources to check. This signals that someone has likely stole personal information and used it to claim benefits, but that data may later be used to steal an identity for more fraud. Nearly 26 million people requested unemployment aid in the initial months after states began ordering shutdowns due to the pandemic.

4) Stock market closings for – 9 DEB 21:

Dow 31,375.83 down by 9.93
Nasdaq 14,007.70 up by 20.06
S&P 500 3,911.23 down by 4.36

10 Year Yield: down at 1.16%

Oil: up at $58.39

5 February 2021

1) Dr. Anthony Fauci, MD has issued a new chilling warning about the Covid virus. A new strain from South African, known as the 501Y.V2 variant, is showing itself to be an even greater threat than the variant that started the pandemic. Experience shows that the South Africa virus has a very high rate of reinfection to the point where previous infection does not seem to protect you against reinfection with the South African variant. While research has shown that the current Covid vaccines may be less effective against the South African strain, there is no evidence that any of these new strains are completely resistant to the vaccines currently available. Nevertheless, the South African coronavirus mutation (B.1.351) poses a risk of reinfection to people who have already had Covid-19 and the vaccine efficacy may also be impacted. However, the number of daily coronavirus infections in the US has been dropping for a couple of weeks, but it’s still well over 100,000 per day, while the number of vaccinations is more than 32 million first dose. This isn’t enough to impact the course of the epidemic and significantly reduce transmission.

2) While the fears of a Treasury sell-off has tailed off, after the big move in the 10-year Treasury at the start of the year, the factors that led to that brief sell-off in Treasurys are very much still at hand. Chief among them are the rollout of Covid-19 vaccines, the huge fiscal stimulus already enacted with more in the pipeline, the pent-up spending power in household savings, and the easy monetary policy. Computer models say a perfect storm is being unleashed, with estimates that the 10-year Treasury yield will jump 162 basis points this year and another 160 basis points next year. This is well ahead of market estimates of roughly 17 basis points of gains in each of the next two years. The model doesn’t include the effects of any additional fiscal stimulus from the Biden administration, with its proposed $1.9 trillion dollars.

3) Experts consider gold futures are set to see a decline, which technical strategists believe may underscore a bearish trend in the yellow metal. Called a ‘death cross’, which occurs when the 50-day moving average, that many chart watchers use as a short-term trend tracker, crosses below the 200-DMA, which is widely viewed as a dividing line between longer-term uptrends and downtrends. The idea is that the cross marks the spot that a shorter-term sell-off can be defined as a longer term downtrend. The potential formation of a death cross, which reflects the recent slump in trading, comes as gold has experienced whipsawing action after the precious metal tumbled 1.6% on Tuesday.

4) Stock market closings for – 4 FEB 21:

Dow 31,055.86 up by 332.26
Nasdaq 13,777.74 up by 167.20
S&P 500 3,871.74 up by 41.57

10 Year Yield: up at 1.14%

Oil: up at $56.46

1 February 2021

1) While on the campaign trail, the new President Biden didn’t say much about space technology or projects. The space agency funding makes up just 0.4% of the national budget compared to 4% back in the mid-1960s. The Congress has not provided the funds for a earth to moon vehicle yet, so this raises the question of just how much will the new President support the space program. With Biden’s focus on the planet and global warming, concerns about worlds beyond earth appear to be diminishing. NASA already supports the earth sciences with its satellites and aircraft, and with the massive federal spending this last year, the Congress and maybe the President will seek to reduce spending so NASA may face cuts these next few years.

2) The automaker Dodge is warning that regulations are killing the V8 engine. They say the days of an iron block supercharged 6.2 liter V8 are numbered because of all the compliance costs. The Biden administration is widely expected to announce stricter emissions regulations in the near future. But electrification can help ensure muscle car enthusiasts don’t suddenly loose their passion, that we’ll start seeing battery-powered drive trains with massive horsepower for cars . . . electric muscle cars.

3) It is expected that 10,000 stores will close by the end of 2021 due to COVID-19. Consumers are increasingly favoring the convenience and safety of shopping online during the pandemic. This is a 14% jump in the retail industry closures from last year, when a record number of major vendors closing more than 8,700 stores. Businesses that sell apparel accounted for the most store closures in 2020. More than 3,000 clothing, footwear and accessories stores were shuttered last year, with Ascena Retail Group (brands Ann Taylor and Lane Bryant), closing more than 1,100 of its store locations. However, virtually no category of retail business was spared, with discount home and office retailer Pier 1 Imports filing for bankruptcy and closed all 936 of its stores. As of January 22, nearly 1,700 retailers have already closed. Other retailers are closing with 7-Eleven closing 300 stores, Family Video is closing its remaining 250 locations, ending its 42-year-old run. Ascena Retail Group will also close 195 brick-and-mortar stores in 2021.

4) Stock market closings for – 29 JAN 21:

Dow 29,982.62 down by 620.74
Nasdaq 13,070.70 down by 266.46
S&P 500 3,714.24 down by 73.14

10 Year Yield: up at 1.09%

Oil: down at $52.15

27 January 2021

1) There are growing fears that the long running bull market is about to crumble and collapse. The biggest sign is there are fewer stocks helping to drag benchmarks toward fresh records. When the underlying momentum wanes then we see weaknesses developing under the surface, which is what’s happening now. Fewer stocks are managing to end above their short-term moving averages even as indexes show record closing highs and yet fewer than 45% of their stocks managed to close above their 10-day moving averages.

2) China is working to overtake America by leading the global recovery from the pandemic thereby becoming more influential on the world stage than ever before. And China just might have the momentum and confidence to pull it off. As the world’s second largest economy shrugs off much of the Covid-19 pandemic this last year, China’s economy continues growing while the world crashes into recession. This could mean China’s GDP will exceed the United States later this decade, which will be years earlier than expected. China has outpaced the United States in attracting foreign direct investment for the first time, signing a trade agreement with the European Union giving European companies greater access to China’s1.4 billion consumers. Furthermore, China’s starts the new year without one of its most aggressive political adversaries, the former President Trump. China has sent help to other countries and in the process left many third world countries deeply in debt to China, claiming they are injecting more momentum into growth. But a host of geopolitical challenges, including the clashes over Hong Kong and alleged human rights abuses in China’s Xinjiang region, taking control of islands in the South China Sea and threats to Taiwan have all exacerbated tensions with the West and may stymie efforts to foster multilateral cooperation. These actions are unacceptable to the democratic nations, who are pulling away from China despite its attractiveness as a market.

3) There are fears that Biden’s executive order will aggravate America’s food crisis, by signing an executive order that addresses America’s most pressing economic needs. This order includes measures to blunt the meteoric rise in food insecurity during the pandemic. The order calls on the U.S. Department of Agriculture (USDA) to expand three key food assistance programs, which are the Pandemic Electronic Benefits Transfer (P-EBT), SNAP, and the Thrifty Food Plan.

4) Stock market closings for – 26 JAN 21:
Dow 30,937.04 down by 22.96
Nasdaq 13,626.06 down by 9.93
S&P 500 3,849.62 down by 5.74
10 Year Yield: unchanged at 1.04%
Oil: down at $52.75