23 September 2020

1) After Amazon’s Prime Day was postponed by the virus in July, it was tentatively reset for the fourth quarter. Amazon didn’t want their Prime Day to overlap with Black Friday, which set an upper limit to the date, so now the company is planning for the 13th and 14th of October. Prime Day is a very big retail day for Amazon, with their 2019 Prime Day grossing about $6 billion dollars in sales.

2) Another round of stimulus still remains on the burner and with the fall elections now closing in, both sides are saying they want a new stimulus bill with a second direct payment to the people. But the bill remains in limbo with no agreement on the details of the bill. The question on everyone’s minds is the direct payment checks to the people and how much they will be. No settlement on that question, but the rumors are this one will be based on each person’s income instead of the single lump sum of last time, with an upper limit of $1,200 per individuals. Only time will tell how much, or even if there is a personal payment, because if not passed before the elections, the possibility of passing will rapidly decrease.

3) The coronavirus has been a big stimulus for e-commerce from the stay at home shopping it stimulated, but surprisingly the home shopping boom has also been a boom for the shipping industry. Those huge ocean going ships stacked high with intermodal containers, their transpacific sea freight shipping rates have been sent to the highest on record, helping the container shipping industry in Asia. Household appliances imports have jumped 51% in August from last year, climbing for a third consecutive month. Shipments of computers, notebooks and other associated electronic gadgets has soared 169%. This increase consumer demand has shipping rates almost triple from this year’s low in March, when the pandemic led to border closures and a near halt in economic activity. With much of the world’s people housebound, the demand for electronic goods and do-it-yourself items has skyrocketed. There is also the coming Christmas holidays and therefore the stocking up in anticipation of sales.

4) Stock market closings for – 22 SEP 20:

Dow 27,288.18 up 140.48
Nasdaq 10,963.64 up 184.84
S&P 500 3,315.57 up 34.51

10 Year Yield: down at 0.66%

Oil: down at $39.55

17 September 2020

1) The Federal Reserve announced it is keeping its key policy rate unchanged and it intended to keep interest rates near zero for a least the next three years. This is a time period that is much longer than analysts had expected and reflects the concern for near future economic growth. The Feds will continue to purchase additional assets, principally government and corporate bonds, to support its monetary stance. Their goal is to achieve a maximum employment while keeping inflation at 2% over the long term. The prime interest rate will remain between 0% and 0.25% until at least the end of 2023. Their actions essentially acknowledge they were a bit behind the curve with their forecast on the economy.

2) Fox News is beginning a round of layoffs, the hair and makeup department being particularly hard hit. None of the network’s on-air talent is being let go, but now only the news anchors will receive hair and makeup services, while their guess will not. This is, in part, because since the pandemic more and more of interviews are being done remotely. The job cuts are expected to affect less than 3% of the overall staff, with the intent to streamline operations. TV news services are shifting from traditional TV broadcast to on-demand outlets streaming video services. Fox News is the most watched cable news network with 3.28 million viewers, that’s more than CNN and MSNBC combined. A time of economic stress causes changes to the economic environment, which opens the way for new technologies to emerge that reduce labor cost.

3) As hurricane Sally continues its journey into the interior of America, the next question on people’s minds is the ‘dollar amount for damages?’, a question that follows every hurricane which makes landfall on the continental United States. Sally dumped heavy rains and has brought historic flooding to the Gulf Coast, leaving much of Alabama and Florida coast lands under water. There were forecast of some areas receiving over three feet of rain, but as the storm system travels north and east, inundating land with water that runs off into rivers, more flooding is feared down river from the runoff. The flooding is a result of Sally moving so slow, slower than the average person walks, turning heavy rains into heavy flooding.

4) Stock market closings for – 16 SEP 20:

Dow 28,032.38 up 36.78
Nasdaq 11,050.47 down 139.86
S&P 500 3,385.49 up 15.71

10 Year Yield: up at 0.69%

Oil: up at $40.18

16 September 2020

1) A survey by Photonics and Harris Insights and Analytic, a market research company, has found that 35% of Americans would like to avoid traditional in-store shopping, another indication of how American consumerism is fundamentally changing. The traditional in-store sales are becoming less attractive to customers who are now less likely to browse. Retailing is responding by investing in new technologies and creating jobs to meet e-commerce. Now 37% of the fashion retailers are selling more through social media.

2) The aquatic-life theme park SeaWorld is laying off nearly 1,900 furloughed workers because of low attendance from the pandemic. These layoffs include 450 food service attendants, 270 park operation hosts, 121 performers and 18 senior trainers. SeaWorld furloughed 95% of its staff back in March, but long term success of the company has forced less optimistic forecast for the economic recovery time wise.

3) In the last six months, about 100,000 restaurants have had to close permanently as independently owned business struggle to make ends meet during the virus crisis. There are one in six restaurants across America that have closed in just a half a year. Another 40% of owners say it is unlikely their restaurant will still be in business six months from now. Presently, outdoor dining has allows many restaurants to maintain a sustainable revenue stream, but with winter approaching, much of this opportunity will disappear. Coronavirus restrictions limit the in-dinning to as little as 30% normal capacity, which means a drastic cut in sales and revenue to the point that many restaurants are unable to support themselves.

4) Stock market closings for – 15 SEP 20:

Dow 27,995.60 up 2.27
Nasdaq 11,190.32 up 133.67
S&P 500 3,401.20 up 17.66

10 Year Yield: up at 0.68%

Oil: down at $38.51

15 September 2020

1) The old, almost extinct vinyl record album technology for music has surpassed the newer high technology CD music media this year, by selling $129.9 million compared to $232.1 million dollars for vinyl records. This is the first time vinyl has outsold CDs since the 1980’s. About 8.8 million records were sold with 10.2 million CDs, so number wise CD’s are still ahead. Overall, the music industry now is center on digital downloads, digital subscription and streaming services such as Spotify, Apple Music and YouTube with revenues up 12% overall. The recorded music for the first six months of 2020 was $5.6 billion dollars so combined vinyl and CD’s are just a small fraction of the total business.

2) Amazon is hiring again expecting to fill 100,000 part time and full time openings across the U.S. and Canada. This is in addition to 33,000 technology and corporate jobs announced just a week ago, many paying six figure salaries. The 100,000 labor jobs pay at least $15 an hour with a $1,000 sign up bonuses in some cities. Amazon is opening 100 new buildings this month because of the pandemic fueled sales surge with increase home delivery, as shopping habits shift to e-commerce. Market value for Amazon is now at $1.6 trillion dollars and continues climbing.

3) Oil giant BP (British Petroleum) says the demand for oil may have peaked last year, that global market for crude oil might never recover from the coronavirus pandemic. The company considers there are three scenarios for energy demand, all of which forecast a decline in demand for oil over the next thirty years. 1) ‘Business as usual’ oil demand increases slightly after the pandemic crisis passes, then plateaus around 2025 finally it declines after 2030. 2) Governments take more aggressive steps to curb carbon emissions, 3) there are significant shifts in societal behavior, both leading to a decline in oil demand. All point to a shift in the world economic system with a significant decline in growth for many countries.

4) Stock market closings for – 14 SEP 20:

Dow 27,993.33 up 327.69
Nasdaq 11,056.65 up 203.11
S&P 500 3,383.54 up 42.57

10 Year Yield: unchanged at 0.67%

Oil: down at $37.38

11 September 2020

1) The new jobless numbers indicate the U.S. job losses persist with claims higher than was forecasts. Jobless claims were unchanged at 884,000 for last week, with the total number of people on unemployment rising by 93,000 to a total of 13.4 million people. Prior to the pandemic, new claims were about 212,000 a week with 1.7 million people on unemployment. What is concerning is the pace of layoffs has not slowed with the economy opening up, adding to fears of a second round of Convid-19 outbreaks. It appears that millions of Americans are heading for long term unemployment with most running out of unemployment benefits after 26 weeks.

2) Quantafuel AS, a Norwegian company established in 2014, who makes diesel fuel from plastic waste, is a success having tripled its value, which is now at $1 billion dollars. This is a time when the world is struggling over what to do with the monumental qualitites of plastic waste that continues to grow at an alarming rate. Even more welcomed is Quantafuel addressing the demand for fuel oils. Their process is more environmentally friendly than incineration of plastic. The company is increasing the production of its present plant and has plans to build additional plants with the goal of boosting production 100 fold in the next decade. No doubt, the Chinese will be showing great interest in this process because of their very limited oil resources.

3) One side effect of the coronavirus pandemic is limiting efforts to root out slavery across the world, because companies and investors are unable to visit factory floors in many countries. Even before the pandemic started, there was an estimated 40 million people working in slave like conditions, with the economic shock of the virus making people more vulnerable to exploitation. Companies are facing increasing legal obligations to ensure their supply chain doesn’t include slave labor.

4) Stock market closings for – 10 SEP 20:

Dow 27,534.58 down 405.89
Nasdaq 10,919.59 down 221.97
S&P 500 3,339.19 down 59.77

10 Year Yield: down at 0.68%

Oil: down at $37.00

10 September 2020

1) The renowned Mall of America announced plans to lay off and furlough hundreds of employees. Located in Bloomington, Minn. the shopping center will permanently lay off 211 workers across various departments at the end of the month with an additional 178 workers to remain on furlough beyond the end of September. The Mall employs about 1,000 workers. Like most other malls in America, the Mall of America has suffered severely from the pandemic and need for social distancing. The malls across America have suffered a decline in recent years as people’s shopping habits and revenues decline. The Mall of America has been delinquent on its $1.4 billion dollar mortgage for May, June and July, and in turn some of its 500 retail tenants are unable to pay rent or having skip out on lease obligations.

2) Federal report warns of the threat from climate change to the economy. The report considers there are consequences that can create chaos in the financial system and disrupt the American economy. It’s considered that climate change poses a major risk to the stability of the U.S. financial system to sustain the American economy, that jobs, income and opportunity are at stake. This is just another indication of the increasing difficulty and expense of keeping individuals in a high technology society. The report makes 53 recommendations for dealing with the climate risks.

3) With the start up of college and return to campus life, there has been a sharp increase in coronavirus cases stemming from universities. For instance, the University of Tennessee has more than 2,100 students and staff members quarantined for Covid-19. As of Monday the university has 600 active cases of Covid-19. Of the 2,100 quarantined cases, about half are on-campus students and the other half off-campus. The surge is blamed on reckless behavior by a small portion of the students, especially traditional college parties with close personal contact. Many other American universities are having similar experience such as the University of Notre Dame, and North Carolina State. Some universities have implemented curfews, restrictions on visitors and even lockdowns of fraternities and sororities.

4) Stock market closings for – 9 SEP 20:

Dow 27,940.47 up 439.58
Nasdaq 11,141.56 up 293.87
S&P 500 3,398.96 up 67.12

10 Year Yield: up at 0.70%

Oil: up at $37.78

8 September 2020

1) About two-thirds of the restaurants in New York are expected to permanently close by the end of this year. Restaurants in New York State are not allowed to do indoor dining, only takeout and outdoor dining is permitted. Therefore, a major portion of New York restaurants are unable to meet their revenue requirements without the indoor dinning. Surveys indicated that 64% of restaurant owners are likely to close by the end of this year, and about 55% to shut down before November, which amounts to a collapse of the restaurant industry in New York State. A group of 100 restaurant owners are banning together to launch a class action lawsuit to open up indoor dining.

2) In August, the American economy added 1.37 million jobs, which was above the 1.32 million forecasted by economist. The big winners were the Government and Retail trade, with the 2020 censes accounting for much of the government’s increase in jobs, but like the censes itself, those jobs will be temporary. The job increase in retail is a result of retail stores opening back up, and so those jobs should remain, baring losses from stores closing from failure. With the growing signs that the U.S. economy is improving and jobs are coming back, there is less pressure on Congress to pass a new fiscal stimulus package. The unemployment rate has fallen below 10% to 8.4%, but is still a long way from the 3.5% before the pandemic.

3) The hopes of a comfortable retirement are continually dimming for the youth of America because of a number of reasons. The increase life span after retirement means more money is needed to cover retirement. Retired people are still subject to economic downfalls such as the Great Recession of 08 that robbed workers of earning power. The age of private pensions is gone, with workers now expected to provide all their own retirement out of their own pockets. This goes hand and hand with Social Security’s money reserves dropping as more retirees take their pension. Interest rates are low, making saving for retirement unproductive while the stock market is risky, plus people are reaching retirement with more debt and therefore requiring more money to sustain themselves. The average American needs to have three quarters of a million dollars to retire and be able to maintain their standard of living.

4) Stock market closings for – 4 SEP 20:

Dow 28,133.31 down 159.42
Nasdaq 11,313.13 down 144.97
S&P 500 3,426.96 down 28.10

10 Year Yield: up at 0.72%

Oil: down at $39.51

For- 7 SEP 20:

Dow 28,133.31 down 159.42
Nasdaq 11,313.13 down 144.97
S&P 500 3,426.96 down 28.10

10 Year Yield: up at 0.72%

Oil: down at $39.15

4 September 2020

1) For first time since World War II the U.S. government’s debt will nearly equal the size of the entire American economy. By the end of 2020, the amount of debt owed by the United States will be about 98% of the nation’s gross domestic product with a debt that is about three times the 2019 level. The huge surge in debt is a result of the Congress spending an additional $3 trillion dollars in emergency funding since March, a result of the economic downturn from the coronavirus crisis. This is why some members of Congress and the White House have balked at approving an additional $2 trillion dollars in spending in view of the weak economy coupled with having little promise of improving soon. Few experts believe the Congress is likely to do something to reduce the deficit in the short term, all the while unemployment remains near 10 percent. Interest rates are low, which makes it less costly for the federal government to borrow. In addition to increase emergency spending, tax revenues fell as business slowed and many people lost their jobs.

2) After a steady increase in the markets, setting new records for highs, the stock markets took a sudden nose dive. This was caused by a massive and sudden sell off of the technology sector. The tech stocks had been on a ten day winning streak then a sudden overnight change which caught everyone by surprise. The Nasdaq dropped almost 600 points while the Dow was down 800 points. Market experts are left wondering what will come next, especially with the next jobs report for August coming out.

3) The pace of rehiring is expected to slow in August, so the economy will likely add fewer jobs than in July, while workers continue to be laid off. Because of the pandemic, America lost about 22 million jobs in March and April. In May through July, about 9.3 million jobs came back, so we are still short about 12 to 13 million jobs. Part of this is a result of so many small businesses having gone bust, so it will take a long time to replace those businesses and therefore replace the jobs they had. Economic turmoil is when technology displacement is prevalent as business seek the means to survive by reducing labor cost (eliminating jobs).

4) Stock market closings for – 3 SEP 20:

Dow 28,292.73 down 807.77
Nasdaq 11,458.10 down 598.34
S&P 500 3,455.06 down 125.78

10 Year Yield: down at 0.62%

Oil: down at $41.03

28 Auguest 2020

1) The decay of the worlds airline industry is reaching out past the airline companies themselves, with jet engine maker Rolls-Royce announcing a $7 billion dollar lost for the first half of 2020. Rolls-Royce gets paid by the hours their engines are flown on airliners, and with the massive drop in air travel from the pandemic, the company’s revenues have drastically dropped leaving its survival in doubt. The company is being forced to sell assets to meet its cash needs, so they are reducing eleven of their locations to just 6, with the loss of 9,000 jobs. Stock dropped 9% on the news of reorganization which was already down 66% since the start of the virus crisis.

2) Not all of the retail industry is bleak news, with Abercombie & Fitch outperforming expectations in the second quarter. While the apparel company did lose ground in the last quarter, it performed better than analyst expected, with sales down by 17%, nevertheless their earnings per share made remarkable gains over last year. This is a result of aggressive costs reductions earlier in the quarter when the company slashed expenses by $200 million dollars by reducing salary expenditures and skipping dividends. Success in their e-commerce operations has also pushed up the revenues and promises to add more as people go to online for more of their shopping.

3) Another small indication that manufacturing is returning to America is Roche Holding AG plans to move its glucose testing strips manufacturing plant from Pueto Rico, where it has operated for about 40 years. The company is streamlining its operations by combining the plant with its other existing facilities. The move will cost 200 jobs in Peuto Rico, which has a number of other drug and medical device manufacturing plants.

4) Stock market closings for – 27 AUG 20:

Dow 8,492.27 up 160.35
Nasdaq 11,625.34 down 39.72
S&P 500 3,484.55 up 5.82

10 Year Yield: up at 0.75%

Oil: down at $42.96

27 August 2020

1) Large hurricanes bring economic damage on a large scale when they make landfall. This season’s biggie is Hurricane Laura now expected to make landfall as a category 4 storm this Wednesday evening or early Thursday morning. The National Hurricane Center rates the storm as having an “un-survivable storm surge” with large and destructive waves causing catastrophic damage along the coast of eastern Texas to the eastern part of Louisiana. The surge could penetrate up to 30 miles inland from the coast. Add to this, the catastrophic wind damage, and Laura promises to carry a large price tag economically as the storm continues first up into Arkansas then across the United States for the Atlantic with rains and flooding. This year is forecast to be a very active hurricane season so more economic damage may be in the play book.

2) Walmart is suspending its InHome delivery service, which offered the convenience of having people’s groceries delivered and unpacked by the delivery person in the customer’s kitchens. But because of the Convid-19 crisis and the need for contactless service, Walmart is discontinuing the service in favor of its Doorstep Delivery service, where groceries are delivered to consumers but now is left on the door step. With its other two delivery service, Walmart is becoming a strong contender in the e-commerce business.

3) Two long established regional grocery chains have filed for bankruptcy, another sign of the shifting of retail business in America, as traditional retailers fail to adapt to the new economic world. Balducci’s and Kings Food Markets of the north eastern coast were having financial struggles before the pandemic set in, but even thought both had a boost in sales from the pandemic, it wasn’t enough to save them. All stores will remain open as their holding company seeks a buyer. The two grocery chains date back to the first half of the twentieth century and they prospered through the decades before e-commerce.

4) Stock market closings for – 26 AUG 20:

Dow 28,331.92 up 83.48
Nasdaq 11,665.06 up 198.59
S&P 500 3,478.73 up 35.11

10 Year Yield: unchanged at 0.69

Oil: unchanged at $43.43