27 October 2020

1) Oil and gas companies are bringing record level of debt to bankruptcy court, making this year the worst oil bust in decades. Companies have brought $89 billion dollars of debt to bankruptcy court this year, compared to $70 billion during the last oil bust in 2014-16. While fewer companies have gone bankrupt this year, 84 compared with the historical high of 142 in 2016, each bankruptcy filing this year reported significantly higher debt. The average bankruptcy debt per company this year is $1.05 billion dollars so far, almost twice as much as the 2017 level of $576 million. But the worst isn’t over yet, it is expected that another 15 to 21 exploration and production companies will file for bankruptcy by the end of the year, pushing the related debt to more than $100 billion. Although crude prices have climbed back to around $40 a barrel, recovery remains tenuous, since energy bankruptcies was rising before the coronavirus pandemic wiped out global demand for crude and petroleum products such as gasoline and jet fuel.

2) Another tropical storm threatens the Gulf Coast again, as 2020 ties record for most named storms. Tropical Storm Zeta has formed in the western Caribbean and is drifting north promising to unleash wind, heavy rainfall and possible ocean surge as it approaches the U.S. Gulf Coast Tuesday night and Wednesday. The storm is most likely to come ashore on Wednesday at tropical-storm level or possibly as a hurricane. The landfall zone includes areas in Louisiana where hurricanes Delta and Laura hit as well as parts of Alabama hit by Sally. The hurricane season still has five weeks left, so the record for most named storms could fall. There are some indications that Zeta could sneak in some last-minute intensification before landfall, possibly becoming a Category 2 hurricane. Zeta’s eventual merger with a frontal system could bring a swath of three to four inches of rain or more into parts of the Southeast and Mid-Atlantic late in the week.

3) Walmart is suing the Justice Department and the Drug Enforcement Administration as a pre-emptive strike, anticipating a legal battle over the retailer’s responsibility in the opioid abuse crisis. Operating more than 5,000 pharmacies in its stores, Walmart says it is seeking a declaration from a federal judge that the government has no lawful basis for seeking civil damages from the company. The government blames Walmart for continuing to fill purportedly bad prescriptions written by doctors that the DEA and state regulators had enabled to write those prescriptions in the first place and continue to stand by today. In 2018, 46,802 people died from an opioid overdose, and health care providers across the country wrote prescriptions for opioid pain medication at a rate of 51.4 prescriptions dispensed per 100 people.

4) Stock market closings for – 26 OCT 20:
Dow 27,685.38 down 650.19
Nasdaq 11,358.94 down 189.34
S&P 500 3,400.97 down 64.42
10 Year Yield: down at 0.80%
Oil: down at $38.64

31 March 2020

1) Oil prices have crashed to an eighteen year low as coronavirus lockdowns cascaded through the world economies, which have drastically cut oil demand. The surplus in oil stocks is ballooning amid the Saudi Arabia and Russia’s dispute over struggle for oil control. The slump in petroleum based products has shut down refineries around the world. Prices are on track for the worst quarter on record. There are no signs of Saudi Arabia and Russia’s dispute being resolved as Saudi Arabia increases its production to further increase surpluses of oil thereby dropping oil prices more.

2) The coronavirus pandemic is expected to drive March auto sales off a cliff, from consumer confidence dropping and shuttered dealerships across much of the country. It’s expected that April may be as bad as or worst than March. Sales forecast for March has dropped 37% and April could be off between 50% and 60%. States under ‘stay at home’ orders have seen an 80% drop in auto sales.

3) With millions of Americans already laid off, fears among experts that job losses could be as high as 47 million to give an unemployment rate of 32%. The loses are a result of government induced economic freeze to contain the spread of the virus. A record 3.3 million Americans have filed initial jobless claims for the week ending 21 March of this year, with an estimated 66.8 million workers consider to be in jobs at high risk for layoff. With a loss of 47 million jobs, the unemployment rolls would rise to 52.8 million, or more than three times the peak number of unemployment in the 2008 Great Recession.

4) Stock market closings for – 30 MAR 20:

Dow 22,327.48 up 690.70
Nasdaq 7,774.15 up 271.77
S&P 500 2,626.65 up 85.18

10 Year Yield: down at 0.67%

Oil: down at $20.28

12 November 2019

1) The KKR & Co. is offering a deal to take the drugstore giant Walgreens Boots Alliance private in what could be the biggest ever leveraged buyout. The New York private equity firm is proposing to buy out shareholders of Walgreens Boots, but there are no details on the proposed transaction. Walgreens Boots has a market value of $53 billion dollars and debt of $16.8 billion dollars. A buyout would give Walgreens Boots time to adapt to a fast changing retail landscape.

2) Some U.S. oil and natural gas production companies are planning to pump less petroleum thereby reducing production for this next year. Several producers, including EQT Corp and Chesapeake Energy Corp have announced their intention to alsoreduce production thereby reining in spending and forecasting slower growth, while other fracking companies like Diamondback Energy Inc., Cimarex Energy Co. and Callon Petroleum Co. plan to hold next year’s spending the same.

3) The Chinese e-commerce giant Alibaba has shattered their single day sales from last year. Alibaba had $33.9 billion dollars in sales, which eclipsed last year’s numbers of $30.8 billion dollars in sales for 24 hours. Alibaba’s annual shopping extravaganza is equivalent to Black Friday or Cyber Monday in the US. The eleventh of November was originally created as a student holiday in China to celebrate single people, but has been transformed into a massive day of sales on Alibaba.

4) Stock market closings for – 11 NOV 19:

Dow               27,691.49         up     10.25
Nasdaq            8,464.28    down    11.03
S&P 500           3,087.01    down       6.07

10 Year Yield:    up   at    1.94%

Oil:    down   at    $56.63

6 November 2019

1) The money-markets have about $3.4 trillion dollars invested, and the large pile of cash could push the already soaring markets higher. The money-markets have grown by $1 trillion dollars over the last three years because of higher money-market rates, concerns of the ten year economic expansion and the ageing of the bull market. But despite the double digit gains this year, that cash remains in the money-markets amid concerns of an economic slowdown, investors wanting the safe bet of having a large cash reserve. Many fear the markets are at an unstable high and a reversal could occur at any time.

2) The U.S. trade deficit for September has falling to its lowest level in five months with imports dropping more sharply than exports. America has a rare surplus of petroleum, which has traditionally been a major source of imports. The import-export difference shrank 4.7% to $52.5 billion dollars, down from the August deficit of $55 billion dollars, with the deficit with China creeping down 0.6% to $31.6 billion dollars.

3) The Bank of America announced it will pay a $20 dollar minimum wage in 2020, a year earlier than planned. This will raise wages for more than 208,000 of its U.S. employees. The higher pay for retail bankers is becoming crucial with the increasingly competitive job market. Other main street banks have also raised their minimum wage, such as Citigroup and JP Morgan Chase. Other major companies including Amazon, Walmart, Target and McDonald’s have also increased their minimum pay.

4) Stock market closings for – 5 NOV 19:

Dow              27,492.63         up    30.52
Nasdaq           8,434.68         up      1.48
S&P 500          3,074.62    down      3.65

10 Year Yield:    up   at    1.87%

Oil:    up   at    $57.27

13 August 2019

1) Royal Dutch Shell is building a 386 acre chemical plant to make bulk plastic. The construction project is one of the largest active construction projects in America employing over 5,000 people. The plant has hundreds of miles of pipelines to feed it petroleum and will have its own rail system with 3,300 freight cars. The new plant is expected to produce a million tons of plastic pellets each year.

2) Saudi oil company Aramco is buying a 20% share in Reliance Industries Ltd of India an oil to chemicals business. This will include the 1.24 million barrels a day Jamnagar refining complex. This is part of Aramco plan for refinery investments to double its processing network and handle as much as 10 million barrels of oil a day by 2030. Reliance has agreed to purchase 500,000 barrels of crude a day over the long term.

3) The IMF (International Monetary Fund) has warned that addition tariffs in the trade war will sharply cut Chinese growth. The IMF has already forecast a 6.2% decline in China’s growth for this year, which assumes no new tariffs. They forecast a sharp cut in China’s growth if the additional tariffs threaten are imposed on the first of September. President Trump has cast doubts on a trade deal, and indicated he might cancel the trade talks scheduled for September.

4) Stock market closings for – 12 AUG 19:

Dow               25,897.71             down    389.73
Nasdaq            7,863.41   unchanged        0.00
S&P 500           2,883.09              down     35.56

10 Year Yield:     down   at    1.64%

Oil:    down   at    $54.78

13 June 2019

1) Demand for oil is shrinking as the trade war causes the world economies to retract. China’s economy is slowing faster than experts had expected, with the EU and US also not growing in oil demand. Fears that oil prices will drop below $40 a barrel fuel fears of a continual global slowing of economies. The U.S. boom in domestic oil production using fracking is dependent on high oil prices, and with American petroleum stocks at an all time high, it may not be feasible to continue fracking.

2) With mortgage rates dropping to their lowest level in nearly two years, there has been a surge in refinancing applications. In just one week, applications increased 26.8%, which is 41% greater than a year ago. Refinance mortgages are the most rate-sensitive because when low, people rush to refinance while they can get the lower rates.

3) For the second straight month, Boeing aircraft reports no new aircraft sales. The drop isn’t just because of the 737 MAX grounding, but the company already has a massive 5,000 aircraft backorder to fill, so many customers don’t need to place additional orders. With the airline Jet Airways halting operations, their pending sales contracts have been canceled, which totaled 71 aircraft.

4) Stock market closings for- 12 JUN 19:

Dow           26,004.83    down    43.68
Nasdaq        7,792.72 down    29.85 
S&P 500          2,879.84    down      5.88 

10 Year Yield:   down   at    2.13% 

Oil:    down   at    $51.08

HE Dr. Emmanuel Ibe Kachikwu Presides Over 168th Opec Meeting…….

Opec countries

By: Economic & Finance Report

Opec (Conference of the Organization of the Petroleum Exporting Countries)  concluded its 168th meeting in Vienna, Austria.  Opec elected , Dr. Emmanuel Ibe Kachikwu presided as the new conference president.  Dr. Kachikwu is also Minister of State for Petroleum for Nigeria. 

As Opec president Dr. Kachikwu took over from former Nigerian petroleum minister, Ms. Diezani Alison Madueke. The president  of the Opec conference is elected yearly, with the term beginning Jan.  1. 

 At the current meeting, Opec decided to continue to watch  how the commidity market playsout throughout the first and second quarter. They decided to keep the output levels at 31.5 million barrels.  Their next meeting is scheduled June 2, 2016. -SB

Energy Decline Having An Lasting Effect On European Stocks

By: Economic & Finance Report

Financial market losses on Friday, sent currencies in Russia and Norway to fresh multiyear lows. Defining concrete losses to European equity indexes.

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The Stoxx Europe 600 index closed the session down 2.5 per cent, with the European subindex of oil and gas companies falling 3.6 per cent.

London’s FTSE 100, which has a very high exposure to the oil and gas sector, declined 2.5 per cent and notched up its biggest weekly loss in around two years. Howevr the DAX in Frankfurt dropping 2.7 per cent and the CAC-40 in Paris ending down 2.8 per cent. In the U.S., the S&P 500 dropped more than 1 per cent in late European trade.

The European central bank indicated a need to sell off the euro against the dollar and British pound…