1) The airline industry is one of the hardest hit segments of the economy from the pandemic, with an estimated 36% drop in traffic this year. But the International Air Transport Association is warning that it could worsen with a 53% drop if boarder curbs on emerging market countries and the U.S. remain in place. The U.S. – EU (European Union) air travel market generates $29 billion dollars a year is threaten by the ban on non essential flights from the U.S. as the EU attempts to avoid an resurgence of the virus. Air travel was down over 90% for April and May, with little prospects for improvement in the near future, leaving the future of air carriers in doubt too.
2) The maker of electric automobiles Tesla has become the world’s most valuable automaker, surpassing Toyota’s for the first time on record. Tesla’s valuation is roughly $206.5 billion dollars compared with Toyota’s valuation of about $202 billion dollars. This underscores the vast investor enthusiasm for the automaker, which has yet to turn a profit on an annual basis. While it’s valuation exceeds Toyota, its car production of 103,000 cars lags far behind Toyota’s production of 2.4 million vehicles. The valuation comes from the stock in the company, with investors piling money in since there aren’t any other electric vehicles investments available, with Tesla stock soaring to $1,135 per share.
3) Electricity bills are set to surge this summer because of millions of Americans sheltering in place. This added demand will mean higher electricity costs for months to come. This will mean an additional $30 to $40 per month on electric bills in cities like New York and Philadelphia. Increases are anticipated to be highest for the northeast area of the country, decreasing when going westward. This comes when people’s finances are already stretched tight because of the coronavirus crisis.
4) Stock market closings for – 1 JUL 20:
Dow 25,734.97 down 77.91 Nasdaq 10,154.63 up 95.86 S&P 500 3,115.86 up 15.57
1) The furniture retailer Wayfair is reducing its workforce by 3% or 500 jobs. The online furniture retailer has more than 17,000 employees globally. The stock for the company has dropped more than 24% in the last twelve months. Wayfair has yet to post a profit and has been criticized for its high costs to run its business. Shipping items like sofas and coffee tables can be expensive, even more so where there’s returns.
2) Newspaper publisher conglomerate McClatchy has filed for bankruptcy. Owner of banner newspapers such as Miami Herald, Kansas City Star, Star-Telegram, News & Observer and Charlotte Observer, a total of thirty newspapers has seen its revenue slide downward for the last six years as readership of newspapers continues to decline, migrating to newer technologies for their news.
3) The U.S. national debt continues to increase at an ever increasing rate. The debt, adjusted for inflation, of 1900-1904 was $65.37 billion dollars. The debt after World War I (1919) was $329.06 billion dollars, a result of paying for the war. Then debt started dropping down to $319.35 billion dollars and by the 1929 stock market crash was down to $253.44 billion dollars, the start of the great depression. By the start of World War II, 1940, it was at $788.68 billion dollars, but at the end of the war (1945) skyrocketed to $3.69 trillion dollars, slowly drifting down to $533.19 billion dollars by 1975. But after that, it started growing again until today its now at $22.72 trillion dollars, 348 times the debt at the start of the twentieth century.
4) Stock market closings for – 13 FEB 20:
Dow 29,423.31 down 128.11 Nasdaq 9,711.97 down 13.99 S&P 500 3,373.94 down 5.51
1) Hallmark Greeting Cards is suffering a downturn in the brick-and-mortar retail industry, closing sixteen of its retail outlets across America. Social media is crushing the card business, so it’s no longer a viable business. People use to buy and send cards all the time, but now it’s all online. This is just another indicator of how the retail business is changing, more people doing their shopping on line.
2) Franchise businesses remain a popular strategy for people to start their own business, giving them the benefit of an established brand. About two-thirds of Americans say they want to start a small business, but fears of failure stop most, with good reason. About half the small business startups fail within five years, and two-thirds within ten years. Most businesses do not fail because they don’t make a profit, but rather because of insufficient cash flow problems.
3) Independent grocery stores and regional supermarket chains, who are already facing brutal competition and shrinking profits, now face losing a valuable source of sales- the food stamp recipients. New rules for SNAP (Supplemental Nutrition Assistance Program) could eliminate 700,000 people from eligibility. Loss of sales could result in reduce orders from suppliers, reducing labor in stores or the closing of stores. Grocery stores have a profit margin of only about 1 % to 2% leaving little room for changes in their sales volume.
4) Stock market closings for – 30 JAN 20:
Dow 28,859.44 up 124.99 Nasdaq 9,298.93 up 23.77 S&P 500 3,283.66 up 10.26
1) J. P. Morgan Chase posted profit and revenue far in excess to analysts’ expectation at the end of 2019. Fourth quarter profit was up 21% to $2.57 a share compared with $2.35 estimates of analysts. The investment bank produced record revenue for the fourth quarter. Citigroup also beat estimates for profit and revenue, their fixed income trading revenue gaining 49%.
2) Consumer prices rose at the fastest pace in eight years, in 2019. The increase was driven by higher gasoline, health care and rent prices in addition to the biggest annual advance in inflation since 2011. The consumer price index rose 0.2% in December, while economist had forecast 0.3%. The cost of living in 2019 rose 2.3% from 2.1%. Price increase for food was mild, while prices fell for used vehicles and airline fares.
3) Three of China’s automakers are considering expanding into Mexico with factories. Car makers Changan, BYD (electric cars) and Anhui Jianghuai or JAC, who already has manufacturing facilities in Mexico, but is considering expanding. The companies are considering expansion sometime this next year. No comments on if and where cars will be exported to.
4) Stock market closings for – 14 JAN 20:
Dow 28,939.67 up 32.62 Nasdaq 9,251.33 down 22.60 S&P 500 3,283.15 down 4.98
1) The pizza giant Domino’s had been the darling of Wall Street, with its soaring sales, but its growth has gone stale. The company’s reported revenue and profit missed Wall Street’s forecast with its stock sagging. The same-store sales grew just 2.4% compared with last years 6.3%. Domino’s operates in 85 countries with 10,000 stores outside of the U.S., which generate half of its revenues.
2) Boeing aircraft has got its first 737 MAX order since the crashes forced grounding of all 737 MAX aircraft. Boeing’s net order tally, including cancellations, was a negative 84 for the first nine months of 2019. In addition, Southwest Airlines’ pilots union has filed a law suit against Boeing for damages caused by the prolonged grounding of its 737 MAX, claiming loss of pay to its pilot from canceled flights and seeing $115 million dollars in compensation.
3) Duke University professor Campbell Harvey, the father of the yield curve and pioneer of the economic forecasting model, says to prepare for a recession. He based his prediction on inverted curves, which happen when short term Treasury yields are higher than those with longer duration, which his research indicates the coming of a recession.
4) Stock market closings for – 8 OCT 19:
Dow 26,164.04 down 313.98 Nasdaq 7,823.78 down 132.52 S&P 500 2,893.06 down 45.73
1) Disney, the owner of the Star Wars franchise rights, is finding that today’s kids are not as interested in Star Wars as previous generations have been. While the last of the trilogies have turned a profit, they have not met the success of previous movies. Purchased from Lucasfilm Ltd in 2012 for $4.05 billion dollars, Disney is worried about the long term profitability of the franchise. It’s newly opened attraction Star Wars theme-park hasn’t meet expectations, indicated the young are not entranced by the intergalactic saga.
2) Gold continues to increase in value as more jittery investors flee traditional havens for money, to the supposed safety of gold ownership. With gold now at $1,500 per ounce, it is outperforming stocks this year. Concerns over the world economy from uncertainty of the U.S. and China trade war, China’s currency, oil and repercussions from political hot spots across the world have all combined to form a economic climate of fear and uncertainty. All foretell of a global slow down in growth, and as always the case, gold provides safety better than money in economic hard times.
3) A federal judge has ordered litigation over defective General Motors ignition switches to be narrowed in claims by owners. Owners claimed they lost value in their vehicles because of the defect, but the judge ruled the owners have failed to show the value of their vehicles has declined as a result of the defect. Instead, damages could only be measured by costs to repair defective vehicles, which is zero if GM paid for repairs. This defect is linked to 124 deaths.
4) Stock market closings for – 7 AUG 19:
Dow 26,007.07 down 22.45 Nasdaq 7,862.83 up 29.56 S&P 500 2,883.98 up 2.21
1) General Electric suffered a loss last quarter despite two previous profitable quarters, a result of the restructuring cost of its electric power division and the grounding of Boeing’s 737 MAX. GE provides the jet engines used on the 737, which Boeing has reduced production of. The grounding of Boeing has drained off more cash than expected, but General Electric forecast a profitable year for 2019.
2) President Trump has fulfilled his campaign promise to lower drug prices by creating a pathway to allow Americans to legally and safely import lower cost prescription drugs from Canada. This reverses the opposition from federal health authorities, despite the public outcry over high prices for drugs in America. It’s uncertain when imports can start as the plan has to go through the time consuming regulatory approval and possible court challenges from drug makers. The opening of the door for cheaper drugs and keeping it open still faces an up hill battle with the political organizations of the pharmaceutical industry.
3) In an effort to keep the American economy on track, the Federal Reserve has reduced the benchmark interest rate by a quarter point to about 2.25%. This is a modest and widely expected move intended to keep the economy healthy in face of the trade war with China and the slowing economic growth overseas. In addition, the feds signaled that the cental bank is ready to make more cuts to stimulate the economy if necessary. A higher interest rate makes for a stronger dollar, a disadvantage for international trade. Wall Street anticipates as many as three more cuts this year, while in addition to the rate reduction, the feds will stop selling off assets this August, two months earlier than expected.
4) Stock market closings for – 31 JUL 19:
Dow 26,864.27 down 333.75 Nasdaq 8,175.42 down 98.19 S&P 500 2,980.38 down 32.80
1) FedEx stock dropped as it missed it estimates for quarterly profit for the second time. FedEx is considered by many to be a bellwether for the global economy and their forecast for global trade growth proved to overly optimistic.
2) Newark New Jersey plans to implement a Basic Universal Income despite other countries who have tried this social plan and have abandoned it. Canada and Finland have found it unworkable and does not have any apparent benefits. Newark has not proposed any means to fund the program.
3) The on going college admission scandal is building resentment among the Z-generation over the special standing and access given to fellow kids because their parents have exceptional monetary means. Their parents are buying entry to ivy league colleges thereby denying access by other students who have actual qualifications for entry.
4) 19 MAR 19 Stock market closings:
Dow 25,887.38 down 26.72 Nasdaq 7,723.95 up 9.47 S&P 500 2,832.57 down 0.37
1) European markets remain stable despite the vote to reject the Brexit plan.
2) Prime Minister May narrowly survived a no confidence vote. Fears continue of economic chaos if Britain does a ‘no-deal’ exit in ten weeks.
3) Ford Motor Company forecasts a weaker than expected forth quarter making for uncertainty in 2019. Ford is the top seller in Britain, so a no-deal Brexit could be harmful for the motor company. Additionally, Ford hasn’t provided a profit forecast for 2019.
4) 16 JAN 19 Stock market closings:
Dow 24,207.16 up 141.57 Nasdaq 7,034.69 up 10.86 S&P 500 2,616.10 up 5.80
Various fund and portfolio managers have to take risk to get ahead in this ever growing investing markets, especially as the new year begins in 2015. There are a few research studies floating about; that indicate that portfolio managers, fund managers, asset allocation managers and other finance managers, lag way behind the money markets when certain investment initiatives are not in place. Overall their records perform unusually low without taking the necessary risk to attain net profit gains.
Managers that do not take the necessary risks in diversifying their portfolios to allocate the funds in various risk allocations, lose the incentives to attain profit, then allowing them to underperform in other aspects of their trading accounts and portfolios. At the end of it all, instituting monitored risk or calculated risk is more appropriate in establishing decent results for clients portfolios.