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

3 September 2020

1) Major American companies are extending their ‘work from home’ policy, such as Google, Uber and Airbnb, until the summer of next year. The companies Zillow, Twitter, Facebook and Square have announce that employees can work from home indefinitely. Some companies are also offering stipends to employees for home office equipment as well as a $500 quarterly credit to use specifically on Airbnbs. This at home work policy remains in effect even after offices start reopening. The work at home is even spreading across the international scene with electronic giant Hitachi having 70% of its employees work permanently from home. Nationwide Insurance plans to downsize from 20 physical offices to just four with the majority of its employees continuing to work permanently from home. It’s looking more and more like working at home is becoming the norm for the future in America.

2) In a bid to counter the competition of e-commerce, the traditional department store giant Macy’s has started opening new, smaller stores away from the malls, reflecting a growing trend in the retail industry. The retail giant will test small-format Macy’s and Bloomingdale’s stores outside of underperforming malls, joining a growing trend in retail. The test stores will begin operation the fourth quarter of 2021 in Dallas, Atlanta and Washington DC. Many other major retailers are turning away from the mall format of retailing, leaving many malls withering on the vine, with foot traffic on the decline even before the Convid-19 crisis. This is another indication of a shift in American culture and society.

3) Fashion retailer Old Navy has announced they will pay their employees to work at polling stations comes election day. Each employee will be paid a full days wages for their poll work. Furthermore, store employees will have up to three hours of paid time-off on election day to vote. Old Navy joins other retailers such as Patagonia, PayPal and Levi Strauss & Co. to help in the national elections.

4) Stock market closings for – 2 SEP 20:

Dow 29,100.50 up 454.84
Nasdaq 12,056.44 up 116.78
S&P 500 3,580.84 up 54.19

10 Year Yield: down at 0.65%

Oil: down at $41.78

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

13 August 2020

1) Another national retail outlet, Stein Mart, is going the way of the brick and mortar retail system announcing they are closing all their stores in bankruptcy amid Covid-19 pandemic. Based in Jacksonville, Florida the company operates 281 stores in 30 states with 9,000 employees. Stein Mart ‘going out of business’ sale is expected to begin in August 14 or 15 with complete liquidation of inventory, with the anticipation of all stores closed by the fourth quarter of 2020. The retailer joins a long list of businesses to file for bankruptcy protection amid the coronavirus crisis.

2) With all the money being pumped into the economy by the government, there were fears of fueling inflation. Those fears were increased with the July consumer price data showing that prices are indeed on the rise. But some are saying these price increases are a result of supply and demand dynamics from the pandemic, and will fall once the supply system becomes stable with production reaching equilibrium again. It’s just a matter of time.

3) Amid suspicion of a rigged election by authoritarian leader Alexander Lukashenko, Germany and Lithuania is calling for renewed sanctions on Belarus. Claiming a landslide victory in his presidential election, Lukashenko has cracked down on protesters and demonstrators. The EU (European Union) has call an extraordinary meeting of foreign ministers to discuss the situation, considering the election was neither free nor fair, and efforts to suppress demonstrations as unacceptable. The EU is considering reinstating sanctions. The protest have been violent with about 1,000 people arrested to add to the 5,000 already being held, and injuries to both protesters and police.

4) Stock market closings for – 12 AUG 20:

Dow 27,976.84 up 289.93
Nasdaq 11,012.24 up 229.42
S&P 500 3,380.35 up 46.66

10 Year Yield: up at 0.67%

Oil: up at $42.56 +0.01

4 August 2020

1) Tailored Brands, who owns Men’s Wearhouse and Jos. A. Bank, has filed for bankruptcy, becoming the latest retailer to succumb to the pandemic. The Covid-19 has wiped out demand for office attire forcing the layoffs of 20% of its workforce and closing up to 500 stores. Lord & Taylor, one of the oldest department stores in America has also filed for bankruptcy. It has started liquidating 19 of its 38 stores. In the first half of 2020, more than 3,600 companies have filed for bankruptcy, with experts predicting that things are only going to get worse. Retail names such as Justice, Ann Taylor, Lane Bryant, Luck Brand, J.C. Penny, Brooks Brothers, Sur La Table, Neiman Marcus, Tuesday Morning, Tailored Brands, GNC and J. Crew have gone into bankruptcy. Such a large number of retailers in trouble can only signal a fundamental change in the American economy.

2) The airline industry in America is facing a round of layoffs in the near future without additional federal aid to save jobs. The airlines received $32 billion dollars in federal payroll support from the CARES Act, with the condition of no layoffs until 30 September, and the anticipation of air traveling increasing by then. But this hasn’t occurred, so as the end of September approaches, layoffs loom. The airline unions have been pushing for an extension in payroll support to preserve the jobs sector of the airlines. American Airlines and United Airlines warn that more than 60,000 employees risk losing heir jobs when the aid terms expire. Other airlines like Alaska, Sprint and Frontier also warn of upcoming layoffs.

3) The owner of 7-Eleven is buying Marathon Petroleum’s Speedway gas stations for $21 billion dollars in cash. This will increase the present 9,800 convenience store chains by another 4,000. Investors were unnerved by the steep price for the deal, with shares falling nearly 9%. Like many other retailers, the chain has also been hit hard by the coronavirus pandemic, with profits down significantly. Another acquisition that finalized is T-Mobile buying Sprint, with the Sprint brand name disappearing from the American business scene.

4) Stock market closings for – 3 AUG 20:

Dow 26,664.40 up 236.08
Nasdaq 10,902.80 up 157.52
S&P 500 3,294.61 up 23.49

10 Year Yield: up at 0.56%

Oil: down at $40.76

23 July 20

1) The business community of America is facing a national coin shortage, making it even more difficult for the retail sector to function. Across the country, restaurants, grocery stores, and retail outlets are posting signs near their cash registers and drive thru windows asking people to pay with credit cards or exact change. This shortage is a result of the spreading coronavirus closing businesses that crippled economic activity in the U.S., so the circulation of coins dropped off significantly. Furthermore, the U.S. Mint who manufactures the nation’s coinage supply, has decreased staffing because of the pandemic, thus reducing the availability of coins.

2) New research has directly connected the explosive growth of passive investing to deteriorating corporate performance over the long haul. Companies with higher passive ownership spent more on stock repurchases, but saw worse financial outcomes. Passive investment can allow opportunistic management behavior with negative effects of future company performance. Companies with high passive ownership are less monitored, therefore allowing management to act unhindered in their own best interest. Passive ownership is a result of investing by mutual and ETF funds who track indexes instead of actively manage counterparts.

3) The government has placed orders for up to 600 million doses of Covid vaccine to Pfizer and BioNTech. The U.S. health officials have agreed to pay $1.95 billion dollars for 100 million doses of a vaccine. Nations around the world have begun ordering vaccines that are still being tested in an effort to halt the spread of the virus. To date, the coronavirus has killed 600,000 people around the world. It is planned the vaccine will be free to U.S. citizens.

4) Stock market closings for – 22 JUL 20:

Dow 27,005.84 up 165.44
Nasdaq 10,706.13 up 25.76
S&P 500 3,276.02 up 18.72

10 Year Yield: down at 0.60%

Oil: up at $41.90

17 JUL 2020

1) Looming in the wings of the pandemic crisis is another major crisis . . . and epidemic of evictions. With the unemployment rate still more than 10% and eviction protections lapsing across America, housing experts expect millions of Americans to lose their homes in the coming months. For millions of Americans, the housing situation was already precarious before the pandemic. Many are paying large percentages of their monthly incomes toward rent, but don’t have enough to cover an unexpected expense of just a few hundred dollars. With insufficient money from unemployment, people are facing living on the streets during 100 degree plus temperatures, hurricane season and possibly freezing weather if the problem continues. This would also mean increased exposure to the Convid-19 virus.

2) A bright spot in the economy is that retail sales rose again for the second straight month as shoppers slowly trickle back into stores. But with conronavirus cases on the rise, this could be short lived. Sales increased 7.5% for June, from May, better than the 5% estimated by economists. Sales were driven by clothing, electronics and appliances as well as home furnishing. Still, foot traffic through stores is way down, people coming in with specific items to consider buying instead of just browsing. So far this year, 4,000 stores are closing permanently with as many as 25,000 expected by the end of the year. Last year, there were 9,302 store closing.

3) The traditional investing axiom of 60/40 portfolios is coming into question. This is the mix of 60% stocks and 40% bonds, which is generally considered the best risk minimizing strategy for individuals to use in building their fortune. But with Treasury yields now hovering around zero, and expected to stay there for years, those gains are in doubt. For decades, this strategy has given the best returns with the least risk in times of volatile markets. Consequently, investors are scrutinizing the strategy as maybe out of date in a changing economy.

4) Stock market closings for – 16 JUL 20:

Dow 26,734.71 down 135.39
Nasdaq 10,473.83 down 76.66
S&P 500 3,215.57 down 10.99

10 Year Yield: down at 0.61%

Oil: down at $40.80

29 June 2020

1) Microsoft is permanently closing almost all of its stores across the nation and world. Just like other retail outlets, Microsoft had to shutter all its stores due to the coronavirus pandemic. There are 83 stores worldwide of which 72 are in the U.S., however only four will remain open in the world. The stores allowed people to try out software and hardware offered by Microsoft including laptop computers. No news if there will be any layoffs or how many, the stores are moving to the digital realm, which will absorb many of the store employees. The physical stores generated negligible retail revenue for Microsoft.

2) As oil prices reach the magic $40 a barrel, shale fracking is starting to reawaken to pump oil. The number of fracking crews had bottomed out at 45 last month, but is now back up to 78 this last week. There had been roughly 400 fracking crews before the decline in oil prices started. The drilling of new oil wells remains on hold with a 70% slump, making for the lowest number of active drilling rigs since 2011.

3) Nike is warning its employees of coming layoffs, but these layoffs will not effect store employees. The layoffs are expected to come in two waves, the first this July followed in the fall with a the second wave. These layoffs come amid reports of poor earnings, with sales down 38% giving a net loss of $790 million dollars when the Convid-19 virus forced closing of most of its stores. This compares with nearly a billion dollars in earnings for the same time last year. Nike has 76,700 employees, but it’s not know yet how many will lose their jobs. All wasn’t bad for Nike, with their online sales skyrocketing 75%, with e-sales accounting for 30% of Nike’s total business.

4) Stock market closings for – 26 JUN 20:

Dow 25,015.55 down 730.05
Nasdaq 9,757.22 down 259.78
S&P 500 3,009.05 down 74.71

10 Year Yield: down at 0.64%

Oil: down at $38.16

25 June 2020

1) There are ten companies that may not make it through the summer. These are high brand names of Hertz, J.C. Penney, Pier 1 Imports, Tuesday Morning, J. Crew, Neiman Marcus, Gold’s Gym, Tailored Brands (Men’s Warehouse and Jos. A. Banks) and Diamond Offshore Drilling, which are all in bankruptcy now. The high number of retailers shows the ongoing retail apocalypse with the retail sector, which had already hit before the pandemic by falling sales, lower costumer traffic and too many stores. Retail was near the edge of collapsed with last years Christmas holiday shopping doing little to boost business, especially those located in malls. Last year, 9,500 retail stores closed, with estimates of 15,000 stores closing for good in 2020. This may indicated a fundamental shift in America’s economy, a shift away from hyper-consumerism to something else besides a service based economy. Shopper visits to stores are about half of last year’s numbers, and that’s with businesses reopening after more than two months on lockdown.

2) Fears continue to grow that we are not finished with the Convid-19 crisis yet, as the number of new cases continues to increase. This is happening with states and cities easing their shutdown measures to reopen the economy to start a recovery. The seven day average of new virus cases has swung up 30% from a week ago. It was hoped the warm weather would suppress the virus spread as it does with the flu, but if the virus is resurrecting, then the shutdown may need to returned with the resulting economic impact.

3) The Ford Motor Co., who is in the process of its global restructuring plan and paying off debt related to the coronavirus pandemic, is betting its future on its new line of pickups. Ford is offering its popular F-150 model in traditional internal combustion engines, new hybrids and all electric versions. The Ford F-150 has been the country’s top selling truck for more than 40 years, the best selling for the last consecutive 38 years. Their F-150 is a key part in Ford’s plans to profitably grow their business, to help in the $11 billion restructuring cost and pay off the $20 billion dollars in new debt.

4) Stock market closings for – 24 JUN 20:

Dow 25,445.94 down 710.16
Nasdaq 9,909.17 down 222.20
S&P 500 3,050.33 down 0.96

10 Year Yield: down at 0.68%

Oil: down at $38.07