23 March 2021

1) Some analysts expect Tesla Inc. stock to hit $3,000 by 2025, up from its current price of $655. This would make the company worth almost $3 trillion dollars. This is based on expectation of a 50% chance of Tesla achieving fully autonomous driving systems within five years. This would allow the company to scale up its planned robotaxi service quickly. Additionally, Tesla’s insurance business adds value to the company, believing the offering could be rolled out to more states in the next few years with better than average margins, thanks to highly detailed driving data the company collects. Presently, their insurance is currently available only in California. Forecasts are for Tesla’s unit sales to be between 5 million and 10 million vehicles in 2025, assuming increased capital efficiency.

2) Intel made small waves by launching an ad campaign featuring none other than the “I’m a Mac guy” himself . . . Justin Long to explain why PCs are better than Macs. Intel’s five YouTube videos have racked up over a million views, but the ad campaign extends to a website extolling the benefits of PC over Mac. In the real world, a PC with an 11th Gen Intel Core mobile processor offers users more, with real research and test results to prove it. Many Apple M1 claims don’t translate to real world usage and appear questionable. When compared to a PC with the 11th Gen Intel Core mobile processor, the M1 MacBook features just don’t stack up.

3) After years of outcry about corruption and wasteful spending, Congress banned earmarks, the legislative maneuver of having special budget items that allow members to funnel money to projects in their districts. Earmark spending went away in 2011 after corruption scandals, but now it’s back on the table. Leaders in both parties are taking steps to allow limited earmarks on spending legislation, opening the door to the sort of ‘horse trading’ that Democrats hope could lead to GOP support for Biden initiatives on issues ranging from infrastructure to the annual federal agency funding bill. Republicans are leery of what type of taxes and revenue-raising devices the Democrats are considering to finance a legislative package that could top $1 trillion dollars. With $28 trillion dollars worth of debt, and on the way to a $30 trillion debt, the Congress ought to be focused on how to save money.

4) Stock market closings for – 22 MAR 21:

Dow 32,731.20 up by 103.23
Nasdaq 13,377.54 up by 162.31
S&P 500 3,940.59 up by 27.49

10 Year Yield: down at 1.69%

Oil: up at 61.47

16 March 2021

1) The technology known as carbon capture and storage, a concept that has been around for at least a quarter century to reduce the climate damaging emissions from factories, is being pursued by major international oil companies. The idea sounds deceptively simple, just divert pollutants before they can escape into the air, and bury them deep in the ground where they are harmless. But the technology has proved to be hugely expensive, and so has not caught on as quickly as advocates hoped. Exxon Mobil, BP and Royal Dutch Shell plus lesser known Norway’s Equinor, France’s Total, and Italy’s Eni are investors in capture and storage projects.

2) Reports are, that amid all the trillion dollar spending, the White House is now starting to consider how to pay for the programs meant to bolster long term economic growth with investments in infrastructure, clean energy and education. The challenges are twofold: 1) how much of the bill is paid for with tax increases and 2) which policies to finance with more borrowing. The administration hasn’t decided whether to pursue a wealth tax. With interest rates so low, U.S. borrowing costs are manageable right now. The federal government currently collects the biggest chunk of its revenue, about half in 2019, from individual income taxes, which now tops out at 37% of income above $518,000 per year. For now, there are few signs of inflationary spiral or fiscal crisis that policy makers thought would accompany debt levels like today’s. The Congressional Budget Office this month projected that the national debt would double as a proportion of gross domestic product over the next 30 years. But the cost of borrowing is rising for the government and across the economy so the large debt could mean trouble in the future.

3) India’s foreign-exchange reserves has surpassed Russia’s to become the world’s fourth largest, as India central bank continues to hoard dollars to cushion the economy against any sudden outflows. Reserves for both countries have mostly flattened this year after months of rapid increase. India’s reserves, enough to cover roughly 18 months of imports, have been bolstered by a rare current-account surplus, raising inflows into the local stock market and foreign direct investment. India’s foreign currency holdings fell by $4.3 billion to $580.3 billion as of March 5, edging out Russia’s $580.1 billion pile. China has the largest reserves, followed by Japan and Switzerland on the International Monetary Fund table.

4) Stock market closings for – 15 MAR 21:

Dow 32,953.46 up by 174.82
Nasdaq 3,459.71 up by 139.84
S&P 500 3,968.94 up by 25.60

10 Year Yield: down at 1.61%

Oil: down at $65.29

28 December 2020

1) Rich Americans are rushing to make large transactions before the end of the month and year, intending to get ahead of expected raising of taxes or closing of loopholes. The year-end frenzy come as a surprise to many advisers, because Republicans did better than many expected in congressional races. This suggests Biden may have a difficult time fulfilling campaign promises to raise trillions of dollars in new revenue from the wealthy. The new Biden administration could close the many loopholes that make the U.S. estate and gift tax easy to avoid.

2) The bill for the pandemic relief is 5,600 pages long containing more than one million words, which makes it slightly longer than “A Dance to the Music of Time”, Anthony Powell’s classic 12-volume work, which is considered the longest novel in the English language, taking more than 100 hours to read aloud. But while the bill doesn’t provide the relief of the first one, it will create two new Smithsonian museums and a Theodore Roosevelt Presidential Library in North Dakota. There is legislation for copyright holders to pursue increasingly frivolous claims against YouTube users. Economic sanctions and other penalties to any Chinese national who attempts to interfere in the process by which the 15th Dalai Lama is chosen. It will ban a now-defunct activist group from receiving federal funding. In short, much of the bill provides no help for Americans struggling to survive this economic calamity. Therefore, the stimulus bill is the worst of both worlds of Democrats and Republicans.

3) Communist China is adding to its military aggressiveness by developing amphibious assault ships to enhance its blue water navy and dominate the seas. The 40,000-ton assault warship is the key to Beijing’s ambition of dominating the Taiwan Strait and South China Sea, where frequent encounters with the United States Navy have occurred this year. A total of eight Type 075 amphibious assault ships have been ordered by the PLA, with the third one currently under construction and expected to be delivered in early 2021. The landing helicopter dock carries 30 attack helicopters and 900 troops. The assault ships gives China the ability to conduct vertical deployment in military operations on islands and reefs, the Chinese Communist citing self-governing Taiwan and the South China Sea as examples.

4) Stock market closings for – 24 DEC 20:

Dow 30,199.87 up by 70.04
Nasdaq 12,804.73 up by 33.62
S&P 500 3,703.06 up by 13.05

10 Year Yield: down at 0.93%

Oil: up at $48.23

14 December 2020

1) Database-software giant Oracle is moving its headquarters out of California (Silicon Valley) to Austin Texas making Oracle the latest tech giant to flee California. The software company had been based in Silicon Valley since it was founded in 1977. High technology industries have a long history in Austin, with IBM, Dell Technologies, and Samsung setting up shop in the city. Depending on their job, many of Oracle employees can choose their office location, as well as continue working from home part- time or full time. This is yet another account of technology talent packing up and leaving the famous tech capital of Silicon Valley for Texas, with Austin, in particular, being a popular destination for relocation. Other tech companies like Hewlett Packard Enterprise, are moving to other cities in Texas, who is relocating their headquarters from San Jose, California to Houston.

2) The Senate has unanimously passed a stopgap funding measure Friday, to avoid a government shutdown for one week, while lawmakers work to close a deal on government funding. Friday evening President Trump then signed the spending bill into law, which keeps the government open at current funding levels. The longest government shut down was for 35 days in 2018, which was the longest-ever shutdown in modern U.S. history. The nonpartisan CBO (Congressional Budget Office) estimates tax revenue is down $2 billion in 2019 because the IRS had halted some operations during the 2018 shutdown.

3) The $908 billion dollar coronavirus relief proposal is going to be split into two packages by lawmakers. The plan will have a $160 billion dollar part that ties together the two most controversial elements, which is more money for state and local governments and protections against coronavirus-related lawsuits. The second part is $748 billion dollars including another round of Paycheck Protection Program funding for small businesses, unemployment benefits, and more money for vaccine distribution, testing and schools. Splitting off the two most controversial items makes it easier to at least pass a smaller coronavirus agreement as part of a government funding deal. Congress is quickly running out of time to cut a big deal on coronavirus relief, the bipartisan group having been negotiating for weeks, to try to finalize its bill after announcing a framework earlier this month.

4) Stock market closings for – 11 DEC 20:

Dow 30,046.37 up by 47.11
Nasdaq 12,377.87 down by 27.94
S&P 500 3,663.46 down by 4.64

10 Year Yield: down at 0.89%

Oil: down at $46.56

2 October 2020

1) With the government support ending the first of October, American and United airlines are cutting 32,000 jobs. The airlines received $50 billion dollars under the CARES Act to boost liquidity and support payroll in exchange for not laying off employees through the 30th of September. Their revenue down by more than 80% and a full recovery still years off, the industry needs to shrink, so American airlines furloughed 19,000 workers with United airlines to furlough 13,000 people. However, both airlines said they are ready to reverse their course if a new support bill is passed.

2) Red China has announce its program to go to the moon. Its new launch vehicle was unveiled on September 18th, which is designed to send a 27.6 ton spacecraft into trans-lunar injections. At liftoff, it will weight about 4.85 million pounds, which is about three times China’s present largest rocket, the ‘Long March 6′. Made up of three 16.4 foot diameter cores or stages, it is similar to America’s ‘Delta IV Heavy’ and ‘Falcon Heavy’. The new three stage rocket will be 285 feet long, but China has not announced a time frame to start testing.

3) Boeing Aircraft has built some 460 of their 737 MAX jets, whose delivery has been frozen since March of 2019. This is a $16 billion dollar inventory, that with the 737 MAX’s certification to fly approaching, needs to be sold for Boeing to stay viable. Many of these aircraft were built for clients that have since canceled their orders, or worst yet have gone out of business, and are now called ‘White Tails’ from a lack of an airline livery painting. Boeing is now looking for new customers to buy these aircraft, in particular Delta airline which is the only major U.S. carrier without any 737 MAX aircraft in their inventory. But Delta’s relations with Boeing has been poor in recent years, while they have also parked many of their jets because of the slowdown from the pandemic, so with Delta intent on not spending cash on aircraft, this makes for a hard sale.

4) Stock market closings for – 1 OCT 20:

Dow 27,816.90 up 35.20
Nasdaq 11,326.51 up 159.00
S&P 500 3,380.80 up 17.80

10 Year Yield: unchanged at 0.68%

Oil: down at $38.58

1 October 2020

1) After two previous recalls for Mustangs and Super Duty pickups, Ford has announced a third recall of nearly every new vehicle it sells today, a total of about 620,246 vehicles for dysfunctional (blank picture) backup cameras. All 2020 models are being recalled, the Ford Explorer, F-150 pickups, Mustang, Transit, Super Duty pickups, Expedition, Escape, Range and Edge. The only exception is the Ecosport. All have defective back up camera systems that can go dark or have a flickering image. Backup cameras are federally mandated, and therefore Ford vehicles don’t comply with Federal Motor Vehicle Safety Standards and therefore must be repaired.
2) Disney has announced it is laying off 28,000 employees in the U.S., a direct result of the pandemic’s effects on its theme parks. The laid-off employees comprise 67% of their part time workers and will affect Disney’s Parks, Experiences and Products unit. The parks and resorts division has more than 100,000 U.S. employees. On shutting down its theme parks globally this spring, Disney’s profits dropped a whopping 91% for the first three months of 2020. The theme parks have been impacted, a result of the limited capacity from physical distancing requirements and the continued uncertainty of the duration of the pandemic.
3) Nigeria is overhauling its State Oil Company and may sell a stake in the company. Nigeria is Africa’s biggest crude oil producer so the sale of shares is a big deal. The Nigerian government seeks to establish a commercially oriented and profit driven national petroleum company, which generates about half of the government’s revenue and more than 90% of its export earnings. The company has for years been a tool for political patronage to cronies, with its closed operations fueling corruption. Being a publicly traded company sheds the cloak of secrecy by opening the books for inspection thereby making corruption more difficult and likely to be detected.
4) Stock market closings for – 30 SEP 20:
Dow 27,781.70 up 329.04
Nasdaq 11,167.51 up 82.26
S&P 500 3,363.00 up 27.53
10 Year Yield: 0.68% up 0.03
Oil: up at $39.86

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

16 July 2020

1) Delta Airlines is expecting to spend up to $3.3 billion dollars on buyouts and early retirements in an effort to slash their labor cost. So far, 17,000 employees have signed up to leave the company because there is little in sight for the pandemic’s impact to end soon. The company is prohibited from laying off workers through 30 September under the terms of the $25 billion federal aid package met to support employee payroll. Delta has roughly 91,000 employees so this is a 19% reduction in their work force. The separation packages include cash severance, extended health care benefits and free flights. Other airlines are offering similar packages in an effort to reduce their work force.

2) Heritage Brands, an anchor of outlet malls across American, is closing all of its 162 stores starting next year. PVH Corp, which owns such brand names as Calvin Klein and Tommy Hilfiger, blames the closure on a combination of changing shopping habits of people and the Covid-19 pandemic. This will result in a 12% reduction in jobs or about 450 employees, saving the company $80 million dollars annually. The company had a 43% drop in revenue because of the impact of the coronavirus.

3) There are growing fears of an environmental disaster erupting in the Red Sea on the coast of Yeman. An abandoned oil tanker with 1.1 million barrels of crude oil, is beached on the coast of Yeman, with the potential to explode or rupture causing major environmental and humanitarian damage in the area. UN officials are trying to gain access to the ship to assess the tanker’s condition, conduct any possible urgent repairs and make recommendations for extraction of the oil, but the area is controlled by Houthi rebels. The danger is from sea water entering the ship’s interior causing rust and loss of structural integrity plus the inert gas that prevents the tanks from gathering inflammable gases has leaked out, so there is the threat of an explosion. To start with, an oil spill could result in 126,000 Yemeni fishermen losing their source of income.

4) Stock market closings for – 15 JUL 20:

Dow 26,870.10 up 227.51
Nasdaq 10,550.49 up 61.92
S&P 500 3,226.56 up 29.04

10 Year Yield: up at 0.63%

Oil: up at $41.04

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

17 June 2020

1) As restaurants start to reopen, they are finding a serious problem- it takes cash to reopen again, cash that many don’t have in the bank. The cost of food, staff, cleaning and training for new sanitary protocols is proving daunting, with one independent owner calculating he needs $80,000 cash to reopen. The suppliers are facing a similar problem since many of their restaurant customers still own them money, but need supplies on credit to reopen, so many suppliers are threatened with bankruptcy too. And if that’s not enough, restaurants that had opened in some major cities are threatened with another shutdown as the virus pandemic re-emerges again, and so not only face another loss of sales revenue, just when they need the money the most, but also have additional cash outlays for reopening. The closing of restaurants has shed more than 8 million jobs.

2) In a month filled with economic bad news, retail sales have posted their largest monthly jump upwards ever. With the cornonavirus lockdown coming to an end, consumers are out shopping again making a 17.7% headline gain including food sales, which beat the previous record of October 2001. Clothing and accessories were the biggest gains of 188%. This gain reverses the 16.4% plunged from a month ago. While very encouraging, the economy still has a lot to regain.

3) There is a faster than expected turnaround in home buyer demand, after a sharp drop-off at the start of the coronavirus pandemic. The National Association of Home Builders/Wells Fargo Housing Market Index jumped 21 points in June to 58, where above 50 indicates a positive market. In April, the index dropped a record 42 points to 30. Builders report increase demand for families seeking single family homes in inner and outer suburbs featuring lower density neighborhoods.

4) Stock market closings for – 16 JUN 20:

Dow 26,289.98 up 526.82
Nasdaq 9,895.87 up 169.84
S&P 500 3,124.74 up 58.15

10 Year Yield: up at 0.76%

Oil: up at $37.76