27 March 2020

1) The $2 trillion dollar coronavirus relief bill has been passed and Treasury Secretary Steven Mnuchin said the people should receive cash payments within three weeks. The IRS has been tasked with distributing the monies, but the agency is hobbled by obsolete technologies such as 1960’s era computers, limited staff and a small budget. So there are questions if the agency can get the job done in a timely manner, let alone in three weeks. Experts say its more like a matter of months rather than weeks for Americans to receive their check.

2) Almost 3.3 million Americans have applied for unemployment benefits this last week, more than quadruple the previous record set in 1982. This is a result of the wide spread economic shutdown from the coronavirus pandemic. This rate of layoffs is expected to accelerate as the U.S. economy sinks into a recession with the collapse of revenues for a wide range of businesses. Economist predict the nation’s unemployment rate could approach 13% by May.

3) Gold has traditionally been a panic investment which people and nations buy to protect the value of their money. The worldwide panic over the coronavirus coupled with a flood of stimulus by central banks has ignited demand for gold to store wealth. But the gold market is running into difficulties in buying. Stored in high security vaults, government mandated shut downs have left access iffy. Also, refiners of gold have been forced to close because of the virus. Transporting gold is done via airlines, but the sharp drop in air service has also made transport of the metal difficult. All these factors have put a squeeze on gold futures.

4) Stock market closings for – 26 MAR 20:

Dow 22,552.17 up 1351.62
Nasdaq 7,797.54 up 413.24
S&P 500 2,630.07 up 154.51

10 Year Yield: down at 0.81%

Oil: down at $23.18

13 March 2020

1) The popular theme parks Disneyland and Disney World have been closed until April because of the threat of coronavirus. The closure commences on 14 March, but the hotel resort will remaining open until 16 March to allow guess to make travel arrangements for returning home. Walt Disney Co. will continue to pay cast members during the closure. Disney Cruise Line will suspend all new departures beginning Saturday until the end of the month. At this time, it is uncertain how adversely this will financially effect Walt Disney Co.

2) A global recession, driven by the coronavirus pandemic, may result because of the flow of goods, services and people becoming more restricted. In the past day, President Trump has restricted travel from Europe, Italy has closed almost every shop, India suspended most visas and Ireland partially shut down. Many sporting events have been closed to public spectators with major lost of revenues. Many nations fear a contraction, with China the first in decades, thus ending the 11 year expansion. The Federal Reserve’s emergency interest rate cut of March 3 failed to boost investor’s confidence.

3) The Federal Reserve has announced its plan to ease market strain and halt its downward spiral. The Feds will offer a huge injection of liquidity to the Treasury market to counter market dysfunction. Government bonds are liquid assets making them the easiest thing to sell in turbulent times when investors need to raise cash. The New York Feds have been buying Treasury bills in what is called repurchase agreements or repos. This added liquidity is intended to bring stability to the markets and arrest the downward movements.

4) Stock market closings for – 12 MAR 20: The markets continue their drastic downward spiral.

Dow 21,200.62 down 2,352.60
Nasdaq 7,201.80 down 750.25
S&P 500 2,480.64 down 260.74

10 Year Yield: up at 0.85%

Oil: down at $30.88

29 January 2020

1) Amazon it pushing hard to establish its Kuiper broadband internet access satellite system. The planned satellite system will have 3,236 satellites in polar orbits to form a mega-constellation system in low earth orbit that will provide broadband internet service for billions of people around the world who are currently being under served. Amazon is pushing the FCC for expeditious granting of application for system. SpaceX and One Web have also started their planned mega-constellation satellite system.

2) North Korea’s economy is largely hidden from the world because it’s one of the most secretive nations. But it’s known the economy is struggling because of its isolationism, where the average worker makes less than $2,000 a year with much of its population undernourished. Citizens are paying as much as $12,000 to defect.

3) Boeing Aircraft has secured over $12 billion dollars to finance its 737 MAX crisis. Loans from over a dozen banks will shore up Boeing’s balance sheet until deliveries of its 737 MAX can resume with resulting revenues coming in. This is at least $2 billion dollars more than Boeing originally sought, making the loans a vote of confidence of its future. The loan is a delayed-draw loan, meaning the company may not use it immediately.

4) Stock market closings for – 28 JAN 20: Markets rebound from threat of coronavirus.

Dow                      28,722.85    up    187.05
Nasdaq                  9,269.68    up     130.37
S&P 500                 3,276.24    up       32.61

10 Year Yield:    up   at    1.64%

Oil:    up   at    $53.98

11 December 2019

1) Analyst say Netflix, the video streaming service, must lower its prices in 2020 to avoid lost of millions of its U.S. customers because of the rising competition. It is suggested that Netflix must add a second lower priced service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock, otherwise they risk losing four million U.S. subscribers. Since Netflix’s balance sheet cannot withstand lower revenues, the company must create a pricing tier that has lower monthly cost, but still support advertising revenue.

2) Mortgage lenders are warned to brace for a downturn, with Fannie Mae and Freddie Mac pulling back on some mortgages meant to make home ownership more affordable. They are reducing the proportion of loans they back to borrowers with small down payments. This tamping down on risk is to limit their defaults thereby producing greater profits.

3) Morgan Stanley, the investment bank giant, is cutting about 1,500 jobs globally in a year end push for efficiency. The cuts are more in the technology and operations divisions, but include executives in sales, trading and research operations including several managing directors. These reductions amount to about 2% of the firm’s workforce with a charge between $150 to $200 million dollars in its fourth quarter.

4) Stock market closings for – 10 DEC 19:

Dow            27,881.72    down    27.88
Nasdaq         8,616.18    down      5.64
S&P 500        3,132.52    down      3.44

10 Year Yield:    unchanged   at    1.83%

Oil:    up   at    $59.09

6 December 2019

1) Boeing says significant additional regulatory requirements may cause additional delays in returning Boeing’s 737 MAX to commercial service and in turn may cause the company to cut or even halt production. Boeing does not expect 737 MAX order cancellations to have an impact on revenues or earnings citing the size of 737 backorder.

2) Saudi Arabia has just completed the biggest initial public offering in history, which raised $25.6 billion dollars from sales of shares in its giant state owned oil monopoly. Three billion shares were sold at $8.53 a share. Aramco is valued at roughly $1.7 trillion dollars, making it the most valuable publicly traded company in the world. Saudi Arabia plans to wean their economy off an oil only base.

3) The Dollar General retailer chain is opening almost twenty stores a week, while thousands of other retail stores are expected to close this next year. So far, the retailer has opened 925 stores this year, with 1,000 opened by the end of 2020. Presently, they have 16,000 retail outlets, and estimate that three quarters of the U.S. residents live within five miles of a Dollar General store. Revenues continue to increase with sales rising 8.9% to nearly $7 billion dollars over the last three months compared to the same period last year.

4) Stock market closings for – 5 DEC 19:

Dow           27,677.79    up    28.01
Nasdaq        8,570.70    up      4.03
S&P 500       3,117.43    up      4.67

10 Year Yield:    up   at    1.80%

Oil:    up   at    $58.33

18 October 2019

1) New home construction has dropped from a twelve year high in September, although single home construction rose for a fourth straight month. This indicates the housing market remains supported by lower mortgage rates even as economy slows. Housing starts declined 9.4% last month as construction in the volatile multi-family housing segment dropped.

2) The Prime Minister of the United Kingdom announced a great new Brexit deal. The proposed exit plan goes before the U.K. parliament this Saturday, the EU (European Union) claimed the deal was a fair and balance one. Parliament must vote approval before the deal can be accepted, however, this time the Conservative party is now committed to this deal and not a ‘no-deal’ and so will campaign for a majority support.

3) The employees for the bank Goldman Sachs will receive the lowest pay in the last ten years. This is a result of software systems doing more and more of the company’s business, another example of technology displacement. The bank set aside 35% of its revenues for staff compensation and benefits this year, the lowest rate since 2009, with an average employee earning of $246,000 less than half of the $527,000 from last year.

4) Stock market closings for – 17 OCT 19:

Dow           27,025.88    up    23.90
Nasdaq        8,156.85    up    32.67
S&P 500       2,997.95    up      8.26

10 Year Yield:    up   at    1.76%

Oil:    up   at    $54.05

9 October 2019

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

10 Year Yield:    down   at    1.54%

Oil:    down   at    $52.57

30 July 2019

1) The once high flying German Deutsche Bank has run aground rapidly slashing jobs and losing a ton of money. Stock for Germany’s biggest lender is trading at a near all time low. This is a result of poor management and failing to fully clean up its crisis era balance sheet. The banks restructuring efforts have fell short coupled with countless legal black eyes that have all contributed to the bank’s financial woes.

2) The pharmaceutical companies Pfizer and Mylan have announced they are combining to create a global powerhouse in the low price drug market. Pfizer will gain most control of the company with 57% ownership, with Mylan shareholders owning the rest. Both companies lost exclusive manufacture rights from patent expirations, that were big money makers for the companies. Mylan, is the manufacturer of the emergency treatment for allergic reactions, the EpiPen. Mylan has recently been in the news for raising the price of EpiPens by 400%.

3) J.C. Penney, the 117 year old department store chain, is at risk of being de-listed from the New York Stock Exchange. To counter its downward spiral, the company has hired advisers to explore debt restructuring. Penney has $4 billion dollars in debt coming due in the next few years, while its revenues are increasingly being lost to sales on the internet and niche brands. Revenue has fallen over the last three years. The retail giant Sears has suffered similar troubles.

4) Stock market closings for – 29 JUL 19:

Dow                 27,221.35        up   28.90
Nasdaq               8,293.33   down   36.88
S&P 500              3,020.97   down     4.89

10 Year Yield:    down   at    2.06%

Oil:    up   at    $57.13

14 May 2019

1) China has countered U.S. tariffs imposed last Friday with tariffs on $60 billion dollars of U.S. imports to China. About 10 to 15% of America’s import revenues come from China, and while the trade war is high stakes and risky, it’s the only real tool America has to deal with China, because China ignores the world trade organization rulings.

2) Fears are increasing that China may not buy as many U.S. treasury notes as she has in the past, which would force America to increase the prime interest rate. There are even fears that China might not buy any bonds at all, or even start selling off bonds she now holds in retaliation for the tariffs. It’s reported that China is also buying up gold.

3) Boeing aircraft is fearful of being a target for tariff reprisals, who holds substantial orders from China. Apple, who gets 20% of its revenues from China, and Caterpillar are also facing business downturns if China places tariffs on imports of their products.

4) 13 MAY 19 Stock market closings: China’s tariffs announcement turns markets downward.

Dow               25,324.99    down    617.38
Nasdaq            7,647.02    down    269.92
S&P 500           2,811.87    down      69.53

10 Year Yield:     down   at    2.41%

Oil:     down   at    $60.97

8 March 2019

1) Family Dollar store is shutting down 400 of its stores while planning to open another 1,000 stores. Sales continue to drop as the corporation experiments on pricing-product mix to revitalize its revenues.

2) Amazon announced it is closing all of its 87 ‘pop-up’ stores. The pop-up store is actually a kiosk placed in major retail stores that allow people to try out some Amazon products and services. Amazon is exploring other strategies of expanding into the consumer market.

3) Analyst have worried that hiring would slow as the pool of unemployed people shrank, but it turns out that millions of people who had dropped out of the job market and therefore were not being counted as unemployed anymore, are returning to the job market.

4) 7 MAR 19 Stock market closings:

Dow              25,473.23      down      200.23
Nasdaq           7,421.46      down        84.46
S&P 500           2,748.93     down        22.52

10 Year Yield:     down   at    2.64%

Oil:    down   at    $56.44