13 January 2021

1) Reports are that Biden will unveil plans to spend trillions of dollars in pandemic and economic relief money this next week. Biden is introducing several members of his economic team, after data shows the U.S. economy has lost jobs for the first time in eight months as a resurgent COVID-19 pandemic has again shuttered restaurants and other businesses. Biden is calling for raising the minimum wage to $15, and for sending out $2,000 in direct cash payments. Biden claims that economic research confirms that with today’s crisis, especially with such low interest rates, taking immediate action, even with deficit financing , is going to help the economy. Biden also say they are looking into other economic relief actions that can be taken unilaterally, including extending a pause on repayments of federal student loans.

2) US naval aircraft carrier groups still rule the seas, but both Russia and China have plans to change that as they strive to expand their blue water navies, by developing new weapons that could threaten America’s dominance. For instance, it is reported that China launched two ballistic missiles that hit a moving target ship in the South China Sea thousands of miles from their launch sites. The Russian navy conducted its third test launch of it’s hypersonic anti-ship cruise missile that was launched from a frigate. The missile reached a speed of Mach 8 before hitting a target more than 200 miles away. These tests are the latest indication that American aircraft carriers, long viewed as kings of the seas, may soon face a real threat to their existence.

3) Iran has told South Korea not to politicize the seizure of their vessel, while demanding the release of $7 billion dollars in funds frozen amid U.S. sanctions. Additionally, Iran has denied all allegations that the seizing of South Korea’s tanker and its 20-member crew amounted to hostage taking, claiming instead it was Seoul who was holding Iran’s funds hostage. The vessel was seized based on an Iranian court order for ‘environmental pollution’, however, the ship’s Busan-based operator, said there was nothing to indicate that before the seizure of the vessel that Iranian authorities were probing possible violations of environmental rules.

4) Stock market closings for – 12 JAN 21:

Dow 31,068.69 up by 60.00
Nasdaq 13,072.43 up by 36.00
S&P 500 3,801.19 up by 1.58

10 Year Yield: up at 1.14%

Oil: up at $53.38

3 December 2020

1) China has landed its Xinhua robotic spacecraft on the moon to spend two days gathering rocks and dirt from the lunar surface, then return those moon samples back to Earth. This is the third successful non-crewed lunar landing made by China, the first being the 2013 Chang’e-3 and its Yutu rover. Then in 2019, Chang’e-4 landed on the moon’s far side, the first spacecraft from Earth to ever do that. China will be the third nation to bring lunar samples back to earth, with first the Apollo moon landings then the Soviet Union’s Luna robotic landers. After China’s spacecraft entered orbit around the moon, Chang’e-5 was split into two vehicles, the lander went down onto the surface then other an orbiter that awaits its return. Moon samples will then be transferred to the orbiter for the journey back to Earth.

2) Further increasing the tensions in the Asian Pacific arena, while also showing its increasing militancy, Russia deploys missiles to Pacific islands, which are claimed by Japan. The deployed missiles are state-of-the-art air defense missile system designed to bring down flying aircraft. The S-300V4 air defense missile systems have entered combat duty on the Kuril Islands, adding punch to the shorter range Tor M2 missile systems deployed there earlier. This is the latest move in a continuous Russian military buildup on the islands, which has included stationing advanced fighter jets and anti-ship missiles there. The Soviet Union took the islands in the final days of World War II, and the dispute over ownership has kept the countries from signing a peace treaty ending their hostilities.

3) Negotiations for a new coronavirus stimulus package is in progress but a deal remains unclear. Plans are for Treasury Secretary Steven Mnuchin and House Speaker Nancy Pelosi to meet, to discuss both the effort to avert a government shutdown next week and the long-stalled stimulus package. It is reported that Senate Majority Leader Mitch McConnell will accept a plan that is just under $1 trillion dollars, which removes a major roadblock, but this bill would not include another $1,200 check for individuals.

4) Stock market closings for – 2 DEC 20:
Dow 29,883.79 up by 59.87
Nasdaq 12,349.37 down by 5.74
S&P 500 3,669.01 up by 6.56

10 Year Yield: up at 0.95%

Oil: up at $44.96

25 November 2020

1) Apple Inc is trying to limit the impact of a bill aimed at fighting child labor in China, having had meetings with government representatives in an attempt to water down the bill. Under the Uyghur Forced Labor Prevention Act, U.S. companies are required to ensure that their products are not made by forced labor in the region of Xinjiang. Many American companies, including Apple, have manufacturing sites that would be effected by this legislation, which would obligate public companies to report to the U.S. Securities and Exchange Commission and could lead to prosecutions over violations. A report by an Australian government body published in March claims that around 1,000-2,000 workers from the Chinese region were involved in Apple’s camera production.

2) Royal Dutch Shell has closed its Convent refinery in Louisiana. Convent is far from obsolete, indeed it is fairly big by U.S. standards and sophisticated. While Convent’s 700 workers are out of a job, the Convent replacement complex in northeast China is starting up. China has at least four projects underway in the country, totaling 1.2 million barrels a day of crude-processing capacity. This is just one example of a seismic shift in the global refining industry as demand for plastics and fuels grows in China and the rest of Asia. America has been the top refiner since the start of the oil age in the mid-nineteenth century, but China will dethrone the U.S. as early as next year. Oil exporters are selling more crude to Asia and less to long-standing customers in North America and Europe. China’s refiners are becoming a growing force in international markets for gasoline, diesel and other fuels.

3) The United States has officially exited the Open Skies Treaty on Sunday, six months after the Trump administration signaled it would. The reason is repeated Russian Federation violations of the treaty designed to allow unarmed aerial surveillance flights by the treaty participants in Europe, Russia, and the U.S. The treaty was negotiated in 1992 and entered into in 2002, and now has 34 participant states after the U.S. exit. Russia has consistently acted as if free to turn its obligations on and off at will by unlawfully denying or restricting Open Skies observation flights whenever it desires. For more than 20 years, Open Skies has been one of the most wide-ranging international arms control efforts to promote openness and transparency in military forces and activities. But Russia has denied flights within 6.2 miles of the Georgia-Russia border, and denying a previously approved flight over a major Russian military exercise. America’s European allies, however, value the treaty as it gives them the ability to collect aerial reconnaissance information, when lacking sophisticated satellite capabilities, that they would not have access to outside of the treaty.

4) Stock market closings for – 24 NOV 20:

Dow 30,046.24 up by 454.97
Nasdaq 12,036.78 up by 156.15
S&P 500 3,635.41 up by 57.82

10 Year Yield: up at 0.88%

Oil: up at $44.81

13 November 2020

1) Joe Biden will immediately face several major problems and hard decisions upon assuming the Presidency. 1) Containment of the coronavirus that has killed close to a quarter-million Americans and shows no signs of abating. 2) Addressing the nation’s bitter political divide as the divide deepens with no apparent end. 3) Regrowing a devastated economy with millions out of work and no real relief in sight. 4) The threat of growing civil unrest and open conflict as people are pushed further out of the social economic system by technology. 5) China’s growing aggressiveness, both domestically and internationally, coupled with China’s goal to be the dominate world power by 2050, making China a tender box for world conflict. 6) Russia and Iran’s trouble making in world activities, especially in the middle east, also could mean serious military conflict problems for America and the West.

2) In September, NTT announced its plan to buy out the remaining shares in NTT Docomo, in a potentially record-breaking deal. NTT currently holds 66 percent of NTT Docomo’s shares, and its chief executive argues the buy would enhance competitiveness and growth. But 28 Japanese telecom companies, including rivals SoftBank Corp and KDDI, have sent a joint letter to the communications minister protesting the purchase. Their fears of making Docomo a wholly owned company will create a powerful force that dominates the market, so they’re challenging the $40 billion dollar NTT takeover bid. The takeover of the country’s biggest mobile carrier would prevent fair competition, therefore the opposition wants to set up measures to protect an environment of fair competition and ensure compliance and implementation. With the sale, NTT may be able to push down prices quickly, forcing competitors to follow suit.

3) China’s repression of its peoples has taken another step forward with Hong Kong’s opposition lawmakers expected to formally tender resignations in protest of the oustings of four fellow supporters of pro-democracy. Their dramatic departure removes dissent in Hong Kong.
The Chinese parliament passed a resolution allowing Hong Kong authorities to expel legislators deemed a threat to national security or for not holding allegiance to Hong Kong, and without having to go through the courts. The fate of the opposition in Hong Kong has been in doubt since the government postponed September’s legislative elections by a year, in a move which critics have said was aimed at killing the pro-democracy camp’s momentum.

4) Stock market closings for – 12 NOV 20:
Dow 29,080.17 down by 317.46
Nasdaq 11,709.59 down by 76.84
S&P 500 3,537.01 down by 35.65
10 Year Yield: down at 0.88%
Oil: down at $40.92

8 June 2020

1) The oil cartel OPEC+ and Russia address extending record oil production cuts with the intent to force noncompliant members to also comply with the curbs in production. The cartel had previously agreed to a 9.7 million barrels per day cut during May and June in an effort to prop up oil prices which collapsed because of the coronavirus crisis. Those cuts are due to tapper to 7.7 million barrels from July to December. But sources say that Saudi Arabia and Russia have agreed to extend the deeper cuts until the end of July and possibly until August. The cost of oil is a prime factor in determining the health of a country’s economy, and therefore the world economy.

2) A surprise to everyone was the U.S. jobless rate dropped in May as hiring rebounded. This signals that the economy is picking up faster than expected from the damage of the coronavirus pandemic. The jobless rate fell from 14.7% to 13.3% in May, while economist had expected the rate to rise to 19%. Canada is also experiencing a reversal in joblessness too. This is with a possible resurgence of Covid-19 with a second wave of infections, and a resulting second crash of the economy and businesses. However, the unemployment rate is the highest since the Great Depression.

3) After the federal government made assurances on March 23, that it would make borrowing easier for American corporations, the food service giant Sysco Corp sold $4 billion dollars of debt. But then not long after, the company laid off one third of its workforce, or about 20,000 people, while their stock holders continued to receive dividends. As the virus spread in April and May, the federal promise spurred sale of corporate bonds with borrowing by top rated companies for a record $1.1 trillion dollars for the year, twice the previous year. Companies like Sysco, Toyota , Omnicom Group and Cinemark Holdings borrowed billions of dollars then fired workers. This calls into question of how the promise to purchase corporate debt helped preserve American jobs. While the feds have yet to buy a single corporate bond, their promise threw the bond marked into a frenzy to buy bonds.

4) Stock market closings for – 5 JUN 20: Job report sent markets skyrocketing.

Dow 27,110.98 up 829.16
Nasdaq 9,814.08 up 198.27
S&P 500 3,193.93 up 81.58

10 Year Yield: up at 0.90%

Oil: up at $38.97$2,531.81

1 May 2020

1) The numbers are in for the weekly jobless claims, with another 3.84 million people losing their jobs. This brings the total to over 30 million in the past six weeks. Expectations were for about 3 million, so the news was not upsetting. The claims peaked at 6.87 million so officials feel the worst is over with declines each week since, but still this has been the worst employment crisis in U.S. history. While some states are starting to bring their economies back on line, much of the key American infrastructure remains on lockdown. Predictions are for the second quarter to decline worse than anything America has ever seen. The unemployment rate is anticipated to be about 15.1%.

2) The crash of the oil market continues across the globe, with the American shale or fracking oil industry being hit the hardest. The shale oil industry had been fueled by lots of easy money, almost unlimited borrowing allowing companies to dramatically ramp up production, despite what the market demand was. Many companies had been in trouble before the coronavirus hit, and that combined with the Russian and Saudi Arabia oil dispute, oil prices have dropped by three-quarters since early January. There is $43 billion dollars of energy junk bond defaults coming in 2020 with hundreds of oil companies facing bankruptcy. The problem isn’t just American, with Shell Oil Co. announcing a cut in their dividends for the first time since World War II. Finally, the pandemic appears to be making fundamental changes to the oil market and consumption so the oil market may never fully recover.

3) The virus pandemic has adversely affected more than just traditional businesses, large and small. Dirty money from the illegal drug business is piling up in Los Angeles because the money laundering systems has also been put on hold by ‘closing orders’ of non-essential businesses. The businesses used by the drug trade to launder their money have been forced to close up, thereby ceasing operations leaving the drug dealers with growing stacks of cash that cant be used until cleaned.

4) Stock market closings for – 30 APR 20:

Dow 24,345.72 down 288.14
Nasdaq 8,889.55 down 25.16
S&P 500 2,912.43 down 27.08

10 Year Yield: down at 0.62%

Oil: up at $18.64

27 April 2020

1) People are tantalized by the incredibly low oil prices, thinking only of lower gas prices. But economically, there is much more to oil and its low price. First, there is the destruction of America’s shale oil (fracking) industry, which has made us independent of foreign oil. There are fears that if oil doesn’t pick up, then the world could see a major shift in global power. The economies of several nations are very dependent on oil sales, the revenue being the bulk of their GDP. For instance, Saudi Arabia’s oil revenues account for 60 percent of its GDP (Gross Domestic Product), two-thirds of its budget, and nearly three-quarters of its exports. For Russia, one-third of its GDP is petroleum, half its budget, and two-thirds of its exports. The turbulent Middle East has states with greater dependence on oil: including Iran, Iraq, Qatar, and Kuwait. For America, oil accounts for only 8% of our GDP. The coronavirus pandemic has drastically reduce oil consumption world wide, and if it’s slow in returning to pre-pandemic levels, some countries could find themselves in serious financial and geopolitical trouble, with their influence waning and other nations displacing them in the world pecking order. It’s anyone guess how things could settle out and in whose favor.

2) Amazon has been using data about independent sellers on its platform to develop competing products, which their stated policies forbid. Such practices would give the online retailer tremendous advantage in competing against similar products, but is using proprietary information. Information includes total sales, vendor cost for Amazon’s marketing and shipping, and how much Amazon made on each sale, and other non-public information.

3) President Trump stated he would veto an emergency loan for the U.S. Postal Service if the USPS didn’t immediately raise its prices for package delivery. The President considers package delivery prices need to be four times the present charges. He has been critical of the USPS for years, considering the postal service problems are a result of mismanagement.

4) Stock market closings for – 24 APR 20:

Dow 23,775.27 up 260.01
Nasdaq 8,634.52 up 139.77
S&P 500 2,836.74 up 38.94

10 Year Yield: down at 0.60%

Oil: up at $17.18

10 April 2020

1) Jerome H. Powell, the Federal Reserve Chair, said the U.S. economy is in an emergency, which is deteriorating with alarming speed. His remark comes after unveiling over $2 trillion dollars in new loans to keep the economy afloat, a result of the coronavirus shutdown. America is moving from the lowest unemployment in fifty years to a very high unemployment in just weeks. Claims for unemployment aid is now up to 17 million and still climbing as more businesses fight to survive. It is expected the U.S. economy may shrink by more than 30% between April and the end of June. The Fed will soon begin purchasing up to $750 billion dollars in corporate loans from big businesses who have a low investment grade, in the hopes of preventing their bankruptcy bringing further damage to the American economy. The Feds are making a wide range of loans to various size businesses which it doesn’t expect to get paid for. No one is making estimates on how extensive this will ultimately be to the American economy.

2) Although Saudi Arabia and Russia have reached an agreement on limiting oil production, it’s not yet known just how large those reductions are going to be, so oil prices had turned negative while awaiting details of OPEC+ cuts in oil production. The general consensus is each nation will cut production by 10 million barrels a day, but with world oil consumption way down because of the pandemic, it’s not certain if the OPEC+ cuts will have much effect, especially for U.S. domestic oil production (shale oil).

3) The Treasury Secretary Steven Mnuchin considers it may be possible for the U.S. to be open and back to business next month, considering it’s just a matter of medical considerations. The administration is doing everything possible for business to resume as soon as the ‘all clear’ is sounded and they have the necessary liquidity to operate. The president is forming a second taskforce charged with addressing the economic devastation which the virus has wrought and take measure to resume economic activity as soon as possible.

4) Stock market closings for – 9 APR 20:

Dow 23,719.37 up 285.80
Nasdaq 8,153.58 up 62.67
S&P 500 2,789.82 up 39.84

10 Year Yield: down at 0.73%

Oil: down at $23.19

6 April 2020

1) Across the world, truckers are having a difficult time in their role of delivering food stocks to the people. In America, truck drivers are finding it more difficult to operate, unable to find places to eat, with restaurants shut down and their rigs too big to go to the drive-thru lanes. They are unable to find places to sleep, shower or even clean toilet facilities. Nevertheless, the food supply chain continues to struggle to get the necessary food to the people.

2) With the government announcement that we are now in a recession, questions abound how long will it last? For the ‘08 recession, it took more than a decade to recover. One major obstacle facing a recovery, from a near total shutdown of the economy, is the small businesses. Half the businesses in the American economy are classed as small businesses, and half of those have less than fifteen days cash reserves, which means a significant number of American businesses will not survive the virus shutdown. This will leave millions of workers scrambling to find work and therefore will greatly hinder a recovery.

3) Oil prices have rallied from news that the Saudi Arabia – Russia price war may be coming to an end with agreements to cut back oil production by ten million barrels a day. Oil is the keystone to economic vitality with oil prices needing to be above about $40 a barrel for shale oil to be profitable so America can remain oil independent.

4) Stock market closings for – 3 APR 20:

Dow 21,052.53 down 360.91
Nasdaq 7,373.08 down 114.23
S&P 500 2,488.65 down 38.25

10 Year Yield: down at 0.59%

Oil: up at $29.00

3 April 2020

1) Unemployment claims have jumped twice the previous week’s numbers, with 6.6 million Americans filing for benefits. This brings the last two weeks total of new unemployed to 10 million. The speed and scale of job losses are unprecedented. The record for loses in a month had been 695,000 in 1982. The coronavirus has wiped out more jobs in two weeks than were lost in the worst months of the last recession. Companies based on white-collar workers, have been able to keep their people working with work at home, but as revenues dry up, it’s questionable how long before they too will be forced to start layoffs. The growing number of laid off workers unable to pay their bills could well lead to a cascade of further layoffs and business failures.

2) While the price of oil has always had an effect on the equities, the recent plunged has had a more profound effect and therefore causing the roller-coaster volatility of the markets. This dramatized how very central oil is to the entire modern world. Stabilizing the oil prices would greatly help stabilizing the markets, and therefore the whole world economic system. Central to this is for Russia and Saudi Arabia to end their price war and resume limiting production. But central to this is Russia’s desire to damage American domestic oil production by destroying the shale oil companies, which would reduced American’s influence in the world especially in the middle east where Russia is very active.

3) Already wracked by fiscal problems from decline of the milk product markets, dairymen now suffer a further decrease in their market as a result of the coronavirus crisis. This is a result of restaurants, schools and other food service outlets reduced to stopping operations and therefore not needing milk products. The dairy industry is still producing, but doesn’t have anyplace to sell their milk, so the industry is asking the government to increase its purchases of dry milk, butter and cheese.

4) Stock market closings for – 2 APR 20:

Dow 21,413.44 up 469.93
Nasdaq 7,487.31 up 126.73
S&P 500 2,526.90 up 56.40

10 Year Yield: down at 0.63%

Oil: up at $24.90