14 January 2020

1) Ford Motor Company’s sales in China has declined for the third straight year, falling by 26.1%. The company has been trying to revive sales in China after the decline started in 2017 and plans to introduce thirty new models in the next three years, with a third being electric models. General Motors has also experienced a decline in sales of 15% this last year.

2) One of the largest suppliers of parts to Boeing’s 737 MAX, Spirit AeroSystems, is laying off 2,800 workers. Based in Wichita Kansas, will eliminate 20% of its workforce. Smaller layoffs will happen at its facilities in Tulsa and McAlester, with half its annual sales from parts for the 737 MAX. Since last February, Spirit’s stock has fell from a high of $100 a share to $71.50 on news of the layoffs.

3) Expectations are that the U.S. will remove China from its list of currency manipulators two days before the signing of initial U.S. – China trade agreement. Part of the agreement is that both nations will not devalue its currency to gain a competitive advantages of exports. Labeling China a currency manipulator was viewed largely as a symbolic action.

4) Stock market closings for – 13 JAN 20: Stocks are up 495% in the past decade.

Dow             28,907.05    up    83.28
Nasdaq          9,273.93    up    95.07
S&P 500         3,288.13    up    22.78

10 Year Yield:    up   at    1.85%

Oil:    down   at    $58.12

10 January 2020

1) HP’s board has rejected Xerox’s $33 billion dollar takeover bid, for the same reason as Xerox’s previous offer, that the proposal significantly undervalues HP. Xerox first moved to acquire HP in November, but was rejected because HP stock holders would lose much of their value in the company. HP is a 2015 spinoff of giant Hewlett-Packard who has a market value of $300 billion dollars that dwarfs Xerox’s value of 7.7 billion dollars.

2) Mack Trucks, the manufacturer of large commercial trucks, announced plans to layoff 305 employees, which is about 13% of their payroll. After two years of high volumes of production, marked demand has dropped so the company must adapt to the lower demand. There are expectations of the truck market in America being down 30% this next year.

3) The American consumer continues to shun the traditional big department stores. Despite the monster holiday shopping season, America’s biggest department stores still lost money. This is a trend that has been in progress for several years as typified by Sears’ decline. Department stores such as JCPenny, Kohl’s and Macy’s continue to decline with dropping sales and store closings. Consumers are now going to big box stores and the internet commerce to save money, signaling a fundamental change in American consumerism.

4) Stock market closings for – 9 SEP 20:

Dow              28,956.90    up    211.81
Nasdaq           9,203.43    up      74.18
S&P 500          3,274.70    up      21.65

10 Year Yield:    down   at    1.86%

Oil:    down   at    $59.59

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

BLACK FRIDAY SALES WAS A HIT, BRICK & MORTAR STILL TOOK A HIT!!!!!!!!!!!!!!!

By: Economic & Finance Report

The analytics are in, Black Friday 2019 did its numbers. Black Friday did over $20 billion in revenue, over $7 billion in online and digital sales alone, from latest info projected (Forbes.com). (1)

The revenue numbers surpassed last year (2018), from Black Friday sales. This was anticipated of course, but maybe not by the figures that came in of $20 billion.

Though with strong numbers, brick and mortars shops and stores will still be closing unfortunately, to focus more of their retail sales online because of what many speculate as being the “Amazon Effect”. The “Amazon Effect” has forced brick and mortar stores and outlets to realign their focus toward online sales and marketing. A game changer to indicate the least. -SB

(1) Content: https://www.forbes.com › sites › johnkoetsier › 2019/11/30 › record-black-f… (Forbes)

12 November 2019

1) The KKR & Co. is offering a deal to take the drugstore giant Walgreens Boots Alliance private in what could be the biggest ever leveraged buyout. The New York private equity firm is proposing to buy out shareholders of Walgreens Boots, but there are no details on the proposed transaction. Walgreens Boots has a market value of $53 billion dollars and debt of $16.8 billion dollars. A buyout would give Walgreens Boots time to adapt to a fast changing retail landscape.

2) Some U.S. oil and natural gas production companies are planning to pump less petroleum thereby reducing production for this next year. Several producers, including EQT Corp and Chesapeake Energy Corp have announced their intention to alsoreduce production thereby reining in spending and forecasting slower growth, while other fracking companies like Diamondback Energy Inc., Cimarex Energy Co. and Callon Petroleum Co. plan to hold next year’s spending the same.

3) The Chinese e-commerce giant Alibaba has shattered their single day sales from last year. Alibaba had $33.9 billion dollars in sales, which eclipsed last year’s numbers of $30.8 billion dollars in sales for 24 hours. Alibaba’s annual shopping extravaganza is equivalent to Black Friday or Cyber Monday in the US. The eleventh of November was originally created as a student holiday in China to celebrate single people, but has been transformed into a massive day of sales on Alibaba.

4) Stock market closings for – 11 NOV 19:

Dow               27,691.49         up     10.25
Nasdaq            8,464.28    down    11.03
S&P 500           3,087.01    down       6.07

10 Year Yield:    up   at    1.94%

Oil:    down   at    $56.63

ALIBABA CLOBBERS EARNINGS, MORE GROWTH EXPECTED!!!!!!!!!!!!!!!!!!!!!

Image Photo Credit: Asia.Nikkei.com

By: Economic & Finance Report

Alibaba Holdings LTD (BABA) surpassed earnings expectations. The Asian e-commerce giant, stated that their retail business and their cloud business, were huge components in their earnings viability, while also beating estimates.

Their retail commerce business (BABA) spurned over $14 billion USD in revenue, while thier (BABA) cloud business did over $1 billion USD in revenue. At the end of the Friday Oct. 31, 2019 business day, BABA’s stock was up over 3%. Not a bad day for a major Chinese e-commerce business..SB

22 August 2019

1) Retailers Target and Lowe’s posted second quarter sales higher than anticipated by analyst. Target’s ‘same store sales’ is up by 3.4% compared to an expected growth of 2.9%. This news boosted Target’s stock by 16%. Lowe’s also reported better than expected second quarter earning results which pushed its stock up 10%. These big box store reports help qual fears of an approaching recession.

2) The chip maker Intel announced two new chip products for the AI (Artificial Intelligence) market, processors as part of its Nervana Neural Network Processor. This chips will accelerate training and inferences drawn from AI models. This will allow AI systems to gain inferences and insights more readily. They will help AI platforms address the crush of data being generated and ensure AI enterprises make efficient use of their data, by processing it where it’s collected.

3) Boeing, the aircraft manufacturer, is incurring additional cost from its grounded 737 MAX, by hiring hundreds of temporary workers to help maintain its growing fleet of 737 MAXs that Boeing is storing until the FAA restores its certification. These temporary workers have skills such as avionics technicians, aircraft mechanics, airframe and power plant mechanics and aircraft electricians. Once the aircraft is re-certified, these technicians will be needed to upgrade the software and prepare aircraft for delivery.

4) Stock market closings for – 21 AUG 19:

Dow            26,202.73    up    240.29
Nasdaq         8,020.21    up      71.65
S&P 500        2,924.43    up       23.92

10 Year Yield:    up   at    1.58%

Oil:    up   at    $55.85

17 July 2019

1) Managing Director Christine Lagarde of the IMF (International Monetary Fund) announced her resignation to become the next head of the European Central Bank. Her resignation from the global lender will be effective the twelfth of September. Lagarde’s second five year term as Managing Director of the IMF was not due to end until July 2021.

2) The pizza giant Domino’s Pizza is seeing its business eroded by food-delivery startups. Second quarter financial reports shows Domino’s sales fell short of analyst estimates causing its stock to drop as much as 7%. Services like GrubHub, DorrDash and EuberEats are cutting into Domino’s food-delivery business in recent years, a result of aggressive promotions and discounts, with Domino’s countering by speeding up its delivery time and expanding number of locations.

3) The electronic news magazine ‘60 Minutes’ had an interview this last Sunday with venture capitalist Kai-Fu Lee about the future of artificial intelligence and China’s efforts to dominate the emerging AI markets. Mr. Lee estimates that in the next fifteen to twenty-five years about 40% of the jobs will disappear from technology displacement. This is in keeping with the recent Osborne Report forecasting that as much as 47% of the jobs will disappear in the next 20 years. An example is the Navy has mandated that new ship designs must use automation to reduce crew sizes by 20%.

4) Stock market closings for – 16 JUL 19:

Dow               27,335.63    down    23.53
Nasdaq            8,222.80    down    35.39
S&P 500           3,004.04    down    10.26

10 Year Yield:    up   at    2.12%

Oil:    down   at    $57.48

13 June 2019

1) Demand for oil is shrinking as the trade war causes the world economies to retract. China’s economy is slowing faster than experts had expected, with the EU and US also not growing in oil demand. Fears that oil prices will drop below $40 a barrel fuel fears of a continual global slowing of economies. The U.S. boom in domestic oil production using fracking is dependent on high oil prices, and with American petroleum stocks at an all time high, it may not be feasible to continue fracking.

2) With mortgage rates dropping to their lowest level in nearly two years, there has been a surge in refinancing applications. In just one week, applications increased 26.8%, which is 41% greater than a year ago. Refinance mortgages are the most rate-sensitive because when low, people rush to refinance while they can get the lower rates.

3) For the second straight month, Boeing aircraft reports no new aircraft sales. The drop isn’t just because of the 737 MAX grounding, but the company already has a massive 5,000 aircraft backorder to fill, so many customers don’t need to place additional orders. With the airline Jet Airways halting operations, their pending sales contracts have been canceled, which totaled 71 aircraft.

4) Stock market closings for- 12 JUN 19:

Dow           26,004.83    down    43.68
Nasdaq        7,792.72 down    29.85 
S&P 500          2,879.84    down      5.88 

10 Year Yield:   down   at    2.13% 

Oil:    down   at    $51.08

SIRIUS XM TO BUY PANDORA

By: Economic & Finance Report

Sirius XM will be making a big acquisition in purchasing Pandora for a reported $3.5 billion dollars.

The deal seems to make sense since the growing competition in streaming services, such as Tidal, Apple Music, Spotify, and now YouTube Music, which  are all culminating new listeners and subscribership.

Sirius XM has a subscriber base of approx. 36 million and Pandora has a listener base of approx. 70 million and of those 70 million, 6 million are paid premium subscribers.

The buyout of Pandora will make Sirius XM the largest audio service network globally. -SB