29 July 2020

1) The fast food mega-giant McDonald’s is reporting a bigger than expected drop in global restaurant sales across the world. This is a result of the pandemic restricting sales of their drive thru and delivery operations, and in some cases shutting restaurants down completely. With second quarter sales down by 30%, McDonald’s is facing a bumpy and expensive recovery. The franchise chain has 39,000 restaurants worldwide, of which 96% are now open, verses 75% at the start of the second quarter. Store sales were down 39% in April but by June was down only 12%. Net income is down by 68% for $483.8 million dollars. McDonald’s is permanently closing 200 locations in the U.S. amid those losses, more than half located in Walmart stores.

2) The Federal Reserve has announced that its lending programs will be extended until the end of the year. This indicates the feds don’t think the U.S. economy is weathering the pandemic storm very well and needs continued help. The program lends to small and medium sized businesses and was due to expire at the end of September. Continuing the program will provide a critical backstop to help the economy recover. This Thursday will bring the first look at the second quarter gross domestic product, which is the broadest measure of the economy, but it’s expected to show an ailing economy.

3) For the second time, the renowned gun maker Remington Arms is filing for bankruptcy. This is the second time in two years that Remington has filed for Chapter 11 bankruptcy protection. Chronic low sales is blamed for Remington’s decline, despite the overall increase in sales of guns in America because of the pandemic. One by one, American gun manufactures have succumb to imports. Remington reports assets of $100 million dollars compared to $500 million dollars in liabilities.

4) Stock market closings for – 28 JUL 20:

Dow 26,379.28 down 205.49
Nasdaq 10,402.09 down 134.17
S&P 500 3,218.44 down 20.97

10 Year Yield: down at 0.58%

Oil: down at $41.07

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