14 July 2020

The restaurant chains were in trouble before the pandemic struck, which is now driving many out of business. Big well known names such as Steak ‘n Shake, which has closed 50 of its restaurants permanently and is trying to sell off the remaining 300 as franchises. Fuddruckers, a subsidiary of Luby’s, is closing 17 restaurants to leave 40, while Red Robin is closing up. The wine and burger Sinburger is closing 18 to leave just 8 restaurants. Wendy’s 400 franchises are in trouble, as well as 1,200 Pizza Huts, both icons of eating out. Although not as well know, Roy Rogers is closing.

2) Wall Street is bracing for some bad numbers from the big banks this week, from huge drops in their profits. The mass unemployment, waves of bankruptcies and the pandemic crisis coupled with near zero interest rates is leaving banks like JP Morgan Chase, Bank of America, Wells Fargo and Citigroup with an expected drop in profits of 50%. The banks are expecting significant loans to go bust and so are setting aside cash to weather the eventuality. Banks around the world could ultimately suffer a credit loss of trillions of dollars. Banks make money off the spread between interest charged on loans and that paid on deposits, but with the near zero interest rate, that spread is very narrow leaving less profits.

3) The tech giant Google intends to invest $10 billion dollars in India over the next five to seven years to grow the company’s business in a fast growing market. Google plans to partner up with other companies in India, as well as investing in its infrastructure, operation and ecosystem and startup scene. The company will focus on artificial intelligence in health, education and agriculture. They will open digital services for locals so they can use their own languages such as Hindi, Tamil and Punjabi. India has a population of more than 1 billion people, with half of them not yet online. The more people on the internet, the more customers Google has for its services.

4) Stock market closings for – 13 JUL 20:

Dow 26,085.80 up 10.50
Nasdaq 10,390.84 down 226.60
S&P 500 3,155.22 down 29.82

10 Year Yield: up at 0.64%

Oil: down at $39.25

1 June 2020

1) For the last few years, a number of retailers have been downsizing by closing a number of their stores across the country, something that the coronavirus pandemic has greatly accelerated. But the restaurant chains have also been downsizing as well, closing branches all across the county. Such popular names as Jack in the Box, Luby’s, Pizza Hut, Ruby Tuesday, Steak’nShake , Subway, Burger King, TGI Fridays and Applebee’s just to name a few, who are closing restaurants across the country. Each have been struggling for the last several years. This is another sign that the American consumer market is in the process of fundamentally changing.

2) The U.S. consumer spending plunged in April by the most on record because of the nation wide lock down. Spending fell 13.6% from the prior month, making for the sharpest drop in six decades. A rise in income temporarily masks the fact that people are in a fragile economic position, because the rise was a result of the one time stimulus checks. The virus crisis halted all but the most essential purchases, with economists expecting it will take a year or more before spending recovers.

3) It’s anticipated that the national debt will increase to more than 100% of the national GDP (Gross Domestic Product) by the end of the year. This will exceed the record set after World War II. The $25 trillion dollar national debt equates to $76,665 dollars per citizen or $203,712 dollars per taxpayer. The federal deficit is over $1.9 trillion dollars through April, and is expected to rise to $3.7 trillion dollars by the end of September, which is the end of the fiscal year. Such debt could draw investors to demand higher interest rates, as the federal government’s position becomes increasingly precarious. This is like an individual piling on credit card debt without consideration for the short or long term consequences to their financial position. For America, those consequences could be deep depression coupled with inflation of the dollar leaving money far less valuable than today.

4) Stock market closings for – 29 MAY 20:

Dow 25,383.11 down 17.53
Nasdaq 9,489.87 up 120.88
S&P 500 3,044.31 up 14.58

10 Year Yield: down at 0.65%

Oil: up at $35.32