1) For first time since World War II the U.S. government’s debt will nearly equal the size of the entire American economy. By the end of 2020, the amount of debt owed by the United States will be about 98% of the nation’s gross domestic product with a debt that is about three times the 2019 level. The huge surge in debt is a result of the Congress spending an additional $3 trillion dollars in emergency funding since March, a result of the economic downturn from the coronavirus crisis. This is why some members of Congress and the White House have balked at approving an additional $2 trillion dollars in spending in view of the weak economy coupled with having little promise of improving soon. Few experts believe the Congress is likely to do something to reduce the deficit in the short term, all the while unemployment remains near 10 percent. Interest rates are low, which makes it less costly for the federal government to borrow. In addition to increase emergency spending, tax revenues fell as business slowed and many people lost their jobs.
2) After a steady increase in the markets, setting new records for highs, the stock markets took a sudden nose dive. This was caused by a massive and sudden sell off of the technology sector. The tech stocks had been on a ten day winning streak then a sudden overnight change which caught everyone by surprise. The Nasdaq dropped almost 600 points while the Dow was down 800 points. Market experts are left wondering what will come next, especially with the next jobs report for August coming out.
3) The pace of rehiring is expected to slow in August, so the economy will likely add fewer jobs than in July, while workers continue to be laid off. Because of the pandemic, America lost about 22 million jobs in March and April. In May through July, about 9.3 million jobs came back, so we are still short about 12 to 13 million jobs. Part of this is a result of so many small businesses having gone bust, so it will take a long time to replace those businesses and therefore replace the jobs they had. Economic turmoil is when technology displacement is prevalent as business seek the means to survive by reducing labor cost (eliminating jobs).
4) Stock market closings for – 3 SEP 20:
Dow 28,292.73 down 807.77 Nasdaq 11,458.10 down 598.34 S&P 500 3,455.06 down 125.78
1) The stock markets continue their downward crash over worries of the conronavirus impact on economies making the week the worst week since the financial crisis. Caterpillar, a bellwether stock for global growth, slide down 3%, the worst performer among Dow stocks. Apple dropped 2.9% while Chevron and Cisco Systems are down more than 2%. Investors are worried the downward slide may continue after the conronavirus subsides, especially if China doesn’t return to its previous position, so recovery could be a long haul.
2) The sale of smartphones is collapsing in China, which is the largest market in the world. The plunged in sales is directly due to the coronavirus outbreak. Chinese companies had skidded to a halt, with the accelerated outbreak last month a result of quarantine mandates, travel restrictions and factory shutdowns. Huawei, the Chinese tech company, is being hit hard because it is the top selling smartphone in China.
3) Gold prices have been acting strangely with the reversals in the markets because of coronavirus fears. Traditionally, gold has been a ‘panic investment’ that investors flee to when there’s economic uncertainty, but this time investors are selling gold to generate cash. They are fleeing anything priced via bidding, for safer assets such as treasury bonds, which in turn is driving down bond interest rates. This indicates how worried the professional investors are about the world economic system.
4) Stock market closings for – 28 FEB 20:
Dow 25,409.36 down 357.28
Nasdaq 8,567.37 up 0.89
S&P 500 2,954.22 down 24.54
1) The threat of coronavirus spreading has caused stock markets to sharply fall over fears of the virus’ impact on the world economy. The death toll in China has risen to 81, and a fifth case has occurred in America. With China the biggest driver of global growth, the virus started in the place where it could have the biggest impact. There are worries that this virus caused market dip could spark a major correction in the markets.
2) General Motors plans to go all electric at its Detroit Hamtramck plant starting next year. GM is committing a $2.2 billion dollar investment in the factory to include $800 million dollars on tooling and projects related to trucks. The plant will be GM’s second builder of plugin models of cars. Only Tesla has sold electric cars in significant volume so far. The Hamtramck plant will employ 2,200 workers.
3) With the Federal Reserve’s bond portfolio swelling at a pace not seen since the 2010s, the Feds are faced with the tricky maneuver of turning the tap off soon. A misstep could have painful consequences, with the risk of what happens when the Feds stops increasing their balance sheet. Questions arise over what will happen to the stock markets when that liquidity spigot closes. This is part of the process called quantitative easing.
4) Stock market closings for – 27 JAN 20: The spread of coronavirus pushes markets down.
Dow 28,535.80 down 453.93 Nasdaq 9,139.31 down 175.60 S&P 500 3,243.63 down 51.84
1) The massive internet retailer Amazon has just been granted a patent for robots that drop off bunches of items on delivery routes. The robot has storage compartments where the customer comes out to the sidewalk, taps in the required security code on their smartphones that opens the door to a compartment so the person can get his package. The robot addresses the last mile or final fifty feet of package deliver. Such a robot also address the problem of porch pirates.
2) The mortgage companies seem to be reverting back to their old ways that triggered the financial crisis in 2008. This is the practice of giving large loans with small down payments to those with low FICO scores. FICO scores as low as 640 are getting mortgages of up to $2 million dollars, scores which were considered sub-prime prior to the 2008 economic near collapse.
3) The stock markets have pulled back from record high levels after the Center for Disease Control announced the first case of conronavirus in America. The highly contagious disease was discovered in a traveler coming from China. Particularly hit were stocks in casino and hotel companies, as well as airline companies and other companies involved with international travel. The Asian markets have also suffered a sudden drop which is blamed on the spreading virus.
4) Stock market closings for – 21 JAN 20:
Dow 29,196.04 down 152.06 Nasdaq 9,370.81 down 18.14 S&P 500 3,320.79 down 8.83
1) Major drug makers such as Pfizer, GlaxoSmithKline and Sanofi have plans to raise drug prices on more than 200 drugs in the United States. Nearly all of the price increases will be below 10%, with about half in the range of 4 to 6%. With soaring prescription drug prices a central issue in the presidential election, the move promises to bring the issue front and center to the American public.
2) The year’s first five days of stock markets is often an indicator of how the market will go for the year. On the first trading day of 2020, stocks jumped up, and if the next four secession are also upwards, stock traders anticipate another good year for the markets. Last year, 2019, started out the same way, rebounding from the worst December since the Great Depression.
3) OPEC’s output drop last month as several Persian Gulf producers stepped up their implementation of cutbacks. The reduced oil production is aimed at balancing global oil markets by reducing a new surplus forming. Cutbacks started in 2019, will continue in 2020 with more and deeper cuts expected for this year. Next meeting of the oil alliance is early March.
4) Stock market closings for – 2 JAN 20:
Dow 28,868.80 up 330.36 Nasdaq 9,092.19 up 119.59 S&P 500 3,257.85 up 27.07
1) Despite positive last quarters, both General Motors and Ford Motor company’s are concerned about the U.S. auto market taking a turn for the worse. Shares for the two automakers, as well as Fiat Chrysler, fell because of smaller figures for the quarter, although smaller than market analysis projected. There are also concerns of the overall impact from a slowing U.S. and international economies with the impact it would have on new car sales.
2) For the second day, the stock markets nose dived with the Dow losing more than 800 points these last two days. Fears of an economic recession cause the Dow to lose 490 points on Wednesday, with indications that manufacturing is slowing down, and even though manufacturing accounts for only 10% of the economy, investors see this as an indication that the economy is contracting soon with a possible recession in the near future.
3) With the markets in decline, there is a lot riding on the up coming job numbers this Friday. Fears of a coming recession could be reinforced with poor job numbers signaling that a recession is nearing. So far, there is little evidence of layoffs on the rise despite scattered reports that more companies are cutting jobs.
4) Stock market closings for – 2 OCT 19:
Dow 26,078.62 down 494.42 Nasdaq 7,785.25 down 123.44 S&P 500 2,887.61 down 52.64
1) The Federal Reserved voted for a quarter percent drop in the interest rate, bringing the ire of President Trump in a tweet, complaining the Feds lack the guts and vision to cut more. But the board surprised everyone by its divided vote, three of the members voted against a policy decision, while seven voted for it. This is considered an indication of how uncertain things are and just what the economic future holds. In response, the stock markets fell over the news of just a quarter percent rate reduction.
2) Some fear that parallels in the market signal the coming of another recession. These parallels include an inverted yield curve with the stock markets making new highs in July, followed by a correction in August, then a rally in early September. Additionally, growth is slowing. These same signs occurred in 2007 prior to sliding into a sever recession. All that is needed is a trigger such as the world oil supply.
3) As a result of the UAW (United Auto Workers) strike, GM (General Motors) announced 1,300 layoffs in their Oshawa plant in Canada. This is because GM plants in the US are shut down and unable to deliver needed parts and assemblies to the Canadian plant. This shows that the strike is spreading to other units of the automakers business.
4) Stock market closings for – 18 SEP 19:
Dow 27,147.08 up 36.28 Nasdaq 8,177.39 down 8.62 S&P 500 3,006.73 up 1.03
1) Netflix has a problem that could have a very major impact on its financial future. There is a debate in the movie industry, if Netflix movies should qualify for Oscars awards, that Netflix movie productions are really just television and so don’t qualify for Oscars. If works could not qualify for Oscars, then big name producers will be less inclined to produce blockbuster movies for Netflix. Netflix has been making multi-billion dollar investments for their content trying to bring high quality productions to its subscribers.
2) Household net worth has fallen by the largest amount since the 2008 Great Recession. The net worth is the measure of total assets such as homes, bank accounts and stocks minus the debts. Net worth declined 3.5% last quarter, driven in part by the poor performance of stock markets.
3) Elizabeth Warren wants to break up ‘Big Tech Companies’, specifically Amazon, Google, Facebook and Apple. She says ‘Big is bad, small is beautiful’ and is calling for major changes to the anti-trust laws.
4) 8 FEB 19 Stock market closings:
Dow 25,450.24 down 22.99 Nasdaq 7,408.14 down 13.32 S&P 500 2,743.07 down 5.86
1) Wells Fargo has had $575 billion dollars imposed on them by state investigators to resolve questionable business practices. This is in addition to $1 billion dollars in fines.
2) The lowering of births rates is raising global concerns about inability to support social welfare programs such as retirement and medical care. Countries such as France, Japan and Greece face critical problems in their future as their populations grow older with fewer new people being born.
3) All three stock market entities have experienced their first weekly gains after three straight weeks of declines.
4) 28 DEC 18 Stock market closings:
Dow 23,062.40 down 76.42 Nasdaq 6,584.52 up 5.03 S&P 500 2,485.74 down 3.09
Back with the latest episode of the EFR podcast; the first episode of the new year, Businessman Bassey along with co host James Lymon and super engineer KH (Kyle Harper), speak on economic and financial developments that occured in the first quarter of 2017.
Topics range from the economy, stock market, wall street, IPOs, companies, wages, labor, global markets, investing, people, and business talk across the economical and financial spectrum…… Check the episode below… Stay Blessed & God Bless-SB