12 January 2021

1) The cryptocurrency Bitcoin plummets the most since March as a stronger dollar and investor nerves strip off nearly $140 billion in the cryptocurrency market cap, renewing fears that Bitcoin may be a bubble waiting to burst. But Bitcoin is still up roughly 89% over the past month. Other cryptocurrency coins, such as XRP and Litecoin, have shed about 18% each. Bitcoin hit a record high last week above $41,000, driven by the combination a weaker dollar, economic optimism, and a wave of bullish sentiment toward cryptocurrencies as big-name investors and investment banks touted a potential for huge gains this year, with the stronger dollar and higher bond yields triggering a plunge in Bitcoin and gold prices.

2) Trump has been permanently barred from the platform Twitter, resulting in$5 billion dollars in losses in market value, with Twitter stock dropping after the barring of the President. Twitter stated they permanently suspended the account due to the risk of further incitement of violence. Trump, who had about 88 million followers, generated enormous publicity for the platform with his controversial and incendiary tweets over the past six years. As a result, Twitter’s stock fell as much as 12% on Monday thus the decline of $5 billion dollars from Twitter’s market capitalization. Investors are worried that the Trump ban will erode interest in the platform and lead to boycotts among those who see the decision as politically motivated and a way to silence a major conservative voice.

3) Fears are growing that a bigger stimulus may be seen as the ‘peak of this bubble’ resulting in a market correction or worst. Some think that with the Democrats set to take control of both the House and Senate, perhaps President-elect Joe Biden will be less likely to spook markets with tax ambitions. Biden has promised $2,000 stimulus checks if the Senate turned blue, so now the question is what will happen? For millions of Americans, it’s been a painful waiting game already, they having subsisted with minimum money since losing their jobs from the pandemic. Joe Biden made the promise that if Jon Ossoff and Raphael Warnock turned the senate blue that would end the block in Washington and allow the $2,000 stimulus checks to immediately go out the door to people who are in real trouble.

4) Stock market closings for – 11 JAN 21:

Dow 31,008.69 down by 89.28
Nasdaq 13,036.43 down by 165.54
S&P 500 3,799.61 down by 25.07

10 Year Yield: up at 1.13%

Oil: down at $52.18

6 November 2020

1) This year’s elections are revealing some interesting things about the new young voters and the society they want. Voters are backing legalized drugs, higher wages and voting restrictions. In Oregon, they have eliminated all criminal penalties for possession of hard drugs. Four other states legalized recreational marijuana. Voters continue to support higher wages with minimum wage settings in states, with Florida raising their minimum to $15 an hour. Abortion encountered more restrictions on the state level. Several states adopted measures, including constitutional amendments, to limit voting rights to U.S. citizens only.

2) The White House task force is warning that new cases of Covid-19 are increasing ‘exponentially’ despite President Trump’s claims that the pandemic would vanish on November 4. Rising case numbers, hospitalizations, and deaths nationwide are causing the task force to sound dire warnings. Recommendations are 1) Do not gather without a mask with individuals living outside of your household, 2) Always wear a mask in public places and, 3) Stop gatherings beyond immediate household until number of cases and positive tests have decrease significantly. The task force is warning states and universities/colleges of the risks during the up coming holiday season and the increase risk of spreading of the virus. States with the highest number of new cases per 100,000 are North Dakota followed by South Dakota, Wisconsin, Montana, Wyoming, Iowa, Alaska, Nebraska, Utah, and Idaho. Vermont remains the state with the lowest number of new cases.

3) Renowned investor Warren Buffett’s (Berkshire Hathaway CEO) favorite market indicator nears record high, signaling stocks are overvalued and riskier than ever for investing. His indicator takes the total market capitalization of a country’s stocks and divides it by quarterly GDP in order to compare the stock market’s valuation to the size of the economy. Currently that’s 168% which signals a record disconnect between asset prices and the economy, and a warning to investors to exercise a great deal of caution towards equities as an asset class. The stock market has never been as expensive as it is today, and not only does this mean that forward returns will likely be exceptionally poor, it means that downside risk has also never been greater than it is today. This indicator also soared before the dot-com bubble burst and surged in the months leading up to the 2008 financial crisis.

4) Stock market closings for – 5 NOV 20:

Dow 28,390.18 up by 542.52
Nasdaq 11,890.93 up by 300.15
S&P 500 3,510.45 up by 67.01

10 Year Yield: up at 0.78%

Oil: down at $38.51

9 September 2020

1) It’s not just American businesses who are feeling the effects of the Covid-19 crisis from reduced sales, American charities are also suffering a major drop in revenues for the same reason. With the recession straining household budgets, people are less able to contribute resulting in charities losing billions of dollars since this spring. Furthermore, traditional money raising methods such a concerts, festivals and galas have been canceled or scaled back to a fraction of their previous size. Many charities are now working to make the holiday season productive to make up shortfalls in revenue.

2) The repressiveness of the Hong Kong police was further exposed when police chased down and tackled a 12 year old girl in a shopping mall. Video footage of several police officers pinning the hapless girl down on the floor went viral worldwide with a public outcry over the excess use of force against political dissenters. The incident touched off angry shouts from onlookers. The police tactics are being criticized as an indiscriminate treatment of children who are not taking part in protest. The girl complained she felt targeted because of her age, that being young has become a crime in Hong Kong, further increasing concerns that the regime is targeting their young for repression.

3) The markets continue their decline after a five week winning streak as investors begin to worry about stretched valuations. The decline is being lead by the technology stocks, which has met a heavy decline for the tech-heavy Nasdaq. Remarks by President Donald Trump to decouple the U.S. economy from China further added to the market’s jitters. The high flying technology company Tesla has suffered it worst one day loss since March with an 18% drop in the price of its stock.

4) Stock market closings for – 8 SEP 20:

Dow 27,500.89 down 632.42
Nasdaq 10,847.69 down 465.44
S&P 500 3,331.84 down 95.12

10 Year Yield: down at 0.68%

Oil: oil down $36.62

28 Auguest 2020

1) The decay of the worlds airline industry is reaching out past the airline companies themselves, with jet engine maker Rolls-Royce announcing a $7 billion dollar lost for the first half of 2020. Rolls-Royce gets paid by the hours their engines are flown on airliners, and with the massive drop in air travel from the pandemic, the company’s revenues have drastically dropped leaving its survival in doubt. The company is being forced to sell assets to meet its cash needs, so they are reducing eleven of their locations to just 6, with the loss of 9,000 jobs. Stock dropped 9% on the news of reorganization which was already down 66% since the start of the virus crisis.

2) Not all of the retail industry is bleak news, with Abercombie & Fitch outperforming expectations in the second quarter. While the apparel company did lose ground in the last quarter, it performed better than analyst expected, with sales down by 17%, nevertheless their earnings per share made remarkable gains over last year. This is a result of aggressive costs reductions earlier in the quarter when the company slashed expenses by $200 million dollars by reducing salary expenditures and skipping dividends. Success in their e-commerce operations has also pushed up the revenues and promises to add more as people go to online for more of their shopping.

3) Another small indication that manufacturing is returning to America is Roche Holding AG plans to move its glucose testing strips manufacturing plant from Pueto Rico, where it has operated for about 40 years. The company is streamlining its operations by combining the plant with its other existing facilities. The move will cost 200 jobs in Peuto Rico, which has a number of other drug and medical device manufacturing plants.

4) Stock market closings for – 27 AUG 20:

Dow 8,492.27 up 160.35
Nasdaq 11,625.34 down 39.72
S&P 500 3,484.55 up 5.82

10 Year Yield: up at 0.75%

Oil: down at $42.96

2 July 2020

1) The airline industry is one of the hardest hit segments of the economy from the pandemic, with an estimated 36% drop in traffic this year. But the International Air Transport Association is warning that it could worsen with a 53% drop if boarder curbs on emerging market countries and the U.S. remain in place. The U.S. – EU (European Union) air travel market generates $29 billion dollars a year is threaten by the ban on non essential flights from the U.S. as the EU attempts to avoid an resurgence of the virus. Air travel was down over 90% for April and May, with little prospects for improvement in the near future, leaving the future of air carriers in doubt too.

2) The maker of electric automobiles Tesla has become the world’s most valuable automaker, surpassing Toyota’s for the first time on record. Tesla’s valuation is roughly $206.5 billion dollars compared with Toyota’s valuation of about $202 billion dollars. This underscores the vast investor enthusiasm for the automaker, which has yet to turn a profit on an annual basis. While it’s valuation exceeds Toyota, its car production of 103,000 cars lags far behind Toyota’s production of 2.4 million vehicles. The valuation comes from the stock in the company, with investors piling money in since there aren’t any other electric vehicles investments available, with Tesla stock soaring to $1,135 per share.

3) Electricity bills are set to surge this summer because of millions of Americans sheltering in place. This added demand will mean higher electricity costs for months to come. This will mean an additional $30 to $40 per month on electric bills in cities like New York and Philadelphia. Increases are anticipated to be highest for the northeast area of the country, decreasing when going westward. This comes when people’s finances are already stretched tight because of the coronavirus crisis.

4) Stock market closings for – 1 JUL 20:

Dow 25,734.97 down 77.91
Nasdaq 10,154.63 up 95.86
S&P 500 3,115.86 up 15.57

10 Year Yield: up at 0.68%

Oil: down at $39.71

24 April 2020

1) The American unemployed continue to climb with an additional 4.4 million for last week. This brings the five week total of more than 26 million workers now unemployed in America, or about 16% of the labor force. Nearly one in six workers have lost their jobs in the last few weeks. But because of lags in the reporting system, these numbers don’t fully show the extent of the problem. With people needing money to pay rents, mortgage, buy food and pay utilities, state governments are facing increasing pressure to retract the ‘shelter at home’ orders and forced closing of businesses, despite dangers of virus flare-ups. Experts warn such moves could undo all the containment that’s been accomplished at the economic cost of the last five weeks. To make things worst, layoffs are expected to continue, that we have not reached the unemployed plateau yet. State, county and city workers may form the next wave of layoffs as tax revenues needed to pay salaries plunge from the pandemic.

2) The clothing retailer Gap, has warned that its existing cash reserves may not be enough to continue operations, something that mirrors the predicament of so many American businesses, especially small businesses. The company says it must take further actions to find liquidity over the next twelve months, including job cuts and new debt financing. The chain has stopped paying rent for its stores, thereby amassing an additional debt of $115 million dollars. Its stock has fallen nearly 60% this year.

3) The coronavirus pandemic is spawning another economic consequence- lawsuits! Carnival Corp. is facing suits from several passengers who claimed they weren’t warned of the high risk from virus onboard ships. Wells Fargo, Bank of America, JP Morgan Chase and US Bancorp are being sued by small businesses who missed out on coronavirus rescue loans. Even universities are threaten with lawsuits for reimbursements of tuition, fees and housing. Judging from past disasters, it’s expected that more lawsuits will emerge in waves, as people seek someone to blame for their misfortunes while opportunistic attorneys capitalize on the crisis.

4) Stock market closings for – 23 APR 20:

Dow 23,515.26 up 39.44
Nasdaq 8,494.75 down 0.63
S&P 500 2,797.80 down 1.51

10 Year Yield: down at 0.61%

Oil: up at $16.72

14 February 2020

1) The furniture retailer Wayfair is reducing its workforce by 3% or 500 jobs. The online furniture retailer has more than 17,000 employees globally. The stock for the company has dropped more than 24% in the last twelve months. Wayfair has yet to post a profit and has been criticized for its high costs to run its business. Shipping items like sofas and coffee tables can be expensive, even more so where there’s returns.

2) Newspaper publisher conglomerate McClatchy has filed for bankruptcy. Owner of banner newspapers such as Miami Herald, Kansas City Star, Star-Telegram, News & Observer and Charlotte Observer, a total of thirty newspapers has seen its revenue slide downward for the last six years as readership of newspapers continues to decline, migrating to newer technologies for their news.

3) The U.S. national debt continues to increase at an ever increasing rate. The debt, adjusted for inflation, of 1900-1904 was $65.37 billion dollars. The debt after World War I (1919) was $329.06 billion dollars, a result of paying for the war. Then debt started dropping down to $319.35 billion dollars and by the 1929 stock market crash was down to $253.44 billion dollars, the start of the great depression. By the start of World War II, 1940, it was at $788.68 billion dollars, but at the end of the war (1945) skyrocketed to $3.69 trillion dollars, slowly drifting down to $533.19 billion dollars by 1975. But after that, it started growing again until today its now at $22.72 trillion dollars, 348 times the debt at the start of the twentieth century.

4) Stock market closings for – 13 FEB 20:

Dow 29,423.31 down 128.11
Nasdaq 9,711.97 down 13.99
S&P 500 3,373.94 down 5.51

10 Year Yield: down at 1 .62%

Oil: down at $51.52

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 December 2019

1) Celadon, a truckload carrier and American trucking giant, is slated to declare bankruptcy as early as December the 11 th. This may possibly be the largest truckload bankruptcy in history. Already, fuel cards for truck drivers are getting turned off, leaving truckers stranded in the field unable to get home without using their own money. As many as 3,200 truck drivers may find themselves stranded in addition to being without jobs. In the first half of 2019, about 640 trucking companies went bankrupt, triple the number from last year as freight volumes decline for 11 straight months. Celadon’s stock has gone from $20 a share down to 41 cents.

2) The Federal Government’s liquidity problem hasn’t gone away yet, even with hundreds of billions of dollars in new liquidity created out of thin air. The Feds will not know if there is enough money to cover repos, the short term loaning of money from bank to bank to cover short term cash shortages. If there is insufficient liquidity, then there’s the danger of a ‘lock up’ of American’s financial system.

3) Yes Bank Ltd. is expected to reject an offer of $1.2 billion dollars, more than half its planned $2 billion dollar capital raising. Instead, the company is turning to institutional investors to make up the shortfall. The bank would prefer to have institutions rather than individual investors in their fund raising. Yes Bank needs new investors in order to replenish its capital, which is now down to regulatory minimum as a result of bad loans.

4) Stock market closings for – 9 DEC 19:

Dow           27,909.60    down     105.46
Nasdaq        8,621.83    down       34.70
S&P 500       3,135.96    down         9.95

10 Year Yield:    down   at    1.83%

Oil:    down   at    $58.87

22 November 2019

1) After HP rejected Xerox’s offer of $22 per share, Xerox is now threatening to go hostile with its $33.5 billion dollar buyout if HP does not agree to a friendly discussion before November the 25 th. Goldman Sachs & Co. set a $14 target price , the median price target on HP stock by 15 analysts is $20. HP had rejected Xerox first offer considering the combined companies would be saddled with outsized debt, and therefore not in the best interest of the shareholders.

2) The world economy is predicted to expand just 2.9% next year. The global economy is stuck in a rut which it wont exit unless governments revolutionize policies and how they invest, rather than just hope for a cyclical upswing. The biggest concern is that the deterioration of the outlook continues unabated, reflecting unaddressed structural changes. The risk of further escalation of world tensions is a serious concern.

3) General Motors and Fiat Chrysler are embroiled in a law suit with GM alleging that fiat Chrysler got an unfair business advantage by bribing officials of the United Auto Workers union. The suit alleges racketeering by paying millions in bribes to get concessions and gain advantages in three labor agreements with the UAW union. Details of the racketeering have been exposed in a federal probe of corruption in the union which resulted in multiple arrests starting in 2017.

4) Stock market closings for – 21 NOV 19:

Dow             27,766.29    down    54.80
Nasdaq          8,506.21    down    20.52
S&P 500         3,103.54    down      4.92

10 Year Yield:    up   at    1.77%

Oil:    unchanged   at    $57.09