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

14 November 2019

1) The new streaming service Disney+ has surpassed ten million sign-ups since its launch Tuesday. In response Disney’s stock is up slightly while Netflix shares are down 1%. While there were technical problems connecting at first, that didn’t prevent customers from flooding the sign up page. The initial signup is for a free seven day trial, so it’s unknown how many will continue with the pay service.

2) In October, consumer prices rose the most in seven months as the price for gasoline was higher, along with medical treatment and recreation. But in general, inflation remained low and fairly stable, with consumer price index jumping 0.4%, primary from rising cost of energy. While gas prices surged upwards 3.7% in October, it’s still less than what Americans were paying a year ago.

3) The ever expanding corporate giant Google will offer personal checking accounts next year in partnership with Citigroup Inc and a small credit union at Stanford University. To be called Cache, it is intended to follow Apple Inc. and Facebook Inc into the financial industry. Google’s strategy is to deeply partner with banks and the financial system.

4) Stock market closings for – 13 NOV 19:

Dow                   27,783.59         up    92.10
Nasdaq               8,482.10    down      3.99
S&P 500              3,094.04         up      2.20

10 Year Yield:    down   at    1.87%

Oil:    up   at    $57.38

8 November 2019

1) Bill Gates, the Microsoft co-founder, says he’s happy to pay his share of taxes, but expressed consternation over Elizabeth Warren’s proposals to tax America’s wealthy. He considers the presidential hopeful is not very open minded to consider his concerns. Warren’s wealth tax proposal is 2% annual levy on household wealth above $50 million dollars with an additional 1% tax on wealth above $1 billion dollars. She estimates this would cover 75,000 tax payers raising $2.6 to $2.75 trillion dollars over a ten years.

2) Stores are starting their Black Friday sales earlier this year, in part because the holiday shopping season is six days shorter. Retailer Target will begin online Black Friday sale on Thanksgiving morning, with stores opening their doors at 5 p.m. and remaining open through 1 a.m. the next day. On Black Friday, their stores open at 7 a.m.. Other retailers such as Walmart started their holiday shopping season last October.

3) Xerox is offering HP a takeover bid of $22 per share. The bid consists of 77% cash and 23% stock which would be $17 in cash and 0.137 Xerox shares for each HP share. If accepted, the deal would generate about $2 billion dollars in cost synergies with HP stock holders owning 48% of the company. HP has announced job cuts between 7,000 and 9,000 by the end of fiscal 2022. HP is worth $29 billion dollars and is more than three times the size of Xerox in terms of market cap.

4) Stock market closings for – 7 NOV 19:

Dow                 27,674.80    up    182.24
Nasdaq              8,434.52    up      23.89
S&P 500             3,085.18    up        8.40

10 Year Yield:    up   at    1.93%

Oil:    up   at    $57.07

5 November 2019

1) Saudi Arabia has started its long anticipated IPO (Initial Public Offering) of Aramco, the Saudi state run oil giant. A sliver of the firm will be offered on a local stock exchange with the intent of raising billions of dollars for the kingdom. Initially, the firm’s shares will be traded on Riyadh’s Tadawul stock exchange, but later shares will be offered on foreign exchanges. Aramco is valued at $2 trillion dollars, with first and second quarter income of $46.8 billion dollars.

2) The high end luxury retailer Barneys of New York fell into bankruptcy, parts sold off as scrape to end an era. The retailer introduced such names as Armani, Alaia, Comme des Garcons, Louboutin and Zegna. The name Barneys was taken control of by Authentic Brands Group, a name which is part of the New York culture since 1923, and will license it to other companies like Saks Fifth Avenue. Next week, the company’s inventory at its five stores and two warehouse locations will be sold.

3) Predictions for 2020 investors include a recession, questions of interest rate cuts, market volatility, impact of the up coming election cycle, Brexit, earnings growth, low unemployment, mild inflation and wage growth. Each of these uncertainties can play a part on the ultimate outcome for the 2020 economy with interactions of them making the future economy uncertain for investors.

4) Stock market closings for – 4 NOV 19:

Dow           27,462.11    up    114.75
Nasdaq        8,433.20    up      46.80
S&P 500       3,078.27    up      11.36

10 Year Yield:    up   at    1.79%

Oil:    up   at    $56.45

9 October 2019

1) The pizza giant Domino’s had been the darling of Wall Street, with its soaring sales, but its growth has gone stale. The company’s reported revenue and profit missed Wall Street’s forecast with its stock sagging. The same-store sales grew just 2.4% compared with last years 6.3%. Domino’s operates in 85 countries with 10,000 stores outside of the U.S., which generate half of its revenues.

2) Boeing aircraft has got its first 737 MAX order since the crashes forced grounding of all 737 MAX aircraft. Boeing’s net order tally, including cancellations, was a negative 84 for the first nine months of 2019. In addition, Southwest Airlines’ pilots union has filed a law suit against Boeing for damages caused by the prolonged grounding of its 737 MAX, claiming loss of pay to its pilot from canceled flights and seeing $115 million dollars in compensation.

3) Duke University professor Campbell Harvey, the father of the yield curve and pioneer of the economic forecasting model, says to prepare for a recession. He based his prediction on inverted curves, which happen when short term Treasury yields are higher than those with longer duration, which his research indicates the coming of a recession.

4) Stock market closings for – 8 OCT 19:

Dow                     26,164.04    down    313.98
Nasdaq                  7,823.78    down    132.52
S&P 500                 2,893.06    down      45.73

10 Year Yield:    down   at    1.54%

Oil:    down   at    $52.57

21 August 2019

1) The Dollar has hit its highest value for 2019, as measured by the Bloomberg Dollar Index. This is when President Trump wants the Dollar value lowered to position America better in international trade. The President claims that the Dollar is so strong now, that it is hurting other parts of the world. He is even suggesting that the U.S. should actually weaken the Dollar, although this could turn the trade conflict into a currency war. Presently, the U.S. economy is doing much better than global peers, so it is unlikely to deteriorate faster than other countries and therefore is unlikely for the Dollar to weaken on its own accord.

2) The millennials are turning away from the large elaborate houses of the baby boomers in the sun belt. Houses built before 2012 are being sold at a deep discount, sometimes as much as a half, so owners are not making a profit. Large homes are receiving 12% to 45% fewer views on the internet and are selling up to 73% slower.

3) America’s steel giant, U.S. Steel announced layoffs of hundreds of its workers in Michigan. The layoffs are expected to be temporary because of a halt in production at the Michigan facility, while also idling two blast furnaces. The reason for production cutbacks is lower steel prices and softening demand. The layoffs are anticipated to last about six months. U.S. Steel’s stock has dropped 73% since March of 2018.

4) Stock market closings for – 20 AUG 19:

Dow              25,962.44    down    173.35
Nasdaq           7,948.56    down      54.25
S&P 500          2,900.51    down      23.14

10 Year Yield:    down   at    1.56%

Oil:    down   at    $56.12

9 August 2019

1) Mexico has become America’s largest trading partner as a result of the U.S. – China trade war. For the first half of 2019, trade between America and Mexico was $309 billion dollars worth of goods, just over 15% of all U.S. trade. In comparison, trade with Canada was $306 billion dollars and China at $271 billion dollars. Trade with Mexico has been steadily rising for several decades, while trade with Canada has historically been high it’s always been flat.

2) A battle may be developing between Amazon and FedEx over handling packages, because of surging e-commerce shipments. With their ground delivery deal ending, FedEx is deepening its pullback from Amazon. The ending of two delivery contracts with Amazon means FedEx will have to seek out new major customers for lost sales while Amazon will now depend more on the U.S. Postal Service and UPS. FedEx is seeking to serve major e-commerce companies such as WalMart as the one-day delivery service for e-commerce heats up.

3) Lift, the internet based ride sharing rival to Uber may become profitable sooner than anyone had predicted. It’s growth is accelerating faster than anticipated, which clears the path to profitability. Some are speculating that 2019 might be Lift’s ‘peak loss’ year with losses being less than 2018. Wall Street is acting positive over the news with Lift’s stock rising from an overnight boost of 4%.

4) Stock market closings for – 9 AUG 19:

Dow                26,378.19    up    371.12
Nasdaq              8,039.16    up    176.33
S&P 500             2,938.09    up      54.11

10 Year Yield:    up   at    1.72%

Oil:    up   at    $52.81