15 July 2019

1) It appears the oil boom in the Permian basins is slowing down as producers dial back growth plans in face of numerous problems. These problems include pipeline limits, reduced flow from wells drilled too close together, low natural gas prices and high land cost. Most serious is that the shale-well oil production is falling off at such a high rate (as much as 70% in first year) that producers are forced to keep spending additional money on new wells in order to maintain production output.

2) Imports from China to U.S. are down by 31% as a result of the trade war. Trade has weakened since the trade war started, with tariffs and counter tariffs and with suppliers looking for alternative countries to fill their orders. This has put pressure on the Chinese government to shore up economic growth and avoid politically dangerous job losses. Nevertheless, Chinese leaders are confident they can survive the tariff fight.

3) The Argyle diamond mine in Western Australia, world’s largest diamond mine, is closing at the end of the next year as diamond supples are exhausted. The mine is famed for the coveted pink and red diamonds it produced, rather than the quantity of lower quality gems it has produced for almost forty years. A glut of cheap and small diamonds has eroded profits worldwide with other diamond mines scheduled to also close operations.

4) Stock market closings for – 12 JUL 19: All three markets closed with record setting highs. Also Standard & Poors broke the 3,000 mark.

Dow               27,332.03    up    243.95
Nasdaq            8,244.14    up     48.10
S&P 500           3,013.77    up     13.86

10 Year Yield:    down   at    2.11%

Oil:    up   at    $60.39

4 July 2019

1) Estimates for National Employment Report forecast 140,000 new jobs, but private employers added just 102,000. This compares to 41,000 new jobs for the pervious month. This report comes ahead of the U.S. Labor Departments’s more comprehensive non-farm payrolls which includes both public and private sector employment.

2) Renown former Chrysler CEO Lee Iacocca, the man who put the Mustang in Ford’s lineup, has died at 94. Mr. Iacocca is also noted for creating the minivan and Chrysler K-cars in his 32 year career in Detroit. He’s best noted for his turn around of Chrysler corporation when in 1979 the company was floundering with $5 billion dollar debt turning out gas guzzler cars that people didn’t want. To save the company, he secured $1.5 billion dollar loan guarantees from the Federal Government which kept the company afloat until new fuel efficient cars could be produced.

3) The U.S. trade deficient surges to a five month high in May as imports of goods increased with businesses building up stock supplies to avoid tariffs. The trade deficit increased 8.4% to $55.5 billion dollars. The widening trade deficit adds to weak housing, manufacturing, business investment and slow consumer spending which may spell a lowering of the American economy. The trade deficit may be further aggravated with the suspension of Boeing’s 737 MAX deliveries.

4) Stock market closings for- 3 JUL 19: Stocks surged up on news of new U.S.- China talks.

Dow              26,966.00    up     179.32
Nasdaq            8,170.23    up       61.14
S&P 500           2,995.82    up       22.81

10 Year Yield:    down   at    1.95%

Oil:     up   at    $57.40

18 June 2019

1) Traditional retail stores, who have been suffering the ravages of e-commerce, are worried about another coming blow. The new tariffs on Chinese imports, which President Trump threatens to impost, could have a disastrous effect on retailers such as Walmart and Target. These next round of tariffs will be specific to consumer goods, which these retailers sell, and will start to force price increases and so most likely will result in decline of sales revenue.

2) While President Trump has been pressing for a cut in the interest rate, the U.S. Federal Reserve is expected to defer and leave the interest rates unchanged. However, the board may possibly lay the groundwork for a rate cut later this year. While the economic outlook has become less clear, there still isn’t sufficient indication of a slow down to warrant cutting interest rates yet.

3) The Pfizer pharmaceutical company is buying Array BioPharma for $10.6 billion dollars for a price 62% above the company’s closing price this last Friday. Pfizer will gain medical technology for new drugs to treat cancer that limit or suppress the effects of chemotherapy. The drugs target a mutation that’s found across many tumor types in those patients who carry the mutation. Two of Array BioPharma drugs have been FDA approved for use in advanced melanoma. There are other drugs which are in the development pipeline.

4) Stock market closings for- 17 JUN 19:

Dow               26,112.53    up    22.92
Nasdaq             7,845.02    up    48.37
S&P 500            2,889.67    up      2.69

10 Year Yield:    down   at    2.09%

Oil:    down   at    $51.90

5 June 2019

1) The tech giants Apple, Google, Facebook and Amazon are facing antitrust troubles. The government is stepping up scrutiny of these big four with possible new rules, regulations and law suits. The investigative efforts will be split between the Justice Department and Federal Trade Commission driven by mounting criticism over political bias, disinformation and privacy breaches. This could spell years of troubles and law suits and possible breakup of the companies.

2) The threat of tariffs on Mexican imports has American oil refiners worried, since Mexico is the number two source of foreign oil to the United States. American produced oil is a light oil which is a poor match for Gulf Coast refining facilities, while the Mexican oil is a heavy oil that when blended with the America optimizes the refinery’s output.

3) The Medicaid system is still suffering from the Great recession, so there are fears than another recession could be devastating for the system. This is at a time when state spending on Medicaid is still high with no signs of subsiding. In a recession, payrolls decrease from people unemployed or underemployed, so contributions are down. This means less buildup of reserve funds needed for the future, and a second recession so soon, could seriously deplete those reserves quicker, leaving the future of the system in doubt.

4) Stock market closings for 4 June 2019: Jump in Dow comes from Fed signals flexibility on rates.

Dow               25,332.18    up    512.40
Nasdaq             7,527.12    up    194.10
S&P 500            2,803.27    up      58.82

10 Year Yield:    up   at    2.12%

Oil:    down   at    $52.95

16 May 2019

1) Markets continue to rise as President Trump delays the actual implementation of auto tariffs. Reportedly, the tariffs are to be delayed for up to six months. Other news helped push the markets up, such as Boeing expects to have its 737 MAX software fix released soon.

2) Monet’s ‘Meules’ is now the most expensive painting ever sold at auction. The painting sold for $110.7 million dollars after an eight minute bidding war at Sotheby’s in New York. This is a crushing return on investment, which was bought for $2.56 million dollars in 1986, giving a return on investment of 4,300%.

3) Prior to the new tariffs, China’s economy was slowing down, showing the fragility of the world’s second largest economy. China’s industrial output, retail sales and investment have slowed more than economist expected. With the faltering of credit coupled with slowing consumption at home, combining with a weaker global economy translates into China running out of steady growth right when it’s most needed.

4) 15 MAY 19 Stock market closings:

Dow                  25,648.02    up    115.97
Nasdaq               7,822.15    up      87.65
S&P 500              2,850.96    up      16.55

10 Year Yield:    down   at    2.38%

Oil:    up   at    $62.13

15 May 2019

1) Tensions increase in U.S. – China trade war with increasing fears that the war could be long and painful. In response to China’s new tariffs on $60 billion dollars President Trump is threatening to impose additional tariffs on $300 billion dollars worth of imports. While just a couple of weeks ago, it seemed that China and America were close to reaching an agreement, now it seems both sides have dug in their heels.

2) One military contractor is reportedly making 9,400% profit on a replacement part, a half-inch drive pin. This part should have cost $46 but the government is being charged $4,361 each. Legislation is being considered that would give contracting officers the power to demand data that would back-up billings.

3) Tensions are increasing in the middle east with Saudi Arabia claims of a terrorist drone attacks on pipeline pumping stations. The reports caused a surged in oil prices with fears of possible oil shortages if attacks on Saudi’s oil production continue.

4) 14 MAY 19 Stock market closings:

Dow            25,532.05    up    207.06
Nasdaq         7,734.49    up      87.47
S&P 500        2,834.41    up      22.54

10 Year Yield:    up   at    2.42%

Oil:    down   at    $61.32

13 May 2019

1) Trump’s tariffs went into effect today, at first driving the markets down, but then they recovered to all close high. Trumps statement that talks with China will continue pushed the markets up, while also leaving open the possibility that the tariffs may be soon removed. The tariffs went from 10% to 25% on $200 billion dollars of Chinese imports.

2) With the new tariffs on China, there are concerns for the U.S. economy and that the threat of an increased trade war between China and U.S. will cause a drop in both China’s and American’s GDP (Gross Domestic Product). Declines in GDP is not expected to be limited to America and China, but the global GDP could also suffer too.

3) The apparent contraction of consumerism continues with more than 6,200 stores to close this year. For the last couple of years, the retail industry has been rocked by the number of store closures. The list of retailers include such big names as Payless ShoeSource, Family Dollar, Gap, Victoria’s Secret, Office Depot and OfficeMax, Kmart, CVS, Pier 1 Imports, Bed and Bath, Lowe’s, JC Penny’s and even Walmart.

4) 10 MAY 19 Stock market closings:

Dow               25,942.37    up    114.01
Nasdaq           7,916.94    up        6.35
S&P 500          2,881.40    up      10.68

10 Year Yield:    unchanged   at    2.46%

Oil:    up   at    $61.71

9 May 2019

1) An experiment in four cities is giving four hundred mothers $4,000 dollars per year to test the effects that an infusion of money has on children. The study hopes to answer questions, for children in low income families, about the development of a child’s well being, how their brains work and their behavior.

2) China has promised retaliation if promised tariffs are imposed after mid-night this Thursday. President Trump is tweeting optimism over the coming deal with China, in contrast to China’s threats to retaliate for imposing any tariffs, leaving markets jittery over what may happen.

3) The Public Service Loan Forgiveness program is for relieving people of massive student loan obligations in exchange for working in professions of public service such as teaching, nursing or public-interest law. However the program is in disarray with more than 73,000 people having applied for debt forgiveness. The applicants are frustrated by the poorly written legislation, mismanagement by contractors to process application for forgiveness, and general apathy.

4) 8 MAY 19 Stock market closings:

Dow            25,967.33         up      2.24
Nasdaq         7,943.32    down    20.44
S&P 500        2,879.42    down      4.63

10 Year Yield:    up   at    2.48%

Oil:    down   at    $61.99

8 May 2019

1) Tomato prices could raise 40% from U.S. withdrawing from trade pact with Mexico, called the Tomato Suspension Agreement which expires this Tuesday. This will trigger duties of more than 17% on tomatoes coming from Mexico. Tomatoes from Mexico are selling below domestic production cost.

2) The Dow Jones slid down 648 points, before rising to 473 points on closing, over news that America will impose higher tariffs on Chinese goods late this week. The Nasdaq and S&P 500 also experienced similar significant drops over fears of a full blown trade war with a down turn in global growth and a drop in China’s GDP.

3) Analyst say that a breakdown in the semiconductor field is a warning sign that a trade war with China is coming. This industry is more sensitive to U.S. – Chinese trade tensions. Watch the Philadelphia Semiconductors SOX index, for if the index falls below about the 1,430 level, that indicates trouble.

4) 7 MAY 19 Stock market closings:

Dow             25,965.09    down    473.39
Nasdaq         7,963.76    down    159.53
S&P 500        2,884.05    down      48.42

10 Year Yield:    down   at    2.45%

Oil:    up   at    $61.44

30 April 2019

1) Reports are that China and the U.S. are nearing the conclusion of talks to overhaul their economic relationships. Talks are nearing a point where they will produce a deal or end with no agreement. These talks have been in progress for months and have included tariffs from both sides, and in the process have upset world markets. The biggest obstacle is agreeing on how to enforce an agreement.

2) This March, U.S. consumer spending has increased the most in nine years, driven by purchases of motor vehicles. However, fears of inflation remain mute, giving support to a stronger economic growth in the second quarter.

3) Corporate economists consider there will be slower U.S. growth in the future. They fear the tariffs recently imposed are a drag on growth. Still, they consider the economy will continue to expand, just not at a fast rate.

4) 29 APR 19 Stock market closings:

 Dow             26,554.39    up    11.06
Nasdaq           8,161.85    up    15.45
S&P 500          2,943.03    up      3.15

10 Year Yield:    up   at    2.54%

Oil:    up   at    $63.57