17 September 2020

1) The Federal Reserve announced it is keeping its key policy rate unchanged and it intended to keep interest rates near zero for a least the next three years. This is a time period that is much longer than analysts had expected and reflects the concern for near future economic growth. The Feds will continue to purchase additional assets, principally government and corporate bonds, to support its monetary stance. Their goal is to achieve a maximum employment while keeping inflation at 2% over the long term. The prime interest rate will remain between 0% and 0.25% until at least the end of 2023. Their actions essentially acknowledge they were a bit behind the curve with their forecast on the economy.

2) Fox News is beginning a round of layoffs, the hair and makeup department being particularly hard hit. None of the network’s on-air talent is being let go, but now only the news anchors will receive hair and makeup services, while their guess will not. This is, in part, because since the pandemic more and more of interviews are being done remotely. The job cuts are expected to affect less than 3% of the overall staff, with the intent to streamline operations. TV news services are shifting from traditional TV broadcast to on-demand outlets streaming video services. Fox News is the most watched cable news network with 3.28 million viewers, that’s more than CNN and MSNBC combined. A time of economic stress causes changes to the economic environment, which opens the way for new technologies to emerge that reduce labor cost.

3) As hurricane Sally continues its journey into the interior of America, the next question on people’s minds is the ‘dollar amount for damages?’, a question that follows every hurricane which makes landfall on the continental United States. Sally dumped heavy rains and has brought historic flooding to the Gulf Coast, leaving much of Alabama and Florida coast lands under water. There were forecast of some areas receiving over three feet of rain, but as the storm system travels north and east, inundating land with water that runs off into rivers, more flooding is feared down river from the runoff. The flooding is a result of Sally moving so slow, slower than the average person walks, turning heavy rains into heavy flooding.

4) Stock market closings for – 16 SEP 20:

Dow 28,032.38 up 36.78
Nasdaq 11,050.47 down 139.86
S&P 500 3,385.49 up 15.71

10 Year Yield: up at 0.69%

Oil: up at $40.18

16 September 2020

1) A survey by Photonics and Harris Insights and Analytic, a market research company, has found that 35% of Americans would like to avoid traditional in-store shopping, another indication of how American consumerism is fundamentally changing. The traditional in-store sales are becoming less attractive to customers who are now less likely to browse. Retailing is responding by investing in new technologies and creating jobs to meet e-commerce. Now 37% of the fashion retailers are selling more through social media.

2) The aquatic-life theme park SeaWorld is laying off nearly 1,900 furloughed workers because of low attendance from the pandemic. These layoffs include 450 food service attendants, 270 park operation hosts, 121 performers and 18 senior trainers. SeaWorld furloughed 95% of its staff back in March, but long term success of the company has forced less optimistic forecast for the economic recovery time wise.

3) In the last six months, about 100,000 restaurants have had to close permanently as independently owned business struggle to make ends meet during the virus crisis. There are one in six restaurants across America that have closed in just a half a year. Another 40% of owners say it is unlikely their restaurant will still be in business six months from now. Presently, outdoor dining has allows many restaurants to maintain a sustainable revenue stream, but with winter approaching, much of this opportunity will disappear. Coronavirus restrictions limit the in-dinning to as little as 30% normal capacity, which means a drastic cut in sales and revenue to the point that many restaurants are unable to support themselves.

4) Stock market closings for – 15 SEP 20:

Dow 27,995.60 up 2.27
Nasdaq 11,190.32 up 133.67
S&P 500 3,401.20 up 17.66

10 Year Yield: up at 0.68%

Oil: down at $38.51

16 April 2020

1) With many of the big box stores under siege from store closings and bankruptcies, the U.S. retail sales has suffered a record drop in March. In turn, factory outputs have declined by the most since 1946, as part of the coronavirus economic contraction in the first quarter. The drop is the sharpest rate in decades despite the measures taken to prop up the economy. People are now making comparisons to the Great Depression of 1930’s, considering this recession will be as deep if not deeper than that depression. People are losing jobs by the millions, and one question is how many of those jobs will return and how many will be taken by technology displacement. Last month, retail sales plunged 8.7%, the biggest decline since 1992 when government began taking numbers. Restaurants and bars are included in the retail decline with a drop of 26.6% last month, although grocery and health care rose. Consumer spending has dropped sharply with forecast of a 41% decline for second quarter. Consumer spending accounts for more than two thirds of the U.S. economic activity.

2) The price of oil has fallen below $20 per barrel because of predictions of a record slump in world demand. In April, global oil demand is expected to fall by 29 million barrels a day from last year. This is oil demand levels that was last seen in 1995. The U.S. had been oil independent for several years now, because of its domestic shale oil production, but for this oil to be profitable to extract, oil prices must be above $40 a barrel. With oil prices forecast to be low for the foreseeable future, the shale oil industry is in dire straights.

3) Time when companies are under stress, such as during a recession, provides impudence for them to reorganize and streamline their operations. By adapting to a new environment through restructuring of a company, they are able to reduce operating cost, thereby being better able to survive. Recession brings layoffs and furloughs, so companies seek to get work done with fewer people, usually by using new technologies. Consequently, those jobs are gone, never to return, when the economy returns to health.

4) Stock market closings for – 15 APR 20:

Dow 23,504.35 down 445.41
Nasdaq 8,393.18 down 122.56
S&P 500 2,783.36 down 62.70

10 Year Yield: down at 0.64%

Oil: down at $20.15

27 March 2020

1) The $2 trillion dollar coronavirus relief bill has been passed and Treasury Secretary Steven Mnuchin said the people should receive cash payments within three weeks. The IRS has been tasked with distributing the monies, but the agency is hobbled by obsolete technologies such as 1960’s era computers, limited staff and a small budget. So there are questions if the agency can get the job done in a timely manner, let alone in three weeks. Experts say its more like a matter of months rather than weeks for Americans to receive their check.

2) Almost 3.3 million Americans have applied for unemployment benefits this last week, more than quadruple the previous record set in 1982. This is a result of the wide spread economic shutdown from the coronavirus pandemic. This rate of layoffs is expected to accelerate as the U.S. economy sinks into a recession with the collapse of revenues for a wide range of businesses. Economist predict the nation’s unemployment rate could approach 13% by May.

3) Gold has traditionally been a panic investment which people and nations buy to protect the value of their money. The worldwide panic over the coronavirus coupled with a flood of stimulus by central banks has ignited demand for gold to store wealth. But the gold market is running into difficulties in buying. Stored in high security vaults, government mandated shut downs have left access iffy. Also, refiners of gold have been forced to close because of the virus. Transporting gold is done via airlines, but the sharp drop in air service has also made transport of the metal difficult. All these factors have put a squeeze on gold futures.

4) Stock market closings for – 26 MAR 20:

Dow 22,552.17 up 1351.62
Nasdaq 7,797.54 up 413.24
S&P 500 2,630.07 up 154.51

10 Year Yield: down at 0.81%

Oil: down at $23.18

5 March 2020

1) The newest supercomputer called El Capitan, which will become operational in 2023, is being built in Lawrence Livermore National Laboratory at a cost of $600 million dollars. The new computer will perform 2 exaflops or 2,000,000,000,000,000,000 floating point calculations per second. If the world population was to perform one such calculation per second it would take everybody eight years to do what El Capitan does in one second. The computer will be used to do simulations of nuclear explosions, genetics research, astrophysical modeling, aircraft/automotive design and climate change. It’s the size of two tennis courts, and will use 30 megawatts of power, enough for 12,000 homes.

2) The long time publishing giant Simon & Schuster, founded in1924, is up for sale by its present owner ViacomCBS. In the last few decades, the traditional publishers have been devastated by technologies and the internet, in particular publishing on demand services. Although Simon & Schuster is not losing money, the publishing industry is no longer a growth industry. The company will most likely be sold to another publisher seeking to reduce cost by merging assets.

3) Oil prices have plunged in response to demand caused by flight cancellations, factory shutdowns and slowdowns in passenger traffic, all caused by fears of the coronavirus crisis. Natural gas prices are also down at a near four year low. The oil and gas companies, who have piled on debt to capitalize on the shale boom, are facing serious fiscal problems and may not survive. The markets for energy have dropped seriously, both stocks and bonds, which in the past, have had a detrimental ripple effect on the rest of the economy.

4) Stock market closings for – 4 MAR 20: The Dow jumped more than 1,000 points after Biden Victories.

Dow 27,090.86 up 1173.45
Nasdaq 9,018.09 up 334.00
S&P 500 3,130.12 up 126.75

10 Year Yield: down at 0.99%

Oil: up at $47.20

3 March 2020

1) Consumer electronics giant Samsung has started building a $220 million dollar research and development center in Hanoi, Vietnam. The center is to be completed by the end of 2022 and will employ between 2,200 to 3,000 people, and will be the largest of its kind in Southeast Asia. It will do research on subjects like artificial intelligence, internet technology, big data and 5G. Samsung is the single largest foreign investor in Vietnam, with investments totaling $17 billion dollars.

2) Huawei technologies, the controversial 5G supplier, is circumventing the barring of doing business with U.S. suppliers of critically needed electronic chips, by turning to manufacturing their own versions. The strategy appears to be working with Huawie selling more than 50,000 next generation base stations free of U.S. technology in their last quarter. The company is quickly ramping up its HiSilicon division to make more America component free devices, amide accusations that Huawei is stealing the intellectual property in making their own chips.

3) History shows that stocks often rebound quickly from a disease outbreak. Within six months, stocks are usually on the mend from drops caused by disease outbreaks. After the disastrous drops of last week, the markets started surging upward again, giving validity to this hypophysis- ‘Invest with a plan, instead of trying to predict trends.’

4) Stock market closings for – 2 MAR 20: Single greatest-gain in one day ever.

Dow 26,703.32 up 1293.96
Nasdaq 8,952.16 up 384.80
S&P 500 3,090.23 up 136.01

10 Year Yield: down at 1.09%

Oil: up at $47.52

11 February 2020

1) Senator Josh Hawley (R) aims to overhaul the Federal Trade Commission to counter the power wielded by big tech companies like Google and Facebook. He proposes dismantling the current agency tasked with protecting US consumers and place it under the Department of Justice. The Missouri senator says the current FTC lacks the teeth needed to hold high tech companies accountable for data breaches or lost of consumer information as well as privacy issues.

2) The genetic testing business for consumers, which has been growing over the past decade, now seems to be slowing because of concerns for privacy and market saturation. One major company announced a 6% layoff of employees with another laying off 14% as a result of slowdown of demand over the last eighteen months. Cost for testing is becoming another factor, especially for amateur genealogical researchers.

3) The U.S. is using technologies such as drones to scout for potential rare-earths reserves at home and aborad. Presently, America is almost 100% dependent on foreign supplies for the critically needed natural resource, most coming from China. Rare-earths are used in applications such as cellphones, wind turbines and missiles. While the U.S. does mine some rare-earths, it all must be shipped overseas, principally China, to be processed. America doesn’t have any processing plants of her own.

4) Stock market closings for – 10 FEB 20:

Dow 29,276.82 up 174.31
Nasdaq 9,628.39 up 107.88
S&P 500 3,352.09 up 24.38

10 Year Yield: down at 1.55%

Oil: down at $49.65

19 December 2019

1) New York Life Insurance is buying Cigna business, which sells life and disability insurance, for $6.3 billion dollars. This is just one of several which have bought into the group benefits business. Such businesses are attractive to insurers seeking to diversity, because the units are less capital intensive, don’t rely as much on investment income and also provide cash flow.

2) Auto makers Fiat Chrysler and Peugeot maker PSA have agreed on a binding merger for $50 billion dollars, which paves the way to the creation of the world’s fourth largest automaker. The merger will create a cost savings of $4 billion dollars by combining technologies and through shared purchasing agreements.

3) There are more people being rejected for auto loans according to a Federal Reserve Bank report. Auto loan rejections spiked in October at 8.1% compared to 4.5% a year ago, while for a full year, rejections are up at 7.1% from 6.1% for 2018. A decade of easy auto credit has sparked concerns that U.S. households could be on the verge of another financing bubble. Other segment of consumer credit have reported fewer rejections of credit applications.

4) Stock market closings for – 18 DEC 19:

Dow                28,239.28    down    27.88
Nasdaq             8,827.74          up      4.38
S&P 500            3,191.14    down       1.38

10 Year Yield:    up   at    1.92%

Oil:    up   at    $60.84

21 May 2019

1 ) Ford Motor Company announces a 10% reduction in its work force by eliminating 7,000 jobs world wide. These jobs are salaried white-collar jobs, which are part of a major restructuring to eliminate bureaucracy and increase the number of workers reporting to each manager. Technologies allow large corporations to streamline their management staff and thereby reduce their staff.

2) The U.S. home sales fell unexpectedly in April with persistent weakness in lower-priced housing market. This market segment had been experiencing an acute shortage of properties. Economist had been forecasting a 2.7% rise in home sales, but the existing home sales dropped 4.4% from last year, making this the 14th straight year-on-year decrease in home sales. Existing home sales make up about 90% of U.S. home sales.

3) The United States Postal Service has started a two week test of commercialized autonomous vehicle technology to carry the mail cross country via robot driven semi-trucks. The test run is between Phoenix and Dallas with five round trips, each 2,100 long. Each test truck will have a safety driver on guard and an engineer. The test vehicles will travel the interstates through Arizona, New Mexico and Texas. To drive the same route would require multiple human truck drivers.

4) 21 MAY 19 Stock market closings:

Dow              25,877.33    up    197.43
Nasdaq          7,785.72    up       83.35
S&P 500         2,864.36    up       24.13

10 Year Yield:     up   at    2.43%

Oil:    down   at    $62.97