1) Monday markets opened in a steep downward spiral from sell offs, driven by the coronavirus fears, followed by the sharp drop in oil prices. The Dow dropped 2,000 points, with a massive sell off of both the S&P 500 and Nasdaq, which triggered a key market circuit breaker that halted trading for fifteen minutes. There are widespread fears over the economic impact of low oil prices, with some experts fearing oil prices down to $20 a barrel. Gold prices crossed the $1,700 dollar an ounce, hitting the highest since December 2012. The banks are hard pressed as the interest continues to sink, cutting into their margins.
2) Experts speculate that the Feds will cut the interest rate to zero in the next few months in an effort to forestall a downturn of the economy. The entire U.S. yield curve fell below 1% for the first time in history on expectations that the Federal Reserve will cut rates to zero in the next few months. Some speculate the Feds may adopt a negative rate just as some European countries have, such as Germany’s -1%.
3) While checkout-free with cashless supermarkets is now a novelty, Amazon expects this technology to spread to other retailers. Amazon has announced it plans to license its automated checkout technology to other retailers, telling of several other companies that have already signed up for the technology. The technology has been proven with cashless convenience stores across America and with Amazon’s new Go-supermarkets. The technology represents another significant step in retail automation.
4) Stock market closings for – 9 MAR 20: The stock market is like a rectal thermometer- it’s rude and crude, but surprisingly effective in showing a sick economy.
Dow 23,851.02 down 2013.76 Nasdaq 7,950.68 down 624.94 S&P 500 2,746.56 down 225.81
1) To settle its civil law suit over fake accounts, Wells Fargo, America’s fourth largest bank, is paying $3 billion dollars. In order to meet sales quotas, employees opened millions of savings and checking accounts using the names of actual customers. Wells Fargo is accountable for tolerating fraudulent conduct, which was remarkable for its duration and scope. The bank company took several steps to conceal the accounts from customers, such as forging signatures and preventing other bank departments from contacting customers to survey their accounts.
2) John Deere, a manufacturer of farm and construction equipment, has experience a first quarter profit, signs that the U.S. farm market is stabilizing. The manufacturer has been buffeted for the last two years by the U.S. – China trade war, which has pushed agriculture business down leaving farmers struggling to turn a profit.
3) Facebook will stop listening to and transcribing messenger voice for its speech recognition technology development. But the company still needs the voice recordings to improve its speech recognition, so the company will pay selected users to record snippets of audio using a development program called ‘Pronunciations’. Test subjects will have phrases recorded, which Facebook will specify, and in turn will receive compensation.
4) Stock market closings for – 21 FEB 20:
Dow 28,992.41 down 227.57
Nasdaq 9,576.59 down 174.38
S&P 500 3,337.75 down 35.48
1) The chip maker Intel announced a chip which makes quantum computers smaller and faster, thus bringing the promise of quantum computer to realization. Working with QuTech, Intel has developed a new chip called Horse Ridge that should make quantum computers smaller, faster and requires less deep cooling. The system on a chip uses Intel’s FinFET low power process, having four radio frequency channels that control a total of 128 qubits, which is more than double the 49 qubits from back in 2018. For a quantum computer to be viable it needs over 1 million qubits.
2) The technology innovation company Alphabet has ended its work on Makani, a design to generate power using wind turbines attached to kites. While demonstration flights were successful, the path to commercialization was considered to be longer and riskier than expected. Makani was a seven year project which developed a 20 kilowatt demonstrator kite into a utility scale model generating 600 kilowatts.
3) Boeing Aircraft’s 737 MAX has met with another problem- foreign-object debris in the fuel tanks of several aircraft. Boeing is conducting a voluntary inspection for debris in undelivered aircraft with further action based on its findings, but doesn’t anticipate this problem will delay re-certification of the aircraft and it resumption of deliveries. Furthermore, Boeing plans to inspect the fuel tanks on all undelivered 737 MAX planes.
4) Stock market closings for – 19 FEB 20:
Dow 29,348.03 up 115.84
Nasdaq 9,817.18 up 84.44
S&P 500 3,386.15 up 15.86
Breaking News: Tesla Inc market value has now surpassed both legendary Ford Motors and General Motors company market values combined.
January 8, 2020 (Wednesday) Tesla Inc had a market cap of $89 billion, approx 2 more billion dollars then Ford Motors ($50 billion) and General Motors ($37 billion) combined.
Many of Tesla Inc’s attributes for rising market cap has to be with a profitable 3rd quarter the electrical auto maker had; also surpassing auto deliveries in the Chinese market, while also having its stock more then double over the past few months. These all seem to be contributing factors to its increased market cap currently.
With all the accolades Tesla has achieved, there are skeptics in the investment community who believe the company will not able to sustain cash flow nor provide more profitability in the next few years.
1) Analyst say Netflix, the video streaming service, must lower its prices in 2020 to avoid lost of millions of its U.S. customers because of the rising competition. It is suggested that Netflix must add a second lower priced service to compete with Disney+, Apple+, Hulu, CBS All Access and Peacock, otherwise they risk losing four million U.S. subscribers. Since Netflix’s balance sheet cannot withstand lower revenues, the company must create a pricing tier that has lower monthly cost, but still support advertising revenue.
2) Mortgage lenders are warned to brace for a downturn, with Fannie Mae and Freddie Mac pulling back on some mortgages meant to make home ownership more affordable. They are reducing the proportion of loans they back to borrowers with small down payments. This tamping down on risk is to limit their defaults thereby producing greater profits.
3) Morgan Stanley, the investment bank giant, is cutting about 1,500 jobs globally in a year end push for efficiency. The cuts are more in the technology and operations divisions, but include executives in sales, trading and research operations including several managing directors. These reductions amount to about 2% of the firm’s workforce with a charge between $150 to $200 million dollars in its fourth quarter.
4) Stock market closings for – 10 DEC 19:
Dow 27,881.72 down 27.88 Nasdaq 8,616.18 down 5.64 S&P 500 3,132.52 down 3.44
1) The bond trading has gone from zero to $88 billion dollars in two years because of technology enabled portfolio trading that brings the same speed to the bond market as for stock traders. Bond trading used to take hours of pen and paper work, but now the same thing only requires seconds to do electronically. Most trades are between $100 million and $200 million dollars. The rate of change in the bond market these last few years has been stunning.
2) The struggling company WeWorks announced it plans to lay off at least 4,000 people, roughly one third of its 12,500 work force, a part of its five year plan for recovery from near bankruptcy. But some analyst WeWorks financial troubles come form its failed IPO (Initial Public Offering) in September which left the company with massive losses of $1.25 billion dollars.
3) The board of directors for HP has unanimously rejected the take over bid from Xerox, which they considers significantly undervalues HP and therefore isn’t in the best interest of its shareholders. The board also had concerns about the impact of outsize debt which could devalue the merged company. News has sent stocks for both companies down. HP does recognize the potential benefits of consolidation and therefore remains open to exploring future mergers. Both companies are in the process of cost cutting programs with HP laying off up to 9,000 workers.
4) Stock market closings for – 18 NOV 19:
Dow 28,036.22 up 31.33 Nasdaq 8,549.94 up 9.11 S&P 500 3,122.03 up 1.57
1) An FAA (Federal Aviation Administration) official states that Southwest Airlines should ground 49 of its airliners that had repairs failing to meet legal standards. The official claims there is a high likelihood of a violation of a regulation, order or standard, so the FAA must take immediate action to revoke the certification of the planes. Aircraft in questions is the Boeing 737 NG which were previously owned by foreign carriers, saying inspections should be speeded up, but fall short of grounding the aircraft.
2) Dean Foods, America’s largest milk producer, is filing for bankruptcy. The 94 year old company has struggled in recent years because Americans are drinking less cows milk. In 2019, sales are down 7%, while for the first half of the year, profits are down 14%, with Dean’s stock dropping 80% in a year. The company is straddled with debt and is unable to fully fund its pensions.
3) The retail giant Walmart is experiencing internal strife over its e-commerce operation with the corporate culture of traditional marketing. Apparently, Walmart’s management doesn’t have a real understanding of the complex technology of e-commerce. The impact of Walmart’s plunge into online retailing has reduced Walmart’s already thin profit margins, which are at historic lows. Some high profile acquisitions and other strategic moves have cratered and talented executives on both sides have departed.
4) Stock market closings for – 12 NOV 19:
Dow 27,691.49 unchanged Nasdaq 8,486.09 up 21.81 S&P 500 3,091.84 up 4.83
Alibaba Holdings LTD (BABA) surpassed earnings expectations. The Asian e-commerce giant, stated that their retail business and their cloud business, were huge components in their earnings viability, while also beating estimates.
Their retail commerce business (BABA) spurned over $14 billion USD in revenue, while thier (BABA) cloud business did over $1 billion USD in revenue. At the end of the Friday Oct. 31, 2019 business day, BABA’s stock was up over 3%. Not a bad day for a major Chinese e-commerce business..SB
1) New home construction has dropped from a twelve year high in September, although single home construction rose for a fourth straight month. This indicates the housing market remains supported by lower mortgage rates even as economy slows. Housing starts declined 9.4% last month as construction in the volatile multi-family housing segment dropped.
2) The Prime Minister of the United Kingdom announced a great new Brexit deal. The proposed exit plan goes before the U.K. parliament this Saturday, the EU (European Union) claimed the deal was a fair and balance one. Parliament must vote approval before the deal can be accepted, however, this time the Conservative party is now committed to this deal and not a ‘no-deal’ and so will campaign for a majority support.
3) The employees for the bank Goldman Sachs will receive the lowest pay in the last ten years. This is a result of software systems doing more and more of the company’s business, another example of technology displacement. The bank set aside 35% of its revenues for staff compensation and benefits this year, the lowest rate since 2009, with an average employee earning of $246,000 less than half of the $527,000 from last year.
4) Stock market closings for – 17 OCT 19:
Dow 27,025.88 up 23.90 Nasdaq 8,156.85 up 32.67 S&P 500 2,997.95 up 8.26
1) Goldman Sachs, the investment bank, is starting a three year, $100 million dollar plan to overhaul its stock trading platform. The project, which is named Atlas, is aimed at the world’s largest quant hedge funds with the intent of shaving milliseconds off trades. The quantitative hedge fund investment has become a cutthroat business as other firms have been winning a larger share of a shrinking pie, and Goldman Sachs realizes they have been falling behind the technology race. They must make a strong effort to push forward the technology of electronic trading to maintain their market position.
2) As trade talks continue in Shanghai between China and America, President Trump has imposed an additional 10% tariff on $300 billion dollars worth of Chinese imports. These imports are due to start on the first of September. This does not include the $250 billion dollars already tariffed at 25%. The President blames the Chinese for imposing the tariff, saying China is not following through their promise to buy more American agricultural products and not doing more to stem sales of synthetic opioid fentanyl.
3) Lowe’s, the home improvement retailer, has told thousands of its workers that their jobs are being eliminated. The company will out source the jobs of maintenance and assembly workers to third party companies. These workers assembly products such as wheelbarrows and grills, claiming this will allow store associates to spend more time on the sales floor serving customers. Lowe’s employs 190,000 full time and 110,000 part time workers.
4) Stock market closings for – 1 AUG 19:
Dow 26,583.42 down 280.85 Nasdaq 8,111.12 down 64.30 S&P 500 2,953.56 down 26.82