30 June 2020

1) The Boeing Aircraft Co. has started it re-certification process for the 737 MAX with the take off of a test aircraft for the first flight. An FAA (Federal Aviation Administration) pilot was on board as test flights begin, to determine if the aircraft is safe for flying with passengers. The first flight test is to fly maneuvers for about three hours, the test craft being fitted with a number of instruments and monitoring equipment to test and record how the aircraft performs. Test include the ‘wind-up turn’ which is a steep turn that essentially approaches a stall, with wings almost at 90 degrees of bank. This maneuver should trigger the Boeing software system that played a role in both crashes, which caused the aircraft design to be grounded. The software caused the aircraft’s nose to be repeatedly pointed downward at the ground until pilots lost control. These certification flights are expected to take approximately three days, and while they are an important milestone, there remains a number of key tasks to be completed.

2) According to the Bureau of Labor Statistics, 47.2% of American adults are now jobless, almost half the adult population. This is a direct result of losing 30 million jobs because of the coronavirus crisis. While there was an unexpected snap back in May, there are now signs of a slowdown in the labor market improvement because of fears of a Convid-19 resurgence increased these last few weeks. The massive loss of jobs is what is now dragging the economy down. Both Texas and Florida have paused plans for further reopening because of a record spike in coronavirus cases.

3) Lending institutions are pulling back sharply on their lending to U.S. consumers during the pandemic, because they can’t tell who is creditworthy anymore. There are millions of Americans out of work and behind on their debts, but many of these missed payments aren’t reflected in credit scores. This is a result of the government’s stimulus package which allows borrowers to defer their debt payments, but credit companies can’t report these late payments to credit reporting companies. For May, there were more than 100 million accounts with deferred debt payments. This is a sign of widespread financial distress.

4) Stock market closings for – 29 JUN 20:

Dow 25,595.80 up 580.25
Nasdaq 9,874.15 up 116.93
S&P 500 3,053.24 up 44.19

10 Year Yield: unchanged at 0.64%

Oil: up at $39.55

12 June 2020

1) The markets took a sharp drop over fears of another shutdown as the number of Convid-19 cases began rising from states starting to opening up for business. The Dow Jones dropped over 1,800 points, closing on the worst day sell-off since March. It appears that this pandemic is going to linger longer than was anticipated. Texas has reported three consecutive days of record breaking Covid-19 hospitalizations. Nine counties in California are reporting spikes in hospital admissions from the virus. The U.S. now has topped 2 million cases in this pandemic. Also, oil prices have taken a sharp downward slide.

2) Inventories of unsold diamonds are increasing, with the five largest diamond producers having stockpiled excess inventories of about $3.5 billion dollars and could go as high as $4.5 billion dollars. World wide demand for diamonds has plummeted, with the renowned diamond supplier De Beers reporting diamond sales in May of about $35 million dollars, compared to last year’s $400 million dollars. The world wide lock down has closed jewelry stores across the world thereby reducing sales to a small fraction of normal. The diamond market resembles the diamond slump of the 2008 financial crisis.

3) More than 1.5 million Americans filed new jobless claims for the first week of June, again decreasing from the previous week of 1.9 million. This is in contrast to the 6.9 million claims in April, with a stead decline each week since then. There was 2.5 million jobs added to the American economy, largely due to 2.7 million workers returning from furloughs. Still, more than 40 million Americans have lost their jobs because of the pandemic forcing shutdowns of so many businesses across America. But the gradual improvement of employment is boosting hopes for a quick economic recovery, however, there remains the problem of technology displacement of jobs. In times of economic stress, businesses are seeking ways and means to cut operating cost, and that gives a niche for entry of new technologies that eliminate the human. Experts in Artificial Intelligence estimate that as much as 50% of the jobs will disappear in 15 to 25 years.

4) Stock market closings for – 11 JUN 20: The stock market is like a rectal thermometer- it’s rude and crude but surprisingly effective at showing sickness.

Dow 25,128.17 down 1861.82
Nasdaq 9,492.73 down 527.62
S&P 500 3,002.10 down 188.04

10 Year Yield: down at 0.65%

Oil: down at $36.17

12 May 20:

1) Economic advisers are urging the reopening of the economy as quickly as possible to reduce unemployment rates, which they fear are already above 20%. But despite the risk of permanent economic damage, public health experts warn that reopening nonessential businesses could lead to a flare up of the pandemic. This could mean unemployment worst than the 1930’s great depression with a true unemployment rate reaching 25%. However, there are early reports that China is experiencing a recurrence of the coronavirus after they’ve started their reopening process, so the warnings of health experts isn’t to be taken lightly. While some officials state that 80% of the unemployment is from furloughs and expect very rapid re-employment with the ending of the shutdown, there remains the very real problem of how fast they can be rehired. With a large portion of businesses now strapped for cash, they will have to restart slowly as money permits. No doubt, many will have gone bust during the shutdown, having already run out of money, while many more will be cash starved for weeks, months or even years, teetering on the brink of bankruptcy.

2) Toyota Motor company plans to cut North American production by about a third before October, with expectations that it will be some time before production is restored to present levels. The company will build about 800,000 vehicles in the United States, Canada and Mexico, a number which is down 29% from the same time last year.

3) The electric automaker Tesla, controlled by Elon Musk, has filed a federal lawsuit Saturday against Alameda County in California to reverse the closing of the auto plant. The Tesla’s plant in Fremont, California was closed by health orders from the county and remain closed for social distancing reasons. Additionally, Musk is threatening to move the manufacturing plant to a more business friendly state such as Texas or Nevada, considering the regulation to be the last straw. In the last few years, California has faced a ‘business drain’ as significant number of businesses and skilled/educated workers move out of California for states offering more opportunity.

4) Stock market closings for – 11 MAY 20:

Dow 24,221.99 down 109.33
Nasdaq 9,192.34 up 71.02
S&P 500 2,930.32 up 0.52

10 Year Yield: up at 0.73%

Oil: at up at $25.38

7 May 2020

1) The bust in the Texas oil fields is the worst in memory, says the billionaire Russell Gordy. The coronavirus pandemic has triggered an unbelievable collapse in crude oil prices that is sinking fortunes across Texas, with no clear way out visible in the near future. Texas accounts for 9% of the nations GDP (Gross Domestic Product), so as oil pulls Texas’ economy down, it will undoubtably pull the nations down too. In the past, declining energy prices have helped the U.S. economy, but this time its likely to cut into investment and employment. Texas may lose 1.3 million jobs by June, as the virus puts an end to the U.S. shale oil revolution, which may spill into a broader downturn for Texas, that will also drag the rest of the country down too. Furthermore, Americans are driving and flying much less, which has reduced the demand for oil, bringing on a crisis in storage for the oil surplus. There are expectations that home prices will decline during the remainder of this year and into the next. This in turn will impact the construction industry.

2) As a result of the pandemic, the mortgage industry is implementing reforms that will be long lasting in terms of how lenders operate and how consumers obtain financing. It’s anticipated that digital mortgage processing will become more prevalent as people seek to minimize contact with others. Relators are seeing as much as a 500% increase in home video tours. Reports are that many people are seeing involuntary credit reductions and even terminations of their credit cards as banks seek to reduce their exposure to risk in a troubled economy where jobs are at risk of elimination. This means a further reduction on consumer spending.

3) Disney has seen a 91% plunged of it profits last quarter, a direct result of the coronavirus crisis. The operating profits in Disney’s parks lost about $1 billion dollars to add to a total loss of $1.4 billion dollars in total operating income. Disney has had to close its Walt Disney World and Disneyland theme parks, plus its Disney Stores and the suspension of its cruises and disruptions of its supply chain . However, its new video streaming service Disney Plus grew 26% to 33.5 million subscribers last quarter with revenues up 260%

4) Stock market closings for – 6 MAY 20:

Dow 23,664.64 down 218.45
Nasdaq 8,854.39 up 45.27
S&P 500 2,848.42 down 20.02

10 Year Yield: up at 0.71%

Oil: down at $24.35

4 May 2020

1) The coronavirus economic troubles has reached out to touch social security. The social security is financed by the payroll tax, those social security deductions on worker’s paycheck and the SSI employers pay for each worker. With a little over 30 million people now unemployed, one out of every six American workers, the monies needed by the government to send out social security checks has been drastically reduced. But the government’s obligation has not been cut, they are sending out the same amount each month, so the government must spend monies they get from other sources. The social security program is the largest single source of federal spending, which is now even more shakier than before.

2) More states are beginning the process of relaxing restrictions on businesses and shut down orders. About half of the states are retracting closing orders for businesses deemed nonessential allowing them to open for business again. The states are using a patchwork of strategies to reopen, based on the type of business and how their operations expose the public to infection of the virus. Two states with large populations, Texas and Ohio, have joined in the reopening process. States are feeling enormous pressure to restart businesses and restore social life, mostly in the South, Midwest and mountain West leading the way. There are big questions if the reopening is too early, that the waning virus infection might suddenly erupt in force.

3) American colleges and universities are also facing crippling financial difficulties from the coronavirus impact, with some small colleges already closing. They are having to bear the cost of having to suddenly shift to online classes, giving partial reimbursements of room and board, plus deferring summer secession without a change in their fixed cost of operations. Many experts considering the college education system is being forever changed in America.

4) Stock market closings for – 1 MAY 20:

Dow 23,723.69 down 622.03
Nasdaq 8,604.95 down 284.60
S&P 500 2,830.71 down 81.72

10 Year Yield: up at 0.64%

Oil: down at $19.69

31 December 2019

1) The automaker of electric cars Tesla has made its first deliveries of their Model 3 that were manufactured in China. The gigafactory in Shanghai is Tesla’s first outside the U.S., which is expected to significantly boost Tesla sales in China, which Tesla considers will become its largest market for the Model 3. Production will soon be 1,000 cars a week, eventually reaching an annual production of 150,000 a year.

2) The national average price for gasoline increased by 1.6 cents to $2.57 a gallon. Gas prices had been dropping for seven consecutive weeks prior to the upswing. The price increase is a result of the drop in oil inventories while oil prices are above $61 a barrel. Gas prices are above $3 a gallon in Hawaii, California, Nevada, Alaska and Washington, while Missouri, Oklahoma, Mississippi, Texas and Louisiana are the five states with the lowest priced gas states.

3) Vietnam is switching from producing and selling raw robusta beans on the commodity markets, to producing instant coffee for the burgeoning Asian market. Instant coffee brings more profit with less risk while also bringing protection from large swings in international commodity prices. Vietnam aims to overtake Nestle as Vietnam’s biggest pure instant coffee supplier in the next five years, and doubling its coffee exports to $6 billion dollars a year.

4) Stock market closings for – 30 DEC 19:

Dow              28,462.14    down   183.12
Nasdaq           8,945.99    down     60.62
S&P 500          3,221.29    down     18.73

10 Year Yield:    up   at    1.90%

Oil:    down   at    $61.68

2 December 2019

1) Deere & Co., the famous manufacture of green and yellow tractors, reported lower earnings blaming trade tensions and poor weather in the U.S. farm belt. Last year’s difficult growing and harvesting conditions have made farmers cautious about investing in new farm equipment. Sales of the construction and forestry division are expected to be down by 10% to 15%, while agricultural is down 5% to 10% next year.

2) Texas oil explorers say predictions of shale production isn’t reflecting the industry’s slowdown. Producers are being starved of funding, stocks have plunged and little interest in public offerings, which may cause a downturn to be more enduring. Seeking to cut costs, drillers have laid off 1,000 workers. There are predictions that U.S. oil production growth will flatten as early as 2021. There is a rapid decline of shale well production, partly a result of placing wells too close together.

3) Global manufacturing has been dragging the world economy down this last year. Weak auto sales have added to the problem, with China’s auto market the worst with a 11% decline in sales. Slow auto sales have cut production at auto plants, with Audi cutting 7,500 jobs. U.S. dealerships are struggling to clear inventory for the new year, with a 12% rise in incentive spending in November, compared to a typical 4%.

4) Stock market closings for – 29 NOV 19:

Dow         28,051.41    down    112.59
Nasdaq      8,665.47    down      39.70
S&P 500     3,140.98    down      12.65

10 Year Yield:    up   at    1.78%

Oil:    down   at    $55.42

TEXAS REFINERIES RESTART AFTER COLOSSAL HURRICANE HARVEY!!!!!!!!!

By: Economic & Finance Report

Texas oil refineries began production of oil again Saturday Sept 3, 2017.  This is after a rocky and unstable week presented to the Texas and Louisiana region from the turbulent hurricane called Harvey. Hurricane Harvey being categorized as a Category 4 hurricane, ruined and destroyed billions and billions of dollars of infrastructure and property (residential and commercial); and distablized the southern gulf region.

The federal government has indicated that close to $200 billion will be needed to infuse in the economies; of Texas and Louisiana especially to jump start business initiatives and future business development projects in the region.

Alot of the Texas refineries had to drastically cut production because of the damage Harvey propelled. More then half of the oil refineries in the US is in the Gulf, so when Harvey hit the region, it really made a impact to oil production.

As the refineries begin to resume their productivity, many people and businesses will have to find ways to pick up and resume their lives, from the turmoil this horrible hurricane has inflicted on them. -SB