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

20 June 2019

1) The $800 billion dollar trucking industry is in a slowdown as retailers and manufacturers are shipping less. Freight rates have declined for the last six months with the spot market dropping 62.5% for May verses last year. Already, a few major trucking firms have gone bankrupt, with one laying off 550 employees. Even the major trucking companies FedEx, UPS and J.B. Hunt have experienced declines sparking fears of a slowdown of the economy.

2) Harley-Davidson is making good its promise to build more motorcycles outside the United States by partnering with China’s Qianjiang Motorcycle to produce smaller motorcycles. The new bike will have a 338 cubic centimeter engine verses the 601 cc engine for its domestic motorcycles. Harley-Davidson is trying to boost its overseas sales as its domestic market shrinks.

3) Expectations for future global growth and corporate profits have shrank as investor confidence continues to decline amid the trade war. Concerns of an economic slowdown further fuel fears of investors for the demise of global growth, despite America’s stock market now trading near its record high. Global profit expectations fell by the second largest amount on record. The giant retailer Walmart announced they will be laying off nearly 600 employees later this year.

4) Stock market closings for- 19 JUN 19:

Dow                 26,504.00    up    38.46
Nasdaq              7,987.32    up    33.44
S&P 500             2,926.46    up      8.71

10 Year Yield:    down   at    2.03%

Oil:    up   at    $54.14

17 June 2019

1) Citizens of Hong Kong have started moving assets offshore amid fears of a China takeover. China’s demand to extradite criminal suspects to face trial in China is seen as a political move to be able to more tightly control the population politically, by eliminating dissidents and political opposition. People of money are also fearing that China will clamp down on moving money out of the reach of the Chinese government. This move is heightening the tensions of China and western nations.

2) As a result of its legal entanglements from lawsuits alleging Roundup herbicide is a carcinogen, Bayer AG plans to invest almost $6 billion dollars in developing new chemical products to combat weeds over the next decade. Roundup is a product inherited by Bayer in its takeover of Monsanto Co. last year, which has driven its stock down by 50%.

3) The trade war between China and U.S. is having unexpected results of other countries taking up the manufacturing slack. This runs the risk of China permanently losing market share to America as well as China failing to archive its goal of becoming the worlds top global manufacturing base. This decreases China’s chances of becoming a technologically advance and innovative economy. China’s loss of their once famed ‘low pay for unskilled labor’ is further increasing the flight of factories to other countries.

4) Stock market closings for- 14 JUN 19:

Dow               26,089.61    down    17.16
Nasdaq            7,796.66    down    40.47
S&P 500           2,886.98    down      4.66

10 Year Yield:    unchanged   at    2.09%

Oil:    unchanged   at    $52.51

13 June 2019

1) Demand for oil is shrinking as the trade war causes the world economies to retract. China’s economy is slowing faster than experts had expected, with the EU and US also not growing in oil demand. Fears that oil prices will drop below $40 a barrel fuel fears of a continual global slowing of economies. The U.S. boom in domestic oil production using fracking is dependent on high oil prices, and with American petroleum stocks at an all time high, it may not be feasible to continue fracking.

2) With mortgage rates dropping to their lowest level in nearly two years, there has been a surge in refinancing applications. In just one week, applications increased 26.8%, which is 41% greater than a year ago. Refinance mortgages are the most rate-sensitive because when low, people rush to refinance while they can get the lower rates.

3) For the second straight month, Boeing aircraft reports no new aircraft sales. The drop isn’t just because of the 737 MAX grounding, but the company already has a massive 5,000 aircraft backorder to fill, so many customers don’t need to place additional orders. With the airline Jet Airways halting operations, their pending sales contracts have been canceled, which totaled 71 aircraft.

4) Stock market closings for- 12 JUN 19:

Dow           26,004.83    down    43.68
Nasdaq        7,792.72 down    29.85 
S&P 500          2,879.84    down      5.88 

10 Year Yield:   down   at    2.13% 

Oil:    down   at    $51.08

12 June 2019

1) For the sixth straight month of a gold buying spree, China continues to add to it’s gold reserves under the protracted trade war. China added 58 tons of gold to its reserves in the five months to April, then added 15.86 tons in May. At this rate China could buy as much as 150 tons of gold in 2019, as they diversify away from the U.S. dollar.

2) The retailer giant Amazon has opened a second cashier-free store in New York, which makes the thirteenth ‘Amazon Go’ store to open in America. The convenience robot store is about 1,700 square feet with Amazon announcing its fourteenth store will open in San Francisco. By 2021, Amazon may open as many as 3,000 of these robot retailing stores which threaten other retailers like 7-Eleven shops, CVS and Walgreens.

3) Ten state attorney generals plan to jointly file a lawsuit to stop the merger of Sprint and T-Mobile. The $26 billion dollar merger will reduce the number of nationwide wireless carriers to three. So far, the deal has won the backing of the majority of the FCC, which makes the Federal Government in favor of the move.

4) Stock market closings for 11 JUN 19:

Dow            26,048.51    down    14.17
Nasdaq         7,822.57    down      0.60
S&P 500        2,885.72    down      1.01

10 Year Yield:    down   at    2.14%

Oil:    down   at    $53.05

7 June 2019

1) The outlook for retailers continues to get grimmer with earning reports shrinking. Three major retailers, Michaels, Home Group and Zales have shown a slowdown in their sales, and these companies sell very different products, indicating this slowdown is not market specific, but rather a general economic slowdown. There is an emerging trend of decline for consumer based companies despite record unemployment.

2) Job cuts soar to 46% in May, worst than last year’s May. The tech sector and retail suffer significantly, with retail cutting more jobs than any other sector. The auto segment is also suffering as a result of lower new car sales. Since the tech sector accounts for the highest paying jobs and from some of the most sought after jobs, this doesn’t bode well for America’s economic outlook.

3) The expanding trade war may result in an 1970’s style supply shock as reliable supplies of cheap imports of manufactured goods are suddenly curtailed. In the 1970’s it was the supply of cheap oil curtailed from the 1973 oil embargo that cause a drastic economic decline. A similar sharp drop in consumer and industrial goods could have the same effect to America’s economy today.

4) Stock market closings for 6 JUN 19:

Dow             25,720.66    up    181.09
Nasdaq          7,615.55    up      40.08
S&P 500         2,843.49    up      17.34

10 Year Yield:    up   at    2.12%

Oil:    up   at    $53.03

6 June 2019

1) The trade war continues to escalate as China takes action against American companies operating in China proper. China is levying fines on Ford’s joint venture for antitrust violations. Changan Ford Automobile Co. will be fined $23.6 million dollars for restricting retailers sale prices. Fed-Ex has recently come under Chinese scrutiny for ‘wrongful’ deliveries. China has threaten to blacklist foreign firms which damage domestic companies’ interests. Chinese citizens are being warned against travel to America, thereby restricting income from tourism and business reaching America.

2) The video game retailer GameStop, with over 5,700 retail outlets, is in decline, and was the place to go to buy video games and virtual reality products. But their sales have been in significant decline, with attempts to use e-commerce to counter the downward slide being of no help. Their forecast for next year show little improvement to its deteriorating business as their business migrates over to Amazon.

3) Bernie Sanders has made good his promise to take his fight for the common worker to Walmart’s annual stockholders meeting, to demand that Walmart workers be given a place on their board of directors. He introduced a shareholder proposal which would make roughly 1.5 million hourly workers eligible for board nominations. Sanders’ consider this move a way to separate himself and his policies from the democratic presidential nomination pack. Walmart is one of the huge American retailers pushing for new robotic technology to use in their stores.

4) Stock market closings for 5 JUN 19:

Dow             25,539.57    up    207.39
Nasdaq          7,575.48    up      48.36
S&P 500         2,826.15    up      22.88

10 Year Yield:    up   at    2.12%

Oil:    up   at    $51.69

3 June 2019

1) The rife between China and America stands to grow deeper with less chance of resolving relationships, with China threatening a hit list of ‘unreliable’ foreign firms. These are individuals and groups who they consider harm the interest of Chinese companies. The threat is retaliatory tariffs on U.S. goods imported into China. These last two weeks have been a war of words as the nations exchange economic threats.

2) Chicago based nursing home chain collapses leaving the federal government on the hook for millions of dollars. First sign was when the owners stop making mortgage payments in 2014. Reportedly, money meant for the thirteen nursing homes were diverted to prop up another investment. This failure is revealing the problems that HUD is having in helping obtain facilities for the elderly by providing affordable loans.

3) Trade wars may expand again with threats by President Trump to impost a 5% tariff on goods imported from Mexico, if Mexico doesn’t do more to stop the flow of illegal immigrates. Tariffs are due to start on 10 June, and will increase in 5% increments until the flow halts. This is coming at a time when more Mexican immigrates are returning to Mexico than are coming, highlighting that the immigration is from other South American countries.

4) 31 MAY 19 Stock market closings: Oil prices sink toward worst May in 7 years from trade war fears.

Dow           24,815.04    down    354.84
Nasdaq        7,453.15    down    114.57
S&P 500       2,752.06    down      36.80

10 Year Yield:    down   at    2.14%

Oil:    down   at    $53.36

24 May 2019

1) Oil prices dropped liked a brick in its worst day of trading in 2019, the result of jitters over trade with China. The price of oil serves as a barometer to the world economic outlook, with a slowing of the world economy translating into a lesser demand for oil and therefore lower oil prices. The situation is aggravated by a surprise jump in American crude stockpile, with inventories up by 4.7 million barrels. The stock market reflected the world economic situation by massive drops too.

2) Panasonic electronics is joining a growing list of firms distancing themselves from Huawei, by stopping their supplying of some electronic parts to Huawei. Companies are declining to do business with Huawei because of warnings from U.S. intelligence that Huawei presences a security risk with their new 5G technology, which will allow the Chinese military to use smart phones to gather foreign intelligence.

3) President Trump announced $16 billion dollars in farm aid to offset the losses by farmers in the ten month long trade war. Distribution of aid payments will be based on where they farm rather than what crops they till. Farmers were a key constituency that help bring victory to President Trump, and they have been the hardest hit from the trade wars with China. China used to import 60% of U.S. soy bean production.

4) 23 May 19 Stock market closings: Dow tumbles 400 points as trade war worries continue.

Dow            25,490.47     down    286.14
Nasdaq         7,628.28     down    122.56
S&P 500        2,822.24     down      34.03

10 Year Yield:    down   at    2.30%

Oil:    up   at    $58.19

21 May 19

1 ) The stock for electric auto maker Tesla fell today as the car maker faces an uphill battle to become profitable in the second half of the year. Delivery of its new cars are way down from sales forecast, with Tesla stock closing down 2.7%, the lowest in two and a half years. Additionally, Tesla may be facing severe financial consequences from a fatal crash involving their Autopilot system.

2) The fallout from Huawei being blacklisted in America has caused the stock market to fall. Huawei uses electronic components in their product line, high technology parts that can’t be procured from other vendors. The down side is these vendors have significant sales from Hauwei, which lowers their revenues.

3) The trade wars with China is threatening to close as many as 12,000 stores in America this next year. For the last two years, the closing of retail stores in America had been accelerating before the trade war started, the result of falling store traffic. Tariffs would cause price increases at a time when consumers are increasingly reluctant to spend their money. All ready, the closure of 6,400 retail stores have been announced.

4) 20 MAY 19 Stock market closings:

Dow              25,679.90    down     84.10
Nasdaq          7,702.38    down   113.91
S&P 500         2,840.23    down      19.30

Year Yield:    up   at    2.42%

Oil:   up  at  $63.30