1) China has announced they are ending caps to foreign financial ownership, allowing foreign firms to have full ownership of financial services companies. Starting in 2020, overseas institutions can apply for total control of onshore ventures. China has been opening its financial sector at an unprecedented pace to lure financial giants such as Goldman Sachs, JP Morgan Chase and Morgan Stanley into greater participation in China’s economy.
2) Investors are retracting the fastest since the collapse of Lehman Brothers. In the past six months, money market funds have attracted billions of dollars of inflows, the largest flight to safe assets since the second half of 2008, with investors raising their cash holdings despite falling interest rates. This is being driven by unresolved issues of the trade war, Brexit and the domestic political turmoil mixed with fears of a recession.
3) The U.S. and China have reached a partial agreement Friday which would broker a truce in the trade war. This will lay the groundwork for a broader deal later with Presidents Trump and Xi Jinping. News to the agreement cause the markets to shoot up over 300 points. Part of the agreement is for China to make agricultural concessions and the U.S. provide some tariff relief.
4) Stock market closings for – 11 OCT 19:
Dow 26,816.59 up 319.92
Nasdaq 8,057.04 up 106.26
S&P 500 2,970.27 up 32.14
1) Two of the largest Wall Street banks are trying to create an index to track the market impact of President Trumps’s tweets. J.P. Morgan Chase and Company has created an index to quantify the effects on U.S. bond yields. Citigroup Inc.’s foreign exchange team consider Trump’s tweets increasingly relevant to foreign exchange moves. Approximately 10% of the president’s tweets since his election in 2016 pertain to subjects of importance to U.S. markets.
2) The Elliott Management Corp. offers a plan to boost the share price of AT&T by more than 50% through asset sales and cost cutting. The four part plan calls for the company to divest assets including satellite-TV provider DirecTV, Mexican wireless operations, parts of its land line business and other assets. The bases for the plan is for AT%T to exit businesses that don’t fit its strategy as well as running more efficient operations, plus stop making major acquisitions.
3) China has added almost 100 tons of gold to its reserves since resuming buying in December. Bullion is near a six year high as central banks including the Federal Reserve cut interest rates. Trade war restrictions as with China, or sanctions as with Russia, gives an incentive for central banks to diversify, with gold providing an ideal hedge with increasing political and economic uncertainty. Spot gold was $1,510.27 an ounce on Monday, and is expected to rise to $1,600 an ounce in the coming months.
4) Stock market closings for – 13 SEP 19:
Dow 27,219.52 up 37.07 Nasdaq 8,176.71 down 17.75 S&P 500 3,007.39 down 2.18
1) The ever present problem of growing student debt is being aggravated by the ever rising cost of college. This rise in cost is fueled by decreasing funding by governments, a lack of cost controls by college administrations and an emphases on plush facilities instead of real education support.
2) Manufacturing shrank in August for the first time since August 2016. The manufacturing index slid to 49.1 from 51.2 in July, where an index below 50 signals a contraction. Production declined by 1.3 percent while employment fell by 4.3 percent with new orders falling by 3.6 percent. With the trade war increasing the cost of Chinese manufactured imports, it would be expected that American manufacturing would be increasing.
3) The United Auto Workers union is targeting GM for contract talks, with the UAW approving a strike. The UAW represents nearly 150,000 hourly workers at Ford, General Motors and Fiat Chrysler with 96% of it’s workers OKing a strike. Leaders of the UAW are under investigation for corruption by the FBI who have conducted raids on key leadership members recently for mis use of monies. The union is angry at GM for layoffs and the closing of plants, plus production plants in Mexico.
4) Stock market closings for – 3 SEP 19:
Dow 26,118.02 down 285.26 Nasdaq 7,874.16 down 88.72 S&P 500 2,906.27 down 20.19
1) Gold is renowned for being a panic investment, something that investors move their money into when fearing that sever financial troubles are coming. Investors are worried about political uncertainty that plagues world markets, and are pushing gold prices up to record highs. Real yields in the US have fallen to about zero which makes gold especially appealing as a safe haven.
2) The Price of oil falls as the trade war deepens stoking concerns over growth. Principal cause for concern is the trade war and the deterioration of manufacturing in China. Oil prices is considered a gage of economic health because slower growth means there will be less demand for oil, so prices drop. Furthermore, since oil is bought and sold as futures commodities, the price reflects anticipation of near future economic state of the world.
3) Owners of 98,000 Volkswagen AG U.S. vehicles which had fuel economy labels overstating efficiency will ask a U.S. judge for $26 million dollars. The EPA said the German automaker must forfeit greenhouse gas emissions credits and lower the fuel economy ratings on these vehicles after using software to falsify fuel efficiency ratings.
1) The industrialist David Koch and political activists dies at age 79. The billionaire is noted for using his fortune to support right wing political movements thereby reshaping American politics. Brother to Charles Koch, the pair were one of the richest people in the world. Mr. Koch die Friday in Manhattan after a long battle with cancer.
2) China is retaliating in the trade war by imposing a tariff on $75 billion dollar on imports from China. It’s a 10% addition on top of existing rates pushing the trade war up another notch, in retaliation for the tariff imposed on $300 billion dollars of Chinese imports. China is also reinstating tariffs on cars and auto parts originating from America.
3) The race for the next internet revolution is on with Bezos and Musk planning to use low orbiting satellites to provide broad band world wide service. Jeff Bezos’ Project Kuiper’ will used a constellation of 3,236 satellites for broad band internet communications with service costing lower than today’s high speed internet service, allowing Americans to save more than $30 billion dollars a year. While testing is now in progress, there are tentative plans to begin serving customers as early as next year.
4) Stock market closings for – 23 AUG 19:
Dow 25,628.90 down 623.34 Nasdaq 7,751.77 down 239.62 S&P 500 2,847.11 down 75.84
1) Home construction in America fell in July by 4.0%, in particular apartments. While a solid job market coupled with falling mortgage rates have boosted the desire to purchase new homes, the inventory shortage and rising prices have stifled sales. However, building permits issued have risen 8.4% with apartment complexes accounting for most of the increase.
2) Japan surpasses China as the largest foreign holder of American Treasury notes. Japan now holds $1.12 trillion dollars of Treasurys while China has $1.11 trillion dollars worth. Since the start of the trade war, China has bought less of the U.S. sovereign debt, with speculation that one tactic China could take in the trade war is to unload its holdings of U.S. debt. So far, there are no indications of China doing that.
3) The threat of fresh water shortages across the world is becoming more pronounced, with western America experiencing growing problems. The Colorado River, is a 1,450 mile source of water for seven states, who’s flow decreased 19% from 2000 to 2014. The river’s water is drawn off to supple cities and agriculture so almost nothing reaches the Pacific ocean. The bulk of the water is used by farmers producing a significant amount of America’s food, with almost 90% of the winter’s vegetables come from the river’s irrigation.
4) Stock market closings for – 16 AUG 19:
Dow 25,886.01 up 306.62 Nasdaq 7,895.99 up 129.38 S&P 500 2,888.68 up 41.08
The Central Bank of China instituted key interest rate reforms on Saturday, August 17, 2019. The China’s Central Bank did this to help companies and corporations with borrowing costs.
China has been suffering from the trade war with the US. The lower interest rates could help companies with lowering their borrowing costs. The central bank will be trying to improve thier interest rates, which will then assist these companies in borrowing costs that would be minimal.
China’s State Council indicated they want the country to focus on market based reformation, which will then lower real interest rates significantly. -SB
1) Retail giant Walmart reported a strong second quarter and raised its earnings expectations for the year. This news eases concerns about consumer demand dropping because of the trade war with China. Shoppers spent more at stores and websites, indicating the consumer economy has not lost steam. Walmart posted a 20 quarter or five years of growth unmatched by any other retailer. The retailer gets 56% of its revenues from grocery sales, so it is less vulnerable to tariffs.
2) In July, American’s spent more at retail stores and restaurants, indicating the economic growth remains healthy, despite fears of a coming global economic slowdown and possible recession. Despite such fears, consumer confidence remains steady. Most economists are not forecasting a recession, because consumer spending and the job market remains strong.
3) Saudi Arabia is ramping up its oil exports to China, with crude shipments doubled over the last year, while its oil exports to America have dropped by nearly two thirds. This shift has occurred in part from oil embargo on Iran, which has caused Asian importers to shift away from Iran to other sources, aided by U.S. growing independence of any oil imports. The U.S. is becoming the worlds largest producer of oil.
4) Stock market closings for – 15 AUG 19:
Dow 25,579.39 up 99.97 Nasdaq 7,766.62 down 7.32 S&P 500 2,847.60 up 7.00
1) Royal Dutch Shell is building a 386 acre chemical plant to make bulk plastic. The construction project is one of the largest active construction projects in America employing over 5,000 people. The plant has hundreds of miles of pipelines to feed it petroleum and will have its own rail system with 3,300 freight cars. The new plant is expected to produce a million tons of plastic pellets each year.
2) Saudi oil company Aramco is buying a 20% share in Reliance Industries Ltd of India an oil to chemicals business. This will include the 1.24 million barrels a day Jamnagar refining complex. This is part of Aramco plan for refinery investments to double its processing network and handle as much as 10 million barrels of oil a day by 2030. Reliance has agreed to purchase 500,000 barrels of crude a day over the long term.
3) The IMF (International Monetary Fund) has warned that addition tariffs in the trade war will sharply cut Chinese growth. The IMF has already forecast a 6.2% decline in China’s growth for this year, which assumes no new tariffs. They forecast a sharp cut in China’s growth if the additional tariffs threaten are imposed on the first of September. President Trump has cast doubts on a trade deal, and indicated he might cancel the trade talks scheduled for September.
4) Stock market closings for – 12 AUG 19:
Dow 25,897.71 down 389.73 Nasdaq 7,863.41 unchanged 0.00 S&P 500 2,883.09 down 35.56
1) The electric car company Tesla Inc is being sued claiming the company limited battery range of its older vehicles using software updates. The alleged intent was for Tesla to avoid costly fixes to defective batteries. The lawsuit is seeking class action status for thousands of Model S and X owners. The suit claims that older generation batteries had their range curtailed by an automatic software update. As a result of a battery fire, Tesla claims they are revising charge and thermal management settings via the software to further protect the battery and improve battery longevity.
2) The Chinese-American trade war hasn’t been bad for all nations, other nations are experiencing increase trade as a result of the war. Australia is the biggest beneficiary with exports to China of natural resources. Second is Switzerland, the third is Mexico which has replaced China as U.S. largest exporter. Fourth is Brazil who is benefitting from agricultural export to China and the fifth is Canada.
3) Malaysia is expanding its efforts to prosecute seventeen Goldman Sachs executives, who were allegedly involved in misleading investors in a $6.5 billion dollar bond sale. The bonds were for the state investment fund, 1 Malaysia Development Bhd or 1MDB. Charges include executives knowing that funds would be siphon off so Malaysia is also seeking to recoup funds and fees.
4) Stock market closings for – 9 AUG 19:
Dow 26,287.44 down 90.75 Nasdaq 7,959.14 down 80.02 S&P 500 2,918.65 down 19.44