1) Many on Wall Street are betting the Federal Reserve Bank will again reduce the cost of borrowing in light of the coronavirus economic threat. Futures contract traders consider there is nearly a 60% chance of a rate cut this March, when the Feds meet, in an effort to counter the effects of the virus on America’s economy. While it appears the spread of the pathogen is declining in China, elsewhere in the world it’s on the rise.
2) Oil prices continue its downward spiral with a twelve month low for U.S. crude. The drop in oil prices is in anticipation of slowing of the U.S. and world economies, a direct result of the spreading coronavirus threat. China, a major world importer of oil, has cut back purchases as it containment policies reduces oil consumption from limited travel to and from major cities, as well as travel within those cities.
3) The home food delivery business continues to grow with DoorDash filing the paperwork with the SEC (Security and Exchange Commission) to start the IPO (Initial Public Offering) process to offer stock to the public. The IPO process has met with poor results from unprofitable companies like Lyft Inc. and Uber Technologies Inc. while WeWork was forced to abandon its IPO last year because of a poor showing of its stock. DoorDash faces the same challenges as Lyft and Uber..
4) Stock market closings for – 27 FEB 20: This is the worst point decline ever for the three markets. The Dow has dropped 3,000 points since Monday.
Dow 25,766.64 down 1190.95
Nasdaq 8,566.48 down 414.30
S&P 500 2,978.76 down 137.63
1) There are fewer international students coming to America, which is hurting American universities and the economy. International student enrollment has been declining since the fall of 2016 which is estimated to cost the economy $11.8 billion dollars and more than 65,000 jobs. There is a perception among students that getting a visa for the United States is more difficult and it’s increasingly unsafe in the U.S.
2) National retailer Kohl’s posted quarterly sales that was lower than analysts’ projections, and has fallen the most in almost three years. This raises further concerns about the future of department stores, a market segment that has been struggling to adapt to broad changes in consumer habits. Kohl’s shares fell as much as 18%, the biggest one day tumble since January of 2017. Other department store chains such as Macy’s and Nordstrom have seen declines too.
3) Home Depot shares fell after reporting a third quarter earnings below Wall Street expectations, and the company cut its full year outlook for the rest of 2019. Like so many other traditional retailers, Home Depot is struggling to adapt to the online market place. While they are spending a lot of money to become a bigger online player, the company hasn’t seen the results they expected. The home improvement retail landscape is getting tougher.
4) Stock market closings for – 19 NOV 19:
Dow 27,934.02 down 102.20 Nasdaq 8,570.66 up 20.72 S&P 500 3,120.18 down 1.85
1) The pizza giant Domino’s had been the darling of Wall Street, with its soaring sales, but its growth has gone stale. The company’s reported revenue and profit missed Wall Street’s forecast with its stock sagging. The same-store sales grew just 2.4% compared with last years 6.3%. Domino’s operates in 85 countries with 10,000 stores outside of the U.S., which generate half of its revenues.
2) Boeing aircraft has got its first 737 MAX order since the crashes forced grounding of all 737 MAX aircraft. Boeing’s net order tally, including cancellations, was a negative 84 for the first nine months of 2019. In addition, Southwest Airlines’ pilots union has filed a law suit against Boeing for damages caused by the prolonged grounding of its 737 MAX, claiming loss of pay to its pilot from canceled flights and seeing $115 million dollars in compensation.
3) Duke University professor Campbell Harvey, the father of the yield curve and pioneer of the economic forecasting model, says to prepare for a recession. He based his prediction on inverted curves, which happen when short term Treasury yields are higher than those with longer duration, which his research indicates the coming of a recession.
4) Stock market closings for – 8 OCT 19:
Dow 26,164.04 down 313.98 Nasdaq 7,823.78 down 132.52 S&P 500 2,893.06 down 45.73
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) Fears are growing that the world is moving towards an economic crisis, based on signs from Washington and Wall Street, starting with President Trump’s retreat from adding new tariffs. The stock market rose over the news meaning Christmas had been saved for this year’s sales. But the bond market wasn’t as optimistic, the rates dropping indicating a lack of confidence in the future economy. Called an inverted yield curve, it signals investors expect a weak growth and lower inflation over the years.
2) The troubling signals from the bond market caused the stock markets to drop, with the Dow dropping 800 points to erase all of Tuesdays gains. Worried about the state of the economy, investors are rushing to long term safe haven assets, pushing the yield on 30 year Treasury bonds to a new record low. The Cboe Volatility Index jumped to a high of 22.
3) The financial problems plaguing Boeing aircraft from the 737 MAX grounding may delay or even cancel Boeing’s next airliner design, the 797. A mid-size airplane, the aviation industry expected Boeing would go ahead with a new design, but the sever loses from the 737 MAX are now casting doubt on that happening, especially if the world economy does deteriorate. The 797 is expected to be a long range jet seating about 250 passengers. The design would make extensive use of light weight composites giving good fuel economy and range. Additionally, engineering resources are being pulled away from the 797 to work the 737 MAX problem.
4) Stock market closings for – 14 AUG 19:
Dow 25,479.42 down 800.49 Nasdaq 7,773.94 down 242.42 S&P 500 2,840.60 down 85.72
1) Mexico has become America’s largest trading partner as a result of the U.S. – China trade war. For the first half of 2019, trade between America and Mexico was $309 billion dollars worth of goods, just over 15% of all U.S. trade. In comparison, trade with Canada was $306 billion dollars and China at $271 billion dollars. Trade with Mexico has been steadily rising for several decades, while trade with Canada has historically been high it’s always been flat.
2) A battle may be developing between Amazon and FedEx over handling packages, because of surging e-commerce shipments. With their ground delivery deal ending, FedEx is deepening its pullback from Amazon. The ending of two delivery contracts with Amazon means FedEx will have to seek out new major customers for lost sales while Amazon will now depend more on the U.S. Postal Service and UPS. FedEx is seeking to serve major e-commerce companies such as WalMart as the one-day delivery service for e-commerce heats up.
3) Lift, the internet based ride sharing rival to Uber may become profitable sooner than anyone had predicted. It’s growth is accelerating faster than anticipated, which clears the path to profitability. Some are speculating that 2019 might be Lift’s ‘peak loss’ year with losses being less than 2018. Wall Street is acting positive over the news with Lift’s stock rising from an overnight boost of 4%.
4) Stock market closings for – 9 AUG 19:
Dow 26,378.19 up 371.12 Nasdaq 8,039.16 up 176.33 S&P 500 2,938.09 up 54.11
1) General Electric suffered a loss last quarter despite two previous profitable quarters, a result of the restructuring cost of its electric power division and the grounding of Boeing’s 737 MAX. GE provides the jet engines used on the 737, which Boeing has reduced production of. The grounding of Boeing has drained off more cash than expected, but General Electric forecast a profitable year for 2019.
2) President Trump has fulfilled his campaign promise to lower drug prices by creating a pathway to allow Americans to legally and safely import lower cost prescription drugs from Canada. This reverses the opposition from federal health authorities, despite the public outcry over high prices for drugs in America. It’s uncertain when imports can start as the plan has to go through the time consuming regulatory approval and possible court challenges from drug makers. The opening of the door for cheaper drugs and keeping it open still faces an up hill battle with the political organizations of the pharmaceutical industry.
3) In an effort to keep the American economy on track, the Federal Reserve has reduced the benchmark interest rate by a quarter point to about 2.25%. This is a modest and widely expected move intended to keep the economy healthy in face of the trade war with China and the slowing economic growth overseas. In addition, the feds signaled that the cental bank is ready to make more cuts to stimulate the economy if necessary. A higher interest rate makes for a stronger dollar, a disadvantage for international trade. Wall Street anticipates as many as three more cuts this year, while in addition to the rate reduction, the feds will stop selling off assets this August, two months earlier than expected.
4) Stock market closings for – 31 JUL 19:
Dow 26,864.27 down 333.75 Nasdaq 8,175.42 down 98.19 S&P 500 2,980.38 down 32.80
1) Gold, which is known as a ‘panic’ investment to guard against economic collapse, is passing $1,400 an ounce for the first time since 2013. Fueled by the fears of an international economic downturn and possible military action between Iran and the U.S., coupled with the large buying of gold by China, experts say that prices could reach $1,500 to $1,600 per ounce in the next year. Gold has historically been seen as a guard against devaluation of currencies.
2) Slack, the workplace messaging software used in tech and media companies, may be breaking the grip Wall Street has on Silicon Valley. The IPO’s of tech companies have been the controlling link of Wall Street on tech companies, but Slack used direct listing of its stock instead of the traditional IPO, thus cutting Wall Street out of the equation. This means that Wall Street isn’t able to tell companies what to do in becoming a public company.
3) Automation continues to cut into the job market with these ten career fields declining because of technology. The Telemarketer jobs are down 52%, followed by File clerks down 46%, Sorters of mail at 44%, Bill collectors down 39%, Data entry 36%, Order clerks 36%, Chief executives at 35%, Production worker helpers 30%, Installation, maintenance and repair helper 30% and finally Telecommunication line installer/repairers down 30%.
4) Stock market closings for- 21 JUN 19:
Dow 26,719.13 down 34.04 Nasdaq 8,031.71 down 19.63 S&P 500 2,950.46 down 3.72
1) Wall Street is expecting another surge upwards of the markets, which they are terming a ‘melt up’ and analysts are recommending call options contracts which pay off in a move higher. Call option contracts give the investor the option to buy in at an agree price, but are not obligated to buy.
2) Pork prices are expected to jump this year because African swine fever is ravaging the hog population of China, a big consumer of pork. Because there still isn’t any containment of the disease, analysts estimate it will be at least twenty months of elevated pork prices. Non-domestic pork demand will continue into 2020 at a minimum.
3) With U.S. crude stockpiles rising, traders are fearing oil prices will slide despite bullish forces traditionally pushing oil prices up. The tightening sanctions on Iran, the unstable state of Venezuela and OPEC’s desired to reduce production, are all forces that push oil prices up, but U.S. domestic production and rising stockpiles may counter these forces.
4) 1 MAY 19 Stock market closings:
Dow 26,430.14 down 162.77 Nasdaq 8,049.64 down 45.75 S&P 500 2,923.73 down 22.10
BOFA Merrill Lynch analysts have warned of a correction in the stock market because of the high risks presented in this year US presidential election. Wall Street has its bets on former Secretary of State; Hillary Rodham Clinton. Wall St. believes Secretary Clinton will be the next president of the United States, but nothing has been characterized as a sure thing, as uncertainty is still present.
Don’t count the Republican challenger, Donald J. Trump out the mix. Trump is still in contention for the presidency, as some stats have him only trailing by 4-5% behind Clinton. With news emerging on Clinton’s foundation connections recently, with heads of state of other countries and Mr. Trumps miscalculations and flubs, both candidates are not a shoe in by many voters this cycle. This seems to have an effect on the stock market and strategists believe that it is placing the stock market on edge.
Analysts and strategists particularly from banking giant BOFA Merrill Lynch, have indicated a strong correction and slowing down of new investment and businesses this cycle; because of how the election this year is progressing. The presidential election has left the domestic markets in unease and in tumult. Nothing is ever definite in the global markets but all eyes are watching to see the effect the elections present to US and global financial markets. -SB