1) The technology known as carbon capture and storage, a concept that has been around for at least a quarter century to reduce the climate damaging emissions from factories, is being pursued by major international oil companies. The idea sounds deceptively simple, just divert pollutants before they can escape into the air, and bury them deep in the ground where they are harmless. But the technology has proved to be hugely expensive, and so has not caught on as quickly as advocates hoped. Exxon Mobil, BP and Royal Dutch Shell plus lesser known Norway’s Equinor, France’s Total, and Italy’s Eni are investors in capture and storage projects.
2) Reports are, that amid all the trillion dollar spending, the White House is now starting to consider how to pay for the programs meant to bolster long term economic growth with investments in infrastructure, clean energy and education. The challenges are twofold: 1) how much of the bill is paid for with tax increases and 2) which policies to finance with more borrowing. The administration hasn’t decided whether to pursue a wealth tax. With interest rates so low, U.S. borrowing costs are manageable right now. The federal government currently collects the biggest chunk of its revenue, about half in 2019, from individual income taxes, which now tops out at 37% of income above $518,000 per year. For now, there are few signs of inflationary spiral or fiscal crisis that policy makers thought would accompany debt levels like today’s. The Congressional Budget Office this month projected that the national debt would double as a proportion of gross domestic product over the next 30 years. But the cost of borrowing is rising for the government and across the economy so the large debt could mean trouble in the future.
3) India’s foreign-exchange reserves has surpassed Russia’s to become the world’s fourth largest, as India central bank continues to hoard dollars to cushion the economy against any sudden outflows. Reserves for both countries have mostly flattened this year after months of rapid increase. India’s reserves, enough to cover roughly 18 months of imports, have been bolstered by a rare current-account surplus, raising inflows into the local stock market and foreign direct investment. India’s foreign currency holdings fell by $4.3 billion to $580.3 billion as of March 5, edging out Russia’s $580.1 billion pile. China has the largest reserves, followed by Japan and Switzerland on the International Monetary Fund table.
4) Stock market closings for – 15 MAR 21:
Dow 32,953.46 up by 174.82
Nasdaq 3,459.71 up by 139.84
S&P 500 3,968.94 up by 25.60
10 Year Yield: down at 1.61%
Oil: down at $65.29
1) Nikola Corp. announced that its long-range fuel-cell semi truck gets as much as 900 miles on a tank of hydrogen gas, and is due to come out in 2024. The Nikola Two fuel-cell vehicle would go at least 750 miles on a tank of hydrogen, while its Tre shorter-range fuel-cell truck, can run 500 miles, and remains on schedule to start production in the second half of 2023. Nikola said that their first Tre FCEV prototypes are scheduled to begin assembly in Arizona and Ulm, Germany, in the second quarter of this year and that testing and validation would continue into 2022. The Nikola 900-mile truck will have a sleeping cabin for drivers and a new chassis designed for North American highways.
2) From California to Indiana, aerospace to appliance manufacturers, American factories are struggling to procure cold-rolled steel. Manufactures are getting hit by a fresh round of disruption in the U.S. steel industry. Steel is in short supply and prices are surging. Unfilled orders for steel in the last quarter were at the highest level in five years, while inventories were near a 3-1/2-year low. The benchmark price for hot-rolled steel hit $1,176 per ton this month, its highest level in at least 13 years. Domestic steel prices have risen more than 160% since last August, leaving steel consumers in a quandary whether to absorb or pass along the increased cost. U.S. steel prices are 68% higher than the global market price and almost double China’s, even with prices in both China and Europe up over 80% from their pandemic-induced lows. But the price gap is so wide that even with a 25% tariff, it would be cheaper to import than buy from domestic mills. The United States imported 18% of its steel needs last year.
3) The global semiconductor shortage will slash earnings of General Motors and Ford Motor Co. by about one-third this year, as supply constraints hamper production and profits. The chip shortage will materially erode margins and could lower expected earnings before interest and taxes by as much as $2 billion for GM and $2.5 billion for Ford. GM’s EBITA margin could fall to 3.4%, while Ford’s could dip as low as 1.8%. Rising demand for the chips needed to build technologically advanced and connected vehicles has introduced a new set of challenges for the North American auto industry, with shortages triggering production cuts and temporary plant closures. Demand from consumer-electronic companies exacerbated the supply shortages amid the coronavirus pandemic.
4) Stock market closings for – 24 FEB 21:
Dow 31,961.86 up by 424.51
Nasdaq 13,597.97 up by 132.77
S&P 500 3,925.43 up by 44.06
10 Year Yield: up at 1.39%
Oil: up at $63.36
By: Economic & Finance Report
1) There are growing fears of another stimulus package as the national debt grows. One measure of unemployment suggests Biden’s $1.9 trillion dollar stimulus plan may do more harm than good. The U-6 unemployment rate, a less popular reading than the commonly cited U-3, suggests additional fiscal support could be unnecessary. The gauge (which includes those only partially participating in the labor force) currently is at 11.7%. Five of the past six recessions saw higher readings. The coronavirus pandemic initially pushed the U-6 rate to a record-high of 22.9% in April, but easy monetary conditions and the $2.2 trillion dollar stimulus package brought the rate down in a matter of months. Still, there are serious questions about the long term stability of the world economics as nations struggle to pay off these huge national debts.
2) A new Covid-19 variant has been discovered in Brazil adding to the two newly emerged variants from the United Kingdom and South Africa. Brazil is one of the worst affected countries by the virus, where more people have died of the virus than anywhere else outside the United States. An urgent COVID warning says the worst months are still ahead, and is expected to get more people sicker faster. Infections and deaths are expected to continue increasing.
3) President-elect Joe Biden has an ambitious environmental agenda, with a principle goal of transitioning away from using fossil fuels. There are many questions just how this climate plan could affect the oil and gas industry in America. The new requirements include disclosure of climate risks from public companies, a commitment to end new drilling permits for federal lands, and to eliminate tax subsidies for the oil and gas industry. Tougher methane regulations to give incentives for Americans to buy cars that do not run on gasoline. It’s not just the big oil companies which can be hurt, for there are thousands and thousands of small companies making up the supply chain businesses, as well as the small independent wildcatters who are producing oil. But while oil is slowly recovering with prices above $50 a barrel, it is all in jeopardy if these proposals go into effect. Biden’s proposals could face stiff challenges from Texas officials and the oil and gas industry itself.
4) Stock market closings for – 19 JAN 21:
Dow 30,930.52 up by 116.26
Nasdaq 13,197.18 up by 198.68
S&P 500 3,798.91 up by 30.66
10 Year Yield: down at 1.09%
Oil: up at $53.17
1) Reports are that Biden will unveil plans to spend trillions of dollars in pandemic and economic relief money this next week. Biden is introducing several members of his economic team, after data shows the U.S. economy has lost jobs for the first time in eight months as a resurgent COVID-19 pandemic has again shuttered restaurants and other businesses. Biden is calling for raising the minimum wage to $15, and for sending out $2,000 in direct cash payments. Biden claims that economic research confirms that with today’s crisis, especially with such low interest rates, taking immediate action, even with deficit financing , is going to help the economy. Biden also say they are looking into other economic relief actions that can be taken unilaterally, including extending a pause on repayments of federal student loans.
2) US naval aircraft carrier groups still rule the seas, but both Russia and China have plans to change that as they strive to expand their blue water navies, by developing new weapons that could threaten America’s dominance. For instance, it is reported that China launched two ballistic missiles that hit a moving target ship in the South China Sea thousands of miles from their launch sites. The Russian navy conducted its third test launch of it’s hypersonic anti-ship cruise missile that was launched from a frigate. The missile reached a speed of Mach 8 before hitting a target more than 200 miles away. These tests are the latest indication that American aircraft carriers, long viewed as kings of the seas, may soon face a real threat to their existence.
3) Iran has told South Korea not to politicize the seizure of their vessel, while demanding the release of $7 billion dollars in funds frozen amid U.S. sanctions. Additionally, Iran has denied all allegations that the seizing of South Korea’s tanker and its 20-member crew amounted to hostage taking, claiming instead it was Seoul who was holding Iran’s funds hostage. The vessel was seized based on an Iranian court order for ‘environmental pollution’, however, the ship’s Busan-based operator, said there was nothing to indicate that before the seizure of the vessel that Iranian authorities were probing possible violations of environmental rules.
4) Stock market closings for – 12 JAN 21:
Dow 31,068.69 up by 60.00
Nasdaq 13,072.43 up by 36.00
S&P 500 3,801.19 up by 1.58
10 Year Yield: up at 1.14%
Oil: up at $53.38
1) The price of oil advanced as shrinking U.S. crude inventories added to expectations of a tighter global supply outlook after Saudi Arabia surprised the markets by pledging to reduce production for the next two months. Gasoline demand is falling to its lowest level since late May, spelling trouble for refining margins as a tighter global crude balance and straggling demand crimp profits for processing a barrel of oil. Saudi Arabia has decided to reduce crude output in February and March as part of an OPEC+ supply agreement. With the outlook for crude oil supply suddenly looking tighter, the oil options markets have grown less bearish.
2) A top scientist explains why a more infectious coronavirus variant is a bigger problem than a deadlier strain, with the deadly coronavirus having now mutated. One variant, called B.1.1.7, is more infectious, and has forced the UK into national lock down, with the variant having also been discovered in several US states, as well as other countries around the world. However, the new variant does not appear to be more deadly, so existing vaccines should also work against it. A really severe disease that one person gets won’t necessarily have as much impact as a lesser disease which a huge number of people get. While not any more deadly the new mutant B.1.1.7 is much more infectious, and is to blame for the surging numbers of people infected, filling up UK hospitals that forced the national lock down. It is estimated to have a 71% higher growth rate than other variants.
3) North Korea’s supreme ruler Kim Jong Un has announced a military expansion, but it is unclear if Pyongyang plans to ramp up its nuclear program too. This could put pressure on the incoming Joe Biden administration just when it is most vulnerable. North Korea plans to boost its military capacities in defiance of international sanctions, as well as a new five-year economic plan, admitting the previous program has failed. It’s unclear just what the military expansion will involve.
4) Stock market closings for – 7 JAN 21:
Dow 31,041.13 up by 211.73
Nasdaq 13,067.48 up by 326.69
S&P 500 3,803.79 up by 55.65
10 Year Yield: up at 1.07%
Oil: up at $50.91
Oil: up at $50.48