1) Boeing Aircraft Co. has reached a $2.5 billion dollar agreement to settle the criminal charge that it defrauded the U.S. government by concealing information about the troubled 737 MAX. This is the ill-fated jet airliner involved in two fatal crashes that killed 346 people. The airline manufacturer entered into a deferred prosecution agreement and in turn, the Justice Department will dismiss the charge against Boeing. This settlement caps a two-year criminal investigation into the two MAX crashes. This settlement will have no bearing on any pending civil litigation. In addition, Boeing will pay a $243.6 million criminal penalty. With the penalty and the fund for relatives, Boeing says it expects to pay an additional $743.6 million dollars for the fourth quarter of 2020.
2) The cryptocurrency Bitcoin is at an all-time high in 2021, one coin now worth $36,000. It has doubled its value in 30 days. Bitcoin is the first and biggest cryptocurrency, which started up in January 2009, and eleven years after its invention, the total value of all Bitcoins in the world is around $359 billion. The Bitcoins are long, unbreakable codes stored in clouds or computers. Bitcoins were invented at the height of the 2008-9 financial crisis. The idea is a type of money that didn’t depend on the traditional banking systems. Cryptocurrency is popular in countries with inflation.
3) Venture capital backed companies in the United States raised nearly $130 billion dollars last year, setting a record despite the COVID-19 pandemic, up 14% from 2019, while the number of deals is down 9% to 6,022. The so-called mega-rounds, which are deals that are $100 million dollars or higher, also hit a record amount and number, with $63 billion dollars raised in 318 deals. However, there is a big drop in the very early stage investment called the seed money stage. The trend of big investments doesn’t look like it will slow in 2021 as there is a lot of capital chasing investments. It’s expected that 2021 is going to be a banner year for many tech companies.
4) Stock market closings for – 8 JAN 21:
Dow 31,097.97 up by 56.84
Nasdaq 13,201.98 up by 134.50
S&P 500 3,824.68 up by 20.89
10 Year Yield: up at 1.10%
Oil: up at $52.73
1) The credit worthiness of automakers has been lowered by Moody’s Investors Service, downgrading about $130 billion dollars in global automakers’ debt. Nine out of 22 global car makers have had their ratings lowered. General Motors Co. has a Baa3 rating for unsecured notes, the lowest investment grade rating and has a negative outlook. Ford Motor Co.’s senior unsecured debt is rated at Ba2, which it two notches below investment grade and also has a negative outlook. Thirteen of the automakers were not downgraded because of their better operating profiles and liquidity, but 75% have a negative outlook. World automakers were having troubles before the pandemic, but now are facing more declining auto sales and low prospects for near term improvement.
2) China has adopted a national security law that allows Beijing to override Hong Kong’s judicial system. The intent of China is to strangle and suppress political opponents in Hong Kong and subjugate the freedom of its citizens. This is another example of the re-emergence of Red China as a totalitarian state, and therefore represents a threat to surrounding nations. It strips the territory of autonomy promised under the handover agreement with Britain, with possible retaliation from America. The move by China has resulted in visa restrictions on officials from both sides, and a threat of future retaliation measures coming.
3) Fears of another virus pandemic have surface with the discovery of a new swine flu virus in Chinese pigs. The new strain, called G4 H1N1 has many of the same characteristics of H1N1 that caused the 2009 global pandemic, and can bind to, infect and replicated in tissue cells located in human airways. While not an immediate threat, the virus bears watching, but on top of the Covid-19 pandemic, the problem of controlling either outbreaks would be multiplied, especially with the now overstretched health care and hospital systems.
4) Stock market closings for – 30 JUN 20:
Dow 25,812.88 up 217.08
Nasdaq 10,058.76 up 184.61
S&P 500 3,100.29 up 47.05
10 Year Yield: up at 0.65%
Oil: up at $39.86
1) The $2 trillion dollar coronavirus relief bill has been passed and Treasury Secretary Steven Mnuchin said the people should receive cash payments within three weeks. The IRS has been tasked with distributing the monies, but the agency is hobbled by obsolete technologies such as 1960’s era computers, limited staff and a small budget. So there are questions if the agency can get the job done in a timely manner, let alone in three weeks. Experts say its more like a matter of months rather than weeks for Americans to receive their check.
2) Almost 3.3 million Americans have applied for unemployment benefits this last week, more than quadruple the previous record set in 1982. This is a result of the wide spread economic shutdown from the coronavirus pandemic. This rate of layoffs is expected to accelerate as the U.S. economy sinks into a recession with the collapse of revenues for a wide range of businesses. Economist predict the nation’s unemployment rate could approach 13% by May.
3) Gold has traditionally been a panic investment which people and nations buy to protect the value of their money. The worldwide panic over the coronavirus coupled with a flood of stimulus by central banks has ignited demand for gold to store wealth. But the gold market is running into difficulties in buying. Stored in high security vaults, government mandated shut downs have left access iffy. Also, refiners of gold have been forced to close because of the virus. Transporting gold is done via airlines, but the sharp drop in air service has also made transport of the metal difficult. All these factors have put a squeeze on gold futures.
4) Stock market closings for – 26 MAR 20:
Dow 22,552.17 up 1351.62
Nasdaq 7,797.54 up 413.24
S&P 500 2,630.07 up 154.51
10 Year Yield: down at 0.81%
Oil: down at $23.18
1) The investment bank Morgan Stanley is buying ETrade Financial Corp. for $13 billion dollars, planning to now manage money for regular people. ETrade will bring five million retail customers worth $360 billion dollars in assets, and an online bank with cheap deposits which Morgan Stanley can funnel into loans. Morgan Stanley had provided financial management to the upper end clients, the million and billionaires.
2) General Electric has avoided a business setback with exports of its jet engines to China. Fears that the Chinese could reverse engineer the new design and bolster its own aircraft manufacturing industry, has drawn threats of barring the LEAP 1C engine export to China. This would have been a major blow to GE’s efforts to recover from its slump, the engine sales being central to recovery efforts. The GE engine is slated for use in China’s C919 narrow body airliner now in development.
3) Clients of Fidelity Investments experienced shock and duress on finding their account balances at $0.00 or worst yet, even unable to find their accounts on the internet. This is a result of Fidelity’s website going down, which the company is working to resolve amongst a blizzard of Tweets from worried clients. Fidelity has 30 million individual investors, some 29.6 million brokerage accounts with a total of $7.8 trillion dollars in total customer assets.
4) Stock market closings for – 20 FEB 20:
Dow 29,219.98 down 128.05
Nasdaq 9,750.96 down 66.22
S&P 500 3,373.23 down 12.92
10 Year Yield: down at 1.52%
Oil: up at $53.73
1) Negative yielding debt are bonds with an interest rate below 0%. Since the peaking of the U.S.- China trade dispute, a third of all investment grade bonds have rates below 0%, for a total of $17 trillion dollars. This forces portfolio managers into riskier assets to deliver returns. But because the global economy is not growing any more, the bonds may not be saleable.
2) The Boy Scouts of America filed for bankruptcy protection under Chapter 11 in the face of 275 abuse lawsuits and another 1,400 potential cases to come. The organization has already paid out more than $150 million dollars in settlements and legal cost. Its strategy is to contain financial damage of abuse scandals and emerge as a more sustainable organization.
3) The luxury automaker JLR (Jaguar Land Rover) is facing halts in their UK production plants because of supply chain problems from the deadly coronavirus in China. The company is racing to prevent plant closures by the end of the month, going to such extreme measures as flying critical parts out of China in suitcases. Fiat Chrysler’s European plants are facing similar closures from parts shortages.
4) Stock market closings for – 18 FEB 20:
Dow 29,232.19 down 165.89
Nasdaq 9,732.74 up 1.57
S&P 500 3,370.29 down 9.87
10 Year Yield: down at 1.56%
Oil: up at $52.10
1) In order to help contain the Chinese coronavirus outbreak, China’s central bank has started deep cleaning and destroying potentially infected cash. The virus appears able to survive on surfaces for many hours which is why buildings in affected areas are regularly disinfecting elevator buttons, door handles and other commonly touched surfaces. Since cash money changes hands multiple times in a day, it too is a potential media to transmit the virus. The cash is disinfected with ultraviolet light and high temperatures, then stored for seven to fourteen days before returning to circulation.
2) The price of wine is expected to drop to its lowest levels in five years, in part because of a surplus of grapes in California. Additionally, there is a decreased demand for wine, with the lower prices lasting up to three years. Vineyards began planting thousands of acres of new vines in 2016, plus more efficient harvesting methods have combined to increase the supply of grapes.
3) GM (General Motors) has decided to pull out of Australia, New Zealand and Thailand as part of their strategy to exit markets that don’t produce adequate returns on investments. The car maker has 828 employees in Australia and New Zealand and another 1,500 in Thailand which will be eliminated.
4) Stock market closings for – 17 FEB 20:
Dow 29,398.08 down 25.23
Nasdaq 9,731.18 up 19.21
S&P 500 3,380.16 up 6.22
10 Year Yield: down at 1.59%
Oil: down at $51.92