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  • August 5, 2020

    1. Rehiring Trend Loses Pace.

      U.S. businesses sharply reduced hiring last month, indicating that virus infections slowed the economic recovery as many states closed parts of their economies again and consumers remained cautious about spending. U.S. firms added just 167,000 jobs in July, payroll processor ADP said Wednesday, far below June’s gain of 4.3 million and May’s increase of 3.3 million. July’s dismal hiring means that according to ADP the economy still has 13 million fewer jobs than it did in February before the viral outbreak intensified. Hiring cratered among companies of all sizes and in nearly all industries. A category that mostly includes restaurants, bars and hotels added just 38,000 jobs last month, after gaining more than 3 million in May and June combined.

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    2. Disney’s Digital Subscriber Base Surges Past 100 Million. 

      Its digital streaming segment was the sole bright spot for the company with Disney+ having 60.5 million paying customers as of Monday – up from 54.5 million on May 4. Disney also announced blockbuster feature Mulan in select markets as a rental at an additional cost. Elsewhere in its streaming portfolio, Hulu had a total of 35.5 million subscribers, up 27% year-over-year. Within that total was a 55% year-over-year increase for its cord-cutting Hulu+Live TV product which had a total of 3.4 million subscribers at the end of the quarter. Sports streamer ESPN+ was a meaningful asset with a total of 8.5 million subs. In total, the 100 million subscribers is a step in the right direction in a quarter when the company made a loss of $4.72 billion.

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    3. U.S. Economy At Pre-Pandemic Levels By End of 2021,

      Federal Reserve Vice Chairman Richard Clarida revealed that he expects the economy to grow in the third quarter, gushing that activity could return to pre-pandemic levels by the end of 2021. The health crisis hasn’t yet caused long-term damage to the U.S. economy, he said in an interview with CNBC, but the risk will grow the longer the pandemic lasts. Mr. Clarida added that the Fed is open to accommodating lending programs through generous fiscal policy that will effectively support the economy.

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    4. 30-Year Fixed Mortgage Drops To 3.14%.

      The average for a 30-year fixed-rate mortgage dropped to a record low of 3.14%. Mortgage rates have fallen faster than ever, and they’ve been remarkably willing to set record after record. Mortgage rates have crashed downward as the numbers of coronavirus cases and deaths in the U.S. have exploded higher and as economic news has gone from worrisome to horrific. Amid the economic uncertainty, risk-adverse investors have been plowing their money into Treasury bonds for safety. The demand for bonds has sent their interest rates into a steep downward spiral, and mortgage rates have trended similarly.

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    5. Improving Wendy’s Sales Gives Hope,

      Burger company Wendy’s Company (WEN) launched a “quick service” breakfast menu in March at the height of the pandemic shutdown in a direct challenge to McDonald’s Corporation’s (MCD) wildly successful all-day breakfast initiative. Wendy’s had failed several well-publicized attempts to build market share to that point, generating lots of skepticism on Wall Street. However, the new venture is now booking an impressive 8% of system-wide sales. Fast food reports are important economic indicators that offer insight into whether the U.S. economy can normalize and at what pace. Major work needs to be done as the reopening trade has fallen flat.

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  • August 4, 2020

    1. China’s Phase 1 Energy Purchases Woefully Short.

      Another flashpoint could shortly emerge as data revealed that China has bought only 5% of the targeted $25.3 billion in energy products from the United States in the first half of 2020, falling well short of its trade deal commitments at a time when relations between the two top economies are already sour. Compounding the problem is the devastation of energy companies in this industry as energy prices have crashed. The pandemic has changed the dynamics of energy purchases with the silver lining that China more than trebled its LNG import from the U.S.

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    2. U.S. President Trump Faces Potential Investigation For Bank And Insurance Fraud.

      Manhattan District Attorney Cy Vance requested a judge to uphold a subpoena for Trump’s tax returns today. The new filing in Manhattan Federal Court hinted at the scope of Vance’s investigation, which includes a subpoena for eight years of Trump’s personal and corporate tax returns. The probe was previously thought to center on an investigation of how the Trump Organization accounted for hush money payments made to women during the 2016 election. Inching towards the election, Trump is doing anything he can do delay to the subpoena. Could details of his tax returns be released in October? This sets up for an explosive run into the U.S. Presidential Election.

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    3. Young Americans Confront Future Poverty,

      33% of U.S. Gen-Z and Millennials admitted that the pandemic “had an extreme or very negative impact on their financial security.” During lockdown, a surge in layoffs and shrinking working hours hit these generations like a ton of bricks. This trend also appeared in the last 2008 global financial recession. Due to economic pressure and the limitations of life in lockdown, many younger consumers have already cut back financial budgets and focused spending on essentials like food, housing, health, and education, and have decreased spending on transportation, leisure, and recreation. But the pandemic could lead to more drastic outcomes in young people’s lives. Unemployment, reduced income, and financial insecurity could trigger more individuals to delay important life goals such as living independently, getting married, having children, or becoming homeowners.

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    4. Online Travel Industry Shedding The Fat,

      Online travel services company Booking Holdings Inc. (BKNG), formerly known as Priceline, said its Booking.com subsidiary plans to reduce its workforce by up to 25%, citing the impact of the COVID-19 pandemic on the travel industry. The firm said it is working with its works councils and employee representatives regarding the job cuts, and other cost reduction and restructuring actions. Demand has stalled after the disastrous U.S. reopening fell flat on its face. This wasn’t the kick in the teeth the company hoped for.

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    5. Ford CEO Resigns After Delivering -38% Return Since 2017,

      Ford Motor Co. revealed that CEO Jim Hackett will leave the carmaker in October, a surprise decision that followed the group’s stronger-than-expected earnings last week and sent shares higher in early Wall Street trading. The 65-year-old Hackett, who has led the group for only three years, will retire and be replaced by Ford’s chief operating officer, Jim Farley, 58, who will also serve on the company’s board of directors joined Ford in 2007 and headed its new business, technology and strategy group. Hackett will remain a special advisor to Ford until March of next year.

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  • August 3, 2020

    1. Microsoft Negotiating To Acquire TikTok.

      The short-form video app TikTok owned by China’s ByteDance has to be one of the top-notch growth tech assets out there on the market. This would easily make Microsoft a $2 trillion company and this big splash would clearly put them in a class of their own above Apple and Amazon. TikTok has over 100 million U.S. subscribers and is a direct competitor with Facebook. This has to be Mark Zuckerberg’s worst nightmare come true as ad dollars are poised to shift onto TikTok. U.S. President Donald Trump has given ByteDance and Microsoft until September 15 to conclude the deal after threatening to scorch the earth and ban the Chinese app first.

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    2. Congress Still Unable to Agree On A Stimulus Bill.

      With the eviction moratorium expiring and the $600 per week unemployment benefit ending, Democrats and Republicans are still at loggerheads over a new stimulus bill that would put more money into American’s pockets. This is taking place while the virus rages through the mid-west and south. Cases have exploded to 60,000 per day and the sticking point appears to be that Republicans want to get rid of $600 per week and replace it with $200 per week while the Democrats believe the $600 per week should be upheld.

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    3. SpaceX’s Crew Dragon Back After Historic Space Mission.

      SpaceX’s Crew Dragon spacecraft is the first private spacecraft to launch successfully into space and return as the spacecraft landed in the Gulf of Mexico. The last time two NASA astronauts visited space was over a decade ago. NASA has awarded SpaceX with $3.1 billion to develop the spacecraft, as well as launch six operational missions, and Musk will build off this success to finally one day move to Mars. The team will spend the next 6 weeks analyzing data before moving onto the next mission.

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    4. HSBC Can’t Create Miracles.

      The British/Hong Kong bank HSBC Holdings PLC has upped its bad debt charges from $7 billion to $13 billion as the coronavirus has its fingerprints all over their earnings report. The bank also indicated that capital reserves are quickly deteriorating, and revenue drivers are under massive pressure as the global outlook sharply erodes. Profit was down 65% year-over-year and the bank has already slashed headcount by 4,000 this year. The performance is a bad omen to come if the health crisis cannot be solved soon.

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    5. Chinese A.I. Firm Sues Apple For $1.4 Billion In China,

      You knew this was just around the corner and right on cue as Chinese A.I. firm Shanghai Zhizhen Intelligent Network Technology Co., Ltd. sues Apple for $1.4 billion for patent infringement. The company demands that Apple stop “manufacturing, using, promising to sell, selling, and importing” their patents. Apple has been absolutely brilliant in navigating Chinese politics and the economy. Remember, this is a country that has no judicial process and it is effectively criminal to compete against local firms as a foreign entity. People don’t understand the magnitude of what CEO of Apple Tim Cook has accomplished in the Middle Kingdom.

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  • July 31, 2020

    1. Rescue Package Held Up in Congress.

      The political circus between the Democrats and Republicans continue as they turn to the blame game because of the inability to hash out a solution to the expiration of $600 in unemployment benefits. Democrats want to extend this same sort of benefit but Republics want to cut it to $200 and set it at a 70% wage replacement. Democrats rejected a last-ditch short-term extension. Professional politicians in the U.S. seem utterly tone-deaf as GDP sinks 32% and the re-opening is reversing. This means more pain for the average American.

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    2. U.S. Government Cough Up $2.1 billion in Vaccine Deal.

      GSK and Sanofi will receive $2.1 billion for 50 million doses of Covid-19 vaccine. This was after the U.S. government paid Pfizer Inc (PFE.N) and BioNTech SE $2 billion for 50 million doses this past week. The deal with GSK and Sanofi roughly works out to $40 per patient. The race is on for a vaccine and heavyweights in the sector are slugging it out to come first to market.

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    3. Amazon Shows Why Tech Is The Best Sector.

      The e-commerce player beat earnings per share (EPS) by over $9! They also beat revenue forecasts by $7 billion. The beginning of the lockdown brought on a bottleneck of grocery orders that Amazon had trouble fulfilling causing delays. As many Americans became more comfortable with the e-commerce experience, they started to order everything else through Amazon allowing Amazon to profit on more lucrative items. Traditionally, groceries aren’t high margin goods. The company has secured additional capacity in fulfillment centers and management has forecasted 3rd quarter revenue growth somewhere between the range of 24% and 33%.

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    4. Fiat Chrysler Loses $1.24 Billion.

      Revenue slipped 56% year-over-year as manufacturing slowdowns affected the automobile manufacturer’s ability to produce cars. Global sales were down 63% to 424,000 cars. The company said that car plants are now operating at pre-pandemic levels boding well for future profits.

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    5. Under Armour Forecasts Sales Drop of 25%.

      Under Armour has a terrible 2nd quarter with sales dropping 41%, but they were buoyed by e-commerce sales which gave the company a lifeline. The apparel company said that 80% of stores in which its products are sold in were closed due to the lockdown. Shares of this company are down 47% this year and it appears as if there is no turnaround story in sight.

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  • July 30, 2020

    1. Historical U.S. GDP Drop of 32.9%.

      The ugly numbers from April to June GDP on an annualized basis shows how deep a hole the U.S. finds itself. The first wave of the virus was one thing, but re-opening too soon has stunted the recovery. The weakness was broad-based with personal consumption, exports, inventories, investment, and spending by state and local governments down big. The administration’s strategy of the virus magically disappearing has to be one of the most questionable government responses out there. Analysts calling for a “V-shaped recovery” were dead wrong as the country still awaits an actual federal strategy to combat the virus that has killed more than 150,000 Americans.

       

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    2. U.S. President Donald Trump Front-Running Election Results.

      In a way to get ahead of the narrative before the election results, U.S. President Donald Trump has suggested delaying the November election where poll numbers indicate he has no chance. His reason this time is to fight against mail-in voter fraud and this was after he told Fox News reporter Chris Wallace that he most likely will not accept the results of the November election. This sets up another circus-like atmosphere as we head into the last 90 days before the election. You can’t make this stuff up.

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    3. Unemployment Still At Painful Levels.

      1.434 million Americans filed for unemployment last week, the 19th straight week that claims have been above 1 million. The depth of pain American workers are experiencing shows no sign of slowing down. No doubt that the premature reopening and subsequent reclosing of the economy have not helped the American worker. Americans also wait day to day as government haggles over another stimulus bill. It’s cringeworthy times for the average U.S. worker, to say the least.

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    4. Resilient Huawei Soldiers On.

      Chinese tech company has surged past Korea’s Samsung to claim the title as the highest-selling smartphone maker in the world on the back of higher Chinese sales. Overseas sales have stalled because of the inability to use Google’s software being a meaningful deterrent to overseas sales. Huawei sold 55.8 million devices representing a 5% drop. Analysts have questioned whether this lead is sustainable as a lack of overseas sales will eventually bite.

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    5. German Economy Craters By 10.1%.

      German exports and imports of goods and services went into free fall in the second quarter, as did household spending and investment in equipment. The EU has been devastated along with most of the world’s economy. Germany hopes its stimulus package of over $153 billion, including a temporary VAT cut to boost domestic demand will help turn around the ship. Generous unemployment benefits are keeping a cap on the unemployment rate at 6.4%. German’s superior social benefits are shining through when it counts when compared to America’s lack of safety net.

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