Everyone and every company, whether big or small is feeling the effects of the pandemic in one way or another. The president has to eat his own words about the disease. He repeatedly has said that the corner is turned. A vaccine is eminent. The problem turned up in his internals. Let us hope he recovers and in the cure, a more humane leader emerges... He didn't. He is rolling the political dice with stimulus. He has asked his party leaders not to work with the Democrats until after he wins the election.
With that said, the way that news is being delivered on network television reminds me of the Woodstock period. In those days, the evening news was more instrumental in its reach within our nation. The evening news was our periscope to the nation. The one point that is so similar is this. Today, every report contains a segment on the virus - the number of cases, deaths and related stories. Back in the day, every news cast contained a report on Viet Nam - causalities, deaths (body bags), and related stories. The negativity of this continual onslaught effects you in more ways that is understood. Even if you never get sick physically, your mind is effected. Thus, my opening sentence, "Everyone and every company..." is feeling pain in one way or another. However, since this is a political and economic blog, I turn my attention to what we here at Evolution are seeing.
Segment after segment...
are beginning to feel the economic pressure caused by the virus and the government's response. The stimulus CARES Act gave money to many industries, both small and large. Within this stimulus program, there were many cases of favoritism and fraud. It is not in the realm of this piece to argue about the inequalities of the program. It is about the lingering effects of the disease. The financial aid of the stimulus is over, but the virus has not passed as expected. As the data comes forward, it is like listening to the body count during the Nam days. It will drive the stock market lower. The market will "jump the creek" and pass support levels. How could it not? Consider these trends:
Airline Industry
The four big carriers expect to layoff 150,000 workers. American Airlines announced this week that 19,000 are getting pink slips. United says it will let go 16,000, but it is possible that number could rise to 36,000. Keep in mind that the airline industry employs one in fourteen jobs in the US. Then, there are the related segments of labor like car rentals, cleaning firms that take care of terminals and hotels. We covered that industry in our last article. In general, these are quality jobs and losses here will hurt the already shrinking middle-class.
Oil
The word is small, but its reach is gigantic. Chemical firms need its energy. Utilities need its gas to make electricity. Plastic cannot be made without it. This hurts the packing industry. The oil industry offers higher pay and there are so many firms in the supply chain that a whole chapter would be needed to explain its real effect. According to the Dallas Federal Reserve Governor, oil companies need crude to sell at $45 and up to keep drilling. Currently, the price fell below $40 and sinking fast. The charts see $28. This is not pretty. It will lead to force mergers as the industry consolidates. It will also flood the bankruptcy courts. Already, two majors, Shell and BP are seeking to sell assets and reshape their firms into alternative energies. This is the world's most important commodity. The virus and government lockdowns has decreased the need for gasoline. With a stay at home an on again, off again response, the use of gasoline has been nullified. This too, will hit the middle-class hard.
Labor in general...
could be viewed in many ways. The difference in unemployment from Sept. 2019 and Sept. 2020 is 186%. A report by Challenger, Gray and Christmas on job losses states that job losses continue to rise. From August to September of this year, the losses roses another 2.6%. They go on to say that 21 million jobs have been lost this year. CNN reports that it will take five years for the US to recover job losses and that another 4 million jobs are lost forever.
Explain this to me...
837,000 filed unemployment claims last week. The government also states that 661,000 jobs were created last week. Then, they say that unemployment fell to 7.9%. How can you have more people filing for unemployment benefits than people who found work lower the percentage of the unemployed? Then, there is this alarming tidbit...
179 million...
citizens are at risk this month to have their water and power turned off due to lack of payment. If people cannot afford to cover basic monthly bills like their water and utilities, how can they pay their rent or mortgages? The disease is unseen, but soon its effects will be seen by all.
Bear Flag Patterns
appear in many of the market leaders like Apple and Microsoft...and then, there is this...
EU versus Brexit, again...
X-Factor
The next is a list of restaurants that are closing their doors. They are mostly chains. The effects of the virus is like an economic cancer that is eroding these firms. Keep in mind that each store that closes multiplies the number of unemployed by X-times.
*Sizzler: six stores closing. *Dunkin Donuts: 800 have been dunked. *Burger King: hundreds gone. *Pizza Hut: 300. *Even Starbucks: lost 400. *McDonald's: Yes, they lost 200. *Ruby Tuesday: 148 *Souplanation or Sweet Tomatoes: 97 and going to bankruptcy. *Steak 'n Shake: 69. *Zinburger: 15. *Le Pain Quotidian: 63. *IHOP: 49. *Brio Tuscan Grille: 48. *Bar Louie: 38. *Craft Works: 37. *Denny's: 15. *Taco Cabana: 19. *Chuck E. Cheese: 34. *Rubio's Coastal Grill: 12. *Pie Five: 10. *Specialty Café and Bakery: 50. *California Pizza Kitchen: several. *Potbelly: 100 and maybe all.
Then, there are these firms that are borderline, but heading the wrong way.
*Outback - Applebee's - Checkers and Rally's - Dave and Buster's - TGI Friday - Friendly's - Cosi - Too Jay's - Luby/ Fuddruckers's - Red Robin- Cheesecake Factory (sorry, Penny).
Bankruptcy
*Town Sports - *Century 21 - *Lord and Taylor - *Stein Mart - *Virgin Atlantic - *Tailored Brands -*Remington - *Ascena Retail - *Briggs and Stratton - *Paper Store - *New York and Co. - *Muji -*Brooks Brothers - *Sur La Table - *Lucky Brand - *Aero Mexico - *Wendy's (NPC International) - *Cirque du Soleil - *GNC - *24 Hour Fitness - *Tuesday Morning - *Latam Airline - *Hertz - *Pier 1 *J.C. Penny - *J. Crew - *Gold's Gym - *Neiman Marcus - *Avianca Air - *Aldo - *True Religion - *Frontier Communication - *Speed Cast International - *Stage Stores - *Dean and DeLuca -
Then, there are these firms that are getting closer to a court date.
J. Jill - Sea World - AMC Theatres - Sears and K Mart - Game Stop - Rite Aid - Party City - and this one who has been in and out of court, Forever 21. Even state sponsored firms are no longer being supported like Norwegian Air.
All in all the list grows every month because like rent these firms have loans that need to be paid and they are past delinquent. All of the above is known data with the ongoing knowledge that there is more unknown data to which paints a cold winter that is coming to the US and world economies.
