OP-ED: Democracy Wins!

Published November 13, 2020

William RutherfordFormer Vice President Joe Biden, Democrat nominee for president, gathered the largest vote total for a candidate in the history of U.S. presidential elections. President Trump repudiated the results, claiming that he had the most legitimate votes; few people backed his claims. Trump says the election is far from over. No doubt extensive litigation is still to come.

The election process was exceedingly slow, but exceedingly meticulous, as Biden ground through the primaries, defeating foe after foe. Newscasters are framing his election as an example to all of us of the importance of never giving up on one’s dream. The general election saw record voter turnout, not only in person but also by mail. Because of the turnout, the counting process took several days, but in the end America’s democracy survived and stood firm. The election was a triumph of our democracy. The result will be noted all over the world and in history books.

In transitional times like these, our enemies perceive an opportunity to undermine us. China and Russia are pointing to the aftermath of our election as an indicator of our failing democracy. There are many […]

By |November 16th, 2020|Categories: Daily Journal of Commerce|Comments Off on OP-ED: Democracy Wins!

OP-ED: After Strong Push, U.S. Slouches Toward More Stimulus

Published October 9, 2020

William RutherfordAlthough the Federal Reserve is doing as much as it can to stimulate the economy, it has said repeatedly that the executive and legislative branches need to do likewise. There is little downside risk to taking action, the Fed chairman says. But even as the economy remains soft and layoffs continue, Congress and the White House have been dragging their feet in reaching an agreement on another stimulus package. It should be noted that nearly 4 trillion dollars have been spent so far in shoring up the economy from the effects of the virus.

The White House has continued its trade war with China – the second largest economy in the world. The trade war seems to have little positive benefit for the U.S., as our trade imbalance widens but the Chinese economy grows.

The coronavirus, which has been shaping the economy for months, took on the executive branch this past week. The personal health of top military officers and legislators suffered. The result is paralysis for both branches: an attempted coup by the virus to take over the government fewer than 30 days before Election Day.

The ability of […]

By |October 13th, 2020|Categories: Daily Journal of Commerce|Comments Off on OP-ED: After Strong Push, U.S. Slouches Toward More Stimulus

OP-ED: Tech Bubble Bursts… Or At Least Becomes A Lot Smaller

Published September 11, 2020

William RutherfordAfter the markets hit new all-time highs, the tech bubble burst and erased $1.7 trillion in value. However, investors are still up $13 trillion, or more than 56 percent, since March lows.

The Nasdaq is up about 26 percent year to date and up 63.58 percent from its 52-week low of 6,631.42 on March 23. After remarkable gains in August, the market started September with more gains and then losses. The Dow Jones dropped 1.8 percent in the week leading up to Labor Day, while the tech-heavy Nasdaq dropped 3.3 percent, losing nearly half of its August gains.

Some observers blamed earnings disappointments, and some blamed whale-size option trading by SoftBank. Possibly it was concern over the virus, lack of progress on another relief bill and increasing tensions with China. Was it a warning?

Like the chief in “One Flew Over the Cuckoo’s Nest,” investors seemed stoic. By Friday afternoon, prior to Labor Day weekend, selling had turned to buying. Apple turned an 8.3 percent drop into a 0.1 percent advance. Was it a buying opportunity?

The day after the holiday […]

By |September 14th, 2020|Categories: Daily Journal of Commerce|Comments Off on OP-ED: Tech Bubble Bursts… Or At Least Becomes A Lot Smaller

OP-ED: US Economy Suffers Record Downturn; Nasdaq Hits All-Time High

Published August 7, 2020

William RutherfordThe U.S. economy contracted at a record rate last quarter. A slowing job market became another sign of a slowing economy. A summer surge in virus infections added to worries.

The Commerce Department said that the U.S. gross domestic product declined at a seasonally and inflation-adjusted 32.9 percent annual rate. It was the steepest drop in 70 years of record-keeping. The U.S. economy is driven by consumer spending, which represents about 70 percent of the U.S. economy. But if one can’t go to a restaurant or the hair salon, spending will decline. Spending on nondurable goods such as clothing and groceries fell by 15.95 percent. At the same time, spending on durable goods fell only by 1.4 percent. Plenty of stimulus money was not spent. The personal savings rate swelled, as worries over the virus and the economy caused people to retain cash.

The unemployment rate increased, with the number of people receiving unemployment benefits rising to 17 million in the week ending July 18.

While the economy slowed, the tech-heavy U.S. Nasdaq stock market traded at its highs, owing to stimulus from the government and the increase in money […]

By |August 10th, 2020|Categories: Daily Journal of Commerce|Comments Off on OP-ED: US Economy Suffers Record Downturn; Nasdaq Hits All-Time High

OP-ED; Market Disconnects From Virus, Takes Its Own Walk In The Park

Published July 10, 2020

William RutherfordWith the first half of the year in the record books, we can reflect back. The S&P began the year at 3,231 and climbed to 3,386 on Feb. 19, when it took a sharp drop ending at 2,237 on March 23. Then the market began a seemingly V-shaped recovery and bounced up to the current level of 3,100 on June 30.

The market was aided by very supportive actions from the government. The Federal Reserve announced that it would do whatever it takes to keep the economy strong. The administration offered strong fiscal support through stimulus packages. The virus appeared to take a breather, which gave the market optimism.

As the stimulus packages began to wear out and the virus began to resurge, only the Federal Reserve was able to continue its support for the market. The Fed has almost unlimited ability to support the market through monetary policy, including even buying assets.

The administration has an appetite for disbursing money through various methods, but that could have a practical and political limit. The virus seems to be in charge. Hope for a vaccine stimulates the market, but fears of a new virus and resurgence […]

By |July 16th, 2020|Categories: Daily Journal of Commerce|Comments Off on OP-ED; Market Disconnects From Virus, Takes Its Own Walk In The Park

OP-ED: Stock Market Bounces Back; Economy Still Fragile

Published June 5, 2020

William RutherfordFinancial results for the first quarter of 2020 have been reported by most members of the S&P 500, showing corporate earnings down 11.2 percent year on year, even though revenues were up 1.9 percent. Due to the COVID-19 virus, S&P earnings for the full year 2020 are expected to be down 23 percent or more. Growth is expected to resume next year, largely because of the easy comparisons with this year.

In the meantime, unemployment remains very high and rising. The Labor Department’s monthly employment report for April shows the jobless rate soared to 14.7 percent – the highest level since the Great Depression. The U.S. has lost 20.5 million jobs amid the coronavirus pandemic. Almost all the job growth achieved during the 11-year recovery from the Great Recession has now been lost in one month.

On June 5 (after this column was written), the Labor Department was to have released May’s employment report, and expectations were for 9 million additional people to have lost their jobs. This would increase the unemployment rate to slightly more than 20 percent. The Labor Department says the real unemployment rate is likely […]

By |June 9th, 2020|Categories: Daily Journal of Commerce|Comments Off on OP-ED: Stock Market Bounces Back; Economy Still Fragile
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