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Too Much Oil: How a Barrel Came to Be Worth Less Than Nothing
Accessed at
https://www.nytimes.com/2020/04/20/business/oil-prices.html
Summary
On Monday, oil prices fell so low that some traders had to pay buyers to take oil barrels. This is the first time ever crude oil prices have turned negative. This has been one of the consequences of the coronavirus to the U.S. economy. The world is running out of room to put the oil, and now future contracts are now being affected. The production market has disappeared for oil producers. The economies that rely on the production and shipping of oil. These companies are reluctant to shut down production because their companies are so heavily reliant on the industry. Countries now must juggle the idea of closing these oil wells, but when demand kicks back up again, it may be very expensive and resourceful to do. The field may lose their former production. Oil prices are set ahead of time some oil being sold next month was deemed worthless. Countries are trying to cut oil productions by a small percentage, but it may be too late for this as well, because of the massive drop in oil demand around the world.
Reflection

Monday’s events took me for a surprise. I did not really consider the implications in the oil industry. People have ceased to use oil at a normal rate, and now we have a surplus of oil so high that is now essentially worthless. This new crisis may cause a lot of problems for a lot of people. For one, countries like Russia and Saudi Arabia, whose economies depend on oil production and export. Now these economies are being forced to a complete stop. Not only that, but the surplus of oil will keep their economies at a complete stop for some time. There is nothing these countries can do. There is not even enough space in the world to store all the excess oil. A lot of these oil companies are going to have to start relying bailouts and bankruptcy claims. It will be interesting to see how many oil companies will be able to push through this time. It may be a long time coming before oil companies will be able to recover and start turning a profit again.
Citation

Reed, Stanley, and Clifford Krauss. “Too Much Oil: How a Barrel Came to Be Worth Less Than Nothing.” The New York Times. The New York Times, April 20, 2020. https://www.nytimes.com/2020/04/20/business/oil-prices.html.

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Small Business Aid Program Stretches Agency to Its Limits

Accessed at https://www.nytimes.com/2020/04/07/business/coronavirus-ppp-small-business-aid.html

Summary

The lightly staffed Small Business Administration has been working tirelessly to combat the onslaught of people asking for help to save their business during the pandemic. On Tuesday, “178,000 loans totaling $50 billion had been approved for small businesses through the Paycheck Protection Program that was unveiled Friday by the S.B.A. and the Treasury Department.” (Flitter) People are beginning to get mad that the relief bill has not gone into effect. The workload has piled up and it has left uncertainty to when people will get the money to keep there businesses afloat. The application process has become more complex with the large wave of people applying for.

Reflection

As expected, small businesses are pushing to stay afloat through loans, and other aid in order to pay bills, and prevent from closing. The big corporations are doing the same, but they are having a bit more success with the process. They are able to take out large loans because they are big accredited corporations, whereas small businesses have to go through this difficult process in order to achieve the funds they need to survive. The process these small businesses have to go through to obtain these funds is a difficult process, and the vehicle they need to pursue. The process has been tremendously slowed because they were not prepared to deal with this amount of pressure coming from businesses so quickly. Now they are so busy businesses will have to wait even longer as the Small Business administration processes all the requests and sends out the money and hopefully it is not too late.
Citation

Flitter, Emily, David Mccabe, and Stacy Cowley. “Small Business Aid Program Stretches Agency to Its Limits.” The New York Times. The New York Times, April 7, 2020. https://www.nytimes.com/2020/04/07/business/coronavirus-ppp-small-business-aid.html.

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As Virus Hobbles Economy, Companies Race to Tap Credit and Raise Cash
Accessed on March 31st, 2020 at https://www.nytimes.com/2020/03/31/business/coronavirus-companies-banks-loans-credit.html

Summary
The article starts with the staggering statistic. “In a single week in March as financial markets convulsed and major parts of the economy began shutting down, banks made over $240 billion in new loans to companies — twice as much in new lending as they would ordinarily extend in a full year.” (Kelly) COVID-19 has stopped revenue for a variety of businesses, and with bills to pay there really isn’t much more ways to stay afloat. Companies are looking to open lines of credit in order to survive these difficult times. Cash is suddenly harder to raise despite the past few years, even companies that haven’t been directly affected by the outbreak still face the difficultly of dealing raising capital. Banks are starting to get bombarded with loan requests, which is usually good for business, but as people continue to dip into their savings, and people are getting these loans they cannot pay back right away, the amount of loanable funds is starting to deplete and their simply isn’t enough to go around. The big corporations are having an easier time borrowing from these banks, because they are less likely to default their debts.  In the past weeks, JP Morgan alone lent out about 78 billion dollars’ worth of credit.

Reflection
This article is daunting. Last week I wrote about the struggles to come for a lot of small businesses in America soon. It was scary to read about how easily big business can get the loanable funds needed to survive through the economic crisis. Kelly writes, “Companies that are rated investment grade” (Kelly) These companies are having an easier time building capital through loans, and these companies have been trying to raise capital through the selling of bonds. This is something that small businesses are having trouble doing. It will be interesting to see what the Fed will do with the incoming banking crisis, and it will be interesting to see how the Government gets involved to help bail people out. The amount of loanable funds is decreasing with the large amount of loans being requested. It is also decreasing through these funds simply being removed from the loanable pool of funds. People are going to start dipping into the saving accounts and this will take away the supply of money. I think their needs to be some sort of bailout plan carried out by both the fed and by the government in order to avoid major economic consequences when this is all over.
Citation

Kelly, K., & Eavis, P. (2020, March 31). As Virus Hobbles Economy, Companies Race to Tap Credit and Raise Cash. Retrieved March 31, 2020, from https://www.nytimes.com/2020/03/31/business/coronavirus-companies-banks-loans-credit.html

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We All Need Small Business. Don’t Let Them Die.
Accessed on March 20, 2020 at https://www.nytimes.com/2020/03/19/business/small-businesses-coronavirus-help.html.

Summary

American economy as well as many other countries rely on their small businesses to contribute a lot to the economy. As a possible shutdown looms, these small businesses face hardships. With the recent mandated closures and recommendations, small business is unable to weather the loss in profits because consumers are unable to utilize their businesses. The only businesses that will be able to weather this crisis are big corporations with an extended amount of funding. Small businesses especially restaurants are facing two main problems: rent and employee wages. Owners are being put in a tough spot, and unfortunately if this problem continues to keep things shut down, then some businesses might never open back up. There needs to be action taken in order to bailout these businesses. This needed help only comes from the government. Government aid can help small businesses by sending money as well as freezing rent payments for these small businesses. The issue compounds itself when workers that are hired by these businesses face this sudden drop in income. They are unable to pay their own debts never mind contribute to the economy.

Reflection

This article has very real implications for state economies and American economy. There are a lot of small businesses in America that survive day to day off what they make. This is also a critical time of the year for business that has already hurt some real profitable days. For example, bars across America for the most part missed out on St. Patrick’s Day, and if this continues Easter brunch may be enjoyed at home for most families instead of out a restaurant. The other day my family ordered from a pub down the street, and employees of the pub reminded us how important it is they receive at least some sort of income, for the employees and for the business itself. If all of these small businesses go under their may be serious long-term economic problems for the community. If people can’t contribute to the economy then the economy is doing worse, and if life doesn’t get back to normal, then the coronavirus may end up being a compounding tragedy for the American people. I think there needs to be government support during this time for the working person, and for these small businesses.
Citation

Mullainathan, Sendhil. “We All Need Small Businesses. Don't Let Them Die.” The New York Times. The New York Times, March 20, 2020. https://www.nytimes.com/2020/03/19/business/small-businesses-coronavirus-help.html.

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Global Markets struggle Stocks Reel; DOW Falls Over 2,000
Accessed in Regis College Library on March 10th, 2020
Summary
Stocks in the United States took a hit Monday as the investors lose trust in companies due to the emergence of the Coronavirus or COVID-19. The market has suffered its worse loses since 2008. The DOW fell 7.6% by the end of Monday. The oil industry bearing the brunt of the losses as the trust in the Oil industry continues to drop. The Oil industry is used as one of the measures for economic health. As the oil prices rises around America, life all around becomes for difficult for everyone. People have moved from the stocks to try and save their money in U.S. bonds. Stocks around the world also dropped. Stocks began to rebound Monday night into Tuesday. The fear of a global recession is still in the minds of people as COVID-19 continues to spread around the world.
Reflection
This seems to have been the worse case scenario for the economy as COVID-19 has in a sense taken grip of the world. it has started to turn stocks for the worse and investors are starting to rely on bonds for their savings now. If companies continue to lose money they will have to start laying off workers. If this happens money will become tight for people and they will stop buying as much and the economy will suffer. If gas prices go up people will have even less money to spend on other items. This article showed a couple of charts of oil companies specifically Brent crude-oil whos stock prices dropped 24.1%. It's a scary drop for one day. It will be interesting to see what will happen if the virus continues to become more of a problem around the world.  If the industries don't begin to rebound it may lead to a recession in the U.S.
Citation
Vigna, P., Chilkoti, A., & Winning, D. (2020, March 10). Global Markets struggle Stocks Reel; DOW Falls Over 2,000. The Wall Street Journal, pp. A1–A6.

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U.S. tech Sales to China face New Limits
Accessed in Regis College Library on February 18th, 2020
Summary
President Trump and his administration is considering new restrictions on the sale of U.S. technology to China in response to the heighten tensions after the trade agreement. These new restrictions would require foreign companies to acquire certain licensing to use American equipment. It also restrict usage of American technologies for Military or National security benefits. This has effected American Companies like General Electric, known for producing jet engines, exports to China. These new restrictions are an effort to undermine China's efforts to become a new emerging super power in the World. This will slow China's efforts in technological advancement, and the advancement of their economy. These restrictions will hurt China's local chip industry because it will be difficult for the Chinese to find suppliers from elsewhere. These new policies could also jeopardize American companies plans to create joint ventures in China.
Reflection
The First thing that comes to mind when reading this is fear from the United States. This article showed that people in the United States Government are starting to realize they are not at the top for technological innovation, and economy. As the Chinese economy starts to grow and advance technology is starting to advance with the help of the United States. If the United States passes these new restrictions this will effect the technology market in China to some degree. If they cant use the proper technology or get the proper materials than they simply will function at a slower rate. This will effect companies in the United States to some degree, but to as much as Chinese manufactures. The article focuses on the manufacturing of a new airplane with the help of GE that will be impeded with these new restrictions. There is also the idea that China will be able to work around these restrictions and emerge as one of the most technologically advanced in the world if they are able to develop the technology needed to sustain companies in China, but as far as this article goes these restrictions are aimed at crippling Chinese efforts.
Citation
Fitch, Asa, Bob Davis, and Ted Mann. “U.S. Tech Sales to China Face New Limits .” The Wall Street Journal, February 18, 2020.

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Australian Dollar Sinks on Slowdown Fears
Accessed in Regis College Library on February 11th, 2020
Summary
The Australian dollar has become tremendously weak reflecting the effects of the newly named COVID-19 or the Coronavirus that is currently plaguing China. The Australian dollars is currently trading at 0.66AUS/USD. This is the weakest the Australian dollar has been since March 2009, when the global financial crisis after the collapse of the Lehman Brothers. The slowed production in China is hurting Australia because they rely on exports of Natural resources to China. China has made efforts to contain this virus by shutting down factories and stopped airplanes from flying, and this is causing problems for Australian economy. One third of Australian exports go to China. Australia could be at risk for a recession if the value of the dollar continues to drop due to the Chinese slowdown. Australia is also still recovering from the massive wildfires that seemed to engulf the country for quite some time.
Reflection
This topic seems to be a common trend in todays business news, as well as world news. The COVID-19 has made a splash around the world now effecting the strength of Australian currency. This makes sense based off how interconnected Australian economy is with China and the Geographical location will certainly make it difficult for Australia. Also the Australian dollar is traded heavily globally, a lot of this exchange done in China. It only makes sense with a lot of the currency invested in China that when China slowdown like the case here, that Australia is bound to suffer from it. The exchange rate may help some exporters who are receiving foreign currency as payment, because of the depreciation of Australian currency against other currencies. As this currency depreciates others will appreciate against it. As long as Australian exporter have taken the proper hedging strategies whether it is a fixed forward rate, or options they may actually make more money. As for the country as a whole this may create difficulties.
Citation
Glynn, James, and Caitlyn Ostroff. “Australian Dollar Sinks on Slowdown Fears.” The Wall Street Journal, February 11, 2020.

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World Factories Return To Growth but Face Risk
Accessed in Regis College Library on February 4th, 2020
Summary
This article is a response to the increase in the Manufacturing purchasing managers index from December into January, but manufacturers are expecting the manufacturing sector to contract due to the impact of the new epidemic. There is a fear that there will be an interruption in the manufactures supply chain. The article comments a lot of the contraction of the manufacturing sector over the past months finally leading to improvement in production in the first month of 2020. The article points too certain claims in surveys that manufacturing will expand across 2020, but most of these surveys were conducted before the outbreak of the virus. It is unpredictable what the virus can do to manufacturers in Asia and Europe.
Reflection
This article was very interesting for a couple of reasons. For one, the article showed a chart of the manufacturing purchasing managers index. This chart centered around the number 50 (above 50 showing expansion, and below showing contraction) as trended significantly downward since 2017. The PMI is a predictor of the economy in each sector. In this case the PMI of manufactures is being analyzed to predicted manufacturing power in the future. Currently the manufactures PMI is slowing to a pace like the financial crisis in 2019. The manufacturing aspect of an economy is vitally important. Of course, this is based off supply and demand as well as the factories ability to produce, but if this disease is causing two main issues for manufactures. The first being they are of course lacking the materials to manufacturing the goods. The second issue they are having is the lack of consumer support. If people are not feeding money into the economy, and in turn to these manufactures, Factories may have to deal with some hardship. This leads to unemployment. This article really shows how different elements of an economy are related and effected.
Citation
Kuepper, Justin. “What Is the Purchasing Managers' Index (PMI)?” The Balance. The Balance, December 9, 2019. https://www.thebalance.com/what-is-the-purchasing-managers-index-pmi-1978996.

Hannon, Paul, and Harriet Torry. “World's Factories Return To Growth but Face Risk .” The Wall Street Journal . February 4, 2020.

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China's Economy vs. The Virus
Accessed in Regis College Library on January 24, 2020

China is currently dealing with a new respiratory virus that has struck fear in citizens across the country. Although the virus appears to not be as dangerous as the severe acute respiratory syndrome, they faced in 2003, The coronavirus appears to be a bigger threat to the economy than before. One of the bigger problems China is facing is containing the spread of the disease. With updated public transportation and high-speed trains, the virus was able to spread around the region a lot faster and a lot further than the SARS virus was able to. China has made attempts to control the spread, but it may be too late to avoid frightening the community. Coupled with a swine-fever epidemic, the coronavirus has driven down consumer spending significantly. Compared with the SARS virus in 2003, The coronavirus shows a more disastrous effect on Chinese economy. In 2003, SARS consumer spending that drove economic growth dropped to just 35% compared to 50% at the time. Now consumer spending drive 60% of the growth in China. This new virus threatens to drop this number even lower, because of how fast it spread throughout the region. This virus differs because it is active in a larger area than the SARS virus. The Chinese economy travel, and tourism has become immensely popular and a good source of revenue for the Chinese, but due to the virus trips have been canceled already putting more hardship on Chinese economy. If the virus continues to get worse then the Chinese economy might be facing drops in the stock that depends on Chinese consumer spending and on tourism. As public safety is the number one concern, the economy taking a hit could be disastrous for the countries efforts to rise as one of the new emerging superpowers in the world. This virus may have a unique impact on the country. It will be interesting to see how the virus impacts China’s ability to trade with the rest of the world.

Taplin, Nathaniel. “China's Economy vs. Virus .” The Wall Street Journal , January 24, 2020, sec. Business and Finance . WSJ.com.

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Virus Fears Rattle Global Markets
Accessed in Regis College Library on January 28th, 2020

After increased severity of the Coronavirus which I wrote about last week, today it has made front page of the Wall street journal. The virus has spread to multiple countries infecting about 4,500 people and killing 106 people already. For the fifth consecutive day, the DOW has dropping 454 points in the past five days (1.6%) due to the increasing severity of this new virus, as well as increasing fear. Other markets in China like Wynn Resorts, American airlines, and Apple have dropped significantly in the past few days. Despite recent agreements between America and China, uncertainty has risen because of this new virus, and people are less apt to take risks in times of turmoil. The most effected businesses are related to vacation, travel, and hotels. This has been a trending topic throughout news sources since the initial announcement of the outbreak. Since then, news sources like social media, televised news, and newspapers carry stories that ultimately lead to panic. It is no surprise that people are starting to take this a lot more seriously and begin to become more and more worried as more people contract the virus. Also, stories have come on regarding the amount of people that allegedly left ground zero at the Huanan Seafood market in Wuhan, China. Obviously, a drop in the market is never good, and if the media keeps feeding the public fear, stocks may begin to drop at an alarming rate in China. For China, this could be devastating, a deadly virus coupled with stock market decline could result in long term hardship. The Chinese economy hardship will have effect on the global market, and especially will effect the United States economy.

Langley , Karen. “Virus Fears Rattle Global Markets .” The Wall Street Journal, January 28, 2020.