This would be the week that the great Minnesota Get Together would have started. The Minnesota State Fair is 11 days of fun, food, rides, food, shopping, food, exhibits, food, livestock shows, food and more food. At the fair you can get alligator on a stick, deep fried candy bars, foot long hot dogs, pronto pups, pretzel dogs, homemade ice cream, pizza on a stick, spaghetti on a stick, Key Lime Pie on a stick and hundreds of other oddities to eat, loading you up on sugar, cholesterol and fat that will carry you over for a whole year until the fair comes around again. One year they actually had Camel on a stick. My wife and I had our second date at the fair and until this year have hit 36 straight years. This would have been 37 but alas, it succumbed to the Covid virus this year. Another tradition killed in 2020.
The oil markets are approaching a new equilibrium. Prior to the Covid Shutdown oil prices were hovering at $61. The new normal price appears to be about $42. Oil has moved in a narrow range since early July in spite of supply drains as the surplus has slowly been drawn down. Gasoline stocks are also depleting, primarily for two reasons. The primary reason is a reduction in distilling which is producing less gas for consumption. The second reason is with the economy slowly re-opening, people are traveling more which has slightly increased demand. Gas prices have stabilized with the majority of the nation now paying between $2.00 to $2.10 per gallon at the pump. The oil rig count in North America rose by 10 rigs to 254. At the beginning of 2019 the rig count was near 900. The drop from 700 to 244 last week was dramatic. It is surprising that 10 new rigs came on line at a time when the breakeven point is close to $50 per rig. The amount of available crude oil supplies in storage awaiting refining is significant. We will see oil as well as gas prices increase but it could be sometime due to the level of supplies awaiting refining not only in tanks but also in anchored tankers off shore worldwide as well as in tanker trains on sidings. For now enjoy the low price of gas.
The housing market is on a tear for those who have kept their jobs and have a stable income. The housing starts number surprised everyone at 1.496 million new units in July. This was a 22.6% jump over the June number. Embedded in the number is a dark side. Single family starts accounted for 940,000 within the starts. The multifamily starts, which includes both apartments and condo units totaled 547,000 units. At a time when apartment vacancies are climbing in many markets, adding to the supply with new construction has raised worries about oversupply issues. With the eviction moratorium ending on non-government subsidized housing, the courts are again processing more evictions, the amount of vacancies will increase dramatically. A concern is rising for the placement of those losing rental housing and where they will go. This is greatest concerns in larger cities which are already pressed with homeless tent cities that continue to grow. As more apartments are vacant and more people are on the streets, how local governments and local property owners react will interesting to watch.
It was no surprise this week when Target and other large retailers posted significant growth numbers both in total sales and sales per store in the past quarter. With the uneven and admittedly unfair government shut down orders over the past five months the outcome was essentially picking winners and losers. The losers were small business owners with small specialty shops or stores deemed non-essential in product offerings. Target, Walmart and others who offer groceries are considered essential and allowed to sell all lines within their store, regardless of whether they were essential or not. This boxed out smaller stores that sold clothing, shoes, etc but not milk and eggs. Without the options of shopping locally at small, neighbor owned stores, shoppers had no choice but to enter the Targets and Walmart’s to spend money. As the economy reopens please shop locally and support those shops and restaurants that were unfairly impacted and lost out on needed income over the past four months by government intervention that sadly picked winners and losers unfairly.
Have a great week.
