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Wall Street Breakfast

Author: bmotrader   |   Latest post: Mon, 27 Jan 2020, 9:03 AM

 

Wall Street Breakfast: Boeing Confirms 737 MAX Production Halt

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The crisis at Boeing is deepening after the planemaker halted production of a 737 line for the first time in two decades, as the grounding of its best-selling MAX jet drags into 2020. While Boeing (NYSE:BA) doesn't expect to lay off any production line workers at this time, the move could have repercussions across its global supply chain and the U.S. economy (until now 737 MAX jets were produced at a rate of 42/month). How long might the shutdown last? Boeing, whose shares are down 6% since the news, stressed this was up to the FAA.

More records

Equities hit record highs on Monday, with Wall Street logging the fourth straight day of gains, as a Phase One trade deal cleared the way to end a banner year with a bang. "Increased trade is going to allow companies to start spending again on capital expenditures. That had been frozen, and most of those are technology purchases," said Kim Forrest, founder of Bokeh Capital. U.S. stock index futures paused overnight, awaiting the latest from the data front - Housing Starts, Industrial Production and JOLTS - as well as earnings from Navistar (NYSE:NAV) and FedEx (NYSE:FDX).
Go deeper: "Expecting A Market Downturn? Follow The 'Noah Rule'" by Frank Holmes.

What to expect: FedEx results

Following weak earnings guidance in September, FedEx (FDX) results come after the bell today as the shipping giant battles new competitors in the industry. Last week, Morgan Stanley said Amazon (NASDAQ:AMZN) is already delivering about half of its own packages in the U.S., and will soon pass both UPS (NYSE:UPS) and FedEx in total volume. E-commerce volume and holiday shipping is one topic FedEx management will likely address, as well as critical business-to-business activity.
Go deeper: Amazon bans merchants from FedEx ground delivery.

Netflix in numbers

The streaming giant saw revenue for its Asia-Pacific business increase 153% during a two-year period ending Sept. 30 and membership rise 148%, according to a company filing. "Europe, the Middle East and Africa" also more than doubled in subscribers since the start of 2017, and is the largest non-U.S. region. The new metrics showed a final tally of 158.3M members globally, which could persuade Wall Street to focus more on Netflix's (NASDAQ:NFLX) growth outside the increasingly competitive U.S. market.
Go deeper: Tech Thoughts feels Netflix is finding itself in a Napster moment.

U.S., Mexico settle USMCA labor row

Tensions have been defused over the new USMCA trade deal as U.S. Trade Representative Robert Lighthizer met with Mexican deputy foreign minister Jesus Seade in Washington. Mexico had expressed fears that the "attachés" called for in the agreement would effectively serve as "labor inspectors," but the U.S. said they will not be labeled as such and will abide by all relevant Mexican laws. The House Ways and Means Committee is set to hold a hearing on the new version of USMCA today, with a vote expected in the full House on Thursday.

Door shut on extending Brexit transition

The sterling honeymoon has come to an end after the currency dropped by the most since last July, tumbling 1.1% to $1.3188. Threat of a no-deal split... Legislation from Prime Minister Boris Johnson will include text that guarantees the Brexit transition phase isn't extended beyond December 2020, even if no new trade terms have been secured. The pound had climbed to as high as $1.3514 on Friday as the Tories swept to victory, fueling optimism there would be a speedy resolution to the Brexit deadlock.

French strike negotiations are suspended

French workers are taking to the streets for the 13th day of a transport strike over President Macron's efforts to reform the pension system. The conflict is being complicated further by the resignation of Jean-Paul Delevoye, appointed by Macron to oversee pension reform, after it was exposed that he failed to report multiple side jobs. Strike organizers are hoping for a repeat of 1995, when they shut down a government pension reform effort following three weeks of strikes just before Christmas.

Toyota's 2020 outlook nears Volkswagen

Automakers are fighting to sell cars in a difficult environment, but Toyota (NYSE:TM) is still forecasting growth in 2020, with sales of 10.77M vehicles worldwide. That puts it closer to No. 1 automaker Volkswagen (OTCPK:VWAGY), which delivered 10.83M vehicles - including its MAN and Scania heavy trucks - in 2018, and has been the top-selling automaker for the past five years. Alliances are also becoming ever more critical in the global auto industry as manufacturers seek to pool resources to develop electric vehicles and autonomous capabilities.

Unilever sales growth will miss forecasts

Like other consumer goods companies, Unilever (NYSE:UN) has struggled to keep up with shoppers turning to fresher foods, niche brands or vegan trends. Sales gains are now seen at slightly below guidance for 2019, and underlying growth will be in the lower half of a multiyear range of 3% to 5% in 2020, according to the company, which blamed a slowdown in South Asia and weakness in North America. Analysts at RBC Europe said the new forecast implies Q4 growth will be the weakest in more than a decade. UN -6.1% premarket.

Raising the tobacco age

Legislation on a federal ban of the sale of tobacco products and e-cigarettes to people under 21 is being talked about in Washington once again. The smoking crackdown would give the FDA six months to develop regulations and then three years to work with states on implementing the change. A large number of states already have age laws in place, meaning the development isn't unanticipated for companies like Juul (JUUL), Altria (NYSE:MO), Philip Morris (NYSE:PM) and Vector Group (NYSE:VGR).

Today's Markets

In Asia, Japan +0.5%. Hong Kong +1.2%. China +1.3%. India +1%.
In Europe, at midday, London -0.2%. Paris -0.4%. Frankfurt -0.8%.
Futures at 6:20, Dow -0.1%. S&P flat. Nasdaq flat. Crude steady at $60.21. Gold +0.2% to $1483.80. Bitcoin -2.6% to $6885.
Ten-year Treasury Yield -3 bps to 1.87%

Today's Economic Calendar

8:00 Fed's Kaplan Speech
8:30 Housing Starts
8:55 Redbook Chain Store Sales
9:15 Industrial Production
10:00 Job Openings and Labor Turnover Survey
12:30 PM Fed's Williams Speech
1:00 PM Fed's Rosengren Speech

 

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