Dennis Muilenburg (Boeing’s CEO), in his first appearance before congress since the grounding of the Boeing 737 MAX, was on the hot seat for most of the morning yesterday as he faced a barrage of criticism from lawmakers. He will be on the hot seat again today as the grilling is expected to continue. Senators from both sides of the aisle are expressing real dissatisfaction and in some cases real anger. Family members from the Lion Air crash and the Ethiopian Air crash filled the conference room looking on and listening intently as he tried to defend his actions and the actions of the company in the days that followed each crash. Senators and family members are calling for his head to roll, while others are calling for the whole board to be thrown out. Texas Senator Teddy Cruz pointed out that Muilenburg chose to ignore pilots concerns during a simulation test and then “lied about it” to congress and the world. He wanted to know why his team did not put those concerns in front of him and why they didn’t run into his office “with their hair on fire” to say, “We have a real problem here!” If you missed it yesterday, be sure to tune in today…
The stock struggled on the opening, falling $1.50 as investors awaited the start of the hearing. Then it began, body blow after body blow as Senators expressed their complete dissatisfaction only to have Dennis attempt to deflect the blame. That didn’t go so well. But the stock found support at the $339.50 level and began to move higher from there as the sense is that the whole C suite is about to get thrown off the plane. By the end of the day, investors took the stock up $8 or 2.3%. Look, Boeing as a company is a time tested American blue chip with a storied history that will recover from this mess. It has some work to do but investors are clearly willing to give it the benefit of the doubt.
Now on a broader scale, US stocks were mixed, European stocks were mixed, and Asian stocks were mixed. Global investors weighed in on the latest trade headlines, which suggested that just maybe, the trade deal – Phase One – will NOT be ready for signatures in November at the Asian Pacific Summit as originally planned. This sent stocks into the negative column as investors tried to hedge their bets and handicap the latest headline. What was 100% is now what? 70%? 50%? 30%? Analysts were quick to point out that the headline did not say that the deal was off, just that they were still working on the details. That may delay the signatures and appeared to allow cooler heads to prevail.
[BREAKING NEWS: The media (Reuters) is reporting that China is pushing back on its commitment to buy $50 billion of US agriculture products, saying that “this is becoming a MAJOR obstacle to the trade talks.” Oh boy, so maybe there’s a 50% chance that Phase One even gets signed?]
At 3:53 pm, trading was halted in JNJ with news pending. What could it be? Well at 3:56 pm, headlines hit the tape saying “third party testing confirms that there is NO asbestos in the baby powder.” Well that’s good to know since I love baby powder, makes you smell like a baby! The stock did not re-open. The last sale was $129.12. As expected, it soared in the after-hours session, rising 4% or $5, taking it right back to where it was two weeks ago to $134-ish. This morning in the pre-market session, the stock is quoted at $132/$132.50.
Earnings yesterday continued to be “better than expected” for the majority of reports. That helped to buoy stocks but did not prevent them from giving up a bit of value. By the end of the day, the Dow lost 20 points, the S&P gave up 3 points, the Nasdaq lost 50 points. All this thanks to negative numbers from GOOG and Akamai, along with concern over trade headlines while the Russell added 5 points. The Dow Transports (the other Dow Index) also took a breath and backed off just a bit, losing 23 points yesterday after having surged by more than 1000 points since Oct 3. This suggests that investors are NOT concerned about any recession in the near future at all.
The market has had a nice run, and the action yesterday just reminds us that there is still a fair amount of uncertainty concerning broader macro global data. Today brings us the first read on third quarter GDP, exp of 1.6% down from the second quarter read of 2%. The surprise will be if the number has either a two handle (upside surprise – bullish) or a zero handle (downside surprise – bearish) and the ADP employment report – exp of 110k new jobs.
In addition, today is FED DAY! Yahoo! As if no one knows what’s coming… It’s a big secret… Will rates go up or down? Investors are on the edge of their seats. Now don’t be surprised at all, once the announcement comes out, if we see the market back off. I mean, the move to new highs was partly in anticipation of today’s announcement. So, could we see a “Buy the Rumor/Sell the News” reaction? Of course, we could if Jay Powell decides to put the brakes on and suggests that “that’s it for now.” Let’s see how the algos and the black boxes react. Understand this, the CME’s FEDWATCH analyzer now suggests that a December rate cut stands at 23% vs. the 70% it was at earlier this month, so maybe the reaction to a “hold” will not be violent.
US futures are basically FLAT as we await the sunrise and the start of another round of earnings. Look for GE, BG, MCO, ADP, CME, SPG, MDR, MAS, ARQL, BKR, and SUM all to report before the opening. But the star of the show happens after the bell when Timmy Cook enters center stage to report on Apple earnings.
Expectations are for $2.84/share. The stock is up 78% year-to-date and it is up 15% this month alone in anticipation of today’s report and what he will say about the next 6 months.
Look for the S&P to digest the move higher yesterday. A retest of 3000 would not be out of the question at all. Investors/traders and algos are about to get hit with more US macro data, more earnings, and that “surprise” announcement by the FED. News that the trade deal may be in trouble will not help the tone. Any weakness in earnings or macro data will cause money to come off the table.
Overnight, trading in Asia was a bit weaker. Japan reported that retail sales surged by 9%, well ahead of the 6.9% expectation but that did little to support the market. In Australia, third quarter CPI rose by 0.5% vs. the 0.6% in the prior quarter. Elsewhere, it was just about earnings…
Japan -0.57%, Hong Kong – 0.44%, China – 0.49% and ASX -0.85%
European stocks are churning in place as their bell just rang and their day gets under way. China trade at the top of the list, while the UK Parliament did vote to hold a general election on Dec. 12. This vote is expected to “break the BREXIT stalemate” which has crippled the UK for more than 3 years now.
FTSE -0.17%, CAC 40 +0.07%, DAX -0.21%, EUROSTOXX -0.15%, SPAIN -0.97% and ITALY -0.02%
Take good care.
Thanksgiving is coming and to celebrate the launch of the little bird Twitter – I offer up the bigger bird – the Turkey. Turkeys are funny – if you don’t pay attention you will dry it out….so try this on for size.
For this you need:
The Turkey, carrots, celery, onions, butter, S&P, an apple and orange, sage, rosemary and thyme, chicken broth, and a splash of champagne.
Begin by rinsing and draining the “defrosted turkey” I say this because – some people think it is ok to cook a frozen turkey – wrong! Be sure to take your turkey out of the freezer on Tuesday and let it sit in the fridge to defrost. By Wednesday – it should be ready.
Make sure to remove the bag with the giblets and neck from the cavity. Let it dry – or pat it down with paper towels.
Preheat the oven to 400 degrees.
Now mix all of your seasonings together set aside.
Place the turkey in a roasting pan.
Next – take some softened butter and massage the turkey – breast, legs and thighs. Now, rub the seasonings into the turkey making sure to season all parts.
Now cut up the apple and the orange into slices and place in the cavity. Rough chop the veggies and place all around the turkey and also in the cavity. Feel free to quarter up some roasting potatoes and include them too. Add the chicken broth and a splash of your favorite champagne – don’t ask why – its champagne – Just enjoy.
Tent the turkey with foil and place in the middle rack and let roast for 30 mins or so…. now reduce heat to 325 degrees and let it cook – 12 – 15 mins per pound. So, figure it out….10 lbs = 120 mins/150 mins. (2 21/2 hrs.)
Now – remove the foil and allow it to crisp up and turn golden brown. Once done – remove from oven and let it rest for 15 mins. Keep it covered to maintain the warmth.