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Morning Commentary

BIG NEWS MASKED QUIET RALLY

By Charles Payne, CEO & Principal Analyst
3/13/2019 9:20 AM
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For the second consecutive session, the market saw Boeing (BA) in the spotlight, while the rest of the market was quietly moving higher on Tuesday. All the S&P 500 sectors were higher, except for Industrials that were dragged down by shares of Boeing, airlines, and defense contractors. Transportation names, in general, were pressured after raising red flags in the lead-up to this week.

The biggest winners were Utilities and Real Estate stocks, although not from knee-jerk anxiety.

S&P 500 Index

+0.30%

Communication Services (XLC)

+0.45%

Consumer Discretionary (XLY)

+0.28%

Consumer Staples (XLP)

+0.04%

Energy (XLE)

+0.65%

Financials (XLF)

+0.23%

Health Care (XLV)

+0.73%

Industrials (XLI)

-0.83%

Materials (XLB)

+0.38%

Real Estate (XLRE)

+0.54%

Technology (XLK)

+0.59%

Utilities (XLU)

+0.69%

Grounded

With virtually the entire planet grounding the Boeing 737 Max 8, there will be more pressure on the FAA to follow suit. In fact, there was bipartisan pressure overnight from Senator Romney and Senator Warren, demanding the FAA to follow its global counterparts. It’s a move I would have liked to see yesterday, or even on Monday. However, Boeing needs to have a greater urgency to address this in a way that matches the current level of angst.

Otherwise, this could become a real panic and a deeper hole. Right now, it appears to be a fixable situation that shouldn’t hurt the company’s order book.

Soft Landing

The 10-year yield skidded to its lowest level since last January on a combination of events, including the Consumer Price Index (CPI) release, and its benign inflationary levels. There is more disappointment in the UK as another May vote effort failed, and there was a strong auction bid during the session. The United States is still the best place to park money, and it’s reflected more in the bond market than equities, but the latter isn’t looking too bad either.

Derailed

This breaking college admission scandal has swept up Hollywood elites, fashion designers, Wall Street bigwigs, college coaches, and others. It has everything at the heart of all the major debates embroiling the country. The arrogance, the money, and the privilege are on full display by the crowd that has claimed the mantle of political correctness and caring.

Portfolio Approach

We are looking to be more aggressive in the model portfolio. We just need to see one last technical hurdle cleared. 

Communication Services

1

Consumer Discretionary

3

Consumer Staples

1

Energy

1

Financials

1

Healthcare

2

Industrial

3

Materials

3

Real Estate

0

Technology

2

Utilities

0

Cash

3

 

Today’s Session

The major indices, including the Dow, are pointing to a higher open despite the fall out from Boeing and the pressure surrounding Brexit.  Gold is hitting a two-week high on Brexit concerns and is trading at $1307 an ounce.

This morning, the Bureau of Labor Statistics released its report on producer prices, which measures price changes before it hits the consumer, for the month of February. The Producer Price Index (PPI) for final demand rose 0.1% (consensus 0.2%), mostly because of higher gasoline prices, while the so-called core index (less food and energy), rose 0.1% (consensus 0.2%).  Year-over-year, the wholesale prices are up 1.9%, compared to 2.0% in January, while core PPI slipped to 2.3% versus 2.5% in January.  

  • Energy rose +1.8%
  • Finished Goods +0.7%
  • Trade -0.4%
  • Processed Goods +0.4%
  • Unprocessed Goods -4.6%
  • Services +0.3%

Overall, the numbers suggest that U.S wholesale inflation is tame, despite unemployment being at an almost a 5 year low with wages growth rising.   

 


 


Comments
Hmmmm. seems to me that the left wants BA stock damaged to cool off the market and hurt Trump. Romney is no fan either...

stephen locke on 3/13/2019 9:51:41 AM
Sen. Romney is a thorn in the side of the current administration. Could it be the "sour grapes" syndrome that Senior Romney suffers from? Nahhhhh...he had HIS chance at POTUS and (quite honestly) blew his chances due to his former health care programming when he was governor of Massachusetts, which did NOT go over "big" with the conservative side of the Republican party. You can anticipate even MORE angst from Sen. Romney in the future, as he is one VERY unhappy soul who had to turn to his religious foundations to secure a seat in Congress from his (ahem?) home state of Utah??? Sad story, if yoiu ask me.

James Warlin on 3/13/2019 1:20:15 PM
From Al Masetti

Re: Boeing

Charles,

Your guest yesterday, David Nelson, Wednesday, 3/12/2019, about the minimal hours by the copilot on one of the Boeing 737 Max 8 airplanes ... only 200 hours or thereabouts,

EXCELLENT comment.

Boeing needs to start a flight academy ... to teach commercial pilots how to master some of the intricacies of the avionics. Maybe one flight academy at each airplane customer's location. FAA requires 1500 hours.

Third world countries have a real problem.

They need to build up EXPERIENCE as well as hours before going into the airliner cockpit..

The pilots and copilots need to learn the technology as well as the basics of flight of complex systems and cockpit resource management.

https://en.wikipedia.org/wiki/Crew_resource_management

For example, APS is one of the leaders in crew resources training

https://apstraining.com/crew-resource-management-in-upset-prevention-and-recovery/

Every airline has gone through this.


Apologies for going on and on.

Regards,

- Al Masetti



Al Masetti on 3/13/2019 2:12:35 PM
Thank you Al I'll pass that on to David and your comments and observations are spot on. CP

Charles Payne on 3/13/2019 7:30:47 PM
hope Romney will not take the mistaken high ground.

Earle H MacDuff on 3/14/2019 11:15:12 AM
 

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