ATTN: Your Flight’s Cancelled
Dear Rundown Reader,
If you’re traveling this year there’s a good chance you will have your flight cancelled.
Because America’s aging fleet of planes are getting grounded left and right.
Not only is that a pain in the rear for travellers, it’s keeping folks with positions in airplane manufacturers on edge.
Today’s Rundown looks at Boeing, their fleet’s current engine problems, what it means for you today and why you shouldn’t worry in the long-term.
Boeing’s still a beast to own. Here’s why.
Your Rundown for Wednesday, June 13, 2018…
Engine Problems Spark Sharp Sell-Off In Boeing
Bad news for Boeing (NYSE: BA) yesterday.
Shares neared a 6-month high as markets opened Tuesday.
By 9:30, the bottom dropped out and a mass sell-off of BA began.
In less than an hour the stock dropped 1.24%.
Showing resilience however, over the following 60 minutes, BA shares recovered losses rising 0.86% off Tuesday’s low.
Today the stock’s tracking sideways, and seems to have made it through the turbulence unscathed.
It’s incredibly fast action where fortunes are made and lost and made back in a matter of hours. The chart looks like a snip from an EKG reading.
But why the tug-of-war between BA bears and bulls?
What are folks seeing in BA that caused such heavy and sporadic action?
The big issue for BA is engine problems.
CNBC reported Monday Rolls-Royce, BA’s 787 engine supplier, is facing a massive parts shortage causing major delays in badly needed repairs for BA’s wide-body fleet.
Currently 43 of BA’s 787 Dreamliners are grounded, as reported by Bloomberg. Fixes can take months to complete.
Bad news for BA. The sell-off began in earnest.
But then, as we noted earlier, savvy folks bought big on the dip.
Because BA is one of 2018’s best performers, up over 24% for the year.
And they pay a healthy dividend as our income expert Mike Burnick note’s as crucial to a successful basket of stocks that earn big for you over the long-term.
Airplane puns withstanding, every company has headwinds to face.
But Rolls-Royce’s problems are indicative of a much larger one.
The American airline industry needs a vastly expansive upgrade to bring us back to levels of acceptable safety.
To do so means a lot of new planes, and a lot of upgrades to the current U.S. airfleet. And that’s a major tailwind for BA.
And BA is sure to garner a nice slice of that new money stream. Short-term, Rolls-Royce supply issues are a blip.
Long-term, it’s into the sky blue yonder for BA and other major plane manufacturers.
Now, turning to the markets this morning…
Market Rundown for Wed., June 13
Yield on the 10-Year Treasury sits at 2.959% this morning, up 0.002.
S&P 500 futures are up 4.00 at 2,788.
Oil’s down $0.37 to $65.99.
Gold’s down $1.50 at $1,297.
Bitcoin goes for $6,465 this morning, according to CoinDesk.
A new study has confirmed that Bitcoin’s price was indeed manipulated. The fallout could be crushing to the space.
We’ll talk again on Thursday.
For the Rundown,