If it isn’t the prospect of 787 Dreamliner deliveries being further delayed pending safety inspections, or continued Covid uncertainty, it’s the worrisome trend of Boeing customers flirting with its European rival
Boeing’s biggest customer outside the U.S., has walked away from a 737 MAX 10 order following a pricing dispute.
The Irish carrier’s CEO, Michael O’Leary, is never one to mince his words and he certainly didn’t hold back on this occasion. Not content with just announcing an end to negotiations, he also praised Boeing’s rival Airbus.
“We do not share Boeing’s optimistic pricing outlook, although this may explain why in recent weeks other large Boeing customers, such as
have been placing new orders with Airbus, rather than Boeing,” he said.
The 787 Dreamliner delay, as the Federal Aviation Administration scrutinizes a production defect, could lead to order cancellations, with
among those considering such a move, The Wall Street Journal reported.
Boeing’s mounting issues are reflected in the stock price, with the U.S. plane maker failing to capitalize on the air traffic recovery so far in 2021. Airbus stock has climbed 28% year-to-date, while Boeing stock is 2% up over the same period, compared with the
Even when the air travel uncertainty subsides, there is plenty more for Boeing investors to be concerned about.
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Millions of Americans Losing Federal Pandemic Unemployment Aid
An estimated 7.5 million Americans lost their pandemic federal unemployment benefits on or before Monday, including extended benefits of $300 a week, programs for gig, freelance and part-time workers, and emergency aid for those who had exhausted their state benefits.
- More people had already lost their pandemic aid in half of states that ended the payments before Sept. 6, claiming they enticed people to collect benefits instead of taking jobs. But most states that ended those benefits early didn’t see a jump in people returning to work.
- Although the unemployment rate fell to a pandemic low of 5.2% in August, and wages are up 4.3% from a year ago, the U.S. economy added only 235,000 jobs last month, according to the Labor Department, far short of the 720,000 jobs that economists had expected.
- Hiring remains especially weak in services sectors, including leisure, hospitality and retail, that require face-to-face contact. Unemployed individuals may be wary of contracting the virus as new infections increase, or may be juggling caregiving needs until schools and child care centers reopen.
- State unemployment benefits average $387 a week, according to the Center on Budget and Policy Priorities. Gregory Daco, chief U.S. economist at Oxford Economics, estimates that losing extra unemployment benefits will result in a collective $4.2 billion weekly loss of household income.
What’s Next: Although the Biden administration has encouraged states to use their emergency coronavirus relief funds to extend benefits or offer additional benefits to jobless workers beyond Monday, state labor departments seem unlikely to do so.
—Janet H. Cho
China Trade Soars, Defying Forecasts
The growth of Chinese exports accelerated in August, exceeding expectations, despite strict restrictions aimed at combating outbreaks of the Delta variant of coronavirus, reduced manufacturing activity and congestion at some of the country’s container ports terminals.
- Shipments jumped 25.6% last month compared with the same period in 2020, data from the Chinese customs administration showed. That was way above the 17.1% prediction from a poll of Reuters analysts. Exports had risen 19.3% in July from a year earlier.
- Exports increased to all markets, notably the European Union, and global demand for Chinese consumer goods and high tech products, including semiconductors, accelerated last month.
- Imports jumped 33% year-over-year, beating economists’ expectations, notably due to higher commodity prices compared with last year’s depressed levels.
- George Soros, the billionaire investor and philanthropist, has criticized asset manager BlackRock for “pouring billions of dollars into China,” which will prove a “tragic mistake,” he wrote in The Wall Street Journal
What’s Next: The impact of gridlock at some of China’s ports wasn’t as severe as expected, and China’s customers may be eager to stock up ahead of time to avoid any potential supply issues before the Christmas season. The government has also promised to support the recovery with further monetary and fiscal stimulus.
Deutsche Telekom Ups Stake in T-Mobile in Share Swap With SoftBank
Tuesday announced a share-swap deal with
that will increase its stake in its U.S. division
while giving the Japanese group a 4.5% stake in the German telecom company.
- Deutsche Telekom also announced that it would sell its T-Mobile Netherlands unit to private-equity groups Warburg Pincus and Apax in a transaction valuing the business at more than €5 billion ($6 billion).
- The deal with SoftBank will push the German group’s stake in T-Mobile to 48.4%, bringing it closer to its target of owning a majority stake in the U.S. company.
- SoftBank in turn will become Deutsche Telekom’s third-largest shareholder behind the German government and investment fund BlackRock.
T-Mobile U.S. and competitor Sprint, owned by SoftBank, merged in 2020 to form a group better able to compete with U.S. telecom market leaders
What’s Next: Markets judge the deal very good for SoftBank, whose shares rose 10% on the news. But investors have reasons to see it as not too bad for Deutsche Telekom, whose stock was up 0.6% in early trading: T-Mobile is the German group’s most profitable division.
Booster Shots in Focus as Covid Cases Continue to Surge
The European Medicines Agency said it is evaluating whether to recommend booster shots of the Pfizer-BioNTech Covid-19 vaccine six months after eligible people (16 and up) received their second shots. Results from its “accelerated assessment” are expected within weeks.
In the U.S., booster shots of
vaccine could come a week or two after approval of
booster, White House chief medical advisor Dr. Anthony Fauci said. Boosters need approval from the Food and Drug Administration and the Centers for Disease Control and Prevention.
- The U.S. is recording more than 150,000 daily new infections and 1,100 deaths, according to the CDC, but college football has kicked off to packed stadiums, including the University of Wisconsin’s 80,000-capacity venue; Texas A&M’s 97,339; and the University of Michigan’s nearly 110,000.
- The surge in cases, mostly linked to the Delta variant in the U.S., is damping business travel demand. About 60% of more than 400 business travelers in a survey by Morning Consult for the American Hotel & Lodging Association said they would postpone trips.
- The seven-day average of Covid-related hospitalizations nationwide is more than 102,000, according to Johns Hopkins University. More than a quarter of U.S. hospitalizations are in Florida and Texas, and Oregon and Idaho are among states nearing capacity in their intensive care units.
What’s Next: Schools are also a concern as cases rise. Dr. Ashish Jha, dean of Brown University’s School of Public Health, told “Fox News Sunday:” “If we have testing in schools, if we improve ventilation, we get adults vaccinated, it is absolutely possible to get every child back to school full time safely this fall.”
—Janet H. Cho
Aluminum Prices Jump After Reported Guinea Coup
Aluminum prices rose to their highest level in 10 years Monday after a reported military coup in Guinea threatened to snarl the metal’s global supply chain.
- Aluminum is used in car parts, beverage containers and home appliances among other products and had already climbed 38% before the coup, Bloomberg reported. China produces 60% of the world’s aluminum, and imports more than half its bauxite from Guinea.
- A faction of Guinea’s military on Sunday said they had suspended the constitution and detained President Alpha Condé.
Shares of mining companies and aluminum producers also jumped on Monday, including Russia’s
United Co. Rusal
and China’s Aluminum Corp. of China. West Africa’s Guinea is a global supplier of bauxite, which is crucial for the manufacturing of aluminum.
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