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22 January 2020
Video commentary for January 21st 2020
Eoin Treacy's view
A link to today's video commentary is posted in the Subscriber's Area.
Some of the topics discussed include: Boeing trading halted, Hang Seng pulls back sharply, Wall Street and global markets steady, gold holds the $1550 area, Treasuries firm, Dollar and Yen steady, risk of some consolidation on Wall Street is rising but no sign of its yet amid continued monetary largesse.
Boeing Sees 737 Max Approval Slipping to Mid-2020 in New Delay
This article by Alan Levin and Julie Johnsson for Bloomberg may be of interest to subscribers. Here is a section:
Boeing Co. is telling 737 Max customers that the grounded jet won’t be approved to fly until June or July, months later than previously anticipated, said people familiar with the matter.
The new delay comes after two recent discoveries, a software flaw that will require more work than expected and an audit that found that some wiring on the plane needs to be rerouted. The timetable also includes a buffer for unanticipated complications, said one of the people, who asked not to be named because the discussions are private.
The new expectations mean that Boeing’s best-selling jet would miss the busy summer travel season for the second straight year, adding to the compensation that the U.S. planemaker is likely to pay airlines. The Max was grounded in March 2019 after two deadly crashes that killed 346 people.
Eoin Treacy's view
Trading was halted on Boeing’s shares ahead of the above announcement. The retort from the FAA that no timetable for the recertification of the aircraft has been set and that safety remains the top priority represents an additional blow.
China Virus Spreads to U.S. With Health Officials on High Alert
This article from Bloomberg may be of interest to subscribers. Here is a section:
The new virus “could be No. 2 or 3, that’s the concern,” Heymann said in an interview. “We need enough information to make a proper risk assessment.”
Despite the worries, the new virus is likely less deadly than SARS, said University of Sydney associate professor Adam Kamradt-Scott.
“It’s important to stress that this virus at the moment has been causing mild illness in the vast majority of people that have been affected,” he said in an interview on Bloomberg TV. “There’s around 10% of cases that have ended up in critical condition and there’s been deaths, but the vast majority of the 200-plus people infected have resulted in mild illness.”
Eoin Treacy's view
The Chinese New Year Holiday begins Friday evening and lasts about a week. Internally, it is a time for families to get together but the length of the break affords many people the opportunity to travel abroad which is why there is so much concern being expressed at present. The reality however is that there are probably about 300 confirmed cases and perhaps triple that which have gone unreported, but there will be hundreds of thousands of people travelling abroad over the next couple of weeks. There is obviously risk of further contagion but it is unlikely to represent the pandemic many fear.
Davos 2020: Sanjiv Bajaj Sees 'Some Uptick' In Consumer Lending Business
This article from Bloomberg quoting the CEO of Bajaj Finserv may be of interest to subscribers. Here is a section:
For the non-bank financial sector as a whole to turn around, the government needs to put aside fiscal discipline for around two years and jump-start the economy, said Bajaj.
“We need the tailwind from the government to rebuild the sector.” Sanjiv Bajaj, MD, Bajaj Finserv
India’s non-bank lenders have been reeling since the latter half of 2018, when IL&FS Ltd. group companies defaulted on debt and triggered an industry-wide credit squeeze, raising borrowing costs for small lenders. The government and the RBI stepped in to support by assuring increased liquidity and a provision for a partial guarantee to help these firms sell loans.
Bajaj said midsize players which aren’t perceived as being “pristine” have had trouble raising funds, especially from banks. “The only answer is either economy to pick up or more equity to come in or the liquidity problem will become a solvency problem in their case.”
“If the government help doesn’t come, we’ll see some deterioration or stagnation,” said Bajaj.
Eoin Treacy's view
The big question for India watchers in the aftermath of the IMF downgrading growth yesterday is how long it will take for measures taken in the third and fourth quarters of last year to transmit into economic growth.