Week of July 19 2019 Weekly Recap & The Week Ahead
“Skate To Where The Puck Is Going To Be” — Wayne Gretzky
1. 737 MAX Woes Hobble Budget Carrier Ryanair — Ryanair (NASDAQ:RYAAY) is taking the knife to its operations in Europe, blaming possible further delivery delays of Boeing’s (NYSE:BA) 737 MAX planes. It’s planning to cut back service at some airports and abandon others entirely because regulators may not return the grounded MAX to service until as late as December. Ryanair had planned its flight schedule based on the delivery of 58 of the aircraft by summer 2020, but Europe’s biggest budget carrier, which can only take delivery of up to eight aircraft per month, now expects to receive only 30. In addition, American Airlines (NASDAQ:AAL) has extended Boeing (NYSE:BA) 737 MAX cancellations for the fourth time, but “remains confident that impending software updates, along with the new training elements, will lead to recertification of the aircraft this year.” That’s despite being the next MAX operator to extend cancellations into early November.
2. China Posts Weakest Growth in 27 Years — China’s economic growth decelerated in the second quarter to its slowest pace since 1992, growing by 6.2% and prompting expectations of more stimulus. The data was weighed down by an impasse in negotiations that shattered hopes for a trade deal in late May, though President Trump and Xi Jinping got discussions back on track by the end of June. Separate economic figures handily topped forecasts as the country’s industrial output grew 6.3% in June from a year earlier, while retail sales surged 9.8%. The Shanghai Composite closed up 0.4% following the news.
3. Huawei May Soon Restart U.S. Sales — the U.S. may approve licenses for companies to re-start new sales to Huawei in as little as two weeks, according to Commerce Secretary Wilbur Ross. It’s a sign President Trump’s recent effort to ease restrictions on the Chinese telecom equipment supplier could move forward quickly amid chip industry lobbying, coupled with Chinese political pressure. Out of $70B that Huawei spent buying components in 2018, some $11B went to U.S. firms including Qualcomm (NASDAQ:QCOM), Intel (NASDAQ:INTC) and Micron Technology (NASDAQ:MU).
4. DoJ Seeks Pause of Antitrust Ruling Against Qualcomm — the U.S. Department of Justice asks a federal appeals court to pause enforcement of the May antitrust ruling that would force the company to change how it licenses its patents, citing support from the Energy Department and Defense Department. The Justice Department says QCOM likely will win its appeal of the May ruling because Judge Koh, who found the company’s license practices were anti-competitive, ignored established antitrust principles and imposed an overly broad remedy. Defense Under Secretary Ellen Lord wrote in a filing made in the 9th Circuit Court of Appeals “For DoD, Qualcomm is a key player both in terms of its trusted supply chain and as a leader in innovation, and it would be impossible to replace Qualcomm’s critical role in 5G technology in the short term,”. In a related note, Vodafone launches 5G in Germany.
5. WHO Declared Ebola Outbreak Global Health Emergency — the World Health Organization has declared the Ebola outbreak in Democratic Republic of Congo to be a “public health emergency of international concern” after the spread of the virus to the city of Goma and into Uganda. The designation signals risk that a disease could spread globally and is meant to corral political and financial support to stop it. Responders have been using an experimental vaccine made by Merck (NYSE:MRK) in an attempt to halt the spread of the virus, with more than 140,000 people in the DRC immunized so far.
The week ahead — Economic data from Econoday.com:
