Market Morning: Boeing Tragedy, Inflation Payrolls & Unemployment, Walmart Challenges Amazon Go

Market Morning

Boeing 737 Max 8 Crashes In Java Sea With 189 People On Board

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The week begins sadly with a terrible tragedy. A Boeing (NYSE:BA) 737 Max 8 with 189 people on board has crashed into the Java Sea. The aircraft was brand new, only in service since September of this year. Lion Air is the largest privately owned airline in Indonesia. Only 13 of Lion’s 201 737 Max 8 order from Boeing have been delivered. It stands to reason that orders will be halted as Boeing may have to check electrical issues with the aircraft model. Nobody knows what caused the plane to go down yet but it is assumed it was not an engine problem since the aircraft is designed to fly on one engine. Whatever it was, the problem occurred soon after takeoff. Boeing closed down 1.24% yesterday and considering the circumstances will likely trade down today as well.

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This Week On the Economic Calendar: Inflation, Real Estate, Payrolls and Unemployment

Big figures on the tape this week in economic data country. Today an hour before market open we have the Personal Consumption Expenditures numbers for September, the number that the Federal Reserve wants to keep at 2% for some reason. An upside surprise should take a whack at bond prices (NYSEARCA:TLT), which have been recovered since last week as the flight to safety into bonds continues among equity volatility. On Tuesday we have the Case Shiller 20, the widely followed index of real estate prices. An underwhelming number could further batter home builder stocks. (BATS:ITB) plus consumer confidence. On Wednesday, 30-year mortgage rates, currently at 5.1%, and employment costs, last month up 0.6%. On Thursday, manufacturing PMI should give a further indication of future inflation trends, and auto sales, which should fall as rates rise and it becomes harder to finance new vehicle purchases. Finally, on Friday, the non farm payrolls number, because farm payrolls are ever and always in a world of their own, and the unemployment rate, which is currently hovering at 3.9%, essentially full employment.

IBM Buys Red Hat for $33B in Cloud Computing Catch-Up Bid

IBM (NYSE:IBM) has a lot of catching up to do in cloud computing, so it offered up $33 billion for software company Red Hat (NYSE:RHT), 65% premium over market. Both Red Hat and IBM. Red Hat has only recently overtaken its 2000 dot com bubble top, though both stocks have gotten smashed since June of this year in a sign of the tech center running out of buyer fuel. Perhaps this new acquisition, IBM’s biggest ever in terms of cash, will reignite the tech really. Perhaps not. IBM seems happy about it. “The acquisition of Red Hat is a game-changer. It changes everything about the cloud market,” said Ginni Rometty, chairman and chief executive officer of International Business Machines Corp., in a statement Sunday. IBM has been in decline for the last 5 years and is now actually below its 1999 highs.

Walmart Goes Amazon At Sam’s Club Now In Bid to Redefine Retail

Walmart (NYSE:WMT) is going full Amazon Go in the form of Sam’s Club Now, which will hopefully be better than Sam’s Club Then, which will hopefully be Now, Soon, if plans go well. The largest employer in the United States will use augmented reality, robotics, and a smartphone app to both optimize layout and allow customers to scan and pay as they go with their phones. No more checkout lines. The new concept store will be smaller than your typical Sam’s Club, about a quarter of the size, as it will be the incubator for new technologies, including prices that update automatically, eschewing the need for those people that stick price tags on things manually with that sticker gun thing. If all goes well, expect Walmart proper to do the same. How else are you going to compete with Amazon (NASDAQ:AMZN).

China Continues Freefall

Chinese shares (000001.SS) are down again today about 2.1% as the perpetual worriers continue to worry about China’s worrying economy. Profit growth for China’s blue chips has declined for 5 months and they’re not selling enough liquor, which could be good for the economy if people are more sober. Depends how you look at it. Most of the Trump Administration tariffs are not even in force yet, but if they ever are expect more downward momentum.



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