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Fourth Issue

S&P 500 Notches Fourth Week of Declines

Vincent Pucillo              September 29th, 2020 

                  

The stock market has not been performing well in the past week, leaving the S&P 500 for a fourth week of consecutive losses. The confidence of investors has crippled due to new coronavirus surges in the U.S. and Europe. There are also signs that global recovery is slow and uneven.


David Coombs, head of multi-asset investments at Rathbone Brothers said “Until we get a vaccine for the population at large, the coronavirus course is uncertain.” Despite this, economic data is providing hints of recovery in manufacturing industry, due to new orders of durable goods. Investors are also awaiting sign of a new government stimulus package.

Bond markets have yielded down to 0.657% from 0.664% on the U.S. 10-year Treasury.
Shares of Novavax are up 11% after the company announced a final-stage study on an experimental vaccine for coronavirus.
Barclays analysts are expecting a bullish outlook for the cruise line industry, as shares of cruise line companies have gone up.

Impresa Aerospace files for Bankruptcy

Jake Heronema                September 29th, 2020     

                          

Boeing supplier Impresa Aerospace, which makes parts involved in the manufacture of the company’s grounded 737 MAX jets, has filed for bankruptcy protection as Boeing continues to struggle both with getting the planes back in the air and the coronavirus pandemic. Impresa Aerospace filed for bankruptcy protection in the U.S. Bankruptcy Court in Wilmington, Del., after a steep loss in revenue due to the global grounding of the 737 MAX aircraft following two fatal crashes that killed a total of 346 people.


Private-equity firm Twin Haven Capital Partners, Impresa’s majority owner and secured lender, plans to buy Impresa Aerospace out of bankruptcy for $10 million, unless a better offer is made, according to court papers.


The bankruptcy is the latest sign of the struggles afflicting Boeing and the aerospace industry, and how the 737 MAX's grounding and the ongoing pandemic has slammed the airline industry's demand for planes and how that is echoing through the entire aerospace supply chain.


The 737 MAX in particular has been a big source of Boeing's woes. A 245-page report released earlier this month by the House.


Transportation and Infrastructure Committee pointed to a "horrific culmination" of missteps including a lack of transparency on the part of Boeing management and “grossly insufficient” oversight by the Federal Aviation Administration for the two fatal 737 MAX crashes.
The slammed airline industry, which continues to reel from the pandemic and steep drop in air travel. Executives of the country's biggest airlines were at the WhiteHouse last week asking President Donald Trump for an additional $25 billion in aid to get them through the pandemic and avoid layoffs.


Boeing expects the 737 MAX to be cleared to fly in the fourth quarter of this year.
Sept. 28 2020 – 166.41 USD +10.34 (6.63%)

Reminiscent of The Great Recession, The Covid Recovery is Losing Steam

Oscar Garner III          September 29th, 2020

‘Those who do not learn history are doomed to repeat it.’, and the U.S. economy has a great deal of studying to do. In the past weeks, economist and government officials have been closely watching our economic recovery hoping to catch a glimpse of light at the end of this tunnel. Unfortunately, the initial market collapse as a result of the Covid-19 outbreak looks like it could leave long-lasting economic scars. Although the initial recovery had strong momentum from government stimulus, most of those funds have since dried up leaving the economy in a virtual standstill.

 

A lack of recovery momentum and uncertain discussions of a second stimulus are reminiscent of The Great Recession in ’08. During that time, the U.S. government took almost a year to begin rebuilding the economy and the effects of that delayed response were apparent with high unemployment for years to come. This time around it seems we have learned our lesson, for the most part. In 2009, the Obama administration enacted only one large stimulus package to trigger an economic rebound which only carried them into the following year. This current administration runs the risk of making a similar mistake with the discussions around another stimulus seeming fruitless.

Employers have hired back less than half of the 22 million workers that have been laid off since April and vulnerable households are running out of saved funds. Without a plan to give buying power back to the consumers we could see elevated unemployment and low GDP for several quarters. With market volatility surrounding the election and a still unsolved global pandemic, this is not the time to leave U.S. economy to its own devices.

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