Boeing

“Supply constrained” is a dominant theme this earnings season, indicating profit opportunities for involved companies. High demand in sectors like tech (Intel, Micron, AMD, Nvidia) and energy (GE Vernova) empowers firms to raise prices. Factors like AI’s demand and semiconductor production complexities drive shortages. Even Boeing faces production constraints. With this imbalance likely persisting, companies navigating supply limitations represent attractive investment opportunities. This situation could also improve the US trade deficit through exports.

U.S. equities rose, led by tech and boosted by economic optimism. The 10-year Treasury yield around 4% makes stocks attractive, prompting potential rotation from fixed income. Cramer’s Silicon Valley insights highlighted AI and market dynamics. Boeing (BA) surged on 737 MAX production increase approval, aiming for higher cash flow. Starbucks (SBUX) is predicted to rebound strongly, with Morgan Stanley raising its price target. Positive sentiment surrounds Starbucks’ turnaround and increased valuation of its Chinese ventures. Other stocks noted include SWKS, MRVL, DRI, CLF, and PLD.

Cathay Pacific is increasing its order for Boeing 777-9 passenger jets, adding 14 aircraft for a total commitment of 35. The 777-9 offers a 20% reduction in fuel consumption and emissions and a 40% decrease in noise. This will allow Cathay Pacific to expand its fleet, improve operational efficiencies, and meet sustainability goals, while also strengthening its brand as a provider of premium air travel with extended long-haul routes. The order reinforces Boeing’s role in aerospace and its contribution to economic growth and sustainability.

The US has resumed export of crucial aircraft components, including engines, to China after a month-long hiatus. This follows the recommencement of Boeing aircraft deliveries to Chinese airlines. This policy shift, alongside eased restrictions on chip design software and ethane, signals progress in US-China trade negotiations and a thawing of trade relations.

Boeing forecasts a strong demand for commercial airplanes, projecting 43,600 deliveries by 2044. Though slightly down from last year, this indicates global aviation growth. Single-aisle aircraft will dominate deliveries. However, Boeing lowered passenger traffic and economic growth expectations. The recent 787 crash and production/quality challenges, along with a global aircraft shortage, are hurdles. Boeing stock fell following the tragic event.

The U.S. DOJ finalized a deferred prosecution agreement with Boeing, sparing criminal charges for 737 MAX crashes (2018-2019, 346 fatalities) tied to concealed safety flaws. Boeing will pay $687 million, including $444.5 million for victims, and enhance compliance measures. Victim families denounced the deal as “corporate immunity,” building on their criticism of Boeing’s 2021 $2.46 billion settlement. Legal experts questioned accountability despite a DOJ fraud indictment for misleading regulators. The agreement coincides with Boeing’s $4.7 billion Spirit AeroSystems acquisition, raising concerns about safety reforms. Analysts remain split on whether this resolves Boeing’s legal risks or delays broader reckoning.