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Empire State Up 3.5, Boeing to Suspend MAX?

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Monday, December 16, 2019

Looking at positive pre-market futures on already record-high stock market indexes to start a new trading week, we necessarily take a peek in the rear-view mirror to see that many market participants were not looking forward to this day. We were to have seen another leg up in the trade war, with Chinese imports slapped with new tariffs on nearly $1.6 billion. Thankfully for the markets, this didn’t happen.

Instead, we got agreements from both the U.S. and China on trade talks, with both sides having agreed in principle to a “phase one” trade deal. This does not address bigger-picture issues like Intellectual Property (IP) rights, but it cools the overall inflamed climate of the nearly 2-year-long trade war between the two countries.

That’s not to say everything is coming up roses this morning: Boeing (BA - Free Report) has announced it is currently considering outright suspension of production of its beleaguered 737 MAX airplane. The grounding of the plane around the world has already cost the company a reported $8.3 billion, and the company makes 42 737 MAX planes each month at present. This news has sent BA shares down roughly 4% at this hour.

Elsewhere, a new Empire State Index for December shows a better-than-expected +3.5 on its headline number ahead of today’s opening bell, beyond the 2.9 reported for November. Historically, these numbers are pretty tepid: for the 21st century as a whole so far, Empire State headlines have averaged 8.62. Its all-time low reached -34.4 at the trough of the Great Recession, in February 2009.

This is a big week for economic data ahead of the Christmas and New Year holidays this year, including today’ PMI flash Manufacturing and Services data (52.6 and 51.6 reported for the previous month, respectively), Housing Starts and Building Permits tomorrow, and Jobless Claims, Trade Deficit and a new Q3 GDP revision later in the week. It’s unlikely any one particular data point will augment the market’s present trajectory, but it should offer good insight on what to expect as we prepare for 2020.

Mark Vickery
Senior Editor

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