Monday Musings: December 23, 2019

Dec 23, 2019


Public Trust Credit Team
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Analogy Practice: The Federal Aviation Administration (FAA) is to Boeing as the Grinch is to Christmas (without the change of heart)

In an effort to move away from the data and legal counsel-heavy strategy of Chief Executive Dennis Muilenburg, Boeing replaced him with David Calhoun, the former Chairman of the Board. The decision came in response to the ongoing issues with the cessation of production of the 737 MAX that was effectively mandated by the FAA. Production will remain halted until problems with the avionics are rectified. The company is not an approved counterparty, meaning it has little impact on Public Trust. However, the entity is the largest commercial aircraft manufacturers in the world and the impact of the production disruptions will ripple through the economy. Sell-side analysts and economists are working to estimate the impact on the total GDP, since the aerospace product manufacturing sector “accounts for 0.32% of total nonfarm employment and 0.69% of value added in the U.S. economy” (per Wells Fargo). Regardless of the total impact, the disruptions at Boeing may very well make airline travel booking slightly more challenging with schedules curtailed or combined to account for fewer new aircrafts available.
All comments and discussion presented are purely based on opinion and assumptions, not fact. These assumptions may or may not be correct based on foreseen and unforeseen events. The information presented should not be used in making any investment decisions. This material is not a recommendation to buy, sell, implement, or change any securities or investment strategy, function, or process. Any financial and/or investment decision should be made only after considerable research, consideration, and involvement with an experienced professional engaged for the specific purpose. Past performance is not an indication of future performance. Any financial and/or investment decision may incur losses.

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