Before The Bell: 70's Stagflation? Citi Downgrades Boeing
Central banks may be dealing with 70's stagflation. Citigroup downgrades Boeing. Stock futures are down.
Bloomberg reports former Bank of England policy maker Charles Goodhart says the world is facing a "minor replay" of stagflation of the 1970's. Goodhart, currently a professor at the London School of Economics, said in an interview that central banks around the world are facing a conundrum due to declining growth and productivity coinciding with "supply shocks on the inflationary side." Goodhart's comments come just as the International Monetary Fund cut its forecast for global growth to the slowest pace in five years while acknowledging that increased inflation poses a problem for global policy makers. See Professor Lance Lewis' thoughts on stagflation in Will Fed's Ease Create Gold Bubble?
From the Bull Pen: Professor Lewis expects gold to outperform in an inflationary environment. Using the gold ETF (GLD), near-term sell stops may be set below $90.
From the Bear Cave: Bears expect FedEx (FDX) to be hit hard should stagflation concerns manifest; buy stops above $95.
Citigroup Downgrades Boeing
According to Briefing.com, Citigroup cut its price target on Boeing (BA) this morning from $87 to $78 following yesterday's 4Q earnings report. The firm cited delays in the 787 Dreamliner program were likely and that it does not believe in Boeing's extended cycle thesis. Further, Citigroup expects the commercial aerospace cycle to peak in 2009. Yesterday, Boeing beat analyst expectations by $0.04, reporting 4Q EPS of $1.36. Revenues came in $17.48 bln vs. $17.33 consensus. Professor Mark Bloudek first wrote of delays in the Dreamliner earlier this month in Boeing's 787 Production Concerns.
From the Bull Pen: Bulls see a more stable play in Lockheed Martin (LMT). Per Bloomberg, the stock has 13 buy recommendations, 8 holds, and 0 sells. Sell-stops may be set below the 200 DMA ($102).
From the Bear Cave: Bears see an attractive downside entry in Boeing with buy-stops above $85 (a point that resembles a break of the downtrend from the October high).
For more ideas, see Minyanville's Spotlight Stocks.
Quick Check Around the World
As traders fire up this Thursday pup, they start out by looking upon foreign markets skewed to the downside.
Asian trading closed with the Hang Seng -0.84%, Nikkei +1.85%, Sensex -0.62%, Taiwan -0.30% and Shanghai -0.78%.
A quick check across the pond finds the CAC -1.20%, DAX -1.30%, FTSE -1.38%, ATX -1.91%, Swiss Mkt. -1.86% and Stockholm -0.80%.
A Look At Commodities
Commodities are mixed this morning. Crude oil is down -1.11 to 91.22. Gold is higher +7.60 to 928.20. Silver is higher +0.170 to 16.930. Copper is higher as well +5.20 to 326.80.
The dollar index is up +0.113 to 75.153.
As of 8:40 AM EST, S&P futures are down 14.6 to 1336, and Nasdaq futures are lower by 22.25 points to 1789.
On the Radar
Personal Income: 0.5% vs. 0.4% cons
Personal Spending: 0.2% vs. 0.1% cons
PCE Deflator (YoY): 3.5% vs. 3.5% cons
PCE Core (MoM): 0.2% vs. 0.2% cons
PCE Core (YoY): 2.2% vs. 2.2% cons
Initial Jobless Claims: 375 k vs. 301 k prior
Employment Cost Index: 0.8% vs. 0.8% cons
9:45 AM EST Chicago Purchasing Manager: 52.0 cons
Click here for the full trading radar.
Have a great day, Minyans! Good luck!
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