Critical of any speculations on possible recovery of airlines, cruise ship owners, and aircraft manufacturers

Review

Stocks on Wall Street closed sharply higher on Monday after the National Association of Realtors (NAR) revealed that pending home sales in the United States unexpectedly shot up by over 44%. This came despite new announcements of surging COVID-19 cases in South and Southwest of the USA, and the list of companies that joined the social media advertising boycott increased sharply during the day.

Investors bet on select stocks on hopes that most state economies will muddle through, people will return to home deliveries, and various private activities if restaurants and bars will remain closed. Southwest Airlines jumped over 5% after its share price upgrades to several investment banks. Shares of non-food retailers Gap and Kohl’s rose 4% and 5%, respectively.

Company & Trends

The Boeing Company (BA) and the US Federal Aviation Administration started running test flights of the company's troubled 737 MAX aircraft yesterday seen as a critical step to getting the planes up in the air again after two crashes in November 2018 and March 2019 that killed 500 people.

Boeing shares surged 5.5% in premarket trades yesterday, and closed almost 13% higher at $192, but the question is where the music is. Even though the lengthy investigation saga, hopefully, may be over, there would hardly be any buyers given the precarious state of the air carriers business. As such at the current price level Boeing is an obvious sell and even short sell, no matter how great holdings of this stocks are among the most popular pension and insurance funds.

Following our story of the day about questionable recovery of The Boeing stock, yesterday the CEO of Airbnb, a well-known private sector tourism aggregator, said Travel will never be the same again.

"It often takes months to see the transformation that will take place over decades," said Brian Chesky. He predicted that in the future, vacation travelers will prefer to stay closer to home, largely restricting their travel to locations that are within a car ride distance, and national parks would become destinations that are even more popular.

"I think we will soon see that travel becomes more individual and more local," he said, citing Airbnb data that shows that nationwide travel is gradually recovering while international tourism is still knocked down. People are not getting on airplanes, they’re not crossing borders, they’re not meaningfully traveling to cities, they’re not traveling for business.

All of this makes us very critical of any speculations about possible recovery of airlines, cruise ship owners, and aircraft manufacturers.