Podcast Summary
Boeing undergoes leadership changes amid safety concerns: Boeing's CEO and board chair are stepping down, new independent board chair elected, and changes in Boeing Commercial Airplanes leadership. Stocks slightly pulled back, Dow close to 40,000, but new home sales dipped slightly.
Boeing is undergoing significant leadership changes as it faces intense scrutiny over safety issues. Boeing's president and CEO, Dave Calhoun, and board chairman, Larry Kellner, have announced their plans to step down, with Steve Mollenkopf being elected as the new independent board chair to lead the process of selecting the next CEO. Additionally, Stan Diehl, president and CEO of Boeing Commercial Airplanes, will retire and be succeeded by Stephanie Pope. These changes come after a mid-flight emergency on a 737 MAX 9 flown by Alaska Airlines, which led to the FAA capping Boeing's output and calls for improved safety culture. In the market, stocks are seeing a slight pullback but could continue to move higher if earnings hold up and cash on the sidelines enters the market. The Dow Jones Industrial Average is closing in on the psychologically important threshold of 40,000. However, economic indicators showed a slight dip in new home sales in February, with a 0.3% month-on-month decline to 662,000, but a 5.9% year-over-year increase. The median sales price of new houses sold in February dipped to $400,500.
Housing market recovery may stall as new home sales decline and mortgage demand wanes: Despite a promising start to the housing market recovery, new home sales dropped in March and mortgage demand has been decreasing, causing concerns for the continuation of the recovery
The housing market recovery may be stalling, as new home sales saw a marginal decline in March after two consecutive monthly increases. This comes as mortgage demand has been waning over the past couple of months. In the electric vehicle sector, Mizuho Securities has turned cautious due to near-term demand issues and tightening liquidity concerns, leading to downgrades and lowered price targets for Tesla, Rivian Automotive, and Nio. On a positive note, JPMorgan initiated coverage on super microcomputers with an overweight rating and a high price target, expecting continued leadership driven by custom solutions and fast time to market. Match Group, the owner of popular dating apps, added two new members to its board of directors following talks with activist investor Elliott Management. Lastly, the trend of mutual fund to ETF conversions continues, with PIMCO proposing the conversion of its mortgage-backed securities fund, as asset managers seek to offer more active strategies and regulatory flexibility in financial product reorganizations.
European Stocks as a Less Volatile Alternative: Goldman Sachs suggests considering European stocks, or 'granolas', as a less volatile alternative to US stocks with similar market-driving potential and potential for effective compounding of earnings through high reinvestment rates.
Key takeaway from today's Wall Street Breakfast discussion is that investors are being asked to share their preferences between ETFs and mutual funds through a weekly survey. Meanwhile, Goldman Sachs suggests looking into European stocks, or "granolas," as an alternative investment option. These stocks, which include companies like GSK, Roche, and Nestle, offer similar market-driving potential with less volatility. The granolas' realized volatility is on average two times lower than that of the "Magnificent Seven" stocks. Additionally, they trade on a similar valuation to the S&P 500 but boast stronger and potentially more stable growth. With a high rate of reinvestment, these European stocks have the potential to compound earnings effectively, with a growth investment ratio of 55% over the last five years, close to the 59% for the Magnificent Seven. Overall, Goldman Sachief's Chief Global Equity Strategist Peter Oppenheimer suggests considering the granolas as a potentially less volatile and equally effective investment vehicle.