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In October, rising bond yields, driven by strong economic data and the upcoming US elections, pressured equities, prompting systematic reallocations into bonds. Despite short-term uncertainties, the economic backdrop is expected to support risk-taking into 2025, with attractive value opportunities emerging in equities and a constructive outlook for merger arbitrage. The portfolio has been de-risked ahead of elections, while increased allocations to commodities are anticipated to yield further opportunities.
In October, rising bond yields, driven by strong economic data and the upcoming US elections, pressured equities, prompting systematic reallocations into bonds. Despite short-term uncertainties, the economic backdrop is expected to support risk-taking into 2025, with attractive value opportunities emerging in equities and a constructive outlook for merger arbitrage. The portfolio has been de-risked ahead of the elections, while increased allocations to commodities are anticipated to yield further opportunities.
In October, rising bond yields, driven by strong economic data and the upcoming US elections, pressured equities, prompting systematic reallocations into bonds. Despite short-term uncertainties, the economic backdrop is expected to support risk-taking into 2025, with attractive value opportunities emerging in equities and a constructive outlook for merger arbitrage. The portfolio has been de-risked ahead of elections, while increased allocations to commodities are anticipated to yield further opportunities.
EasyJet reported a record £3.59 billion ($4.5 billion) in ancillary revenue for the year ending in October, driven by charges for add-ons like extra baggage. CEO Johan Lundgren criticized a €29 million fine from Spain for these practices, arguing it undermines consumer choice and competition. Despite regulatory challenges, EasyJet's performance improved, reflecting strong demand for travel across Europe.
Virgin Atlantic CEO Shai Weiss criticized the U.K. Labour government's budget as a "tax on growth," highlighting increased Air Passenger Duty (APD) rates that could hinder the aviation sector's contribution to the economy. The budget, which includes significant tax hikes aimed at businesses, has raised concerns among corporations about expansion and investment. Despite challenges, Weiss expressed optimism for Virgin Atlantic's return to profitability in 2024, despite ongoing issues with Rolls-Royce Trent 1000 engines affecting operations.
Boeing's Starliner program, part of NASA's commercial crew initiative, is grappling with significant financial losses totaling $1.85 billion, while facing technical challenges like overheating engines and helium leaks. As NASA shifts astronaut returns to SpaceX's Dragon, the future of the Starliner program remains uncertain, especially with the planned retirement of the International Space Station in 2030. Boeing's new CEO, Kelly Ortberg, may need to reassess the company's strategy, potentially moving away from fixed-price contracts to stabilize the program.
The EVTOL industry faces significant challenges, with many companies, including Lilium and Kitty Hawk, declaring insolvency or ceasing operations due to a lack of commercial viability and funding. Despite initial hype and investment, the sector is plagued by failures, leaving only a few firms, like eHang, with minimal success. As major players like Rolls-Royce exit the market, the future of urban air mobility appears increasingly bleak.
Ukraine's defense production capacity has surged from $1 billion in 2022 to $20 billion in 2024, yet the country can only afford to utilize about half of that. The demand for drone signal jammers has skyrocketed, with production reaching 2,500 units monthly amid the challenges posed by Russian drones and landmines. Over 800 defense companies have emerged since the 2022 invasion, marking a significant shift in the military landscape.
Boeing has issued layoff notices to over 400 workers from the Society of Professional Engineering Employees in Aerospace as part of a larger plan to cut 10% of its workforce, totaling around 17,000 jobs. This decision follows financial struggles and an eight-week strike by its machinists' union. Affected employees will remain on the payroll until mid-January.
With Donald Trump poised to return to the White House in January, expectations are high for a resurgence of tough rhetoric and potential actions against China. This shift is likely to increase volatility for companies heavily invested in the Chinese market, the world's second-largest economy.

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