1 00:00:03,320 --> 00:00:07,640 Speaker 1: Broadcasting live to New York, Bloomberg eleventh Rio to Washington, 2 00:00:07,720 --> 00:00:12,760 Speaker 1: d C. Bloomberg to Boston, Bloomberg twelve hundreds to San Francisco, 3 00:00:12,880 --> 00:00:17,239 Speaker 1: Bloomberg nine to the Country series Exam General one and 4 00:00:17,440 --> 00:00:20,759 Speaker 1: around the globe the Bloomberg Radio plus Japp and Bloomberg 5 00:00:20,760 --> 00:00:25,200 Speaker 1: Dot Gone. This is taking Stock. Coming up on taking stock. 6 00:00:25,239 --> 00:00:28,120 Speaker 1: We're going to take stock of the aerospace industry. We're 7 00:00:28,120 --> 00:00:31,480 Speaker 1: gonna take a look at Boeing, for example, Boeing announcing 8 00:00:31,560 --> 00:00:35,400 Speaker 1: today billions of dollars worth of new orders for aircraft 9 00:00:35,479 --> 00:00:40,000 Speaker 1: and maintenance plans at the Farnborough International Air Show. Seeking 10 00:00:40,040 --> 00:00:44,199 Speaker 1: with Howard you Bell from Jeffries. He's an aerospace and 11 00:00:44,240 --> 00:00:47,560 Speaker 1: defense electronics analysts. He's going to tell us about all 12 00:00:47,600 --> 00:00:51,279 Speaker 1: that and more. When it comes to the guys, I'm 13 00:00:51,280 --> 00:00:53,440 Speaker 1: gonna fly right over to Charlie Pellett. Now he's in 14 00:00:53,440 --> 00:00:55,720 Speaker 1: the Bloomberg Buos room with the Bloomberg Business Flash, and 15 00:00:55,720 --> 00:00:57,760 Speaker 1: I think you very much, Kathleen Hayes, thank you him. 16 00:00:57,760 --> 00:01:00,480 Speaker 1: Boeing shares their advancement right now by one and a 17 00:01:00,480 --> 00:01:03,160 Speaker 1: half percent. The a's the ticker it is at one 18 00:01:03,200 --> 00:01:07,000 Speaker 1: thirty two oh four. Stocks are climbing SMPT five hundred 19 00:01:07,040 --> 00:01:10,039 Speaker 1: index a trading at a record very close to a 20 00:01:10,120 --> 00:01:13,360 Speaker 1: record now up ten points back at thirty nine a 21 00:01:13,440 --> 00:01:16,199 Speaker 1: game there of five tenths of one percent. Stick around 22 00:01:16,240 --> 00:01:19,039 Speaker 1: for the close. Will the SMP five hundred index be 23 00:01:19,160 --> 00:01:22,920 Speaker 1: hitting a record down? Industrials up one oh one to 24 00:01:23,040 --> 00:01:25,760 Speaker 1: eighteen thousand, two hundred forty seven, a gain there of 25 00:01:26,200 --> 00:01:29,600 Speaker 1: six tents of one percent. The nastack Compositive Index up 26 00:01:29,640 --> 00:01:34,360 Speaker 1: thirty eight points. Nastack did trade above five thousand right 27 00:01:34,400 --> 00:01:37,679 Speaker 1: now up by eight tenths of one percent. Tenure down 28 00:01:37,720 --> 00:01:41,120 Speaker 1: twenty thirty seconds, yield there one point four two percent, 29 00:01:41,520 --> 00:01:44,440 Speaker 1: and we've got gold down three seventy ounce to twelve 30 00:01:45,160 --> 00:01:47,920 Speaker 1: thirteen fifty four, a drop there of three tents of 31 00:01:47,960 --> 00:01:50,760 Speaker 1: one percent. We are just about thirty minutes away from 32 00:01:50,800 --> 00:01:54,640 Speaker 1: al Coah's results. What should we be expecting? That question 33 00:01:54,680 --> 00:01:58,360 Speaker 1: for Anthony Young, he's a metals and mining analysts with mcquarie. 34 00:01:58,360 --> 00:02:00,920 Speaker 1: He was our guest just about an hour ago right 35 00:02:00,920 --> 00:02:03,520 Speaker 1: here on taking stock. Well, I mean, this quarter is 36 00:02:03,560 --> 00:02:06,000 Speaker 1: somewhat unique given the split at the company is going 37 00:02:06,040 --> 00:02:09,079 Speaker 1: to be occurring at the company. So the split and 38 00:02:09,120 --> 00:02:12,160 Speaker 1: will pay a major factor in this earnings release. UM 39 00:02:12,240 --> 00:02:15,359 Speaker 1: investors are looking for further details on that, but then 40 00:02:15,400 --> 00:02:18,600 Speaker 1: also fundamentally UM trying to figure out, you know, what's 41 00:02:18,639 --> 00:02:20,960 Speaker 1: going on with the aluminium business and what's going on 42 00:02:21,280 --> 00:02:25,040 Speaker 1: with the downstream or their industrial business, and looking at 43 00:02:25,040 --> 00:02:28,480 Speaker 1: the UM drivers that are impacting that and the profitability 44 00:02:28,520 --> 00:02:31,320 Speaker 1: that they're ample to generate in those two companies once 45 00:02:31,360 --> 00:02:34,320 Speaker 1: they split. And again ALCA after the bell shares up 46 00:02:34,320 --> 00:02:38,240 Speaker 1: now by two point one percent, recapping SMP up ten, 47 00:02:38,320 --> 00:02:41,280 Speaker 1: a gain of point five percent three two on Wall Street. 48 00:02:41,320 --> 00:02:46,040 Speaker 1: Now the other stories making news. Thank you, Charlie from 49 00:02:46,080 --> 00:02:48,919 Speaker 1: the Bloomberg news Room. I'm Jill Schneider. This news update 50 00:02:49,000 --> 00:02:51,280 Speaker 1: is brought to you by the Jeep Grand Cherokee, the 51 00:02:51,320 --> 00:02:55,200 Speaker 1: most awarded suv ever. The Grand Cherokee continues to raise 52 00:02:55,280 --> 00:02:58,680 Speaker 1: the bar with its luxurious interior and legendary four by 53 00:02:58,680 --> 00:03:02,320 Speaker 1: four capability. I wanted your local Jeep dealer today. The 54 00:03:02,440 --> 00:03:05,200 Speaker 1: UK will have a new Prime minister by Wednesday night. 55 00:03:05,400 --> 00:03:08,640 Speaker 1: David Cameron says he will offer his resignation to the Queen. 56 00:03:08,919 --> 00:03:12,080 Speaker 1: The next Prime Minister will be Home Secretary Theresa May. 57 00:03:12,280 --> 00:03:14,799 Speaker 1: The parents of the Dallas police shooter are speaking out 58 00:03:14,880 --> 00:03:18,239 Speaker 1: after the deadly ambush that killed five police officers. James 59 00:03:18,320 --> 00:03:21,560 Speaker 1: Johnson told the website The Blaze he shocked by what 60 00:03:21,639 --> 00:03:26,840 Speaker 1: his son did. I love my son, I hate Micah. 61 00:03:26,880 --> 00:03:29,480 Speaker 1: Johnson's family says he never showed signs of hatred for 62 00:03:29,520 --> 00:03:33,200 Speaker 1: certain groups of people, but that he hated injustice. Indiana 63 00:03:33,240 --> 00:03:36,040 Speaker 1: Governor Mike Pence says he's ready to help Donald Trump 64 00:03:36,080 --> 00:03:39,520 Speaker 1: transform America. Pence is set to appear with the presumptive 65 00:03:39,520 --> 00:03:43,600 Speaker 1: Republican nominee at a fundraiser in Indianapolis tomorrow. This country 66 00:03:43,680 --> 00:03:46,280 Speaker 1: is facing great challenges at home and abraun. I think 67 00:03:46,360 --> 00:03:50,360 Speaker 1: we needed a strong leadership supporting our troops, strong leadership 68 00:03:50,360 --> 00:03:52,960 Speaker 1: to get this economy moving again. And we need clear 69 00:03:53,000 --> 00:03:56,080 Speaker 1: minded leadership to make common sense conservative point us to 70 00:03:56,120 --> 00:03:58,440 Speaker 1: the Supreme Court of the United States. And and I'm 71 00:03:58,480 --> 00:04:01,560 Speaker 1: prepared to make that case anywhere across Indiana and anywhere 72 00:04:01,560 --> 00:04:03,400 Speaker 1: across this country that Donald Trump would want me to. 73 00:04:04,000 --> 00:04:06,520 Speaker 1: For the second time this year, Manhattan Hinge will make 74 00:04:06,560 --> 00:04:09,960 Speaker 1: its appearance starting tonight. The solar spectacle is created when 75 00:04:09,960 --> 00:04:13,000 Speaker 1: the setting sun aligns with the city's street grid, creating 76 00:04:13,040 --> 00:04:15,560 Speaker 1: a ray of light between the buildings. Every street that 77 00:04:15,640 --> 00:04:18,040 Speaker 1: runs east to West will be cast in a warm 78 00:04:18,080 --> 00:04:20,960 Speaker 1: glow just after eight p m. Global News twenty four 79 00:04:20,960 --> 00:04:24,800 Speaker 1: hours a day, powered by more than journalists and analysts 80 00:04:24,800 --> 00:04:27,800 Speaker 1: in more than one twenty countries. From the Bloomberg News Room. 81 00:04:27,880 --> 00:04:32,640 Speaker 1: I'm Jill Schneider, Charlie, and we thank you. What again recapping? 82 00:04:32,640 --> 00:04:35,280 Speaker 1: We do have equities trading higher SLM P five, How 83 00:04:35,279 --> 00:04:38,520 Speaker 1: did it index up nine to nine? That is a 84 00:04:38,560 --> 00:04:42,160 Speaker 1: gain of point four. I'm Charlie Pellett and that's a 85 00:04:42,200 --> 00:04:48,839 Speaker 1: Bloomberg business flash. This is taking stock with Pim's box, 86 00:04:48,880 --> 00:04:54,360 Speaker 1: and Kathleen has on Bloomberg Radio bowing growing more optimistic 87 00:04:54,360 --> 00:04:57,880 Speaker 1: about airplane orders, increasing its long term forecasts on the 88 00:04:57,920 --> 00:05:02,159 Speaker 1: expectation that demand for air travel the expanding around the globe, 89 00:05:02,200 --> 00:05:05,760 Speaker 1: led by China and though developing countries. Here to discuss 90 00:05:05,800 --> 00:05:08,680 Speaker 1: this is Howard your Bell, senior equity research channelists for 91 00:05:08,760 --> 00:05:13,160 Speaker 1: Aerospace and Defense Electronics at Jeffreys here in New York City. 92 00:05:13,200 --> 00:05:17,320 Speaker 1: How Ared, Welcome to the show. Well, it is interesting 93 00:05:17,400 --> 00:05:20,760 Speaker 1: that you know that I think that the the figure 94 00:05:20,760 --> 00:05:22,880 Speaker 1: of course that Boeing is looking at five point nine 95 00:05:22,920 --> 00:05:25,440 Speaker 1: trillion dollars over twenty years. That's a lot of money 96 00:05:25,440 --> 00:05:27,159 Speaker 1: and a lot of airplane orders, but the fact that 97 00:05:27,240 --> 00:05:29,320 Speaker 1: China and developing countries are going to be leading it 98 00:05:30,400 --> 00:05:33,720 Speaker 1: not totally. If that's been really continuation of a trend. 99 00:05:34,040 --> 00:05:36,599 Speaker 1: I think we've all forgotten there's a large and growing 100 00:05:36,680 --> 00:05:39,680 Speaker 1: middle class in China. Howard, I wonder if you could 101 00:05:39,680 --> 00:05:43,359 Speaker 1: speak a little bit more broadly about the Farnborough Air Show, 102 00:05:43,720 --> 00:05:47,719 Speaker 1: which actually closed early today because of a torrential downpour. 103 00:05:48,080 --> 00:05:50,680 Speaker 1: What's at stake there, I mean, taking place in Britain, 104 00:05:50,800 --> 00:05:53,160 Speaker 1: And what if you give us your thoughts about Brexit 105 00:05:53,240 --> 00:05:57,839 Speaker 1: the UK industry and orders for these international companies. That's 106 00:05:57,839 --> 00:05:59,760 Speaker 1: a mouthful. Yeah, well, that's why I give it to 107 00:05:59,760 --> 00:06:05,000 Speaker 1: you at a time. Oh I will well, I'm dodging 108 00:06:05,040 --> 00:06:07,840 Speaker 1: that bullet. But um, first, I'd say that Brexit is 109 00:06:07,880 --> 00:06:11,680 Speaker 1: an unfortunate event. But um, and it creates a little 110 00:06:11,680 --> 00:06:15,760 Speaker 1: bit of friction for air travel. Um. But but I'm 111 00:06:15,800 --> 00:06:18,760 Speaker 1: not sure it's going to be you know, a big 112 00:06:18,800 --> 00:06:21,640 Speaker 1: calamity over the long haul. I mean, if we look 113 00:06:21,680 --> 00:06:23,840 Speaker 1: at UK air travel, it's about two and a half 114 00:06:23,839 --> 00:06:27,520 Speaker 1: percent of global traffic. And if if you assume, um, 115 00:06:27,640 --> 00:06:31,200 Speaker 1: it takes maybe ten out at worst, it's just a 116 00:06:31,200 --> 00:06:35,880 Speaker 1: couple of percentage points of loss. Second, what happens is 117 00:06:35,920 --> 00:06:38,279 Speaker 1: it does make it cheaper to manufacture in the UK, 118 00:06:38,960 --> 00:06:44,440 Speaker 1: and over time, whether it's UM, Boeing or Airbus or whomever, UM, 119 00:06:44,560 --> 00:06:46,760 Speaker 1: Britain will become a bit more of an export economy 120 00:06:46,800 --> 00:06:49,680 Speaker 1: than than it's possibly been. And maybe the last point 121 00:06:49,720 --> 00:06:52,800 Speaker 1: I make in terms of Brexit, that's unfortunate, you know, 122 00:06:52,839 --> 00:06:55,640 Speaker 1: in terms of friction, um, it just now means um, 123 00:06:55,920 --> 00:06:57,680 Speaker 1: the Brits will have to be in the same line 124 00:06:57,720 --> 00:07:01,799 Speaker 1: going to the EU as the Americans. Well, a little 125 00:07:01,800 --> 00:07:06,560 Speaker 1: more competition maybe. But it's interesting that what the came 126 00:07:06,600 --> 00:07:09,560 Speaker 1: out of the air show this year is the industry 127 00:07:09,560 --> 00:07:13,600 Speaker 1: broadly expecting fewer aircraft orders. Were Boeing's talking up the 128 00:07:13,960 --> 00:07:18,240 Speaker 1: least the longer term view? Is that consistent? Yes, I 129 00:07:18,240 --> 00:07:21,640 Speaker 1: think so. I mean we we have down orders this year. 130 00:07:21,640 --> 00:07:24,400 Speaker 1: I mean when you have a seven year backlog in 131 00:07:24,520 --> 00:07:28,640 Speaker 1: some categories, it's hard to um, you know, wait, I 132 00:07:28,680 --> 00:07:32,600 Speaker 1: mean airlines want to be patients, they want to target deliveries, 133 00:07:32,680 --> 00:07:36,000 Speaker 1: they want to see exactly what their fleet fleets are 134 00:07:36,080 --> 00:07:39,720 Speaker 1: and and it's really a smart idea not to necessarily 135 00:07:40,240 --> 00:07:43,240 Speaker 1: buy a twenty or twenty five year asset based on 136 00:07:43,440 --> 00:07:46,560 Speaker 1: one year's worth of business. Howard, what is your thought 137 00:07:46,640 --> 00:07:48,880 Speaker 1: on investing in Boeing at the present time. I think 138 00:07:48,880 --> 00:07:50,800 Speaker 1: the stock is down about five five and a half 139 00:07:50,840 --> 00:07:54,800 Speaker 1: percent so far this year. Yes, um it was, it is, 140 00:07:54,880 --> 00:07:57,160 Speaker 1: but um it's actually it was actually up in the 141 00:07:57,240 --> 00:08:01,360 Speaker 1: last quarter despite all the volatility and the market just shade. 142 00:08:02,720 --> 00:08:04,920 Speaker 1: I we like it longer term when we have as 143 00:08:04,920 --> 00:08:07,440 Speaker 1: a buy. I think the you know, they've had a 144 00:08:07,440 --> 00:08:09,840 Speaker 1: couple of events this year that have been unfortunate. The 145 00:08:09,840 --> 00:08:14,160 Speaker 1: biggest has probably been um, you know, miss missing um 146 00:08:14,280 --> 00:08:17,680 Speaker 1: costs on the case for tanker, but I think they 147 00:08:17,720 --> 00:08:23,080 Speaker 1: have those risks understood. There's a substantial free cash flow 148 00:08:23,120 --> 00:08:26,840 Speaker 1: going forward. Um as the company continues to go down 149 00:08:26,840 --> 00:08:29,320 Speaker 1: on the improve on the learning curve, on building the 150 00:08:29,400 --> 00:08:32,960 Speaker 1: seven eight seven and the model mix works in their favor. 151 00:08:34,000 --> 00:08:39,559 Speaker 1: So in terms of the health of the company, the 152 00:08:40,080 --> 00:08:43,360 Speaker 1: bottom line, the revenues, where is bowing in its cycle? Now? 153 00:08:43,400 --> 00:08:45,920 Speaker 1: I grew up in Olympia, Washington, so I remember when 154 00:08:46,280 --> 00:08:50,120 Speaker 1: Boeing was fully ensconced in Washington State, and of course 155 00:08:50,120 --> 00:08:52,640 Speaker 1: it's it's spread its operations around the world. Where is 156 00:08:52,679 --> 00:08:57,160 Speaker 1: it now? Well? Still, the vast majority of production is 157 00:08:57,160 --> 00:09:00,559 Speaker 1: is in UM is in Seattle, and of course all 158 00:09:00,640 --> 00:09:03,839 Speaker 1: seven three sevens are built there today. UM there's a 159 00:09:04,280 --> 00:09:09,720 Speaker 1: split between South Carolina and UM Everett for the seven 160 00:09:09,760 --> 00:09:12,400 Speaker 1: eight sevens, and I think that's frankly, you know, healthy, 161 00:09:12,679 --> 00:09:15,880 Speaker 1: You create a little bit of sibling rivalry, rivalry if 162 00:09:15,880 --> 00:09:19,360 Speaker 1: you want to call it that. UM. The the ability 163 00:09:19,400 --> 00:09:24,400 Speaker 1: of bowing to now source from more places is good UM. 164 00:09:24,400 --> 00:09:27,520 Speaker 1: But I also think what's happened has been that with 165 00:09:27,640 --> 00:09:31,160 Speaker 1: recent wage agreements and other factors, the company is now 166 00:09:31,160 --> 00:09:35,040 Speaker 1: in a position to actually do more by excuse me, 167 00:09:35,120 --> 00:09:39,200 Speaker 1: do more make inside than by UM. The productivity of 168 00:09:39,280 --> 00:09:42,120 Speaker 1: the I AM is terrific and it's and it's making 169 00:09:42,400 --> 00:09:44,800 Speaker 1: people outside have to step up their game in order 170 00:09:44,800 --> 00:09:47,400 Speaker 1: to sell the Bolling Howard. I was noting over the 171 00:09:47,400 --> 00:09:50,199 Speaker 1: weekend that there're being, of course, many changes inside the 172 00:09:50,280 --> 00:09:58,840 Speaker 1: aircraft extended American Airlines, premium economy sections, the companies that 173 00:09:59,000 --> 00:10:02,960 Speaker 1: make the equipment that goes into the planes. Are there 174 00:10:03,000 --> 00:10:06,880 Speaker 1: any that you think investors would benefit from owning? Well, 175 00:10:06,920 --> 00:10:10,040 Speaker 1: we don't have a buy on B Aerospace, but they 176 00:10:10,040 --> 00:10:13,920 Speaker 1: are the premier provider of seats and cabin interiors. They 177 00:10:13,960 --> 00:10:17,440 Speaker 1: have a leading share of galleys, and I do agree 178 00:10:17,440 --> 00:10:21,319 Speaker 1: with you, Pim that UM as airlines have become more 179 00:10:21,440 --> 00:10:25,720 Speaker 1: full um load factors average or more. In many cases, 180 00:10:26,040 --> 00:10:28,600 Speaker 1: people realize there's no such thing as a free seat 181 00:10:28,840 --> 00:10:31,240 Speaker 1: where they can leave their stuff and work, and they 182 00:10:31,240 --> 00:10:33,320 Speaker 1: have to pay for it. And so what better way 183 00:10:33,360 --> 00:10:37,520 Speaker 1: to do it than um to offer better comfort with seats. 184 00:10:37,600 --> 00:10:40,920 Speaker 1: And that's been a big effort by both Boeing and Airbus, 185 00:10:40,960 --> 00:10:44,120 Speaker 1: but also by b Aerospace to do it right. Thank 186 00:10:44,120 --> 00:10:46,880 Speaker 1: you very much for spending time with us. Howard Rebel. 187 00:10:47,400 --> 00:10:50,880 Speaker 1: He is a senior equity research analyst aerospace in the 188 00:10:50,960 --> 00:10:55,199 Speaker 1: defense electronics industry and a managing director at Jeffreys and Company. 189 00:10:55,400 --> 00:11:03,640 Speaker 1: You're listening to taking stock and this is Bloomberg. This 190 00:11:03,840 --> 00:11:06,320 Speaker 1: is taking stock on. Kathleen Hayes a long with pim Fox. 191 00:11:06,360 --> 00:11:09,120 Speaker 1: So we're gonna be finding out next how to make 192 00:11:09,240 --> 00:11:12,280 Speaker 1: some income in a low deal, low growth environment.