| By Julia Horowitz • Wednesday, December 18 | | | | Good Wednesday morning. In today's newsletter: Boeing's crisis could hit the US economy, FedEx's nightmare year deepens and why investors are ignoring impeachment.
US futures point higher after stocks notched more record highs on Tuesday. Markets in Europe were mixed in early trading. In Asia, Hong Kong's Hang Seng ticked up, while the Shanghai Composite and Japan's Nikkei lost ground.
▸ Forwarded this newsletter? Want global markets news and analysis from CNN Business reporters every morning? You can sign up here. | | | What's happening now in markets: MARKET DATA AS OF 6:10 AM ET | | MARKET FLASH Boeing's crisis will weigh on the US economy
Boeing's 737 Max crisis keeps getting worse and worse. That's bad news for the US economy.
Boeing — which said this week that it would suspend production of its 737 Max jet in January — is the nation's largest exporter and a crucial part of America's manufacturing sector.
US factories are already strained by the trade fight between the United States and China, my CNN Business colleague Chris Isidore reports. The Boeing stoppage could add more pain.
"Boeing's decision to halt production of the 737 Max aircraft could deliver a big hit to the manufacturing sector just as prospects were beginning to brighten," Michael Pearce, senior US economist at Capital Economics, wrote in a research note. | |
Tallying the damage: If the production pause lasts through March, it could trim about 0.5 percentage points off US GDP in the quarter, according to estimates from several economists. Global economic growth could be impacted, too.
That's because of Boeing's vast network of suppliers, which rely on the plane maker to power their own businesses. Layoffs at such companies look inevitable, according to Joe Brusuelas, chief economist at RSM, a tax and consulting firm.
"It cannot be overstated just how important the domestic and global supply chains associated with Boeing are to the small- and medium-sized firms that [populate] the real economy," Brusuelas told clients.
Meanwhile, Boeing's business woes are only growing. An Irish company that sells and leases aircraft sued Boeing on Tuesday to void an order for 22 of its 737 MAX jets. It's also seeking at least $185 million in damages. | | VOICES On the euphoria sweeping Wall Street "The bulls are alive."
MICHAEL HARTNETT, BANK OF AMERICA CHIEF INVESTMENT STRATEGIST
Read more from CNN Business. | | EARNINGS WATCH FedEx stock drops on bleak earnings | |
FedEx shares are down more than 7% in premarket trading after the company reported dismal earnings for its most recent quarter and cut its outlook for fiscal 2020.
The numbers: Profit plummeted nearly 40% in the most recent quarter.
FedEx's business has been battered by a tough mix of headwinds, my CNN Business colleague Clare Duffy reports. Global trade fights have eaten into FedEx's vital international shipping business. A later Thanksgiving meant less revenue during an all-important online shopping period.
Meanwhile, the company ended its ground delivery relationship with Amazon, which had been one of its biggest partners. Amazon is rapidly building out its own delivery network that could upend the existing logistics industry.
FedEx is working on expanding its ground services so it can stay competitive. But high costs associated with this effort have stung.
Investor insight: FedEx shares are up just 1% this year. Competitor UPS' stock has jumped 23%, while the S&P 500 has risen 27%. | | UP NEXT
General Mills reports results before US markets open. Micron follows after the close.
Also today →
▸ US crude oil inventories post at 10:30 a.m. ET.
Coming tomorrow: Another big day of central bank decisions, this time featuring the Bank of Japan, the Bank of England and Sweden's Riksbank.
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WHAT WE'RE READING AND WATCHING
▸ You might be buying trash on Amazon — literally (WSJ)
▸ The best investment of the decade turned $1 into $90,000 (CNN Business)
▸ Bed Bath & Beyond's new CEO cleared out most of his C-suite (CNN Business)
▸ Tesla considers cutting the price of China-built cars (Bloomberg)
▸ Fiat Chrysler and Peugeot reach an agreement on $50 billion merger (Reuters)
▸ JPMorgan: Boeing will still burn $1 billion a month on the 737 Max (CNBC) | | | FINAL WORD Why markets will ignore Trump's impeachment
Wednesday is a big day in American politics. All signs indicate that the Democrat-led House of Representatives will impeach US President Donald Trump, charging him with abusing his power and obstructing Congress.
US politicos will be watching closely. Investors? Perhaps not. That's because the market expectation is that Trump will be impeached by the House of Representatives but won't be removed from office by the Senate.
"There looks almost certain to be no political pay-off for markets to worry about from this epic impeachment saga," Rabobank strategist Michael Every told clients Wednesday.
Instead, investors are looking ahead to the second half of 2020, when the US presidential election could be a source of volatility.
"With the Senate unlikely to convict, we don't see the impeachment process as a source of market risk," Mark Haefele, chief investment officer at UBS Global Wealth Management, said earlier this month. "But the same cannot be said about the 2020 election," which he noted could affect tech, energy and healthcare stocks.
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