Stocks closed at another record today with the Dow rising by 85 points to 22,956 on lighter trading volume. What can I say? This thing keeps going higher as underlying economic strength, consumer optimism and strong corporate earnings rule the day.
Oil prices are on the rise due to improving global demand coupled with the prospects of unrest in Iraq where Iraqi gubment troops are trying to take the Kirkuk oil hub back from the Kurds who obtained it in 2014 from ISIS who obtained it in 2012 from Iraq. This northern hub produces about 500k barrel per day and with the Kurds now wanting independence, hostilities are starting to heat up. One guru noted that ISIS was a common enemy but with their defeat the Kurds and the Iraqi’s are now turning their sites back on each other with the potential to push oil prices higher if supply is disrupted. Now that the fighting is over the feud can resume! Sigh. WTI crude was up 40 cents to $51.80 per barrel.
Canadian aircraft and transportation equipment maker Bombardier is struggling. After almost going belly up with the launch its C series jet which competes against Boeing’s 737, the US Commerce Dept. slapped a 300% tariff on Bombardier’s C series jet which effectively killed sales in the US. The turbulent path of bringing the C series to market is costing both Bombardier and the Province of Quebec which pumped a billion loony’s into the company to keep it afloat. The cash infusion is what triggered the tariffs in the first place and now Bombardier is looking to sell its regional turboprop division to raise cash. The problem here is that sales in the unit are off 50% thanks to increased competition from Brazil’s Embraer as well at ATR and Airbus. Also remember that Japan and China are working on their version of short haul regional jets and hope to enter that market within a few years. Japan has an operation in Moses Lake, WA and has been paying retired aerospace engineers as consultants on the project. Talk about a competitive business! Maybe Bombardier could hire Elon Musk as president. Beauty eh?