Macro

The FAA grounded all Boeing 737 MAX aircraft following similarities between two deadly crashes involving Ethiopian Airlines and Lion Air, which killed 346 people. The decision impacts U.S. carriers like American, United, and Southwest, shakes investor confidence, and precedes Boeing's planned software fix, affecting global aviation safety perceptions and Boeing's market value.

Industrial sector sentiment is neutral this month despite the FAA grounding all Boeing 737 MAX jets following two fatal crashes, which severely dented aerospace confidence and delivery timelines. The broader industrial base, however, remains supported by steady demand in machinery, automation, and defense contracting, buffering the negative impact of the aerospace setback. Overall, the sector absorbs the shock without a broad downturn, reflecting resilience across sub-industries.

Bristol-Myers Squibb is acquiring Celgene in a $74 billion cash-and-stock transaction, creating a combined oncology-focused pharmaceutical giant amid investor skepticism and a significant increase in debt. The deal aims to bolster Bristol's declining immuno-oncology portfolio and address Celgene's looming patent expirations, particularly for Revlimid. Market reaction was mixed, with Bristol's shares falling 12% and credit default swaps spiking, reflecting concerns over valuation and long-term growth prospects.

Medicare-for-All fear during the Democratic primary crushed insurers and hospitals mid-year, while pharma stayed steady; the fear eased in the autumn as moderate Biden rose over Warren.

Houthi rebels' drone strikes on Saudi Aramco's Abqaiq and Khurais facilities disrupted 5 million barrels per day of oil production, nearly 5% of global supply. The attack, the most severe on Saudi energy infrastructure in decades, threatens the kingdom's oil exports and upcoming Aramco IPO. Global markets face potential volatility as concerns mount over energy security and supply stability.

Energy sector sentiment is unexpectedly bullish this month despite a major supply shock, as drone attacks halved Saudi Aramco’s output and threatened broader global oil supply. The market reaction reflects confidence in spare production capacity elsewhere and limited near-term disruption to global balances, with prices stabilizing on expectations of coordinated releases from strategic reserves. Geopolitical risk premiums are being offset by resilient non-OPEC output and moderating demand growth forecasts.

The New York Fed conducted emergency repo operations to stabilize funding markets after overnight borrowing rates surged to 10%, well above its target range. The move, triggered by Treasury issuance and tax flows, signals stress in short-term funding and may force the Fed to resume balance sheet expansion. Market participants warn of broader implications if the Fed loses control of short-term rates.

Financial markets absorbed the Fed’s $53B liquidity injection amid repo rates spiking to 0.10% — a sign of acute but contained funding stress. Despite the strain, the swift central bank response tempered dislocation fears, supporting a modestly positive sector read. The broader backdrop of stable policy transmission underpins resilience, keeping sentiment from deteriorating further.

The trade war kept base-metals demand soft, but the Fed's pivot to rate cuts drove gold's best rally since 2010 toward $1,550, lifting precious-metals owners through the second half.

WeWork's parent company has withdrawn its IPO plans amid a collapsing valuation and the recent ousting of CEO Adam Neumann. The company, once valued at $47 billion, now faces scrutiny over governance and sustainability, with S&P downgrading its credit to junk status despite $2.5 billion in cash and a future $1.5 billion infusion from SoftBank.

The Fed's pivot to three rate cuts pulled mortgage rates back down and re-accelerated housing in the second half; WeWork's September IPO implosion was a black eye for flexible-office CRE but didn't dent the broader owner.

Apple lowered its Q1 revenue guidance to $84 billion, citing economic slowdown in China and weaker iPhone upgrades globally. The rare move spooked markets, with shares dropping 7%, though services and wearables showed strong growth. The revision highlights risks from U.S.-China trade tensions and shifting consumer behavior.

Apple's January China warning and the May Huawei blacklist hurt chip suppliers, but the Fed's pivot to rate cuts fueled a strong tech rally (S&P +29%).

On November 25, 2019, LVMH agreed to acquire American jeweler Tiffany & Co. for $135 per share in cash, an equity value of about $16.2 billion, making it the biggest luxury-goods acquisition on record. The price sat nearly $2 billion above LVMH's initial October bid and deepened the group's push into hard luxury and jewelry alongside brands like Louis Vuitton and Bulgari.

Phase One trade deal

PG&E Corp. filed for Chapter 11 bankruptcy due to over $30 billion in liabilities from wildfires linked to its equipment, threatening its role in California’s clean energy goals. The bankruptcy follows a collapse in market value, executive departures, and failed rescue attempts by major investors. Customers may face higher bills as the utility navigates a complex, multi-year restructuring.

Utilities sentiment is neutral this month despite PG&E's bankruptcy filing over $30 billion in wildfire liabilities, which weighed heavily on investor confidence. The sector's stability was supported by broad regulatory predictability and consistent demand, tempering fears of wider credit contagion. While wildfire-related risks remain concentrated in certain regions, the overall utilities landscape showed resilience, anchoring sector performance.

Disney+ launched Tuesday but faced technical outages and regional access errors due to overwhelming subscriber demand. The service, priced at $6.99/month, competes with Netflix and other streamers, with Disney working to resolve issues impacting users in regions like Puerto Rico. Market implications include potential delays in initial subscriber growth, though bundling and free trials aim to boost long-term adoption.

The streaming wars launched in earnest with Disney+ and Apple TV+, the market recovered strongly and the ad market stayed healthy. Steadily positive.

United Technologies and Raytheon are merging in an all-stock 'merger of equals' to form Raytheon Technologies, a new aerospace and defense leader with nearly $74 billion in annual sales. The deal, pending regulatory and shareholder approval, will position the combined entity as the second-largest U.S. aerospace firm behind Boeing, with operations consolidated into four key business units. United Technologies' CEO Greg Hayes will lead the new company, which aims to leverage expanded R&D and cost synergies to drive long-term value.

Budgets hit records above $716B amid great-power competition, and the December establishment of the Space Force created a new service and program stream, the peak of the Trump defense era.