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Jefferies' Rubel Likes Boeing Long Term: Well Positioned(Audio) · Bloomberg Intelligence

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  Speaker 1: Broadcasting live to New York, Bloomberg eleventh Rio to Washington,
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  Speaker 1: We're going to take stock of the aerospace industry. We're
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  Speaker 1: gonna take a look at Boeing, for example, Boeing announcing
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  Speaker 1: today billions of dollars worth of new orders for aircraft
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  Speaker 1: and maintenance plans at the Farnborough International Air Show. Seeking
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  Speaker 1: with Howard you Bell from Jeffries. He's an aerospace and
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  Speaker 1: defense electronics analysts. He's going to tell us about all
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  Speaker 1: that and more. When it comes to the guys, I'm
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  Speaker 1: gonna fly right over to Charlie Pellett. Now he's in
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  Speaker 1: the Bloomberg Buos room with the Bloomberg Business Flash, and
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  Speaker 1: I think you very much, Kathleen Hayes, thank you him.
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  Speaker 1: Boeing shares their advancement right now by one and a
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  Speaker 1: half percent. The a's the ticker it is at one
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  Speaker 1: thirty two oh four. Stocks are climbing SMPT five hundred
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  Speaker 1: index a trading at a record very close to a
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  Speaker 1: record now up ten points back at thirty nine a
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  Speaker 1: game there of five tenths of one percent. Stick around
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  Speaker 1: hitting a record down? Industrials up one oh one to
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  Speaker 1: eighteen thousand, two hundred forty seven, a gain there of
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  Speaker 1: six tents of one percent. The nastack Compositive Index up
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  Speaker 1: thirty eight points. Nastack did trade above five thousand right
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  Speaker 1: now up by eight tenths of one percent. Tenure down
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  Speaker 1: twenty thirty seconds, yield there one point four two percent,
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  Speaker 1: and we've got gold down three seventy ounce to twelve
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  Speaker 1: thirteen fifty four, a drop there of three tents of
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  Speaker 1: one percent. We are just about thirty minutes away from
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  Speaker 1: al Coah's results. What should we be expecting? That question
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  Speaker 1: for Anthony Young, he's a metals and mining analysts with mcquarie.
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  Speaker 1: He was our guest just about an hour ago right
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  Speaker 1: here on taking stock. Well, I mean, this quarter is
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  Speaker 1: somewhat unique given the split at the company is going
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  Speaker 1: to be occurring at the company. So the split and
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  Speaker 1: will pay a major factor in this earnings release. UM
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  Speaker 1: investors are looking for further details on that, but then
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  Speaker 1: also fundamentally UM trying to figure out, you know, what's
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  Speaker 1: going on with the aluminium business and what's going on
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  Speaker 1: with the downstream or their industrial business, and looking at
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  Speaker 1: the UM drivers that are impacting that and the profitability
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  Speaker 1: that they're ample to generate in those two companies once
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  Speaker 1: they split. And again ALCA after the bell shares up
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  Speaker 1: now by two point one percent, recapping SMP up ten,
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  Speaker 1: a gain of point five percent three two on Wall Street.
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  Speaker 1: I'm Jill Schneider, Charlie, and we thank you. What again recapping?
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  Speaker 1: We do have equities trading higher SLM P five, How
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  Speaker 1: did it index up nine to nine? That is a
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  Speaker 1: gain of point four. I'm Charlie Pellett and that's a
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  Speaker 1: Bloomberg business flash. This is taking stock with Pim's box,
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  Speaker 1: and Kathleen has on Bloomberg Radio bowing growing more optimistic
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  Speaker 1: about airplane orders, increasing its long term forecasts on the
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  Speaker 1: expectation that demand for air travel the expanding around the globe,
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  Speaker 1: led by China and though developing countries. Here to discuss
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  Speaker 1: this is Howard your Bell, senior equity research channelists for
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  Speaker 1: Aerospace and Defense Electronics at Jeffreys here in New York City.
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  Speaker 1: How Ared, Welcome to the show. Well, it is interesting
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  Speaker 1: that you know that I think that the the figure
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  Speaker 1: of course that Boeing is looking at five point nine
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  Speaker 1: trillion dollars over twenty years. That's a lot of money
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  Speaker 1: and a lot of airplane orders, but the fact that
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  Speaker 1: China and developing countries are going to be leading it
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  Speaker 1: not totally. If that's been really continuation of a trend.
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  Speaker 1: I think we've all forgotten there's a large and growing
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  Speaker 1: middle class in China. Howard, I wonder if you could
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  Speaker 1: speak a little bit more broadly about the Farnborough Air Show,
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  Speaker 1: which actually closed early today because of a torrential downpour.
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  Speaker 1: What's at stake there, I mean, taking place in Britain,
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  Speaker 1: And what if you give us your thoughts about Brexit
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  Speaker 1: the UK industry and orders for these international companies. That's
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  Speaker 1: a mouthful. Yeah, well, that's why I give it to
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  Speaker 1: you at a time. Oh I will well, I'm dodging
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  Speaker 1: that bullet. But um, first, I'd say that Brexit is
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  Speaker 1: an unfortunate event. But um, and it creates a little
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  Speaker 1: bit of friction for air travel. Um. But but I'm
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  Speaker 1: not sure it's going to be you know, a big
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  Speaker 1: calamity over the long haul. I mean, if we look
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  Speaker 1: at UK air travel, it's about two and a half
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  Speaker 1: percent of global traffic. And if if you assume, um,
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  Speaker 1: it takes maybe ten out at worst, it's just a
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  Speaker 1: couple of percentage points of loss. Second, what happens is
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  Speaker 1: it does make it cheaper to manufacture in the UK,
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  Speaker 1: and over time, whether it's UM, Boeing or Airbus or whomever, UM,
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  Speaker 1: Britain will become a bit more of an export economy
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  Speaker 1: than than it's possibly been. And maybe the last point
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  Speaker 1: I make in terms of Brexit, that's unfortunate, you know,
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  Speaker 1: in terms of friction, um, it just now means um,
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  Speaker 1: the Brits will have to be in the same line
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  Speaker 1: going to the EU as the Americans. Well, a little
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  Speaker 1: more competition maybe. But it's interesting that what the came
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  Speaker 1: out of the air show this year is the industry
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  Speaker 1: broadly expecting fewer aircraft orders. Were Boeing's talking up the
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  Speaker 1: least the longer term view? Is that consistent? Yes, I
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  Speaker 1: think so. I mean we we have down orders this year.
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  Speaker 1: I mean when you have a seven year backlog in
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  Speaker 1: some categories, it's hard to um, you know, wait, I
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  Speaker 1: mean airlines want to be patients, they want to target deliveries,
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  Speaker 1: they want to see exactly what their fleet fleets are
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  Speaker 1: and and it's really a smart idea not to necessarily
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  Speaker 1: buy a twenty or twenty five year asset based on
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  Speaker 1: one year's worth of business. Howard, what is your thought
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  Speaker 1: on investing in Boeing at the present time. I think
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  Speaker 1: the stock is down about five five and a half
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  Speaker 1: percent so far this year. Yes, um it was, it is,
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  Speaker 1: but um it's actually it was actually up in the
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  Speaker 1: last quarter despite all the volatility and the market just shade.
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  Speaker 1: I we like it longer term when we have as
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  Speaker 1: a buy. I think the you know, they've had a
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  Speaker 1: couple of events this year that have been unfortunate. The
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  Speaker 1: biggest has probably been um, you know, miss missing um
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  Speaker 1: costs on the case for tanker, but I think they
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  Speaker 1: have those risks understood. There's a substantial free cash flow
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  Speaker 1: going forward. Um as the company continues to go down
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  Speaker 1: on the improve on the learning curve, on building the
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  Speaker 1: seven eight seven and the model mix works in their favor.
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  Speaker 1: So in terms of the health of the company, the
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  Speaker 1: bottom line, the revenues, where is bowing in its cycle? Now?
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  Speaker 1: I grew up in Olympia, Washington, so I remember when
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  Speaker 1: Boeing was fully ensconced in Washington State, and of course
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  Speaker 1: it's it's spread its operations around the world. Where is
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  Speaker 1: it now? Well? Still, the vast majority of production is
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  Speaker 1: is in UM is in Seattle, and of course all
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  Speaker 1: seven three sevens are built there today. UM there's a
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  Speaker 1: split between South Carolina and UM Everett for the seven
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  Speaker 1: eight sevens, and I think that's frankly, you know, healthy,
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  Speaker 1: You create a little bit of sibling rivalry, rivalry if
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  Speaker 1: you want to call it that. UM. The the ability
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  Speaker 1: of bowing to now source from more places is good UM.
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  Speaker 1: But I also think what's happened has been that with
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  Speaker 1: recent wage agreements and other factors, the company is now
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  Speaker 1: in a position to actually do more by excuse me,
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  Speaker 1: do more make inside than by UM. The productivity of
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  Speaker 1: the I AM is terrific and it's and it's making
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  Speaker 1: people outside have to step up their game in order
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  Speaker 1: to sell the Bolling Howard. I was noting over the
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  Speaker 1: weekend that there're being, of course, many changes inside the
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  Speaker 1: aircraft extended American Airlines, premium economy sections, the companies that
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  Speaker 1: make the equipment that goes into the planes. Are there
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  Speaker 1: any that you think investors would benefit from owning? Well,
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  Speaker 1: we don't have a buy on B Aerospace, but they
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  Speaker 1: are the premier provider of seats and cabin interiors. They
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  Speaker 1: have a leading share of galleys, and I do agree
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  Speaker 1: with you, Pim that UM as airlines have become more
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  Speaker 1: full um load factors average or more. In many cases,
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  Speaker 1: people realize there's no such thing as a free seat
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  Speaker 1: where they can leave their stuff and work, and they
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  Speaker 1: have to pay for it. And so what better way
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  Speaker 1: to do it than um to offer better comfort with seats.
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  Speaker 1: And that's been a big effort by both Boeing and Airbus,
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  Speaker 1: but also by b Aerospace to do it right. Thank
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  Speaker 1: you very much for spending time with us. Howard Rebel.
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  Speaker 1: He is a senior equity research analyst aerospace in the
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  Speaker 1: defense electronics industry and a managing director at Jeffreys and Company.
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  Speaker 1: You're listening to taking stock and this is Bloomberg. This
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  Speaker 1: is taking stock on. Kathleen Hayes a long with pim Fox.
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  Speaker 1: So we're gonna be finding out next how to make
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  Speaker 1: some income in a low deal, low growth environment.