Is This the Start of Another Record-Breaking Quarter for the Stock Market?

April 1, 2024 | Season 6, #12

Embark on a journey through the financial markets with me, Keith Lanton, as your seasoned guide. Ready your portfolios and sharpen your market acumen because today's episode is a treasure trove of insights that could redefine your approach to investing in the second quarter. We'll traverse the promising landscapes of equity performances and bond market updates, and discuss the Federal Reserve's next chess moves in the wake of fresh economic data. Whether it's delving into value stocks that have caught Barron's eye or weighing up the art of risk balancing—your investment toolkit is about to get a serious upgrade.

Strap in as we navigate the twists and turns of market volatility, where the narrative is no longer dominated by macroeconomic chatter but by the strategic maneuvers of Silicon Valley's tech titans and their global counterparts. Microsoft's antitrust dance, Philip Morris's innovative streak, and Tesla's pricing gambits are just a few of the stories steering the market's direction. From dissecting futures and PCE price indexes to analyzing UPS's strategic alliances, this episode serves up a data-driven feast that's sure to satisfy your appetite for financial mastery. And with geopolitical tensions and economic indicators also in the spotlight, you'll emerge from this episode not just informed, but empowered to take on the quarter with confidence.

** For informational and educational purposes only, not intended as investment advice. Views and opinions are subject to change without notice.

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Transcript

Alan Eppers: 0:00

And now introducing Mr Keith Lanton.

Keith Lanton: 0:04

Good morning, welcome to Monday, April 1st, also known as April Fool's Day and also known as the first day of the second quarter. Quite a strong quarter for US stock markets as well as most international equity markets. Bond market is figuring out what the next steps will be. We've kind of settled here at about a four and a quarter on the 10-year. Volatility has come down on the Treasuries. We'll talk a little bit about that this morning.

Keith Lanton: 0:45

This morning what we're going to do is we're going to share a few quotes, get us in the mindset of Monday morning, beginning of a quarter, how we're going to start thinking about investing and putting our money to work in this quarter after a significant rise in equity markets in the first quarter. We'll examine what a strong first quarter may mean for the future of the year in terms of returns, historically, and we'll talk about the Federal Reserve, what they may be thinking and doing, especially after the release of economic data on Friday, when markets were closed for Good Friday and, of course, easter Sunday yesterday and I hope everyone who celebrates had a fantastic day with their families and then what we'll do is we will talk about some value stocks yes, value that Barron's discussed over the weekend, and then I will conclude, brad is away this morning, so we'll miss him today. Some things to think about. Let's level set our minds and our expectations and not get too caught up in trivial matters that in the grand scheme, are not important. All of us day to day get very tied up with and many times upset over things that, when we look back, are relatively unimportant or not important at all. So hopefully this will help set some perspective here as we begin the week in the quarter.

Keith Lanton: 2:19

Steve Harvey said people who want to see you win will help you win. Remember that. Albert Einstein said strive not to be a success, but rather to be of value. Nelson Mandela said it always seems impossible until it is done. And Anne Frank wrote remember that the best days of our lives haven't even happened yet. So on that note.

Keith Lanton: 2:44

We'll talk about what we want to think about heading into this quarter, how we want to position our portfolios and what our mindsets are in terms of our risk tolerance. Many of us may start to feel more emboldened as markets have been rising and the volatility has been coming down. So one thing to do is to try and take a step back, level set, try and remember even though it's a little bit more in the past how you felt in 2008, 2009, and 1999, if you were in the markets then, and how you would react today if you were to experience a downdraft like those downdrafts, and how you would position your portfolio, knowing how you may react if you were to get a significant decline. Right now, it's easy to feel extremely optimistic and bullish and I'm not suggesting that the future is otherwise, but nevertheless, we need to prepare for the worst and hope for the best. So keep that in mind when you set your portfolios up how much you would be able to take in terms of pain on the downside, and structure your portfolios appropriately, because in these good times, many of us can experience euphoria and feelings of less susceptibility to suffering a downdraft than we may experience in reality. So let's talk about things that are going to drive the market.

Keith Lanton: 4:06

Of course, we've been laser-focused on what the Federal Reserve is going to do with interest rates. Widely expected the Fed's going to cut rates. Friday we got a PCE report and after that report we got some commentary from Chairman Powell on what the Fed's outlook is in terms of cutting interest rates and how quickly they're likely to do it. And after that report, on Friday Barron's ran an article suggesting that the consensus, which is that the Fed may cut rates three times. That's both what the Fed has intimated in their dot plot diagram as well as what market participants of Wall Street strategists are suggesting three rate cuts before the end of 2024. But after this employment report, some of that sentiment may be shifting and Barron said don't bet on multiple rate cuts. The case for one and done. And if you think about what we're experiencing currently inflation above target, solid labor market, booming stock market and we're also expecting Federal Reserve interest rate cuts. So if you think to yourself historically, if you think about economic theory, which of those doesn't belong and perhaps you will choose Federal Reserve, interest rate cuts typically don't go along with those other three. Well, the consensus currently says that all four are parts of the best of all possible worlds bull market that we are currently experiencing, although a few economists and investment professionals are demurring on the last, that's the Federal Reserve interest rate cuts. While the markets have fallen in line with the Federal Open Market Committee's current median projection of three reductions of one-quarter percentage point by the end of the year cuts, those three factors arguably point to fewer rate cuts and perhaps even none.

Keith Lanton: 5:47

The Fed's preferred inflation measure, the Personal Consumption Expenditures Price Index, which was released as US financial markets, as I mentioned, were closed on Friday for Good Friday, showed a three-tenths of 1% rise in core prices, excluding food and energy, in February. As expected, that lowered the year-over-year rise to 2.8%, which is a marked deceleration from its post-pandemic peak surge and down from the mid-3% range just six months ago, and it brought core PCE close to the Fed's 2024 year-end projection of a 2.6% yearly rise. And the Fed is on a projected glide path to 2.2% by the end of next year, 2025. And the Fed is projecting that we will be experiencing inflation of 2% once again by the end of 2026. But this may be as good as it gets, at least for now. The relevant news is that recent inflation data are rising briskly, writes Michael Lewis, who heads Free Market Inc. The three-month core PCE. So the most recent three months, the PCE has rebounded to 3.5%, from under 2.5% at the end of 2023.

Keith Lanton: 7:00

Meanwhile, another piece of data we got on Friday showed that spending surged 0.8% in February, despite personal income growing just 0.3%. The robust spending in excess of income growth set off concerns about consumers' balance sheets, as the savings rate dipped to 3.6% from 4.1% the previous month. But what that ignores the chief economist at Apollo Global Management, stressing that the bull market has meant that the asset side of investors' balance sheets has ballooned or boomed or grown. So since November, when the Fed announced that they may start considering cutting interest rates, what's happened is that the stock market has gained $10.9 trillion in value. The bond market has gained $2.6 trillion in value. That's $13.5 trillion more that consumers have in their accounts at banks and brokerage firms, and that $13.5 trillion that they didn't have before compares to annual consumer spending of about $19 trillion. So this makes it much more difficult, if you think about it, to get inflation under control. When consumers have these assets on their balance sheets Now, it doesn't mean that we all go out and spend this money that we've suddenly earned in the stock market, maybe a little bit in the bond market, but it does add to our paper wealth.

Keith Lanton: 8:23

It does make those who have it feel more comfortable and therefore it makes those more likely to spend, and that's perhaps one of the reasons why people are willing to spend more than they did before in terms of their income relative to their savings. That brings the savings rate down, but that doesn't take into account the full picture, which is that the asset side of the balance sheet is increasing, which is why people are comfortable saving a little bit less, because they have a lot more in their bank and brokerage accounts, and this is something that makes it more challenging to get interest rates to be significantly lower when we have more money in our bank accounts. And what some strategists are suggesting is that what we may see going forward is that the Federal Reserve may cut interest rates in June one time and then be done for the year. Of course, this is all data dependent, depends on what other data we get. We do get some key data this week, which we'll talk about, but nevertheless it's looking perhaps increasingly likely that we may not get those three cuts.

Keith Lanton: 9:28

And if you think about what the Fed's got to contend with for the rest of the year, that is, the political cycle, the election coming up at the end of the year. So if the Fed does cut one time perhaps in June, perhaps about six months away from the election they may be a lot more hesitant to cut later in the cycle unless they see real clear signs of labor market weakening or real clear signs that inflation is decelerating. So Bespoke Investment Group found that the FOMC, the Federal Open Market Committee, held rates steady 71% of the time in the last six months of an election year presidential election year and only hiked them 15% of the time. And when it cut rates, which was about 13.5% of the time, it was during the 2008 financial crisis and 2020, during COVID. So if you look at the history of when the Fed will cut interest rates in an election cycle, you've got to have some really clear compelling evidence and at the moment it's not looking like we may get that clear compelling evidence. So we may not get the interest rate cuts that we're anticipating and the markets will come to grips with that as time goes on, and I think to some extent we are coming to grips with that even now grips with that as time goes on, and I think to some extent we are coming to grips with that even now and what the markets are more focused on and I'm not suggesting that this is the wrong level of thinking markets are more suggested on what are the growth potential? What is it where we're seeing earnings growth? Where is it that we're seeing real potential for the future? Things like, of course, artificial intelligence, but also other areas of the markets, beneficiaries of this, consumer spending and markets are more focused on growth right now than they are on interest rate cuts and we'll see if that mindset continues.

Keith Lanton: 11:15

So Barron's, talking about this very strong first quarter, tried to give us some historical context on what we may see for the rest of the year. When the year gets off to such a good start and the trader column said the stock market had a great start to the year what history says happens next. So although last week the S&P 500, which was up about one-tenth of one percent was actually was up four-tenths of one percent, was muted during the holiday short and week, its first quarter performance is one for the record books. S&p 500 has hit 22 record closes year-to-date, most in the first quarter since 1998. S&p 500 up 10.2 percent for the first three months of 2024. That's only the fourth time since the start of the millennium it has gained eight percent or more in the first three months of the year. Previously, it hadn't done so since before the dot-com bubble bursting in 1998.

Keith Lanton: 12:11

The S&P 500's first quarter rally comes on the heels of last year's 24% surge, which has led some skeptics to believe that the market has gotten ahead of itself. But there are strong arguments in favor of continuing gains of itself. But there are strong arguments in favor of continuing gains. Nvidia recent surge shows that AI optimism is not hype, because that surge was driven by very strong earnings and, unlike 2023, this year is more than just tech that is driving the market higher. S&p 500 healthcare and consumer staples indexes notched their best quarter since the fourth quarter of 2022. In March alone, financials and consumer staples were on track for five months of gains, their best showing since 2018.

Keith Lanton: 12:53

And there's more to cheer the bulls up Of the 16 times the S&P 500 has managed to rise 8% or more in the first quarter and this goes back to 1950, in the first quarter, and this goes back to 1950. Only once, in 1987, the year of the Black Monday crash did the index lose ground for the rest of the year. In the other 15 years the index gained an average of 9.7% during the subsequent three quarters, so in other words going back three quarters of a century. If the S&P climbs 8% or more in the first quarter, there's a 94% chance of more gains for the rest of the year. So overall that bodes very well for 2024's ongoing momentum. However, there is a little bit of a gray lining here. There is a decent chance that the gains during the rest of the year won't match the first quarter. In 10 of the 15 years noted above, excluding 1987, the first quarter's gains were higher than those seen in the second through the fourth quarters.

Keith Lanton: 13:52

And speaking of the strength of the markets, another aspect of the markets that some who are concerned are speaking of and Barron talks about this in the up and down column of Wall Street is the fact that the market's volatility index, or the VIX, has declined and the markets have been climbing as investors seem complacent with this relatively benign volatility. So in a world that feels increasingly chaotic, the stock market has oddly become a source of calm. Barron said investors should enjoy it while it lasts. If you go back last week, we had an extremely low volatility week and the market's recent calm has started to raise the bear's concerns. I just mentioned a look at the VIX and see a market that is happily ignoring the all-too-obvious dangers, or worse and of course we can all point to dangers like the geopolitical tensions in the Middle East, the situation that is happening in Ukraine, the immigration crisis that's happening here in the United States, concerns about the direction of interest rates all weighing on possibilities for why this market could potentially decline.

Keith Lanton: 15:14

But Barron says other factors appear for far more important. For starters, the correlation of the tendency to move in the same direction between single stocks has fallen to very low levels, a sign that idiosyncratic factors, not macro ones, are having the most direct impact on shares. Typically, markets are viewed as most healthy when the markets aren't all moving together, when companies are moving based on their individual merits of their businesses as opposed to the overall economic developments, and what this means is that moves higher and lower can cancel each other out, resulting in a relatively low VIX, and this can be seen in the performance of the Magnificent Seven. Last week, meta was down and Video was down, both down over 4%, but that was offset by rises in Google, amazon and Tesla, and what's happening is even though we're having down stocks being offset by up stocks more up stocks than down stocks so we're seeing rising markets. In fact, last week, we saw gainers outpace losers by two to one, and the muted volatility could also partially be attributed to the treasury market, which is finally calming down.

Keith Lanton: 16:23

Brad has spoken many times about the move index, or the volatility in bonds, and talking about the fact that bonds have been more volatile than stocks, which is something that's extremely unusual. The move index was down to 86 last week. That number was up to 200 in 2023, to give you an idea of the magnitude of the volatility and how much it's declined in the bond market, the 10-year net excuse me, 10-year is finally settling in the low 4% range and bonds are starting to become a calming factor for the market. Now, the low volatility that we're experiencing does not mean that angst is just around the quarter. Periods of calm with short blips of angst can last for years, as they did in the mid-90s and the years before the 2008-2009 financial crisis. Excuse me one second. And with the economy and corporate earnings showing resilience amid higher rates, bond volatility, normalizing and correlations low. Barron saying volatility could remain low for quite some time and perhaps even lower If it does just enjoy the silence. So that's the backdrop heading into first quarter ending second quarter of 2024.

Keith Lanton: 17:45

What do we have going on this morning? Well, we have futures moving higher. Looks like the second quarter is going to get off to a positive start. S&p futures are up about 14 points, nasdaq futures up about 62. Dow futures up about 100 points.

Keith Lanton: 18:02

Bond and equity markets were closed on Good Friday but, as we mentioned, friday's calendar featured the release of the personal income and spending report as well as, of course, the PCE price indexes. As mentioned, the personal spending number jumped significantly higher than expected, up eight-tenths of one percent. We were looking for it to be up half a percent and the PCE price index was up three-tenths of a percent month over month, a little better than expected. We were expecting it to be up four-tenths of 1%, but when you look at PCE, factoring out food and energy the core PCE that was up three-tenths of a percent, which was anticipated. The key takeaway from the report is the sticky nature of prices, although a close second is a recognition that spending outpaced income by a significant amount.

Keith Lanton: 18:47

This morning Treasury yields a little change from Thursday. Two-year note is down one basis point to 461. Ten-year note up two basis points to 422. And if you take a look at equity indices in the Asia-Pacific region, china one of the reasons we're seeing strength here in the US today, china up 1.2% and this is because the Chinese manufacturing PMI came in stronger than expected 50.8, expected to come in at 50.1. And non-manufacturing PMI was 53, expected to come in at 51.3. So seeing better than expected economic data out of China, giving a lift to markets overall because China obviously big market, second largest economy. Because China obviously a big market, second largest economy, and a rebound there would be a positive outside of China as well.

Keith Lanton: 19:44

Individual companies in the news Microsoft in the news saying they are going to separate teams and office globally amid antitrust scrutiny. So they will sell its chat and video app team separately from its office product globally after it unbundled the two products in Europe in a bid to avert a possible EU antitrust fine previously. Microsoft also talking about a collaboration, potentially with OpenAI, to produce a $100 billion Stargate artificial intelligence supercomputer. Other companies in the news Philip Morris is going to be launching their flagship heated tobacco device called IQOS and they are choosing to do that in Austin, texas. This will be the testing ground for its US. This will be the testing ground for its US entry. This heated tobacco device is seeking to be a competitor to vaping. Philip Morris is suggesting that perhaps it's less bad for you or more healthy, I guess, depending on your perspective than vaping and this is an important product launch for them than vaping and this is an important product launch for them. And we'll see how the FDA and the US consumers react to this new product.

Keith Lanton: 20:58

Other companies in the news Tesla announcing they're going to increase their Model Y prices in the US by $1,000. Also, a report in Thomson, in Thompson Reuters, that Tesla buyers are snubbing Tesla as Elon Musk's reputation dips, suggesting that his polarizing personality is causing some would-be buyers to consider other electric vehicles because of their opinion about Elon Musk. 3m, mmm the symbol in the news this morning. They completed their spin-off of their healthcare business, which is now Solventum, going to be trading on the New York Stock Exchange under the symbol SOLV. And, perhaps equally importantly, 3m announcing that they have settled with public water suppliers to address the PFASs those are the plastics and drinking water that settlement receiving final court approval.

Keith Lanton: 21:59

Also UPS stock rising this morning. Fedex stock declining after UPS announced a significant partnership with the US Postal Service and FedEx disclosing its agreement to provide domestic transportation services to the US Postal Service. And FedEx disclosing its agreement to provide domestic transportation services to the US Postal Service will expire by its terms on September 29, 2024. Fedex had previously alluded that they would allow this contract to expire if they could not renew it on more favorable terms, suggesting it was not particularly profitable and therefore they were seeking better terms. And obviously the Postal Service decided that the terms that they were getting were better from UPS and, at least at the moment, the market's reacting favorable to the decision by UPS to step up to the plate on that and punishing FedEx viewpoints.

Keith Lanton: 22:54

This morning Geopolitical News New York Times is reporting that Israel and Hamas have resumed ceasefire negotiation. Washington Post reporting that the Biden administration will provide billions of dollars in bombs and fighter jets to Israel. Reuters reporting that the Biden administration will make it harder for China to access US artificial intelligence chips. Bloomberg reporting that Japan's top foreign currency official has pledged to act on the yen's decline. Wall Street Journal saying that Donald Trump is considering John Paulson and Jamie Dimon for cabinet positions, including Treasury Secretary and the Wall Street Journal also reporting that Donald Trump is close to tapping into the windfall from Trump Media and Technology Group.

Keith Lanton: 23:36

What's going on this week? Well, today we have the Institute for Supply Management releasing both its manufacturing and servicing managers indexes for March, looking for the manufacturing PMI to come in at 48.5. And the services PMI, which is released on Wednesday, is expected to come in at 52.5. Tomorrow we have the Bureau of Labor Statistics releasing the Jobs Openings and Labor Turnover Survey, also known as the JOLTS Report. Expectations for 8.7 million job openings on the last business day in February, 163,000 fewer than in January. And then Friday, all eyes will be on the jobs report. Economists forecast 180,000 increase in nonfarm payrolls, following a 275,000 gain in February. There were also some revisions lower in previous months. In February, unemployment rate expected to remain at 3.9%. The unemployment rate has been below 4% for more than two consecutive years, first time that has happened since the 1960s.

Keith Lanton: 24:39

Instead, we talk about a few value stocks written up in Barron's, one of which has not been a stock that's traded below market multiple in many years, and that is Hershey symbol HSY. Hershey has a cocoa problem. The problem there is that cocoa prices have exploded and therefore that's obviously a big input into the making of chocolate, which Hershey's is a big manufacturer of those delicious chocolate treats. But Barron says to buy the stock anyway. Hershey stock has dropped 23% over the past 12 months.

Keith Lanton: 25:13

Cocoa makes up one-fifth of the cost of goods for Hershey's business and cocoa prices have more than tripled over the past year, squeezing the company's margin and causing some investors to flee the stock, which is typically very stable. Now cocoa's rise has been truly extraordinary, as it approaches $10,000 per metric ton. It's now more expensive than copper. The run-up has been driven by supply constraints in Africa, as dry weather and wildfire have reduced the beans available for sale Under investment in plant disease have also hurt crop yields. But there are many indications, barron suggesting that the cocoa market has become overheated and it's unlikely to stay that way. Commodity prices tend to overshoot in both directions and high prices bring fundamental changes. So therefore Barron's is projecting that eventually this too shall pass and that these higher commodity costs will mitigate and that the cocoa pain has masked some strong underlying performance to Hershey's business.

Keith Lanton: 26:21

Sales grew by over 7% in 2023, and the company expects revenues to grow 2.5% this year. Business in the US has been strong. Hershey saw only a mild decline in the number of confectionery items sold, even as it raised prices. But the real story and the real growth is overseas, where Hershey only gets a tenth of its business. The company and its Reese's gummy and legacy chocolate brands will need to just take a small sliver of share away from major players like Mondelez and Nestle in order to have an impact on their bottom line.

Keith Lanton: 26:53

Hershey's stock has rarely traded as cheap as it does. The stock, at around 196 this morning, is trading a little over 20 times 12-month earnings expectations, well below its five-year average of 23.5 times. The only time it has been cheaper during the past 20 years has been during market dislocations in 2009, 2018, and 2020. What's more, hershey's high quality and predictability of earnings typically means that it trades at a premium to the S&P 500 and to consumer staples, and now it is trading at a discount to both.

Keith Lanton: 27:25

Hershey's is also paying investors well to wait for cocoa prices to come down. Company produces over a billion dollars in annual free cash flow, which allows it to repurchase stock. It bought back about 25 million shares of stock in the fourth quarter, has authorization to purchase 370 million more based on the continuing buyback that was approved by the board. It continues to grow its dividend, which has increased for 48 consecutive years. The stock yields 2.8%. So if COCO prices come down, you may see more investors step in. Long-only investors may want to consider investing, adding to the stock or purchasing the stock here at current levels.

Keith Lanton: 28:06

Another stock that Barron's speaking favorably of on the value side, and this stock we've already spoken about this morning because we had some news as well on the stock, and this is UPS, united Postal Service. We talked this morning about its deal with the US Postal Service this article written before that but Barron's suggesting that the recent drop in the UPS stock has created an opportunity. No matter what it does, ups can't make anyone happy, at least until today. We're not talking about its package delivery, but about the stock's response to shippers' guidance, which it gave guidance last week. If you go back to January, ups dropped about 8% after the company provided lackluster full-year guidance, announced 12,000 layoffs and reported operating profits that disappointed investors. Understandably. Bad news was bad news. The stock sold off.

Keith Lanton: 28:59

After such a disappointing update, one would think the market would celebrate a more optimistic outlook, like the one UPS offered on Tuesday of last week when it outlined a new set of three-year targets. But if you thought that you'd be wrong, the company blew past analyst targets when it released its 2026 financial targets and it also predicted profit margins that were going to be higher than what was previously anticipated. Yet the stock fell about 8% on Tuesday because the market really just didn't believe the projections, suggesting that the outlook was too optimistic. Perhaps the market didn't know about this deal that was coming today and perhaps that's one of the reasons that we're seeing the stock move higher. But the market's basically viewing the projections, at least at the time, as wishful thinking. But Barron's suggesting that, even if you're taking those numbers at face value and the sell-off in the shares, even if the wishful thinking didn't come to fruition, if you look at a scenario, in that scenario you're getting paid 4.5%, which is the dividend yield in UPS stock. So you were getting paid to wait for them to turn the ship around, which they were suggesting they were going to do. So if you accept management at face value worst case scenario you collect 4.5%, lots of bad news priced into the stock. Better case scenario is that they are going to improve the business, improve the margins, and perhaps this show-me story just got something to show to the business. Improve the margins, and perhaps this show-me story just got something to show to the market and perhaps today we'll see if these gains hold. We're seeing the potential turnaround in UPS stock after experiencing significant labor cost increases, after passing on some wage improvements to their drivers and that, of course, compressing margins, but the story here is that UPS is now working on reining in costs and growing their business, and we'll see if that is something that will continue.

Keith Lanton: 31:00

Finally, one last value stock and then we'll turn it over to questions, thoughts and comments, and then we'll turn it over to questions, thoughts and comments, and this is a stock that has been beleaguered for some time and that is Boeing symbol BA. Now, this article in Barron's on Boeing is really a backdoor catalyst to suggest why Boeing may have some upside, because what it's talking about is Boeing's biggest competitor, which is Airbus. Boeing's pain has been Airbus's gain, but that advantage may not last long unless the aircraft carrier meaning aircraft maker, meaning Airbus can ramp up production. So Airbus has been outproducing Boeing, if you look at the delivery of the narrow-body jets where they compete most fiercely, which is the Boeing 737 MAX, which has been much maligned, has been in the news and has had issues, and the Airbus A320. And as a result of those challenges, airbus has a commanding 61% of the narrow body market and the momentum continues to be very much with Airbus.

Keith Lanton: 32:05

So where's the good news? Well, it's not as simple as that. Airbus has an unfilled order backlog of 8,599 aircraft, which is an industry record, which is great, but at current production rates, it will take Airbus a decade to deliver all of those airplanes. So what that means is, if you are placing an order now for an Airbus A320 or A321, you may have to wait 10 years to get that airplane. If you're an airline that's seeking to grow, that clearly presents a challenge and clearly presents an opportunity for Boeing if they're right, their ship to be able to win back market share. So Airbus is winning as much as it can.

Keith Lanton: 32:47

The main problem with Airbus becoming overly dominant is you can't get your aircraft until the 2030s, and this is where, if Boeing, which announced the new CEO, although they haven't named him or her yet, but Boeing more than likely to name an engineer at least someone with an engineering background to the CEO ship is what is expected, and perhaps Boeing can start convincing airlines to give them a deeper look, especially when the fact that they're going to struggle to get the aircraft from their other main source, which is Airbus Now Air is Airbus Now. Airbus recognizes this. They are seeking to ramp up production, but we saw what happened when you try and ramp up production too quickly and get too aggressive, like what happened at Boeing, and you start to see safety and quality flip. So you know this may be a moment where Boeing has the opportunity to win back some market share, and this, of course, will take time. But in this two-horse race there's only so much of a burden or so much load that any one of them can carry.

Keith Lanton: 34:00

That's everything I've got.

Alan Eppers: 34:03

Thank you for listening to Mr Keith Lanton. This podcast is available on most platforms, including Apple Podcasts, Spotify and Pandora For more information, please visit our website at www. heroldlantern. com.

Sophie Cohen: 34:21

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