11th February 2023 – 17th February 2023 | Another week in the markets
| S&P 500 | Nasdaq | VIX | DJIA | Russell 1000 | NYSE |
| 4,079.09 | 11,787.27 | 20.02 | 33,826.69 | 2,247.99 | 15,840.16 |
| -0.28% | 0.59% | -2.48% | -0.13% | -0.11% | -0.44% |
| Nifty 50 | Gold | Silver | Brent crude | USD-INR | EUR-INR |
| 17,944.20 | $1,851.30 | $21.72 | $83.15 | 82.86 | 88.61 |
| 0.49% | -1.34% | -1.30% | -3.90% | 0.45% | 0.59% |
Source: MarketWatch
Hello Saturday,
This week, tensions between the US and China heighten, Air India enters into a historic deal with US aircraft manufacturer Boeing, and another train derails in the US.
- YouTube CEO Susan Wojcicki steps down, to be replaced by long-serving chief product officer Neal Mohan at a time when YouTube’s ad revenue growth is slowing
- China imposes sanctions on US defence companies Lockheed Martin and Raytheon Missile and Defense Corp for selling arms to Taiwan, further escalating tensions between the US and China
- Air India to buy 470 aircraft from Boeing and Airbus in the industry’s biggest-ever deal, which will help Air India modernise its fleet of aircraft and boost Airbus and Boeing’s revenues
- The US Department of Justice accelerates its antitrust investigation against Apple, with the tech giant potentially facing a lawsuit in the coming months
- A Norfolk Southern freight train derails in Michigan, only two weeks after a major derailment in Ohio, bringing renewed focus to the US’s deregulation of the railway industry
Taking stock | NewTube | Wrist slaps over arms | Get. Jet. Go! | DOJy monAppley | Freight fright | Invest wisely
Taking stock
US stocks took a modest hit this week after Federal Reserve officials commented on interest rate hikes and stronger-than-expected inflation reports. The S&P fell 0.28% and the Dow shed 0.13%, while the Nasdaq gained 0.59%.
NewTube
On Thursday, YouTube CEO Susan Wojcicki announced that she was stepping down from her role. Wojcicki was one of the first Google employees and one of the most prominent women leaders in tech. She plans to focus on her family, health, and personal projects moving forward, and will take on an advisory role at Alphabet.
Neal Mohan, who serves as YouTube’s chief product officer, will replace Wojcicki. This change in leadership comes at a critical time, as YouTube has been facing tough competition from streaming services and platforms such as TikTok and Instagram. Due to this competition, the video-sharing platform’s advertising revenue fell 7.8% in Q4 2022, with respect to Q4 2021.
YouTube’s global ad revenue:
Source: Statista
Since his appointment as chief product officer in 2015, Mohan has focused on growing YouTube Shorts and Music, and on developing the company’s subscription models. He was also behind YouTube’s bagging of NFL Sunday Ticket in December 2022. Mohan taking over as CEO may help the platform have a more competitive edge and could improve ad revenue growth.
Wrist slaps over arms
This week, China imposed sanctions on Lockheed Martin and Raytheon Missile and Defense Corp over arms sales to Taiwan. Both these American defence companies have been added to China’s ‘Unreliable Entity List’, and have been banned from imports and exports related to China. These sanctions have further escalated tensions between the US and China.
The fines imposed on the two companies are double the amounts of their arms sales contracts with Taiwan, which Beijing views as a breakaway province. China has also restricted the two companies from making further investments in the country, and has cancelled residence permits for the companies’ staff in China.
This is not the first time China has announced sanctions against Lockheed and Raytheon. It has done so three times before, in 2022, 2020, and 2019, though it was not clear what those sanctions entailed or how they were enforced.
Get. Jet. Go!
The airline industry saw its biggest deal ever as Tata-Group-owned Air India placed an order for 470 aircraft with Boeing and Airbus. This deal, meant to modernise Air India’s aircraft fleet and expand its network, comes with an option to order 370 additional planes.
This deal represents Boeing’s third biggest sale of all time, with 220 jets ordered: 190 Boeing 737 Max single-aisle planes, 20 787 Dreamliners, and 10 777X widebodies. The deal is valued at $34 billion for Boeing, and while delivery will take several years, it has accelerated Boeing’s own expansion plans.
The deal will also support Boeing’s engineering and manufacturing jobs across its factories in the US, and may help boost the airline’s profit in the coming years. As a result, investing in Boeing shares might be a good idea right now.
DOJy monAppley
Another month, another Big Tech antitrust probe. This week, the US Department of Justice (DOJ) escalated its antitrust investigation against Apple. In 2019, the DOJ had started an investigation into whether Apple had monopoly power. However, in recent months, the DOJ has accelerated its antitrust investigation, with more litigators being put on the case and new requests for documents and consultations. The investigation primarily deals with Apple’s policies for third-party apps on its App store, and whether it unfairly favours its own products, thus creating a monopoly.
The DOJ already has two ongoing antitrust lawsuits against Google, the first of which is going to trial in September this year. If the government decides to take legal action against Apple, the company could face a major lawsuit in the coming months. Already facing a range of lawsuits around the world, Apple needs to explore working with regulators and reviewing its App store policies without losing its market clout.
Freight fright
On Thursday, a freight train derailed in Southeastern Michigan. This derailment comes barely two weeks after a train carrying carcinogenic chemicals derailed in Northeastern Ohio, forcing residents to evacuate their homes. Even now, the extent of the damage is unclear.
The train operator connected to both derailments is Norfolk Southern. Since the Ohio derailment on 3 February, the company’s shares have fallen over 5%. According to analysts, while these events are unfortunate, they may not have a long-term impact on the company’s share price. Historically, such events would only be buying opportunities if they led to major short-term price drops.
However, these derailments have renewed focus on the US’s deregulation of the railway industry and its negative consequences. According to railroad union officials, federal legislation has been loosening safety norms over time, which has allowed rail operators to cut costs and make such accidents all but inevitable.
Invest wisely
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Warm regards,
Another week
in the markets
