Boeing Flies Higher, and Ford Continues to Expand

Boeing Flies Higher, and Ford Continues to Expand

Although we don't believe in timing the market or panicking over daily movements, we do like to keep an eye on market changes -- just in case they're material to our investing thesis.

Stock markets across the globe are mixed today as investors come to grips with the European Commission's cutting of its economic-growth outlooks for the eurozone in 2014. It trimmed the forecast for gross domestic product growth from 1.2% to 1.1%. The commission pointed out that while it still expects Europe's recovery to improve next year, increasing external challenges are slowing progress. Closer to home, the Dow Jones Industrial Average is flat as of 2:45 p.m. EST as investors continue to monitor earnings season.

Boeing has been one of the Dow's best performers this year and continues flying near all-time highs. Boeing is 0.5% higher today while the aerospace giant is in negotiations with its largest union regarding where the 777X jetliner will be built. Talks between Boeing and the International Association of Machinists and Aerospace Workers, which includes more than 32,000 employees, have accelerated and are at a critical stage this week. The state of Washington hopes to keep assembly of the 777X within its borders, although Boeing gave no mention of using engineers there.

This is an important development for investors to watch, because the two sides have a bumpy past that has involved numerous strikes. The last thing any investor wants is for production on a pivotal aircraft to be postponed, especially after Boeing's 787 Dreamliner turned into a nightmare of budget overruns and production delays.

Also inside the Dow Jones, Caterpillar is up slightly this afternoon as the company tries to dig itself out of a pretty deep hole. Caterpillar's sales are down $11 billion compared to last year, and it expects sales to remain flat going into 2014. That sent earnings plunging 44% in its recent quarter, and the company is trying to apply a Band-Aid by cutting costs wherever possible.

This is unfortunately coming at the expense of jobs; Caterpillar recently announced plans to close a plant in West Virginia as demand for its mining equipment continues to be weak. The company has in the past year declared its intentions to close half a dozen plants. While unfortunate, and likely to continue, the cost-cutting measures are to be expected.

"This is consistent with the company's strategy and something we expect to see more of as the company right-sizes its manufacturing footprint for the current demand environment," Ted Grace, a Boston-based analyst for Susquehanna Financial Group, told Bloomberg in a telephone interview.

Outside of the Dow, Ford unveiled more specifics regarding its plan to expand into emerging markets. This has been a focal point for CEO Alan Mulally's "One Ford" strategy because the automaker was late to the game in most emerging markets -- including the world's largest automotive market, China. That looks to change, slowly but surely.

Ford and its Lincoln luxury brand will launch 17 new or refreshed vehicles in the Middle East and Africa over the next two years. This will include popular vehicles such as the Fusion midsize sedan and the EcoSport, which has sold extremely well internationally. Ford believes the Middle East and Africa will become one of the next big automotive growth markets, and the company wants to secure its fair share.

While this was mostly overlooked, Ford recently posted a record month in India. Ford India sold nearly 15,000 combined domestic wholesales and export vehicles in October. That's Ford India's best monthly performance ever and is an increase of 35% in year-over-year results. One major thing for investors to watch is how Ford uses its operations in the region. It plans on using India as a distribution hub; Ford India has already added 10 new markets to its export list and increased exports by 71% year over year.

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