Penn Wealth Publishing

2021.03.21 Penn Wealth Report Vol 9 Issue 02

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20 penn wealth Report voluMe 9 issue 02 21 Mar 2021 Penn Wealth Report Copyright 2021. All Rights Reserved. investMent intelligence weekly Business Report our MaritiMe shipper spikes on the growing concern over container shortage For anyone who believes that America, or the world in general, is ready to stand up to China's trade practices, try this one on for size: the communist nation ended 2020 with a record trade surplus. e demand for Chinese goods is now so great that the world is facing a shipping container crisis. Just how bad is it? Because the ship- pers can make so much more money on the goods leaving China as opposed to the goods entering the country—like grain from the United States—they are literally rushing back empty containers to China to alleviate the backlog of goods waiting at Chinese ports. Spot freight rates are up nearly 300% from a year ago. While that is a sick testament to the state of global trade, one industry is certainly reaping the rewards: the maritime shippers which had been crushed during the trade war and subsequent pan- demic. We have been fascinated by this highly-cyclical industry for decades, and when one of our favorites, Nordic American Tankers (NAT $4), saw its share price drop to $2.80 this past October, we jumped in, adding the Bermuda-based shipper to the Penn Intrepid Trading Platform. NAT jumped 14% in one day on news of the container shortage. ink the run will be short-lived or that the shippers are now overvalued? Take a look at the accompanying chart on NAT. Despite the fact that there are nearly 200 million intermodal freight containers around the world, the rapid increase in demand caught nearly everyone off guard. Ready for the icing on the cake? 97% of these containers are now made in, you guessed it, China. For a brief refresher on the shipping industry, visit our 2018 Penn Wealth Report story on e State of Global Shipping. We see the upswing continuing to gain momentum as global economies revive. yet More proBleMs for Boeing as engine failures Mount It was the last thing Boeing BA $212 needed (how many times have we said that over the past three years?): A Boeing 777, leaving Denver for Hawaii, had one of its two engines suffer an "uncontained fail- ure," with fire and smoke visible to passengers, and with debris dropping down on a Denver suburb. ankfully, the aircraft was able to make it back to the airport on one good engine and with no passenger injuries—unlike a very similar incident in 2018 which involved the death of a passenger following engine debris striking a window. at incident occurred just two months after a United Airlines 777 suffered engine failure, with a cracked fan blade forc- ing the aircraft to make an emergency landing in Honolulu. is is an extremely disturbing trend, and one which certainly places Raytheon's RTX $73 Pratt & Whitney unit in the hot seat. But aircraft maker Boeing shares some blame, as problems continue to mount for the Chicago-based firm. First there were the deadly 737 crashes which grounded the fleet for the better part of two years. en came the 787 Dreamliner "design flaws" and canceled orders. Now the 777 faces grounding in the US—and probably around the world. And the situation isn't looking much better on the space side of the business, with the company's problem-laden Starliner cap- sule and its high profile recent failures. In each case, Boeing can point fingers at suppliers or partners, but there is a point at which all fingers will point back to them. A sad state of affairs for a for- merly-great American company. e entire Boeing board of directors, along with its C-suite execu- tives, should be broomed. e company needs a clean sweep if it has any chance of returning to its position of aerospace and defense dominance. Unfortunately, the very individuals which need to be fired are all part of the mutual admiration society which controls the decisions on lead- ership. If ever a company needed an aggressive activist investor to come along and force change, it is right now, and it is at Boeing. Even then, the company's downward flight path may be too steep to pull out of. investor darling workhorse has its shares cut in half after losing usps contract It has been one of those "new investor" cult stocks with one of the key buzz phrases, or acronym in this case, that the new wave of retail money flocks to: EV. e company is Workhorse WKHS $16 , Weekly Business Report MaritiMe shipping & ports autoMotive e content of this report reflects the personal views, opinions, and research of Penn Wealth Publishing. While measures are taken to help assure the accuracy of data, no guarantees can be made and the firm is not liable for any losses incurred by subscribers. is is not a solicitation to buy. Always consult your investment professional before investing any money. aerospace & defense

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