Boeing

• BOJ Should Be Allowed $643 Billion Fund to Buy Foreign Bonds, Iwata Says (Bloomberg)
• Banks Hoarding ECB Cash May Double Company Defaults (Bloomberg)
• China Police Open Fire on Tibetans as Protests Spread (Bloomberg)
• Sarkozy Presidential Rival Hollande Would Lower Retirement Age, Lift Taxes (Bloomberg)
• IMF takes tougher stance over Greek debt (FT)
• Iran threatens to act first on EU embargo (FT)
• PM says ‘no complacency’ on economy (FT)
• George Soros: How to pull Italy and Spain back from the edge (FT)
• Japan's NEC to slash 10,000 jobs (Reuters)
• Obama Planning Corporate Tax Overhaul (Bloomberg)

The advance reading of Q4 UK GDP released today came in at -0.2%, slightly below expectations, however many market participants had feared a worse outcome for the indicator, allowing the GBP to pare the losses made in the lead-up to the GDP announcement. The Bank of England minutes released today have shown that the MPC unanimously agreed to keep the UK rate at 0.5%, and maintain the volume of the APF, however they also revealed that some MPC members saw the need for further QE in the future. Despite higher than expected German IFO Business Climate data this morning, European indices are trading in negative territory, with technology and financial stocks suffering the highest losses. This has seen asset reallocations into safe havens, which has seen Bunds outperform for the morning.

When it comes to corruption, cronyism and general muppetry in Washington D.C., the only real question is 'where does one start?' Yet one has to start somewhere to conclude with a list of the ten most corrupt and despicable marionettes in D.C. Which is precisely what JudicialWatch has done in its annual compilation of the "Top 10 Most Corrupt Politicians in Washington D.C." for 2011. And confirming what everyone knows, that both the left and right are merely irrelevant names for the same general social affliction, or should we call it by its true name - wealth pillage - the split is even between democrats and republicans. In no particular order, the winners of 2011 are...

Traders in the market (what little is left of them) always seek out the investment thesis with the highest upside/downside ratio to a delta in any fundamental forecast. In other words, what derivative play to a secular trend generates the higher IRR? A good example is the ABX which allowed contrarians in 2006 and early 2007 to bet on a collapse in subprime and put on a "short" at next to now cost of carry, with practically no downside if the thesis ended up being wrong, and unlimited upside (just ask Paolo Pellegrini and Kyle Bass). Well, as we just learned, one of UBS "surprises" for 2012 is that oil could drop below $70/barrell. Is this possible? Absolutely - should the Eurozone collapse, and/or China experience the long-overdue hard landing, a deflationary shock (which will naturally only precipitate the central banks into an even more rapid devaluation of legacy paper currencies) can and likely will send crude tumbling (Iran geopolitical concerns aside) as happened back in early 2009 when crude collapsed to around $30/barrel however briefly. So is there a better option to play crude downside than merely shorting CL? Perhaps one idea with better "upside" in case of a deflationary collapse in crude is to get bearish on Boeing instead. As the following chart from Goldman shows, 3 of the 4 biggest widebody (and thus most profitable) aircraft orders are from Gulf airline companies - Emirates, Qatar and Etihad. Together, they amount to about 450 profitable future orders... which could well be cancelled if Gulf states revert to their panicked state last seen so vividly in the spring of 2009 when they were cancelling orders left and right. 

Don't ever, ever, ever invest in airlines. Ever.

Goldman's "conviction buy" list claims its latest crashing (not literally) and burning (literally) casualty. "We are removing Boeing from the Conviction List. It remains Buy rated...It now appears the new product cycle of the 787 program has renewed risk of being incrementally problematic before delivering the earnings and sentiment catalyst that we still believe will eventually be realized. Since we added it to the Conviction Buy List on 5/10/10, BA is down 2.5% vs. the S&P 500 up 4.6%."

Durable Goods prints at 3.3%, higher than expected 2.0% (even as the previous is traditionally revised from -1.3% to -1.0%), which however was pushed exclusively by transportation, as durable goods ex. transportation dropped by 0.8% on expectations of 0.5%, (and down from a revised 1.9%), which was the second drop in the past three months. In fact the transportation segment surged by 16%, mostly due to Boeing which announced receipt of orders for 117 aircraft, compared to 10 the month before. Remove the $6.6 billion contribution from the doubling in non-defense goods and you have a major headline miss, as the M/M change would in fact have come in negative. But just as iPads now determine the tech component of the economy, why not have one-time 787 sales define the broader GDP? Depending on adjustments, today's report may actually bias the October 29 GDP report higher. Lastly, and confirming the weakness of the September report was the Non-defense cap ex aircraft, which came at -0.6% on expectations of 0.8%.

One of our daily scans returned an oddball pattern at the end of last week that is extremely rare and extremely interesting from a technical perspective; 4 consecutive "filled white" candles. The culprit: none other than Boeing, the big BA, who just yesterday completed an "ultimate-load wing up-bending test on the 787 Dreamliner" with "positive initial results." Though analysis of the data for the long-delayed Dreamliner will take several weeks to sift through, we took a few snapshots and present a technical profile for the big BA and Continental Airlines (CAL), which stood out as another utterly fugly issue ripe for reversal.

Commercial satellite-launch services provider Sea Launch, which is 40% owned by 787 on time manufacturer extraordinaire, Boeing, filed for bankruptcy last night in Delaware (09-12513). The Long Beach company which has used the Kazakhstan Baikonur Space Center for rocket launches in the past, has listed liabilities of over $1 billion.

Commercial satellite-launch services provider Sea Launch, which is 40% owned by 787 on time manufacturer extraordinaire, Boeing, filed for bankruptcy last night in Delaware (09-12513). The Long Beach company which has used the Kazakhstan Baikonur Space Center for rocket launches in the past, has listed liabilities of over $1 billion.