Google Makes a Push Into Banking | Boeing 737 MAX Is Ready For Take-Off

MarketBites Investment Newsletter for 11/19/2020

Your daily dose of stock market commentary and most important investment and business news. written by investment professionals at Taylor Hoffman Capital Management.

Today’s Top Investment Stories
  1. Google Makes a Push Into Banking
  2. Boeing 737 MAX Is Ready For Take-Off
What is driving the stock market today? – November 19th, 2020

– U.S. stocks fell as lockdown threats overshadowed vaccine news. The S&P 500 Index dipped in afternoon trading, on news that New York City decided to close schools again. On the bright side, Pfizer announced that its Covid-19 vaccine was 95% effective in clinical trials. The company is in line to receive U.S. regulatory authorization for its vaccine within days.

– Bitcoin broke above $18,000 per coin, for the first time since 2017. The digital currency is up 146%, as more institutional investors embrace the asset class. Paul Tudor Jones recently purchased Bitcoin as a hedge against inflation. Paypal started allowing customers to transact cryptocurrencies this October. Some other prominent investors remain skeptical, like Ray Dalio, who commented that “he might be missing something” when it comes to the Bitcoin price surge.

Coronavirus tracker: Per Johns Hopkins, the U.S. reported 161,645 new cases yesterday, while Europe had 215,886 new cases. United States Covid hospitalizations are at 76,823.

– By Raymond Kanyo


Top Story 1: Google To Offer Checking & Savings Accounts 

What is Happening?
In a massive push, Google rebranded its Google Pay app into a comprehensive digital bank. It seems that banks are playing the “if you can’t beat them, join them” card, and directly partnering with Google. Citi Bank is one of the lead associates in bringing digital checking and savings products to the platform.

Why does this Matter?
This new line of business comes at a time when Google is under fire in advertising; its main profit engine. Interestingly, Google is again trying to offer a service for free, in exchange for data collection. Through Google Pay, Google will have access to consumers’ finances, transactions, and spending habits – all valuable data that banks have long held onto tightly. Google will also own the customer relationship and branding, but banks are willing to give that up to gain access to younger demographics.

Citi Bank’s key comments on the partnership:
“This collaboration gives us a platform to drive significant scale in our retail bank… We can deepen our existing relationships and serve an exponentially larger and new generation of customers, such as Gen Z. The traditional banking model is evolving, and partnerships are becoming a key part of the industry’s future.”

The Takeaway:
Google is entering the digital payment and banking industry at the right time. It seems that Google Pay won’t directly compete with brick and mortar banks, however, Paypal’s Venmo and Square’s Cash are directly in the cross-fire. Google Pay’s robust digital banking features, coupled with 150 million existing customers, could give Venmo and Cash executives some sleepless nights.

– By Raymond Kanyo


Top Story 2: 737 MAX Rejoins the Fleet

What is Happening?

Boeing has opened up to new FAA regulations and safety measures, in light of two crashes that involved 346 passengers deaths. With the 737 MAX back in production, there are many questions to be considered.

Why does this Matter?

Since the two crashes, Boeing has gone from an intense overdemand to an oversupply. Corporate and consumer skepticism, paired with the coronavirus pandemic, has hampered demand for the Boeing 737 MAX. Analysts estimate that nearly $20B worth of business has been lost from order cancellations, production halts, and various legal battles.

The reintroduction of the 737 MAX comes with hesitation. Regulators in Europe, Canada, and the U.S. have different expected timelines for when their governing bodies can take over pre-sale inspections. For most airlines, the reintroduction of the 737 MAX won’t happen until 2021. Pilots must now undergo additional training in order to fly the 737 MAX. Consumer sentiment will be interesting to watch, as the model is added back to fleets around the globe.
The Takeaway:
Boeing has taken a beating on the 737 MAX, but the firm hopes new safety measures and production improvements will ease consumer sentiment regarding the model. With potentially another 10% of sales yet to be cut by struggling airlines, Boeing may not be out of the weeds yet.

– By Jack Dunne

What else is happening:
Laid-off or new opportunity? – (read here)
Apple slashes app-store fees for small developers. – (read here)
Sonos is rising after strong earnings. – (read here)
Southwest notifies 400 workers of potential furlough. – (read here)
Deals & IPOs:
  • Russian dollar store ‘Fix Price’ to IPO – (read here)
  • Robinhood seeks advisers ahead of IPO – (read here)
  • Home Depot to buy HD Supply for $8.7B – (read here)
  • Scooter startup ‘Bird’ eyeing SPAC – (read here)
Earnings Calendar:
EARNINGS TODAY:
BJ’s Wholesale ($BJ), Intuit ($INTU), Macy’s ($M), Qiwi ($QIWI), Williams-Sonoma ($WSM)
EARNINGS TOMORROW:
Foot Locker ($FL), Hibbett Sports ($HIBB)
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