Weekly analyst note synopses

Note: LNC begins today a weekly synopsis of select analyst notes we receive in the previous seven days.


  • Delta Air Lines guides down on weaker PRASM.
  • Garuda claims it’s now a buyer’s market for new aircraft.
  • Interior supplier B/E Aerospace sees a bright future.
  • Boeing’s 787 deferred production plans faces challenges
  • Irkut is pricing the MC-21 15%-20% under the Airbus A320neo and Boeing 737-8.

Buckingham Research

Weekly Insight: June 13, 2016


We would remain Defense bulls regardless of the election outcome. Our favorite names: L-3 Communications (LLL), Raytheon (RTN), and Lockheed Martin (LMT). Investors are increasingly looking at how the November elections could impact Defense. We think Defense stocks are attractive on their own merit. We see a Clinton win as a neutral to the stocks, however, a Trump win could be bullish for Defense – both as a move to safety (since Trump priorities are relatively unknown) and because we think a Trump administration will consider substantive increases to Defense spending.

Top Weekly Data Points:

Defense; first the bad news. A CR for FY17 is likely because on Thursday, Senate deficit hawks defeated, in a 56-42 vote, Senator McCain’s (R-Az) bill to increase Overseas Contingency Operations (OCO) by $18B (60 votes needed to pass). This was one of several efforts to plus up Defense spending above the President’s FY17 request. The good news – flat y/y spending was already in street estimates. Also, it was a close vote and we don’t think it will be difficult to pick off the four opposition Senators needed to pass. This is a mild set back to efforts to increase the Defense budget and we still expect FY17 Investment spending to grow high single digits.

There were two A&D CEO changes this week. While the July exit of Spirit Aerosystems (SPR) President and CEO Larry Lawson and promotion of COO Tom Gentile to CEO was expected, the timing and brief transition period was a surprise. That surprise drove SPR to underperform this week on concerns about what Lawson’s departure might imply for SPR’s negotiations with BA over a new pricing agreement. Also a surprise, Embraer (ERJ: Not Covered) President and CEO Frederico Curado will be replaced by Paulo Cesar Silva.

Russia rolled out the 160-211 seat MC-21-300. On paper, it appears to be an attractive competitor to Boeing/Airbus narrowbodies, however, we doubt it will have commercial success in international market. What’s interesting is that the MC-21 sets the trend for the future use of composites in airplanes. – 30% of the MC-21 structure is composite. ‘New technology’ widebodies are 50% composite. It’s generally accepted that widespread use of composites are less suited to narrowbody aircraft than widebodies given the higher cycle times. As such, we expect future Boeing/Airbus narrowbody designs to have comparable composite content (about 30% of the structure).

Boeing updated orders and B787 net orders total 13 YTD vs. 45 at the same point last year. B787 orders are a watch item for us. At its investor day, BA noted that it needs to “sell the additional 787s which will solidify the 14/mo production rate”. We think many already factor in a 14/mo rate break in mid/late 2019 which implies a step up in advances in mid/late 2017 as progress payments start 2-yrs prior to delivery. If insufficient orders drives BA to delay a 14/mo rate or not achieve it at all, we think that poses risk to consensus 2017/18/19E FCF estimates given the delay or elimination of the step-up in advances.


B/E Aerospace (Buy) June 13, 2016

Forty percent of BEAV’s sales are aftermarket, and of this approximately 50% are spare parts and 50% are services and retrofit programs . . . We recently spoke with over 15 interior OEMs and MROs and the retrofit outlook into 2017-2018 remains very positive. Specifically, we believe the industry is looking for double digit growth after a slower 2014-2015. Specifically, retrofit RFP activity is up in all regions, and our checks support our confidence in BEAV’s 2017 retrofit and the industry outlook.

Cowen and Co.

Delta Air Lines, June 13, 2016

At an investor conference last week, Delta discussed the current state of the airline and now forecasts operating margins to be at the low end of their initial guidance of 21% – 23%. The guide to the lower end of the range is because PRASM is at the low end of expectations and fuel costs are moving higher. Delta stated 2Q16 PRASM is forecast to be at the low end of initial guidance of down 2.5% – 4.5%. Management stated the company is also tracking below the low end of guidance in June and will need to see improvement in the next two weeks to hit the low end of the range. Comment: Delta should have lowered the range to negative 3% – 5%. We are lowering our estimates to reflect the update. We forecast 2Q16 EPS of $1.77, down from our prior estimate of $1.86 and compared to the consensus estimate of $1.83. We forecast 2016 EPS of $6.30, down from our prior estimate of $6.45 and compared to the consensus of $6.47. We forecast preliminary 2017 EPS of $6.65, down from our prior estimate of $6.70 and compared to the consensus of $6.95

Goldman Sachs

Boeing (Sell) June 14, 2016

Spirit Aerosystems (Sell) June 14, 2016

The 787: A deferred-production-dreamliner-dream, deferred

Volume input should be getting more attention on the 787
We think margin assumptions in the 787 accounting block are aggressive. But it may be simple demand that makes or breaks the program, more than margins. With enough demand, Boeing may keep extending the block size, and slowly absorb costs with more volume (though even this would mean much slower cash generation than consensus expects). With little new demand, an extension may be far from a foregone conclusion.

The challenging math of current 787 supply & demand
The current amount of units yet to be ordered as a percentage of the block, is near the highest ever on any aircraft; and any block extension would only increase that gap. 787 demand has been soft with book-to-bill below 1.0X since first delivery, and could stay there given lower crude and more competition. At current production, if orders pace at their last five year average, Boeing would exit 2020 with an unsustainable 1.9X backlog/sales on 787. The current skyline is near-full through 2018, then holes open in 2019 and beyond. We think back to 10/month is more likely than up to 14/month.

The pure margin input to the deferred unwind, also a big hurdle
Achieving the margin assumptions currently implied by the 787 accounting block, looks extremely unlikely to us. With enough demand, Boeing could continuously extend the block, providing more units over which to spread costs. However, doing that is not a cure-all. It causes a much slower unwind of deferred over a much longer period of time. We estimate the current block implies ramping quickly to a mid-20% margin in 2018, then mid-30% in 2020; which we think would require surpassing the historically high margins of the 777 and 737. If BA were to approach a 25% cash margin late in the current block and exit there, we estimate it would need to write-down half of the $32bn deferred production balance (without an extension). The combination of mix of variant and price assists the challenge; but does not fully solve it and carries risk given the need to sell more aircraft and escalator headwinds.

Sell Boeing (BA) and Spirit (SPR)
We think 787 demand and volume disappointment would drive shares of BA lower. We think 787 will be one of several drivers of worse than expected free cash flow at BA. For SPR, 787 is a meaningful driver, and lower volume would impede its cash generation potential. We also see margin risk given SPR’s ongoing negotiations with BA on new pricing contracts.

JP Morgan

On the Radar: June 13, 2016

Coming up this week…

Some aerospace/defense companies will present at a competitor conference this week.

Aero/Def recap

Our commercial aerospace coverage outperformed a flat market by ~50 bps last week (unweighted average). BEAV and BA led the way, returning 3.8% and 3.0%, respectively, while SPR underperformed on news of a CEO transition and TXT underperformed following a jump the prior week on a potential takeover report that we consider unlikely.

With sentiment moving toward “risk off” through the week, we would have expected defense to do relatively well and each of our defense stocks outperformed a flat market, returning 1.5% (unweighted average). LLL momentum continued, with the stock gaining 3.0%, and RTN stood out on the plus side as well. GD continued to lag other defense names but finished up 1% on the week, ahead of the market.

Headline News

Spirit AeroSystems CEO Larry Lawson announced his retirement effective July 31st. COO Tom Gentile, who was hired in April, will take the top spot.

Latam, the largest airline in South America, is looking to push out or cancel deliveries of some widebodies amid continued weakness in Brazil. The carrier has 26 Boeing 787s and 27 Airbus A350s on order.

Canada’s Innovation Minister said the federal government is willing to “find a solution” to the dual share structure at Bombardier that has reportedly been a sticking point in the company’s effort to secure additional Canadian financial support for the C Series. The current share structure allows the Beaudoin-Bombardier family to control the company. This latest report is from Reuters.

TransDigm moved ahead with plans for $1.9 bn of previously announced debt offerings. The company has now raised $950 mn of 6.375% subordinated notes due 2026 plus $500 mn from a new 3.75% term loan maturing in 2023 and received a commitment for a delayed draw term loan for an incremental $450 mn. In addition, TransDigm modified existing credit agreements to allow restricted payments – including dividends and repurchases – of up to $1.5 bn, or just over 10% of the current market cap. Pro forma, we estimate that with the $1 bn acquisition of DDC and a potential $1.5 bn dividend, net-debt to pro forma LTM EBITDA would be > 6.5x.

Embraer unexpectedly announced plans for a CEO transition that will see Commercial Aviation chief Paulo Cesar de Souza e Silva take over from Frederico Curado in July with the transition complete by year end. Mr Curado led Embraer for nine years.

Commercial Aero News

The chief of Indonesia’s Garuda said the carrier would take its time in placing an order for up to 250 aircraft, according to Bloomberg. Arif Wibowo stated that it is a “buyers’ market” for aircraft and that other airlines have rescheduled deliveries. The comments clearly advance Garuda’s cause and must be viewed in this context but they are also consistent with investor perceptions regarding pricing pressure on new aircraft orders.

Emirates is moving toward an order for either A350s or 787s but an announcement is not expected at the Farnborough Air Show, according to Flightglobal.

TAP Portugal is considering a purchase of 35 aircraft in the 100-150 seat segment within the next 24 months, according to Air Transport World. The airline is looking at the Embraer E195 E2 jet.

Christoph Mueller, the outgoing CEO at Malaysia Airlines, said the carrier is evaluating an order for a large narrowbody and considering both the A321 and 737-9.

Iran may order ~100 aircraft from Boeing, potentially matching its commitment to Airbus earlier this year, according to Reuters. The airline is also talking with Boeing about providing support for its existing fleet. We believe the report is consistent with existing expectations.

Boeing delivered 71 aircraft in May and secured orders for 125. Through May, net orders and deliveries stand at 268 and 301, respectively, for a book-to-bill of 0.9x, vs the 1.0x target for 2016. Backlog at the end of May was 5,762 aircraft. Large potential orders remaining this year include the Iranian opportunity referenced above and conversion of ~100 737 MAX options from Ryanair.

Airbus secured 83 orders and delivered 57 aircraft in May. Backlog at the end of May stands at 6,759 aircraft. YTD net orders and deliveries stand at 162 and 234 respectively.

China’s Sichuan Airlines ordered 15 A320s, according to Air Transport World. Separately, Boeing reported one 787 order last week from an undisclosed customer.

Boeing announced plans to consolidate the 787 leadership team under program manager Mark Jenks. Beverly Wyse who has lead Boeing South Carolina since January 2015, will move to head the corporate Shared Services Group.

Airbus delayed delivery of China Airlines’ first A350 from July to September and three more A350s for the carrier will be late as well. Issues with interiors continue to slow the pace of A350 final assembly and push out deliveries.

Qatar Airways canceled its first A320neo, citing delivery delays. The airline can exercise walkaway clauses on four other delayed aircraft.

Emirates is considering a premium economy class as first- and business-class bookings have fallen. Emirates would be the first of the big-three Middle East carriers to offer this level of service.

Irkut, the Russian aircraft manufacturer, rolled out its MC-21 narrowbody aircraft. Deliveries are slated to begin in late 2018 but a delay seems likely. We do not think the aircraft poses a serious threat to Airbus or Boeing.

Alcoa and Alumina agreed to a hearing on September 20, 2016, to address the AWAC JV issues surrounding Alcoa’s planned separation.

Defense News

May investment account outlays were $12.0 bn, down 16% vs. May 2015. Fiscal YTD, investment accounts are down 1% vs. 2015 while O&M is down 3%.

The Danish parliament approved the purchase of 27 F-35s. The government previously recommended buying Lockheed’s F-35 over competitors including the Eurofighter Typhoon and Boeing’s F/A-18.

Lockheed indicated it would move $825 mn of F-35 work out of Canada if the country backs away from plans to purchase the jet. The news comes as Canada considers ways to fulfill the current government’s campaign promise not to purchase the F-35 in the context of commitments from previous governments. One possibility floated last week could see Canada purchase Boeing F-18s to fulfill capability gaps near term while deferring a final decision on F-35.

·         Honeywell is seeking to sell a unit that provides engineering and operations support for NASA, DoD, and other government agencies, according to a Bloomberg report that says the business may fetch up to $450 mn.

The Army awarded Boeing a $668 mn FMS contract for 24 Apache helicopters for Qatar. Deliveries will start in 2019.

Northrop Grumman was awarded a $600 mn modification to previously awarded contract for missile defense technical integration.

Turkey signed a $3.5 bn contract for 109 Black Hawk helicopters, manufactured by Sikorsky, now part of Lockheed. The agreement firms up Turkey’s selection of the Black Hawk for its utility helicopter requirement five years ago and a 2014 preliminary contract.

The Department of Homeland Security reaffirmed the award of a cybersecurity contract to Raytheon worth up to $1 bn over 5 years plus two option years. DHS awarded Raytheon the contract in Sept but recently completed “corrective actions” following questions from the GAO. Separately, Raytheon received a $249 mn contract to refurbish vehicle parts for the Marines.

The GAO recommended that Congress consider not funding the Littoral Combat Ship (LCS) in FY17 due to concerns over the ship’s survivability and lethality.

LLL announced that Heidi Wood is joining the company as Chief Analytics Officer. Wood had been at SPR since 2013.

Wells Fargo

Under the Radar, June 13, 2016

  • US Treasury said May defense outlays were down 12.8% y/y and down 15.3% sequentially. Investment account (procurement + research and development [R&D]) outlays were down 16.3% y/y driven by Air Force procurement (down 43% y/y) and R&D (down 26% y/y). The investment account outlays were down 6.3% sequentially. Trailing 12-month, investment outlays are down 1.6% y/y.
  • WingX said European business aviation activity was down 0.1% y/y in May as business jet activity was up 2% but turboprops and piston activity were down. Light jet segments were up in May, driven by over 10% growth for Embraer’s Phenom 300 and Textron’s Mustang, but offset by 3% decline in heavy jets.
  • In May, Boeing delivered 71 aircraft (47 737s, 14 787s, 9 777s, 1 747) and Airbus delivered 57 aircraft (48 A320s, 3 A330s, 3 A350s, 3 A380s).
  • Flightglobal reported Emirates is finalizing an order for either the Airbus A350 or Boeing 787, but does not expect to complete the deal in time for the Farnborough airshow in July.
  • Per Bloomberg, the US Department of Homeland Security reaffirmed the $1B contract won by Raytheon last September to protect over 100 federal agency networks from cyber threats against the protests by competitors. We believe this is the Domino contract and is an important win for its cyber capabilities.
  • Bloomberg reported Denmark agreed to a $20B kr ($3B) deal with Lockheed Martin to purchase 27 F-35s. The plane will replace older F-16s.
  • According to Russian Aviation, Irkut said that it intends to use price to undercut Airbus’ A320 and Boeing’s 737 by about 15-20% with its MC-21-300 aircraft.
  • Esterline’s Armtec was awarded a $25.3MM modification to a foreign military sales contract (Pakistan, Romania, UAE, Saudi Arabia) for infrared countermeasure flares through October 31st, 2017.
  • Flightglobal reported Boeing signed a $667MM contract for 24 AH-64E Apache rotorcraft to Qatar. A planned 5-year contract for the production of 275 aircraft is expected to close in Q2 2017.
  • Per Air Transport World, China Airlines was told by Airbus that its first A350 XWB will arrive at the end of September instead of the original July date. The delivery delay is due to a backlog of aircraft waiting for cabin completion.
  • SpaceX announced that it is planning for the first relaunch of a used rocket in either September or October 2016.
  • India’s Prime Minister Modi announced that the Nuclear Power Corporation of India and Toshiba’s Westinghouse will begin engineering and design for six nuclear reactors, though the final contract will not be completed until June 2017. Diversified industrial, Curtiss Wright makes 4 reactor coolant pumps for each reactors and this means it could mean a $550-$600MM revenue opportunity.
  • According to Bloomberg, Honeywell may sell its Technology Solutions (HTSI), which handles engineering and operations services for NASA and US government agencies. The article estimated HTSI generates about $50MM of EBITDA.

Defense News reported Lockheed Martin’s Sikorsky signed a $3.5B T-70 Black Hawk utility helicopter contract with Turke


28 Comments on “Weekly analyst note synopses

  1. Nice idea, but tons of topics for 1 post. Maybe summarize & link?

    “New technology’ widebodies are 50% composite. It’s generally accepted that widespread use of composites are less suited to narrowbody aircraft than widebodies given the higher cycle times. As such, we expect future Boeing/Airbus narrowbody designs to have comparable composite content (about 30% of the structure).”

    I think composites in NB fuselages has more to do with mechanical properties. For WB’s the minimum skin thickness of CRFP is often not determined by strength but hail impact. You can’t scale that down for a lower load NB fuselage.

    We shouldn’t take these mechanics as a given though. New laminates, nanostructured metals and polymernanocomposites are climbing the TRL’s in laboratories.

    A material combining the easy of processing, damage control and cost of metals surfaces, things could change quickly. That said the Al suppliers aren’t sitting on their hands either.

    • I would of thought higher cycles would favour the fatigue properties of composites, although I do have a vague recollection of an explanation why this is not the case. Someone remind me and Keesje!

      • Analysts are not at the cutting edge of techno understanding, they just report what’s happened (Leeham excepted of course!)

        As this progresses, I suspect any tech issues and or limitation will change.

        Costs change as well with out of auto clave curing.

        Its too dynamic unless you are deep into it and even then you don’t know what tech goes viral.

        I predict the Sun will rise tomorrow in the East.

      • grubbie,
        CFRP has indeed much better fatigue resistance than aluminum. Density is also lower by about 35%, at much higher strength, so normally an empty CFRP plane should weigh only about half that of an aluminum one.
        But, the cost for carbon products is at least twice that of aluminum products. Depending on the technology it can be 10 times or more.
        The huge advantage in the carbon wings is that they can not only be much lighter and stronger, but thinner, longer and have a smoother surface. This reduces drag significantly. A carbon body on the other hand “only” saves weight.
        This is why currently the combination of carbon wings and aluminum body is the most economic compromise.

        • Yes the hail impact ‘ on the upper skins’ is often determines the skin thickness as Keesje says
          (“Long-Term Durability of Polymeric Matrix Composites”, pg 165)
          The Airbus technique of using separate panels to build a fuselage section and thus allow thicker above and thinner below skins would be well suited

    • I am no more excited about this than the so called Airbus deal.

      Shades of China trying to play them off against each other.

      Reality says that you should buy Airbus A320 series not 737s as there is no upside to 737 (and the more expansive MAX-10 would have the heavy LEAP engine)

      A330NEO vs 787? Depends on the mission.

      A350 vs 777? 777 wins on availability

      747 vs A380? Again depends on the mission.

      Just grabbing 200 of anything is nuts and reflects no planning or strategic thinking and will fall on its face.

      They are no more ready to do anything that I am .

    • Iran in its modern state is really worth the visit in order to kill all the reports from media … they tend to please their customer and do not even dare to travel there even, at least, to see the real world.

      In short there is no point to sell to China, India ,Pakistan … if you do not accept to sell to Iran.

      I went there 2 years ago on a 40 years old A300 in perfect condition … parts for maintenance ?? They buy from vendors at a 20% premium and get them easely !!!

  2. Goldman Sachs: “At current production, if orders pace at their last five year average, Boeing would exit 2020 with an unsustainable 1.9X backlog/sales on 787.”

    That is when the 777 Classic will be at its lowest point in terms of revenue, and way before the 777X will have started to generate positive cash flows. It is also the time when the 737 will likely have started to experience B2B ratios below 1. I was counting on the Dreamliner to help Boeing go through this difficult period, but it looks like it’s not going to happen, especially in the context of a softening widebody market. And this is happening at a time when Boeing is spending a lot of money on the 777X and should be spending a lot of money on a 737 replacement as well. This implies that engineers will increasingly have to fight with the accountants to get money for their projects, and I am not sure who is going to win. Perhaps no one will. Not even the shareholders.

    • I can`t see a market for more that 20 A330Neo+B787s. A330 is a lot cheaper so I am in the 10×787 mo camp and I agreee the deferre costs ae a bigger risk than generally admitted to.

  3. I like the idea of a “weekly analyst note synopses”. But may I suggest to LNC to remove the military stuff to unclutter this new column.

  4. “If BA were to approach a 25% cash margin late in the current block and exit there, we estimate it would need to write-down half of the $32bn deferred production balance (without an extension). ”

    I have a black out.. Can’t they just pay Airbus $6Bill to close down the A330 line?

  5. A slow down of orders and deliveries and multiple cancellations to something more consistent with historical norms and suddenly the birds come home to roost. the problems of the new WBs looks like being put in stark relief as they have little chance of recouping development costs given the lower imperative placed on fuel use.

    The A330 may not sell at current anticipated volumes given a downturn (7/month?) but presumably can generate cash and profit based on fully amortised cost, perhaps the B777 classic could do the same and will be preferred to the X by some which would solve one headache for Boeing at least. Even the A380, no not going there…

    Looking at the B787 and A350 though there must be some real concern about how to generate the sales, income and margin to cover the costs incurred and to become cash positive and profitable. Looking at the A350 there is already a question mark over Sri Lankan orders (3 in FAL) and a mysterious delay in the 2 Qatar aircraft on the flightline. Linking this to gaps in the B787 programme appearing relatively soon it looks like the sureties of the past few years regarding sales, production etc may fast become a thing of the past. Perhaps Boeing should reduce the accounting block…..

    • My take is that the 787 will sell North of 2000, just not in the short time line.

      Its more the issue of ramping back to rate 10 now, not going up to 14 (I must be a good analyst I predicted that a couple of weeks ago!)

      Of course now we see the consequences of McNenarys brilliant moves, saddled with a duplicate plant that is excess to production needs.

      • It would be interesting to know the rules on which the accounting block may be calculated. I would suggest that a high degree of certainty relating to the whole block must exist ie confirmed orders or similar. If the current orders are being trimmed and there is a dearth of new orders then it is questionable whether the current block should be used. Otherwise we are in the realms of fantasy accounting.

        It doesn’t affect the cash position of course but at the same time it would materially affect the reported profits with a very substantial loss in the year of revision. I predict that Boeing will find it difficult to justify their current block let alone any increased block within 2 years if the current weak market persists.

        And I for one think that that is highly likely

        • This accounting practice was already stretched to its logical limit and could only work as long as the orders kept coming in. But that is no longer the case and the business model is falling apart. The question has often been asked on this blog if we were in a market bubble. I think we are, but it’s not like it’s going to burst overnight. The world economy might be slowing down but the number of passengers carried keeps growing. But this growth will likely slow down somewhat, while fuel prices will remain low. This should affect all aircraft manufacturers, but Boeing would probably be more impacted because this scenario will likely take place while Boeing will be going through a difficult transition period from the 777 Classic to the 777X, while suffering from a possible deterioration of the 737 position on the market in the coming years. This means that all of Boeing’s programmes (787/777/737) would be going through a difficult period more or less simultaneously. This looks like a rather pessimistic view, but I think it is still more realistic than what they want to see in Chicago.

      • Iran in its modern state is really worth the visit in order to kill all the reports from media … they tend to please their customer and do not even dare to travel there even, at least, to see the real world.

        In short there is no point to sell to China, India ,Pakistan … if you do not accept to sell to Iran.

        I went there 2 years ago on a 40 years old A300 in perfect condition … parts for maintenance ?? They buy from vendors at a 20% premium and get them easely !!!

      • The only chance for Boeing is already acheived …that is get rid of Mr MCsomething …!!!!

  6. “Perhaps Boeing should reduce the accounting block…..”

    That would seriously hit the stocks. Most Boeing executives incomes are for the largest part stock awards, stock option grants and an annual incentive bonuses. That prohibits e.g. reducing accounting blocks. All stock owners sing along to create stock holder value for the next quarterly.

  7. The one I am interested in is how the MC-21 fares.

    I don’t think its will get much more than Russian and allied orders, but its an awful good model for what the future is.

    Its what the Chinese should have shot for, you can copy old tech and expect to make the big leagues.

    • It could be Russia`s A320 with all that implies, if they can keep political (meaning national account deficit) issues out of it.

      China doesn`t have the know how to shoot for this, Russia does, the question is really can Irkut build enough of them, with the suppliers they choose themseves, rather than have suppliers chosen in the Kremlin for them, and find the cash to get a decent FAL going.

  8. sowerbob: “…it looks like the sureties of the past few years regarding sales, production etc may fast become a thing of the past. Perhaps Boeing should reduce the accounting block…..”

    Perhaps A&B should revise their intentions to increase production rates on various programmes. I laud the effort Boeing is putting on producing as many airplanes they can per year, but this appears to be increasingly risky in the context of a “stagnating” world economy and persistently low fuel prices. It looks like the party will soon be over. And what is coming next might be sobering indeed.

  9. Yep, not sustainable, to quote a wise man, if you don’t remember your history you are doomed to repeat it.

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