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Another Alfa Romeo Comeback Story May Be Ending

After a brief surge, Alfa Romeo's comeback plan looks to have stalled, outsold in Europe by Lancia.

Has yet another Alfa Romeo comeback story fizzled out before it ever really got going?

It’s hard to see it any other way, with the fabled Italian sports and premium brand outsold in Europe for the first half of the year by its ignored, underfunded Fiat Chrysler Automobiles stablemate, Lancia.

Alfa Romeo has five models on its books, including the 4C sports car, the dated MiTo three-door hatch, the just-facelifted Giulietta five-door hatch and the expensively developed Giulia sedan and Stelvio crossover.

Lancia, on the other hand, sells just one car – the eight-year-old Ypsilon five-door hatch. It might be a legendary name, with some of the most desirable cars ever built on its books and with multiple World Rally Championships to its name, but its reputation for quality is so bad in Europe that it has retreated to just one market: Italy.

FCA analyst Fiat Group World pointed out that Alfa Romeo sales fell to 29,187 in the first half of 2019, while the Ypsilon, based on the budget Fiat Panda, managed 34,691 sales in Italy alone.

Alfa’s sales fell 42 percent year-on-year in Europe, while Lancia’s rose 29 percent with an ancient product that wasn’t terribly good to begin with.

It has been an across-the-board pummeling for Alfa, with its business sales dropping from 33,400 last year to 19,200 this year, while its private sales fell 40 percent.

It was hammered in France, where its sales fell 61 percent, but the biggest concern will be its collapse in its home market of Italy, where it dropped 47 percent to only 14,700 registrations.

The clunky, one-market Ypsilon is single-handedly embarrassing Alfa Romeo.

The clunky, one-market Ypsilon is single-handedly embarrassing Alfa Romeo.

In a frightening buyer revolt, only 5000 Alfas were privately registered in Italy in the first half of the year.

Even the newest Alfa model, the Stelvio, saw its European sales drop by 18 percent this year to just 13,800 registrations as it was overtaken by updates to rivals like the BMW X4.

The heavily publicized Giulia sedan, which shares its expensively developed rear-drive architecture with the Stelvio, saw its sales fall 44 percent to 5767 registrations across Europe.

There was more bad news in the US, where it sold 9037 cars in the first half; down on the 12,265 it sold in 2018.

Alfa is twinned with Maserati within the company and the Modena-based brand at least has plans to pull its product lineup into the next decade with a range of plug-in hybrids, a Porsche Macan-testing crossover and an all-electric sports car.

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I have been testing cars and writing about the car business for more than 25 years. My career began in daily newspapers and developed into editorship of two automotive magazines. I’ve been based in Italy as a freelancer for more than a decade, covering the European car business, with a focus on product testing and product development for readers around the world.

 

Source: Another Alfa Romeo Comeback Story May Be Ending

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Plane Talk: 737 MAX In Focus For Boeing Q2, With F-35 Top Of Mind At Lockheed

Getty Images
Getty Images

Key Takeaways:

  • Lockheed and Boeing are reporting Tuesday and Wednesday
  • Boeing’s troubled 737 MAX likely to be in spotlight
  • Lockheed navigating geopolitical issues

It’s a tale of two planes this week as Boeing (BA) and Lockheed Martin (LMT) earnings line up on the runway.

After months of grappling with 737 MAX troubles, Boeing (BA) doesn’t seem likely to get much of a lift from earnings season when it reports Wednesday. Thanks to BA’s announcement last week of a nearly $5 billion charge related to the situation, some of the financial mystery surrounding the crisis is out of the way as earnings approach.

At LMT, geopolitics are a potential challenge for sales of the popular F-35 jet fighter and might be a discussion point on its earnings call Tuesday.

Boeing Quarter to See No Contribution from Key Airliner

For BA, Q2 is the first this year to fully reflect the complete grounding of the troubled 737-MAX plane after two deadly crashes.

Last Thursday, Boeing said it will record an after-tax charge of $4.9 billion, or $8.74 per share, connected with its estimate for potential concessions and other considerations to customers for disruptions. This charge will result in a $5.6 billion reduction of revenue and pre-tax earnings in the quarter. The entire estimated amount will be recognized as a charge in Q2.

The good news—if you can find any in a situation like this—is that BA also said it expects to get the plane back into service by early in Q4, which is earlier than some analysts had expected. Before BA’s announcement, some media reports speculated it wouldn’t get into the air again until next year. Also, the charges might look relatively small compared to BA’s $210 billion market capitalization.

Big Drop in Q2 Deliveries for Boeing

Maybe even harder to swallow for BA and its investors is the competitive impact of the crisis. Deliveries of BA’s airliners slid 37% in Q2, even as Europe’s Airbus (EADSY)—the world’s other leading aircraft manufacturer—made solid strides.

Airbus said it delivered 389 planes in the first half, up 28% from 303 a year earlier. It’s on pace to deliver a record number of planes this year. Meanwhile, BA’s deliveries went the wrong way in the first six months of 2019, falling to 239, from 378 a year earlier. Deliveries of the company’s 737 model fell by more than half.

BA reported no orders of the 737-MAX in June for the third-straight month since the separate crashes that killed 346 passengers earlier this year and in 2018. The company continues to work through software issues with the troubled jet, including another flight control issue involving failure of a microprocessor announced by the Federal Aviation Administration (FAA) last month.

BA’s earnings conference call is probably going to sound more like a “737-MAX” conference call, so consider listening closely for any updates on fixes to the jet. Some analysts say BA is doing the right thing by not focusing too much on timetables and emphasizing a quality outcome over timing.

Even if BA can satisfy the government that it’s taken all the necessary steps to make the plane safe again, airlines would need more than a month in many cases to get the planes back into flying condition, The Wall Street Journal reported recently. Several airlines have now pushed back their estimates of when they can get the 737 MAX back into their rotations, with Southwest (LUV) the latest to do so. Last week, LUV pulled the plane off of its flight schedule into early November, a month longer than it had expected in June. LUV is the largest U.S. operator of the jet.

BA’s Q1 earnings report barely reflected the 737-MAX issue, because the plane wasn’t grounded until nearly the end of that quarter. In Q2, it was on the tarmac for all three months, so now investors can get a sense of the full impact.

However, even in Q1 things weren’t all that positive, with BA noting then that cash flow fell nearly 10% from a year earlier due to lower 737 aircraft deliveries. Revenue came in slightly below expectations in Q1 and fell $500 million from the same quarter in 2018.

This time around, struggles could get worse, if analysts are correct. Beyond that, BA—like other industrial companies—faces the challenge of higher materials costs due in part to U.S. tariffs on steel and aluminum from China. These are important components of aircraft building.

If you’re looking for any good news from BA, perhaps it’s worth noting that the company did deliver a record 18 of its 787 Dreamliner jets in June, with monthly production of that jet now at 14.

Boeing Earnings and Options Activity

When BA releases results, it is expected to report adjusted EPS of $1.78, down from $3.33 the prior-year quarter, on revenue of $19.99 billion, according to third-party consensus analyst estimates. That revenue would represent a 17.6% drop from a year ago. These earnings projections don’t reflect the charges announced by BA last week.

The options market is implying about a 3.1% stock move in either direction around the upcoming earnings release. Implied volatility was at the 22nd percentile as of Monday morning.

Looking at the July 26 weekly expiration, put volume has been light overall, but heaviest at the 365 and 370 strikes. Call volume has seen a little more action, most heavily at the 375 and 380 strikes.

Note: Call options represent the right, but not the obligation, to buy the underlying security at a predetermined price over a set period of time. Put options represent the right, but not the obligation to sell the underlying security at a predetermined price over a set period of time.

No Turkish Delight for Lockheed

Like BA, Lockheed Martin (LMT) faces a possible headwind from tariffs on materials it uses to build products. It also has its own issues with a plane, though arguably they’re nowhere near the level of BA’s concerns.

LMT’s F-35 fighter jet, which makes up about 30% of the company’s sales, recently came into the spotlight when the U.S. government halted delivery of two F-35 planes to Turkey. This was in response to Turkey making a multi-billion dollar deal to buy a Russian missile system. The issue becomes more serious for LMT because Turkey also faces the forfeiture of 100 promised F-35 jets, CNBC reported.

Complexities build for LMT when you consider that the F-35 is financed and manufactured partly by Turkey. That means LMT could need to replace the manufacturing done in that country.

For now, LMT sounds hopeful about its fighter jet despite the Turkey controversy.  “We continue to see strong demand both from our existing partners and potential new international customers and are confident the F-35 program will continue to grow,” a company official told the WSJ.

However, the company’s earnings call tomorrow could include questions from analysts about any deeper financial impact LMT might face.

A couple other factors to consider going into the call include whether the recent strong dollar is having an impact on foreign demand for LMT products, and whether business is seeing any impact from the U.S./China tariff situation.

There’s a sense that LMT and other defense companies could be getting helped by rising defense budgets, including in the U.S. However, the U.S. defense budget for next year remains contested in a battle between Democrats who control the House of Representatives and President Trump and congressional Republicans. Democrats in the House passed a $733 billion defense budget bill earlier this month that Trump and Republicans oppose. Trump had proposed $17 billion more in spending.

The House and Senate have a few weeks left to reconcile their competing versions of a defense bill. Any delay on a new budget agreement might raise questions about demand for LMT’s products in the coming months.

Lockheed Earnings and Options Activity

Lockheed crushed estimates in Q1, with earnings up 49% from a year earlier. At the time, LMT updated its forecast for 2019 financial results, with earnings anticipated between $20.05 a share and $20.35 a share. Expected full year revenue was also increased, to a range between $56.8 billion and $58.3 billion.

One thing to watch when LMT reports tomorrow is whether any of that guidance changes.

Lockheed Martin is expected to report adjusted EPS of $4.77, up from $4.05 in the prior-year quarter, according to third-party consensus analyst estimates. Revenue is projected at $14.2 billion, up 6% from a year ago.

The options market is implying about a 2.5% stock move in either direction around the coming earnings release. Implied volatility was at the 18th percentile as of Monday morning.

thinkorswim chart

TREADING WATER: Boeing shares (candlestick) have basically been treading water for a few months now, as this year-to-date chart shows, while Lockheed shares (purple line) have retreated from recent highs. Data Source: S&P Dow Jones Indices. Chart source: The thinkorswim® platform from TD Ameritrade. For illustrative purposes only. Past performance does not guarantee future results.

thinkorswim

TD Ameritrade® commentary for educational purposes only. Member SIPC. Options involve risks and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options.

I am Chief Market Strategist for TD Ameritrade and began my career as a Chicago Board Options Exchange market maker, trading primarily in the S&P 100

Source: Plane Talk: 737 MAX In Focus For Boeing Q2, With F-35 Top Of Mind At Lockheed

Digitization Is Poised To Transform Steel Plants

We live in a digital age, and our production processes need to evolve to reflect that fact. Converting traditional production environments into highly automated “smart” plants will entail fundamental changes in the way metals manufacturers interact with their suppliers and customers. When technology works in perfect harmony with the different aspects of metals production, the effect can be compared to that of a skilled orchestra’s performance……………

Source: Digitization Is Poised To Transform Steel Plants

Turbomachinery International Reports: MHI Targets Leadership Of Global Gas Turbine Market

Kenji Ando is Senior Executive Vice President of Mitsubishi Heavy Industries (MHI), President and CEO of MHI Power Systems and President and CEO of Mitsubishi-Hitachi Power Systems (MHPS). MHPS is an energy joint-venture established in 2014 by MHI and Hitachi. Ando is a 40-year veteran of MHI. Turbomachinery International recently visited him in Japan and enjoyed a tour of several MHI facilities. He discussed the state of the gas turbine market, the extent of the current downturn, new technology and alternative technologies………

Source: Turbomachinery International Reports: MHI Targets Leadership Of Global Gas Turbine Market

Volvo’s Plans To Grow Trucking Industry Involves Better Fridges, Autonomous Tech – Sebastian Blanco

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Turns out, a better refrigerator and autonomous driving technology have something in common. They are both features that could help increase the number of semi truck drivers on the roads in the U.S. Because people like Malcolm Bryant don’t come around that often. I recently visited the Volvo Trucks Customer Service Center in Dublin, Virginia the day that Bryant (not pictured above) was honored by Volvo Trucks and Southeastern Freight Lines for a career that has lasted more than 50 years – and his spotless safety record with zero accidents during that time………….

 

 

 

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Investor: Value of Crypto Dropped, But Ecosystem and Industry are Growing Rapidly – Joseph Young

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In the past seven days, the valuation of the crypto market dropped from $184 billion to $138 billion, by more than $46 billion.

The cryptocurrency market experienced one of the worst weekly sell-offs in all of 2018, and the prices of major digital assets like Bitcoin have dropped by around 75 percent to 85 percent from their all-time highs.

crypto market cap
Source: CoinMarketCap

Despite the steep decline in the valuation of the crypto market, renowned cryptocurrency investor and CoinShares executive Meltem Demirors stated that the cryptocurrency ecosystem, market, and industry are still improving at a rapid rate.

ICOs in Trouble But Industry is Vibrant

Over the past several months, initial coin offering (ICO) projects have lost billions in market cap, after raising more than $30 billion in the past two years. Many projects that have had less than $10 million in daily volume had valuations of hundreds of millions of dollars to billions of dollars, in most cases without any working product to show.

ICOs have started to struggle in remaining relevant and driving new capital into the cryptocurrency market. As Binance CFO Wei Zhou pointed out, it is of significant importance for the long-term trend of the market for the space to see the emergence of high-quality projects and founders to attract smart capital.

“On the issuer side, many crypto projects that raised money through an ICO face massive challenges to stay relevant and create real purpose. This is what happens when you lack a true finance function, and unfortunately, ‘crypto finance’ is still nebulous and undefined on the whole. Just look at this balance sheet below, which characterizes many crypto firms that raised cash through token offerings,” Demirors said.

But, as seen in the success of infrastructure-building businesses like Coinbase and Binance that have achieved a market cap of over $8 billion, the cryptocurrency exchange market and industry have started to see exponential growth in terms of infrastructure, user base, and revenues.

Binance, for instance, achieved 10 million users across 180 countries and in an interview, Binance CFO Wei Zhou emphasized that the company is aiming to secure one billion users in the long run.

As such, while the value of major cryptocurrencies has declined substantially over the past eleven months, Demirors stated that the cryptocurrency ecosystem had grown noticeably in virtually every major area.

“So while value may be moving out of the assets themselves as the market digests new information and re-formulates its thesis on crypto assets, value is continuing to grow across the cohort of companies serving the crypto ecosystem. Just look at the people in this industry — thousands who continue to spend their time, energy, and capital on helping the crypto ecosystem grow. By writing, researching, advocating, building, developing, or simply holding.”

Even Traditional Finance is Struggling

blackrock

Blackrock, the world’s largest asset manager, recorded its first quarter of net outflows as clients withdrew more than $3.1 billion and analysts are predicting the US stock market to continue sinking after deleting all of 2018 gains.

Bespoke Investment Group co-founder Paul Hickey stated that most investors in the US market are “rushing for the exits,” given current market conditions and intensity of the recent sell-off.

The decline in the momentum of the US stock market, which will directly affect major economies in Asia in the likes of South Korea and Japan, is having a negative impact on the cryptocurrency sector as investors shift away from high-risk, high-return trades.

However, Demirors noted that funds and asset managers in the crypto sector have historically survived several market cycles and major corrections in the past, and 2018 will be no different.

“Lastly, the funds and asset managers in the space, while under pressure, have historically done well given their longer time horizon and their ability to survive and weather market cycles. We expect this trend to continue, especially for some of the larger, better capitalized managers with deep experience who are able to manage finances and allocation strategies to capitalize on short-term price movements while keeping a long-term investment outlook.”

As Binance CEO Changpeng Zhao and Coinbase CTO Balaji Srinivasan said, it is of utmost importance for both businesses and individuals in the space to continue building throughout a mid-term bearish trend.

 

 

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How The Internet Of Things And AI Help Keep The Lights On – Mitsubishi Heavy Industries

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More and more of us are living in smart, connected homes. We use devices like Amazon’s Alexa to control our lights, Google’s Nest to learn and anticipate our heating preferences, and smart meters to give us real-time data about our energy usage.

But these Internet of Things technologies have an impact far beyond our homes, especially when it comes to energy.

Smart meters, for example, give a clearer picture of energy usage not only to consumers, but to grid operators too, taking the guesswork out of balancing supply and demand.

And this is just the tip of the iceberg when it comes to the digital infrastructure now helping the energy sector to be more efficient than ever before.

Smarter supply with AI

If you visit a modern power plant, you will find digital sensors attached to every piece of equipment.

These sensors generate vast amounts of data, which Artificial Intelligence is able to analyze and make sense of to increase efficiency – helping to generate more electricity from less fuel.

Not only this, but combining data and AI can create a power plant capable of operating itself.

And this is not just a futuristic vision. In Takasago, Japan, Mitsubishi Heavy Industries Group is in the process of building a ground-breaking new natural gas power plant capable of running autonomously.

The plant uses a digital platform developed by Mitsubishi Hitachi Power Systems, MHPS-Tomoni. This has the capability to mine data generated by sensors around the plant, and uses AI to take on tasks such as diagnosing failures before they happen, reducing supply when needed, or increasing power generation if demand spikes.

While the plant can be fully independent, the concept of Tomoni – which translates as ‘together with’ – emphasises the importance of AI and experienced engineers working together to make power plants operate as efficiently as possible.

Though the new Takasago facility is still under construction, operational plants are already using the system to improve their performance. One gas-fired power plant in Oklahoma, USA, using MHPS’s digital platform has set a global 60 hertz combined-cycle efficiency record of 62%.

In addition, ongoing surveillance of sensor data and AI-driven analytics can help plant operators detect potential problems early and take action. This surveillance can take place anywhere, via the cloud. MHPS has calculated that they can typically reduce downtime by three days per incident as a result.

AI and IoT can help detect problems early and reduce downtime.

AI and IoT can help detect problems early and reduce downtime.Shutterstock

Data driving down demand

While it is a significant step forwards, using AI to run power plants more efficiently only solves the supply side of the wider energy efficiency equation.

Reducing energy demand is also critical, and huge leaps forwards have been made over the past decade.

According the International Energy Agency, global energy intensity – measured as the amount of primary energy demand needed to produce one unit of GDP – fell by 1.8% in 2016. Since 2010, intensity has declined at an average rate of 2.1% per year, which is a significant improvement from the average rate of 1.3% between 1970 and 2010.ore than half of these gains have come through the improved HVAC systems and energy efficiency of buildings. This is thanks to everything from advanced building insulation, energy efficient lightbulbs through to devices like smart thermostats.

But industrial energy – the biggest and most intensive area of energy consumption – has so far only accounted for around a sixth of the total global investment in energy efficiency.

Despite these relatively low levels of spending compared to buildings and transport, the IEA says energy use per unit of economic output in the industrial sector fell by nearly 20% between 2000 and 2016.

The IEA says this trend is likely to continue thanks to the growing use of energy management systems, which provide a structure to monitor and control energy consumption and identify opportunities to improve efficiency.

These industrial-scale systems connect with IoT sensors and use AI to analyse the data that they generate and provide actionable insights.

Through data visualisations, factory owners can get a clear understanding of their energy use, and even identify which pieces of equipment are running inefficiently. Poor calibration or potential faults are among the triggers that signal a piece of equipment may need to be repaired.

Factory owners can also see the patterns in their energy usage that may help them identify the best times to operate certain functions, cutting costs and increasing efficiency.

In some countries, such as the US and UK, for example, major energy users can even use this knowledge to participate in so-called ‘demand side response programs’ in the local electricity markets. In these markets energy consumption can be traded as virtual generating capacity.

This effectively means they are paid not to operate during times of peak electricity demand. It also helps grid operators make sure there is always enough electricity to keep the lights on.

A leading industrial firm, Mitsubishi Heavy Industries Group (40 billion USD annual revenue) is finding new, simpler and sustainable ways to power cities, improve infrastructure, innovate manufacturing and connect people and ideas around the globe with ever-increasing speed and efficiency. For over 130 years, the company has channeled big thinking into innovative and integrated solutions that move the world forward. MHI owns a unique business portfolio covering land, sea, sky and even space across industries from commercial aviation and transportation to power plants and gas turbines, and from machinery and infrastructure to integrated defense and space systems. Visit MHI Global or MHI Spectra.

 

 

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