Finimize - 🐂 Running of the bulls

What’s going on here?

The stock market didn't just ignore the bearish forecasts in the first half of the year: it decided to run with the bulls.

What does this mean?

Analysts were in a serious funk when 2023 first rolled around, predicting a bear market and warning of a looming recession. But it looks like the S&P 500 decided to prove them wrong. See, it’s not just up a bit: it climbed a staggering 16% in the first half of the year, roaring past many pundits’ full-year predictions.

One driver of that has been the boom in AI: after all, it lit a fire under tech stocks, including the likes of Nvidia and Microsoft, and that’s warmed the entire market. It also doesn’t hurt that the US economy is trundling along much better than anyone expected, with solid, upwardly revised 2% growth in the first quarter helping to keep those recession whispers quiet.

Why should I care?

The bigger picture: No crystal ball.

This rally is a reminder that expert predictions, while often insightful, are still just predictions – and this year, they didn't quite hit the mark. Stocks have proven to be more than a reliable guard against inflation too, outpacing the rate of price rises. And that’s no shocker: a lot of canny companies have managed to foist cost increases onto customers, cushioning the blow to their own profit margins.

For markets: Later or later.

With inflation coming down, investors have been hoping that stock-boosting interest rate cuts could be on the cards sooner or later. But this week the Federal Reserve essentially trashed any prospects of that “sooner” option: the central bank signaled that it’s planning to keep on hiking rates in a bid to fully stamp out price pressures – despite pausing hikes just last month. And that nasty little surprise could make it hard for stocks to continue their upward march.

What’s going on here?

Qatar Airways delivered some pitch-perfect results on Thursday.

What does this mean?

Airlines all over the world are staging a comeback after a few turbulent, pandemic-plagued years – and Qatar Airways benefited from all that momentum and another tailwind: the World Cup. See, acting as the soccer tournament’s official airline was a game changer for the firm, which flew over a million fans out to the event. And that amounts to a serious year-on-year bump, helping push passenger figures 71% higher than those racked up the year before. Unsurprisingly, all those extra fares led to some tidy takings too: the airline reported that its annual revenue came in at $21 billion last year, clocking up a record high.

Why should I care?

Zooming in: Strictly business.

Qatar Airways, often topping the charts in world airline awards, is planning a move that seems to run counter to its five-star image. While others in the industry, like Lufthansa and Air France, are doubling down on more profitable high-end offerings, Qatar Airways is planning to ditch first-class operations on its long-haul aircraft. See, the firm just doesn’t think it’s worth the squeeze, given the amount of space those first-class seats occupy. Instead, then, it’s planning to double down on its more popular business class (what it calls its “Q suite” offering) in a bid to fatten profit margins.

The bigger picture: Pie in the sky.

Qatar Airways isn’t just sitting pretty, though: it has plans to boost the number of destinations it visits from 170 to over 255. But there’s a hitch: the firm needs more planes. Legal tussles with Airbus and production snags at Boeing have been slowing things down. So, the speed at which these issues get resolved will determine if the airline’s ambitious growth plans are a real possibility or just a flight of fancy.