The aerospace rally, which began Monday with a TSA tweet about weekend airline traffic growth, is entering its second day Tuesday.
Surprisingly, while airline stocks appear to be up 1% or 2% more or less across the board, the farther up the supply chain you go, the better the news gets, with shares of airplane manufacturer Boeing (NYSE:BA) rising 3.8% through 11:20 a.m. EDT, and its Boeing suppliers Heico (NYSE:HEI) and Triumph Group (NYSE:TGI) up 4.3% and 11.8%, respectively.
This is a curious state of affairs to say the least, when you consider that although air travel numbers have improved a bit over the past four months, they're still 70% below where they were a year ago, and far from good enough to turn airlines profitable again. Moreover, unprofitable airlines aren't usually able to buy a lot of airplanes and airplanes that don't get bought generally don't get built, and so don't they consume airplane parts.
In that regard, the fact that Boeing just reported today that it delivered only four airplanes globally in the entire month of July -- and had 43 order cancellations -- doesn't bode particularly well for Boeing stock, or for Heico or Triumph Group, either.
Granted, there is another news item that bears watching, because it has the potential to encourage more air travel. Russian President Vladimir Putin announced today that Russia has "registered" the world's first vaccine against the novel coronavirus, and that his own daughter has even taken the vaccine.
According to Putin, the vaccine "works quite effectively, it forms a stable immunity and, I repeat, has passed all the necessary checks."
He said all this, by the way, despite the fact that the vaccine in question has undergone less than two months of testing, that no clinical data on the vaccine has been published, and that it has not yet even begun phase 3 clinical trials. Regardless, Russia is promising to begin full-scale production of the vaccine next month, and says it has orders in for as many as 1 billion doses of the vaccine from 20 countries.
Will Russia's vaccine be the miracle that saves the world from COVID-19 and gives travelers enough confidence to resume flying in great numbers -- saving the airline industry, and the aerospace industry that supplies it, as well?
I have my doubts. Investors today appear optimistic, and with Boeing stock still 45% below where it began the year, Triumph stock off 68%, and even Heico selling at a 10% discount, I certainly understand the desire to hope for a miracle.
I just don't believe this particular miracle is the one we've been looking for.