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Germany’s 2020 growth forecasts are downgraded

Germany’s 2020 growth forecasts are downgraded

Advertising figures with a protective face masks in Munich, Germany.

Lennart Preiss | Getty Images News | Getty Images

Germany’s economic prospects for 2020 are looking increasingly bleak, with the country’s leading research institutes downgrading GDP (gross domestic product) forecasts for this year and beyond.

Publishing a joint economic forecast Wednesday, Germany’s prominent economists warned that the coronavirus pandemic is leaving what they called “substantial marks” on the German economy, adding that “its impact is more persistent than assumed in spring.”

They revised their economic outlook downward by roughly one percentage point for both 2020 and 2021. They now expect GDP to fall by 5.4% in 2020 (lower than a previous -4.2% forecast) and to grow by 4.7% (less than a previously forecast 5.8%) in 2021, and 2.7% in 2022.

The “Joint Economic Forecast” is published twice a year on behalf of the German Economy Ministry and is prepared by the German Institute for Economic Research (DIW Berlin) and the Ifo Institute in Munich, as well as several other organizations.

They said the downgrade follows a more pessimistic assessment of the recovery process. “Although a substantial part of the drop in output experienced in spring has already been recovered, the remaining catch-up process is the more difficult part of the return to normality,” Stefan Kooths, head of forecasting at the Kiel Institute, said on the outlook.

The downgrades are not surprising given a second wave of coronavirus cases that is ravaging Europe and no less Germany, a country that has been praised for its initial response to the virus in spring. Germany kept deaths from the virus low and still under 10,000, far lower than the toll seen in the U.K., France, Spain and Italy, which have all seen over 30,000 fatalities. Nonetheless, Germany, like its neighbors, has been seeing

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JetBlue Upgraded and Downgraded: What’s Next?

JetBlue Upgraded and Downgraded: What’s Next?

JetBlue Airways (NASDAQ:JBLU) stock got a big upgrade from J.P. Morgan analysts last Wednesday. Less than 24 hours later, however, Fitch — one of the three major credit rating agencies — cut the airline’s credit rating to junk territory.¬†

These dueling changes to ratings highlight the substantial uncertainty about airlines’ short- and medium-term prospects. Let’s take a look at the justifications for the analyst moves and what they mean for JetBlue stock moving forward.

JetBlue stock gets a boost

J.P. Morgan analyst Jamie Baker downgraded JetBlue to an underweight rating (the equivalent of sell) in June following a furious rally that saw JetBlue stock surge nearly 90% in just a few weeks. At the time, Baker correctly predicted that airline stocks’ momentum couldn’t last.

JetBlue shares have subsided since then, pulling back about 20% from their early June high. That, along with continued progress toward vaccines, prompted the J.P. Morgan analyst team to turn bullish again. On Wednesday, the brokerage upgraded JetBlue stock to outperform and raised its price target to $17,¬†well above the stock’s current trading price.

JBLU Chart

JetBlue Stock Performance. Data by YCharts.

Interestingly, Baker is not especially bullish about JetBlue’s near-term prospects. He believes that demand is not living up to management’s expectations. However, the analyst argues that the airline will respond to any demand shortfall with additional cost cuts to trim cash burn. Moreover, JetBlue has ample cash to make it through the next year and is well-positioned to capitalize on a rebound in demand in 2022.

Fitch sounds a note of caution

Credit analysts at Fitch were more cautious about JetBlue last week, downgrading its long-term issuer default rating to BB-, or three notches below investment-grade status. Entering March — just before the pandemic crushed U.S. air travel — Fitch’s rating on JetBlue was just

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