Investors bail out Boeing after Max 9 grounding

Grounded

Investors left Boeing and one of its biggest suppliers in stitches this morning after a harrowing failure at 16,000 feet this weekend, in which a door panel was torn off in flight from a new 737 Max 9 plane.

Aviation safety officials have ordered the grounding of the Max 9, one of Boeing’s best-selling models, and airlines around the world have canceled hundreds of flights as they await instructions from regulators in the U.S. and elsewhere.

The latest update: The NTSB said yesterday that the piece of fuselage that fell from the plane was found in a backyard in Portland, Oregon.

Shares in Boeing fell by almost 9 percentand Spirit Aerosystems, which designed the Max 9’s door panel, or ‘plug’, sunk in premarket trading. Shares in Boeing, a major defense contractor, had risen sharply since the outbreak of war in October between Israel and Hamas. But the shares remain well below the level they reached at the beginning of 2019 after the enormous rumors surrounding the economical Max.

The latest accident could be a blow to Boeing’s turnaround plan, as well as its reputation. No one was injured aboard Friday night’s Alaska Airlines flight. But it is the latest in a series of safety failures before and since two fatal crashes involving Indonesia’s Lion Air and Ethiopian Airlines in 2018 and 2019. The crashes, of different versions of the Max, were linked to a faulty computer system that controlled the commands of pilots ignored. . After the accidents, the planes were grounded worldwide for almost two years.

Deliveries of the 737 were delayed after Boeing found problems with the work spirit did on the planes last year. Boeing’s wide-body Dreamliner was also held up as the company worked to address the FAA’s safety concerns. “The problem is what’s going on at Boeing,” John Goglia, an aviation safety consultant and plane crash investigator, told The Times.

Boeing CEO David Calhoun hoped that would be 2024 a comeback year. Instead, the company canceled a leadership retreat, Bloomberg reports this, and worked with the FAA this weekend to provide its airline customers with instructions on how to inspect their planes. Boeing will hold a companywide meeting tomorrow, at which Calhoun said he will increase the focus on safety.

Questions also arise regarding Alaska Airlines. The company had stopped flying that plane long distances over water due to concerns about a pressure indicator.

HERE’S WHAT’S HAPPENING

Congressional leaders reach an agreement on government spending. The agreement limits top spending to about $1.66 trillion, in line with the deal President Biden made last year with Kevin McCarthy, the former Speaker of the House of Representatives. But it is unclear whether there will be enough votes to win over the Conservatives and avoid a partial government shutdown in less than two weeks.

“Oppenheimer” and “Succession” win big at the Golden Globe Awards. The film about the father of the atomic bomb won five awards, making it the favorite for the Oscars, while “Succession” took the top honor for a television series, winning four. It’s too early to say whether the awards broadcaster, CBS, or its organizers, Penske Media and investor Todd Boehly, emerged victorious.

A commercial spacecraft is headed to the moon. This morning, a Vulcan rocket was fired carrying a robot lander (and the remains of “Star Trek” creator Gene Roddenberry). The spacecraft, built by a joint venture between Boeing and Lockheed Martin, is the first of several launches planned this year as a series of companies hope to erode SpaceX’s dominance in the space launch industry.

A radio and podcast giant files for bankruptcy protection. Audacy, the largest radio company in the US, owner of WFAN Sports Radio and New York’s 1010 WINS, filed for Chapter 11 this weekend in Texas to reduce his debt. The company has been hit hard by an advertising decline.

A growing conflict between Ackman and Business Insider

Bill Ackman’s battle against elite universities has expanded in unexpected ways: The parent company of Business Insider, the publication that accused his wife of plagiarism last week, said it was reviewing the reporting of its journalists in light of that reporting.

And Ackman, who loudly called for the ouster of Claudine Gay as president of Harvard, escalated his campaign against his wife’s alma mater, MIT — including both its senior leadership and faculty.

Media giant Axel Springer said it would investigate Business Insider’s processes. after Ackman criticized articles stating that his wife, Neri Oxman, a former MIT professor, plagiarized other scientists in her 2010 dissertation. While Oxman apologized for any academic violations and said she asked for corrections, Ackman said questioned the motivations behind the cover.

Although Springer is known for its hands-off approach to its media interests, which also include Politico and Germany’s Die Welt and Bild, the publisher said he wanted to “ensure that both our standards and our journalistic values have been maintained.” (Semafor reports this that some Springer executives were concerned that reporting on Oxman, who was born and raised in Israel, could be viewed as anti-Semitic and anti-Zionist.)

Business Insider defended itself. The outlet’s global editor-in-chief, Nicholas Carlson, wrote in an internal memo that he stood behind the publication’s reporting. It was motivated by “truth and responsibility,” he said.

Meanwhile, Ackman has called for MIT faculty papers to be examined for plagiarism. using artificial intelligence tools to assess their work. He also suggested that similar efforts should be undertaken at other colleges and universities at Business Insider.

The demand continues his campaign against MIT President Sally Kornbluth, who critics say has failed to adequately combat anti-Semitism on campus. (She also testified last month at the same Congressional hearing that helped seal the fate of Gay and Liz Magill, the former president of the University of Pennsylvania.)

New reports about Musk’s drug use raise questions about behavior

Elon Musk made waves in 2018 when he smoked marijuana during an interview on Joe Rogan’s podcast, with images of him holding a joint quickly becoming fodder for discussions about the billionaire’s behavior and internet memes.

Musk has not broken any laws, as recreational marijuana is legal in California, where the show was filmed. But a report from the Wall Street Journal that he is accused of consume other substancesincluding some that are illegal, has reignited debate about his behavior.

Tesla and SpaceX executives discussed Musk’s actions, including consumption of ketamine (for which he said he has a prescription), LSD and psychedelic mushrooms, according to the Journal. One Tesla board member, Linda Johnson Rice, became so frustrated with the issue that she chose not to seek re-election in 2019, the report said.

Why it matters according to Het Journaal:

Illicit drug use would likely be a violation of federal policy, which could jeopardize SpaceX’s billions of dollars in government contracts. Musk is inherent in the value of his companies, potentially putting at risk about $1 trillion in investor-owned assets, tens of thousands of jobs and large parts of the U.S. space program. …

In addition to violating federal contracts, any illegal drug use would violate corporate policies at both SpaceX and Tesla, and raise questions about Musk’s executive role at publicly traded Tesla, where the board has a duty to shareholders to oversee the management.

Elon Musk refuted the report, on his social network “Not even traces were found of drugs or alcohol,” he wrote.

He later added that the media “will stop at nothing to destroy X.”

Investors don’t seem to be bothered by it. Tesla shares fell only slightly in premarket trading.

“It’s like having the best bow and arrow in the gunpowder age.”

— Mike Madrid, a Republican anti-Trump strategist, on Nikki Haley’s fundraising surge from deep-pocketed donors. Supporters of the former South Carolina governor include investor Stanley Druckenmiller and metals magnate Andy Sabin (and Democratic tech entrepreneur Reid Hoffman), but Haley continues to trail Donald Trump in the Republican primaries by double digits.

The coming week

There’s plenty on the calendar this week to keep Wall Street busy, including JPMorgan Chase earnings and the latest inflation report. Here’s what you need to check out.

Tomorrow: The Albertson supermarket chain announces third-quarter results.

Thursday: The December consumer price index report is expected to show that headline inflation rose last month, while “core” inflation, which excludes food and fuel, cooled somewhat. A more favorable figure could make markets more volatile, as Wall Street has already started to dial back expectations for a Fed rate cut in the first quarter as concerns about inflation persist.

Fast Retailing, the parent company of Uniqlo, reports quarterly figures.

Friday: It’s a profit bonanza. On deck are Bank of America, Bank of New York Mellon, BlackRock, Delta Air Lines, JPMorgan Chase, UnitedHealth Group and Wells Fargo.

Saturday: Taiwan is hosting a crucial presidential election as Beijing steps up pressure on the self-governing island to unite.

READING THE SPEED

Offers

• Berkshire Hathaway settled a lawsuit on the valuation of Pilot Travel Centers, the truck stop chain over which Warren Buffett’s conglomerate bought control from the Haslam family. (CNBC)

• US Steel’s proposed $14.1 billion sale to Japan’s Nippon Steel will test President Biden’s efforts to boost domestic industrial production. (NYT)

• “Wall Street Doubles the bonds” (WSJ)

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