DAX:
- Bayer (BAYN TH) +1.5%
- Bayer to Change Operating Model; Announces Staff Cuts
- MTU Aero (MTX TH) +1.4%
- MTU Aero Raised to Outperform at BNPP Exane; PT 279 euros
- Siemens Energy (ENR TH) +1.3%
- Infineon (IFX TH) +1.3%
- TSMC’s Outlook Backs Hopes for Global Tech Recovery in 2024
- Watch European, US Samsung Suppliers Over New Galaxy Products
MDAX:
- Evotec SE (EVT TH) +1.9%
- Evotec SE Raised to Outperform at RBC; PT 18.60 euros
- Hensoldt (HAG TH) +1.1%
- TeamViewer SE (TMV TH) -3.6%
- TeamViewer SE Cut to Underperform at BNPP Exane; PT 13 euros
SDAX:
- Thyssenkrupp Nucera AG & Co KGaa (NCH2 TH) +1.7%
- Heidelberger Druck (HDD TH) +1.5%
- Norma (NOEJ TH) -1.3%
- MorphoSys (MOR TH) -1.5%
>>> Up
* AMS-Osram Raised to Buy at Deutsche Bank; PT 2.50 Swiss francs
* Arjo Raised to Buy at Pareto Securities; PT 50 kronor
* BLUENORD ASA Raised to Buy at ABG; PT 600 kroner
* Evotec SE Raised to Outperform at RBC; PT 18.60 euros
* Kinnevik Raised to Buy at SEB Equities; PT 117 kronor
* Microsoft Raised to Outperform at BNPP Exane; PT $471
* MTU Aero Raised to Outperform at BNPP Exane; PT 279 euros
* Telenor Raised to Buy at Citi; PT 145 kroner
* Telenor Raised to Buy at Citi; PT 145 kroner
* Temenos Raised to Buy at Stifel; PT 100 Swiss francs
>>> Down
* Ahold Delhaize Cut to Neutral at UBS
>>> Down
* Ahold Delhaize Cut to Neutral at UBS
* Ambu Cut to Hold at SEB Equities; PT 120 kroner
* Atlas Copco Cut to Reduce at HSBC; PT 145 kronor
* BAE Cut to Underperform at BNPP Exane; PT 1,128 pence
* Byggmax Cut to Sell at SEB Equities; PT 28 kronor
* Cloetta Cut to Hold at Nordea
* Detection Tech Oy Cut to Hold at Nordea; PT 3.80 euros
* Essity Cut to Underweight at Barclays; PT 235 kronor
* Leonardo Cut to Underperform at BNPP Exane; PT 16 euros
* Rockwool Cut to Hold at DNB Markets; PT 1,960 kroner
* TeamViewer SE Cut to Underperform at BNPP Exane; PT 13 euros
* Thales Cut to Neutral at BNPP Exane; PT 155 euros
>>> Initiation
>>> Initiation
* Capita Reinstated Neutral at Citi
* ITV Reinstated Equal-Weight at Morgan Stanley; PT 68 pence
* Moneysupermarket Rated New Overweight at Morgan Stanley
* Team Internet Group PLC Rated New Overweight at Cantor
* Voltalia Rated New Hold at SocGen; PT 9.30 euros
>>> Call
* Voltalia Rated New Hold at SocGen; PT 9.30 euros
>>> Call
Asian equities were mixed Thursday, with China extending a drop, after strong US retail sales data cast fresh doubt on the likelihood of a Federal Reserve rate cut in March. Stocks in mainland China retreated, with the Shanghai Composite Index slipping below 2,800 to the lowest since 2020. The heavy selling in the world’s second-largest economy followed underwhelming economic reports and signs from Premier Li Qiang that authorities will avoid huge stimulus to revive growth.
Japan and South Korean equities advanced, while those in Australia fell. Hong Kong shares rose toward the day’s high after briefly erasing all gains. US stock futures edged lower. Investors continue to shun Chinese equities, Jun Rong Yeap, market strategist at IG Asia Pte, wrote in a note. “China’s economic data revealed a challenging growth environment despite the series of stimulus efforts,” he added. The muted outlook for China and the repricing of expected Fed cuts have wiped 2% from global stocks this year. Recent weakness in the yen against the backdrop of strength in the greenback has nudged the Japanese currency within arm’s reach of 150 per dollar. Treasuries edged higher after further selling on Wednesday which was concentrated on the short end of the curve. The policy-sensitive two-year yield jumped 14 basis points, its biggest one-day increase since June. The 10-year rose four basis points to climb above 4.1% for the first time in more than a month.
The greenback pared most of the gains recorded Wednesday against its Group-of-10 peers. Elsewhere, the Australian dollar was little changed following a report which showed the nation’s employment unexpectedly slumped in December. The drop in bond prices reflected a shift in investor expectations for a Fed rate cut in March. Swaps pricing shows the chances of such a cut slipped below 60% on Wednesday for the first time since the middle of December. That’s down from 80% on Friday. The decline followed comments from Fed officials this week pushing back against market expectations for imminent cuts and stronger-than-expected retail sales data Wednesday. Bumper consumer spending helped propel the economy in recent weeks, the Fed said in its Beige Book survey. Over in Japan, a sale of 20-year sovereign bonds recorded a lower-than-expected cut-off price, following weak auction results of other major tenors this month. In corporate news, operators of Boeing Co.’s 737 Max 9 have completed inspections on an initial batch of 40 planes, a key step to eventually end the grounding of the aircraft. Meanwhile, Apple Inc. has to stop selling its Series 9 and Ultra 2 smartwatches with a blood oxygen feature in the US, after suffering another legal setback in a patent dispute. Gold eked out a gain after falling more than 1% Wednesday. West Texas Intermediate climbed toward $73 per barrel Thursday while Bitcoin traded near $42,500 to head for a second day of losses. US After Hours DFS -7.9%, AA -2.3%, FUL -1.8% lower on earnings; BTU +5.4% will join S&P SmallCap 600; RAMP +9.3% higher on guidance and deal to acquire Habu; PLUG -15.2% lower on ATM to sell shares.
Nikkei -0.03% Hang Seng +0.76% CSI +0.57% Shanghai -0.45% Shenzen -0.65%
Eur$ 1.0892 CNH 7.2187 CNY 7.1965 JPY 147.99 GBP 1.2679 CHF 0.8649 RUB 88.3789 TRY 30.1419 WTI$ 72.96 +0.55% Gold 2,006 BTC 42,642 +0.02% ETH 2,525 +0.06%
S&P +0.02% Nasdaq +0.14% EuroStoxx +0.16% FTSE -0.02% Dax +0.15% SMI +0.09%
Macro :
- HSBC Strategists Warn of European Equity Correction in Near Term
- ECB Asks Some Banks to Detail Exposure to Grifols: Reuters
- Hedge Funds Cash In on New Year’s Swoon in Most-Shorted Stocks
- Luxury Stocks Face More Gloom as Warnings Grow: Earnings Watch
- EU December Car Registrations Drop 3.3% Y/y to 0.867m Units
Keep an eye on :
Keep an eye on :
- ARGX BB : Argenx Vyvdura Japan Approval for Generalized Myasthenia Gravis
- BGC LN : Baltic Classifieds Group Holder Apax Partners Offers 17m Shares
- BAYN GY : Bayer Agrees With Worker Groups to Cut ‘Many’ Management Jobs
- BBVA SM : BBVA Plans Early Redemption of Subordinated Notes on Feb. 22
- BESI NA : Europe’s Best Tech Stock of 2023 Has Room to Run, Goldman Says
- BPSO IM : US Lender May Build 10% Stake in Italy’s Popolare Sondrio: Sole
- BP/ LN : Sinopec and BP Sign MoU to Enhance Cooperation in China
- BIRK US : Birkenstock’s First Earnings Crucial After IPO Wobble: ECM Watch
- CAMX SS ; Camurus Prelim FY Revenue ~SEK1.72b, at High End of Guidance /// Offering of Shares Prices at SEK545/Share
- COTY US : Kim Kardashian Makeup Would Be Positive for Coty, Jefferies Says
- DAN IM : Italy, Metinvest, Danieli Pledge to Relaunch Tuscan Steelmaker
- DRX LN : UK Government Proposes New Funding Options For Drax’s Biomass
- EFECTE FH : Matrix24 Offers EU15 in Cash Per Share for Efecte
- ENT LN : Vexed Entain Shareholders Might Sit on £4.6 Billion BetMGM Pot
- EQT SS : EQT FY Adjusted Ebitda Misses Estimates
- EQT SS : Swedish PE Firm EQT Plans to Exit a Number of Companies in 2024
- FLU AV : Flughafen Wien Sees 2024 Profit at Least EU210M
- FRAS LN : Frasers Group Raises Voting Rights in ASOS to 25% From 24.17%
- FRAS LN : Frasers Group Raises Voting Rights in ASOS to 25% From 24.17%
- GALE SW : Galenica FY Sales Meets Estimates
- IBE SM : Cofece will have 60 business days to resolve the agreement between Iberdrola and the AMLO Government
- LTMC IM : Apollo to Place 6.4% of Lottomatica’s Share Capital
- MAERSKB DC : Maersk Warns of Jammed Ports, Inland Delays From Red Sea Turmoil
- MOWI NO : Mowi 4Q Harvest Misses Estimates; Operating EBIT About €203M (1)
- REP SM : Repsol 4Q Downstream Refining Margin/BBL Beats Estimates
- CFR SW : Richemont 3Q Sales at Constant Exchange Rates Beats Estimates
- RILBA DC : Ringkjoebing Landbobank Sees 2024 Net Income DKK1.8B to DKK2.2B
- 2330 TT : TSMC’s Outlook Backs Hopes for Global Tech Recovery in 2024
- VIRP FP : Virbac 4Q Revenue Misses Estimates
Rome prepares to take control of troubled steel plant
Giorgia Meloni’s government has failed to agree with ArcelorMittal over former Ilva factory
Giorgia Meloni’s government is preparing to put Europe’s largest steelworks under special administration after failing to agree with ArcelorMittal on the plant’s future.
Rome’s announcement, expected as soon as Thursday, would come after a tense stand-off over the injection of €320mn urgently needed to keep the factory running — including payment of its outstanding gas bills.
The historic steelworks is being operated by Acciaierie d’Italia (AdI), a joint venture co-owned by ArcelorMittal, the Luxembourg-based international steel giant, and Italy’s state investment agency, Invitalia.
Formerly known as Ilva, the plant located in the southern town of Taranto has long been dogged by environmental problems and struggled to stay afloat, with production dropping to less than 3mn tonnes last year, compared with its capacity of 8mn tonnes. Earlier this week, a court ruled that the gas company Snam could stop supplying energy to the steelworks due to about €200mn in unpaid bills, though AdI has appealed.
But closing a factory that employs about 10,000 people would become a political problem for Meloni, who has vowed to strengthen Italy’s industrial base and create jobs.
Once it places the plant in special administration — an Italian insolvency regime intended to keep large illiquid industries operating — Rome will be able to appoint its own interim executive to take over management from ArcelorMittal while it seeks a buyer.
The move would bring the steelworks back full circle to 2018, when ArcelorMittal took control of the plant from special administration and was briefly hailed as the plant’s potential saviour before relations with Rome quickly soured.
During emergency talks in Rome last week, Aditya Mittal, chief executive of ArcelorMittal, told Italian ministers that his company was not willing to inject any more money into the business.
The government — which provided an emergency €680mn loan to the steelworks last year — has said Invitalia could inject the money itself and convert last year’s loan into equity, thereby becoming the majority stakeholder.
But the partners are at odds over how AdI would be governed if Invitalia had a majority stake, according to several people familiar with talks.
ArcelorMittal has also offered to exit the business altogether, but wants compensation of €200mn for its shares, and an additional €200mn for supplies provided to the factory, those people said.
After last week’s failure to reach a breakthrough, Italy’s economic development minister, Adolfo Urso, told parliament that “drastic intervention” was required to save the plant.
“These hours are decisive for immediately guaranteeing — in the absence of commitment from the private partner — the continuity of production and the safeguarding of employment in the period necessary to find other private industrial investors,” Urso told lawmakers.
Built in the 1960s, the Taranto plant was once a source of pride. But it proved an environmental disaster, spewing out lethal carcinogens that neighbours said were poisoning them and fuelling a surge of cancer cases.
In 2014, Rome took control, intent on finding new owners to clean up the ageing plant, restore it to financial health and increase production. In 2018, after a competitive bidding process, ArcelorMittal agreed to a €1.8bn lease-to-purchase deal, pledging hundreds of millions of additional funds for the environmental clean-up.
It sold off several of its other European steel plants to secure a green light from EU’s competition authority. But the following year, the anti-establishment Five Star party came to power and withdrew the legal immunity clause that protected ArcelorMittal from criminal liability for the plant’s environmental problems.
ArcelorMittal threatened to walk away, but instead agreed to form a joint venture with the public investment agency to run the plant together.
However, relations have remained fraught, with the two sides accusing each other of failing to live up to commitments. Surging gas prices in 2022 put further pressure on operations.
“It’s a situation that tells very much about the relationship between Italian politicians and companies,” said Carlo Calenda, a senator and former economic development minister, who helped negotiate ArcelorMittal’s entry. “They simply don’t know how to approach industry.”
Calenda said he was pessimistic about the factory’s prospects following the breakdown of relations with ArcelorMittal.
“My outlook on Ilva is very bleak. It will be very difficult for the state to manage a factory in a very competitive market.”
Bobby Jain’s hedge fund launch falls short of $8bn-$10bn target
Millennium alumnus has tempered his ambitions after initially aiming for industry’s biggest ever debut
Bobby Jain’s new hedge fund is falling short of its original $8bn-$10bn fundraising target, thwarting his ambition for the industry’s largest-ever debut.
The Credit Suisse veteran and former co-chief investment officer of Millennium Management has told potential clients he is now aiming to launch Jain Global in July with $5bn-$6bn of assets, according to investors.
The smaller target comes as performance among so-called multi-manager hedge funds slows and as cracks start to appear in the model pioneered by Izzy Englander’s Millennium and Ken Griffin’s Citadel.
“Bobby let the expectation get set at too high a level,” said one big investor. “Now he has to reel it back.”
Running a multi-manager platform is a fiendishly complicated juggling act that requires market-leading IT systems, sophisticated risk management and the allocation of capital across dozens of portfolio managers trading different strategies.
Jain has sweetened the terms for investors who sign up fast, cutting performance fees for those willing to commit by the end of this month.
Those who invest $250mn or more will pay a performance fee of only 10 per cent indefinitely, said people familiar with the situation — half the industry standard. Accounts of $100mn-$250mn will pay a 13 per cent performance fee, while those investing less than $100mn will pay 15 per cent.
Since Jain started the firm last July he has faced a delicate balancing act in generating enough buzz around the launch to entice clients and hire portfolio managers without setting expectations at a level he is unable to meet.
“With a launch like this it’s a race between hiring the people and raising the capital,” said another big investor. “The people want to know the capital has been raised and the investors want to know who the people are.”
Jain, who left Millennium in June last year, began fundraising for his new firm last September but was hamstrung by an agreement with his former employer not to solicit any of its clients until this year, according to several people familiar with the situation.
Multi-managers seek to make money regardless of overall market performance and their record of strong risk-adjusted returns has made theirs the most popular strategy among investors in the $4tn global hedge fund industry.
Assets at multi-manager firms increased 150 per cent between 2018 and 2022, according to Goldman Sachs, against 13 per cent growth for the rest of the hedge fund industry. Last year Citadel was up more than 15 per cent, outperforming peers that recorded annual returns of between 3 per cent and 10 per cent, according to investors.
But an expensive war for talent is eating into returns, and their “pass through” charging model — where investors pay all the fund’s costs instead of a management fee — is drawing greater scrutiny from clients.
Meanwhile, successive interest rate rises have lifted the risk-free return available elsewhere to investors, putting greater pressure on hedge funds to justify their positions in client portfolios.
All of this has contributed to a level of “investor fatigue” towards the multi-manager sector, said one person close to Jain Global.
Jain, 53, began his career at Chicago trading firm O’Connor and Associates before joining Credit Suisse in 1996, where he worked his way up to global head of asset management. In 2016 he left for New York-based Millennium, as part of Englander’s push to make the business more institutional.
At Millennium, where he was co-chief investment officer with Englander, Jain helped refine the firm’s risk management approach. It carefully monitors its more than 320 investment teams, forcing managers to cut positions that are going sour and allocating more money to those who are doing well.
Jain had been regarded internally and externally as a potential successor to Englander, although this has been disputed by some in the Millennium camp. Jain left abruptly in 2022 after it became clear to him that his career there had reached a ceiling.
Details around the launch of Jain Global have been trickling out since. Hedge fund debuts have been few and far between in the past few years as potential founders have opted to join established platforms rather than take on the cost and risk of setting up a business themselves.
“Putting together a large number of high-quality teams and executing flawlessly on day one is going to be a real challenge . . . kind of like the moon landing,” said one investor that is a large allocator to hedge funds.
Citadel and Millennium, each of which runs about $60bn in assets, employ roughly 2,500 and 5,500 people respectively and invest tens of millions of dollars a year in technology and data analytics.
The fortunes of ExodusPoint, whose founder Michael Gelband is another Millennium alumnus, illustrate the challenges for new entrants. Its $8bn debut in 2018 remains the largest hedge fund launch but despite the initial fanfare, the firm’s returns have been underwhelming, according to some investors; it was up 7.3 per cent last year, said people familiar with its performance.
Meanwhile, Canadian alternatives giant Brookfield Corporation last year closed its multi-strategy hedge fund Brookfield Hedge Solutions Advisors after four years, reflecting challenges scaling the $1.3bn business.
Even established players such as Schonfeld Strategic Advisors have struggled to keep up in recent years. Millennium and Schonfeld held talks last year about a tie-up but were unable to agree on a deal.
People close to Jain say there is still room for a new entrant that can attract portfolio managers interested in joining a smaller start-up business, with greater opportunities for subsequent management responsibilities and shared rewards if the business does well.
In his favour is his charisma, experience and network. However, he is launching during a costly bidding war for portfolio managers in which signing bonuses and performance fees have climbed to their highest levels.
“There has been a war for talent for some time. There will be vast swaths of the talent market who won’t be accessible to him,” the allocator said.
In recent years incumbents firms such as Citadel, Millennium and Balyasny Asset Management have moved to lock up investors’ capital for years, in part because a stable business is a draw for talent.
Jain, however, is offering investors the opportunity to fully redeem their investments within two years. While longer than most other hedge funds, it is shorter than some multi-manager hedge funds including Millennium which has moved to five years.
Redemptions create problems if too many investors pull their cash out at the same time because the cost of running the hedge fund has to be borne by a smaller number of investors.
One established rival questioned whether seasoned portfolio managers would leave their existing employers to join a firm whose longevity is not guaranteed.
Jain has tried to entice potential employees, dangling a future allocation of capital from Jain Global to portfolio managers who may want to spin out with their own hedge funds later. He has made several big hires as he sets out to build a team of 35-40 portfolio managers in offices in New York, London, Singapore and Hong Kong.
Jain Global’s chief investment officer for fundamental equities in the Americas will be Townie Wells, a former portfolio manager at Citadel, who is joining in October. Sam Kellie-Smith, who was chair of global markets at Morgan Stanley, will lead the Asia team while Paul Enright, who managed his own money for six years after 12 years at hedge fund Viking Global, will be chair of fundamental equities.
After Hours Summary: DFS -7.9%, AA -2.3%, FUL -1.8% lower on earnings; BTU +5.4% will join S&P SmallCap 600; RAMP +9.3% higher on guidance and deal to acquire Habu; PLUG -15.2% lower on ATM to sell shares
After Hours Gainers:
Companies trading higher in after hours in reaction to earnings/guidance: RAMP +9.3% (guides Q3 revenue above consensus; also to acquire Habu)
Companies trading higher in after hours in reaction to news: BTU +5.4% (to join S&P SmallCap 600), IMTX +3.2% (stock offering), OKE +1.9% (increases dividend and authorizes $2 bln share repurchase program), VOR +1.3% (doses first AML patient with VCAR33 and provides corporate update), FLNC +1.1% (surpasses 20 GWh of deployed and contracted storage systems globally), BHP +0.5% (provides operational review for 2H23), DHT +0.3% (provides business update, improving its estimated cash break-even levels), GTLB +0.3% (announces the GitLab Duo Pro add-on), FAST +0.1% (increases dividend), CAAP +0.1% (reports Dec traffic)
After Hours Losers:
Companies trading lower in after hours in reaction to earnings/guidance: DFS -7.9%, BTMD -6.5% (lowers Q4 guidance; also to acquire Asteria Health), TALO -5.1% (guides Q4 in-line, also commences $300 mln stock offering), WTFC -3.2%, SNV -2.4%, AA -2.3%, FUL -1.8%, KMI -0.4%
Companies trading lower in after hours in reaction to news: PLUG -15.2% (enters into ATM sales agreement to sell up to $1 bln in shares), ELF -2.4% (to join S&P MidCap 400), COF -2% (in sympathy with weak DFS earnings), MRCY -1.5% (names new COO; also simplifies organizational structure; also 100 job cuts), WGO -1.3% ($300 mln convertible notes offering), VRDN -0.6% (commences stock offering), BROS -0.1% (to expand operations at its Phoenix office), NFLX -0.1% (NFLX not planning to launch app for AAPL's Vision Pro headset, according to Bloomberg), AAPL -0.1% (NFLX not planning to launch app for AAPL's Vision Pro headset, according to Bloomberg), NDAQ -0.1% (reports December volumes)
Closing Stock Market Summary
Today's trade featured a negative bias. The major indices were able to close off their lows, though, thanks to a push higher in the last half hour of trading. The late afternoon improvement, which left the S&P 500 and Nasdaq Composite near their best levels of the day, was largely driven by mega cap stocks making upside moves.
The Vanguard Mega Cap Growth ETF (MGK) was down as much as 1.5% earlier, closed near its best level of the session with a 0.5% loss. Meta Platforms (META 368.37, +0.91, +0.3%) eked out a slim gain after being down as much as 2.4%.
The overall negative vibe was related to rising market rates and a recalibration of the market's optimistic rate cut view. The 2-yr note yield jumped 14 basis points to 4.36% and the 10-yr note yield climbed four basis points to 4.11%.
Activity in the Treasury market was partially a reaction to this morning's release of the December retail sales report, which did not go the market's way. That is to say, consumer spending was slightly better than expected in December and not likely to persuade the Fed to cut rates as much, or as early, as the market hopes.
On a related note, European Central Bank President Lagarde echoed recent comments by other central bankers, saying rate cuts are likely to begin this summer, according to FT.
The fed funds futures market is now pricing in a 59.1% probability of a 25 basis points rate cut at the March FOMC meeting versus a 66.9% probability yesterday, according to the CME FedWatch Tool.
Still, selling activity was fairly modest, suggesting market participants are simply hesitant to buy at this level rather than anxious to sell. The Invesco S&P 500 Equal Weight ETF (RSP) declined 0.8%.
The S&P 500 financial sector closed with a 0.3% decline after some components reported quarterly results since yesterday's close. Charles Schwab (SCHW 63.45, -0.86, -1.3%) and U.S. Bancorp (USB 40.82, -0.56, -1.4%) were influential laggards from the sector after their quarterly results while Citizens Financial Group (CFG 31.73, +0.53, +1.7%) went against the grain with a gain.
Meanwhile, the rate-sensitive real estate sector (-1.9%) saw the largest decline.
- S&P 500: -0.6%
- Nasdaq Composite: -1.0%
- Dow Jones Industrial Average: -1.1%
- S&P Midcap 400: -3.2%
- Russell 2000: -5.6%
Reviewing today's economic data:
- Weekly MBA Mortgage Applications Index 10.4%; Prior 9.9%
- December Retail Sales 0.6% (consensus 0.4%); Prior 0.3%; December Retail Sales ex-auto 0.4%; Prior 0.2%
- The key takeaway from the report is that consumer spending remained healthy in the final month of 2023, which does not strengthen the argument for an imminent start to a rapid rate cut campaign by the FOMC.
- December Export Prices -0.9%; Prior -0.9%
- December Export Prices ex-ag. -0.9%; Prior -1.0%
- December Import Prices 0.0%; Prior was revised to -0.5% from -0.4%
- December Import Prices ex-oil 0.0%; Prior was revised to 0.1% from 0.2%
- December Industrial Production 0.1% (consensus -0.1%); Prior was revised to 0.0% from 0.2%; December Capacity Utilization 78.6% (consensus 78.8%); Prior was revised to 78.6% from 78.8%
- The key takeaway from the report is that output remained relatively steady in December, though it followed downward revisions to November's production rate and capacity utilization.
- November Business Inventories -0.1%; Prior -0.1%
- January NAHB Housing Market Index 44 (consensus 38); Prior 37
Thursday's economic calendar features:
- 8:30 ET: Weekly Initial Claims (consensus 206,000; prior 202,000), Continuing Claims (prior 1.834 mln), December Housing Starts (consensus 1.417 mln; prior 1.560 mln), and Building Permits (consensus 1.478 mln; prior 1.460 mln)
- 10:30 ET: Weekly natural gas inventories (prior -140 bcf)
- 11:00 ET: Weekly crude oil inventories (prior +1.34 mln)
Boeing 737 MAX 9 Part in Plane Blowout Was Made in Malaysia, Official Says
New details emerge about manufacturing process in harrowing Alaska Airlines flight
WASHINGTON—A Boeing BA 1.28%increase; green up pointing triangle 737 MAX 9 plug door that blew out during a harrowing Alaska Airlines flight earlier this month was manufactured in Malaysia, according to the nation’s top air-safety investigator, who offered new details from the probe into what led to the accident.
Jennifer Homendy, chair of the National Transportation Safety Board, said Wednesday that SPR 3.65%increase; green up pointing triangleSpirit AeroSystems produced the plug door in Malaysia before it wound up in the Boeing supplier’s Wichita, Kan., factory, and eventually on a train to the plane maker’s 737 factory in Renton, Wash., near Seattle.
Homendy said the safety board’s investigation would delve into the plug door’s production, transport, installation and entry into service—as well as quality checks along the way. The plug door’s origin highlights the complexity of Boeing’s supply chain after years of increased outsourcing of various components’ production. Boeing and Spirit said they are supporting authorities’ investigation into the accident.
“We have no indication right now of where in the process this occurred,” Homendy said after a closed-door briefing with members of the Senate Commerce Committee on Wednesday. “This could be anywhere along the line, and we are not just pinpointing manufacturing.”
The Federal Aviation Administration, which grounded about 170 MAX 9 jets after the Alaska blowout and emergency landing, said Wednesday the aircraft would be banned from flying passengers until it evaluated data from inspections of the planes’ plug doors. The agency offered no estimate for when the MAX 9 jets would resume flying.
Alaska and United Airlines have said they found other MAX 9s in their fleets with loose hardware surrounding those jets’ plug doors.
Homendy said Wednesday some bolts on the plug door are supposed to be loose and aren’t meant to be torqued. Instead, she said, they are secured by pins. The NTSB’s metallurgical analysis will be looking for signs of fatigue cracking and corrosion and other potential factors that led to the Alaska blowout, she said.
The FAA also said Wednesday its investigation into Boeing’s manufacturing processes included those involving Spirit, once a unit of the aerospace giant it sold off in 2005.
FAA chief Mike Whitaker told The Wall Street Journal last week “all indications are it’s manufacturing” that led to the Alaska accident, and not a design flaw with the plug door.
Several senators who attended the briefing said the jets might have to remain grounded while the investigation advances. “They need to figure out what caused the problem, because it may be systemic,” said Sen. Jon Tester (D., Montana) in an interview.
Sen. Maria Cantwell (D., Wash.), who chairs the Senate Commerce Committee, said the panel would likely call a hearing to examine the FAA’s oversight of Boeing’s manufacturing. Sen. Ted Cruz (R., Texas), the panel’s ranking member, said air-safety officials need to ensure a similar accident doesn’t happen again. “People get on a plane, they expect the doors to stay on,” Cruz said. “Who screwed up—we don’t know.”