(ZH) Former Boeing Employee Says 737 Max "Still Not Fixed"

Former Boeing Employee Says 737 Max "Still Not Fixed"
BY TYLER DURDEN
TUESDAY, JAN 26, 2021 - 19:45
Boeing's troubled 737 Max returned to US skies last month. American Airlines was the first domestic carrier to fly the Max and has since operated more than 200 flights. While other domestic and international carriers gear up for a much wider re-launch of the aircraft, a former senior manager at Boeing's 737 Max plant in Seattle has published a new report warning that the Max is "still not fixed."
Ed Pierson, the report's author, retired from Boeing in August 2018 and worked at the Max factory in Renton, Washington, claims more investigations are needed into the aircraft's electrical system and production quality problems at the factory.
Pierson alleges that the US and European regulators have primarily ignored factors that he points out in the report, which may have played a role in Lion Air flight JT610 and Ethiopian Airlines flight ET302 crashes that killed 346 people. He links both crashes back to conditions at the factory in Renton.
Pierson firmly believes Boeing's effort to redesign Max's flight control system, called MCAS software, ensures a single sensor failure would not happen in flight is not enough.
"The paper underscores the likely role a chaotic and dangerously unstable production environment played in the accidents. Mr. Pierson also puts forth three other plausible accident scenarios not addressed in the accident investigations. The 14-page report includes a timeline and an analysis that ties the two 737 MAX airplane crashes together in ways not previously reported. Most importantly, Mr. Pierson's analysis raises serious doubts as to the safety of the 737 MAX. Alarmingly, the FAA's recertification fixes do not address the problems identified in the report," the report's abstract reads.
In late 2019, Pierson testified during a House Transportation Committee hearing on both Max crashes where he described the Renton factory as "chaotic" and "dysfunctional."
With the planes returning to the air, he is worried that Boeing and regulators have overlooked many of the issues he pointed out.
In the report, he believes the production defects of critical Max parts were defected when they entered service, adding that the aircraft's complex wiring systems may have contributed to the random deployment of the MCAS system in flight.
Pierson said the MCAS sensor failures contributed to both crashes but asked why they were happening to new aircraft.
All of this suggests, Pierson explained, "point back to where these airplanes were produced, the 737 factory".
Pierson's report was analyzed by famed pilot Chesley Sullenberger who said the "report is very disturbing, about manufacturing issues in the Boeing factories that go well beyond just the Max, and also affect… the previous version of the 737."
"Like electricity, Boeing and the FAA have taken the path of least resistance throughout the entire design, development, certification, production, and now recertification of the 737 MAX," Pierson said in the report.
"The design of the 737 MAX, MCAS software and the failure to provide vital information and training to pilots did not trigger these accidents. Neither did corporate decision making made years ago, unethical behavior, deceptive marketing, or a misguided leadership culture that prioritized profits over safety. Nor did deregulation, regulatory capture, or a completely broken aircraft certification process. In fact, all of these things contributed mightily to these tragedies. Unfortunately, every MAX airplane ever manufactured shares this same wretched history. The pilots are certainly not to blame. They did everything they could to save the lives of the people who trusted them. The triggering event for these crashes was a defective AOA Sensor part, and quite possibly, a malfunctioning electrical system stemming from a dangerously unstable production environment," he said."
Pierson concludes: "We can either investigate these production problems and fix them, or we can wait for another disaster."
* * *
Read The Full Report attached:737 MAX - Still Not Fixed

(ZH) Musk Tweet Sends Gamestop Soaring (Even More) After Hours

Musk Tweet Sends Gamestop Soaring (Even More) After Hours

Update 4:40pm: Well that escalated quickly. Just 20 minutes after Musk's tweet, GME exploded to $240...
* * *
Update 4:20pm: Just one hour ago (see below) we said that it is "increasingly likely that GME will hit $200" thanks to the stock entering the peak OTM vol "gamma gravity". Well, moments ago, GME just hit a new all time high $194.50, surging about $44 after hours and nearing the $200 gamma level on, drumroll, an Elon Musk tweet that merely said...
... That one tweet alone added over $3 billion in market cap to Gamespot (or perhaps GammaSpot) whose stock price may crush not just hedge fund but also dealers who are painfully short gamma in the name and will be forced to buy a lot more either now or when the stock opens for trading tomorrow.
In short, we are almost certain to see a $200+ print tomorrow.
* * *
For the third day in a row, Gamestop has exploded higher, and after a brief period of rangebound trading the stock has almost doubled, surging from $90 to as high as $144 (at which point it was halted), dropped and resumed its move higher.
While there has been nothing fundamental to explain the latest move higher - the bullish tweets by Chamath Palihapitiya and Cameron Winklevoss were discussed earlier - the main reason cited for the latest melt up, in addition to a continued short squeeze of course, is that GME has now fallen in the notorious "gamma vortex", and one look at the highest strike price in this Friday's expiring options confirms this: with less than 300 $200 Jan 29 puts traded, there has been an absolute frenzy of calls, which at last check were above 70,000 and rising rapidly.
A quick look at the volume at price for the $200 calls shows the insanity that is being unleashed here...
... and with dealers clearly short gamma, they are now rushing to buy the stock creating the infamous feedback loop where the more OTM call activity takes place, the higher the stock rises (amid dealer delta hedging), leading to even more call buying and so on.
What this means in English is that at this point it is increasingly likely that GME will hit $200 as the gamma gravity is activated (and for those who still need an explainer, please read "All You Ever Wanted To Know About Gamma, Op-Ex, And Option-Driven Equity Flows").
The only question we have is whether Melvin Capital is still short the stock, and whether it is about to need an even bigger bailout from Citadel and Steve Cohen. And, as a follow up, at what GME price will Citadel and Point72 themselves require a bailout from the NY Fed...

>>> Stoxx 600 Pre-Market Indications

  • Evotec SE (EVT TH) +4.5%
    • Evotec Gets U.S. Contract Worth $28.6M for Antibody Production
  • Siemens Healthineers (SHL TH) +4.5%
    • Siemens Healthineers 1Q Strong Across Portfolio: Morgan Stanley
  • Nokia (NOA3 TH) +3.5%
  • LVMH (MOH TH) +3%
    • Watch Kering, Hermes, Other Luxury Stocks After ‘Big’ LVMH Beat
    • LVMH’s 4Q Sales Beat, FY Ebit Performance Outstanding: Bernstein
  • Sartorius (SRT3 TH) +2.6%
    • Sartorius Stedim Sees 2021 Adj Oper EBITDA Margin About 32%
  • Chr. Hansen (51C TH) +2.4%
  • Sanofi (SNW TH) +2.1%
    • Sanofi to Help BioNTech Vaccine Production for EU Supply
  • BAT (BMT TH) +1.4%
  • Glaxo (GS7 TH) +1.3%
  • Imperial Brands (ITB TH) +1.3%
  • Aroundtown (AT1 TH) -0.8%
  • ASML (ASME TH) -0.8%
    • Watch Chip Stocks as Texas Instruments Slips on Supply Concerns
  • Commerzbank (CBK TH) -0.8%
  • Symrise (SY1 TH) -0.9%
  • BHP Group PLC (BIL TH) -0.9%
    • Iron Ore Gets Stung Again as China’s Steel-Cut Vow Deepens Slump
  • Banco Santander (BSD2 TH) -1.3%
  • Coloplast (CBHD TH) -1.5%
  • Deutsche Lufthansa (LHA TH) -1.5%

>>> TradeGate Pre-Market Indications

DAX:
  • MTU Aero (MTX TH) +0.8%
    • MTU Aero Raised to Neutral at Exane; PT 195 euros
  • Infineon (IFX TH) -0.5%
    • Watch Chip Stocks as Texas Instruments Slips on Supply Concerns
MDAX:
  • Siemens Healthineers (SHL TH) +5.3%
    • Siemens Healthineers Prelim 1Q Revenue Beats Estimates
    • Siemens Healthineers 1Q Strong Across Portfolio: Morgan Stanley
  • Sartorius (SRT3 TH) +3.6%
    • Sartorius FY Adjusted Ebitda Beats Estimates
  • Evotec SE (EVT TH) +3.6%
    • Evotec Gets U.S. Contract Worth $28.6M for Antibody Production
  • Telefonica Deutschland (O2D TH) +1.3%
  • Hochtief (HOT TH) +1.1%
  • Commerzbank (CBK TH) -0.8%
  • Deutsche Lufthansa (LHA TH) -1.5%
  • Hugo Boss (BOSS TH) -1.8%
SDAX:
  • Jenoptik (JEN TH) +4.8%
    • Jenoptik Prelim FY Revenue About EU765M, Est. EU765.0M
  • Global Fashion Group (GFG TH) +4.6%
  • Encavis (CAP TH) +2.5%

FT : Why Ericsson took on its own government to defend rival Huawei

Why Ericsson took on its own government to defend rival Huawei
Intervention by Swedish telecoms equipment lays bare geopolitical pressures facing businesses

A company acting under pressure from China, or one standing up for free trade and a global internet?

The extraordinary sight of Ericsson, the Swedish telecoms equipment maker, squaring up to its own government in support of its Chinese arch-rival Huawei has laid bare the intense geopolitical tensions facing some businesses.

Borje Ekholm, Ericsson’s chief executive, had already raised eyebrows in November when he criticised Sweden’s decision to ban Huawei from its 5G networks, saying in an interview with the Financial Times that the move restricted free trade and competition.

But in private he went even further. Swedish daily Dagens Nyheter this month revealed text messages sent by Mr Ekholm to a government minister in Stockholm in which the chief executive said of the ban: “As it looks right now, Sweden is a really bad country for Ericsson.” He added that in his situation “you fully understand why Europe has very few tech companies”.

Anna Hallberg, Sweden’s minister for foreign trade, must have sensed an implicit threat to leave Sweden as she replied that the country was a good place for a global company to have its headquarters.

So was Mr Ekholm merely fighting his corner, or was his lobbying of his own government on behalf of Huawei a sign of how China manages to exert influence on large multinationals?

Sweden’s decision to ban Huawei was unusual in several respects. Sweden has a model of having strong independent regulatory agencies, as evidenced in its controversial approach to the Covid-19 pandemic. So the Huawei decision was not taken directly by the national government. Instead, it was made by its telecoms regulator on the advice of its security services and armed forces, which warned that China was involved in “extensive intelligence gathering and theft of technology, research and development”.

But the decision also stood out because, instead of mentioning vague national security concerns for the ban as other European countries had done, Sweden set out the worries of its intelligence services explicitly.

For Mr Ekholm, Sweden could have achieved the same end-result of barring Huawei from its networks but in a more subtle manner that protected Ericsson and other Swedish companies from retribution. Indeed, Chinese authorities warned within days of the announcement that there would be a “negative impact” on Swedish companies.

Ericsson’s chief executive also argued that other things were at risk. He told the FT that Huawei was not just a competitor but a partner in setting global standards for networks. Inside the Swedish company there is a worry that the global telecoms operating system could be at risk, at a time when China and other parts of Asia are ahead in 5G.

However, others argue that Ericsson might have been threatened by the might of a China where it sells far more network gear than, for instance, in Sweden. Elisabeth Braw, a Swede who is resident fellow at the American Enterprise Institute, notes that Mr Ekholm appeared to confirm to Dagens Nyheter he had felt pressure from Chinese authorities on the matter.

“It’s tragic in a sense that he has to plead with Swedish ministers to do something, otherwise Ericsson will be harmed,” she says.

For Ms Braw, western governments need to up their game to better support their companies from potential threats from China and elsewhere. “If you’re the government of Sweden or Finland or the UK or Germany, you now have the responsibility to help your companies, otherwise they may not be your companies any more,” she argues.

Mr Ekholm’s complaints underscored the piecemeal nature of many European countries’ approach to Huawei, China and broader technology matters. There is little sense of a joined-up policy on how to deal with the threat from China or support domestic companies.

Several European countries, including the UK, have talked about finding other network gear suppliers to reduce the risks of depending too much on Ericsson and Nokia. That contrasts with the US where the Trump administration had floated the idea of taking a stake in one or both of the Nordic duo.

The stakes are high: China’s support of Huawei, through cheap funding and much else, is well known, and has led to a commercial advantage that Ericsson and Nokia can find hard to counter on their own. Will Europe, for which 5G is a rare technological sector where it enjoys a clear lead over the US, stand up for its homegrown talent?

FT : Revolut: bitcoin hype-merchant or bank?

Revolut: bitcoin hype-merchant or bank?
The fintech appears to have lost its way in the unicorn forest.

Revolut — the London-based, Russian-led $5.5bn fintech unicorn — appears to be having an identity crisis.

Earlier this month the firm applied for a full UK banking license so that it can start to offer overdrafts, loans and fully fledged current accounts to its three million-plus British customers. Over the past year or so Revolut has also hired a load of grandees from the world of traditional finance — such as Aberdeen Asset Management founder Martin Gilbert, now Revolut’s chairman, and former Goldman Sachs vice-chairman Michael Sherwood — in an apparent bid to shake off its reputation for being unreliable and unprofessional, and to become a grown-up financial institution.

And yet it often seems to behave more like a teenager.

The thing is, Revolut does already offer lots of good and sensible services for helping customers manage their money, such as budgeting and analytics tools, “savings vaults” with decent interest rates (or decent enough, given the times we live in), and a “linked accounts” feature that allows you to see all your various bank balances in one place.

But the problem is that none of those seem to make them very much money. So they also offer a load of much less sensible features for helping retail customers take on risks, such as cryptocurrency speculation, “commission-free” stock trading, and commodity trading, under the category of “Wealth”.

The only two months that yet-to-make profit Revolut has ever said it has broken even were in late 2017 and in November 2020. Here are those two time periods on a chart — guess what the chart is showing?


If you guessed something that rhymes with, er, fit loin, you guessed correctly.

Revolut declined to tell us which segments powered its profitability in those two particular time periods, nor whether they had managed to stay in the black since November. But we do notice that their two months of profitability seem to coincide quite neatly with the months in which the price of bitcoin suddenly surges. So we can see why the company is so keen to push that particular class of gambling trading.

And they do really push it.

This is what this serious financial institution sent via push-notification to customers on its app last week (you can see the same thing on its blog):

Yes, Revolut wants its customers to “celebrate” a milestone that literally doesn’t exist. We have said it before and we will say it again: there is no such thing as a “market cap” in the world of crypto. Revolut then shares the “fun fact” that “with Bitcoin leading the charge, it makes up $762bn of the total market capitalisation - which is more than Facebook! ($754bn)”

The most fun facts are always the ones that aren’t true.

Revolut goes on to present “3 ways Revolut makes trading crypto quick and easy”, which really feels like a plea for their customers to get involved in the market. Here’s number three (emphasis ours):

It took Bitcoin 11 years to get to $20,000, but only about 3 weeks to double that to $40,000. In 2020 alone, the value of bitcoin grew by over 400%. You can get in on the action from just $1 - starting small is OK! Remember, the value of assets is variable and can go down as well as up.

It has also taken less than three weeks for the price of bitcoin to crash by about 25 per cent — it was trading around the $31,000 mark at pixel time, down from a high of just over $41.500 on January 8. But strangely, Revolut hasn’t notified their customers of this.

Look, we understand that Revolut is trying to disrupt finance and to become “the world’s first truly global financial superapp”, so to moan that they are not behaving like a boring old bank might seem a little unreasonable.

But we also think it feels a little discordant for Revolut to simultaneously be trying to be taken seriously as a place that’s going to look after your hard-earned money, while also encouraging retail investors to get involved in highly frothy markets.

Of the main challenger banks that have emerged in the past few years in the UK, Starling Bank was the first to become profitable. It says its average balance in its consumer bank accounts is now £1,625 — that compares to a reported average balance of £250 for Revolut, and £359 for Monzo.

So why is Starling Bank doing so much better than its competitors? We think the main clue is in the name. The bank has been clear about what it is offering from the start, and hasn’t tried to jump on any high-risk bandwagons, temptingly lucrative as those might be. It might be less exciting than the other challenger banks, but its reputation is one of reliability and maturity.

To sum up: if Revolut really wants to be taken seriously as a bank, it needs to start behaving like one.

Still, even if it hasn’t achieved that yet, at least the company portrays a serious image in its marketing (screenshot from Revolut’s website, under the “influencers” tab):

>>> What to look at today - 27th of January 2021

Asian stocks fluctuated Wednesday after their biggest slide in two months as investors mulled a slew of earnings reports and awaited the conclusion of a Federal Reserve policy meeting. The dollar edged up.
Equities climbed in Japan and fell in Australia, which reopened after a holiday. Nasdaq 100 futures jumped after Microsoft Corp.’s fiscal second-quarter sales rose at a faster clip than analysts had projected. S&P 500 and European contracts dipped. The U.S. benchmark ended an up-and-down session slightly lower on Tuesday.
Elsewhere, Treasury yields were steady, oil advanced and Bitcoin dipped below the $32,000 level.
US After Hours MSFT +4.2% jumps on strong earnings; FFIV -6.2%, SBUX -1.4%, TXN -1.4%, AMD -0.5% head lower on earnings; WBA +8.4% jumps on report of new CEO
Big Earning Day in the US today with Apple, Facebook ...full list of Companies Reporting attached

Nikkei +0.31% Hang Seng +0.12% CSI +0.21% Shanghai +0.00% Shenzen +0.24%

Eur$ 1.2161 CNH 6.4740 CNY 6.4640 JPY 103.68 GBP 1.3740 CHF 0.8866 RUB 74.9125 TRY 7.3615 WTI$ 52.97 +0.68%

S&P -0.02% NAsdaq +0.48% EuroStoxx -0.17% FTSE -0.32% Dax -0.19% SMI +0.17%

Macro :
- Astra CEO Says Vaccine Bottleneck Caused by Late EU Order: Welt
- SPAC Boom Heats Up as Latest Blank-Check ETF Hits the Market

Keep an eye on :
- AIR FP : Airbus Helicopters Lifts Share of Civil Chopper Orders to 70%
- AZN LN : Astra CEO Says Vaccine Bottleneck Caused by Late EU Order: Welt
- BARN SW : Barry Callebaut 1Q Sales Miss Estimates
- BARN SW : Global Chocolate Sales Decline in Sept.-Nov.: Barry Callebaut
- BUSER SS : Bambuser to Offer SEK500m Shares via Carnegie, Numis Securities, Prices 32.3m Shares at SEK15.50/Share
- CON GY : Continental Sues Nokia in Royalty Fight Over Telecom Patents
- DAI GY : Daimler Diesel Case Not Same as VW Defeat Device, Court Says
- DAI GY : Nikola Backer Luxor Invests in European Electric-Truck Startup
- ENEL IM : Enel Considers Joining Race for PPL’s British Unit: Reuters
- ENGI FP : Engie Is Said to Pick BNP Paribas to Sell Stake in Gas Network
- EQNR NO : Equinor Faces Mongstad Fine Over Underground Pipe Leaks: DN
- EVT GY : Evotec Gets U.S. Contract Worth $28.6M for Antibody Production
- GFS LN : Allied Bidco Received Valid Acceptances of 13.1M G4S Shares
- HLAG GY : Hapag-Lloyd Prelim FY Ebitda EU2.7B
- HSBA LN : An Eventual HSBC Breakup Wouldn't Be a Shock: Elisa Martinuzzi
- JEN GY : Jenoptik Prelim FY Revenue About EU765M, Est. EU765.0M
- JD/ LN : JD Sports Fashion Confirms Exploring Additional Funding Options
- KPN NA : KPN 2021 Adjusted Ebitda After Leases Forecast Misses Estimates
- LAND SW : Landis+Gyr Sees 2023 Adj. Ebitda Margin 12% to 13%
- LONN SW : Lonza FY Core Ebitda CHF1.41B Vs. CHF1.33B Y/y
- LSE LN : Singapore CCCS Consults on LSE’s Commitments for Refinitiv Deal
- MC FP : LVMH’s 4Q Sales Beat, FY Ebit Performance Outstanding: Bernstein (Press Release attached)
- NOKIA FH : Continental Sues Nokia in Royalty Fight Over Telecom Patents
- QIIWI SS : Qiiwi Games to Offer Up to 1m Shares via Pareto Securities, Prices 1m Shares at SEK66.50/Share
- RIEN SW : Rieter FY Sales Miss Estimates
- SAN FP : Sanofi to Produce Pfizer-BioNTech Vaccine From July: Figaro
- DIM FP : Sartorius Stedim Sees 2021 Adj Oper EBITDA Margin About 32%
- SEBA SS : SEB Revises Financial Targets, Dividend to Be About 50% of EPS
- SHL GY : Siemens Healthineers Prelim 1Q Revenue Beats Estimates
- SOW GY : Software AG 4Q Revenue Beats Estimates
- SLR SM : Solaria Energia Closes Long-Term Power Purchase Agreement
- S30 FP : Solutions 30 4Q Revenue EU238.3M
- SO FP : Somfy Sees FY Current Operating Margin About 20%
- SEV FP : Suez Says It’ll Pursue Asset Sales Strategy Amid Veolia Bid
- SY1 GY : Symrise Sees FY Ebitda Margin Low End Of 21% to 22%
- UCG IM : UniCredit Set to Name Andrea Orcel as CEO to Replace Mustier
- VIE FP : Veolia Will Oppose Any Sale of Suez Strategic Assets
- VIV FP : France Plans to Rescue Soccer League After Double Financial Blow
- VOD LN : Vodafone Considering Options For Ghana in Africa Restructuring
- WLN FP : Worldline Seeks New Acquisitions, CEO Tells Les Echos

>>> Europe : Brokers Upgrades & Downgrades - 27th of January 2021

>>> Up
* Air Liquide Raised to Buy at SocGen; PT 154 euros
* Arrow Global Raised to Buy at Peel Hunt; PT 262 pence
* Axa Raised to Neutral at Citi
* Bilia Raised to Buy at SEB Equities; PT 135 kronor
* Centrica Raised to Buy at Goldman; PT 67 pence
* DFDS Raised to Buy at ABG; PT 310 kroner
* Eurofins Scientific PT Raised to 88 euros at Berenberg
* Greencore Group Raised to Buy at Jefferies; PT 150 pence
* Intertek Raised to Buy at Berenberg; PT 6,450 pence
* Liberbank Raised to Buy at Jefferies; PT 36 euro cents
* Marzocchi Pompe Raised to Outperform at EnVent S.p.A.
* Microsoft PT Raised to $300 from $260 at Jefferies
* MTU Aero Raised to Neutral at Exane; PT 195 euros
* Naturgy Raised to Hold at Grupo Santander; PT 23.90 euros
* NN Raised to Buy at Citi
* Nordea Bank Raised to Overweight at Morgan Stanley; PT 88 kronor
* Norma PT Raised to 54 euros from 43 euros at Berenberg
* Thales Raised to Outperform at Exane; PT 97 euros

>>> Down
* Aena Cut to Sell at Banco Sabadell; PT 136.50 euros
* Air France-KLM Cut to Sell at Berenberg; PT 3 euros
* Arjo Cut to Hold at SEB Equities; PT 64 kronor
* Autoliv GDRs Cut to Hold at SEB Equities; PT 830 kronor
* Babcock Cut to Underweight at Barclays; PT 145 pence
* Kaubamaja Cut to Hold at SEB Equities; PT 9.20 euros
* Legal & General Cut to Neutral at Citi
* SGS Cut to Hold at Berenberg
* Tele Columbus Cut to Equal-Weight at Barclays; PT 3.25 euros
* TUI Cut to Reduce at Commerzbank; PT 265.54 pence
* Zurich Ins. Cut to Neutral at Citi

>>> Initiation
* Banco BPM Rated New Overweight at Barclays; PT 2.20 euros
* BPER Banca Rated New Overweight at Barclays; PT 1.90 euros
* Credito Emiliano Rated New Equal-Weight at Barclays
* Intesa Sanpaolo Rated New Overweight at Barclays; PT 2.40 euros
* J. Martins Rated New Hold at SocGen; PT 15 euros
* Marlowe Rated New Buy at Peel Hunt; PT 753 pence
* Mediobanca Rated New Overweight at Barclays; PT 9.50 euros
* UniCredit Rated New Equal-Weight at Barclays; PT 8.60 euros
* Vivendi Resumed Buy at SocGen; PT 31 euros

>>> Call
* Citi Upgrades Axa, NN Group; Positive on Reinsurers, Dutch Life
* Greencore in Good Position to Capitalize on Recovery: Jefferies
* Nordea Raised at Morgan Stanley After Underperforming Peers
* Siemens Healthineers 1Q Strong Across Portfolio: Morgan Stanley
* Testing Stocks to Benefit From Megatrends, Berenberg Says