Grounded
Investors are bailing on Boeing and one of its biggest suppliers this morning after a harrowing malfunction at 16,000 feet this weekend in which a door panel sheared off a new 737 Max 9 airliner in midflight.
Air 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 N.T.S.B. said yesterday that the piece of fuselage that fell off the plane was found in a backyard in Portland, Ore.
Shares in Boeing fell nearly 9 percent, and Spirit Aerosystems, which makes the Max 9’s door panel, or “plug,” sank in premarket trading. Stock in Boeing, a major defense contractor, had risen sharply since war broke out in October between Israel and Hamas. But its shares remain well below the levels they hit in early 2019 on huge buzz around the fuel-efficient Max.
The latest mishap could deal a blow to Boeing’s turnaround plan, as well as its reputation. Nobody was injured aboard Friday night’s Alaska Airlines flight. But it’s the latest in a series of safety lapses before and since two deadly 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 malfunctioning computer system that overrode pilots’ commands. The planes were grounded worldwide for nearly two years after the accidents.
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 while the company worked to address F.A.A. safety concerns. “The issue is what’s going on at Boeing,” John Goglia, an aviation safety consultant and airplane crash investigator, told The Times.
David Calhoun, Boeing’s C.E.O., hoped 2024 would be a comeback year. Instead, the company has canceled a leadership retreat, Bloomberg reported, and was working over the weekend with the F.A.A. to supply its airline customers with instructions on how to inspect their planes. Boeing is set to hold a companywide meeting tomorrow, at which Calhoun has said he will reinforce its focus on safety.
Questions are also swirling around Alaska Airlines. The company had halted flying that plane long distances over water following concerns about a pressurization indicator.
HERE’S WHAT’S HAPPENING
Congressional leaders reach a government spending deal. The agreement caps top-line spending at roughly $1.66 trillion, in line with President Biden’s deal last year with Kevin McCarthy, the former House speaker. But it’s unclear if there are enough votes to win over conservatives and avert 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 top honors for a television series, winning four. It’s too early to declare whether the award show’s broadcaster, CBS, or its organizers, Penske Media and the investor Todd Boehly, came out ahead.
A commercial spacecraft heads for the moon. A Vulcan rocket blasted off this morning, bearing a robotic lander (and the remains of Gene Roddenberry, the “Star Trek” creator). The spacecraft, built by a joint venture between Boeing and Lockheed Martin, is the first of several launches planned this year, as an array of companies hope to erode SpaceX’s dominance of the space launch industry.
A radio and podcast giant files for bankruptcy protection. Audacy, the U.S.’s biggest radio company, which owns WFAN Sports Radio and New York’s 1010 WINS, filed for Chapter 11 in Texas this weekend to cut its debt. The company has been hard hit by an advertising downturn.
A widening conflict between Ackman and Business Insider
Bill Ackman’s fight against elite universities has broadened in unexpected ways: The parent company of Business Insider, the publication that last week accused his wife of plagiarism, said it was reviewing its journalists’ reporting in light of that coverage.
And Ackman, who loudly called for the ouster of Claudine Gay as Harvard’s president, escalated his campaign against his wife’s alma mater, M.I.T. — including both its senior leaders and its faculty.
The media giant Axel Springer said it would examine Business Insider’s processes, after Ackman criticized articles that said his wife, Neri Oxman, a former M.I.T. professor, plagiarized other scholars in her 2010 dissertation. While Oxman apologized for any academic infractions and said she was requesting corrections, Ackman questioned the motivations behind the coverage.
Though Springer is known for taking a hands-off approach to its media holdings, which also include Politico and Germany’s Die Welt and Bild, the publisher said it wanted to “ensure that our standards as well as our journalistic values have been upheld.” (Semafor reported that some Springer executives worried that the coverage of Oxman, who was born and raised in Israel, could be seen as antisemitic and anti-Zionist.)
Business Insider defended itself. The outlet’s global editor in chief, Nicholas Carlson, wrote in an internal memo that he stood by the publication’s coverage. It was motivated by “truth and accountability,” he said.
Meanwhile, Ackman has called for examining M.I.T. faculty’s papers for plagiarism, using artificial intelligence tools to review their work. He also suggested that similar efforts should be undertaken at other universities and at Business Insider.
The demand continues his campaign against Sally Kornbluth, the M.I.T. president, who critics say has failed to sufficiently combat antisemitism on campus. (She also testified at the same Congressional hearing last month that helped seal the fates of Gay and Liz Magill, the University of Pennsylvania’s now-former president.)
New reports of Musk 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 footage of him holding a joint quickly becoming fodder for discussions about the billionaire’s behavior and internet memes.
Musk didn’t break any laws, since recreational marijuana in California, where the show was taped, is legal. But a Wall Street Journal report accusing him of consuming other substances, including some that are illegal, has reignited debate about his behavior.
Directors of Tesla and SpaceX have discussed Musk’s actions, including the consumption of ketamine (for which he has said he has a prescription), LSD and psychedelic mushrooms, according to The Journal. One Tesla board member, Linda Johnson Rice, became so frustrated by the issue that she chose not to seek re-election in 2019, the report added.
Why it matters, according to The Journal:
Illegal drug use would likely be a violation of federal policies that could jeopardize SpaceX’s billions of dollars in government contracts. Musk is intrinsic to the value of his companies, potentially putting at risk around $1 trillion in assets held by investors, tens of thousands of jobs and big parts of the U.S. space program. …
In addition to violating federal contracts, any kind of illegal drug use would break company policies at both SpaceX and Tesla, and would raise questions about Musk’s executive role at the publicly traded Tesla, where the board has a duty to shareholders to oversee management.
Elon Musk rebutted the report, posting on his X social network that after he smoked on Rogan’s show, he agreed to three years of random drug testing at NASA’s request. “Not even trace quantities were found of any drugs or alcohol,” he wrote.
He later added that the media “will stop at nothing to destroy X.”
Investors don’t seem bothered. Shares in Tesla were down only slightly in premarket trading.
“It’s like having the best bows and arrows in the age of gunpowder.”
— Mike Madrid, an anti-Trump Republican strategist, on Nikki Haley’s surge in fund-raising from deep-pocketed backers. Supporters of the former South Carolina governor include the investor Stanley Druckenmiller and the metals magnate Andy Sabin (and the Democratic tech entrepreneur Reid Hoffman), but Haley continues to trail Donald Trump in Republican primary polls by double digits.
The week ahead
There’s plenty on the calendar this week to keep Wall Street occupied, including earnings from JPMorgan Chase and the latest inflation report. Here’s what to watch.
Tomorrow: The grocery chain Albertsons reports third-quarter results.
Thursday: The December Consumer Price Index report is expected to show that headline inflation ticked up last month while “core” inflation, which excludes food and fuel, cooled slightly. A more favorable reading could make markets more volatile, as Wall Street has already begun to dial back expectations for a first-quarter Fed rate cut as inflation concerns continue.
Fast Retailing, the parent company of Uniqlo, reports quarterly earnings.
Friday: It’s an earnings 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 holds a pivotal presidential election, as Beijing increases pressure on the self-governing island to unify.
THE SPEED READ
Deals
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Berkshire Hathaway settled a lawsuit over the valuation of Pilot Travel Centers, the truck-stop chain that Warren Buffett’s conglomerate bought control of from the Haslam family. (CNBC)
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The proposed $14.1 billion sale of U.S. Steel to Japan’s Nippon Steel is testing President Biden’s efforts to increase domestic industrial production. (NYT)
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“Wall Street Doubles Down on Bonds” (WSJ)
Artificial intelligence
Best of the rest
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