Boeing 737 Max Groundings Fallout; Risk of Government Shutdown Eases

On today's podcast: 1) US air-safety officials retrieved the fuselage panel that blew off during an Alaska Airlines flight on Jan. 5, as authorities begin piecing together evidence to learn what led to the sudden decompression on the almost-new Boeing Co. 737 Max 9 aircraft. 2) US congressional leaders announced a deal on a top-line spending level for the current fiscal year, lessening the chances of a partial government shutdown on Jan. 20. 3) The Pentagon ’s failure to notify President Joe Biden that his defense secretary had been hospitalized for four days was the result of a series of errors , including confusion over Lloyd Austin’s wishes and his chief of staff falling ill, people familiar with the matter said. 4) United Launch Alliance ’s long-awaited Vulcan rocket lifted off on Monday, heralding a new era for the longtime Pentagon contractor fighting to expand market share against Elon Musk’s SpaceX . Full Transcript: Good morning. I'm Nathan Hager and I'm Karen Moscow. Here are the stories we're following today. We begin with the latest developments involving Boeing after disaster was narrowly averted on an Alaska Airlines flight on Friday. Boring stock right now is down more than eight percent, and we get more from Bloomberg's John Tucker, John and Nathan. The airlines around the globe have been grounding Boeing seven thirty seven Max nine half to a fuselage section on a brand new Alaska Airlines jet blew out during a flight on Friday. This is a door panel that can be sealed or used for access, depending on the configuration. Only luck prevented a more disastrous outcome. The National Transportation Safety Board cheer Jennifer Homandi says Alaska Airlines pilots did report pressurization warning lights on three earlier flights of the two month old plane in question. The auto pressurization fail light that did illuminate in three previous flights, one on December seventh, one on January third, and one on January fourth. A schoolteacher in Portland found the missing fuselage door plug in his backyard. The door plug that blew out was next to seats twenty six A and twenty six P, and just by chance, there was nobody sitting there. The plane did carry one hundred and seventy one passengers, a valuable data usually collected by the so called black box that was a raised Boeing suppliers. Spirit Aerosystems Holdings was the company that installed the planel on the nearly new jet. John Tucker Bloomberg Radio, all right, John, thank you well be now when to turn to the latest developments in the Middle East. Secretary of State Anthony Blincoln is in the region for a fourth time since the Israeli Hamas war broke out. Lincoln is warning the war could quote easily become a wider conflict. He spoke during a news conference in Doha. This is a conflict that could easily a tastasize, causing even more insecurity, more suffering and Secretary of State blank And met with Jordan's Kingdomdullah on Sunday, a day after stops in Turkey and Greece. Well back here in the US here, and the risk of a government shutdown on January twentieth has eased somewhat with word of a deal on spending caps. Bloomberg's Amy Morris has details from Washington. Senate Majority Leader Chuck Schumer and House Speaker Mike Johnson negotiated the bipartisan deal, which caps spending at one point five to nine trillion dollars. Republicans have agreed to a set of budget moves to spare immediate cuts to domestic agency budgets. The deal does not include an agreement to block all conservative policy writers, so there still may be debates over defunding investigations into former President Trump, and while that might cause an impass later, for now, lawmakers have the framework they need to avoid a government shut down this month. The next deadline is February second. In Washington, Amy Morris, Bloomberg Radio, all right, Amy, thank you now. The latest on the health of Lloyd Austin. Bloomberg News has learned the Pentagon's failure to notify prison and in bid and that his Defense secretary had been hospitalized for four days, was the result of a series of errors. They include confusion over Austin's wishes and his chief of staff, Falling Hill from a Republican Congressoman list. Cheney is looking for answers I think they've got some very serious explaining to do. I think that there's a real difference between public transparency and you know, alerting the commander in chief to the fact that Secretary of Defense is in the hospital. Apparently the deputy Secretary was on vacation in Puerto Rico. I think it's inexplicable. We need to know more about exactly what happened there. But that's not the way the Pentagon ought to be conducting business. And that's former Congressome and liszt Cheney. On Saturday, Secretary Austin apologized for failing to inform the public for days, while saying he's on the mend and expects to return to the Pentagon soon. Let's turn to Wall Street now, Karen Bank earnings and the possible Bitcoin ETF will be front and center this week. More from Bloomberg's Charlie Pellett. Friday, we hear from JP Morgan, Chase, City Group, Bank of America, Anne Wells Fargo. Early earnings reports come amid questions about the path of inflation and FED interest rate POTLESE. Cameron Dawson is chief investment officer at New Edge Wealth. The thing that's the biggest challenge for US for earning sestaments in twenty four is the expectation that topline growth will re accelerate in a year where nominal growth because of inflation is expected to decelerate. Also this week, the Securities and Exchange Commission will decide whether to approve an exchange traded fund tied directly to the world's largest cryptocurrency in New York, Charlie Bloomberg Radio, All right, Charlie. Thanks. In company news, Bloomberg News has learned MRK is in advanced talks to acquire cancer drugmaker Harpoon Therapeutics. The price tag about seven hundred million dollars. San Francisco based Harpoon is developing drugs that harness the body's immune system to fight cancer. Shares of Harpoon are up about one hundred percent well. Also, while following Apple Care, which has fallen almost six percent to kick off the new year, Jeffries says Apple's iPhone sales slump in China is deepening and the companies likely to see volumes decline further this year. Apple saw a double digit falled volumes in December. Jeffries forecast a similar decline for twenty twenty four. Checking shares of Apple right now they are a little changed to the downside. And on the economic front, Nathan, inflation will be the focus for our investors. Bloomberg's Any del Judaice has more the Labor Department issues the Consumer Price Index Thursday and the Producer Price Index Friday, both covered December. Rising gasoline prices could have an impact on the household data, says Bloomberg Economics. Looking further out, Bloomberg economics 's US inflation continuing to run above the federal reserves two percent target this year, even with all the raid hikes. Vinny del Judice, Bloomberg Radio, Nathan, thank you. It's time for a look at some of the other stories making news around the world, and for that we're joined by Bloomberg's Amy Morris, Sammy, Good morning, Good morning, Karen. Ukraine suffered a second large scale Russian missile barrage this year as temperatures dropped below freezing in the latest escalation of aerial attacks. Now, this barrage killed one woman and left at least thirty more people wounded. After months of relatively few air strikes, Russia is ramping up bombardment just before the new year, firing hundreds of missiles at cities across Ukraine, including the capital. Meanwhile, Ukraine has been targeting bases and occupied Crimea, with the Air Force saying over the weekend that it destroyed our Russian command post there. Meanwhile, President Joe Biden is set to visit Charleston, South Carolina, today, including a stop at Mother Emmanuel Ame Church, where back in twenty fifteen, nine church goers were shot and killed by a self proclaimed white supremacist. Charlotte City Councilman Malcolm Graham is the brother of one of those victims. Cynthia Graham heard and tells ABC News that when the President visits local black history points of interest, he's sending us strong message of visiting sites like the new Historic African American Museum, he makes a point that history matters, that black history matters. It just not just occurs in the month of February, that black history is also American history. Biden, meanwhile working to shore up support among black voters and Nicki Haley's home state as the Republican governor of former governor of South Carolina, is rising in the polls. Texas Republican Congressman Tony Gonzalez reflected on the third anniversary of the January sixth attack on the Capitol and stands by his labeling of the mob as domestic terrorists, refusing to accept former President trump statements made on the writers describing them as heroes and hostages. They're certainly not heroes. You know. They broke the law, and we have to obey our laws. We are a nation of laws, and they have to obey the laws. Representative Gonzales tells ABC's This Week he does not support Donald Trump's proposed plan to pardon those convicted for their actions that day. Hospitals across the country are telling people mask up flu and COVID nineteen cases are once again on the rise. The viruses have actually been on the incline for the past few weeks. Health officials are predicting infections will increase even more throughout this month. Global news twenty four hours a day and whenever you want it with Bloomberg News. Now. I'm Amy Morris and this is Bloomberg Karen Hurry, Amy, thank you. We do bring you news throughout the day here on Bloomberg Radio. But now you can get the latest news on demand, and that means whenever you want it. Subscribe to Bloomberg News Now to get the latest headlines at the click of a button. Get informed on your schedule. You can listen and subscribe to Bloomberg News Now on the Bloomberg Business app, Bloomberg dot Com plus Apple, Spotify, and anywhere else you get your podcasts. Time now for the Bloomberg Sports Update, here's John stash Hour John Karen. The NFL regular season is over. The playoffs begin on Saturday with a late afternoon game between the Cleveland Browns and the Houston Texans. A team that won only eleven games over the previous three seasons won ten this year, and the Texans won the AFC South when Jacksonville lost its game yesterday at Tennessee twenty eight to twenty. Saturday night, it'll be Miami at Kansas City. The Dolphins blew a lead in the AFC East and last night's lost to Buffalo twenty one to fourteen cost the Dolphins the AFC East, so they're a wildcard and they'll take on the Chiefs Sunday at one Eastern Pittsburgh in Buffalo. Then it's Green Bay at Dallas. The Packers gaining a wildcard spot with a seventeen to nine win over Chicago. The Cowboys won the NFC East. They blew out Washington yesterday thirty eight to ten. Sunday night, it'll be the Rams in Detroit, so Matthew Stafford will face his former team in the wildcard weekend will conclude next Monday night. Slumping Philadelphia at Tampa Bay, Eagles have been a train wreck down the stretch of the season, losing five to the last six. They were beaten by the Giants yesterday twenty seven to ten. The Bucks won the NFC South with a nine to nothing win over Carolina Atlanta Falcons of fired coach Arthur Smith. Will the Patriots part ways with Bill Belichick after twenty five years as coach there? We should find out soon. Michigan and Washington played tonight in the Houston for the National Championship, both teams fourteen and er. Although the Huskies haven't won a game by more than ten points since September, the Wolverines are the famous from coast to coast, from New York to San Francisco, Boston to Washington, DC, nationwide on Syrias Exam. The Bloomberg Business app in Bloomberg dot Com. This is Bloomberg Daybreak. Good morning. I'm Nathan Hager. Airlines around the world are starting to ground their Boeing seven thirty seven Max nine jets after part of the fuselage blew out on a brand new model operated by Alaska Airlines last Friday. It is another blow to Boeing's turnaround efforts after two deadly seven thirty seven Max crashes nearly five years ago. From More, we were joined by Bloomberg News. Aviations are Anthony Palazzo. Anthony, what more do we know about why this mishap happened and where the investigation stands? Hi Nathan, thanks for having me. Yeah, So, we had two developments late late yesterday. One is that the investigators have found the door panel that fell out of the plane. This is a key piece of evidence and they're going to be looking very closely at the condition of that panel to understand why it popped out of the fuselage section. The panel was found in the backyard of a Portland area school teacher. So what could that panel tell us about how this happened? Well, well, what they've what they've said so far is that they've looked at they've looked at the tabs that hold that panel in from the interier of the plane, which was largely undamaged, and that they didn't find a whole lot of They didn't find, you know, a problem there. So they're gonna so they're going to need to keep going to understand exactly how this came off. Those those panels are screwed in with four bolts. They're not in use, although they can be opened from the outside of the plane. Those are essentially openings that are built for an emergency door. But a lot of the a lot of the airlines that use this aircraft, it's a stretched Boeing seven point thirty seven Max Jet, a lot of the airlines don't use those exit doors because they're not needed for the seat configurations that they need. So this is putting more scrutiny on the manufacturing process at Boeing, particularly around the seven thirty seven Max. Is there something particular about the Max nine that could have caused a problem like this as opposed to the seven thirty seven Maxes that were involved in those crashes that we all remember just a few years ago. Yes, well, the well, the the Max nine is a stretched version of the of the core Boeing Max plane, which is called the Max eight. So it's a it's a bit longer, and it can seat more people. But because it can seat more people in its in its most densely packed configurations, it requires more additional safety exits. So a lot of a lot of the low cost carriers that would use that plane would would want to put in more seats and therefore more more emergency exits most carriers. So now the Max eight does not have that that kind of a kind of configuration, doesn't have those exits and doesn't need them. The way that Boeing has done it is that they put in the essentially modular cutouts into the frame so they can make all the fuselages the same, and then when they finish the aircraft they can decide, you know, with the customer whether or not to install those doors or to install plugs in those holes. So now that's the difference. Yeah, right, And now we have a couple of hundred of these seven thirty seven Max nines getting taken out of service, these low cost carriers including Alaska and United grounding these jets. How big a blow potentially could this be for Boeing When it's been trying to put a turnaround plan into place. Well, it's a real setback, you know. The extent to how deep or how long term it ends up being that's all yet to be determined. But certainly investors are selling down the stock. This morning we sell that shares go down about eight point three percent in pre market trading. Their supplier is Spirit Aero Systems, that is a former Boeing unit that makes the fuselage and they they're down about sixteen percent. I think there's been there's been a lot of there's been a lot of speculation about the relationship between Boeing and Spirit and how wise it was to separate the two companies. You know, Spirit's been responsible for a couple of the real supplier glitches that have held that production at Boeing, and they've been weakened financially. Boeing had to reduce some contracts with Spirit, they had to infuse some money into it. So this may be something that that Boeing recon suitors in the longer term. This is Bloomberg Daybreak Today, your morning brief on the stories making news from Wall Street to Washington and beyond. Look for us on your podcast feed. At six am Eastern each morning on Apple, Spotify, and anywhere else you get your podcasts. You can also listen live each morning starting at five am Wall Street Time on Bloomberg eleven three to zero in New York, Bloomberg ninety nine to one in Washington, Bloomberg one oh six to one in Boston, and Bloomberg ninety sixty in San Francisco. Our flagship New York station is also available on your Amazon Alexa devices. Just say Alexa Play Bloomberg eleven thirty plus. Listen coast to coast on the Bloomberg Business app, seriusxmb iHeartRadio app, and on Bloomberg dot Com. I'm Nathan Hager and I'm Karen Moscow. Join us again tomorrow morning for all the news you need to start your day right here on Bloomberg Daybreak See omnystudio.com/listener for privacy information.