While Boeing continues to weigh on the Dow, the NASDAQ has been boosted by a strong move in the semiconductor/chip sector which is benefitting from demand for 5G and electric cars. At the close the Dow was up 65 points at 25,914. Trading volume was lower. Bank stocks were higher along with chip companies. Micropoopie (Microsoft) closed at a new high.
The Boeing saga continues as the FAA is looking into how it certified the safety of the 737 Max leading up to its launch in 2016. There is speculation that the process was hurried and not thorough. Gurus are now saying that it will be at least two months before Boeing can possibly deliver another Max which will affect cash flow and earnings in the near term. It is looking like the anti-stall system is the issue and reports indicate that some US pilots complained to the FAA that, when engaging the auto pilot, the plane would suddenly nose over forcing the pilot to switch back to manual. Boeing’s stock gapped lower but is holding support at $370 per share. Relative strength is falling however and put option volume jumped 20-fold as investors rush to buy downside protection in case of a further selloff.
Wall Street has a saying regarding mergers which is: “two turkeys don’t make an eagle”. Some in Germany apparently disagrees with this and reported that Deutsche Bank and Commerzbank are now in merger talks with the aim of taking these two ailing banks and making them one big giant bank. The only way this will work however is to lay off redundant labor which is estimated to be upwards of 30,000 people along with selling assets like real-estate and perhaps shares of long held industrial companies of which both banks are major holders. It will be interesting to see how this plays out since labor groups and regulators are not supportive of the effort while some politicians and the finance minister are supportive.