Stocks started the week on an uptick with the Dow rising 17 points to 23,439 on lighter trading volume. The NASDAQ moved higher on higher trade. The Dow lagged thanks to a selloff in GE which might have to change its name from “golly gee” to “holy crap”.
Boeing surprised everyone at the Dubai “Du-Buy” airshow when Emirates suddenly dropped an expected order for A380 double decker’s and instead picked up 40 787-10s for a list price of $15.1 billion. It was rumored that the deal happened because Airbus would not committee to keeping the money losing A380 production line open for the next 10 years. Emirates is expected to start delivery of the 787’s in the year 2022. Boeing shares were higher on the news.
The lightbulb finally came on as shares of GE took an 8% hit when the company announced it would head into a major reorganization effort which includes a 50% cut in the annual dividend. When Jeff Immelt was CEO he tended to favor share buybacks and dividends over things like funding the pension obligation. This has led GE to report a pension shortfall of approx. $30 billion. The company will be reorganized into aviation, power and medical segments with lightbulbs and transportation divisions as potential asset sales. Wall Street was not happy with the announced plan and indicated it might take years for the stock to recover. Even TV investment guru Jim Cramer admitted that holding GE while it fell from $30 to $18 was “stupid”.