WEBVTT - Boeing Groundings, China Sanctions, Oil Prices

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<v Speaker 1>Good morning.

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<v Speaker 2>I'm Brian Curtis and I'm Doug Krisner. Here are the

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<v Speaker 2>stories we're following today.

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<v Speaker 3>Congressional leaders have agreed on a spending deal. We get

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<v Speaker 3>more from Bloomberg's Dan Schwartzman. Dan, that is correct, Brian.

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<v Speaker 4>A deal has been announced on a top line spending

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<v Speaker 4>level for the current fiscal year. The agreement lessening the

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<v Speaker 4>likelihood of a partial government shutdown, which would occur on

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<v Speaker 4>January twentieth. Republican House Speaker Mike Johnson and Democratic Senate

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<v Speaker 4>Majority Leader Chuck Schumer negotiated the package, which now heads

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<v Speaker 4>to the appropriations committees in both chambers to negotiate detailed

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<v Speaker 4>spending bills that now have an overall spending limit. The

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<v Speaker 4>cap for the twelve annual appropriations bills is one point

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<v Speaker 4>five to nine trillion dollars. The country is facing two

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<v Speaker 4>government shutdown deadlines. One is January nineteenth and the other

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<v Speaker 4>February second. President Biden welcoming the news of a deal

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<v Speaker 4>being agreed to, saying it provides a pathway to full

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<v Speaker 4>year funding bills. Snowstorms hit the northeast portion of the country,

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<v Speaker 4>leaving more than a foot of snow in New York'

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<v Speaker 4>Hudson Valley, while Blank getting Boston and New England with

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<v Speaker 4>heavy snow. Areas west of New York City in New

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<v Speaker 4>Jersey got strong accumulation as well. City mostly just got

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<v Speaker 4>hit by some rain. A second storm is now moving

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<v Speaker 4>across the Western States, winter storm warnings and advisories being

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<v Speaker 4>issued from Arizona all the way to Illinois their blizzard

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<v Speaker 4>warnings in Colorado and New Mexico. That storm is expected

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<v Speaker 4>to dump nine inches of snow west of Chicago starting

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<v Speaker 4>Monday night, with parts of New York and New Jersey

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<v Speaker 4>getting in an additional one to three inches on top

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<v Speaker 4>of what came down today. The winter storms, also, by

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<v Speaker 4>the way, have just retavock on the transportation industry, six

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<v Speaker 4>hundred and ninety two flights being canceled across the country. Boston, Newark, Chicago,

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<v Speaker 4>and Seattle were hit particularly hard. That was according to

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<v Speaker 4>airline tracking company flight Aware. Amtrak also having to cancel

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<v Speaker 4>some trains to Boston as well as across the Midwest.

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<v Speaker 4>Secretary of State Anthony Blinken continuing his World Win tour

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<v Speaker 4>of the Middle East with a stop off in Doha

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<v Speaker 4>Cutter on Sunday, Blinken warning that the Israel Hamas conflict

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<v Speaker 4>could easily spiral into a regional conflict.

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<v Speaker 5>This is not just a regional issue, it's a matter

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<v Speaker 5>of global concern, and that's certainly the case when it

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<v Speaker 5>comes to the Hoofi attacks on freedom of navigation in

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<v Speaker 5>one of the world's busiest trade corridors, the Red Sea.

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<v Speaker 4>Blanken, speaking from Cutter, which maintains ties with Hamas and

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<v Speaker 4>has been key and hostage negotiations which have freed more

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<v Speaker 4>than one hundred Israeli so far. Blinken earlier in the

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<v Speaker 4>day meeting with Jordan's King Abdullah the Second, as well

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<v Speaker 4>as the Foreign Minister I'man Safadi. The Secretary of State

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<v Speaker 4>has already made stopovers in Turkey and Greece, and he

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<v Speaker 4>is planning to visit the UAE, Saudi Arabia, Israel, the

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<v Speaker 4>West Bank and Egypt. Some good news in London, Mayor

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<v Speaker 4>Sadik Khan announcing earlier this afternoon that a planned strike

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<v Speaker 4>in the subway system had been called off. The London Tube,

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<v Speaker 4>as it's known, has more than two hundred and seventy

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<v Speaker 4>stations covering around two hundred and fifty miles and accommodates

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<v Speaker 4>around four million rides per day. The National Union of Rail,

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<v Speaker 4>Maritime and Transport Workers were planning to strike over dispute

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<v Speaker 4>over working conditions and pay right was called off due

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<v Speaker 4>to positive discussions on both sides. Global News twenty four

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<v Speaker 4>hours a day and whenever you want it with Bloomberg News.

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<v Speaker 1>Now.

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<v Speaker 4>I'm Dan Schwartzman, and this is Bloomberg.

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<v Speaker 3>Dan, Thanks very much. Five and a half minutes here

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<v Speaker 3>past the hour. I'm Brian Curtis, along with Doug Krisner

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<v Speaker 3>and Paul Allen will join us a little bit later.

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<v Speaker 3>Let's take a look at some of the top business

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<v Speaker 3>stories of the hour.

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<v Speaker 1>Now.

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<v Speaker 3>Airlines around the globe are pulling there Boeing seven thirty

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<v Speaker 3>seven Max nines from service. It follows the Federal Aviation

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<v Speaker 3>Administration's call to temporarily ground all one hundred and seventy

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<v Speaker 3>one planes. The FAA order comes after a section of

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<v Speaker 3>the main body on a brand new Alaska Airlines jet

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<v Speaker 3>blew out mid flight. Bloomberg's Mary Schwangenstein says that Boeing

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<v Speaker 3>is pushing to get these planes inspected and back in

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<v Speaker 3>operations soon.

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<v Speaker 6>They want the operators of certain of these Max nine

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<v Speaker 6>to take them out of service. Do the inspections, which

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<v Speaker 6>don't take all that long. They take a number of

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<v Speaker 6>hours to do them, and to do those inspections before

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<v Speaker 6>they fly them again if they fall within certain inspection timeframes,

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<v Speaker 6>and so Alaska said they've already done quite a few

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<v Speaker 6>of their aircraft. You know, it's not a good look

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<v Speaker 6>for any aircraft operator or manufacturer. Rather, when you have

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<v Speaker 6>to stop and take the planes out of service to

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<v Speaker 6>look for some particular defect that could, you know, be

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<v Speaker 6>a major problem of this aircraft had been higher.

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<v Speaker 3>In the air Bloomberg's Mary Schwoangenstein. The grounding is a

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<v Speaker 3>major setback for Boeing. The company has grappled with manufacturing

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<v Speaker 3>defects and costly repairs in recent years. Most recently, the

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<v Speaker 3>FAA said that it is monitoring some inspections of Boeing

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<v Speaker 3>airplanes to look for a possible loose bolt in the

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<v Speaker 3>rudder control system. And coming up in a few moments,

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<v Speaker 3>we'll be chatting with Julie Johnson, who is Bloomberg Senior

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<v Speaker 3>aerospace reporter on the latest from Boeing.

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<v Speaker 2>Doug Elon Musk's drug use is reportedly causing worry among

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<v Speaker 2>executives and board members at the company's led by Musk.

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<v Speaker 2>The story from Bloomberg's Denise Pellegrini.

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<v Speaker 7>Wall Street Journal reporting Musk has used LSD, cocaine, ecstasy,

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<v Speaker 7>and psychedelic mushrooms, often at private parties, and people close

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<v Speaker 7>to the Tesla and SpaceX ceo tell the journal his

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<v Speaker 7>drug use is ongoing. In particular, he's consuming ketamine. Musk

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<v Speaker 7>said in August he had a prescription to use a

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<v Speaker 7>drug as an antidepressant, and after Musk puffed on a

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<v Speaker 7>blunt containing marijuana on Joe Rogan's podcast in twenty eighteen,

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<v Speaker 7>the Pentagon reviewed the federal security clearance tied to Musk's roll,

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<v Speaker 7>a CEO of Space Exploration Technologies, which is certified to

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<v Speaker 7>launch military spy satellites. Musk didn't respond to a request

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<v Speaker 7>for comment from Bloomberg News to this story, but Alex Spiro,

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<v Speaker 7>an attorney for the billionaire, told the journal his client

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<v Speaker 7>is regularly and randomly drug tested at SpaceX. It has

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<v Speaker 7>never failed a test. Denise Pellegrini Bloomberg Radio.

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<v Speaker 3>In the latest US jobs report, we saw gains in

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<v Speaker 3>jobs and wage increases, and both exceeded expectations, But as

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<v Speaker 3>Doug pointed out early, a number of caveats. We'll get

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<v Speaker 3>to that a bit later. US payrolls rose by two

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<v Speaker 3>hundred and sixteen thousand. Randy Krasner is professor of economics

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<v Speaker 3>at the University of Chicago Booth School of Business. He

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<v Speaker 3>tells us what these numbers might mean to FED policymakers.

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<v Speaker 8>I think the FED focuses a lot on wage growth,

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<v Speaker 8>and we've seen wage growth above expectations. I think it's

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<v Speaker 8>really clear that the FED is going to be waiting

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<v Speaker 8>a while before it starts cutting rates because the labor

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<v Speaker 8>market is still quite strong, the wage growth is still

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<v Speaker 8>quite strong, and just the key thing that then feed

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<v Speaker 8>into services as well as manufacturing inflation.

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<v Speaker 1>Randy Krasner is there.

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<v Speaker 3>In the coming week, the FED will have some key

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<v Speaker 3>economic data to analyze, be getting a big report on

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<v Speaker 3>consumer prices on Thursday and then producer prices on Friday.

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<v Speaker 2>China has sanctioned five US defense firms in response to

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<v Speaker 2>deals for arm sales to Taiwan. We have more from

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<v Speaker 2>Bloomberg sivon Men in Hong Kong.

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<v Speaker 9>Orn Ministries says the sanctions are a result of what

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<v Speaker 9>it calls gravely wrong actions taken by the US. The

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<v Speaker 9>companies affected include BAE Systems, Land and Armament Alliance Tech Systems,

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<v Speaker 9>Operation Aero Vironment via SAT and data link solutions. The

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<v Speaker 9>decision is seen as the latest retaliation to US military

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<v Speaker 9>sales to Taiwan. The latest arms deal amounted to about

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<v Speaker 9>three hundred million dollars. China responded immediately by intensifying military

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<v Speaker 9>training around the Taiwan Strait. These new sanctions freeze the

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<v Speaker 9>five companies. Properties in China and entities there are banned

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<v Speaker 9>from any transactions with those firms. In Hong Kong, I'm

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<v Speaker 9>von Mann Bloomberg Radio.

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<v Speaker 3>Saudi Arabia will cut crude prices in all regions, including

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<v Speaker 3>its main Asia market. Bloomberg's Juan Wong has more on that.

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<v Speaker 10>The cuts will begin next ones amit persistent weakness in

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<v Speaker 10>the market cuts and supply by Opec Plus are another

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<v Speaker 10>part of the story. The cuts were aimed at prevent

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<v Speaker 10>hending a build up of oil and storage. Saudi Arabia

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<v Speaker 10>is taking on the bulk of the burden. It has

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<v Speaker 10>set voluntary cuts of two million barrels a day through

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<v Speaker 10>the first quarters, hoped that that will offset otherwise strong

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<v Speaker 10>global supply that is hurting prices that may push the

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<v Speaker 10>OPEC Plus group to extend output cuts into this year

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<v Speaker 10>in Hong Kong. Joined Wong Bloomberg Radio.

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<v Speaker 3>This is Bloomberg Daybreak Asia. I'm Brian Curtis along with

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<v Speaker 3>Paul Allen in Sydney. Well.

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<v Speaker 1>Our top story.

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<v Speaker 3>Boeing this morning, the FAA ordering the grounding of some

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<v Speaker 3>one hundred and seventy one planes in the States, and

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<v Speaker 3>global airlines have taken many of the seven thirty seven

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<v Speaker 3>Max nine.

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<v Speaker 1>Jets out of service as well.

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<v Speaker 3>Joining us now is Julie Johnson, Bloomberg Senior Aerospace reporter

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<v Speaker 3>with more on this. So I guess the basic question is, Julie,

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<v Speaker 3>what does this say about Boeing's manufacturing standards and controls?

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<v Speaker 11>Well, you know, this just has to be very dismaying

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<v Speaker 11>for people at Boeing. The company. You know, the company

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<v Speaker 11>once again is under immense scrutiny and and you know,

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<v Speaker 11>just just a blizzard of really bad headlines and just

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<v Speaker 11>a you know a lot of reputational damage to them

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<v Speaker 11>from this incident. In fact, that's probably going to be

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<v Speaker 11>what lingers more so than the grounding, But we'll see

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<v Speaker 11>on that. But anyway, Boeing's put it just put a

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<v Speaker 11>huge effort into improving quality and safety. They they had

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<v Speaker 11>definitely seemed to be making progress, and that was one

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<v Speaker 11>reason why you know, their shares shot up more than

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<v Speaker 11>forty percent through Friday from the end of October. You know,

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<v Speaker 11>Wall Street was starting to buy the story. And then

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<v Speaker 11>and then you have another very scary incident involving a

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<v Speaker 11>Max that points to a manufacturing flaw most likely, and

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<v Speaker 11>it's it's just deja vu all over again.

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<v Speaker 12>Yeah, you say most likely a manufacturing floor. I mean,

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<v Speaker 12>the investigation is still under way, but why is it

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<v Speaker 12>that we seem to be leaning that way at the moment.

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<v Speaker 11>Well, this design has been used by Boeing across the

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<v Speaker 11>previous generation or I guess more selectively, but it was

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<v Speaker 11>in a previous generation of Max. The design's been in

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<v Speaker 11>place since around two thousand and six without any incident,

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<v Speaker 11>and it was so so this you know, analysts are

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<v Speaker 11>thinking this is probably a one off incident, and it's interesting.

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<v Speaker 11>I don't know if we want to get into an

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<v Speaker 11>explanation of the door plug feature on the Max nine,

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<v Speaker 11>which is now being scrutinized by the FAA, and you know,

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<v Speaker 11>it's at the brunt of these inspections but the Alaska

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<v Speaker 11>Airline jet had two of these. They're cutouts for emergency

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<v Speaker 11>exits if airlines want to put them in there. Alaska

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<v Speaker 11>used what's called a plug in the fuselage to cover

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<v Speaker 11>the exits that didn't need them for the configuration that

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<v Speaker 11>it flies. So anyway, there are two of these behind

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<v Speaker 11>the wing. One blew out, the other was fine and

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<v Speaker 11>Friday night, and so it's more than likely you know,

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<v Speaker 11>a bolt failure or or you know, who knows, but

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<v Speaker 11>it's looking like a manufacturing issue.

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<v Speaker 3>Only two US airlines operate this seven thirty seven model.

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<v Speaker 3>I mean, it's still said to be a popular plane,

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<v Speaker 3>and we mentioned that other global airlines are affected. You

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<v Speaker 3>wonder if it's only two US airlines, and since it

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<v Speaker 3>was only this one incident, whether there is the strong

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<v Speaker 3>possibility that this passes quickly, that they.

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<v Speaker 1>Get a handle on this. Are you are you seeing

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<v Speaker 1>and hearing much about that?

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<v Speaker 11>Well, you know, again it's early days and and so

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<v Speaker 11>you know, we'll see what the NTSB and the FAA

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<v Speaker 11>find and Boeing's part of this as well as they

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<v Speaker 11>do as they do their inspection.

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<v Speaker 3>I mean, it's probably not a fair comparison, but we

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<v Speaker 3>see we see car recalls all the time, Yet the

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<v Speaker 3>standards for air flight and for driving need to be

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<v Speaker 3>very different.

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<v Speaker 1>Maybe you can just flesh that out a little bit.

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<v Speaker 11>Well, yeah, I mean, if you're at altitude, you know,

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<v Speaker 11>if you're climbing in an airplane, it's just a very

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<v Speaker 11>unforgiving environment if something fails. And so I think the

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<v Speaker 11>standards for safety are just so much higher for you know,

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<v Speaker 11>for aircraft than automobiles for example, just for that very reason. Well,

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<v Speaker 11>just back to your earlier you know, this is the

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<v Speaker 11>Max nine is the lowest selling of the family, so

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<v Speaker 11>from that perspective, and it's January when US airlines have

0:13:21.120 --> 0:13:24.760
<v Speaker 11>generally fairly light flying schedules, So this is I think

0:13:24.800 --> 0:13:28.920
<v Speaker 11>those are the two reasons why people are thinking this

0:13:29.160 --> 0:13:33.920
<v Speaker 11>probably is going to be relatively minor in terms of

0:13:34.000 --> 0:13:39.800
<v Speaker 11>impact to the industry and financial impact, but the reputational

0:13:39.880 --> 0:13:42.560
<v Speaker 11>hit for Boeing just really is bad.

0:13:43.640 --> 0:13:45.800
<v Speaker 12>Yeah, And there have been a number of other smaller

0:13:45.840 --> 0:13:48.520
<v Speaker 12>manufacturing issues as well that we've heard about. Nothing as

0:13:48.600 --> 0:13:51.600
<v Speaker 12>dramatic as a door plug blowing out in mid air,

0:13:51.679 --> 0:13:56.160
<v Speaker 12>but misaligned hals, a loose rud a bolt. What is

0:13:56.200 --> 0:13:59.120
<v Speaker 12>going on at Boeing? Is there an underlying calls to

0:13:59.160 --> 0:14:01.880
<v Speaker 12>what's to the sorts of manufacturing defics.

0:14:02.160 --> 0:14:05.840
<v Speaker 11>Oh yeah, absolutely, you know, and we could I could

0:14:05.840 --> 0:14:08.720
<v Speaker 11>spend the next hour talking about this because it's fascinating

0:14:08.760 --> 0:14:13.640
<v Speaker 11>and it's really complicated, and both Boeing and Airbus have

0:14:14.200 --> 0:14:21.560
<v Speaker 11>really struggled to recover from from COVID and when they

0:14:21.560 --> 0:14:25.600
<v Speaker 11>had Boeing stopped work on it seven thirty seven for

0:14:25.640 --> 0:14:29.440
<v Speaker 11>a few months, and while Airbus slowed its rate down,

0:14:29.920 --> 0:14:32.440
<v Speaker 11>Boeing was also dealing with the max grounding at the

0:14:32.480 --> 0:14:37.720
<v Speaker 11>same time. But I'm recovering has just been incredibly difficult,

0:14:38.520 --> 0:14:42.040
<v Speaker 11>and a lot of it has to do with for Boeing,

0:14:42.160 --> 0:14:48.080
<v Speaker 11>especially really skilled people who just you know, when the

0:14:48.120 --> 0:14:51.800
<v Speaker 11>buyouts came in twenty twenty, they just said I've had enough,

0:14:51.920 --> 0:14:55.680
<v Speaker 11>no more, no no more, you know, turbulence and job

0:14:55.720 --> 0:15:00.120
<v Speaker 11>and security. I'm I'm going to retire, and I'm so

0:15:00.600 --> 0:15:05.120
<v Speaker 11>Replacing that generation of workers, especially in aerospace, has been

0:15:05.200 --> 0:15:05.960
<v Speaker 11>a problem.

0:15:06.400 --> 0:15:08.040
<v Speaker 1>Julie, thanks so much for joining us.

0:15:08.160 --> 0:15:10.800
<v Speaker 3>We know that Chinese regulators are taking a close look

0:15:10.840 --> 0:15:14.080
<v Speaker 3>at this too. We had an emergency meeting that was

0:15:14.120 --> 0:15:17.880
<v Speaker 3>called that sources are telling us about no direct action yet,

0:15:17.920 --> 0:15:20.360
<v Speaker 3>but we'll be watching that Julie Johnson has been with us.

0:15:20.520 --> 0:15:26.600
<v Speaker 3>Bloomberg Senior Aerospace Report. This is Bloomberg Deabreak Gasia, your

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