Boeing Crashes: $43 Billion in Share Buybacks Turn into Existential Threat

Of immediate concern is how much cash Boeing is burning due to the 737 MAX fiasco and now the coronavirus, and how much cash it can pile up to avoid a liquidity crisis.

By Wolf Richter for WOLF STREET.

Boeing’s shares [BA] came unglued, plunging 18.1% today, after having already plunged over the past four weeks. Since February 12, shares have crashed 46%, and since the peak on March 1, 2019, 57%:

Today’s plunge came after a flurry of disclosures and leaks in the morning about Boeing, including:

  • Sources said that Boeing is planning to draw down entirely and much quicker than expected its new credit facility of $13.825 billion as early as Friday, apparently worried that banks might freeze the credit facility later, and banks did during the Financial Crisis.
  • Boeing disclosed that it had negative net orders of -28 aircraft for the first two months of 2020, with cancellations of the 737 MAX exceeding orders for all models;
  • It imposed a hiring freeze to “preserve cash”

Trying to forestall a liquidity crisis. 

Of immediate concern is how much cash Boeing is burning to deal with the 737 MAX fiasco, and how much cash it can pile up to avoid a liquidity crisis.

Back in October 2019, Boeing obtained a new credit line of $9.5 billion, which about doubled the size of its existing credit line. Credit lines serve as liquidity backup that a company can draw down when it needs cash. Then in February, it obtained another loan facility, this time a two-year “delayed-draw term loan” for $13.825 billion from a consortium of banks, led by Citibank. This type of loan allows Boeing to wait drawing the money until it needs it.

Boeing initially drew $7.5 billion on this new credit line and was expected to draw any other amounts way down the road, as needed to deal with the 737 MAX fiasco. But the disruptions from the coronavirus have been thrown on top of its existing 737 MAX fiasco.

Now Boeing is expected to draw the remainder of the line as early as Friday, sources told Bloomberg. According to one of the sources, Boeing is drawing down the rest of the loan as a precaution due to market turmoil.

This means that Boeing is worried the banks might freeze the unused portion of the credit facility and make the cash unavailable, as banks had done during the Financial Crisis, when companies found that access to their credit lines was suddenly blocked just when they needed the cash most urgently.

The cash pressures on Boeing are enormous.

There is the plunge in revenues from stalled sales and deliveries of the grounded 737 MAX, and the cash drain from working with its suppliers for the 737 MAX program to keep them afloat.

Then there are the settlements with airlines, such as Southwest and American Airlines, over the grounded 737 MAX in their fleets, where Boeing pays the airlines. The amounts of the individual settlements have remained confidential, but in its annual report, released on January 31, Boeing spelled out its estimates for the combined amounts: $8.2 billion.

This came in two lumps. In Q2 2019, it “estimated potential concessions and other considerations to customers for disruptions and associated delivery delays related to the 737 MAX grounding, net of insurance recoveries,” at $5.61 billion. Then in Q4 2019, it estimated an additional $2.62 billion, for a total of $8.2 billion.

Negative new orders in 2020 so far.

Boeing also disclosed today just how awful its new orders look: During January and February, Boeing received net new orders of negative -43 orders for the 737 MAX, driven by a flood cancellations. It received only one order (from FedEx) for its 767, and 17 orders for its 787. This includes the conversion by Air Lease Corp of nine 737 MAX orders into three 787 orders; and the conversion by Oman Air of ten 737 MAX orders into four 787 orders.

This brought Boeings net total new orders for the first two months, net of cancellations and conversions, to a negative -28.

And Boeing delivered only 30 planes during those two months, down from 95 in the same period last year.

The hiring freeze to “preserve cash”

And now there’s a hiring freeze, pending a “review of priorities and critical needs,” the company announced in a letter to employees, reported by the Washington Post. This hiring freeze is likely related to the 737 MAX fiasco, and not the coronavirus, or at least not yet.

“We’re also taking steps to address the pressures on our business that result from the pain our customers and suppliers are feeling,” wrote CEO Dave Calhoun and CFO Greg Smith in the letter to employees. “It’s critical for any company to preserve cash in challenging periods. That’s why we’re implementing steps similar to what many companies are doing right now.”

If it hadn’t wasted $43 billion on share buybacks…

This mad scramble for cash and the existential urge to “preserve cash in challenging periods” comes after this master of financial engineering – instead of aircraft engineering – blew, wasted, and incinerated $43.4 billion on buying back its own shares, from June 2013 until the financial consequences of the two 737 MAX crashes finally forced the company to end the practice. That $43.3 billion would come in really handy right now:

The sole purpose of share buybacks is to inflate the stock price because they make the company itself the biggest buyer of its own shares. But those $43 billion of share buybacks cost the company $43 billion in cash. Now those buybacks have stopped because Boeing needs every dime of cash to stay liquid and alive, and shareholders, who’d been so fond of those share buybacks, are now getting crushed by the damage those share buybacks have done to Boeing’s financial position.

Shares of shale oil drillers collapsed by 25%-50% on Monday. Their bonds got massacred. Saudi-Russia price-war strategy appears successful in wiping out investors in the US shale-oil sector. Read...  The Great American Shale-Oil Bust Turns into Massacre

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  191 comments for “Boeing Crashes: $43 Billion in Share Buybacks Turn into Existential Threat

  1. Trinacria
    Mar 11, 2020 at 7:11 pm

    Is this the twin sibling of GE?

    • Willy2
      Mar 11, 2020 at 8:30 pm

      – The GE conglomorate also produces airline engines. So, GE should be worried as well.

      • 911Truther
        Mar 11, 2020 at 9:21 pm

        GE is bankrupt. Their accounting fraud gets exposed soon.

        • rankinfile
          Mar 12, 2020 at 6:46 am

          Both sell military craft and hardware.They will be preserved at all cost.Unfortunately,so will Tesla,different reasons though.
          They will outlive all of us.

        • nick kelly
          Mar 12, 2020 at 12:42 pm

          The reasons will have to be VERY different.

        • Mark Fuchs
          Mar 17, 2020 at 11:24 pm

          Everyone knew this buyback bubble was going to burst, hahaha in your face bojng
          Now what ?

      • mike
        Mar 12, 2020 at 12:07 am

        Both Boeing and GE will be put into a financial coma by the recent decision of the administration. However, for once (at last), this administration is making a wise decision as to the coronavirus: a cordon sanitaire limiting travel from Europe should help health authorities (maybe) start to track incoming, US citizens and their contacts, test them, and quarantine the infected ones.

        Indeed, maybe, all US citizens and legal permanent residents coming back from infected areas should also be quarantined automatically for 14 days: e.g., in a huge area of huts in the warmer areas of the Nevada/New Mexico desert, far from the cities. There is legal precedent for quarantining persons that have been infected and this is an emergency situation.

        Under section 361 of the Public Health Service Act (42 U.S. Code § 264), the U.S. Secretary of Health and Human Services is authorized to take measures to prevent the entry and spread of communicable diseases from foreign countries into the United States and between states. The authority for carrying out these functions on a daily basis has been delegated to the Centers for Disease Control and Prevention (CDC).

        Under 42 Code of Federal Regulations parts 70 and 71, CDC is authorized to detain, medically examine, and release persons arriving into the United States and traveling between states who are suspected of carrying these communicable diseases. The US Supreme Court would probably allow such preventive, quarantines for 14 days so long as the quarantined are held in reasonable, safe conditions and maybe somewhat compensated for their time. That is what should have been done starting in January 2020, when the Chinese desperately shut down their own cities.

        Both GE and Boeing are critical to the US economy. We can nationalize all of the banksters’ financial institutions, which are parasitic and which could mostly be merged together into a US bank and disappear without real harm to the overall economy, once they ask for aid but productive companies like Boeing, GE, Intel, GE, etc., must be preserved at all costs. China would love to buy the parts of a bankrupt Boeing or Boeing itself.

        Those are the kind of productive, non-parasitic companies whose employment of thousands of Americans produces multiplier effects in our economy and whose technology is critical to our military defense, which congress must always protect. All of the restaurants/coffee shops/florists/fast food places, etc., for example, are not worth one Boeing or one GE to the safety of Americans– no offense to florists.

        • Andy
          Mar 12, 2020 at 3:41 am

          Preserve them but not at cost to US taxpayer – let them go bust and new owners purchase the assets from a receiver.

        • Jos Oskam
          Mar 12, 2020 at 3:55 am

          “…for once (at last), this administration is making a wise decision as to the coronavirus: a cordon sanitaire limiting travel from Europe…”

          I might have agreed with you if they had done this immediately, the moment it became obvious the virus had traveled to Europe. Now the USA has outbreaks all over the place and this is just noisily closing the barn door after the horses have bolted.

          And don’t even ask me why the UK is exempt, while at the same time there are no travel restrictions from the EU to the UK whatsoever.

        • Brian
          Mar 12, 2020 at 6:58 am

          The travel ban might help a little, but what would really help is instead of a travel ban, require a negative test before entering the country. Also,more important, expand testing here! Those are the things we need that would actually help, not a travel ban that’s not even real. As for GE and Boeing, arguably only pieces of GE are really needed. So, some bailout might be required, but only for pieces. Jack Welch hollowed out that company. The bad accountants running it now are what people should have exactly expected. So bail out some of the divisions, but not all. As for Boeing, they seem to have destroyed their own engineering and manufacturing. I’m not sure what’s worth bailing out there. They can’t build airplanes or space capsules correctly, or even reliably help with satellite launches. They can’t even give an honest accounting of what their failures are. What exactly is valuable about Boeing?

        • grudan
          Mar 12, 2020 at 8:43 am

          Exactly, Jos. Unfortunately, trump continues to demonstrate his lack of understanding for how things like this work, and thus people will die. When we had 15 cases, he bragged about how effective his leadership was, and that they would simply disappear. We wasted time when there was still a chance to prepare testing capabilities, so we’re way behind on that too. And now still focusing on containment where the real risk is all the undiagnosed carriers spreading the virus internally, is like closing the door to the lab after you’ve already put the bacteria in the Petri dish. For someone who brags about his knowledge, and how many Twitter followers he has, you’d think he’d get the notion of “going viral.”

        • Mark_2
          Mar 12, 2020 at 9:30 am

          “Both Boeing and GE”

          (tangent warning)
          culture is everything because it dictates how people work together and if this ain’t right the company ain’t right.
          Also, culture doesn’t change immediately or in a few years with a new and capable CEO, which I believe Culp(GE) is. The bigger the ship the more difficult it is to turn. I sold GE at $12.13, lost around 30% of my investment and never looked back.

        • Jeff
          Mar 16, 2020 at 1:08 pm

          Situation may lead to another phase of Defense businesses both braking apart and consolidating… Similar to what happened in Defense during 80s and 90s.

    • 2banana
      Mar 11, 2020 at 8:45 pm

      Well, at least the Boeing CEO didn’t become the “jobs czar” while shipping thousands of jobs to China…

      • Frank
        Mar 11, 2020 at 11:03 pm

        Like most giant US Corporations, the Trump 2 rounds of Corp tax cuts did not go to investing in US operations, they were used for stock buy backs and executive bonuses. And the Trump tax cuts grew the deficit at its highest rate since WE II! Like everything else, Trump’s tax cuts are a broken disaster that will take years to recover.

        • Jon
          Mar 12, 2020 at 1:09 pm

          It would be helpful to remember that Congress is in charge of spending, not the president. Stock buybacks became legal under Bush, I believe, not Trump.

      • MC01
        Mar 12, 2020 at 7:01 am

        Under Jeff Immelt GE built an enormous R&D center in Bangalore which had a capacity about 30% higher than that of the recently closed GE R&D centers in Munich, São Paulo and Shanghai combined. It has to be seen to be believed.

        Immelt used the Bangalore R&D center to blackmail the Obama Administration first, and then the Brazilian, Chinese and German governments by continously threaten to move GE R&D operations there. Senior R&D people was sent to Bangalore on week-long tours as a not so veiled threat.
        No small wonder GE has suffered a serious “brain drain”: all the very smart people working in those three R&D centers got the message and started to look around for a new job. Rolls-Royce, United Technologies, BMW, Ricardo, Wärtsilä… they were all very happy to hire these folks.

        In a scale from 0 to 10, where 10 is the ultimate stupidity, this scored 132.

        • California Bob
          Mar 12, 2020 at 10:19 am

          But, but, BUT … GE has Six Sigma!!!

        • Mark_2
          Mar 12, 2020 at 10:59 am

          @California Bob
          “But, but, BUT … GE has Six Sigma!!!”

          …triple 6 sigma

        • Harrold
          Mar 12, 2020 at 1:08 pm

          And India is now closed.

    • MCH
      Mar 11, 2020 at 9:24 pm

      May as well be, it’s former former CEO came from GE.

      Thanks you Jimmy Mac.

    • Frank
      Mar 11, 2020 at 11:02 pm

      Like most giant US Corporations, the Trump 2 rounds of Corp tax cuts did not go to investing in US operations, they were used for stock buy backs and executive bonuses. And the Trump tax cuts grew the deficit at its highest rate since WE II! Like everything else, Trump’s tax cuts are a broken disaster that will take years to recover.

      • MD
        Mar 12, 2020 at 3:45 am

        Yup. Tax cuts (corporate and personal)/soaring stock prices creating jobs are one of the many lies told to us to ensure the status quo is maintained.

        Working out very nicely for the ‘have yachts’; at least till recently. But they’ll all be short the market now so the wealth gap will just grow.

    • Alex
      Mar 12, 2020 at 1:17 pm

      I never understood why Boeing continued building the 737max after the grounding. That to me said if we don’t have the aircraft back flying in 18 months they will go bust. Luckily they put a stop to this and can probably last another year. There is still a real risk the plane won’t get recertified to fly everywhere. Sure the FAA will give it the go ahead but others may not. They really should have scrapped it straight away amd got on with building a new designed single aisle plane.

      • char
        Mar 12, 2020 at 9:21 pm

        My guess is that they already bought the parts. Firing workers for a short time is also not economic wise but assembly is not the big money pit with planes that have been matured anyway

    • Anonymous
      Mar 13, 2020 at 6:46 pm

      Repercussions of intentional corporate looting.

  2. Unamused
    Mar 11, 2020 at 7:16 pm

    One gets the feeling that BA is already doing its bankruptcy liquidation. It just hasn’t been to court yet.

    Share buybacks should never have been allowed for numerous excellent reasons, but then, the same could be said of other regulations designed to prevent corporations from blowing up the economy.

    • timbers
      Mar 11, 2020 at 8:39 pm

      And who do you suppose will be paying for all those Boeing stock buy backs? We the tax payers when Boeing gets bailed out. In surprised it hasn’t been proposed in DC yet.

      • 911Truther
        Mar 11, 2020 at 9:23 pm

        Too big to fail is mounting on all sides. BA. AAL. GE. PBGC. The states. The cities. Too much. Ponzi dollar fails soon.

        • sierra7
          Mar 11, 2020 at 11:38 pm

          The “Invisible Hand” will soon be giving all of us the, “Visible Finger”!

      • Unamused
        Mar 11, 2020 at 11:14 pm

        And who do you suppose will be paying for all those Boeing stock buy backs? We the tax payers

        And your descendants. Since they haven’t been born yet they’re not a political liability. OTOH, you have your own resources and so will be much less affected, and you can give yourself a great deal of credit for that.

      • Mike G
        Mar 12, 2020 at 2:10 am

        The Pentagon will rig some “wins” of big defense contracts.

        • Unamused
          Mar 12, 2020 at 6:40 am

          Corporate welfare, crony ‘capitalism’, the unwritten mission of the MIC. Not that it’s any secret.

          Protecting the country? That’s for the rubes. People can be so gullible. It keeps the profits coming.

    • MCH
      Mar 11, 2020 at 9:17 pm

      There is no need to fear, Elon is here.

      And for the moment at least, TSLA’s market cap exceeds that of Boeing… and also… Lockheed Martin. I think it’s time for SpaceX to buy out Boeing.

      Forget those nasty 737s, we’ll fly you across the planet in a rocket instead.

      • char
        Mar 11, 2020 at 10:29 pm

        That is the plan. Though not as competition for the 737. But for very long flights fuel use is comparable. Problem was/is that rockets are single use while 747 are not

        • MCH
          Mar 12, 2020 at 12:50 pm

          I have two words for you: “REUSABLE ROCKETS.”

          Yeah, and I’m not saying how reusable…. that’s magic.

        • char
          Mar 12, 2020 at 9:45 pm

          Rockets are not that expensive and “flying” from London to Sydney in 2 hours instead of a day is worth a few extra $k. So fly 25 first class passengers for $3k extra for 20 flights and you get $1.5m That is what a rocket in serie production could cost.

          IMHO the magic is not so much in reusable but in safe. Financially it is do-able

      • Paul Ehrlich
        Mar 11, 2020 at 10:35 pm

        Will Elon buy such a scrap?
        He has already enough of it by his own!

      • Keith
        Mar 12, 2020 at 12:24 am

        Earth is flat. Moon landing was a giant hoax and we have had lies built upon lies since (including TV and Hollywood movies). We have satellites and such in lower space orbit, but nothing past 200 miles. Bigger fraud than US corporate and .gov accounting.

        • Dick
          Mar 12, 2020 at 12:45 am

          Earth is flat but objects orbit it. Nice.

        • Mar 12, 2020 at 9:06 am

          Dick,

          I think Keith was being sarcastic. Or at least part of his comment was sarcastic.

        • Tony
          Mar 12, 2020 at 3:33 am

          How do you orbit a flat earth?

        • Karl
          Mar 12, 2020 at 5:50 am

          OK, now pull back quite a bit – it’s way too far up.

        • Debt Wazoo
          Mar 12, 2020 at 7:08 am

          Dear sir, would you kindly pass that crack pipe?

        • Thomas S
          Mar 12, 2020 at 8:42 am

          How does anything “orbit” (in a “low orbit”) of course, around a flat earth??

        • Lisa_Hooker
          Mar 12, 2020 at 9:31 am

          Must be a very, very, very, very elliptical low space orbit.

  3. Tonymike
    Mar 11, 2020 at 7:17 pm

    Boo, hoo for Boeing. Don’t worry as Uncle Sugar will bail them out or let them built an unfit bomber or a brick with wings (at taxpayer expense) for a gazillion dollars each unit. (B21 Raider so nice we can’t even know it’s price. Yes it is a NG build)
    Looks like they are choking on their greed. No lessons learned, few fired, and the chairs are reshuffled on the titanic.

    • Kasadour
      Mar 11, 2020 at 9:22 pm

      The list of industries in need of a bail out or will be in need of one is getting long.

      • A
        Mar 12, 2020 at 12:21 am

        Boeing is one that will actually get a bailout in tough times. They’re like wall street – HQd in a blue state so Democrats like em and big business billionaires so Republicans like em.

        But the airlines, hospitality industry, oil drillers? No way you get Democrats in the house to vote to bail them out in an election year – not with Bernie/AOC voters holding their feet to the fire not to cave on big business and climate change.

        • nick kelly
          Mar 12, 2020 at 12:45 pm

          If the airlines don’t get a bailout who will Boeing sell to?

  4. Iamafan
    Mar 11, 2020 at 7:23 pm

    No wonder the bank repos are way up. Liquidity issues.
    This week will be the largest ever.

  5. IdahoPotato
    Mar 11, 2020 at 7:26 pm

    Thoughts and prayers.

  6. Rowen
    Mar 11, 2020 at 7:37 pm

    (Un)fortunately, Boeing is Too Big to Fail. It will get a bailout.

    • 2banana
      Mar 11, 2020 at 9:06 pm

      Most likely.

      But not before stock and bondholders are slaughtered.

      Now if we could get some perp walks of Beoing executives…

      • Unamused
        Mar 12, 2020 at 6:52 am

        Now if we could get some perp walks of Beoing executives…

        The oligarchy isn’t inclined to prosecute itself, 2b. OTOH, it might throw one of its own under the bus if it means the others get a bigger piece of the pie. That won’t happen with Boeing because it would make the pie smaller.

    • NewGuy
      Mar 12, 2020 at 10:22 am

      Tell them to sell all that stock that they bought to raise cash. Of course they will take a beating, but who cares. They created their own misery.

  7. Gandalf
    Mar 11, 2020 at 8:07 pm

    Share buybacks and corporate tax cuts need to be banned, forever, like with a Constitutional Amendment, to prevent corporate lobbyists from changing things from one generation to another.
    The time to get this passed will be during the coming Great Corporate Financial Crisis (GCFC, aka GFC Part Deux)

    • 2banana
      Mar 11, 2020 at 8:50 pm

      Things worked fairly well with Glass-Steagall on the books and enforcement (jail) for violations of fraud and GAAP laws.

      • Unamused
        Mar 12, 2020 at 6:55 am

        You leftists. All you can think about is integrity in corporate governance.

    • Steve
      Mar 12, 2020 at 11:48 am

      You do realize corporations don’t pay taxes. And Yes, on a micro level you can choose to buy or not buy their product, but on the macro level, that option doesn’t exist. It just make them move operation to a different, more advantagious country with lower taxes. Hell, even China had a lower income tax rate than we did.

    • clint
      Mar 18, 2020 at 2:07 am

      Agreed and these stock buybacks bringing the price up On their stock gave the executives how large a bonus year after year? We should only bail them out what they want minus the buybacks.

  8. GotCollateral
    Mar 11, 2020 at 8:25 pm

    I wonder who got stuck holding Boeing Baa1 toilet paper as rehypothicated collateral… lol

    • Steve M
      Mar 11, 2020 at 8:40 pm

      Toilet paper is a hot commodity right now.
      They might pull out of it yet.

      • Mar 11, 2020 at 9:08 pm

        Lesson to bondholders: when you invest in unsecured BBB trash, accept unsecured BBB as collateral, prepare to be willing to use it to use it as toilet paper, and make use when you use it, you wipe up all in those cheeks.

        • 2banana
          Mar 11, 2020 at 10:35 pm

          Even bigger lesson.

          Risk should be objectively valued.

          Like in a 15%+ interest rate to accept that risk of toilet paper bonds.

        • GotCollateral
          Mar 12, 2020 at 1:01 am

          @2banana

          But…but… you will miss out on the deal! Someone else will just come around and get that nice sweet yield! Don’t you want some yield too??? You have 5 seconds to decide.

          :P

  9. Olivier
    Mar 11, 2020 at 8:33 pm

    Boeing may be having only a hiring freeze, i.e., no layoffs yet, but the situation is a bit more severe at the suppliers: I know someone who has just been fired (with others) at one of those for lack of work.

    • 2banana
      Mar 11, 2020 at 10:36 pm

      Any word if the outsourced software coding to India was stopped?

      • tommy runner
        Mar 12, 2020 at 1:11 pm

        its being used on the new voting machines. every time a selection is made on npp ballot, it pushes the desk down.

    • Page 88
      Mar 11, 2020 at 11:30 pm

      What location or region???…….does not have to be specific…..example …northeast Ohio….

  10. Bobber
    Mar 11, 2020 at 8:34 pm

    No sympathy here for anybody losing money on Boeing, other than employees. The stock rose inexplicably for years. A pure momentum trade.

    • IdahoPotato
      Mar 11, 2020 at 10:16 pm

      “The stock rose inexplicably for years.”

      The buybacks had something to do with it.

      • Mar 12, 2020 at 2:48 am

        Boeing execs used share buybacks to
        extract 43 billion $ from the company.

        They know Boeing is “too big to fail”;
        so it’s: heads they win, tails we lose.

        And this is only the tip of the iceberg;
        more fraud and bailouts coming.

        Negative interest rates
        and negative risk premiums
        will ease the pain so the (dying) boomers
        ( Trump and Biden ) won’t feel anything.

  11. Willy2
    Mar 11, 2020 at 8:46 pm

    – I fear Boeing will “call in their chips” with members of Congress and will be bailed out. At least to save its military part of the company.
    – Will the executives be forced to pay back their profits / money they made by buying back Boeing stock ? I fear they will be allowed to keep their ill-gotten profits.

    • Doolittle
      Mar 11, 2020 at 9:18 pm

      Absolutely! Boeing owns half of Congress. We’ll soon be told that it is a national security emergency and that the taxpayers absolutely give Boeing $1 Trillion or else we’ll be doomed. Congress will cut hospital and health funding in this crisis if need be to keep Boeing afloat. The crooks have their priorities.

      • Unamused
        Mar 12, 2020 at 7:08 am

        Boeing owns half of Congress.

        Co-owners, actually. Think of them as shareholders expecting a fat ROI. Like every successful organised crime syndicate, they cooperate among themselves and share in the proceeds.

        Naturally, other stakeholders get burned, for example, you, but that’s only a problem if the co-owners think the victims might storm the Bastille, and the US doesn’t have one.

  12. Paulo
    Mar 11, 2020 at 8:54 pm

    Timing is everything. They can blame it on Covid 19.

    • Rock Me Daddy
      Mar 11, 2020 at 9:19 pm

      Boe-lehman(08)-american/united(01)-ing

      also aig…

      strap in kids (hee hee)

      the Glee/$$$chadenfreude index is gettin’ giddy

      here is my death pool:

      invesco
      lincoln finacial
      JPM

      bonus: DUH DUH DOICHE BANC and

      extra bonus: $Hitty banc C

      who you got? any REITS?
      blackstone kkr?

      hmmmmm

      remebr to hold up your arms weeeeeeeeeee ; )

  13. Brant Lee
    Mar 11, 2020 at 9:01 pm

    News is happening every hour. Tom Hanks has Coronavirus. The NBA has suspended its season. What the heck is this virus?
    Corporate America may all soon be in the same situation as Boeing along with the banks. The economy is living paycheck to paycheck. Top-down or bottom-up, when the payments stop coming in on the I.O.U.’s, even the FED can’t print fast enough.

    • Lumberjack
      Mar 11, 2020 at 9:15 pm

      Deutsche Bank announced that they won’t be paying off some of those sucker bonds that let them do this. To the tune of over a $Billion I’d say. Deutsche Bank is highly connected into other Wall Street banks by huge amounts of derivatives. The banks and the insurance companies that also make those bets are crashing fastest of the stock shares. The Fed just made a massive increase in the speed at which the printing presses are running by jacking up the amounts of repo money that will be loaned to their cronies at near zero rates. In terms of stimulus, that’s pushing on a string, but its probably keeping a bank alive right now, most likely Donald Trump’s favorite German bankers.

      • Frederick
        Mar 12, 2020 at 12:39 am

        Both DB and Commerzbank are looking very bad of late Wonder how low their stock prices can go before they go belly up or get bailed out if they aren’t already

        • MC01
          Mar 12, 2020 at 5:57 am

          Two companies that are a classic example of “too big to fail but too big to bail out”.
          Japan managed to avoid an ignominous liquidation of their big bankrupt banks because they had two mega banks in more or less acceptable shape (Mitsubishi and Sumitomo) who could swallow the biggest trainwrecks like Sanwa Bank under face-saving “mergers” and with the help of many trillions yen in fresh liquidity.
          But Germany has no such luxury, and a Deutsche Bank/Commerzbank merger would be as financially catastrophic as it is politically toxic.

          Deutsche Bank looks more and more like Mitsui Bank looked back in the days: once considered a vital cog in the Japanese export machine, it was slowly dismantled precisely by the need to keep those exports going no matter what. Scandals, catastrophic investments, huge losses, a “firefighter” government going around to hush everything down… the only thing Deutsche Bank misses is rebranding itself like Mitsui did in 1991.

          Lately I am starting to see German firms using Deutsche Bank less and less: last week I made a payment to a vendor in Germany not through DB like we used to but through “National Bank AG”.
          I was told by an old Japanese executive he understood Mitsui Bank was “finished” (his words, not mine) when the brightest graduates stopped applying for the jobs there, preferring the financial departments of Honda and Sony, “two new kids in town” (again his words, not mine).
          I wonder what DB’s “Mitsui Bank Moment” will be.

    • Rock Me Daddy
      Mar 11, 2020 at 9:35 pm

      youre right, i read on this site(wolf’s) that subprime credit cards and subprime auto loans are at record 90-day default/delinquency rates since the last crash; mainly in small and midsize regional banks, but also money center banks; their bigger portfolios and lack of lending to those groups tends to mask their particular exposures, but they got other covenant-lite™ problems….

      ; ) stay up

    • Frederick
      Mar 12, 2020 at 12:36 am

      It’s even worse than “paycheck to paycheck” Have you seen the debt clock for the US recently?

      • Unamused
        Mar 12, 2020 at 7:14 am

        Have you seen the debt clock for the US recently?

        “It was a bright cold day in March, and the clocks were striking thirteen . . .”

  14. VeryAmused
    Mar 11, 2020 at 9:08 pm

    As I have stated in previous posts I felt this was it. The virus accelerant that sets the slow burning financial tinder heap ablaze.

    But the speed in which this is devolving is absolutely breath taking.

    They may trip the futures circuit breakers again tonight. Hell, they may do it within 15 minutes of this post.

    I am becoming less amused by the day.

    • Unamused
      Mar 12, 2020 at 5:03 am

      GMTA.

  15. Rosie Riviter
    Mar 11, 2020 at 9:09 pm

    For many of those buybacks, the executives involved have already cashed their bonuses and sold their shares at the increased price. By now, they are on a yacht in the South Pacific saying “Suckers!” There is no loyalty among rats.

    • IdahoPotato
      Mar 12, 2020 at 12:03 am

      Denis Muilenburg
      CEO of the Year Award (2018), Thurgood Marshall College Fund
      Dean’s Award (2018), University of Washington College of Engineering
      Person of the Year (2018)

      • Mike G
        Mar 12, 2020 at 2:13 am

        Our American meritocracy, ladies and gentlemen

        • mike
          Mar 12, 2020 at 4:13 pm

          You have a good point. While I do advocate that our largest manufacturers (meaning companies that actually produce most of their products in the US, NOT Apple, etc.) be bailed out, there is no need to keep the same owners. (Contracts can be made by the government with the companies bailed out, so they can avoid messy bankruptcies.)

          That was the huge mistake that Obama made, allowing the banksters to retain control of US financial institutions and wealth, reportedly due to his treasury secretary and AG, whose motives no doubt were pure as the driven snow. Now, the US government should demand a substantial share in every US company that receives a bailout: convertible bonds can be required, and those can then be converted to stocks in these companies, which are deposited in the Social Security Administration, so regular Americans can also profit from later growth/profits.

          Since banks and Wall Street have a love affair with Enron-style, etc., shenanigans, derivatives gambling, then transferring their gains rapidly to their bankster owners via dividends, the US government particularly should require that any ultra-low interest rate loans or other bailouts to banks or financial firms be in the form of convertible bonds. In their case, those bonds should be for shares amounting to 99% or more of the total outstanding shares in those banks.

          Why allow the parasitic corrupt to scam Americans out of more money via bailouts as they have since the 2000s? Otherwise, we might as well bail out Ponzi schemes, con men (other than those in our government) and gambling dens.

          That way, we can finally take back our government from what Simon Johnson rightly called “The Quiet Coup” in his article in The Atlantic. The House of Representatives should condition all help/bailouts to businesses on these requirements that the US take back control over US wealth from Wall Street and the banksters.

          That way, the massive wealth transfer to the ultra-rich, which the “Fed” bankster cartel (which masquerades as a government agency) engineered over the last twenty years can be reversed.

        • mike
          Mar 12, 2020 at 4:15 pm

          I made a typo: instead of 99%, which would give government only half ownership, I meant to write 999%.

  16. Rexx Rock
    Mar 11, 2020 at 9:15 pm

    What a great day trade shorting BA.I thought it would tank today but not by that much.Unbelievable ! Everything is going down,is it 2008 ?

    • Frederick
      Mar 12, 2020 at 12:40 am

      Nope, it’s MUCH worse than 2008 actually

    • Joe
      Mar 12, 2020 at 2:59 am

      Author isn’t educated in finance. Companies don’t buy back their stock to simply “inflate the stock price”. They do it because they think their stock is undervalued and it would benefit remaining shareholders. At the time, management believed their stock was a good investment. Hindsight is 20/20 and they could not have predicted future events. Remaining shareholders benefit by keeping a larger share of the company’s earnings in future years.

      • Mar 12, 2020 at 9:24 am

        Joe,

        At first I thought you were being sarcastic. Then I re-read it, and now I think you’re serious. In case you’re serious and I missed your humor, I have to tell you that you just accomplished a unique feat: you posted the #1 biggest piece of WALL STREET PROPAGANDA BULLSHIT on this site ever, hahahahahahaha contgrats, dude, you made it!

        • Jon
          Mar 12, 2020 at 1:25 pm

          Wolf,

          I remember that Amazon had a round of stock buybacks in January of 2019. Do you happen to know just how much their total is on stock buybacks?

          Thanks.

        • mike
          Mar 12, 2020 at 4:21 pm

          Amen.

          Sarcasm Example for Joe:
          The company executives in companies who engage in all of these share-buy backs do not ever consider the fact that the stock options that they usually hold can be exercised for a substantial profit, if they merely pump up the value of their companies’ stocks. They are as pure-hearted and sweet as banksters, Fed officials, and former Enron executives.

        • Felix_47
          Mar 15, 2020 at 10:04 pm

          I do think the Chinese government would be happy to buy Boeing and maybe leave the military business to Raytheon or LM but buy the commercial business to make it fly with Congress. They could set up a holding company headquartered in the US and put well connected southern democrats on the board, lobbyists and other free trade advocates. Jim Clyburn comes to mind since he is in North Charleston where the SC assembly plant is. The commercial planes are largely built elsewhere now anyway. IBM sold its computer business, as a practical matter, to Lenovo. The mainframe legacy business is gradually vanishing.

      • sierra7
        Mar 12, 2020 at 9:48 am

        Joe:
        Ha-Ha-Ha-Ha-Ha-Ha-Ha-Ha-Ha…..ad infinitum!!
        (And this is before I read Mr. Richter’s response below!)

      • Lisa_Hooker
        Mar 12, 2020 at 9:51 am

        Dear Joe –

        001 buy stock in a low volume up market
        005 see price of stock going up
        010 break if c-suite execs have enough money
        015 goto 001

        • Ethan in NoVA
          Mar 12, 2020 at 11:32 am

          Props for BASIC program structure!

        • Mar 12, 2020 at 9:43 pm

          Double props for non-consecutive line numbering in the BASIC program structure.

          Evokes the idea that the company used to actually do stuff in-between the stock buybacks, but such functionality was gradually deleted as superfluous.

  17. Johnny W.
    Mar 11, 2020 at 9:20 pm

    Will BA be able to complete the Embraer deal now? Do they have the spare 4.2billion?

    • MC01
      Mar 12, 2020 at 3:18 am

      As far as I know the deal is going ahead.
      Lots of buzz for the new Embraer turboprop regional airliner, let’s just hope it doesn’t get scuttle to pad some c-suite’s bonus.

      • nick kelly
        Mar 12, 2020 at 1:11 pm

        Speaking of Turbo-prop, Bombardier was probably a leader until it decided to develop a jet liner ( the C-series now Airbus A 220)
        On the road show in India the Bombardier team arrived in one of their turboprops (Q 400? )

        The Indians seemed more interested in the plane on the tarmac than the upcoming jet. BTW: these things are no slouch: 400 mph with much shorter runway needed. They service Nanaimo on Van Isle from Calgary.
        I wish I knew why B could not stick to its knitting. Mitsubishi now owns the T prop division as B struggles to sell everything to recover from the C-series costs. I am PO’ed cuz B was Canada’s main player in aviation.

        At least the revival of the Twin Otter by Viking is going OK.
        What a plane. Its been chartered twice by US Airforce to evacuate sick person from Antarctica. Leaving from Calgary it hops to end of SA, then breaks rules ( goes past point of no return re: fuel) to land I believe on skis. No US plane capable unless maybe that Marine VTO plane with the giant props.

        If you are listening MC 101 any thoughts on B’s self- destruction, leaving only their small corporate jet division? Are corporate jets going out of fashion.

  18. Rock Me Daddy
    Mar 11, 2020 at 9:40 pm

    you know what is amusing: it is this: that the house finacnial serivces comitte has had scheduled this past 30 days, 3 heairng ona dead horse that was the wells fargo account openingfraud scandal;

    for which thier at the time CEO john fund got banned for life from the industry and fined 17 point 5 millllion dollars…dont feel bad for him he had ‘earned” 250 million with stock options by then at least…

    • Frederick
      Mar 12, 2020 at 12:42 am

      For the life of me I can’t understand why anyone would bank with Wells Fargo They treat their depositors worse than Goldman Sachs or Jon Corzine

  19. Rock Me Daddy
    Mar 11, 2020 at 9:42 pm

    the point is that just this week the us doj brought the SAME fruad account openeing charges against another regional bank

    fifth-third bank

    and thats great. thats fine
    but here is my gripe

  20. Rock Me Daddy
    Mar 11, 2020 at 9:45 pm

    jaime dimon has been the first and only bank ceo in all us banking history to have his bank be hit by the us govermint departmnt of justice with 4 feloniesi n the last 8 years

    including a RICO raceteering charge brought and active now.

    jpm bank under jaimie dimon is the first and nly money center bank in us history to be hit wit he RICO charge.

    the last time the us govomnt used RICO was in 2017 against the Gambino crime family.

    begs the question: is jpm banc under j dimon a criminal organization????

  21. Paulo
    Mar 11, 2020 at 9:47 pm

    Pre market was down over 1K after Trump gave his speech. Now, he is walking back just about everything on the travel ban to Europe and it still is 965 down.

    What a joke. This is it, methinks. And…worse than I ever thought it would be.

    • Rock Me Daddy
      Mar 11, 2020 at 9:58 pm

      he looks SO unhealthy, totally obese..i was shorting him as to wheter or not he would die in office…then o i took off the short…but now man..IF he wins another term, i will take that bet alll day ….but until november??

      they willl do a weekend with bernie; keep his ass ‘alive’

      xD

      (nfl season gone????) nooooooooooooooooooooo…0000..ooo..oo .o .o.o.oooo…oo.o.o..o.o.o.o..o…

  22. Mar 11, 2020 at 9:53 pm

    Boeing.
    This is very sad. And much of the problem is due to stock buybacks. Whereby many companies borrowed at very low interest rates and executed buybacks at exceptionally inflated stock prices.
    I’ve been doing financial research for a long time.
    In early 1966 I was advanced from a retail broker to head up an institutional trading desk with a strong regional broker in Vancouver.
    Naturally, I went to Seattle to write up a report on Boeing.
    There must have been some 5 offices, each with a “VP” to talk with research analysts.
    Without looking it up some 8 months ago I began writing it up–strongly condemning the buybacks.
    The default is an inevitable tragedy.

  23. KPL
    Mar 11, 2020 at 10:11 pm

    Given that anyway Boeing cannot sell its planes, the best thing to do is layoff your sales and marketing teams enmasse and recruit designers who can design planes that are fly-worthy (aka a startup). IMHO, that is only way out for Boeing out of this mess.

    • Suzie Alcatrez
      Mar 11, 2020 at 10:52 pm

      The Fed will be the buyer of last resort for Boeing.

      • IdahoPotato
        Mar 11, 2020 at 11:55 pm

        The military seems to have taken upon itself the task of keeping Boeing afloat. The corrupt nexus between Boeing and the military top brass has a long history. Underbid, overpromise and then demand taxpayer dollars to meet its commitments is a storied Boeing tradition. The Pentagon seems to be fine with this.

        https://www.nbcnews.com/think/opinion/broken-boeing-airplanes-are-going-military-thanks-corruption-bad-decisions-ncna1153671

        “The 737 Max isn’t Boeing’s only airplane that suffers from malfunctions. Its new aerial refueling tanker — the type of plane that makes it possible for the Air Force’s aircraft to traverse long distances while being based a safe distance away from enemy attacks — is also riddled with problems.

        And yet, the Pentagon earmarked $2.85 billion in the 2020 budget for 15 Boeing aircraft it can’t use — while retiring 29 refueling tankers that still work fine to free up resources for the new planes. With military leaders headed to Capitol Hill this week to testify about their budget priorities for 2021, lawmakers need to hold them accountable for the decision.”

        “A new tanker replacement competition saw Boeing’s design, based on its civilian 767 airliner, defeated by a competing offer from Airbus/Northrop Grumman in 2008. But here, too, there was controversy. Boeing complained the competition had been conducted unfairly, and the Government Accountability Office sided with Boeing — so the replacement competition had to be restarted again.

        Boeing was expected to once more lose to Airbus — but it emerged the winner in 2011, apparently due to having underbid on the price, gambling that it could make money back in the long term through additional sales and exports. Indeed, in 2019 Boeing openly boasted to potential export clients that they would essentially receive free research and development funding for their Pegasus aircraft paid for by U.S. Air Force dollars.”

        • MC01
          Mar 12, 2020 at 3:01 am

          The funny thing is the 767 tanker conversions used by the Italian and Japanese military, both designed and performed by Boeing, are absolutely fine. Zero problems.
          The newly built KC-46 Pegasus however suffers from what I can only call an absurd amount of issues that so far have cost Boeing $1.1 billion in penalties.

          These problems are not tied to some new and unproven technology, but to stuff that has been in use for decades, such as the latches keeping palletized cargo in place inside the aircraft. This is 50’s technology: it’s stuff that has been around for longer than most readers here.
          The reason is the contractor that manufactured this stuff had no previous experience in the airline or even freighter sector, and for whatever reason Boeing staid silent instead of sending the latches back to the contror like they should have done.

          This is exactly the same thing that happened with the Airbus A400M: unexperienced contractors brought in for purely political reasons and an uninspired design team resulting in a snakebitten design.
          The difference is the A400M is already being quietly retired: the Luftwaffe has sent half of their fleet in “long term storage” already and Spain is looking for a buyer for half their own. The new (and doomed) German-French mixed transport squadron is being equipped with Lockheed C130’s.
          But the KC-46 will have to be fixed, and it will cost billions to do so. If it was so important to handle the contract to Boeing, why not just buy the standard 767 conversion like Italy did? Not enough work for two-bit contractors low on quality but high on political backing?

        • MCH
          Mar 12, 2020 at 12:55 pm

          @MC01

          All in the name of lower cost and cheaper stuff…. it’s sad that Boeing didn’t learn anything from the 787 delays.

          They really need to fire that entire board, and senior management, get rid of the rot that started with Stonecipher, and continued with that idiot Jimmy Mac, and then onto Denny Mull, and now Mr. Calhoun.

          May be it’s time to merge to Lockheed Martin.

    • Mikey
      Mar 12, 2020 at 2:11 am

      Silly rabbit. Engineers go first. Sales keep the stock price up and you can hire h1b later.

  24. Citizen AllenM
    Mar 11, 2020 at 10:16 pm

    (Es)ta beuno, Compadre!
    -Flaco- playing- Texas Tornados

    Gonna sleep tonight….
    But I got to go on with my life….

    Hope it’s ok, you know what I mean?

    BA will be bailed out, just buy the bonds, suckerz.

    But things are going to be sideways for quite a while.

    2008 on steroids, my friends.

    Got my new hot computer up and running, guess I should hook up to my old options account and start cranking again.

    Easy money coming, before they figure they can’t stop the waterfall.

    A lot of people are going to be very unhappy as this proceeds, so we enter into an undiscovered country.

    The roaring 20s came after the Spanish Flu, so we will get a party until it drops after this clears.

  25. Justice
    Mar 11, 2020 at 11:18 pm

    Justice

    • Debt Wazoo
      Mar 12, 2020 at 7:19 am

      Debt Wazoo

  26. Whateva
    Mar 11, 2020 at 11:53 pm

    I hope it goes to zero. Before you ask me why I wish others ill – yes my pension money is in there too, and I still hope it goes to zero. This plundering madness needs to stop.

    • Frederick
      Mar 12, 2020 at 12:50 am

      You are correct The entire culture of fraud and theft needs to collapse and be swept away so that a better system can sprout and grow from the ashes Unfortunately a lot of good people will get caught up in the carnage Many have warned about what’s coming for a very long time Some listened, most didn’t

      • KPL
        Mar 12, 2020 at 1:45 am

        “Many have warned about what’s coming for a very long time Some listened, most didn’t”

        Hussman comes to mind. As he says you can look like a fool before the event (by listening and seeing the market go up) or after the event (do not listen and see the market go down). Ask Wolf – in his own words looking like a moron before Feb 20 and a genius after (with a few moronic moments thrown in!)!

        The great part of this downturn is the FED cannot say “hey you I am here to absorb it all!” Screw them!!!

      • say it aint so
        Mar 12, 2020 at 7:10 am

        Sounds like 2007…all over again….

      • S
        Mar 12, 2020 at 8:13 am

        >>The entire culture of fraud and theft needs to collapse.<<

        During a liquidation crisis alot of Ponzi schemes get discovered. Of course, all the Ponzi's eventually collapse for one reason or another. However, since we haven't been allowed to have a recession for the past 10 years, there are many many yet uncovered Ponzi schemes. It should make for interesting reading in the months ahead.

    • Mark
      Mar 12, 2020 at 6:24 am

      “I hope it goes to zero. ”

      Not while The War Party Of The Rich has anything to say about it.

      Vulture capitalism must be maintained. This will end in more socialism for the rich . Don’t you know that all their losses are passed on to the serfs ?
      And all their gains are pocketed as they laugh ?

      Again and again and again. Pull either lever in 2020.

  27. Social Nationalist
    Mar 12, 2020 at 12:25 am

    There is no bailout coming.

  28. ALWAYS TANKIE
    Mar 12, 2020 at 1:12 am

    Nationalize Boeing. Or you know just bail them out with national dollars and let them stay private. Maybe start a war, that might help.

  29. WES
    Mar 12, 2020 at 1:25 am

    Looking back, Boeing moving their headquarters from Seattle to Chicago, is probably when the financial engineers succeeded in eliminating the last aircraft engineers from top management.

    • Unamused
      Mar 12, 2020 at 7:21 am

      Letting financial engineers design the planes hasn’t worked out so well.

      • timbers
        Mar 12, 2020 at 8:25 am

        Yep.

        But really now, we all know financial engineering can not fail, it can only BE failed.

        What about the CDC, HHS, and other related agencies. I know we under fund these places and put in people in charge who know little or nothing of what the respective field is OR have faith based ideological agendas the antithesis of what the agency is intended to do. Also we have a financial engineer of sorts in the WH, but is that enough?

  30. MD
    Mar 12, 2020 at 3:55 am

    Another classic case of low IRs leading to malinvestment and disaster.

    And yet the Fed apparently is ‘pathetic’ and needs to lower them further and fire up the presses.

    But that’s what happens I guess when you have a man in the WH who built his fortune via financial speculation!

    The USA’s Berlusconi.

  31. Nick
    Mar 12, 2020 at 4:22 am

    Protect Boeing. We have seen many years of fight between Airbus vs Boeing… But if we don’t care about these companies in the next years they will be over-passed by China manufacturers.

    • MC01
      Mar 12, 2020 at 10:49 am

      China has a long way to go when it comes to airframes and a very long way to go when it comes to engines.
      Bullying and cajoling local airlines into ordering local versions of obsolete airliners and an overtly ambitious poor Airbus A320 clone (with Western engines and avionics) won’t get them anywhere.

      But Boeing has literally nothing going forward. The 777X risks becoming another Airbus A380 and for exactly the same reasons. The promised 777-300ER freighter conversion hasn’t materialized: it was one of the main sales pitches to present users to convince them to jump over to the 777X and the 787-10 by increasing the value of used aircraft. The re-engined 767 is a bad lazy idea and in light of the 737MAX a PR catastrophe waiting to happen. I could go on for a while. The only good things they have going right now is the work with Qantas to extend the 787 endurance and ETOPS certification and the twin turboprop Embraer is working on. That’s not much to go by.

      Boeing doesn’t need to be protected: the company needs people with a vision to lead it, not all these old boys that have managed to ruin some of the best engineering companies in the world, companies that as my mother always says “can run themselves through sheer inertia”.

      • Willy2
        Mar 12, 2020 at 12:20 pm

        – So, that’s why the Boeing executives bought back their own shares. They knew what was coming. They knew the “pipeline” was empty.

        • MC01
          Mar 12, 2020 at 2:04 pm

          No, they behaved like Mexico’s and Nigeria’s fuel thieves: they tapped into the pipeline and sucked it dry.

          In 2000 Boeing started a program called Yellowstone to replace all their offerings with three brand new aircraft families, all using as many common advanced technologies as possible. With regular upgrades Boeing would have been able to sell the Yellowstone into the 2040’s.
          The only aircraft to get ahead was Y2, the 787 (Dreamliner), allegedly because it was too far advanced in the development stage to cancel. The narrowbody (Y1) and the large widebody (Y3) were both scrapped, the former in favor of the 737MAX and the latter in favor of the double whammer of the 747-8 and 777X.
          It’s widely suspected the laughable re-engined 767 Boeing is trying to pitch airlines was what the c-suites intended as the Y2 “replacement”.
          These folks understand as much about aircraft as I do about manners.

          One can immediately see the problem here: this was an attempt to save time and money on R&D to goose share price and hence bonuses. I am sure I am not the only one who saw companies ruined by this kind of conmen and their enablers.

          Boeing needs to refill the pipeline right now, and not with 30+ year old aircraft with new engines and a few new bells and whistles. Much more critically they need to change the mentality at the top: the old boys have to go, every single one of them, and without severance package.
          This is not just to send a strong signal to both employees and the world at large, but also to close the door for good to these no-good sons of a gun for a few decades.

  32. Iamafan
    Mar 12, 2020 at 4:52 am

    The plan was 2nd quarter, the Treasury was to auction less marketable T’s so net new money would have been financed by the state and local governments (SLUGS). Well. Mnuchin basically put an end to that plan when he said they would not decrease the issuance of Treasuries for the second quarter.

    The real question is who will be the buyer? Scared investors still running away from the market or the Fed? If it is the Fed, then what can it result to? What will more Q.E. accomplish now?

  33. Say It Isnt So
    Mar 12, 2020 at 7:14 am

    just as in 2007…no one can say there were not signs of imminent danger…but as George Carlin always said, “It’s a Big Club and you Aint in it”

    Time for pitchforks..

  34. Tim
    Mar 12, 2020 at 7:15 am

    Slightly off topic, but Ireland has just closed schools and colleges – so far as I can see, though, they’re not suspending flights.

    Why not?!

    Looking at Irish numbers, about half of all cases so far have been travel-related, others are contact with infected persons (who may have caught it whilst travelling).

    • Debt Wazoo
      Mar 12, 2020 at 7:21 am

      > they’re not suspending flights.
      > Why not?!

      Because Frau Merkel.

    • Gandalf
      Mar 12, 2020 at 10:50 am

      The headline news (on Google News anyway) is that Trump has three resort properties in the UK and Ireland, and that is the ONLY reason they were excluded from the US travel ban he announced yesterday.

      It’s an utterly useless ban, designed only to feed his xenophobia about Europe and their population of immigrants.

      In Houston, an American tourist who’d returned from Egypt recently was diagnosed with corona virus.

      So right, why not ban travel to Africa? or his pal Modi’s India? or Mexico and South America?

      The most important thing to do right now, which the administration is NOT doing, is to start doing mass testing and contact tracing for the corona virus. Test kits manufacturing is still being ramped up. We need not thousands, but a few hundred million test kits right now.

      And that’s not happening

      The closest thing I can think of politically that matches these series of dunderhead move by Trump would be Jimmy Carter’s decisions in 1979, in response to the Iran Oil Crisis to

      1. Impose price controls on oil and gas rationing on the American people. Price controls and rationing accomplish only shortages and long lines.

      2. Add a windfall profits tax to the Cockroach US oil industry to prevent it from profiting on the skyrocketing cost of oil, a windfall created by created by Carter himself with a series of huge foreign policy mistakes in Iran:

      a. Carter first let it be known that if the Shah went down, the US would do nothing. So the Shah got toppled, very very easily, as all his supporters fled with this news.

      b. Carter then let the Shah into the US for cancer treatments, despite acknowledging in a Cabinet meeting that this might cause riots in Iran and problems for the US Embassy there. Right, Carter did not pull the US Embassy people OUT despite anticipating problems for the US Embassy in Iran. Smart and righteous man, he was, but really bad at figuring out how his own decisions might go wrong.

      c. After the US Embassy was taken hostage, Carter imposed an embargo on Iranian oil imports to the US. Let the record show that the loss of Iranian oil which caused the spike in oil prices was caused by an embargo that CARTER imposed. The Iranians didn’t shut off the oil, Carter did.

      I could go on and on about all the wrong things Trump has done in all this, from bad mouthing the Fed into all those stupid rate cuts, and his signature Corporate Tax Cut, the extra profits from which Corporate America used to do stock buybacks out the wazoo, buying at the top of the market. And Trump’s alienation of every country in the world not aligned with his nationalist anti-China, anti-European Union agenda.

      There’s no room for any more stimulus corporate tax cuts or Fed rate cuts. No more dry powder. America stands alone. China ain’t going to help by giving or selling us the millions of virus test kits that we need. America stands alone. Trump’s sole remaining buddies in North Korea, Russia, India, and Bojo in the UK can’t or won’t help

  35. S
    Mar 12, 2020 at 7:53 am

    Having been an investor during the 1987, 2001 and 2008 crashes, I think this time around “they” will close the markets for an extended period of the time. So I will be buying some gold miners a bit earlier than expected.

    • VeryAmused
      Mar 12, 2020 at 10:55 am

      Outside of the in place circuit breakers, this would be a very very VERY bad idea.

      This would signal to the market that the economy was atomic bomb level devastatingly bad.

      When they opened it would be unmitigated carnage.

      I can barely imagine…/shudder

  36. unit472
    Mar 12, 2020 at 8:57 am

    HISTORIC DAY! EVERYTHING is being liquidated on Wall Street.

    I used to kid my father after the market collapse in 2008 that he got live through two depressions and a World War. Looks like I’m catching up and I’ve got a plague too. We will see about the World War but I’m too old to participate.

    • Unamused
      Mar 12, 2020 at 9:47 am

      We will see about the World War but I’m too old to participate.

      If it comes to that you won’t have a choice, and neither will anybody else.

      • sierra7
        Mar 12, 2020 at 10:08 am

        Unit 472:
        I too see a total inevitable disaster emerging from our general economic greedy stupidity. I was enraged after the GFC ’08-’09 mess when we had a chance to alleviated some of the nasty de-regulations that were passed over the decades. Now we have no choice but to bite the bullet. My concern is my children and grandchildren and yes some great grandchildren that will have no clue as to how bad things can get before they get “better”.
        Most have good jobs that pay decent; they all have worked very hard over the years.
        I’ve warned them time an again about what we would eventually have to face in this system……sometime the whole fiasco has to revert to some kind of historical “mean” so as to re-value that which has been de-valued.
        The FED in my opinion has shot its wad. Yes, it can lower interest rates a bit more to zero but it’s too late.
        The “old guard” politicians of both parties have no stomach to re-levy the good regulations (rules of the capitalist game) that helped bring some prosperity to this country and the new seem not to have the historical education to have a clue.
        Boeing is a good example of how not to operate such what was a great company.
        “Greed is good” said Gordon Gecko. But too much greed will destroy, as it did in the movie…..movies are a certain reflection of real life.
        Get ready for the mass layoffs.
        I’m 90 years old this year and I remember the life my family led during the Great Depression.
        It ain’t gonna be pretty.
        Thx for a great blog, Mr. Richter.
        (I’m prejudiced because I was born and raised in SF)

        • Bobber
          Mar 12, 2020 at 12:43 pm

          The worst injustices may yet come, when they decide to bail out the corporate offenders for the good of “all of us”. Privatize the gains, socialize the losses.

      • 91B20 1stCav (AUS)
        Mar 12, 2020 at 2:32 pm

        Una-i sadly note that so many of my fellow citizens have Unit’s attitude. Probably too young to have gone through ‘duck and cover’ in grade school, or have been drafted into a shooting war in their later years (although those who missed out on that may have put any future possibilities out of their minds…).

        may we all find a better day.

        • Unamused
          Mar 12, 2020 at 3:10 pm

          I hear you. Thanks.

  37. Mar 12, 2020 at 8:58 am

    Buybacks are done on the cuff. Corporate cash is a hoax, likewise money on the sidelines. Money spent shrinking the float has some precedent, makes the company leaner. When the bottom is in they sell new shares and begin expanding their market cap. The internal damage to the dollar was masked by corrupt forex systems, carry trade rentiers, petrodollar politics and trade deficits. Global system rots from inside, IMF policies. IMF now runs EU as well but is trying to turn over a new leave. Central banks are buying gold and fiddling with bitcoin. This is a dollar problem, they will defend it at current price minus X. Next crisis is government spending.

    • unit472
      Mar 12, 2020 at 9:28 am

      Gold is down almost 4% Bitcoin 25%. .

  38. joe
    Mar 12, 2020 at 9:01 am

    Just try to explain conservative cash flow management to a young person. Get rolling eyes, blank looks, and who-are-you grandpa looks.
    They never saw bad times, always got participation and victim trophies, and never got mugged at a bus station at 03:00.
    The world ended with the end of multi-generational living and forced mobility for promised jobs.
    It’s all corporate propaganda now racing to the end of Roman and now Western Civilization.

  39. Iamafan
    Mar 12, 2020 at 9:08 am

    Guys look at your broker screens for the bid/ask spread of Treasuries.
    Quick look at 10 year notes, the spread was 30 bps and more.

  40. Jdog
    Mar 12, 2020 at 9:39 am

    It is amazing how you can go for literally decades behaving unethically without what seems to be any consequences, and then is a very short period, the reckoning for that behavior comes like a earthquake.
    The corporate officers at Boeing, by all rights, should be in prison for their behavior, which has resulted in the unnecessary deaths of airline passengers and crew, and the fleecing of shareholders by their ponzi share buy back schemes. If you want to know who is responsible for this crash, it is the CEO’s and officers of corporate America.

  41. DanS86
    Mar 12, 2020 at 9:39 am

    Boeing put its C-Suite above its customers and employees. Put it into bankruptcy, fire the C-Suite, and re-organize to lean and mean.

  42. Rcohn
    Mar 12, 2020 at 10:01 am

    I suggest that everyone examine the huge buyback policies of many retailers , whose future is in great doubt

  43. Unamused
    Mar 12, 2020 at 10:09 am

    The corporate officers at Boeing, by all rights, should be in prison for their behavior

    By all rights? They buy all rights, so nobody else can have any. Immunity from prosecution is one of the perks of the privileged class.

    That said, if you want to rile the base you instead go after the refugee victims of the privileged class. Generating defenseless targets is a profitable global industry. The courts will even allow their traumatised kids to be stored in cages until they can be sold off to the evangelicals.

    If you want to know who is responsible for this crash, it is the CEO’s and officers of corporate America.

    Responsible, but not liable, and not accountable. It’s not a crime to enrich the privileged officers of a corporation by burning all the other stakeholders – investors, employees, suppliers, customers, and the public alike.

    You know how it is. The price of freedom keeps going up and up, but the quality keeps deteriorating. On NC they call it part of the crapification of America.

    • unit472
      Mar 12, 2020 at 10:24 am

      Well Harvey Weinstein got 23 years in prison but that was for offending progressive morality not swindling shareholders and employees. He has to serve at least 20. OTOH Jeff Skilling got 24 years for his Enron crimes but he was released after 12 and is on the prowl again.

      • Unamused
        Mar 12, 2020 at 11:06 am

        Well Harvey Weinstein got 23 years in prison but that was for offending progressive morality

        Compared to the other kind of ‘morality’. If you can call it that.

        Of course, in some quarters Weinstein’s only mistake was in failing to coerce his victims into signing non-disclosure agreements, the kind that get you off the hook for just about anything so you can run for high office. But that’s a very different kind of ‘morality’, now isn’t it?

        In the old days a contract to conduct or cover up an illegal activity was invalid. When did that change? Forgive me for asking, but I get the feeling you would know.

        • Lisa_Hooker
          Mar 12, 2020 at 11:27 am

          Well, a major problem is when the NDA includes a prohibition of disclosure of the NDA itself. No evidence. Catch-22.

  44. Jonathan
    Mar 12, 2020 at 10:14 am

    BA is 12% down at this timestamp.

    • Unamused
      Mar 12, 2020 at 11:11 am

      IBM down 12.8%. Not that they’re competing. DJIA down 9.00%.

      Unlike interest rates, stock prices really can’t go negative. Although they said the same thing about interest rates, IIRC.

      • Mark_2
        Mar 12, 2020 at 11:59 am

        “Unlike interest rates, stock prices really can’t go negative.”

        No but as experienced folks pointed out in another thread, they can go to zero. At least they can’t take more out of your pocket than you spent initially!!!

  45. timbers
    Mar 12, 2020 at 10:22 am

    The TV is saying we need to suspend all taxes so the stocks can go back.

    The only reason The Little People exist, is to spend a little money so stocks can go up. That’s why we need to stop their taxes so they have a little more to spend to make the stocks happy again.

    If stocks go up, why do we need government?

    The stocks are our gods. We have to make them happy. That’s the job of POTUS, Fed and the corporate media.

    Everybody know this. Our top leaders have told us this is true.

  46. TownNorth
    Mar 12, 2020 at 10:26 am

    Also down considerably every day is DOW Chemical…this seems to be because they have a division that supplies chemicals and products for fracking and oil in general, but I’m not sure. Looks like they also had a buyback spree over the last few years, but not as large as Boeing.

  47. Say It Aint So
    Mar 12, 2020 at 10:28 am

    If you had watched Cramer on Tuesday night…he posted a slide stating, “How to restore investor confidence” and he listed these:
    1. Fiscal stimulus
    2. Change of Tack by President
    3. Step up in finding solution
    4. Back community based health System

    He was so somber and almost in tears…any body who was around when the dot com debacle roiled markets knows the perils of the Govt intervention…most of us were not too badly impacted by 2008…The fixing of a problem usually revolves around what was the root cause of the problem in the first place. If Trump bails out the airlines it will cause losing of votes…It is time the consumer who has managed their finances correctly is not on the Hook for the speculation that has taken place while at the same time the stock buybacks were in full blown activity….

  48. Iamafan
    Mar 12, 2020 at 12:08 pm

    Today, March 12, 2020, the Desk will offer $500 billion in a three-month repo operation at 1:30 pm ET that will settle on March 13, 2020. Tomorrow, the Desk will further offer $500 billion in a three-month repo operation and $500 billion in a one-month repo operation for same day settlement. Three-month and one-month repo operations for $500 billion will be offered on a weekly basis for the remainder of the monthly schedule. The Desk will continue to offer at least $175 billion in daily overnight repo operations and at least $45 billion in two-week term repo operations twice per week over this period.

    Bazooka or bubble gum?

    • Anmol
      Mar 12, 2020 at 12:21 pm

      Iamafan, you beat me to it. They bought a 1000 point rise in DOW. However, its doubtful how long they can buy off the shorts. Also, all these folks are over 60. What happens when the President, VP and the Fed ends up with the big Corona?

      • Anmol
        Mar 12, 2020 at 12:42 pm

        I have a feeling Trump has the Corona, and they are pre-empting another last selloff with this announcement.

    • Mar 12, 2020 at 12:36 pm

      Yes rates heading for zero and the Fed buys more? What does that accomplish? Is this shifting the liability from the taxpayer to bank reserves, and balance sheets?

      • Iamafan
        Mar 12, 2020 at 12:50 pm

        Oh remember the $60 billion a month T bill purchases.
        Now it ain’t in T bills only. They will but the whole slew…

        As a part of its $60 billion reserve management purchases for the monthly period beginning March 13, 2020 and continuing through April 13, 2020, the Desk will conduct purchases across a range of maturities to roughly match the maturity composition of Treasury securities outstanding. Specifically, the Desk plans to distribute reserve management purchases across eleven sectors, including nominal coupons, bills, Treasury Inflation-Protected Securities, and Floating Rate Notes. The distribution of purchases across sectors will be the same distribution as the Desk uses to reinvest principal payments from the Federal Reserve’s holdings of agency debt and agency MBS in Treasury securities. The first such purchases will begin tomorrow, March 13, 2020.

  49. CLN
    Mar 12, 2020 at 12:20 pm

    I’m wondering … based on what is presented here about BA, and what we already know about GE and some others facing cash flow “issues” … if this could be the start of (and a new model for) a bank run.

  50. doug
    Mar 12, 2020 at 12:21 pm

    . The Fed said it would offer $500 billion in a three-month repo operations on both Wednesday and Thursday. It also said it would offer $500 billion in a one-month repo operation tomorrow. In addition, the New York Fed added it would conduct one-month and three-month operations for $500 billion every week for the remainder of the month

    “bazooka” in the headlines…

    • Iamafan
      Mar 12, 2020 at 12:57 pm

      Now remember the borrowers (mainly only primary dealers) will need COLLATERAL in the same amount. Since the dealer weekly reports say the dealers have less than $250 billion in Treasuries and about $65 billion in MBS, then these larger amounts the Fed is targeting is really for the INVESTMENT HOUSES that cannot borrow from the Fed directly but can borrow from the primary dealer/banks.

      This is being done simply to make sure repo does not freeze up like in 2008-09.

      • Mar 12, 2020 at 3:35 pm

        Fed wants to REPO hedge funds, but they will use the money to short the market. Well maybe that is the plan, lure them into the roach motel, then squeeze them. Don’t think for a moment that after Fed commits 1T in QE to banks, that they are not going to back up their efforts in the overnights futures. Pelosi and the Democrats are forming their own public bailout. No repeat of 2008.

  51. Abomb
    Mar 12, 2020 at 12:45 pm

    Wolf, can you have an article explaining today’s moves by the Fed? What exactly will the be purchasing as far as “coupon bearing securities”?

  52. Iamafan
    Mar 12, 2020 at 12:48 pm

    Remember the Wolf airline index? I asked which ETF covers the airlines.
    I found the answer.

    The Airline INDEX is ^XAL (NYSE Arca Airline Index) but that is the index and not an ETF.

    The ETF or invest-able product is JETS. https://finance.yahoo.com/quote/JETS

  53. Bobber
    Mar 12, 2020 at 12:58 pm

    For several years, I’ve been hearing the vague phrase “it won’t end well”. I suspect we’ll be finding out what that means.

    • MC01
      Mar 13, 2020 at 7:35 am

      It won’t end well for taxpayers and fixed yield markets, that’s for certain.

  54. Gandalf
    Mar 12, 2020 at 1:15 pm

    I suspect Boeing will get broken up and its worst parts shut down and its best parts sold off to pay the huge debt. What’s left will be what can survive on their own but isn’t sexy enough to get bought up by others.

    Why? That’s what happened to Curtiss Wright after WWII. Curtiss Wright was at one time the largest aircraft manufacturer in the US. It made huge profits during WWII, but became increasingly profit driven rather than striving for excellent engineering.

    During WWII, CW was rapidly eclipsed by other smaller aircraft and engine companies that did still maintained excellent engineering cultures. Nevertheless, CW ended WWII with $100 million cash on hand. Rather than use this war profit to forge ahead into the jet age with new and innovative aircraft and engines, CW shareholders forced it to pay out the cash in dividends.

    CW had been working on building the most advanced wind tunnel in the US. Postwar, it just gave it away to Cornell University, along with money to finish the wind tunnel.

    Today, it is still alive as a corporation, making parts and doing equipment service work for other companies, very unsexy stuff, instead of major aircraft and engine projects.

    So, this isn’t the first time a dominant US aircraft manufacturer got taken down by bean counters trying run a technology driven business.

  55. nick kelly
    Mar 12, 2020 at 2:12 pm

    If you grit your teeth you can feel a bit sorry for CNBC today. Two hours ago their headline was: Stocks have big rally as WH announces help’

    Two hours later…all gone. At least in the old newspaper biz you had the excuse that it was yesterday’s paper.

    Maybe old Jimbo C is right for once. Maybe the Fed is just going to have to buy stocks or something. Japanification? Actually, Japan is doing OK. Big trade surplus. The massive debt is held internally and the yen is seen as a haven currency. Why that is, is far beyond my knowledge.

    • Gandalf
      Mar 12, 2020 at 2:18 pm

      Jim Cramer … hahahahahaha!

    • Gandalf
      Mar 12, 2020 at 2:26 pm

      Probably all algos- buy up stocks instantly based on news from the Fed and WH. Then, when the stocks rise, SELL. With connections to the exchanges microseconds faster than anybody else, the best algo traders can do the pump and dump faster than ordinary humans

    • Bobber
      Mar 12, 2020 at 2:58 pm

      Our friend Jim Cramer is herding people into stock like MSFT that “can make money in any environment”. Wow.

  56. The Sky is Falling
    Mar 12, 2020 at 5:32 pm

    It is increasingly looking like the Fed is pushing on a string. There efforts to reflate failed today

    If not for the breaker the markets would have kept plunging to zero.

    Look around you. Everything is shutting down. How many millions are going to be left with ZERO income in the coming weeks?

    They won’t shop. They won’t service mortgages, credit cards, car loans, etc…

    The economy will grind to a HALT.

    What can the Fed do about that? Sweet F-All. They can pump out 50 trillion dollars but that will just create even MORE PANIC.

    If pumping out cash was the secret to prosperity then Zimbabwe would be the most affluent country on the planet.

    The only way out of this is if this virus abates in the very near term. If it is still raging by the end of March, the fat lady will sing. She is warming up as I type.

    We are on a knife edge now. CONfidence is shot to hell. The big money is now looking at today’s result and questioning the Fed’s omnipotence.

    Questioning the Fed’s ability to levitate the markets.

    This is TOO BIG. Bigger than the Fed. They are overwhelmed.

    And yes, the sky is about to fall. Without a miracle

  57. Matt P
    Mar 12, 2020 at 5:57 pm

    Gov of Washington just ordered all area schools that the children of Boeing workers attend closed until Apr 24. Just wait until factory workers stop showing up because they habe no one to take care of their kids or they’re getting sick. This stock is only going to keep going down and it will hurt the entire economy. Most people have no idea how tied into everything Boeing is. They can drag down gpd all on their own because of the effects on their suppliers.

  58. Alex
    Mar 12, 2020 at 8:22 pm

    The amusement of this complete debacle is never ending.

    1. Boeing in a bid to make shareholders happy by rushing the 737Max is facing financially ruin.

    2. Trump gave companies huge amounts of money with tax cuts, many of these greedy companies used the money for share buybacks which are now moving towards being worthless.

    3. The man who thinks he knows it all (Trump) has proven beyond any doubt, he knows literally nothing about the modern world and modern financially system.

    Boeing will only survive this through Government bailout, plain and simple. So the American people will be saddled with fixing yet another crisis made by the greedy.

    I’d like to say I have zero sympathy, but I really feel for the people who didn’t vote for him. They are about to lose so much including financially security, elderly loved ones and freedom. As for the Trump voters, this is the man you thought could deal with a crisis, he can’t. So many people knew he wouldn’t be able to. Saying I told you so has no meaning in this case, we all lose.

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