5 ms·

Boeing Shares Halted Pending News

47 points by tempsy 7y ago

tempsy 7y ago
I don't think a Dow component has ever been halted before, so this is highly unusual. Shares crashed more than 5.5% in the 30m or so before it was halted.
- londons_explore 7y ago
  I hope everyone who sold in those 30 minutes has a good non-insider-trading story. Stock markets seem full of insider traders who are rarely punished, and who keep people like me from investing.
  - Macha 7y ago
    From the video: The FAA have already announced it may be June/July before the 737 can be reapproved, and the previous guidance was April/May. That's the news that caused the initial drop, but apparently there's further news to come that caused the halt. EDIT: Apparently the further news was just Boeing's confirmation of the above.
- ceejayoz 7y ago
  https://investorplace.com/2019/10/merck-and-pfizer-boosted-the-dow-jones-today-thanks-to-upped-guidance/ https://investorplace.com/2019/10/merck-and-pfizer-boosted-t... > Shares of Johnson & Johnson (NYSE:JNJ) were halted in late trading pending release of news. The news turned out to be that Johnson and Johnson said it found no asbestos in the baby powder it recalled. JNJ was trading slightly lower prior to the trading stop, but is up over 3% after the close. (J&J is a Dow component.) https://www.sec.gov/fast-answers/answerstradinghalthtm.html https://www.sec.gov/fast-answers/answerstradinghalthtm.html > A trading halt—which typically lasts less than an hour but can be longer—is called during the trading day to allow a company to announce important news or where there is a significant order imbalance between buyers and sellers in a security.
- sergiomattei 7y ago
  Was it a circuit breaker tripping? Afaik markets often implement them to halt trading if the stock dips too fast too quick.
  - tempsy 7y ago
    It was planned given the news, but clearly something leaked beforehand because it dropped significantly in the minutes prior to the halt.
- BinaryIdiot 7y ago
  > I don't think a Dow component has ever been halted before, so this is highly unusual. What do you mean? Stocks get halted all the time especially before big news.
  - deleted 7y ago
    [deleted]
  - tempsy 7y ago
    Dow component... Though someone mentioned JNJ did. Otherwise it's very uncommon for a blue chip to be halted.
    - dmurray 7y ago
      AAPL had a trading halt last January [0], pending a profit warning. Google will likely find dozens if not hundreds more halts in Dow components. [0] https://thefly.com/landingPageNews.php?id=2842788 https://thefly.com/landingPageNews.php?id=2842788
tempsy 7y ago
Update: It's resumed trading. News was that the FAA would delay ungrounding of 737 Max until June/July at earliest, months later than Boeing originally promised.
K0SM0S 7y ago
Question: how much would it cost Boeing if the 737 MAX was never allowed to fly again? Could it bring them down, on the brink of bankrupcy, or is it something they could stomach?
- SteveNuts 7y ago
  Without "doing the math" - I'd say they'd get bailed out by the US government since Boeing is a huge provider of military hardware.
  - lucb1e 7y ago
    I expect they don't need bailing, they do so much more than a single airplane model.
    - favorited 7y ago
      I agree that it would be unlikely to tank enough that it needs a bailout, but it could significantly hurt. They have a large stock of undelivered 737 MAX airplanes (~400 brand-new planes sitting in parking lots), and wouldn't be paid for them. They also wouldn't be able to deliver on any existing 737 MAX contracts.
      - zelon88 7y ago
        You never know. Companies like Boeing create LTAs with their suppliers, agreeing to specific pricing over many numbers of years. Most of these contracts are written with language that if a part is no longer required that Boeing must still buy out the LTA. Basically, Boeing must buy parts for the 737 Max from suppliers even if they can never build another plane! Either that or the suppliers who make parts for the 737 will have to eat all the WIP and inventory costs which would be just as devestating to the domestic manufacturing market as if Boeing itself went under. Aerospace is a yuuuuuge market for American Manufacturing. It's one of the only manufacturing markets that China is unable to compete in.
  - K0SM0S 7y ago
trhway 7y ago
Boeing 737-800 crash landing in 2009 already highlighted the same general issues as with 737 MAX: https://www.dailymail.co.uk/news/article-7909915/Design-shortcomings-Boeing-plane-caused-737-crash-2009-new-report-finds.html https://www.dailymail.co.uk/news/article-7909915/Design-shor... >New York Times cites unpublished Dutch report on Turkish Airlines crash from 2009 in which nine people were killed near Amsterdam >Dutch investigators determined that design flaws led to the Boeing 737-800 crashing into a field >Investigators found that a sensor mistakenly triggered a command computer to idle the engine as the plane approached the runway for landing >But American investigators with the US government and Boeing pressured the Dutch investigators to emphasize pilot error while downplaying Boeing's role And that about simulator sounds very familiar too: >Boeing has stopped production of the planes and agreed to allow pilots to undergo simulator training before the jets return to service.
- panarky 7y ago
  We should stop talking about this as an engineering defect that the FAA needs X number of months to review. The root cause is not an engineering defect, but a set of organizational, cultural, and managerial defects. This is the root cause that leads inexorably to a variety of seemingly unrelated engineering defects. Perhaps regulators should hold off on approving new airplanes until Boeing can demonstrate that they have fixed the organizational, cultural, and managerial defects that are the root cause of their safety problems.
kangnkodos 7y ago
I thought I saw a headline earlier today that said that Boeing was permanently halting production of the 737 Max. It was probably fake news. I can't find any real news on that subject. Maybe the market today is overreacting to that fake news/rumor?
- oarsinsync 7y ago
  You may be confusing 'officially' with 'permanently' There's a headline on the front page of HN saying that they've officially halted production. https://news.ycombinator.com/item?id=22108220 https://news.ycombinator.com/item?id=22108220
mrr54 7y ago
I don't really understand halting share trading. Who is the exchange to say who may or may not trade a product you own? It just seems weird. If there's bad news, the people who pay attention most closely, and get access to that information the fastest should be allowed to use it, surely?
- lucb1e 7y ago
  Indeed, this is the first time I heard such a thing is even possible. When buying stock I got the impression I would own that part of the company and never read that I may not be able to sell that property if the company in question so wishes. I thought it was a relatively liquid investment but apparently not necessarily so?
  - devmunchies 7y ago
    Do people even hold the physical stock titles anymore? There is nothing preventing someone from selling a physical title. Its why I'm weary of a cashless society.
    - gowld 7y ago
      Stocks are not bearer instruments. Anyway, you are going to sell your paper certificates in the few hours trading is halted? To whom? Your next for neighbor? Someone on the sidewalk?
  - djannzjkzxn 7y ago
    Shares are often halted for major news. I think it’s meant to protect sellers from situation where many sell with a market order and the price goes near 0. This would result in a wealth transfer from more naive “Main Street” traders to “Wall Street” market makers. Although if the market makers are effective enough, you wouldn’t need the halt at all.
- lrajlich 7y ago
  It’s to prevent flash crashes. If you don’t like the rules of the exchange you can always trade your securities elsewhere (eg otc)
magduf 7y ago
They should have paused all building of the 737MAX long ago, and switched to other models. The 777 in particular seems to at least have a stellar reputation still.
- nwallin 7y ago
  You can't really just up and retool a production line for a one year delay. Even switching to 737NG isn't really possible. And the triple 7 isn't a replacement for the MAX. It has double the passenger capacity. It's like if Ford had to stop manufacturing Fiestas and manufactured F-150s in their place. These are different markets.
  - magduf 7y ago
    It should have been pretty obvious that this plane was a turkey and that building more of them was just throwing good money after bad. Meanwhile, they could have been producing more planes that don't have problems, and actually sell, even if they are for different markets. There's a backlog for all planes, so switching to something else would have at least helped clear that backlog and net more profit, instead of just building more planes that are just going to sit in parking lots. While doing this, they should have immediately started work on engineering for an all-new replacement for the 737. Of course, instead of having me as their CEO, Boeing would rather have some clown like Muilenberg who makes stupid decisions that got them to where they are now, and then give him a giant golden parachute when they get rid of him for incompetence. I would have cost far less.

47 points by tempsy 7y ago

I don't think a Dow component has ever been halted before, so this is highly unusual. Shares crashed more than 5.5% in the 30m or so before it was halted.

londons_explore 7y ago
I hope everyone who sold in those 30 minutes has a good non-insider-trading story. Stock markets seem full of insider traders who are rarely punished, and who keep people like me from investing.
- Macha 7y ago
  From the video: The FAA have already announced it may be June/July before the 737 can be reapproved, and the previous guidance was April/May. That's the news that caused the initial drop, but apparently there's further news to come that caused the halt. EDIT: Apparently the further news was just Boeing's confirmation of the above.
ceejayoz 7y ago
https://investorplace.com/2019/10/merck-and-pfizer-boosted-the-dow-jones-today-thanks-to-upped-guidance/ https://investorplace.com/2019/10/merck-and-pfizer-boosted-t... > Shares of Johnson & Johnson (NYSE:JNJ) were halted in late trading pending release of news. The news turned out to be that Johnson and Johnson said it found no asbestos in the baby powder it recalled. JNJ was trading slightly lower prior to the trading stop, but is up over 3% after the close. (J&J is a Dow component.) https://www.sec.gov/fast-answers/answerstradinghalthtm.html https://www.sec.gov/fast-answers/answerstradinghalthtm.html > A trading halt—which typically lasts less than an hour but can be longer—is called during the trading day to allow a company to announce important news or where there is a significant order imbalance between buyers and sellers in a security.
sergiomattei 7y ago
Was it a circuit breaker tripping? Afaik markets often implement them to halt trading if the stock dips too fast too quick.
- tempsy 7y ago
  It was planned given the news, but clearly something leaked beforehand because it dropped significantly in the minutes prior to the halt.
BinaryIdiot 7y ago
> I don't think a Dow component has ever been halted before, so this is highly unusual. What do you mean? Stocks get halted all the time especially before big news.
- deleted 7y ago
  [deleted]
- tempsy 7y ago
  Dow component... Though someone mentioned JNJ did. Otherwise it's very uncommon for a blue chip to be halted.
  - dmurray 7y ago
    AAPL had a trading halt last January [0], pending a profit warning. Google will likely find dozens if not hundreds more halts in Dow components. [0] https://thefly.com/landingPageNews.php?id=2842788 https://thefly.com/landingPageNews.php?id=2842788

tempsy 7y ago

Update: It's resumed trading. News was that the FAA would delay ungrounding of 737 Max until June/July at earliest, months later than Boeing originally promised.

K0SM0S 7y ago

Question: how much would it cost Boeing if the 737 MAX was never allowed to fly again? Could it bring them down, on the brink of bankrupcy, or is it something they could stomach?

SteveNuts 7y ago
Without "doing the math" - I'd say they'd get bailed out by the US government since Boeing is a huge provider of military hardware.
- lucb1e 7y ago
  I expect they don't need bailing, they do so much more than a single airplane model.
  - favorited 7y ago
    I agree that it would be unlikely to tank enough that it needs a bailout, but it could significantly hurt. They have a large stock of undelivered 737 MAX airplanes (~400 brand-new planes sitting in parking lots), and wouldn't be paid for them. They also wouldn't be able to deliver on any existing 737 MAX contracts.
    - zelon88 7y ago
      You never know. Companies like Boeing create LTAs with their suppliers, agreeing to specific pricing over many numbers of years. Most of these contracts are written with language that if a part is no longer required that Boeing must still buy out the LTA. Basically, Boeing must buy parts for the 737 Max from suppliers even if they can never build another plane! Either that or the suppliers who make parts for the 737 will have to eat all the WIP and inventory costs which would be just as devestating to the domestic manufacturing market as if Boeing itself went under. Aerospace is a yuuuuuge market for American Manufacturing. It's one of the only manufacturing markets that China is unable to compete in.
- K0SM0S 7y ago

trhway 7y ago

Boeing 737-800 crash landing in 2009 already highlighted the same general issues as with 737 MAX: https://www.dailymail.co.uk/news/article-7909915/Design-shortcomings-Boeing-plane-caused-737-crash-2009-new-report-finds.html https://www.dailymail.co.uk/news/article-7909915/Design-shor... >New York Times cites unpublished Dutch report on Turkish Airlines crash from 2009 in which nine people were killed near Amsterdam >Dutch investigators determined that design flaws led to the Boeing 737-800 crashing into a field >Investigators found that a sensor mistakenly triggered a command computer to idle the engine as the plane approached the runway for landing >But American investigators with the US government and Boeing pressured the Dutch investigators to emphasize pilot error while downplaying Boeing's role And that about simulator sounds very familiar too: >Boeing has stopped production of the planes and agreed to allow pilots to undergo simulator training before the jets return to service.

panarky 7y ago
We should stop talking about this as an engineering defect that the FAA needs X number of months to review. The root cause is not an engineering defect, but a set of organizational, cultural, and managerial defects. This is the root cause that leads inexorably to a variety of seemingly unrelated engineering defects. Perhaps regulators should hold off on approving new airplanes until Boeing can demonstrate that they have fixed the organizational, cultural, and managerial defects that are the root cause of their safety problems.

kangnkodos 7y ago

I thought I saw a headline earlier today that said that Boeing was permanently halting production of the 737 Max. It was probably fake news. I can't find any real news on that subject. Maybe the market today is overreacting to that fake news/rumor?

oarsinsync 7y ago
You may be confusing 'officially' with 'permanently' There's a headline on the front page of HN saying that they've officially halted production. https://news.ycombinator.com/item?id=22108220 https://news.ycombinator.com/item?id=22108220

mrr54 7y ago

I don't really understand halting share trading. Who is the exchange to say who may or may not trade a product you own? It just seems weird. If there's bad news, the people who pay attention most closely, and get access to that information the fastest should be allowed to use it, surely?

lucb1e 7y ago
Indeed, this is the first time I heard such a thing is even possible. When buying stock I got the impression I would own that part of the company and never read that I may not be able to sell that property if the company in question so wishes. I thought it was a relatively liquid investment but apparently not necessarily so?
- devmunchies 7y ago
  Do people even hold the physical stock titles anymore? There is nothing preventing someone from selling a physical title. Its why I'm weary of a cashless society.
  - gowld 7y ago
    Stocks are not bearer instruments. Anyway, you are going to sell your paper certificates in the few hours trading is halted? To whom? Your next for neighbor? Someone on the sidewalk?
- djannzjkzxn 7y ago
  Shares are often halted for major news. I think it’s meant to protect sellers from situation where many sell with a market order and the price goes near 0. This would result in a wealth transfer from more naive “Main Street” traders to “Wall Street” market makers. Although if the market makers are effective enough, you wouldn’t need the halt at all.
lrajlich 7y ago
It’s to prevent flash crashes. If you don’t like the rules of the exchange you can always trade your securities elsewhere (eg otc)

magduf 7y ago

They should have paused all building of the 737MAX long ago, and switched to other models. The 777 in particular seems to at least have a stellar reputation still.

nwallin 7y ago
You can't really just up and retool a production line for a one year delay. Even switching to 737NG isn't really possible. And the triple 7 isn't a replacement for the MAX. It has double the passenger capacity. It's like if Ford had to stop manufacturing Fiestas and manufactured F-150s in their place. These are different markets.
- magduf 7y ago
  It should have been pretty obvious that this plane was a turkey and that building more of them was just throwing good money after bad. Meanwhile, they could have been producing more planes that don't have problems, and actually sell, even if they are for different markets. There's a backlog for all planes, so switching to something else would have at least helped clear that backlog and net more profit, instead of just building more planes that are just going to sit in parking lots. While doing this, they should have immediately started work on engineering for an all-new replacement for the 737. Of course, instead of having me as their CEO, Boeing would rather have some clown like Muilenberg who makes stupid decisions that got them to where they are now, and then give him a giant golden parachute when they get rid of him for incompetence. I would have cost far less.