Sure, easing today could give the current bull market a bit more room to run... But it would only worsen the fallout when the inevitable bust arrives, leaving the Fed with even less “ammunition” in an economic crisis. But we’re not the only ones who think easing would be a mistake. In 2011, Trump tweeted, “The Fed’s reckless policies of low interest and flooding the market with dollars needs to be stopped or we will face record inflation... “ In February 1968, the first Boeing 737 entered airline service. Designed to be a shorter, lower-cost twin-engine alternative to airplanes at the time, the 737 series grew to become the highest-selling commercial jetliner in history. In the last 50 years, the overall structural design of the 737 has changed very little. Sure, it’s been updated as technology has advanced, but it’s more or less a “living fossil” of the industry... A design that’s stood the test of time and even outlived newer jetliners long since retired... and a design that’s at the root of Boeing’s current troubles. By now you probably know the story... In 2011, facing pressure from rival Airbus, Boeing decided to upgrade the engines on its 737 rather than design a new aircraft... a change that ultimately led to the installation of the problematic anti-stall MCAS software at the heart of the recent crashes. Boeing has promised to upgrade its MCAS A bad month for Boeing...
software and install a previously optional “warning system” in all of its affected 737s, but even that’s not going as planned. After failing to meet the FAA’s April 1 software deadline, Boeing said it needs more time... Using a practice known as “non-advocate review,” Boeing employees not involved in the project were tapped to test and vet the new software. According to unnamed sources at the company, a problem came about during this process but the specifics are unclear. What we do know is that the 737 Max is Boeing’s best-selling jet. Grounding the planes has left the company with halted deliveries and a stockpile of finished 737s... all of which are still running on bad software. At the same time, business and regulatory pressures are mounting. Some airlines are demanding that Boeing compensate them as they cancel flights and their planes sit idle. At least one airline is seeking to cancel its deal to buy more Max jets... And there were zero orders for the 737 this past March, and only 10 for January and February combined. Despite the bleak outlook for Boeing today, it’s hard to speculate how much the company will hurt in the end. Boeing currently has 5,000 orders for the 737 Max already booked, and Airbus has managed to have a worse first quarter for orders of its A320 jetliner... the catalyst for Boeing’s 737 redesign in 2011. For better or worse, the 737 jetliner has become the lifeblood of Boeing... It’s the one aircraft that Boeing can’t afford to give up or redesign... And it probably won’t. What could possibly go wrong?
American Consequences
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