Last Call: Boeing's Woes Continue
Rumack: Can you fly this plane, and land it?
Ted Striker: Surely you can't be serious.
Rumack: I am serious... and don't call me Shirley.
Below, Boeing's Dreamliner woes become more serious, as the FAA temporarily grounds all 787 planes.
Market Musings With CNBC Market Master Rober Hum
Narrow trading continues as major averages end mixed for fourth straight day. S&P 500 ekes out another 5-year high at the close, but Dow snaps 5-day win streak.
Boeing responsible for nearly all of Dow's decline today; stock falls another 2% after-hours as FAA grounds all U.S. Dreamliner flights.
Crude oil closes at a 4-month high after rising nearly $1 to $94.24.
The Word on the Street Tonight
FAA Grounds All Boeing 787 Planes Until Proven Safe/CNBC: "The Federal Aviation Administration grounded all Boeing 787 planes, also known as the "Dreamliner," until the aircraft are proven to safe to fly. Regulators made the call to ground the planes after two incidents thought to be battery related. On Wednesday, an All Nippon Airways flight in Japan made an emergency landing after the crew reported "smoke in the cockpit" and the battery-warning light went off. Last week, a Japan Airlines Dreamliner caught fire at Boston's Logan Airport. The emergency order was a result of the second incident "to address a potential battery-fire risk in the 787" and will "require operators to temporarily cease operations," the FAA said in a statement."
Boeing 787 Output, Review Threatened if Engineers Strike/Reuters: "An escalating series of mishaps on Boeing's new 787 Dreamliner has dealt engineers pushing for a new contract a strong card to play at the negotiating table. The engineers are considered by aviation experts to be crucial to a safety review of the 787 that the Federal Aviation Administration launched last week after a fire, fuel leaks and other failures sparked widespread fears about the new jet. … On Wednesday, the union made a "best and final" offer to Boeing, proposing to incorporate areas where the two sides had already agreed into the expired contract and extend it for four more years. This would end "protracted and increasingly contentious negotiations that appear headed for a strike," the union said and allow Boeing and its workers "to focus on reaffirming confidence and proving the 787 is the reliable and safe product employees know it to be." Boeing did not immediately respond to a request for comment on the offer. Experts said a walkout by engineers would impede both the safety review and Boeing's ambitious effort to double production of the 787 this year because key people with knowledge of the aircraft and the clearance to certify that production lines are meeting FAA requirements would be taken away. "The engineers have to be involved," said R. John Hansman, a professor of aeronautics and astronautics at Massachusetts Institute of Technology. "Nobody at the FAA knows this airplane as well as the engineers who were involved in the design and testing."
Billionaire Carl Icahn Takes Herbalife Stake: Reports/CNBC: "Carl Icahn is telling other investors he has bought a stake in nutritional supplements seller Herbalife, according to a Dow Jones report on Wednesday. Last week, the New York Post quoted sources as saying Icahn had taken a long position in the company. With the reported stake, the billionaire investor is betting against Pershing Square's Bill Ackman, who announced a major short position in Herbalife last month. Ackman, who has a 20 million share short position, has called Herbalife a pyramid scheme and has argued that federal regulators will eventually shut the company down. Icahn is also lining up on the side of Third Point's Dan Loeb. The activist investor disclosed an 8 percent stake in Herbalife earlier this month. In a letter to investors, Loeb, citing Herbalife's 32-year history, called Ackman's short thesis that the government was going to step in a shut the company down "preposterous." In laying out his bullish case in an investor letter, Loeb said "the shares could be worth $55 to $68, offering 40 to 70 percent upside and making the company a compelling long investment for Third Point."
EBay Earnings Hit Target but Outlook Falls Short/CNBC: "EBay reported holiday quarter earnings and revenue that were in line with analysts' expectations but the company's guidance fell short of estimates on Wednesday. After the earnings announcement, eBay stock initially ticked lower but later turned positive in extended-hours trading."
Dell Buyout Rumors Have CIOs Assessing Vendor Risk/WSJ: "Rumors of Dell's potential leveraged buyout by an equity firm have some customers wondering if and how such a deal could impact their IT investments. Though some CIOs worry that distractions resulting from such a deal could derail the company's technology roadmap, they also said they would easily switch to another vendor of computers, servers and storage — such as Hewlett-Packard Co. — if they needed to."
Malicious Virus Shuttered U.S. Power Plant/DHS: "A computer virus attacked a turbine control system at a U.S. power company last fall when a technician unknowingly inserted an infected USB computer drive into the network, keeping a plant off line for three weeks, according to a report posted on a U.S. government website. The Department of Homeland Security report did not identify the plant but said criminal software, which is used to conduct financial crimes such as identity theft, was behind the incident. It was introduced by an employee of a third-party contractor that does business with the utility, according to the agency. DHS reported the incident, which occurred in October, along with a second involving a more sophisticated virus, on its website as cyber experts gather at a high-profile security conference in Miami known as S4 to review emerging threats against power plants, water utilities and other parts of the critical infrastructure. In addition to not identifying the plants, a DHS spokesman declined to say where they are located. Interest in the area has surged since 2010 when the Stuxnet computer virus was used to attack Iran's nuclear program. Although the United States and Israel were widely believed to be behind Stuxnet, experts believe that hackers may be copying the technology to develop their own viruses."
Biggest Growth Story is Outside the US/FT: "The market had hoped for a "Grand Bargain". Instead, it got a small, ultimately insufficient fiscal deal. The best to be said of the agreement hammered out on New Year's eve is that it beat the alternative. While investors still cheered, nobody should mistake this for an economic, fiscal, or financial positive. Ideally Washington would have crafted a deal coupling long-term tax and entitlement reform with short-term stimulus. Instead, we got the opposite. The US now faces significant fiscal drag on an already sluggish recovery. … Today, while US companies are still reasonably priced, they are relatively expensive compared with the rest of the world (the S&P 500 trades at a 40 per cent premium to international markets based on price-to-book). Given the near-term outlook for slower growth, more volatility, and a debt-ceiling showdown, that premium may no longer be justified. At the same time, the rest of the world is in marginally better shape. Given the shift in relative fundamentals, investors should consider reallocating some portion of their holdings out of the US and into emerging markets, smaller developed markets and European exporters."
Manti Te'o Says He's the Victim of "Girlfriend" Hoax/AP: "Notre Dame said Wednesday that a story about Manti Te'o's girlfriend dying, which he said inspired him to play better as he helped the Fighting Irish get to the BCS title game, turned out to be a hoax apparently perpetrated against the linebacker. As news of the alleged hoax spread, Te'o himself released a statement, according to CBSSports.com, saying he as the "victim of what was apparently someone's sick joke and constant lies. … The university issued a news release Wednesday after Deadspin.com reported it could find no record of Lennay Kekua existing."
How Much is Your Degree Worth? New Pressure on Colleges to Disclose Grads' Earnings/NBC News: "…Efforts to disclose the earnings potential of degrees in specific majors from particular colleges and universities are picking up steam, promising to bring competitive pressure to bear on institutions by steering students away from programs with lower market value and colleges whose graduates fare poorly — and holding higher education directly accountable for the return on investments made by families and taxpayers. "We're on the cusp here of something really big," says Grover "Russ" Whitehurst, a senior fellow at the Brookings Institution who was an assistant secretary in the U.S. Department of Education during the George W. Bush administration."