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tv   Closing Bell  CNBC  March 13, 2019 3:00pm-5:00pm EDT

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thanks for phoning in. jim from cfra. strong buy rating of boeing on six-week lows on the back of the development. >> taking the three-day stretch to a 15% decline. >> "closing bell" will pick up the story right now. #. welcome, everyone to "closing bell. i'm sara eisen. >> i'm will frfred frost we will pick up with the breaking news. president trump ordering boeing 737 max 8 planes to be grounded. a live look at the flight tracker of 737s in the air right now. no new ones will be taking off some due to land we will talk to gordon bethune, that is coming up. let's get first of all to contessa brewer for an update on all the latest breaking news as it relate ts to boeing. >> today has been a turn jabts
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of stances when it comes to these max 8s because we saw both the canadian transport minister and now president trump deciding to ground the planes in the air space over both canada and the united states. let's go to the white house where moments ago the president issued the order >> we're going to be issuing an emergency order of prohibition to ground all flights of the 737 max 8 and the 737 max 9 and planes associated with that line any plane currently in the air will go to its destination and thereafter be grounded until further notice >> in fact, we're hearing from boeing now that they are recommending to the faa the temporary suspension of operations of the entire global fleet of 371 737 max aircraft at this point they say they've been in consultation with the faa, the
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ntsb and with customers and boeing supports this action to temporarily ground the max 8 and the max 9s as the president said boeing says, though, it continues to have full confidence in the safety of this airplane we also are getting a statement now from the american airlines saying that the faa informed us that based on new information they're grounding the u.s. boeing 737 max fleet out of an abundance of caution american airlines has 24 aircraft affected by the directive and they go on to say our teams will be working to rebook customers as quickly as possible we apologize for any inconvenience. right now over u.s. air space there are 28 737 max 8s and eight 737 max 9s those will be under this order from the white house to be grounded when they reach their destination and the question will be, how will the airlines go about accommodating these passengers there are leasing companies but
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other airlines have already gone ahead and brought in leased aircraft at this point for instance norwegian air bringing in a dreamliner to accommodate passengers leaving the united states for dublin. >> thank you for the update. boeing shares by the way turned around on the news they were higher, set to break their losing streak. now lower 1.5% loss of market cap, a $40 billion over the past few sessions let's bring in phil lebeau who covers the stock and the industry and on the phone right now. phil, about what this is all going to mean for boeing and what the company is going to do next >> a couple things, first of all boeing is going to comply and work with the faa. they're not going to fight this. that's the nature of the statement that they just issued. what we will see now is the question of how quickly can boeing say we believe that we f know exactly what the problem is with these aircraft and the reason that they're grounded and there's a software fix, a patch if you will, that is designed to
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assist with some of the problems that they believe, they believe, at this point, contributed to the accident with lion air they don't know that for certain. that software fix and you'll have a lot of people pointing to it saying, well they can just put that on the planes and everybody can take off again they don't know definitively what caused these two crashes and that's what's been part of the hesitation there i would be curious first of all and we haven't heard yet exactly what faa means when they say new information. have they received some data from somewhere that has indicated look, we think there is a systemic issue with the 737 max aircraft in terms of the airlines and rebooking passengers, i flew in, i'm in phoenix and flew chicago to phoenix two hours ago and landed and flew on a 737 max 9 i can tell you it was the topic of conversation for everybody that i was sitting near. they were all saying well, i wonder if we're okay to fly.
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i didn't come across anybody who said, i'm worried about being on this plane, but it is something on the minds of travelers. i think that you'll see american, southwest and united able to quickly move their passengers into other flights. southwest, keep in mind, they have 34 max 8s they've got a fleet of 750 planes while it will impact their services to a certain extent, certainly in the next couple days, they will be able to quickly reschedule those passengers and the same thing with american and united relative to their whole fleet the number of max aircraft is still relatively small >> well, phil, i'm sure in the age of wi-fi on planes, i'm sure it's a topic of conversations for those passengers still in the air on 737 max 8s and wish them as easy and safe flight which is the best case regardless of this latest change in recommendation. what did you make, phil, of the president's statement? do you get the feeling that president sort of pushed the faa
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towards this decision or overruled the faa at all >> i don't think he overruled -- look this is conjecture. i don't think he overruled, but i think if you listen to kayla tausche or eamon javers and they cover the white house extensively, this is a president who it appears when he sort of has made up his mind about something, that's the direction of the policy. whether or not he did this in consultation with the faa, little hard to say it may be after canada said we don't feel comfortable with this and this wave of countries and airlines saying we're grounding the plane, it may be that the president finally said you know what, we look a little odd going against the trend that is happening around the world out of an abundance of caution shut it down and ground these planes there's no way of knowing what made him decide today that finally we were going to ground these planes, but i wouldn't be be surprised if certainly the fact that everybody else has done it, certainly weighed in to
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his decision >> so phil, a lot of people, especially investors, are trying to see whether there are parallels between this and then what happened in 2013 when the boeing dreamliners were grounded because of the lithium ion battery fires. it turns out there was a lot of worry about that as you remember, and then they were back in the air and it became an important, you know, product for boeing and the stock went on a historic run do you see this as a parallel? do you see parallels and differences and should that be a template for investors >> i think it's a little bit hard to call it an exact template and the big difference is this, with the battery fires, they knew what the problem was they knew it because of the two incidents, one where the plane landed in san diego and then you had the incident in japan and there was also a plane that was landing in boston. so they had these fires or batteries that were clearly catching on fire and they could immediately say okay, what's the problem here once you know that problem it's a lot easier to zero in on a
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solution especially for a company like boeing which is very much driven by what's the data shows, how do we fix this as engineers in this case, they think they know what caused the lion air crash or contributed to it, which was perhaps faulty data being fed foot aircraft's computers that was pushing the nose down and the pilot perhaps didn't handle the situation the right way. they don't know that definitively that's the big difference between this grounding and what happened in 2013 with the dreamliner to a certain extent this is a little bit more of a black box and not trying to be a play on words or a pun here, but they are not entirely sure. it's going to take them some time to say okay, we know that this is the issue and we know that we have a solution here you can bet that airlines and countries will say, are you s e sure is this exactly what the problem is. >> two fatal aircraft crashes
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this time around talk to me about the stock price move i know we've come into today with significant declines already, but are you surprised with this fairly significant development with the u.s. grounding the flights that the stock is only down a percent or so at the moment >> well, it was down 11%, wilf, over the last couple days. it took a pretty good hit over the last couple days we've talked about this over the last few days on your show the bull case remains for many people who look at boeing and say, boy, look at that backlog of orders. it is likely that airlines are going to cancel their orders probably not now unless this drags on for upon or extended period of time and people really question the max aircraft, which i don't foresee that at this point i think that's what the investors are focused on they're focused on okay, them take a hit from this, some financial implications, some system over the last few days
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from the -- some estimates over the last few days it might be a billion five, that's just a guess at this point. if you look at boeing's stock and think this is a buying opportunity you are looking at the fact that with the max line alone, it's a six-year wait to get a new one. if you're an airline where are you going to go if you no longer have confidence in this aircraft are you going to air bus it's a six year wait for an a-320 something close to that. it's not like you can go out and find another airplane right away. >> down 16% in the last eight sessions all negative a loss of $41 billion in market cap. thanks. >> phil, thank you very much for joining us i'm sure we'll be in touch again if there are more developments meantime southwest just released a statement. contessa brewer has the details of that. >> they posted this on their website. southwest is aware of media reports a stating that boeing 737 max 8 fleet will be grounded in the united states, and we are
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currently seeking information and confirmation and additional guidance from the faa and will respond accordingly in the interest of aviation safety and one we learn more the updates will be posted on-line at this point, the -- we saw southwest on this news plummet about 3.6%, although it looks like it's rebounding somewhat. that follows american airlines' confirmation that they're working with the faa and the ntsb and boeing saying that they're recommending to the faa the temporary suspension of the entire global fleet of max aircraft, though they continue to stand by their aircraft and its safety wilfred? >> contessa, interesting how this is sort of drip fed out, that there wasn't a clear once and for all initiative that reached all the airlines, seemingly southwest hasn't got all the details yet. >> that's right. >> thank you very much >> let's continue the discussion and bring in chris hart former ntsb chairman. chris, thanks very much for
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joining us last night, the faa issued a statement saying once again, that they see no systemic performance issues and provide no basis to order grounding of the aircraft what do you think has changed in the last 18 hours or so? >> well that's the big question. thanks for asking me i'm getting reference to new information and speaking in the blind because i don't know what that new information might be. i would just note that this is unprecedented, not open in the state of knowledge as was previously mentioned, but in the basic nature of this recall. the battery grounding was based upon a mishap that once it occurs the pilots can't do anything about it. that makes it a very challenging -- since the pilot can't do anything about it, it's a single point failure and -- which pilots can't do anything about whereas in this case, pilots can do something about it and that's what was going on was
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that pilots were being trained to be able to respond to this problem. it's unprecedented in the sense that this is the first grounding i'm aware that the faa has done that does not involve a mechanical problem that disables the airplane beyond the point of a pilot to recover >> well, isn't partof the problem, christopher, the investigations are such in early stages i don't know if the black box from the ethiopian air flight has landed for download which they're talking about, you know, which country it's going to do that in. how does the faa make a decision like this without having that kind of information? >> well, that's why i'm saying i don't know what new information is because the new information is certainly spotty and that only from one. we know pretty much nothing from the ethiopian accident yet except for what a few radars traces we have that information is insufficient to determine much of anything. it's also unprecedented to be doing a grounding on the basis of such little knowledge it's kind of using a
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sledgehammer when a more surgical approach might have been more effective. >> chris, i'm a little confused on the -- i know we still don't know definitive details on either of the crashes, certainly not the second of the two, but is there not a gray area somewhere here in between where it is not definitively pilot error and it is not definitively mechanical and while you're in that level of uncertainty, surely you err on the side of caution and without pointing the finger at anyone you make sure the planes are grounded until it's sorted out once and for all? >> the question -- that's a good point, but the question is grounded until what end state? in the case of the batteries, they had to demonstrate that batteries could have a fire and the fire would be vented from the airplane so it wouldn't damage the airplane. there is a very objective measurable end state there when the issue is like this one, where it's a problem of the pilot airplane interaction if you will, what is the end state that will stop the grounding
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i don't -- i'll have to see what the statement says on, you know, grounded until what happens. that's going to be difficult to determine. >> yeah. i mean what kind of information is being gathered at this point beyond the black box what can they get from satellite data, for instance, and what else do you think investigators from the faa would be looking into >> they're probably a wide variety of sources they can find the black boxes will be the richest ones there are typically, i don't know about that part of the world, but other sources of information available. we've heard about radar tracks in the case of the ethiopian crash, so there are undoubtedly other sources available, some of which are more public than others, but i know the investigators are good at that and also good at having enough trust to be given access to even information that doesn't normally enjoy public access >> chris, what's your take on how this information has been released in the last half an hour to 40 minutes and the fact that there are still many 737
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max 8s in the air at the moment and presumably passengers in the advent of wi-fi on planes, will be aware that this ban has come into place >> well, i would just say as i said before, it's kind of to me an unfortunate use of a sledgehammer when a surgical approach would have been maybe better we'll have to wait and see one of the big question marks at this point is, grounded until when that's -- the end state is not clear. >> if it is a software issue as some have reported and speculated, how long does that take to fix? >> it depends on the nature of the issue and typically if it's a software issue it's a human issue. it's not going to be just one or the other because the two have to work together it's a question of not only the software but what are the human factors'aspect of the software those have to be addressed as well and one be dering what the end state is going to be. >> yeah. plenty of questions still. chris, thank you for helping us digest what we know so far.
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>> thank you for having me former ntsb chairman let's bring in gordon bethune former continental airlines chairman and cnbc contributor. were you surprised to see the u turn president trump now grounding the 737 maxes following the rest of the world after as clear as last night the faa said there's no risk never seem to be amazed about people who don't know anything about the topic can make decisions of this magnitude. he is the president of the united states. i thought we would have fairly good process in place to investigate accidents and then this one is very difficult, however, the airplane has been flying for a couple years, thousands of flights, 350, in the air today, but i'm saying, that proximity of the time is what is causing the political pressure, not the data that says the airplane
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i'm a little chagrined without getting the data which is imminent because they have the flight data recorder. >> one of the headlines at the bottom of the screen from a statement from the faa, getting a little more information, saying that this decision was in part because of fully refined slight a little bit about what was behind ordering the temporary grounding of the 737 maxes as a result of the data gathering process and new evidence collected at the site and analyzed today. >> does that alter your sort of level of surprise slight criticism of the decision if it is the faa making a decision based on updated information and data as opposed to the president perhaps overruling what the faa had previously decided >> absolutely. if the faa has information that is applicable gives it a determination that's more serious than what we have now,
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which is nothing, then i'm going to support them. they're very professional people and don't have an agenda, so, you know, i put my full faith and confidence in them i do know, you know, our country has a fairly good regulatory process and the faa in our country is about as good as in the world and flight training standards are the highest. this may be as one of your guests mentioned earlier, if it's asoftware, well then it's a human factor two, too. those issues need to be addressed if, in fact, they have found the cause of it. it will be more than just a couple of weeks until it gets fixd >> i mean, why were we last in the world? even close allies like the uk and australia and canada this afternoon, all stepping out before the faa which usually sort of leads global policy and standards in this space as you know why did we come behind them? >> you know, i think they want to be very careful in what they
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say because they would be criticized if they're wrong. you can't be strung up in saying down the airplane and stop flying nobody can criticize you except the people who own the airplanes have to pay for it they would rather take that consequence in making a mistake and then a third airplane heads rolling and they could envision that they're doing the same thing for them in their circumstances. i don't want to talk for the leaders of china and the uk. they're making decisions what's good for them, but i mean i worked for the boeing company five years and ran the 737 program and i know that airplanes are thoroughly vetted. nobody is perfect and this illustrates that they're not i don't think the boeing company had an agenda to try to pass off something that's not good enough they just don't do that. >> gordon, talk to me a little bit more about this software issue which again we must always
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preface with the fact that we don't know the finer details yet, but if it is a software issue is that not in this modern age a manufacturing issue more thana pilot issue, just the changing nature of the technology is now -- >> yes i think so one of the things that i'm learning, too, because i'm not current with the current design, but there's two of them one on the left and right, and my understanding from talking to sources this morning, is that if there's a split in the readings, one reading one way and one reading the other, the system still works. if either one is pointing the need for the airplane to come down that's almost ludicrous. that's, you know, a philosophy that needs more thinking and i would suspect a software fix if they both indicate there's a problem certainly then the probability of problem exists, what i'm saying is and the other
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not, that's probably a glitch and not a real emergency they shouldn't activate that system and surprise the pilots and everybody. unfortunately, we're sitting here in the comfort of our own home and these guys are about 800 feet just having taken off and bang, nose pitches down. i don't want to criticize those pilots >> so gordon, i mean, if you were still running an airline, say southwest or american today, who has more of these planes in their fleets, how do you manage a situation like this? are you on the phone with boeing are you in communication with your customers how do flights change? >> well, when you can fly, obviously, for the last few days they have these guys, now he them all, you go back and you have every pilot review all the information and the corrective action you should take because the corrective action for this is documented. there is a disconnect. there's a -- the stabilizer,
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which is a horizontal tail, is, in fact, has the run away procedure, not connected to this problem but for any other reason the stabilizer does this, you cut it off it's an emergency cutoff switch right by your leg. either pilot has it there. and the other thing is you turn off the auto throttle and autopilot and fly the airplane manually and get rid of all of the software flight data recorder and computer information and you fly like you learned to fly i think most of the pilots in america kind of get that thorough education but i don't want to overlook the element of surprise at a low altitude that, you know, can catch you unaware and not able to catch up you get overtaken by events. that's what happens. maybe these incidents both were
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so quickly after takeoff, that a low altitude, you had very little time to do all of the things you need to do. #. >> gordon, the president was saying earlier in the week that the airplanes have become too technologically advanced and taken away from the job the pilot does do you agree with that, the sentiment behind it? >> no. there's so many things in technology that have made our safety numbers just go to the moon, so we have the safest systems in the world for ground proximity warnings, missing other airplanes in flight. technology really has made air transportation safer and safer it doesn't mean that technology, as you know and said earlier, always works the new stuff has bugs in it at the same time those should be driven out with a certification process. if this is a bug it hasn't shown up in two years, 350 airplanes flying hundreds of hours a week. it's got to be a really rare
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thing. but the fact that it's within the four months of another seemingly same -- don't know if it's the same -- seemingly the same that's caused people to make a decision. you could be right or wrong. i would not have done it, but i'm not in charge. >> gordon, thank you for your time and thanks for joining us just then. >> okay. >> now we've got breaking news on brexit. in london with the details >> hi, wilf. the first of several votes this evening inside the house of parliament and 312 mps against 308 have pushed forward an amendment that essentially rules out no deal forever. this is a nonbinding vote worth noting but this is very significant because this has the potential to entirely derail theresa may's plans for brexit she has said she will honor the result of this vote and this will likely mean she will have
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to request an extension with the european union, something that could be agreed upon next week in brussels a very, very tight vote. there's the potential that some ministers inside the government voted alongside that majority that would in theory mean they could be liable to losing their jobs but another defeat for theresa may, not nearly as resounding as the one that defeated her deal. this boxes her into a tighter corner as she approaches negotiations with brussels next week. >> the pound is up further off the back of this news. surprising 1.24% higher on date, about a percent higher before the vote talk to me about exactly what this means in terms of politically binding, legally binding and the differences there on what this amendment exactly how it was worded. >> so what the government had tried to do in its open motion today was to rule out no deal on
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march 29th, which was the initial deadline that was going back a month or so to promises made by ter see ra may they tried to still keep the pressure on lawmakers in the uk saying march 29th would be ruled out but the idea that there would be no deal was still on the table. that was designed to try to get some mps to vote in favor of theresa may's deal that seems now not to be a possibility. this amendment put forward by a number of mps, some who diecided not to push it, event cooper a thorn in theresa may's side over parliamentary procedure and brexit pushed the amendment forward and voted on and we've now seen this narrowing of options for theresa may. another amendment being voteded on an get a result on that that's about trying to manage a transition out of europe, a so-called managed no deal, but given that no deal has now been
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in a nonbinding manner put off the table it does seem like the second amendment voted on is a moot point. >> the worse market case scenario a crash with no deal out of the air which is what would happen by default on march 29th question, can that still happen? >> it can. but as he says, the chances of it have fallen dramatically because a clean bill, a clean amendment, nonbinding says we rule out a no deal forever >> they can't vote on a deal. >> exactly it's not binding and it is -- a resounding political set of -- around the prime minister to say she can't take the country -- >> you are not the one to negotiate this deal. >> you can't take the country to no deal because there's a
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majority in parliament in a nonbinding way that says we rule out no deal. legally it is true to say also that the default if they don't find something else, is still a no deal brexit tomorrow, they will vote on whether they want to extend article 50 and seek a different alternative and given the results today it's overwhelmingly likely they will do that. >> the other reason that pound is rallying the two market friendly scenarios are pushing it beyond the deadline of two and a half weeks crashing out of the eu because they don't want to do that or potentially other options like a second referendum, still sort of hanging out there and nobody knows if it's possible legally to do. there is a view it would turn out differently. >> the reason the market likes the idea of an extension it increases the chances of a second referendum. they go hand in hand still a lot of hurd tolls get to that point but this is a significant development that we have had in a nonbinding fashion,
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parliamentarians say they are expressed their preference for no deal to take no deal off the table before and now we need to see tomorrow a vote that says we extend article 50, we want to extend article 50 and the eu 27 accept that and after that extension is confirmed -- >> how long? few months >> we don't know that. that is the other question i mean willem can give his insight, even if that happens tomorrow, and mps seek the extension we need the eu to confirm it and it's unclear they will do that and how long they will do that. >> that's right. i was just looking through some of the variety of comments european leaders have made over the last few months about the reasons they would accept to offer an extension and what the length of an extension would look like. the french, for instance, are very keen on a long extension whether that's been part of a negotiating tactic or like to see a longer period of time for
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the british to figure out what they want to do. we will only offer that extension if you give us a specific set of circumstances such as a general election or second referendum. the idea they would allow for an extension for a short period of time weeks or months, just so parliament behind me can figure out what they really want to do is not something that is automatically going to happen. >> very quickly, willem, thank you very much. i just want to say one little wild card to keep in mind. >> another one. >> some high-profile cabinet members voted against the prime minister's wishes in this deal if in the next 24 hours or day or two that leads either of them to being forced out or resigning, then clearly the other wild card is a very unstable government again and the questions of whether we have some kind of election or what ever else because of a collapsing government. >> what if she takes this final vote as a statement they can no longer lead the country out of the eu successfully what happens? she's given no indication she
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wants to leave >> whether forced on her or chooses to do there's a small wild card chance we do lead to some kind of elections or something. that's not what today's development is i'm just saying keep it in mind today's development is mps saying they want to take no deal off the table albeit in a nonbinding legal way, the pound up about 1.25%. >> clears up a little bit but not much. >> we wait for the day everything is cleared up, whatever the result. please arriven >> shares of boeing our other breaking story, after the faa says this afternoon it will temporarily ground all boeing 737 max aircraft in the united states our contessa brewer has the latest on what we know. >> a conference call for the federal aviation administration has started with daniel elwell on the record likely to get questions or to talk about why the faa has reversed course when for the last few days, they've been saying their full confidence was behind this aircraft
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but the statement that they released on ethiopian airlines is that the faa is ordering the temporary grounding of the boeing 737 max aircraft operated by u.s. airlines or in the u.s. territory. the agency made the decision as a result of the data gathering process and new evidence collected at the site and analyzed today that's significant the evidence together with newly refined satellite data available to the faa this morning led to the decision the grounding will remain in effect pending further investigation including examination of information from the aircraft's flight data recorders and cockpit voice recorders and faa team is in ethiopia assisting the ntsb as parties to the investigation of the flight 302 accident. now listen, here's the thing the president came out and said there was a change in information that changed my mind he called the situation tragic here's what he had to say from the white house.
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okay well, the president basically said we received new information and the loss of life was tragic and we don't want to take chances even though we believe in the safety of the aircraft and he said through an order of protection he was grounding all these planes let's go to boeing's reaction to this they say that they continue to have full confidence in the safety of these planes, but after consultation with the federal aviation administration, the ntsb, and aviation authorities and customers significantly around the world, boeing has determined out of an abundance of caution and in order to reassure the flying public of the aircraft safety, to recommend to the faa the entire suspension of operations in the global fleet of max aircraft and fitch is just out talking about the credit ratings now on boeing saits saying that groundings and delivery delays will likely need to last beyond several months for the company's rating to be affected. that's the new information we have i'm going to jump on this faa call and see if there's any new
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information i need to pass along to you guys about this new information, what brought about the grounding of the planes. >> all right thank you very much. keep us posted contessa brewer. let's bring in representative graves ranking member of the aviation subcommittee and transportation committee congressman, you just heard the update, the faa says new evidence collected at the site and analyzed today along with refined satellite data available today, do you have any more details on what they found that led them to change their mind and ground these planes? >> we have been in touch with the faa and ntsb and boeing and airlines and other officials it does appear that there's new information both from the faa teams and ntsb teams on the ground at the ethiopian air crash site as well as some satellite data from one of our partners country partners that has provided preliminarily, connects some of the characteristics of the ethiopian and lion air flight and until we
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better understand that the administration determined the appropriate thing to do is to ensure there's not a systemic problem here and they determined to ground the aircraft. >> congressman, so you are -- are you content and happy with the timeline and decision making process of the faa, given that they made this decision only in the last hour or so when other aviation authorities made it yesterday or the day before? >> and i think that's a really important distinguishing factor. i support what faa did today i think that many of the other countries that did this prior to having any real evidence that there was a systemic problem or any true threat i think their decisions were premature and if i had to guess, my guess is it would be partially based upon some of their own airlines and own air manufacturing companies like air bus and others, trying to somewhat create a competitive advantage for these other airlines
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i don't think those decisions were based on fact. >> there's only two, one is french and one is american there's a huge list of countries from australia to the uk to korea and many more that don't make planes. you're saying they did this to punish the u.s. and boeing for competitive reasons? >> i think that there were decisions beyond just the evidence from the disasters, the influence decisions. when you look at the suppliers it goes well beyond just being in those countries where air bus has operations andso i think that possibly did influence because when you look at the evidence of the data that was out there, it did not justify the grounding until the new -- -- >> it does now, right? >> until the new information was available today. >> you don't think they just put safety first and erring on the side of caution and listening to some flight attendants and pilots. >> if we acted on emotion, if we
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acted on the feelings or emotions of flight attendants and others we would all be walking everywhere air travel continues to be the safest form of transportation there is in the world today. as keep in mind in the united states, we've had tens of thousands of flights on the 737 8s and flown millions of customers around the united states and not had a single incident that has occurred look, i want to distinguish fact from fiction today there is new evidence that justifies potentially out of an abundance of caution taking another look at this yesterday that did not exist so i think that the actions yesterday and before were premature. you can't go out there and start grounding aircraft and cause a disruption in air travel and business around the united states and around the world based on emotion you have to have facts now we have evidence that potentially suggests that this decision is the right one. it's the right one let's take a careful look and move forward carefully. >> congressman, i totally agree there's a big difference between fact and fiction and you're
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never going to run long-term successful businesses purely on emotion, but that is different from accusing certain countries of capitalizing on two massive tragic disasters for their own profit, which is what you just did. >> look, when you look at the evidence that was available prior to today, there was nothing that justified this action if you took that same standard and applied it to cars, boats and everything else, once again, we would be walking everywhere and so that standard was simply not appropriate to make decisions without the appropriate evidence that justifies the decision >> didn't the ceo of ethiopian airlines make the connection himself on cnn >> i'm sorry >> the ceo of ethiopian airlines made the connection himself between the two planes that went down. >> i didn't hear his statements but i'll say it again, that the evidence that became available today is the first bit of
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evidence that even potentially connects the two crashes that would simply justify the actions that were taken today. it's why i support what faa did as of today, yesterday, i think it would have been premature. >> so now what what happens next? what is your subcommittee doing to stay in touch with the faa? are you holding hearings >> approximately one-fifth of the 737 8 fleets operates in domestic airlines in the united states airlines, so we're going to be continuing to work with those airlines, working with boeing, faa and ntsb to make sure that this proceeds in a manner keeping in mind safety is first, the safety of passengers is paramount and making sure that there is no effort to start flying these airplanes again until we have complete confidence some of the other things that we need to look at and the ethiopian air crash the co-pilot reportedly only had 200 flight
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hours. there is no airline in the united states, it would be illegal in the united states for someone with that few hours to get behind the controls and get on the flight deck of a commercial airliner. there may be other things related to training and related to the amount of air time these pilots have in the united states compared to other countries that may be contributing factors and we these to make sure we understand all of that before moving forward. >> congressman, does that make it the airlines' fault or the local civil airation authorities fault for not having stricter regulations? >> all of those things need to be taken into consideration. we have flown several million passengers in the united states on those same planes tens of thousands of flights without any type of situation, accident, doesn't like that, which does suggest that there is a difference ween what we do here and other places we need to make sure we understand that. this is early in the investigation and let the lion air investigation continue moving forward and extract as much evidence out of that
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actionable evidence and continue making sure we get all the information from the black boxes downloads from the ethiopian air flight and take appropriate action based on fact >> and one more thing i just want to mention, congressman, on your point about other countries with political motives, there were members of your own party two prominent senators cruz and romney, who also called for the faa to ground these flights. i don't suppose they were politically motivated to squash -- >> i don't have any idea what -- >> the competition >> i don't any idea what their vote motivation was. i don't agree with them. if you apply that safety standard our primary mode of transportation would be walking and horses >> thank you very much for joining us and sharing what you know. >> thanks. >> congressman graves. let's focus back to the markets. just 18 minutes of trade left at the moment we're up 140 points on the dow the s&p up a healthy 0.8%. the high for the day on the s&p was over 1%. essentially gains, the theme of the day, as it has been all
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week, let's discuss the action, rebecca patterson, cio at besmer trust joins us rebecca, thanks for joining us last week doom and gloom, this week positive and good momentum and all sectors positive today what's your take >> i think this is kind of going to be the rest of this year where we have central banks getting more dovish, keeping interest rates low providing a measure of support and we have a healthy u.s. consumer a big part of the u.s. economy overall and a lot of those lingering uncertainties. you were talking about brexit, even if they get an extension through with the eu 27 that's hanging throughout trade policy, even a deal with china, trade uncertainty isn't going away ahead of the 2020 elections. the global economy slowing we have the ying-yang environment where you can see some more upside on equities thanks a lot to the u.s. consumer and the central banks, but it's probably going to be capped by a lot of other issues out there ranging from trade and
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politics and policy so we're at a position right now where we're using pockets of strength to incrementally trim our equity exposure and next year see the global economy slow further. >> you mentioned brexit. we got that breaking parliament vote this hour the market is taking such a glass half full view at this point. they must extend it and they must have a second referendum. it's so bad they have to figure out what to do to make a no deal not happen which was voted on. there are other risks around it. how as an investor do you prepare and hedge yourself around things going wrong in a major economy with such a major question mark? >> we went underweight uk assets in our client's portfolios when the brexit vote happened which is a couple years ago now which is hard to believe you know, sterling fell initially by more than 10% it stabilized basically since, but we felt that uncertainty around such an important economies plus the fact that uk
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is a very large current deficit country needs to get capital inflows to prevent steriling from falling further we thought there were better opportunities for our capital than playing this game of what will happen with brexit. we've stayed under weight there and continue to be and added to an underweight to europe in december not only because of brexit, that was a fact, to but the fact that europe is so exposed to global trade, global manufacturing to china, and we think even if things stabilize on some of these issues, it's unlikely we will get a big improvement and hoping chinese growth stabilizes but i don't think it's bouncing, we hope we get a u.s./china deal but don't think it's going to resolve everything and we have a lot of politics on continental europe as well. the entire region we're pretty cautious on. that's important for a u.s. focused consumer given how much exposure the s&p has to europe in terms of a source of revenue. >> what about the u.s. data on the economy, rebecca, and the
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best ways to play it >> we're seeing a real buy fercation right now. the service sector in the u.s. is holding up well you see that in business confidence surveys the last read was 56 anything above 50 is expansion we've cooled a little but holding up pretty well low unemployment rate, rising wages, low interests, great for the consumer the manufacturing sector in the u.s. has taken a hit, though, and again, igo back to how muc of this is trade and slower growth in europe and china it's probably a combination of everything we need to see that stabilize and improve. it's not the driving part of our u.s. economy, but it's certainly a drag we're having right now and will that trade deal lead to a resurgence of capital expenditures to capex. i'm little a dubious, but that would be the upside surprise if we get it later this year. so right now i would prefer to look at companies that are a bit more domestic focused and service sector focused as long as they're not at risk from firms like amazon, i think
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they're going to a safer place to put yourself right now in terms of u.s. equitiesp we're pretty overweight, about 70% of our equity exposure is to the u.s. right now >> domestic and amazon proof thank you. >> yeah. >> rebecca patterson another check on shares of bo y boeing off lows to ground all max planes in the u.s. you told me a few hours ago you wanted the faa to ground these planes they have done so. are you surprised it took so long and new evidence to come to light? >> i am thrilled that president trump or whoever in his administration made this decision this is very, very good for the flying public. this is going to give a assurances to the flying public once they've reviewed the planes and looked at them and tried to figure out if there's some technology issues and talk to
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pilots, this is a good news story. i mean it's what was needed and the timing wasn't perfect, but it's overdue and i think it's good for boeing and good for the aviation industry. >> it's overdue because of the data, because of the pr, or what is why was it overdue? >> it was overdue because we're the last countryto -- we're th lone ranger on this. african countries, european countries, canada, they all saw the writing on the wall. these planes needed to be inspected and need to be inspected by safety inspectors they need to be shown to the flying public that they're safe to fly and once that's done, everything will be fine >> you know, the faa is having a call right now there's some headlines crossing
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secretary lahood he says that the faa says it will take months before a software fix for boeing 737 max planes to be complete if that is true they also say they don't know how long the grounding will last if it is a software issue as has been speculated what does that mean and how long will that take and any precedent? >> it doesn't make any difference how long it takes the timing part of it is not as important as the thoroughness. it has to be thorough. everything has to be looked at and when the final report comes out, the final report needs to say we looked at everything, here's what we needed to fix, it's been fixed and now these planes are 100% safe to fly. however long it takes, is not the issue. the issue is thoroughness, detail, a deep dive, as thorough an investigation as possible >> ray, talk to us about the
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process from here in terms of what airlines are likely to be doing. this is more than just a handful of planes for the likes of southwest airlines and american airlines do you think this is going to cause huge gridlock in the u.s. air space system >> i think it's going to cause some inconvenience i mean obviously these planes have been scheduled to fly here and there and to be in use and they're going to have to be taken out of service and inspected and -- but look all hands will be on deck on this. the airlines don't like the idea of having to cancel flights and rearrange things so they're going to have all hands on deck and they're going to have the help of the faa. the faa has very professional safety inspectors, boeing has very professional safety inspectors they'll have a number of people work on this, but the timeliness is not as important as the
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thoroughness and i think the flying public will be patient because they want to know that the planes are safe. >> and you know there's going to be a lot of questions, secretary lahood, about why other nations took this step before the faa when the faa and boeing should be the two authorities to know most about this aircraft and some of the safety issues. how do you answer that >> well, i'm glad i don't have to answer it i think it will be up to others to answer that, but we'll see how it plays out the faa now is going to be all up to their eyeballs in scheduling these evaluations, scheduling these -- they'll look at these planes and really doing what needs to be done. >> ray lahood, thank you for joining us. >> thank you. >> former u.s. transportation secretary. after the decision did go his way he called earlier, wilfred,
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for the faa to ground these planes, said he wouldn't feel comfortable, we shouldn't feel comfortable flying these planes. >> we should say as well the stock is essentially flat on today's session as you pointed out. it had been higher for first time in six sessions. >> took a dip on the news. >> still down 11.5% for the week intraday up and down and back to flat. >> let's bring back contess ta brewer. >> we're just getting off the call and the faa acting administrator daniel elwell says there was physical evidence here that helped them link the trajectory of the aircraft with what they had seen from the lion aircraft and said that black boxes had been damaged and they were hoping to get the details out right away because they had gotten the black boxes, discovered them so shortly instead because it's going to take special equipment to get the information off of the damaged boxes, those black boxes will go on a flight to france
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and help them read that. they say that this was related to the software fix after the boeing lion air and said there was a lot to learn before that they can say it was the same cause and effect and the lion air report isn't final at this point. it would be too soon to draw conclusions there was a correlation between these two flights but instead what the satellite tracking shows is that there was -- they were tracking the altitudes and movement of the planes looked similar here just to clarify there will be a ferry order for these planes that have been ordered grounded that means that for them to land, discharge their passengers, they will be allowed then to go back to either their original destination or a place they can have maintenance performed. just to clarify that and one more note, there's been a lot of speculation about whether the government shutdown contributed in any way in a delay in these software fixes for boeing because, of course, the faa, some parts of that were
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shut down as well, and he was definitive on this call saying that the shutdown did not cause any delay to the software fixes coming from boeing we have just heard -- go ahead. >> i was just going to ask, contessa, to clarify the main point i think you made there from the call which is that satellite data suggested the track and the flight path of both crashes was similar and that was the main part of the new information, the new assessment the faa made that led them to decide to ground the planes. >> remember, there are systems on this plane that are sending out information in real time and some of that is about the positioning of the plane as it takes off. we heard from the transport minister in canada today, with a dramatic reversal yesterday saying there was no reason to ground these planes. today saying i got new information, there is a reason to ground these planes and saying that that new information came in, he was going to share it with his colleagues in the united states, and we heard the president come out and say the
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same thing, the faa administrator saying they have the satellite data here that the altitude had tracked correctly similar to what had happened in the lion air crash. >> by the way, i brought this up earlier with senator graves, we have heard similar comments from the ceo of ethiopia air. earlier in the week he did tell cnn we believe the similarities are substantial between the two crashes, that both incidents featured new models of the same airplane, both flights lasted only minutes before the planes went down. he's not a safety authority. this is not an official investigation. but he had put that out there, contessa, if people are wondering why other authorities and agencies around the world from china to europe cracked down and grounded these flights. >> ethiopia is still the lead investigator in looking into this crash, but ntsb and the faa are contributing their support to the investigation as those black boxes then go to france to have the data pulled off of
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them i wanted to mention we also are just getting in a statement from united that says nothing is more important to united than the safety of our customers. they have the max 9s the said are also being grounded. they say they will cooperate with the order coming from the white house, grounding these planes, and working to prepare the fleet to minimize the impact to customers that's been in effect since sunday working on these contingency plans for 40 flights a day to figure out how they're going to rebook customers on these flights and i imagine the similar strategy is happening both at american airlines and southwest airlines as well >> absolutely. contessa, bring us any more if you get it thank you very much. contessa brewer, boeing shares flipping back into positive territory with a few minutes to the bell to the nasdaq, leading the market higher today, bertha coombs there with the details. >> the nasdaq moving higher today really across the board and across all classes in terms of today, we are seeing large
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caps continuing to lead. those fangs are moving higher as the nasdaq has moved higher here for the rest of the week the third straight day that we're higher amazon a big addition along with netflix, apple also higher as well, even as it faces some pushback from spotify in europe over those app listings and requirements that it has in terms of being able to take a little bit of profit from those apps what's interesting today is that even as the small caps are not the big gainers on the day, biotechs which often are what boost the small caps, are moving higher and they are among the leaders sector wise today. despite the fact that we see strength in technology it's biotech that's the real standout some of the big biotech names here which have been beaten down, when the market has moved lower are among the leaders.
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among those that are really surging, a drug approval over at the fda which today also moved on the issue of e cigarettes read more about that on over to wilf >> thanks very much. we have got two minutes left of trade. there is boeing intraday for you as we just summarized actually up for the first time in six sessions and then down on the news of the faa grounding the planes flat as we end out the session still down over 11% over the course of the last week. look at the british pound up on this session as mps made it clear they do not want a no deal brexit another set of losses for prime minister theresa may back to the u.s. equity markets as we've already pointed out the dow has lagged a little bit over the last couple sessions same true today but not to the same extent. nasdaq and s&p up 0.7% a little off that but none the
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less a positive session and week sectors all in the green as i bring in bob which is nice leading the chargeis energy, health care and industrials and staples. utilities towards the bottom >> we dropped a little bit midday as the planes were -- the president grounded the planes in the united states but we've held up very well overall and finally got decisively over 2800 we only did this once this year, march 1st, where we went be back over 2800. we had a shot early on at 2820 and failed several times before the last six or seven months but overall this is a very positive development. some of this may be due to the quadruple wichg that happens four times a year and happen tomorrow major rollover in the options index futures business so the important thing is, china tonight, industrial production, retail sales, the hope here is a little more stability in the chinese economy, maybe positive
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outcome eventually on brexit, who knows, heaven knows where that will go at this point, but an extension, at the very least the positive for the market. >> that will be voted on tomorrow as you say, bob, who knows when it comes to brexit we'll have to keep an eye on it. there goes the bell at the new york stock exchange. we're up by 0.7% on the s&p at the close. the nasdaq up similar the dow up 0.6% and the russell up 0.4% that does it for the first hour of the closing bell. back to you. pretty strong close on wall street welcome to "closing bell." i'm sara eisen along with mike santoli, senior markets commentator. on wall street, strong up third day in a row stocks fell every day last week. all major s&p groups closed higher energy, health care leading the charge, industrials, consumer staples, financials all doing
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very well and when it all shakes out, boeing actually ended the day higher they were volatile all day after the faa did ground the company 737 max fleet and took a dip on the news, came back and actually now broke the losing streak after eight days down ahead of this the only dow stocks to close lower were home depot and disney we will have more on the boeing story throughout the hour and in a moment let's talk about the markets, joining us is a cnbc contributor from doug lane and associates. mike actually some big news dominated between brexit and boeing. >> yep. >> but the market had a strong day. >> the market was really an upward drift mode for most of the day. the boeing news has been shrugged off except for the drug direct impact on the -- direct impact on the dow. it's been about subdued bond yields, interest rates remaining low, volatility getting drained
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away and this bid for big growth stocks tech and health care stocks have been the leaders today it's a familiar pattern from periods in the past we've had in the last several years during this cycle don't know how long it's going to last. the s&p did get to a new high for a year for a four or five month high but means it's at the upper end of the range and see if it has the horses to get beyond just on the strength -- >> for the nasdaq highest intraday level since october -- >> the level people watching on the s&p was -- >> around 2820 in that range if you go back to early november the closing high was 2813. it's in this band right here where it's stopped about four rallies since october and six if you go back a year. >> close 281099. shares of boeing volatile after the faa said it's grounding all boeing 737 max aircraft in the u.s. contessa brewer has the latest. >> it may be that flight aware has played a role in grounding
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these airplanes because it said that it was asked for some of the information about flight 302 and that the system was able to capture it then we heard from the faa in a conference call with reporters this afternoon that newly refined satellite data that the faa got this morning was able to show a similarity in plane movement to what had happened in the lion air they said in the initial information they saw, that the plane movement did not look right but once they saw the refined data the evidence aligned the flight closer to what we know happened with lion air. they're saying that black boxes are playing a part in the decision and they were hoping to get the data off right away because they discovered the black boxes right away, but instead what happened was the data recorders were damaged and those are on a flight to france to get special equipment to pull the data off the faa and ntsb are assisting
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ethiopia the lead investigator on this case and in the meantime you have all of the flights, the max 8 and max 9 planes, as the president said grounded in the united states with the exception that they will get an exclusion if they need to get back to a destination where maintenance would be performed and the faa administrator making sure to clear up any conceptions that it might have been the government shutdown that led to delays in boeing's software fixes. interesting to note at its low today, boeing was off by 3.5% ending the day up half a percent. >> thank you very much for that. keep us posted with any further developments in the meantime let's get more from phil lebeau who joins us on the phone. phil, about an hour ago when we spoke it was still slightly up in the air as to whether the faa made this decision because of new information or whether perhaps they just wanted to follow suit of some civil aviation authorities around the world. what is your take now? we hear the details it is based
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on new data, new information that they've gathered? >> they said all along the data would lead them to make a decision and clearly they were able to do a better comparison, further analysis of the ends of the flights. they were only a couple minutes long each of them. the crash in indonesia in october and what happened on sunday in ethiopia that gave them the confidence to say we see enough similarities here based on the refined data that we didn't see initially let's just do the prudent thing and should down the planes >> when was the last time something like this happened in this country >> in terms of a grounding >> yeah. >> on this scale you would have to go back to the dreamliner back at the beginning of 2013 and in that case, it was just 50 aircraft that were grounded because of the lithium ion battery fires and it took them about 90 days, just over, before they could show they had a
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solution, that they could test it out and make sure that it would be effective and work and get it certified by the faa and get the planes back in the air whether or not this can be as short if not shorter once they start working on a software fix for what they believe the problem is, that remains to be seen because guys, they don't know definitively what the problem is and what caused these two crashes. they still have to investigate, find that cause, and then say okay, we definitely know this what is we need to do for a solution >> phil, stick around. we will bring in les, retired boeing 777 captain and editor at "flying" magazine. what's your take as to what pilots across america will be thinking given this news from the faa of grounding the plane >> i think it's a great stress reliever if i was a crew member on one of these airplanes i would -- it would have been an issue for me
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to get into the airplane, think about what the possibilities were, and just say hey, all right, let's suds sit down and go over scenarios that potentially could cause us problems in regard to what's in the news today be very careful especially on takeoff be armed with the information that boeing has provided as far as what the remedy would be if they encountered a situation where they didn't have flight control over the airplane. >> what about the pilots that are in the air currently aboard one of these planes? what's going through their minds right now? >> well, i can guarantee you, the same kind of thing but they're probably going, you know, how am i going to complete the rest of my schedule, where will i misconnect, how are my passengers going to connect now that this airplane is on the ground i think at this point, they've got to -- they -- for those that were advocates for putting this
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airplane on the ground, thinking there was issues with t, i think that they're very happy at this point in time >> there are some questions, this has been up for discussion for a while and the president noted in a tweet whether all of this has become too automated and software dependent and a source of the problem. do you buy that view >> i don't want to get political on this, but i disagree. you know, there's a certain point where we design things into products that take away the human. boeing has done a good -- has done a good job working in harmony with pilots, with their machines, listen we have to evolve with technology technology helps us in the air space system alone the technology is next gen system that's in the air space system is now being instituted there's all sorts of technology involved for flying an airplane, for the
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most part that technology helps us, and we as pilots have to evolve with that technology. it's still the basics of being able to fly an airplane. you still have to fly an airplane when you pull back on the control wheel the nose will go up and push down, the nose will go down. it's the same thing no matter the technology of an airplane. >> the other question to you, if you're a pilot in the u.s. and more than 40 countries ban or ground these aircraft and the faa does not, does that make you nervous or you're confident in the faa's decision >> well, the faa does a very strange choreographed ballet with the manufacturer and the airlines it's a tough position to be in i think some of the information that i sourced the airplanes
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here in the u.s. have a slightly different system than -- and i don't want to get into the weeds on this, but a slightly different system so there may have been more confidence from the pilots here in the u.s. in the airplane not behaving with the characteristics we had the tragedy for lion air and ethiopian airlines you know, i sort of skirted around your question, but yeah, i'm sure they were -- i'm sure they were concerned that the faa wasn't stepping up to it i think there was some piece of information that was discovered. all these airplanes have data that is constantly fed too their hard drives if you would say, and that data can be pulled out. american airlines had that data pulled for that reason about 14,000 hours is what i'm being told of that data was being pulled just to see if there were any glitches related
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to the possible lion air situation. >> stick with us mike, i want to switch focuses stock price ending higher. what does this mean for the outlook? >> it suggests at a 15% gut check off an all-time high it discounted a lot of this uncertainty and at least for the moment, we've kind of used up a lot of the what ifs. coming off a high, added risk premium back into the valuation which had gotten pretty high i don't say it's over but right now if you were bearish on the stock what else are you waiting for in the immediate future? >> i don't know. there could be liability. >> absolutely. >> norwegian air wants to be compensated by boeing for the grounding of these flights. >> sure. >> how much is boeing on the hook with the airlines >> i think it's too hard to know right now. i think that in terms of the airlines, they will work this out. that's not to be flip about this, but i don't think that my
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sense is that you are not going to see a huge financial hit in terms of compensation with different airlines there have been some estimates here that ultimately this could cost between a billion and a billion five which is not chump change, that's significant, at the same time when you look at the reserves of boeing and the cash on hand, and the ability if need be, to access the capital markets, they've got the liquidity that's there how much this impacts the bottom line is still too early to say but certain hi there will be compensation that will have to be made to the carriers depending on how long the grounding lasts. >> what's your take on the stock? >> mike said it well 15% down the question what is the future liability if any going forward and really that question and when you talk to boeing and talk
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to the airlines, they have a long-term understanding over time they're as dependent on boeing as boeing on them >> you're buying here? >> we don't own the stock, we own the airlines, we own delta and united we haven't owned boeing in many years. i find more value on the other side there could be an opportunity if the stock goes lower to seek it is a big cash flow generating machine. >> i was talking about the short term because it's still even after this decline is -- looks more expensive than almost any time in the past decade. that's how much of a crowded favorite stock this was within the industrials even after the 15% check it's still pricey. >> do you fear gridlock for the airlines in the coming weeks and months >> you're coming into a season where the next few weeks you're not that busy in flying. they're trying to figure out what planes will go into service and how much has to go into it it's the airlines that don't have it that are going to do better. >> phil, how many of these
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planes actually are in fleets and disruption this will cause >> there's 371 if you look at that relative to the global market of commercial airplanes out there, you're looking at maybe 1.5% if that. or even that 1%. it's a very small percentage of the overall number of commercial airplanes that are out there and when you look at the united states, i know there are people saying well what happens if i'm on a southwest flight tomorrow southwest has 750 planes, close to that, a huge fleet. they have already i'm sure and in the process of rebooking people moving them on to other flights. we may see issues with a few delays or cancellations people saying i was supposed to be going at this time and now i have to wait and go later in the day or following day taefl work through that quickly, at least here in the united states
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that are' already doing that overseas ni know wee began, we know some people flying on these flights today had to book with somebody else there are going to be some isolated cases like that but they will able to work this out quickly in terms of passengers >> the norwegian stories of a lawsuit will be one off, everyone else will workthis of and future orders and discounts and things like that >> yes i think. you're going to have a few one offs but i don't think it's going to be massive. >> les, the final word as we wait for information from the faa, ntsb, boeing, what will you be listening for >> i'm going to be listening for what boeing seems to -- which ware they're leading as far as what the problem is that caused these tragedies. i mean we still have prelim flair information from the
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accident of lion air back in october. i would be interested to see what exactly the problem was and how it's going to be fixed please remember, boeing is a quality company. and they build quality machines. they're going to fix this problem. we need to have those accidents run its course to the fact that we've fixed it once they get to the point we know this product is good, then the public can feel safe about getting in that airplane again. >> les, thank you very much for joining us again with your perspective. phil lebeau, thanks to you too meantime the british parliament ruling out leaving the eu without a deal ahead of the march 29th deadline. let's bring in cnbc outside of parliament to find out what this means. >> not once but twice lawmakers voted against the idea of the uk leaving the eu without a deal and important to note that is not legally binding as a vote,
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even though prime minister theresa may said that she will follow the wishes of the house of commons behind me what it does mean is that we will see a vote tomorrow whereby lawmakers will be able to ask the government to seek an extension for the negotiating period we've had two years of talks between the uk and the eu and tomorrow they'll have a chance to say prime minister theresa may we would like you to go to brussels next week and say we need more time the problem there is that the europeans all 27 of the member states have not got a consistent view on an extension period. we've heard from the european commission to take no deal off the table it is no the enough to vote against no deal you have to agree to a deal we have agreed a deal with the prime minister and the eu is ready to sign it the prime minister facing a lot of criticism in the building behind me from members of parliament saying she has not given them a chance to vote
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openly for other suggestions that is something that may happen, though, in the next few days those are known as indicative votes and will allow lawmakers to see whether there is a workable majority for an alternative to the deal on the table. >> i guess the other takeaway from the evening is the pressure the prime minister will feel personally particularly given the number of people who have voted against her tonight? >> that's right. here in the uk, there is a concept collective responsibility whereby the government and the cabinet around the prime minister take collective responsibility for government direction what we've seen tonight is one junior minister resigning and two dozen ministers ab taining from the key vote this evening normally that would lead to resignations but because theresa
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may is under so much pressure and needs them to vote with her on future votes she's unlikely to sacome of them. it's another embarrassing situation to find herself in >> thank you very much for that and guys, i say the pound up 1.8% above 133 the key focus now not so much tomorrow's vote where given today's votes we certainly expect mps to vote to seek a delay, the focus will be on whether the eu 27 grant it quickly and grant how long an extension as to whether this jump in the pound to 133 is justified or not. >> and the hope here is with the market taking an optimistic view they've capped their downside. in other words, they made it less likely the parliament that they're going to crash out with no deal. let's see if the eu lets that happen it's in their best interest because it hurts the european economy. is this an issue for markets
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outside of the british stocks? >> yes at the end of the day the global economy is related if we can get certainty to what happens, if something does happen is better than saying nothing is going to happen and be out completely and then you just know the unintended consequences that's the issues the markets are worried about. what happens if that is the case, especially in the financial markets. one of the contracts and the derivatives and getting unravelled and that would cause a disruption. >> the pure contagion in 2016 doesn't exist anymore. >> you don't see it around the votes. >> you wonder if even the effect on the pound will it be like the mexican peso ahead of the election where it's basically priced in all at once or just about. free to go >> i would also say 133 the highs of 2019 but, of course, still significantly low, the
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prebrexit levels all of that in perspective. >> thanks for joining us. >> thank you. >> up next, kkr ahead of global asset allocation, where he sees opportunities right now. >> housing and urban development secretary ben carson will be here to explain why the house is proposing to slash his agency's current budget by roughly $9 billion or more than 16% and a lot more unleashing the promise of clean energy. at emerson, when issues become inspiration, creating a better world isn't just a result, it's a responsibility. emerson. consider it solved.
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the uk parliament voting to rule out leaving the eu without a deal in a nonbinding vote after prime minister theresa may's brexit vote was defeated yesterday. let's bring in henry mcvey global head of macro asset allocation at kkr. >> thanks for having me. >> what's your view on the implications of brexit just a macro factor for the uk's gdp as opposed to the u.s. >> factor. >> our base view and the currency telling you is that we'll get some form of resolution i think you were mentioning the pound moved up. we've got lots of businesses around europe. clearly there's been slowing related to brexit as well as its
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trade and so the way we're approaching it this is going to be a slow growtheconomy, low inflation but still quite a bit to do at least what we do in the private market i was mentioning beforehand, if you think about the european public markets they have not performed very well. they're very overweight banks which are being penalized by rates being low and a lot of multinationals there that are not performing that well so we've been spending a lot of time talking to multinationals about spitting out subsidiaries, we did that with unileaver and financial services not doing much like banks and insurance because of the low rates and penalty that puts on the institutions technology we're very active a major effort in berlin across technology, media and content and that that's a big focus for us. >> interesting to hear that. so far for us the news recently on europe a lot of doom and gloom, 1% growth. >> yeah. >> close to recession. the ecb will have negative
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interest rates forever and continue with the qe the gentrification of europe is one of the mantras on the street. >> i think some is right there are challenging demographics let me give you a couple things that go against that wages are rising faster in europe than the u.s. that's telling you something in terms of actual employment two is, europe was way behind on technology certainly as it related to e-commerce and you're seeing a boom in logistics and a boom across mobile payments and a lot of the portfolio companies we've been active have been related to that. there's no question in my mind that rates will stay lower in europe through 2012. th -- 2021 that has implications for the u.s. the u.s. treasuries never traded more than 250 basis points above the bund and the german ten year rate at 20 basis points. our view is there's going to be a notable demand for yield around the world if you're an insurance company
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or you're a u.s. saver, it's very hard to do -- to get what you need in that type of rate environment. that's where we're focused which is how do you take cash flows from hard -- kind of assets and turn them into income for either individual investigators investors or institutions? >> obviously we had this huge mini panic last year. >> yeah. >> we've kind of gained back much of it or if not most of it. does that set us up for anything better or just kind of -- >> i think we in early january upgraded equities, u.s. equities and downgraded those a few weeks ago and our base view in te december the market was pricing in a deception high yield was telling a recession was coming which we don't see. i think from here, though, now is a good time to pause. if you look at the earnings consensus it's flat for three
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quarters and then has 12% growth in the fourth quarter. it's related to financials rebounding, autos rebounding, materials rebounding we're probably taking the under on that. i would say outside of the u.s. we're spending more of our time in asia, probably our most aggressive growth area, certainly in japan and china and india and be southeast asia. that's where we're focused >> what's importance for china's economic performance resolution of the trade deal or the domestic stimulus? do you phi fefear the stimulus s away if the trade deal gets done. >> we put this in a piece we published. china's exports were 36% today it's 18% exports in europe are 49% of gdp. so china has repositioned their economy. unequivocally to us, the bigger factor is what happens to domestic demand. china's 300 millennials. the u.s. population is 300
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million in total and the u.s. population is about that we're very focused on that domestic consumption i do think trade, you will get some resolution in some areas but the technology divide is more secular in nature between the u.s. and china >> very quickly, everybody is talking about the budgets. big deficits everywhere including in the u.s do you see any kind of turning point for the u.s. bond market around this issue? >> i don't think in the near term that the u.s. bond market rates are going to go up because of what we learned out of the ecb and i also think inflation we're going to be talking about disinflation in the second half of the year. longer term you're hitting on a key issue but i don't think that's today's business. >> henry mcvey, good to talk to you. >> thank you for having me. >> from kkr. >> up next the latest on the grounding of the boeing 737 max fleet and live to an airplane being impacted. >> then hud secretary ben carson
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tsighs in on the proposed budget cu to his agency we're back in a couple minutes a cfa charterholder does. you've worked hard to grow your wealth. make sure you're working with a wealth manager who can grow with you. cfa charterholders have the investment expertise to unlock opportunities other advisors might not see. learn what a cfa charterholdr can do for you at will it feel like the wheend of a journey?p working, or the beginning of something even better? when you prepare for retirement with pacific life, you can create a lifelong income... so you have the freedom to keep doing whatever is most meaningful to you. a reliable income that lets you retire, without retiring from life. that's the power of pacific.
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open an account with no minimums today. and it's only from fidelity. comcast business built the nation's largest gig-speed network. then went beyond. beyond chasing down network problems. to knowing when and where there's an issue. beyond network complexity. to a zero-touch, one-box world. optimizing performance and budget. beyond having questions. to getting answers. "activecore, how's my network?" "all sites are green." all of which helps you do more than your customers thought possible. comcast business. beyond fast. hello, wilf, everyone. here's what's happening at this hour a college admissions scandal costing two top business executives their jobs. hercules capital ceo manuel enriquez and cochairman of an international law firm william mclashen have resigned or placed
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on leave in all 50 people have been charged in the $25 million bribery scandal. we're learning the scope of a school shooting in brazil. at least nine are dead and 17 others were wounded when two gunmen entered the building and began firing before taking their lives. facebook users around the world are reporting issues with logging in and posting to the company's core platform as well as instagram and whatsapp. the company is working to resolve that issue and st. patrick's day an irish holiday but often celebrated by many americans and this year spending is expected to hit $6.5 billion with the average person shelling out $40 just possibly on some dark beer. that is the news i don't know why there's a lamb in that but whatever that's the news update i will send it back to you. >> thanks. the faa grounding all boeing 737 max planes in the u.s. following moves by dozens of
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other countries after the second fatal crash of a 737 max 8 plane in less than six months. bring back contessa brewer with what we know at this point. >> the faa acting administrator told reporters they collected physical evidence at the site and dot refined satellite data to help them make the decision after they saw similarities between the ethiopian and lion air crash before and leading their investigation as the black boxes get taken out of the country heading to france because they've been damaged and require special equipment to get the data we are now getting new and updated reaction from southwest airlines which says it is immediately complying with today's faa requirement for the u.s. airlines to ground the boeing 737 max 8 and 5% of daily flights they've been in constant contact with the faa since the accident on sunday here i'm quoting from their release, while we remain confident in the max8 after completing more than 88,000
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flight hours we support the actions of the faa across the globe in further reviewing the data they say they are rebooking customers without additional fees united and american have followed suit and will try to make this as easy on passengers as possible. one more note we got a press release from flight aware they had along with their partners at arien shared satellite data the data they get that helps them monitor these planes globally they had shared it with ve investigators looking into this accident cnn reporting that information was shared with american investigators on monday and with canadian authorities last night. today we saw a dramatic reversal from canada which grounded its planes this morning. and then this afternoon the grounding of american airplanes. we're working to get confirmation of that ourselves that's a cnn report coming in. >> thank you very much for that. up next we will get the outlook
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for housing when we're joined by ben carson and find out why the white house is proposing steep cuts to his agency >> plus, this just in speak with acting faa administrator dan elwell about the decision to ground max planes. he will join us live in few moments. the future of technology investing lies beyond the tech sector. it's about technology transforming every sector. ♪ at pgim, our bottom-up approach uses a technology lens to identify long-term winners. from energy... to real estate... to retail. finding such opportunities for alpha is the true value of active investing. and around the world, you have a partner in that pursuit. pgim: the global investment management businesses of prudential.
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this week the white house unveiled its plan for 2020 and the administration requests $44.1 billion in funding for the department of housing an urban development, a 16.4% decrease from the 2019 estimate joining us to discuss this and more, is the housing and urban development secretary ben carson mr. secretary, good afternoon and thanks for joining us. >> it's a pleasure thank you. >> this is quite a bit decrease from expectations. 16% down what's your take >> well, it's actually about a 7% increase over last year's presidential budget proposal, and as most people know, the final budget frequently bears little resemblance to the initial proposed budget,
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regardless of which administration is in place what this presidential budget does do is focuses on the important priorities for instance, no one will be evicted. we recognize the responsibility to some of the indigent people, certainly to the elderly and disabled people, and many people who are just down on their luck and those people will be taken care of. we also are focusing on priorities like homelessness a significant increases for homelessness because this is a problem that we can get rid of in our lifetime. we're looking at things like lead abatement, major increase in funding for that because of the long-term effect that has on our children speaking of our children, we have to at some point begin to think about their future in terms of our fiscal management of resources that's what is reflected here as
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well some people think you can only be compassionate or only be fiscally responsible, but the fact of the matter is you can be both unless we begin to think of that we will have successfully ruined the future of our children. >> secretary carson, to be clear, are any housing assistance programs at risk because of these budget cuts >> all of the housing assistance programs have been taken care of very careful consideration was made of each of the housing assistance programs to make sure that no one would lose their housing. that has been taken care of. we have to learn how to distinguish between our needs and our wants. if we're just always going to deal with our wants, we're going to absolutely destroy our future >> secretary, you mentioned that the first drafts don't end up typically being the final drafts or so your executive has been tweeting along a similar line.
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are you content with the draft as it is or pushing to get more than you've been allotted so far? >> we can make it work i suspect we will probably end up with more but i will tell you whatever we have, we're going to be very, very fiscally responsible with it as you may know we now have a cfo. we didn't have a cfo at hud for eight and a half years and some of our fiscal policies reflected that now putting in financial controls is making all the difference in the world and we continue to do that and we'll be able to stretch each dollar much further because of that. >> secretary carson, wanted to ask you about opportunity zones which i know you've been talking a lot about, focussed a lot on and have -- are trying to help communities in that way. were you disappointed to see that amazon pulled out of long island city which was a designated opportunity zone that could have gone so far to help that community as far as jobs and development?
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>> well, you know, i understand, you know, both sides of that issue. we're always looking for ways to increase economic opportunity wherever you go. entrepreneurship and innovation are the things that have driven our country. if we allow that to happen, and we allow the american spirit to prevail without putting too many restraints on it it will take care of these problems, no question about that. >> i guess that perhaps there's an observation that those investment opportunities that might deliver a return on an after tax basis might seem appealing to an investor don't necessarily -- aren't necessarily cost effective in terms of getting the results for those neighborhoods. these things have been tried in the past how might this be different? >> they have been tried in the past but in the past, they have not had the long-term incentive. the difference here is, you can invest your unrealized capital
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gains into a qualified opportunity fund and if you leave it in there for five years, you get a 10% reduction and the capital gains that you owe on the initial investment. leave it in for an additional two years extra 5% if you leave it in for 10 years you don't have to pay any capital gains on the new money gained from the investment that's a substantial benefit but the more important benefit is that you are taking dollars that are going to be invested in something somewhere and you are directing them to the areas that have been most neglected economically, historically and places that would have been neglected forever and having a cans to revitalize those areas and to provide jobs and opportunities for the people there so they can climb the ladders and become part of the american dream this was what we want to happen because when you look at all the money that has been gained over the last couple of years, you know, you're probably talking
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about $2.3 trillion in capital gains. and if we can begin to funnel some of that to the areas neglected so that everybody can share in the economic improvement, that's what america is about >> finally, secretary carson, based on your conversations inside the industry with the builders and the developers and everyone else you talked to, what do you see for the housing market it's been sort of rough over the last few quarters. generally speaking, are we bottoming in terms of the economy and housing? >> well, you know, we're lagging behind and have to catch up from the great recession that occurred and there's a supply and demand issue that is putting substantial pressure on the housing market but also, you know, we have to look at the innovations. there's a lot of great things going on, accessory dwelling units, manufactured housing, people think about trailers, but, you know, these things look better than site built houses and withstand hurricanes better.
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last week i was down in texas and got to drive the 3d printable house and these are the kinds of things that will begin to change the dynamic. the other thing is so important is local jurisdictions have got to begin to look at the zoning regulations, the other types of regulatory barriers which are adding so much cost to housing you know for a single family dwelling, 25 to 27% additional cost for multifamilily 32.1% and up to a quarter of cases 42% this is untenable. those are the things we have to look at and a lot of things have been on the books, 10, 20, 50, 100 years nothing do with what's going on today and we have to tackle those things if we want to bring the price of housing down and that will solve a lot of problems. >> secretary ben carson, nice to talk to you. >> it's a pleasure thank you. >> from hud. still to come the acting faa
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administrator dan elwell will be here to talk about the decision to ground 737 max planes in stju a few moments. stay with us on "closing bell. i'm off to college. i'm worried about my parents' retirement. don't worry. voya helps them to and through retirement... dealing with today's expenses ...while helping plan, invest and protect for the future. so they'll be okay? i think they'll be fine. voya. helping you to and through retirement.
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let's bring in dan elwell who joins us from d.o.t. headquarters in washington, d.c. thank you so much for joining us can you tell us more about what you guys found in terms of the data and the evidence that led you to make this decision today? >> sure.sure good afternoon before i start, i just want to say again our condolences from the department and the faa to the families and loved ones of those who perished in that terrible accident on sunday. we have been working tirelessly since that accident to find evidence that could help support a reasoning behind it or reason behind it. and the new information that we got just today verified for us that the incident flight, the ethiopian airlines flight, the track of that airplane was close enough to the track of the lion air flight that went down in the
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ocean four or five months ago, close enough to that flight to warrant the grounding of the airplanes so we could get more information from the black boxes and determine if there's a link between the two. and if there is, two find a fix to that link >> you only got that data today, is that right? where did that data come from? why did you not get it sooner? >> so the data was available in raw form it's data on the flight track of the aircraft that came from satellite. it's called space based adsb, like the adsb we have put into the u.s. ter rerestrially it was very raw and very hard to excerpt. there was not an obvious link between the track of the
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ethiopian flight and the lion air flight initially but starting yesterday, the company who has that data and the ntsb and boeing were able to do some enhancements to that return, that track return. and when they finished the enhancement, we were able to see that the track, the full track of the flight, the ethiopian flight was very close to lion air. the initial track we got on sunday was only three minutes long, the first three minutes of the flight the new track data was almost for the entire length of the flight also, the evidence that we discovered on the ground actually was even further evidence that the flight was very similar to lion air >> we first heard about this development from president trump. who exactly made the decision? >> so the decision is an
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emergency order to ground the airplanes and that authority rested in the faa with me. i did make the decision, but of course any decision like that is made with and i sought all the counsel and the expertise that is available to me at the faa and of course because of the magnitude of this kind of action, i consulted with secretary chow and the president along the way. both the president and the secretary agree with the decision and endorse it. >> so you got most of the data on monday, but it was just very heavy data and hard to interpret. were other aviation authorities around the world able to interpret it quicker than you, is that what led to them grounding the flights sooner >> no, i don't believe so. we got the refined data in
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practically realtime it came with the help of canada because aereon provides a service that canada subscribes to all along we have been in consultation with other countries and when other countries grounded the 737 we were looking for what data they were using to support the grounding. we weren't able to find that from the other countries and we said all along we weren't going to ground until we had actionable data. that's what faa looks for. >> do you think they took actions preliminarily? usually the faa leads the world in these kind of decisions did you feel global pressure and why do you think the faa in this instance was the last to act >> we were certainly aware of what was going on around the world, but we didn't feel global pressure as i said, we are a data-driven,
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action-oriented agency and we don't make decisions about grounding aircraft or regulating or even shutdown decisions for airports or aircraft without actionable data. in this case, the actionable data didn't arrive until today i can't speak to the motivations of the other countries, but for us it was an independent decision >> what will it take from here to reverse the decision? >> the order states until we get more data -- and there's not specificity there because we don't know what we're going to find the black boxes were found the day after the accident, but they still reside in ethiopia unfortunately, we've not been able to get the boxes to a country where we can start pulling data we thought all along that by now we would have had some of the channels of data that we need to make determinations. but the boxes were damaged and they had to be shipped to
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another country. so as soon as we start pulling that data and the investigation, which is ongoing, starts giving us more information, we'll be able to take a closer look. >> what's been your communication so far with boeing, and how did they react to the news you were going to ground these planes? >> so boeing agrees with the decision we, of course, in every instance like this, which are very rare of course, but we're in co ee'rn communication with the parties involved in significant safety incidents. this was no exception. so we went to boeing right at the beginning to get from them whatever information they had, both about the aircraft, about the flight, any data they might have that's pulled from the aircraft
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we've been in communication with boeing from the beginning. >> was one of the reasons you didn't have the data initially because you don't pay for a data service that canada does pay for? is that something you said earlier? >> that's true, but it didn't hinder us in collecting data aireon provided the data immediately. we had flight track 24, a service that was available immediately. again, the initial data that we had was very incomplete and it was raw. this is an area that is not served by radar, so satellite data has a little bit of a latency that made the data points on the track at first too rough to make a real track line of the flight and it was only after the enhancements were done yesterday and into this morning that we were able to really have
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a good picture of the flight track. and of course, as i said earlier, that flight track lined up close enough to that lion air incident that we made the decision >> please keep us posted as you learn more we appreciate the time today >> thank you very much >> the administrator of the faa joining us from washington, coming out and trying to give us information about what they knew and when they knew it. sounds like they did get that new information today that led them to make the decision. >> right you know, kind of adhere to a protocol and for future incidents try to have some standards by which you're making this call. >> the interesting take-away from boeing from what he said is that clearly some of those rue m rumors we got an hour or two ago was there was a similar flight path for both incidents, which reduced the odds these were two totally random events.
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doesn't make it impossible that's the case, but if they had very similar flight paths and i think he saidthree minutes, so very brief, then statistically the chances there is some kind of similar issue increases. >> hard to ignore that in light of this news, boeing stock actually finished .5% higher. >> it did. these planes are grounded and you could kind of assess the company's response and try and handicap how they're going to do. >> back to the broader markets today, relevant point for the whole week, this hasn't derailed the market sentiment. >> not at all. it really hasn't had a lot of ripple effects up 2.5% or so on the s&p just week to date we took care of last week's little pullback and looking
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ahead to not much. the fed meeting next week and bond yields remaining very subdued. >> you know what's not quiet, is the british pound which is actually having its best session in two years celebrating that the parliament today, in case you missed it, voted against a no-deal brexit. >> the focus briefly will be on parliament again tomorrow, but then on the eu to see if they agree to an extension. thanks for watching. "fast money" starts right now with breaking news boeing 737 max planes are now grounded around the world including here in the united states the stock ending the day slightly higher, still having its worst week in three years. >> the faa says it got newly refined satellite data that led to the decision to ground the boeing max aircraft. the grounding is temporary while the investigation continues. this is a dramatic


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