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“I promise you, if you fly it… they won’t come.” – Jeff

Hey there carnivores,

Markets fell on Tuesday, after NYC school shutdowns caused concerns.

Today we’re breaking down Boeing’s return to the limelight.

 

All clear for takeoff

You hate to see it. No, seriously…

The Federal Aviation Administration has cleared the 737 Max for takeoff again, ending the twenty-month grounding that started last March. The moratorium has cost the company more than $20B.

In case you forgot, the Max was grounded after two separate crashes killed 346 people. A failed safety feature that should have stopped the plane from ascending too quickly actually caused the airplanes to stall and nose dive. So, literally the two things you don’t want your jet to do.

Jet life

The FAA’s approval only applies to domestic flights in the US meaning airlines in thirty-one other countries affected by this grounding need their nations’ aviation authorities to sign off. Something tells me Indonesia and Ethiopia are going to take their time…

Costly

The grounding of the 737 Max was one of the most expensive mistakes a corporation has made… ever.

“Welcome to the club.” – BP

Boeing has attributed $20B in direct costs to the “hiccup,” with $8.6B used to compensate customers, $6.3B in increased costs to the 737 Max program, and $5B for additional costs of production.

Then there’s the $600M spent on jet storage, pilot training (which all pilots need to go through before flying the Max), and software updates.

$BA rose initially after the news broke, but ended down 3.21% over concerns of ‘rona keeping the Max in the hangar. Of course, that’s a blip on the radar considering the stonk is down 50% since the March 10, 2019 crash.

The bottom line…

Now that the 737 Max is ready for the runway, the question remains: “Who would want to fly in one?”

To date, only American Airlines has added flights with the 737 Max to its schedule, and those are only on select trips between Miami and New York over the next couple of months. United and Southwest appear to be holding off until the first half of next year, probably to see how AA’s flights go.

And if you are one of those lucky passengers who just has to get away from the Big Apple to shake your a** with Mr. 305 down in Miami, you can always just change your flight if you find yourself booked on a 737 Max.

Thanks to the pandemic (and being thirsty for passengers) US airlines are waiving changes fees. They’ll presumably just charge an even higher baggage fees to make up for it…

 

 

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The General (Motors)

GM is getting into the insurance game, taking advantage of the fact that car manufacturers can remotely track vehicle behavior, and therefore reward (or penalize) driving behavior.

The program will be branded under GM’s OnStar, a service that comes preinstalled on every GM car sold in North America, and is a lot like satellite radio in that no one uses it after the free trial.

Those customers who agree to have their driving critiqued could save money based on observation of the speed limit, lack of sudden stops, and practicing otherwise good driving. It’s like a backseat driver that will charge you money for not listening.

Money talks

The only language Duolingo speaks? Straight cash, homie. The language learning platform raised $35M via a new fundraising round led by Durable Capital and General Atlantic. The deal values the Rosetta Stone competitor at $2.4B. Duolingo might say that the valuation is très bon (French for “very good,” you cretins).

Duolingo’s earned it, though. According to the firm, 4% of users pay for its premium service, and make up 80% to 85% of its revenue. The company is also on track to double its annual revenue for 2020 to upwards of $200M, a trend that Duolingo’s seen the last three years in a row.

A full bushel

Apple had a busy day. For starters, it announced that it would be halving its App Store commission to 15% for businesses that generate no more than $1M in revenue. So, “small” or just not very good, who’s to say? For those over the $1M mark, that 30% fee isn’t going anywhere. You hear that, Epic Games?

Later in the day, Apple made headlines again, this time agreeing to pay a $113M settlement to resolve its “batterygate” controversy. That $113M will be paid out across 34 US states and Washington, DC, after allegations back in 2016 that Apple was downplaying its iPhone battery life problems.

If you’re keeping track at home, Apple had already paid out more than $500M resolving other, various disputes around the globe. Wouldn’t it be cheaper just not getting sued?

Missing the target…

In a good way. Target released its Q3 numbers on Wednesday, and let’s just say they went above and beyond. The company announced earnings of $2.79 per share, blowing the $1.60 per share estimates out of the water. It also beat on revenue, bringing in $22.63B against a $20.77B estimate. On the news, Target shares climbed 3.4%.

So, what drove the growth? Same-day services, like pickup and drive up, rose 217% during the quarter. Transactions at Target were up 4.5%, while the average basket price grew 15.6%. If you’re using a basket at Target, you’re kidding yourself.

 

Author:
Jeff Bishop

One of the best traders anywhere, over the past 20 years Jeff’s made multi-millions trading stocks, ETFs, and options. He is renowned as an incredible trader with a deep insight and a sensitive pulse on the markets and the economy. Jeff Bishop is CEO and Co-Founder of RagingBull.com.

Even greater than his prowess as a trader is his skill and passion in teaching others how to trade and rake in profits while managing risk.

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