Bloomberg - Evening Briefing - Stormy skies

US Secretary of State Antony Blinken’s plane breakdown as he sought to leave Davos this week was perhaps a fitting emblem for the dramas rippling across the aviation industry. The skies are stormy for the plane’s maker—Boeing—as well as commercial carrier Spirit Airlines. Shares of the latter dropped (then pared some losses) after a federal judge blocked JetBlue Airways’ proposed $3.8 billion acquisition, saying the combination would stifle competition and raise fares for consumers. The Biden administration had argued the merger would eliminate a key incentive for bigger airlines to offer budget-friendly fares to weary American passengers. The ruling represented a major win for the government’s antitrust enforcers, who have taken a more aggressive approach to airline mergers. Afterwards, Spirit remained defiant and both airlines appealed. On track to lose money for seven straight years with a heavy debt load and diminished prospects in the low-cost travel market, Spirit downplayed speculation that it’s planning to restructure under bankruptcy court protection.

A National Transportation Safety Board investigator examines the fuselage plug area of a Boeing-made Alaska Airlines 737 Max 9. Source: Handout/Getty Images North America

Then there’s Boeing. Blinken’s 737 had been deemed unsafe to fly out of Switzerland, a glitch that came at a difficult time for the embattled aircraft manufacturer. Boeing had many of its 737 Max 9 aircraft grounded following a midair blowout of a door plug on an Alaska Airlines flight this month. Passengers are suing both Alaska and Boeing, and the latter also faces an investigation by the US Federal Aviation Administration. It’s the latest in a string of reputational, manufacturing and engineering setbacks for Boeing and especially the 737 Max. Today, Boeing’s name and that of the troubled model are linked to some of the worst aircraft safety and design failures in recent aviation history. Some 346 people were killed in the Boeing 737 Max crashes of Lion Air Flight 610 in late 2018 and Ethiopian Airlines Flight 302 fewer than five months later. The company once enjoyed a sterling reputation for safety and reliability, but it has increasingly focused on pleasing shareholders. 

Another week, another round of good US economic news. The flavors this time were falling initial jobless claims, soaring consumer sentiment and strong retail sales data. The latter underscored how solid the American economy has remained through a Federal Reserve rate-boosting campaign that’s arguably broken the back of inflation. But Wall Street is eager to know when those rate hikes will be reversed. Fed Governor Christopher Waller said earlier policy moves should be “carefully calibrated and not rushed,” while Atlanta Fed President Raphael Bostic said he wants to see more evidence inflation is on track toward the 2% target. His comments seem to counter market expectations for as many as six rate cuts this year. In Europe, which has previously been hesitant to discuss unwinding its interest-rate increases, officials in Davos signaled the chance of a move around mid-year. That’s when they’ll know more about inflation, wages and the stuttering European economy—as well as harm to supply chains by conflict in the Red Sea tied to the Israel-Hamas war.

As violence spreads across the Middle East, many of the flashpoints can be seen to have a common actor. “Everywhere in the background stands Iran, which arms Hamas, Hezbollah and the Houthis,” Marc Champion writes in Bloomberg Opinion. And a large part of the increasing risk of a regional conflagration is the decades-long shadow war between Iran and Israel. Iran attacked what it said was an Israeli spy base in Iraq, an alleged Islamic State target in Syria (using sophisticated missiles potentially capable of hitting Israel) and militant separatists in Pakistan. Pakistan fired back even as each side said it didn’t want escalation. Iran-backed Houthis continue firing on vessels going to and from the Suez Canal, with US President Joe Biden conceding American missile strikes in Yemen have yet to stop the attacks. Five Arab nations are quietly touting a settlement for postwar Gaza, but Prime Minister Benjamin Netanyahu isn’t buying it or a two-state solution.

The Al-Maghazi refugee camp in Gaza Photographer: Mahmud Hams/AFP

Donald Trump got his big win in Iowa, but now it’s New Hampshire where he faces a more formidable effort by Nikki Haley in next week’s GOP primary. Haley has the same old problem, though: Attack Trump like Chris Christie and Asa Hutchinson did and you alienate the Republican Party’s far-right base. But holding fire costs, too. By not taking on the twice-impeached GOP frontrunner, unaffiliated voters may not engage, a former chairman of the New Hampshire Republican Party said. Ron DeSantis, who once looked like a Trump-slayer, gave up on the New Hampshire primary and has moved staff to South Carolina (where Haley was once governor). Trump, who faces four separate felony indictments in state and federal courts, has turned his attacks on Haley as some polls show her within striking distance in more moderate New Hampshire.  

Nikki Haley Photographer: Adam Glanzman/Bloomberg

Taiwan’s presidential election had favorable conditions for a Beijing-friendly win, but China’s Xi Jinping let the prospect slip away. Voters instead returned the US-friendly ruling party to power, despite frustrations over the Democratic Progressive Party’s handling of the economy and rising military tensions with its neighbor. China rebuked Singapore and the Philippines on congratulating Taiwan’s new President Lai Ching-te for his victory. Meantime, a pullback in global travel by Chinese visitors has drained nearly $130 billion from global tourism. 

Steve Forbes is putting the “highlights” of his extensive collection of Winston Churchill memorabilia up for auction, including a painting he made of a Moroccan gorge (priced at $395,000) and his writing desk ($450,000). Paris is hosting the 2024 Olympics but you can see events without ever stepping foot in the city, since some competitions will be held around France as well as its territories. (Tahiti, anyone?) Maybe people have less to celebrate: France’s Champagne producers shipped fewer bottles last year, with domestic shipments at lowest level in almost four decades (excluding the 2020 pandemic lockdowns).

At auction is a copy of Into Battle, a collection of Churchill speeches he inscribed to his friend Pamela Plowden. Source: Peter Harrington Rare Books

• The ECB’s first monetary policy meeting of 2024; BOJ rate decision.
• Tech earnings from Intel to Netflix and ASML Holdings.
• A slew of US economic data, including fourth quarter GDP. 
• US Republican presidential primary in New Hampshire.
• Academy Award nominations in the aftermath of film industry strikes.

With India’s national elections a few months away, the inauguration of a controversial Hindu temple where an ancient mosque once stood may be the capstone of Narendra Modi’s 10 years in office—and his bid to stay there. In the Bloomberg Originals mini-documentary What This $200 Million Temple Says About Modi’s India, we explore the new temple’s construction in the context of India’s religious fault lines, and how Modi’s political party has navigated them to power.

Watch What This $200 Million Temple Says About Modi’s India

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