1. Boeing (BA) could be in for a bumpy ride this morning after reports late Friday that hairline cracks were found on the wings of 42 Dreamliner jets being built for the aircraft maker. And a 777 jetliner, manufactured by the Seattle-based plane maker, disappeared and then crashed into the ocean off the southern tip of Vietnam with 239 people on board en route to Beijing from Kuala Lumpur, Malaysia early Saturday.
The safety track record of Boeing planes is considered one of the best worldwide and there's no reason at this point to suspect any mechanical defects were involved in the Malaysia disaster. Also, Boeing says the flaw behind the wing cracks is being addressed and that none of the 122 Dreamliners being flown worldwide were affected. It still expects to deliver 110 of the wide-body 787s by the end of the year.
Still, shares of Boeing, one of the 30 stocks in the Dow Jones industrial average, fell 1.1% in after-hours trading Friday as reports of the wing cracks surfaced, and there could well be some short-term anxiety though analysts say they don't expect these developments to tarnish the plane-maker's reputation. Its stock is up 58% the past year and earlier this year, it posted a 26% profit gain for the fourth quarter.
2. IBM's CEO penned a mea culpa letter to shareholders in the hardware giant's annual report, out over the weekend. Ginni Rometty apologized to investors for last year's shortcomings, writing: "We must acknowledge that while 2013 was an important year of transformation, our performance did not meet our expectations." In 2013, revenue at IBM (IBM) fell 5%, and it was the only stock in the Dow to decline for the year. Top executives gave up annual bonuses and IBM announced layoffs! for the first time in 10 years. Rometty reaffirmed IBM's goal of $20 a share in adjusted earnings by 2015, up from $11.67 in 2010, the report said.
3. It's proxy season! It's the time of year when mere mortals get to find out the details of the eye-popping compensation packages of CEOs and other top executives in corporate America, courtesy of required annual regulatory filings to the Securities and Exchange Commission. Last week, we learned CEO Brian Moynihan's exec package at Bank of America (BAC) totaled $13.1 million in 2013, a cool 37% gain over the prior year's pay and perks. Not bad. Alas, former J.C. Penney CEO Ron Johnson was not given severance when he left the struggling retailer and was paid about $660,000 for the four months he worked before the board decided his makeover of J.C. Penney (JCP) wasn't working.
4. 10-year Treasury note yields: The biggest event on the economic calendar this week is the government's auction of Treasury notes. The one to watch is the 10-year note, which is used to determine 30-year fixed-rate mortgages, among other key borrowing rates. The Treasury Department will sell $21 billion of new 10-year notes, priced to yield 2.75%. Then, traders have it and that yield can go higher or lower, depending on the demand for the bellwether Treasury since bond yields move inversely to their prices. Geopolitical risk, like the fear that the situation in the Ukraine will deteriorate, would send traders fleeing the risk of stocks for the safety of Treasury notes, in which the yield would rise. Stay tuned.
5. Gold is having its moment in the pre-spring sunshine. A published report in Bloomberg says hedge funds and other speculators expanded bets on higher precious metal prices for a fourth straight week and are the most bullish on the commodity since December 2012. The price of gold is already up 11% this year, closing Friday at $1,340 an ounce and the most bullish experts predict $1,400 an ounce of gold is on the horizon. Hedge funds also are adding to bulli! sh bets o! n futures trading in sugar, corn and coffee, driving combined wagers on a commodity rally to a record high.
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