A major curveball in retirement preparedness: divorce

Getty Images; Chelsea Jia Feng/BI

• Divorce can derail the best-laid retirement plans.
• Divorced baby boomers — especially women — often struggle financially in retirement.
• A Business Insider analysis shows divorcees have lower incomes and savings than married people.

A decade ago, Libby Mintzer imagined her retirement.

Her gated community would sit along a river, each house hugged by palm trees and Florida coast humidity. Mintzer planned to spend mornings at yoga class and evenings on the deck with her husband, watching the sun set in pinks and oranges from their rocking chairs.

Today, the 73-year-old lives alone in Tampa and receives $1,600 monthly Social Security income. When Mintzer and her husband divorced in the early 2010s, she lost all assets — the house on the river and any shared investments — and doesn't receive any spousal support. She drained most of her savings in her 60s when she cashed out the few thousand dollars in her 401(k) to fund her then-husband's business venture.

"I always thought of everybody else before me," Mintzer said. "And I would tell any woman now: 'Don't do it.'"

Although Mintzer used her $200,000 in settlement money to buy and furnish a one-bedroom apartment, she's barely able to keep up with the rising HOA fees. She said she has maxed out her credit cards to pay for groceries, and she's scrambling to apply for part-time jobs but isn't having any luck landing roles.

It's a painful departure from her married life. Mintzer had a 30-year career as a paralegal and was often the main household income earner with her six-figure salary. She had worked hard to ensure she and her husband would be comfortable as they aged.

Millions of Americans are feeling financial pressure in retirement. Monthly Social Security checks aren't enough for most baby boomers to get by, further fueling a retirement crisis. And boomers are experiencing a newer phenomenon that adds to their financial distress: More are getting divorced later in life.

A 2022 study published in the Journal of Gerontology found that, from 1990 to 2010, the divorce rate for adults 65 and older has nearly tripled; among adults ages 50 to 64, the divorce rate per 1,000 rose from 4.85 in 1970 to 12.72 in 2019.

Divorcees have lower average 401(k) balances, less savings, and a more limited monthly retirement income than married people, according to a Business Insider analysis of individual-level data from the Census Bureau's 2023 Survey of Income and Program Participation. Those numbers undergird the reality that an increasing number of middle-aged and older Americans are facing: The reverberations of their divorces will be felt long into their golden years.

For retirees like Mintzer, this can leave them struggling to survive.

"I cannot live with just Social Security," she said. "I don't have any money to live on."

Most married couples' retirement savings are tied together

In many ways, the world is built for married people: Taxes and living expenses are cheaper for two. Married couples also often share a household income, savings, assets like real estate and investments, and custody if they have children. But all of that gets divided up in a divorce.

To be sure, the divorce rate has been steadily declining for years. According to the CDC's analysis of 45 states, the divorce rate was around 2.4 per 1,000 Americans in 2022, down from around 4 per 1,000 in 2000.

Still, a couple's retirement assets might feel the damage of a breakup. The average married retiree has over $100,000 more in their 401(k) and savings accounts than a divorced retiree. This might be because settlements caused retirees to split or completely lose access to the accounts, said Melody Evans, a vice president wealth management advisor at TIAA, a retirement and wealth management firm.

Indeed, there are ways to protect assets from divorce. A prenuptial agreement can be helpful, but it typically doesn't protect wealth built after the couple ties the knot, like retirement savings.

Talking about money as a couple — and understanding joint assets — is one of the best ways spouses can protect themselves during a divorce, Evans said.

To preserve retirement savings, she said couples can also split their 401(k) and Roth IRA funds, or take Social Security based on the higher-earning spouse's salary.

Evans added that if one person in a relationship is in charge of banking and major purchases, the other spouse might be in the dark about their household's financial situation.

"When I hear about people having a really hard time or feeling like they missed assets during a divorce, generally, it's because they were not fully aware of what assets the couple had," Evans said.

This division of wealth in a divorce — and financial literacy gaps — can have major consequences. BI's analysis found that the average income of a married retiree is $2,577 a month, considering money they might receive through pensions, Social Security, retirement accounts, and insurance benefits.

A divorced retiree, however, takes home $1,940 a month. This compares to retirees who were never married ($1,887 monthly), people who are widowed ($2,381 monthly), and people who remarried after a divorce ($2,476 monthly).

Women can be especially vulnerable to lost assets and savings

While divorce can impact anyone's retirement plans, some demographics are more vulnerable to lost assets and savings. For example, Evans said some women might not have a strong financial infrastructure compared to men — women couldn't have their own credit cards until the mid-1970s, and it was more common for baby boomer women to be stay-at-home-parents, or hold primary domestic responsibilities.

Evans said that these traditional gender roles could contribute to long-term income differences. America's gender pay gap also means women might earn less than men for the same job.

"There is generally a disparity in terms of how much one person has saved into a retirement plan versus the other," she said. "Maybe that's because one spouse didn't spend as much time in the workforce, maybe they helped in the households differently."

On the whole, according to Business Insider's data analysis, retired women's finances fall behind men. Men's monthly retirement incomes are nearly $600 more than women's — $2,610 to $2,042 — and they're more likely to have a balance in a retirement account. Among retirees with retirement accounts, men have, on average, $318,727 socked away, regardless of marriage status. Women have $239,706.

Kathryn Clark got married as a teenager and raised her sons in California's Bay Area. After Clark finished her GED, she worked a series of roles in the accounting, healthcare, and tech industries — and was oftentimes the main household income earner.

When Clark finalized her divorce around the time she turned 50, she had been married for three decades. Neither she nor her husband had strong retirement savings, and they sold their house a few years before they split because they could no longer afford it. Clark didn't leave the relationship with any money or assets. She did, however, become the sole parent financially providing for their children. Clark's youngest son was still a teenager when the divorce was finalized, and she had to spend all the money she had to support herself and her kids.

"When the divorce came, I had nothing," she said. "I just walked away with half of what was in the bank account — which couldn't have been more than a couple hundred dollars."

Now 80 years old, Clark lives near the Bay Area in a low-income housing unit. She lives check to check on Social Security, has no savings, and struggles to afford groceries on just $23 a month from SNAP. When Clark's ex-husband died a few years ago, she learned that she could receive an extra $400 monthly based on his Social Security contributions. She had previously been trying to get by on less than $1,000 a month.

Overall, divorced women like Clark see lower monthly retirement incomes than their male counterparts — and peers who have remarried. Divorced women, on average, have around $1,800 a month in retirement income, while divorced men receive nearly $300 more monthly, per BI's analysis.

To protect themselves, Evans said people should invest early in understanding their full financial situation, a task she said wealth advisors can help with. One of Mintzer's greatest divorce regrets is that she didn't safeguard her retirement savings.

"Don't rely on someone else — whether it's a husband or wife or children," Mintzer said. "From the day you turn 18 and you start working, start preparing for that day when you're not going to be working anymore."

Are you financially struggling due to a divorce? Are you willing to share how you manage money in your marriage? If so, reach out to these reporters at allisonkelly@businessinsider.com and jkaplan@businessinsider.com.

Read the original article on Business Insider

from Business Insider https://ift.tt/QtHOjLW

3 common myths about supplements that prevent people from improving their health, according to the US' top expert

Stefan Pasiakos encourages people to read up on supplements before taking them.

Office of Dietary Supplements/ Getty Images

• Supplements aren't regulated in the US like drugs are.
• It's important to do your homework before taking them, the director of the Office of Dietary Supplements said.
• Know that supplements aren't a silver bullet and moderation is key, Stefan Pasiakos said.

Supplements are a polarizing topic. While some people swear by them, others think they're a total waste of time and money.

But the US' top supplements expert, Stefan Pasiakos, told Business Insider that neither view is helpful.

"You need to come at it from an objective standpoint and let the evidence speak for itself," said Pasiakos, who leads the Office of Dietary Supplements at the National Institutes of Health, a government body that assesses the latest scientific findings on supplements to strengthen public understanding.

Pasiakos, a nutritional scientist by training, joined the ODS in July 2023 with the goal of bringing a high level of scientific objectivity to the supplement field, he said. By providing people with clear information, he hopes he can help them make informed choices that optimize their health.

Dietary supplements from multivitamins to probiotics have become staples in our bathroom cabinets, with almost 58% of Americans saying they had taken some kind of supplement in the past 30 days, according to the latest data from the CDC published in 2021. It's no surprise, then, that the US dietary supplement market had an estimated value of $45.1 billion in 2023, according to Statista.

But the FDA doesn't approve supplements before they hit the market, meaning, unlike drug manufacturers, companies don't have to conduct multiple clinical trials to prove their products work, quantities of ingredients don't always have to be listed, and products are sometimes contaminated by or cut with other substances not mentioned on the packaging. One 2023 study published in JAMA Network Open found that 89% of the 57 dietary supplements tested didn't accurately list their ingredients.

While this means doing your homework before taking a supplement is crucial, it doesn't mean they can't play a role in supporting and promoting health, Pasiakos said.

He shared three common misconceptions about supplements that could prevent people benefiting from them.

1) The more supplements, the better

When it comes to vitamins, minerals, and nutrients, more is not always better, Pasiakos said. It's common for people to think that because something is "natural" you can't have too much of it, but that's untrue, he said.

There are instances where consuming above and beyond what's recommended is unsafe, and for a lot of natural products, we simply don't know where those upper levels are, Pasiakos said.

When people take above the recommended daily limit of a supplement, the effects can be serious. In May 2023, a man died after taking too much vitamin D over nine months.

Overdosing on magnesium, meanwhile, can in extreme cases, cause paralysis and death, while overdosing on vitamin C can lead to kidney problems and vitamin B12 deficiencies, professor Rob Chilcott, the head of toxicology at the University of Hertfordshire, UK, previously told BI.

More than half of Americans took some kind of supplement in 2021, according to the CDC.

Getty Images

2) Supplements are 'tainted and adulterated'

People tend to fall into two camps, those who think all supplements are "tainted and adulterated" and others who think they all work, Pasiakos said.

Pasiakos said that certain resources, such as the ODS's supplement fact sheets, can help people make informed decisions about supplements, while the third party NSF Product Certification program can guarantee a product contains what the label says it does.

But it's important to know that verification programs are not backing any health claims a company might make about their product. "It's simply saying that what's on the label is in the dietary supplement," he said.

"All I would say is that people make sure that they become educated on these products, understand what's in them, and know that the industry is not out to get them. But there are certainly aspects of certain dietary supplements that may be considered unsafe," he said.

3) Supplements are a silver bullet

Pasiakos said people are always looking for a silver bullet to make them healthy, but they won't find it in dietary supplements.

Like many dietitians, Pasiakos takes a food-first approach to his health. He sees supplements as complementary to a healthy diet, not as a way to replace or substitute one.

"You can't look at dietary supplements without understanding the underlying diet," he said. If you don't know what a person is eating and getting from their diet nutrient-wise, you can't advise them on what dietary supplements they should take, he said.

"I can't just ignore that. So that's why I look at it that way."

Read the original article on Business Insider

from Business Insider https://ift.tt/Y3XAHfg

Wider Middle East conflict threatens the global economy — when the US and China already face headwinds, experts say

The widening Middle East conflict, Hurricane Helene, and China's woes all pose economic headwinds.

Peter Zelei Images/Getty Images

• The widening conflict in the Middle East threatens to crimp growth and stoke inflation, experts say.
• Hurricane Helene is a big short-term disruption but shouldn't hit quarterly GDP, they say.
• They don't expect Beijing's stimulus measures to address China's deeper problems.

Experts say the escalating war in the Middle East could choke global economic growth and reignite inflation, just as the US is dealing with the aftermath of Hurricane Helene, and China is trying to stabilize its beleaguered economy.

Shockwaves of war

The regional conflict has expanded, with Israel threatening retaliation against Iran for attacking it with missiles in response to the killing of Hamas and Hezbollah leaders.

The escalation comes as the global economy is already under pressure from the delayed impact of interest-rate hikes, reduced trade, uncertainty around the upcoming US election, and China's economic slowdown, said Ahmet Kaya, a principal economist at the UK's National Institute of Economic and Social Research.

"War in the Middle East could exacerbate the instabilities in the global economy, further increase the uncertainties, harm disinflationary efforts, and eventually reduce the global GDP growth," he told Business Insider.

Kaya warned the conflict could accelerate inflation by disrupting international supply chains and causing the cost of energy and shipping to rise. He estimated an increase in oil prices of $10 a barrel could raise inflation in advanced economies by about 0.4 to 0.6 percentage points, and a 10% rise in shipping costs could lift it by about 0.3 percentage points.

US crude has already climbed by 10% in just over a week to over $74 a barrel on Friday, its highest level since August, while Brent crude is up almost 9% to above $78.

Kaya said resurgent inflation could lead central banks to delay cuts to interest rates, dampening growth at a time when recession fears are rife in many countries.

In Israel, the war and its lack of an obvious endpoint have knocked confidence and curbed investing and growth, making it harder for authorities to temper rising inflation without crushing the economy, said Assaf Razin, a professor emeritus at the Eitan Berglas School of Economics at Tel Aviv University.

He told BI the government must urgently improve its policies and close social and economic gaps, or "Israel's negative economic spiral could deepen, putting its status as a stable nation at risk."

Weathering the storm

The conflict is less of a worry for the US, according to Oliver Allen, a senior economist at Pantheon Macroeconomics. Rising oil prices could drive inflation but they've dropped since the spring, and the US is a net energy exporter, so the effect on incomes and economic activity would "probably be trivial," he told BI.

Confidence is unlikely to take a meaningful knock unless there's material escalation, Allen added.

However, Hurricane Helene could trigger a "fairly sharp rise" in next week's initial jobless claims data, and reduce nonfarm payroll employment by about 20,000 in October's report, Allen said. But he emphasized that hurricanes have historically had limited and short-lived impacts on growth and inflation.

"The most likely outcome looks like a small but passing impact on some of the lower-level activity data and a slight, but also temporary, lift to inflation from some of these supply-side shocks," he said.

An Oxford Economics report said that Hurricane Helene could affect several parts of the US economy — including consumer spending, the job market, housing, business profits, and industrial production — but it would likely have only a minimal impact on fourth-quarter GDP.

Oxford Economics researchers said state and local economies might suffer but there would probably be limited fallout at the national level. Output is poised to recover during the rest of this quarter, boosted by cleanup and rebuilding after the storm, they said.

One piece of good news arrived on Thursday night as tens of thousands of striking port workers agreed to suspend strike action and return to work while contract negotiations continue.

Trouble in China

China is facing a cocktail of economic challenges. Its GDP grew by a disappointing 4.7% year-on-year in the second quarter, down from an annual average of nearly 8% for the decade before the pandemic.

However, "that's not all bad given high inflation last year," Duncan Wrigley, the chief China economist at macroeconomic researchers Pantheon, told BI, adding inflation would have been higher had the economy grown faster.

He predicted that China's recently unveiled economic stimulus package would buttress short-term growth but would not address its root problems such as high youth unemployment and a beleaguered property market. Wrigley suggested those and other issues could rear their heads again next year, spurring Beijing to offer further support.

Read the original article on Business Insider

from Business Insider https://ift.tt/8mU32D4

Meta is ready to inject AI images of you into your Instagram and Facebook feeds

Galeanu Mihai/Getty

• Meta is testing bringing more AI-generated content to some users' experiences on Facebook and Instagram.
• The expanded features will show AI-generated images in some users' feeds.
• Only users who have onboarded and added photos to Meta's Imagine yourself feature will see the content.

Meta is experimenting with serving more AI-generated images and content to Facebook and Instagram users.

The company will now show some users images of themselves generated by Meta AI in their Facebook and Instagram feeds, it announced at its annual developer conference, Meta Connect, last week.

The push toward injecting AI content into people's feeds will be an interesting test of people's openness to seeing their likeness in posts they didn't proactively create as they scroll. It's also an early glimpse at how Meta may envision its social media feeds in the future evolving as AI becomes more prevalent in daily life.

The expansion builds on the "Imagine Me" feature, which came out in beta in July and allowed users to create AI-generated selfies in direct messages with Meta AI or in their feeds, stories, and profile pictures.

An example of Meta's AI posts the company is testing in some users' feeds.

Meta

However, the new AI content added to feeds could be "based on your interests or current trends," the company announced. Others might show AI-generated images of the user.

"Imagines with your face in them can only be generated for users who have onboarded to Meta's Imagine yourself feature, which includes adding photos to that feature and have accepted the feature's terms," a Meta spokesperson told BI. "Content imagined for you by Meta AI is only displayed for you and you have the option to share them with your friends and family."

Users who see the images can opt-out by tapping the three dots in the top right corner of a post. Choosing "hide" will stop them from seeing similar posts in their feeds, and "stop seeing this content" will turn off suggested AI images of themselves in their feeds.

Social media consultant and industry analyst Matt Navarra told BI that it's crucial for Meta to "strike a balance between AI-powered features and genuine user-generated content."

"There is a novelty factor and that in itself could drive engagement and possibly keep people in feeds and on the platform longer," Navarra said of the feature expansion. "However, the long-term response will really depend heavily on the quality and relevance of the AI-generated content because if it's just more AI slop in feeds, I'm not sure how, long-term, that will keep people engaged without causing additional problems for Meta to deal with."

"If it feels intrusive or repetitive, which doesn't really align with their interests, then users probably will become quite disengaged," Navarra added. "There's also the potential for users to feel slightly uneasy about their likeness being used in AI-generated images or how customized or personalized it becomes."

Kevin Roose, co-host of The New York Times' "Hard Fork" podcast, called the new feature "the creepiest thing I can imagine them doing" in a recent episode.

"Imagine you're talking about fishing with your friend, and all of a sudden, because you've clicked on some fishing stuff, you're just scrolling through your Instagram feed and you see a picture of yourself in a fishing outfit going fishing," Roose said on the podcast.

"Like you are going to throw your phone into the nearest body of water and you're never going to log on again," he predicted.

Read the original article on Business Insider

from Business Insider https://ift.tt/yuMKolw

These 3 indicators are pointing to a healthy labor market similar to the pre-pandemic boom, according to Goldman Sachs

Steel workers placing sheet steel in a large brake press

Thomas Barwick/Getty Images

• Investors are worried that labor market weakness could thwart a soft landing.
• However, Goldman Sachs' Joseph Briggs doesn't think there's reason for concern.
• Briggs shares 3 indicators of a healthy labor market and overall economy.

As inflation creeps downward, investors are increasingly turning their attention to the labor market to look for clues of a soft landing.

Both July and August employment data fell short of Wall Street expectations after revealing lower-than-expected job additions, sparking fears of a recession and sending stocks tumbling. The highly anticipated September jobs data will be released this Friday.

Investors shouldn't be worried, though. Labor market fundamentals remain strong, according to Joseph Briggs, co-lead of Goldman Sachs' global economics team and a former Federal Reserve senior economist.

"If we take a broad assessment across a number of different labor market indicators, they are still roughly where they were from 2017 to 2019, and that was a pretty healthy labor market," Briggs said.

In Briggs' view, the following three indicators point to a normalizing late-cycle labor market, and in turn, a strong economy.

3 signs of a healthy labor market

Layoffs are one important indicator of the job market's health, and luckily, companies aren't laying off many workers right now.

Both layoff rates and initial claims are hovering at or below pre-pandemic levels, Briggs pointed out. Initial claims, or first-time jobless claims filed by individuals seeking unemployment benefits, dropped to a four-month low of 218,000 last week.

Low layoffs, in particular, are a positive sign because they help the economy avoid a dangerous feedback loop, Briggs said. Layoffs lead to decreased consumer spending, hurting companies, which leads to even more layoffs.

Thankfully, the labor market isn't experiencing this sort of spiral right now. "We're not really seeing any signs on a widespread basis that employers are actually firing workers," Briggs said.

On the contrary, consumer spending is quite robust, driven by continued job gains and wage growth, according to Briggs.

Wage growth is improving and exceeding inflation this year, posting 3.5% year-over-year growth in August 2024. Real average weekly earnings increased 0.2% from July to August of this year. Briggs predicts that US workers could see 2.0 to 2.5% real income growth in the upcoming year.

The US economy is also adding jobs at a steady pace that supports consumer spending, Briggs said. In August, 142,000 jobs were added, which Briggs sees as a healthy monthly increase. He expects the US economy to continue adding jobs at a rate of 140,000 to 150,000 a month. This pace of job growth isn't as aggressive as it was during the post-pandemic hiring frenzy, but that's to be expected as the labor market normalizes, and investors shouldn't take this development as an indicator of recession.

Lastly, GDP growth remains strong, setting the stage for a favorable hiring environment. The US economy posted 3% annualized GDP growth in the second quarter of 2024, faster than the 1.4% growth rate in the first quarter and beating Wall Street expectations.

Briggs is optimistic about future GDP growth as well. He expects the impacts of the Fed's rate-cutting cycle to start manifesting in the economy relatively quickly, boosting US GDP within the next few quarters.

The overall economy has been improving in the past few months in anticipation of rate cuts and will continue to do so, in Briggs' opinion. Most notably, mortgage rates have been decreasing.

"The changes that we've seen over the last few months point to about a half-point boost to annualized GDP growth over the second half of 2024 and the first half of 2025," Briggs said.

"There are sectors of the economy that are still highly rate sensitive, and these will have a clear impact on GDP growth," he added.

These areas include the housing market, consumer durables, small-cap companies, and industries such as software and pharmaceuticals. With multiple areas of the economy set to benefit from rate cuts, investors should be confident that a soft landing and strong labor market are in the cards.

Read the original article on Business Insider

from Business Insider https://ift.tt/JMsflhm

Boeing's 737 safety mess just got worse

An Alaska Airlines Boeing 737 Max 9 aircraft.

Kevin Carter/Getty Images

• The National Transportation Safety Board has more concerns about Boeing's planes.
• It said at least 40 airlines outside the US may be operating aircraft with risky rudder parts.
• This is the latest blow to Boeing, which has been plagued by safety probes.

The National Transportation Safety Board (NTSB) has flagged fresh concerns with Boeing's 737 planes, saying that at least 40 airlines outside the US may be operating aircraft with faulty components.

The NTSB issued a press release on Thursday, saying it had issued urgent safety recommendations to Boeing and the Federal Aviation Administration (FAA).

The release said that the NTSB was investigating a February 6 incident with a United Airlines Boeing 737 Max 8 plane, which experienced "stuck" rudder pedals while landing at Newark Liberty International Airport in New Jersey.

The Board said that its investigators tested a rollout guidance actuator — one of the rudder control components from the affected airplane — at the component's manufacturer, Collins Aerospace.

When tested with another identical unit from a separate airplane, both actuators failed. Moisture was detected in both units.

Collins Aerospace later found that the sealed bearings on the units had been incorrectly assembled, "leaving the unsealed side more susceptible to moisture that can freeze and limit rudder system movement," per the release.

The NTSB said that Boeing's 737 flight manual instructs pilots facing a jammed rudder to overpower the system by applying "maximum force." But the Board warned that such force on faulty rudders could
"unintentionally cause loss of control or departure from a runway."

NTSB Chair Jennifer Homendy wrote a September 30 letter to the FAA's administrator, Michael Whitaker, saying she was concerned that the FAA "did not take this issue more seriously until we issued our urgent safety recommendation report."

She added that she had been made aware the "FAA has been downplaying the urgency of this issue, maintaining that the units are no longer in service."

Homendy said that Boeing had said that it had received 353 affected actuator units since February 2017.

Per Homendy's letter, 271 affected actuators may now be installed on aircraft in service operated by at least 40 foreign air carriers. She added that 16 units "may still be installed on US-registered aircraft."

Homendy also slammed Boeing for failing to inform United Airlines that faulty actuators were installed in the 737 planes it had delivered to them.

"We are concerned of the possibility that other airlines are unaware of the presence of these actuators on their 737 airplanes," Homendy wrote.

"Not making operators fully aware of the installed systems and equipment on the airplanes delivered to them is unacceptable and cannot continue to be tolerated," she added.

A bad look for Boeing

Guy Gratton, an associate professor of aviation and the environment at Cranfield University, told BI that component faults reflect poorly on Boeing.

"It's another instance of national authorities in the USA (the Federation Aviation Administration, and the National Transportation Safety Board) stepping in to address safety issues that Boeing themselves should have already identified and rectified," Gratton said. "I'd anticipate their customers worldwide being disappointed in that."

However, he added that he thought this issue was not as serious as Boeing's past safety issues, like the January 5 incident when the door plug on an Alaska Airlines passenger plane — a 737 Max 9 model — detached during a flight, forcing pilots to make an emergency landing.

"This fault could not in itself lead to loss of an aircraft, and even an aeroplane going off the side of a runway, whilst extremely embarrassing and expensive, would be unlikely to lead to loss of life," Gratton said.

He added: "I'd still be content to get into a Boeing 737, and I do — but it does continue to show the company as being troubled, and its products less trustworthy than those of the obvious competitors."

Latest blow to an already beleaguered Boeing

Boeing shares dropped 2.74% on Monday.

It's also worth noting that the NTSB probe is the latest setback for the company. Their Max family has been plagued by safety concerns since the two crashes of its 737 Max jetliners in 2018 and 2019 that killed a total of 346 people.

And following the Alaska Airlines door plug incident, the FAA barred Boeing from expanding production on Max plane models until quality and safety issues were addressed.

A string of whistleblowers have also alleged this year that the company is lax with safety and quality control. Some bombshell allegations were publicized in a sprawling 204-page report released on June 17 by the Senate subcommittee that investigated Boeing's safety and quality practices.

These accounts include testimony from Sam Mohawk, a quality assurance inspector for Boeing, who alleged that the company lost track of hundreds of faulty 737 parts and ordered staff to conceal improperly stored plane parts so FAA inspectors would not see them.

Merle Meyers, a former Boeing quality manager, said that Boeing's manufacturing team regularly tried to retrieve bad parts from a "reclamation" area even after they were thrown out.

Boeing declined to comment on BI's queries, saying it would defer to the NTSB on the investigation. The FAA didn't immediately respond to a request for comment from BI, sent outside business hours.

Read the original article on Business Insider

from Business Insider https://ift.tt/p3WqX7E

China's stimulus package might not be enough to fix its economy, but it sent stock markets 8.5% higher — a gain not seen since 2008

On Monday, mainland China's benchmark CSI 300 posted its biggest gain since 2008.

Costfoto/NurPhoto/Getty Images

• China's aggressive stimulus measures have sparked a significant stock market rally.
• Many analysts say the measure is not enough to fix the challenges in China's economy.
• However, the measures aim to boost sentiment and stem the negative feedback loop between markets and the economy.

Skeptics have been out in force since China rolled out aggressive stimulus measures last week to prop up its ailing economy and markets.

It's just not enough to reverse the magnitude of China's problems — including an epic property crisis and high youth unemployment — they say.

Still, traders, investors, and speculators have sent China's stock market to its best month in nearly a decade, signaling that the market players think that Beijing's moves are a "bazooka."

On Monday, mainland China's benchmark CSI 300 closed 8.5% higher, posting its biggest gain since 2008.

Hong Kong's Hang Seng Index gained as much as 4.2%.

The gains are significant because the Chinese markets were in a prolonged market slump until last week's announcements.

"The PBoC and Politburo, all leaning in on putting a floor in property, boosting equities and backstopping households, have hit the right notes," Vishnu Varathan, Mizuho's macro research head for Asia excluding Japan, wrote in a note on Monday.

The People's Bank of China's stock market stimulus was unusual.

State media China Securities Journal explained the thinking behind the move in an editorial on Monday

"The capital market is not only a 'barometer' of the macroeconomy, but also a 'thermometer' of investor sentiment," said the editorial, which acknowledged the vicious cycle of negative feedback between the stock markets and economic sentiment.

"Boosting the capital market is an important breakthrough in strengthening confidence. An active stock market and improved investor confidence will improve expectations for economic development," the media outlet wrote.

Chinese central bank governor Pan Gongsheng even said during his Tuesday announcement of the stimulus measures that authorities would consider injecting more liquidity into the system if stock market support measures from swaps and loans for share buybacks prove to be successful.

Pan did not spell out the definition of success or put a limit to the amount of additional liquidity that authorities could inject, fueling euphoric hopes that the Chinese Communist Party could come close to throwing the kitchen sink.

"In other words, the state is actually telling investors that the Chinese stock market will not continue to decline, and China will provide 'unlimited ammunition' to support the stock market," Criss Wang, an independent analyst who publishes on the Smartkarma platform, wrote on Monday.

Once the capital market is stabilized, overall sentiment would improve and boost the economy, she added.

New tactics and shrinking factory activity

The PBOC's recent intervention is a "clear departure from previous policy," wrote Global Data.TS Lombard economists wrote in a note last week.

"The bank, which usually cautions against speculation, now seeks to encourage it!" they added.

Whether such a strategy would work in the long run is a question mark, since China's economy faces significant fundamental challenges.

China's factory activity shrank for a fifth straight month in September, official data showed on Monday.

But the financial markets are fickle and trading increasingly automated, so there may be room for the rally to run.

"The sheer relief of coordinated China stimulus is manifesting as 'risk on' and can take on its own momentum," wrote Mizuho's Varathan.

The Hong Kong Stock Exchange will be closed on Tuesday for a public holiday.

Mainland China's stock markets will also be closed from Tuesday to Monday.

Read the original article on Business Insider

from Business Insider https://ift.tt/lM82NOq