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Trump Tweet-Attacks Boeing


Image source: Giphy.com

What's going on?

A tweet from Donald Trump momentarily sent shares of American aviation giant and defense contractor Boeing into turbulence (tweet this) – but it also shows the president-elect’s apparent proclivity for targeting individual companies, which is becoming a risk for investors.

What does this mean?

Trump tweeted that the costs of the new Air Force One being developed by Boeing are way too high and should be reduced, even threatening to cancel the order! Cancelling the Air Force One project would obviously hurt Boeing’s profits, but perhaps more importantly, markets interpreted Trump’s comments as a possible attack on defense contractors that supply the government as shares in Raytheon and Lockheed Martin were also down after the tweet.

Why should I care?

For markets: Not every Trump policy will be good for stocks, as markets seem to think right now.
Stock markets have been pretty optimistic about the economic prospects of a Trump presidency. But even though Trump has made big promises on infrastructure spending and has indicated that he will aim to cut regulations and taxes for businesses, some of his policies won’t be good for corporate America, like higher import taxes or jabs aimed directly at individual companies (e.g. this Boeing tweet).

For markets: Trump’s tweet risk is a new concern for investors.
Boeing now joins Ford and others on a list of companies that Donald Trump has singled out on Twitter for behavior he says is unacceptable. By identifying individual companies so regularly, Trump is taking a different tact than most (though not all) policymakers, in particular previous presidents. Markets will have to ponder what these comments really mean for companies…

Originally posted as part of the Finimize daily email.

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