Boeing is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!
Earlier I shared with you that when it comes to President-elect Donald Trump, the media takes him literally but not seriously. His supporters, on the other hand, take him seriously but not always literally.
We saw an example of this polarity Tuesday morning when Trump took a shot at Boeing, tweeting to his nearly 17 million Twitter followers that the jet-manufacturer “is building a brand new 747 Air Force One for future presidents, but costs are out of control, more than $4 billion. Cancel order!”
When journalists sought clarification, Trump said he wants Boeing to make money, “but not that much money.”
As the Wall Street Journal pointed out, the current Air Force One has been in use for 30 years—since Ronald Reagan’s administration—and includes many cutting-edge modifications for communications and defense. It’s designed to withstand a nuclear blast. For the value we get out of the president’s main ride, in other words, the exorbinant sticker price might not be so exorbinant as it initially appears.
But then, the $4 billion Trump refers to couldn’t be confirmed. Boeing responded by saying it’s currently under contract to build the jet for only $170 million, and production hasn’t even begun yet.
Again, in questioning the details of Trump’s tweet, the media might be missing the forest for the trees. It’s possible the president-elect means simply that we need to keep government cost overruns in check—not literally cancel the Air Force One order—something we can all agree with.
Investors Take Trump Seriously—and Somewhat Literally
Investors have so far managed to find the right balance between taking Trump seriously and literally, to a certain extent. Since Election Day, small-cap stocks have rallied more than 12 percent, suggesting the market sees Trump’s “America First” policies benefiting them the most. Because they have less exposure to foreign markets than blue-chip companies, small caps are in an attractive position to take advantage of lower corporate taxes, streamlined regulations and a stronger U.S. dollar.