Boeing Stock Has Much to Gain From a Trump Presidency
Forbes published an article in the weeks before the presidential election, suggesting that Donald Trump would be terrible for Boeing Co (NYSE:BA) (Source: “Trump Will Be Disaster For Commercial Aviation,” Forbes, August 25, 2016.)
However, this doesn’t resonate with the reality of the airliner market or even Trump’s agenda. As it happens, Boeing stock gained over two percent on November 9.
China is one of the reasons for Forbes’s bearish sentiment on Boeing stock, even though China is likely to remain the top buyer of Boeing equipment for years to come. Forbes takes Trump at face value when it notes that Trump complained about some Boeing planes having their assembly finished in China. (Source: Ibid.)
But Trump has run on a platform of promising jobs and growth. Now that he’s president-elect, why uselessly compromise that valid goal?
The other concern is that Trump would block the sale of some 100 Boeing airliners to Iran. That contract, which got the green light from U.S. authorities a few months ago, is worth $25.0 billion. It certainly helped sustain BA stock against recent market shocks. On top of that, Boeing has set up its headquarters in Hillary Clinton’s home city of Chicago. It simply would not make sense to Trump’s platform of growth, or his boastful nature, to concede such an easy bashing point.
As for Iran and China, Donald Trump found it useful to rally support around him. He targeted the nuclear deal with Tehran as an example of Barack Obama’s failure. Would he interfere with this deal? It’s highly doubtful. Airbus Group SE (EPA:AIR) also has a deal to sell dozens of new planes to Iran. Rather than suffer, Boeing stock has a chance to grow. In fact, as a nationalist, Trump would encourage Boeing to do better than Airbus.
Trump Is About Industrial Growth. Boeing Is a Key Player in This Strategy
Trump wants to add jobs. Compromising with China and Iran is better than having to receive angry calls from Boeing management and possible labor action from Boeing factory workers—many of whom could have voted for Trump. In more concrete terms, Boeing stock moved up on post-election Wednesday.
Speculation aside, in October, Boeing received orders for 77 net orders for new planes in October. There were many a “737” and the more expensive “787 Dreamliner” on the books. Boeing also delivered several Chinese airlines, which took delivery of 787s, “777s,” and 737s.
Where Trump might focus his energies more fruitfully—in a way that benefits his job growth plans—is in encouraging investment in Boeing. China has started to design and build its own airliners, and it’s also boosting military spending. As it happens, Boeing stock could make big gains if Trump stands by his commitment to raise military spending.
The recession that helped Trump’s surprise win was the worst since the 1930s. In fact, the recession and lack of true growth, the kind that spreads to workers rather than Wall Street, needs well-paying, skilled manufacturing jobs.
Washington’s financial deregulation and the banks’ toxic financial products were to blame—not Boeing. The market has already spoken, and it sees Boeing stock as bullish under Trump.