President-elect Donald Trump on Tuesday directed one of his infamous impulsive tweets at Boeing, which currently has a contract to build the next version of Air Force One. Specifically, he said: “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!”
Boeing’s stock took a wild ride downward in the immediate aftermath of the outburst, but bounced back to roughly where it began by the time the closing bell rang. As it turned out, the Department of Defense had budgeted $1.65 billion ― not $4 billion ― and Boeing said it currently has a $170 million contract with the Air Force. Such clarity aided the company’s late-in-day stock rally.
But the tweet touched off a furious round of “Where did Donald Trump get his information?” questions. Reporters were subsequently tasked with the job of questioning whether Trump had any skin in the game with regard to Boeing. Spokespersons for the president-elect said ― without providing documentation ― that he had sold all of his stock holdings earlier in the year.
The whole incident revived concerns about the potential for Trump’s tweets to suddenly manipulate markets for no good reason. But it also uncovered other winners and losers that went relatively unnoticed.
BIG WINNER: THE PENTAGON
Perhaps the day’s biggest irony is that Trump’s complaints about imaginary Air Force One cost overruns pushed an even bigger story about government waste right out of the newshole. Prior to Trump’s Boeing complaint, most of the media was still absorbing a blockbuster story from The Washington Post’s Craig Whitlock and Bob Woodward. They described how the Pentagon went in search of wasteful spending, found a nonsensical amount of it, and then buried its own findings.
As the Post reported:
The Pentagon has buried an internal study that exposed $125 billion in administrative waste in its business operations amid fears Congress would use the findings as an excuse to slash the defense budget, according to interviews and confidential memos obtained by The Washington Post.
Pentagon leaders had requested the study to help make their enormous back-office bureaucracy more efficient and reinvest any savings in combat power. But after the project documented far more wasteful spending than expected, senior defense officials moved swiftly to kill it by discrediting and suppressing the results.
According to my back-of-the-envelope calculations, $125 billion is greater than $4 billion. And yet I have a really good feeling about which story will attract the lion’s share of attention on the Sunday morning political chat shows. The Pentagon caught a nice break.
BIG LOSER: CORPORATE CEOS
It’s hard to feel bad for our nation’s chief executives, who over the past four decades have enjoyed skyrocketing increases to their take-home pay that don’t align with the relative quality of American CEO-ing over the same period of time. But the Chicago Tribune’s Robert Reed argues that we should feel some concern over the “chilling effect on corporate CEOs speaking out in public.”
While not hearing from CEOs isn’t a major hardship for most people, this backing away threatens to damage the already shaky dialogue that exists between business leaders and the rest of us.
Even in a controlled environment of a Chamber of Commerce occasion or similar event, businesspeople get out there and share their views about the issues of the day, whether it’s public safety, the environment, markets, free trade or community development.
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Sounds corny, but at such events the protective corporate bubble can be pierced, if only a little. Community activists, media members, employees, students and other stakeholders get to quiz executives about their corporate strategies and decisions.
“We need more healthy CEO dialogues, not fewer,” Reed writes.
ALSO WINNING: EVERYONE WHO DIDN’T WRITE THIS CNBC PIECE ASKING US TO CONSIDER THE COST-CUTTING VALUE OF TRUMP’S PRIVATE JET
For some reason, CNBC’s Robert Frank wrote a piece titled, “As Trump pushes back on Boeing, consider his private jet cost a fraction of Air Force One.”
Hmmm, yes, let’s consider.
So, after about two seconds of considering, I’m thinking that maybe one of the big reasons that Trump’s own plane “cost less then a tenth of Air Force One” is because Air Force One was specifically designed with the goal of making sure the president of the United States isn’t getting shot down all the damn time. This isn’t something that I thought we were ready to rethink. But as Frank points out, Microsoft co-founder Paul Allen’s secondhand plane cost Trump merely $60 million after all the renovations were done. Let’s definitely see if Allen has any more planes laying around.
Frank pauses momentarily to ponder the innovative way Air Force One has been designed to “the president shouldn’t die” specifications, but dismisses such thoughts in the next breath:
Aviation experts say Trump’s plane is more luxurious, but Air Force One is a technology marvel, with an anti-missile system, scramblers, massive communications systems and back-up systems. So the two aircraft are not really comparable. But based on the Trump-gold standard for private jets, it’s no wonder he’s demanding a cost cut from Boeing.
Again, based on the “Trump-gold standard for private jets,” you don’t have an anti-missile system or other state-of-the-art countermeasures to being blown out of the sky, but it really makes you think, man.
TOO EARLY TO TELL: HIGH-FREQUENCY TRADERS
Redeeming CNBC’s coverage of Boeing Tweet Day, Eamon Javers digs into the notion that traders might be able to game Trump’s Twitter activity with computerized algorithms designed to start immediately capitalizing on Trump’s market manipulations. That sounds great, just great. Naturally, people are already working on figuring out a way to do this.
Efrem Hoffman, founder of a market analysis firm called Running Alpha, said Trump’s tweets represent a new source of market information for those willing to study them and identify patterns. “One specific strategy that I am working on is looking at tweets that come from Trump’s Android phone — as these have been shown to reflect his personal beliefs and convictions,” Hoffman said. “Somewhat more unfiltered than tweets coming from other mobile devices that reflect the opinions of his colleagues/staff.”
Hoffman said he is analyzing the sequencing of Trump’s tweets in terms of volatility between Trump’s episodes of anger or jubilation, and cross referencing those episodes with keywords associated with specific industries of policy categories. He said he is looking at the sentiment of Trump’s followers and how the tweets are received as a possible measure of market player uncertainty.
There is a healthy amount of skepticism as to whether something like this could be pulled off, and Javers notes that it “is always possible that algorithmic traders are already analyzing Trump’s tweets and simply decided that the [Boeing] tweet was too vague to trade on.”
Nevertheless, that 10-second delay between Trump’s Twitter missive and the market’s convulsions remain exploitable terrain. Someone is sure to find a way to get rich off Trump’s tweets. Probably not you, though!
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Jason Linkins edits “Eat The Press” for The Huffington Post and co-hosts the HuffPost Politics podcast “So, That Happened.” Subscribe here, and listen to the latest episode below.