Courtesy of Pam Martens
On January 20, 2017, the date of Donald Trump’s inauguration as President of the United States, the giant aerospace company, Boeing, closed the trading day at $159.53. Yesterday, it clocked in at $352.75 by the closing bell. The Trump era has added 122 percent to the pockets of Boeing shareholders, giving it a market cap of $207.6 billion.
Trump’s erratic reign had been good for Boeing – right up until Thursday, March 1, when Trump announced that he would be imposing 25 percent tariffs for foreign-made steel and 10 percent for aluminum. The stock market took a dive along with Boeing on the announcement.
Boeing is not just your average publicly-traded stock. It’s one of the 30 components in the Dow Jones Industrial Average, which is an index that affords greater weight to a stock based on its price. At yesterday’s closing price of $352.75, Boeing is by far the most expensive stock in the Dow. As such, it has a weighting of 9.76 percent of Dow performance. That compares with GE, the cheapest stock in the Dow, which registered a closing price of $14.42 yesterday and has a minuscule weighting of 0.40 percent in the Dow.
Trump has been a serial Tweeter about how his presidency has buoyed the Dow. Now, ironically, his steel and aluminum tariffs could be the undoing of that blissful relationship – in no small part because of Boeing’s precarious situation in the midst of a full blown trade war.
The problem isn’t that Boeing will see its aluminum costs for its planes rise dramatically. Morningstar analyst Chris Higgins notes the following in that regard:
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