Boeing Wins Contract For Next-Generation Jet Fighter
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What are the key announcements in today's episode?
Boeing wins a contract to make what might be the most expensive fighter jet in history. Plus, the oil and gas industry was excited about a Trump presidency. Now it's feeling less certain.
President Trump has certainly signaled that he wants his administration to be all good for the oil and gas industry. But it does seem like there's going to be tension along the way.
And investors poured billions into leveraged ETFs. Now their value is plunging. It's Friday, March 21st. I'm Alex Zosula for The Wall Street Journal. This is the PM edition of What's News, the top headlines and business stories that move the world today.
Why did Boeing win the contract for the next-gen fighter jet?
Boeing has been selected to build what may turn out to be the most expensive fighter in history, a sophisticated jet the Air Force believes is vital to deter China's military in the decades ahead. President Trump announced the new program at the White House today.
The F-47 will be the most advanced, most capable, most lethal aircraft ever built. An experimental version of the plane has secretly been flying for almost five years, and we're confident that it massively overpowers the capabilities of any other nation. There's no other nation. We know every other plane. I've seen every one of them. And it's not even close. This is at next level.
What are the potential costs and implications of the F-47 fighter jet?
The Pentagon hasn't released cost estimates for the program, but experts say the total research, development, and acquisition costs could top $50 billion. Lockheed Martin had been vying with Boeing for the contract. The fighter's future had been in doubt after the Biden administration opted to leave the final decision on how to proceed to the incoming Trump administration. Elon Musk, the billionaire and Trump ally, has publicly campaigned against manned aircraft, which he had said were, quote, obsolete in the age of drones. Germany's parliament has authorized a massive spending package that includes as much as 1 trillion euros, or just over a trillion dollars, in civilian and defense investments to build up its infrastructure and reduce military reliance on the U.S.
The journal's Germany bureau chief Bertrand Benoit is here to tell us more. So how would this work on a practical level? The incoming coalition government seems to be split on a number of issues, right?
How is Germany planning to enhance its defense spending?
It's not necessarily going to be a big fight. It's more going to be technically complicated. So you have two things. You have a 500 billion infrastructure fund, which is limited in size and in time. It runs over 12 years. And then on the other hand, we have the military spending. And there, what you have is unlimited in time and in scale. So essentially... What the Germans have decided is that any spending that is higher than 1% of GDP is not going to be subject to the fiscal rules that the country has. And so essentially, Germany will be able to spend as much on the military going forward as investors are ready to lend to it.
Yeah, let's talk a little bit more about this money used for defense. Are any American defense companies expected to benefit from this?
That's a very interesting question, because initially we had an interview with Friedrich Merz, who was in line to become the next chancellor, just before the election. And one of his messages at the time was that he would encourage German military to invest more in U.S. hardware. Now the tables have turned a bit because there is this sense that The security of Europe is no longer a priority for the U.S. and therefore that perhaps Europe should be looking after its defenses on their own. And that means supporting their own defense industry. And there's a higher likelihood that given the choice, the procurement will go to European defense companies and this being Germany to German defense companies.
That was WSJ Germany Bureau Chief Bertrand Benoit. Thank you, Bertrand.
What impact did the fighter jet contract have on stock markets?
Thank you, Alex.
It was a week of big swings for U.S. markets, with the impact of the Fed's decision to hold rates steady and concerns over the effects of President Trump's trade policies continue to loom. Today, though, major U.S. indexes ended the day slightly higher. The Dow and the S&P 500 both rose about 0.1 percent, and the Nasdaq was up about half a percent.
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Chapters
6 chapters
1
What are the key announcements in today's episode?
0:03–0:46
2
Why did Boeing win the contract for the next-gen fighter jet?
0:46–1:25
3
What are the potential costs and implications of the F-47 fighter jet?
1:25–2:20
4
How is Germany planning to enhance its defense spending?
2:20–3:59
5
What impact did the fighter jet contract have on stock markets?
3:59–4:40
6
Why are leveraged single-stock ETFs plunging?
4:40–11:02
Speakers
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