WSJ What’s News: Summary of "Boeing Wins Contract For Next-Generation Jet Fighter"
Release Date: March 21, 2025
The latest episode of WSJ What’s News, hosted by Alex Sosalev, delves into major developments in the defense sector, market fluctuations, and significant corporate and political news impacting global and U.S. landscapes. This detailed summary captures the key discussions, insights, and conclusions presented throughout the episode.
Boeing Secures Historic Fighter Jet Contract
The episode opens with breaking news that Boeing has been selected to build what may become the most expensive fighter jet in history. Announced by President Donald Trump at the White House, the new fighter jet, designated the F47, is intended to serve as a cornerstone in deterring China’s military advancements for decades to come.
President Trump, addressing the press at [01:30], stated:
“The F47 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 a next level.” [01:30]
Despite the Pentagon not releasing official cost estimates, experts estimate the total research, development, and acquisition costs could exceed $50 billion. Lockheed Martin, Boeing’s main competitor, had been in contention for this contract, but Boeing ultimately prevailed. The decision's timing was influenced by the transition from the Biden to the Trump administration, which saw a shift in defense priorities.
Germany’s Defense and Infrastructure Investment
The conversation transitions to Germany's recent authorization of a substantial 1 trillion euros ($1.1 trillion) spending package aimed at bolstering its infrastructure and reducing military reliance on the U.S. Bertrand Benoit, WSJ's Germany bureau chief, provides an in-depth analysis at [02:50]:
"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..." [02:50]
Benoit explains that Germany has decided to allow military spending exceeding 1% of GDP without being constrained by existing fiscal rules, enabling unlimited military investment contingent on investor willingness to fund it. When asked if American defense companies would benefit, Benoit clarifies that initial plans favored U.S. hardware investment. However, the current sentiment shifts towards supporting European, particularly German, defense industries due to perceived declining U.S. commitment to European security.
Market Reactions and Leveraged ETFs Collapse
The episode then covers the U.S. stock market's response to these defense developments. Following the fighter jet announcement, Boeing’s stock rose by over 3%, while Lockheed Martin’s shares declined by nearly 6%. Major U.S. indexes (Dow and S&P 500) saw marginal gains of approximately 0.1%, with the Nasdaq up by about 0.5%.
A significant portion of the discussion focuses on the crash of leveraged exchange-traded funds (ETFs). Jack Pitcher, WSJ markets reporter, explains at [07:02]:
"Part of the reason for that is investors looking to get rich quick, people who are attracted to gambling with their money. Some of these ETFs can have huge gains and losses in a single day. And for most of the last two years, it's been huge gains. People have flocked to these products and they make it easy to make really large bets on a single stock or a stock index." [07:02]
Leveraged ETFs, which use borrowed capital to amplify returns, saw their assets under management increase by 51% to $134 billion in the year ending January 31st. However, recent market downturns have led to massive losses, with some ETFs down by 80% from their highs. Despite significant losses, net inflows remain positive, suggesting that many investors are holding onto these funds in hopes of recovery, unaware of the long-term divergence from their intended daily leverage goals.
Jack Pitcher further elaborates on the inherent risks:
"A thing about these funds that not everybody understands at first is they use borrowed money to create a leverage return over a period of one day... It can start going down so much that if an investor held them the whole time, it's going to be very hard for them to ever recover to their original investment, even if the stock is going up quite a bit again." [07:57]
Oil and Gas Industry's Uncertainty Under Trump
The episode shifts focus to the oil and gas industry's reaction to President Trump's policies. Initially, the industry celebrated Trump's victory, hoping for regulatory rollbacks and increased production. However, current sentiments reveal growing unease due to trade policies, steel tariffs, and permit regulations. Colin Eaton, WSJ oil companies reporter, discusses at [09:10]:
"The oil and gas industry really does love the rollback regulations and they say they're going to pump more oil. But the concerns now are everything else in terms of trade policy, the tariffs on steel. They're also concerned about the job cuts related to agencies that permit their projects..." [09:10]
Eaton highlights that the primary concern revolves around the administration's apparent desire for lower oil prices, which are detrimental to the shale industry’s profitability. The industry's preference is for legislative stability over fluctuating executive orders to ensure long-term investment certainty.
Columbia University’s Compliance with Trump’s Conditions
In an exclusive report, the episode unveils that Columbia University has agreed to President Trump’s stringent demands in exchange for the restoration of $400 million in federal funding. The memorandum reveals requirements such as banning masks, empowering 36 campus police officers with arrest powers, and appointing a senior vice provost to oversee specific academic departments.
This agreement follows intense negotiations between the university and the government’s Task Force on Antisemitism. The move has sparked concern nationwide, with many educational institutions fearing similar demands. This development underscores the heightened tensions between academic freedoms and governmental oversight.
Upcoming Segments and Closing Remarks
Alex Sosalev concludes the episode by previewing upcoming segments, including a markets wrap-up and a deep dive into the U.S. healthcare landscape, particularly focusing on potential Medicaid cuts under congressional debate. The episode wraps up with acknowledgments to the production team and a thank you to listeners.
Notable Quotes:
- President Trump on F47 Fighter Jet: “[...] This is a next level.” [01:30]
- Bertrand Benoit on German Defense Spending: “[...] Germany will be able to spend as much on the military going forward as investors are ready to lend to it.” [02:50]
- Jack Pitcher on Leveraged ETFs Risks: “[...] if an investor held them the whole time, it's going to be very hard for them to ever recover to their original investment...” [07:57]
- Colin Eaton on Oil and Gas Industry Concerns: “[...] They prefer the Trump administration try to push these things through the legislative route, through Congress and submit some of this stuff in law.” [10:03]
This episode of WSJ What’s News provides a comprehensive overview of significant defense contracts, market dynamics, industry uncertainties, and the intersection of politics with education, offering listeners a nuanced understanding of the forces shaping current events.