So much for the idea that Democratic victory in November's mid-term elections would put an end the war. One look at the five year chart of the Amex Defense Industry Index (shown above) should make that perfectly clear. As you can see, the index has been in a steady uptrend since the start of the war in March 2003, has over tripled in value, and is now surging - presumably with our troop levels in Iraq - to a new all time high.
The index is composed of fourteen stocks, listed below:
Armor Holdings (AH) Alliant Technology Systems (ATK) Boeing (BA) Rockwell Collins (COL) DRS Technologies (DRS) EDO Corp (EDO) Flir Systems (FLIR) General Dynamics (GD) Goodrich Corp (GR) L-3 Communications (LLL) Lockheed Martin (LMT) Northrop Grummon (NOC) Ratheon (RTN) United Industrial (UIC)
All of these companies are in the business of making the stuff that wars are fought with - weapons, armor, planes, guns, bombs, ammunition, and/or electronics and communications systems. And all (of course) share one well-known and very well-to-do customer in common: The United States Government.
Unlike the Dow, which is limping along to phony new highs on the strength of only a few of its component members (one of them being Boeing) and terrible breadth, the advance in the DFI healthy one from a technical standpoint. Twelve of the fourteen stocks are at or very near five-year highs. This is not a market that is being driven by liquidity, or simply adjusting itself to the realities of inflation. This is a market driven by fundamentals. Bullish ones. And it is not just American companies that are cashing in on the action. Just yesterday India announced that it would be buying 40 of a 166 new fighter jets in total, from Russia.
The Democratic paper tigers in the US Congress who were swept to victory on voter dissatisfaction with current war policy may talk tough about ending the war. But at the end of the day, a non-binding resolution is just that: Non binding. After all, the Democrats are also part of the established banking, business and government triumvirate that knows all too well that war is great for business, and great for expanding the powers of government.
The markets are speaking: the world is heading for more war. Adjust your life strategies accordingly. For a deeper understanding of the business of war, I urge you to watch the BBC documentary Why We Fight.
Subscribe to my low volume email announcement list to stay updated.
The content on this site is protected
by U.S. and international copyright laws and is the property of GoldSeek.com
and/or the providers of the content under license. By "content" we mean any
information, mode of expression, or other materials and services found on GoldSeek.com.
This includes editorials, news, our writings, graphics, and any and all other
features found on the site. Please contact
us for any further information.
Live GoldSeek Visitor Map | Disclaimer
The views contained here may not represent the views of GoldSeek.com, Gold Seek LLC, its affiliates or advertisers. GoldSeek.com, Gold Seek LLC makes no representation, warranty or guarantee as to the accuracy
or completeness of the information (including news, editorials, prices, statistics,
analyses and the like) provided through its service. Any copying, reproduction
and/or redistribution of any of the documents, data, content or materials contained
on or within this website, without the express written consent of GoldSeek.com, Gold Seek LLC,
is strictly prohibited. In no event shall GoldSeek.com, Gold Seek LLC or its affiliates be
liable to any person for any decision made or action taken in reliance upon
the information provided herein.