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BULLISH
ON WAR
by Michael A. Nystrom
BullNotBull.com
February 16, 2007
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
is a 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.
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As always, comments on
this story are welcome here.
Also of interest:
Alan
Greenspan 1967: Gold and Economic Freedom
How the
Fed Lost Control of the Money Supply
Must
See/Listen Video: Dr. Bill Veith with Alex Jones on the Fiat Money
System
McNosis,
Retiring Boomers and the Silent Crash
Tough
Times Ahead for Elder Boomers?
Ron
Paul: Inflation and War Finance
A
New American Dark Age
© 2007
Michael A. Nystrom
Editorial
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CONTACT
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Michael A. Nystrom
Cambridge, MA
www.bullnotbull.com
l Email
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