Defense stocks in retreat -- boo hoo
Renae Merle of the Washington Post reports Defense Department budget cuts may mark the end of good times for the defense industry:
"The stock of Lockheed Martin Corp., the Pentagon's largest contractor, is down 5 percent since August, despite a third-quarter profit of $427 million. Shares of Northrop Grumman Corp., the maker of submarines and satellites, have stayed flat despite a profit of $293 million during its last quarter."Moreover, stocks of smaller and mid-sized contractors who specialize in IT and electronics have high valuations, according to JP Morgan research cited in the Washington Post article:
"'As we believe defense growth will slow to near-zero in 2007, we do not believe these companies will sustain the double-digit top line growth that their managements and investors are targeting,' the [JP Morgan] report said."Is any of this surprising to people? Iraq has turned into a quagmire for our military, despite the claims of Dick Cheney and Condi Rice to the contrary. Hundreds of billions have been sunk into fighting this war with no end in sight. Big-name companies with powerful friends such as Halliburton have been furiously overcharing the government to provide war-support and construction services (and $45 cases of soda pop, $100 laundry bags, ad nauseum). And, not surprisingly, people are asking what the heck we're doing over there in the first place if the WMD "evidence" was a bunch of lies by Washington hawks who wanted war.
Congress has to respond to these concerns, and will put pressure on the DoD to scale back its spending ambitions. I feel terrible about the soldiers and innocent people who have been caught up in the mess in Iraq, but will not be shedding a tear for the defense industry.
I am having a really difficult time trusting the local chapter of the Better Business Bureau. After you hear the reasons why, I think you'll understand. Read
This is a very alarming story: The NYSE has fined Schwab $1 million after non-employee "investment advisers" used forged letters of authorization and forged checks. Business Week has the report. Read
On the heels of my posts about Ameriprise and Fidelity actively targeting the 76 million baby boomers entering retirement, I see news that AARP (formerly known as American Association of Retired Persons) is also changing its services and strategies, to take into account this attractive ... Read
I have a love-hate relationship with Kiplinger's magazine. Read
Well you left out:
$300 billion to rebuild Katrina/Rita damaged areas
$500 billion for prescription drug plan (mostly for pharmaceutical industry)
$100 billion for "missile defense shield"
and on and on....
And to think, we have a "conservative" party in control of all three branches of government.
where is all this money coming from? the printing presses of the US Treasury and loans from Japan/China.
oh well...I'm sure those 76 million retiring baby boomers will help fix this whole mess in few years.
FO,
I appreciate the personal finance commentary, but the political commentary leaves much to be desired... Please stick with what you're good at.
Thanks,
JC
A servicemember currently serving overseas
Thanks for your comment, JC, and for your appreciation of my finance commentary. However, I have to ask: What exactly in my post leaves much to be desired, and why shouldn't I express what I think in this forum? This is, after all, relating to news about a very important sector of the U.S. economy.
FO,
Since you asked...
Just a few quotes: "Iraq has turned into a quagmire for our military" This is debatable. All you hear in the media is the bad stuff. Extraordinary progress on the ground isn't newsworthy. The bias in the media is breathtaking at times...
"Hundreds of billions have been sunk into fighting this war with no end in sight" No objection to the dollar figure, but 'no end in sight'? Please. Our exit strategy is the same today as it was a couple years ago. After we stand up a sovereign, peaceful nation, we're outta there. Not all wars are going to be 4 days of ground action followed by a ticker tape parade (e.g. Gulf War I). Nation building takes time. Our military can do incredible exploits. With willing hearts and skillful hands, the difficult we do at once, the impossible takes a bit longer. We're just 30 months into this conflict. Toss me a bone here...
"people are asking what the heck we're doing over there in the first place". You ALWAYS have war protesters in every conflict. This is nothing new, it's America for Pete's sake! Freedom of speech, etc. This lends no credibility to the argument.
"bunch of lies by Washington hawks who wanted war" This is more political bloviating. After 9/11 our nation was in no mood to cut our enemies any slack. So we rounded up the usual suspects and took action. If we didn't do anything these same critics would be complaining that we let Saddam off the hook. I'm grateful for leadership that has courage to step up and take the fight to the enemy rather than simply take it in the rear.
"I feel terrible about the soldiers and innocent people who have been caught up in the mess in Iraq" Thank you for your sympathy, but I think we would much appreciate more support and less undermining the mission.
"will not be shedding a tear for the defense industry" Agreed! They're no charities. They're making bucks off this war while our support infrastructure is gutted across the board to pay their inflated prices.
That's why I prefer your financial commentary to your political commentary. Nothing personal!
I suppose you'll vehemently disagree with the sentiment expressed above. That's fine. I'll let you have the last word...
JC
JC, one thing I am quite sure you have come to appreciate serving overseas is how good we have it here, and that we can say (pretty much) what we want about *anything* we want, without fear of reprisal. I will not skirt a topic or supress my opinion because someone doesn't like what I have to say.
Conversely, I welcome respectful debate on this forum, and if someone disagrees with me or spots an error in my logic and/or facts, please feel free to tell me (and others) by posting on this forum. I can change my mind based on new information or reasoning, and am not afraid to admit I am wrong. I only ask that the debate remain civil, on-topic, free of plagiarism, and not include personal attacks or libel.
JC, you and I clearly disagree on some things, and I don't think we're going to change each others' minds. I therefore won't respond to your arguments -- it would be a waste of our time, and other peoples' patience. Thanks for making an effort to speak your mind here, and for keeping the punches above belt. I look forward to your thoughts on other posts!
