Tuesday, June 12, 2018

Peace is bad business

In response to a de-escalation of the tensions between the USA and North Korea USA Today reported on Tuesday that shares of Raytheon, Lockheed Martin, Northrop Grumman, Boeing, and General Dynamics all "took a dive."

According to USA Today, "Shares of Raytheon, which makes Patriot and Tomahawk missiles, fell 2.6 percent. Lockheed Martin, which supplies the Pentagon with air and missile defense systems as well as the F-35 Stealth fighter jet, tumbled one percent. And Northrop Grumman, which has increased its focus on cyber warfare and missile defense systems more recently, declined 1.3 percent. Boeing, which makes Apache helicopters and aerial refueling aircraft, dipped 0.2 percent. General Dynamics, a Navy shipbuilder, fell one percent."

Financial analyst Brad McMillan noted in an interview with USA Today, falling defense stocks represent investors' fears that the chance for a hot war between the U.S. and North Korea—which he describes as "one of the big potential growth stories recently"—could be slipping away. "If weapons are used they need to be replaced. That makes war a growth story for these stocks," McMillan explained. "What the agreement does, at least for a while, is take military conflict off the table."

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