Today's Dire Warning Is Good News for These Stocks

Folks, the U.S. military industrial complex can't keep up... That's the crux of the draft version of the U.S. Department of Defense's coming National Defense Industrial Strategy report. [Chaikin PowerFeed]( Today's Dire Warning Is Good News for These Stocks By Vic Lederman, editorial director, Chaikin Analytics Folks, the U.S. military industrial complex can't keep up... That's the crux of the draft version of the U.S. Department of Defense's coming National Defense Industrial Strategy report. It's packed with stark warnings about our defense capabilities. Here's one of the most surprising takeaways from the report... U.S. defense spending is near its lowest level since World War II. It clocked in at roughly 3.1% of U.S. gross domestic product last fiscal year. That's still a huge dollar amount. But the percentage is small compared with other times in U.S. history. In turn, a big problem is brewing for the U.S. military... We're shipping a lot of our existing supplies of tanks, missiles, and other weapons to help Ukraine and other allies around the world. But we can't replace these items quick enough. Today, we'll use the Power Gauge to dig deeper into the state of the defense industry... Recommended Links: [A Severe Financial Crisis Is Underway]( It doesn't matter if you have money in the markets right now or you're waiting on the sidelines. The short period we're about to enter could have the power to make – or destroy – fortunes. And what you do in the coming days could determine your wealth for the next decade. [Click here to learn more](. [Gold Is Headed Above $3,000 (Here's How to Play It)]( With so many strange events happening across the economy (the longest bear market for bonds since the Civil War... unprecedented bank closures... and soaring prices), it's no wonder the richest investors are loading up on gold. But you might not realize there's a much better way to profit from rising gold prices – WITHOUT ever touching an ETF, mining stock, or even bullion. [Full details here](. We've already seen some of the repercussions of this problem in Ukraine... In May 2022, President Joe Biden and Lockheed Martin (LMT) promised to double the production of Javelin anti-tank missiles by 2024. And Uncle Sam opened the money spigot... By last December, the security-assistance package from the U.S. to Ukraine grew to $21 billion. Among other things, this package included roughly 8,500 Javelin missiles. But the plan ran into trouble almost immediately... The defense industry caved under the pressure. A year later, production is still ramping up. Now, the U.S. hopes to double production by 2026 – two years later than the original plan. It's hard to understate the importance of these weapons systems... Some sources put the Javelin missile's "kill rate" at up to 90%. But whatever the actual number, it's so high that a viral marketing campaign dubbed the weapon as "Saint Javelin." We can't build enough of these missiles – at least not as fast as they're needed. Even worse, this problem isn't unique to the weapons used to help Ukraine in its current conflict... The Defense Department also found that China is running circles around us in shipbuilding. According to the think tank Center for a New American Security, China has launched 160 new ships since 2013. The U.S. only managed to build 66 new ships over the same period. Folks, everything we've talked about so far today leads us to one takeaway... Uncle Sam will spend more on defense in the next few years. And it will likely be a lot more. The Power Gauge helps us track this shift as it unfolds. We monitor the defense industry through the SPDR S&P Aerospace & Defense Fund (XAR). It gets a "bullish" grade today... [Chaikin PowerFeed] Notice that XAR turned higher in early October. Then, the defense-focused exchange-traded fund ("ETF") started soaring later that month. It's now up nearly 20% over that span. Next, look at the bottom panels on the chart... You'll see that the Power Gauge flipped to "bullish" again on XAR as this rally began. The ETF once again started beating the benchmark S&P 500 Index around the same time. That's a powerful combination. And importantly, a lot of growth potential remains... You see, most of XAR's holdings currently earn a "neutral" rating from the Power Gauge. But as momentum shifts in this industry's favor, they'll likely flip to "bullish" or better ratings. In the end, XAR is set for even bigger gains... Uncle Sam is now grappling with the realities of lean defense spending. And we'll likely see a big push from both political parties in the coming months and years to fix that problem. When Uncle Sam turns on the money spigot, it can change the game for these companies. So I'll keep a close eye on the defense industry. And I recommend you do the same. Good investing, Vic Lederman Market View Major Indexes and Notable Sectors # Hld: Bullish Neutral Bearish Dow 30 -0.190% 10 17 3 S&P 500 -0.420% 147 275 75 Nasdaq -0.580% 33 53 13 Small Caps -0.230% 619 940 364 Bonds +1.330% Utilities +1.350% 2 17 11 — According to the Chaikin Power Bar, Large Cap stocks and Small Cap stocks are Bullish.. Major indexes are mixed. * * * * Sector Tracker Sector movement over the last 5 days Real Estate +2.68% Industrials +2.48% Utilities +1.90% Health Care +1.80% Discretionary +1.17% Financial +0.76% Staples +0.49% Materials -0.64% Information Technology -1.10% Communication -2.12% Energy -2.57% * * * * Industry Focus Aerospace & Defense Services 9 18 5 Over the past 6 months, the Aerospace & Defense subsector (XAR) has outperformed the S&P 500 by +5.73%. Its Power Bar ratio, which measures future potential, is Strong, with more Bullish than Bearish stocks. It is currently ranked #11 of 21 subsectors and has moved up 1 slot over the past week. Top Stocks [rating] MOG.A Moog Inc. [rating] HII Huntington Ingalls I [rating] TXT Textron Inc. * * * * Top Movers Gainers [rating] CPB +7.11% [rating] CCL +5.94% [rating] BBWI +4.94% [rating] ALB +4.45% [rating] MKTX +4.29% Losers [rating] BF.B -10.38% [rating] FSLR -6.50% [rating] ODFL -5.55% [rating] CEG -4.80% [rating] EQT -3.88% * * * * Earnings Report Reporting Today Rating Before Open After Close AVGO, LULU DG COO No earnings reporting today. Earnings Surprises [rating] VEEV Veeva Systems Inc. Q3 $1.34 Beat by $0.05 [rating] BF.B Brown-Forman Corporation Q2 $0.50 Missed by $-0.01 [rating] SMTC Semtech Corporation Q3 $0.11 Beat by $0.09 * * * * You have received this e-mail as part of your subscription to PowerFeed. If you no longer want to receive e-mails from PowerFeed, [click here](. You’re receiving this e-mail at {EMAIL}. 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