Friday, August 30, 2013


In the wake of what the US claims is a confirmed chemical weapons attack by the Syrian government on their own citizens, a US military strike appears to be imminent. 

The Wall Street Journal reports that the Obama administration laid the groundwork for unilateral military action in Syria, a shift officials said reflected the U.K.'s abrupt decision not to participate and concerns that President Bashar al-Assad was using the delayed Western response to disperse his military assets.

The push for a quick international strike to punish Syria for what the U.S. said was a chemical-weapons attack appeared in disarray on Thursday, after British lawmakers defeated a government motion in support of military action.

But President Barack Obama is prepared to act without Britain, officials said, noting that unlike U.S. involvement in the 2011 military operation in Libya, the options under consideration in Syria are smaller-scale and wouldn't require a coalition to be effective.

"Here, what's being contemplated is of such a limited and narrow nature that it's not as if there's a similar imperative for bringing in different capabilities from different countries," a senior administration official said. "We believe it's important that there be diplomatic support from key allies, and we think we're getting that."
After a week of U.S. saber rattling that raised expectations about an imminent attack on Syria by a U.S.-led coalition, the White House had yet to release details about the intelligence, but said its findings conclusively showed the Assad regime used chemical weapons on a large scale against civilians last week.

U.S. intelligence agencies believe the main poison used was likely sarin, and estimate the death toll at 500 to 1,000 people, according to a senior U.S. official.

Syrian government officials have denied the Assad regime used chemical weapons, and accused their opponents of staging the attacks to provoke international action. Mr. Assad on Thursday said that "Syria will defend itself against any aggression," Syrian state media reported.

As of Thursday evening, neither Mr. Obama nor his aides had made a public case to support their claims about Mr. Assad's role in the attack. The White House has said it would make some findings public by the end of this week.

Friday morning in the Philippines, Defense Secretary Chuck Hagel said despite Britain's rejection of support, the U.S. would continue to work to build an international coalition. "Our approach is to continue to find an international coalition that will act together," Mr. Hagel said.

White House officials on Thursday signaled a desire to act quickly in Syria, on the U.S.'s own timetable and unilaterally, if necessary. A meeting of the permanent members of the U.N. Security Council in New York on Thursday ended with no sign of progress on an agreement. 

U.S. officials have said the intelligence is clear-cut and that they don't need to await the U.N. investigators' findings before deciding how to proceed.

U.S. officials on Thursday defended the strength of the intelligence linking the Assad regime to the alleged Aug. 21 chemical attacks, but the Obama administration held off on releasing the unclassified intelligence.
One senior U.S. official cited "multiple pieces of evidence of regime involvement," adding: "Nobody's thinking that this is a rogue operation" by the Syrian unit that controls the regime's arsenal of poison gas.

Everyone knows that world conflict can cause volatility in the market, and especially with a global economy that is still weak and recovering but how are some markets reacting to the imminent threat?

Lockheed Martin (LMT). Lockheed Martin's main weapons system is the F-35 joint strike fighter, expected to become one of the world's largest military aircraft programs. Stock prices hit their 52 week high last week but since slipped back and is currently trading around $122.50 but trending back up.
52wk high: 126.729
52wk low: 85.88
EPS: 8.92
PE: 13.70
Div Rate: 4.60
Yield: 3.76
Market Cap: 39.28b
Volume: 221.92k

Boeing (BA). Boeing supplies the U.S. military and other international forces with the likes of the AH-64D Apache combat helicopter, drones, missiles like the A160T Hummingbird, and the F/A-18E/F Super Hornet strike fighter. Stock is currently trading about $5 off the 52 week high and trending down.
52wk high: 109.49
52wk low: 69.03
EPS: 5.47
PE: 18.90
Div Rate: 1.94
Yield: 1.8489
Market Cap: 78.91b
Volume: 500.47k

Northrop Grumman (NOC).   Northrop Grumann's areas of focus include drones and cyber security in support of its homeland security solutions. They also develop CBRNE (Chemical, Biological, Radiological, Nuclear and Explosives) detection systems in place around the U.S. to identify potential threats. Stock is trading about $4 off their 52 week high and is trending down.
52wk high: 96.4201
52wk low: 62.80
EPS: 8.04
PE: 11.60
Div Rate: 2.44
Yield: 2.622
Market Cap: 21.38b
Volume: 154.74k

General Dynamics (GD). General Dynamics produces military vehicles such as the legendary Abrams M1 Main Battle Tank, as well as ships, munitions, and military-grade communication systems. Stock hit the 52 week high near the beginning of August but is currently trading about $4 below that and trending down.
52wk high: 87.85
52wk low: 61.70
EPS: -0.85
Div Rate: 2.24
Yield: 2.6801
Market Cap: 29.17b
Volume: 148.96k

Raytheon (RTN). Raytheon's sectors of expertise are missiles and electronics. Their stock also hit the 52 week high last week and is now about $2 below that and trending down.
52wk high: 77.93
52wk low: 52.24
EPS: 5.91
PE: 12.80
Div Rate: 2.20
Yield: 2.907
Market Cap: 24.37b
Volume: 180.65k

Being the chief export of the Middle East it’s no wonder that oil and petroleum prices would reflect the uneasiness of a potential aggravation in the regional conflict.

Both West Texas Intermediate and Brent Crude have been trading well above the $105 mark for most of the quarter but both experienced significant spikes last week following the announcement of the chemical attack. Currently they are at $108.80 and $115.16, respectively, and trending down but if the US does follow through with a military strike it’s likely they will experience another sharp increase.

While it looks like the market is taking it’s time to adjust and react to the current situation but it would be advisable to keep an eye on these areas over the next few weeks as the situation develops more.

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