Last Friday, the entire world held its breath for the much-anticipated G20 summit in Hamburg, Germany.
The Hamburg sit-down was the very first time that Trump and Putin had met face-to-face… and let’s just say that everyone was quite nervous about the outcome.
With Russian meddling continuing to dominate American news headlines with accusations of the country tampering with the U.S. presidential election (as well as Russia’s stance on the current Syrian and North Korean issues), most feared that this meeting would be nothing short of explosive.
The Moscow Times reported that American news outlets described Putin as “a guy who knows what he’s doing” and Trump as someone who “seemed nervous.”
This sentiment is completely understandable when you consider the Russian president’s background as a KGB intelligence operative with extensive training in the art of manipulation. Whereas, our president chooses to continuously blabber on and reinforce himself via feeble tweets.
Although no official record of what was said between the presidents during the summit has been released, the topic of Russian operatives interfering with the American election was most certainly discussed.
After Putin insisted many times that “nobody knows” who hacked the election, it is difficult to believe that Trump became suddenly insistent and forceful about the subject after continuously brushing it aside as nothing for many months.
Trump tweeted about his exchange with Putin saying, “I strongly pressed President Putin twice about Russian meddling in our election. He vehemently denied it. I’ve already given my opinion.”
And that was that. The issue was dropped.
The Los Angeles Times reported Putin’s response:
Unlike Trump, Putin was brave enough to meet with reporters following the meeting. Of the hacking issue, Putin said: “I believe it would not be entirely appropriate on my part to disclose details of my discussion with Mr Trump. He asked pointed questions, I answered them. It seemed to me that he was satisfied with those answers.”
It’s been made obvious that Trump really wants to befriend Putin and doesn’t really care who meddled with the election. After all, it did work out in his favor.
As for Putin, he must be ecstatic; he’s never had such a huge fan in the White House before.
To the rest of us, we see that Trump has been played like a fiddle.
But on the other side, weapons manufacturers won’t let this weak settlement stand in their way of cashing in on one of the greatest opportunities since the end of the Cold War.
Even if it’s just another arms race, tensions between America and Russia could mean huge paydays.
Not Missing Out
Weapon makers have told their investors repeatedly that they are relying on tensions with Russia to fuel new business after seeing increases in the Russian military budget.
Retired Army General Richard A. Cody, now vice president at L3 Technologies, Inc. (NYSE: LLL), the seventh-largest U.S. defense contractor, explained to shareholders in December that the industry was facing a historic opportunity.
Following the end of the Cold War, Cody said that peace had “pretty much broken out all over the world” with Russia in decline and NATO nations celebrating.
“The Wall came down,” he said. And with that, “all defense budgets went south.”
To go along with that, the Aerospace Industries Association (AIA), a lobby group for Lockheed Martin Corporation (NYSE: LMT), Textron Inc. (NYSE: TXT), Raytheon Company (NYSE: RTN), and many other defense contractors, argued back in February that the Pentagon isn’t spending enough to counter Russia’s global aggression.
Most arms manufacturers aren’t just pushing for an arms race within America — they’re urging the rest of the world to muscle up, as well… none more so than Raytheon.
Before the G20 summit in Hamburg last week, President Trump visited Warsaw, Poland, to negotiate and finalize a deal for the Polish government to purchase the American-made Patriot Air and Missile Defense System manufactured by Raytheon.
Although Poland has remained a long-term advocate of more U.S. military presence in Europe, Russia’s decision to deploy the Iskander missile systems on it borders in November made the demand for assistance more urgent.
Along the border that it shares with Poland, Russia has been heavily reinforcing those areas due to growing tensions since 2014.
Russia is also working toward expanding its weapon’s range from its current 250- to 310-mile range to much greater distances.
The Kremlin refused to comment at length about the Patriot deal. However, spokesman Andrey Golovatyuk told Sputnik radio that the technology will be outdated long before Poland receives it:
I doubt that the Patriot system can match our Iskander because the characteristics of the Iskander that Patriot cannot intercept it.
Raytheon’s Patriot is not a strategic range missile. Being more medium range, it’s better suited against aircraft and cruise missiles.
Russian military aircraft intercepts have peaked over the past three years, and Russia’s paratrooper forces have excelled as one of its most elite military units.
The Patriot missiles are intended to deter Russia from turning those resources into a direct assault.
“This is a missile system that will be used against bombers and fighter jets,” says Omar Lamrani, a senior military analyst at the private intelligence firm Stratfor. “The real concern is hostile, hot war.”
Raytheon has also confirmed that Romania has also inquired about acquiring its Patriot missiles.
Alongside Poland, Romania is hosting elements of the U.S. missile shield in Europe, which Russia considers an offensive move.
Russian officials have called both countries “targets” for Russia’s own missile systems.
The Bottom Line
Strongly betting on missile defenses, companies such as Raytheon; Orbital ATK, Inc. (NYSE: OA); and Aerojet Rocketdyne Holdings, Inc. (NYSE: AJRD) remain optimistic for future growth as tensions continue to rise with North Korea and Russia.
The U.S. government confirmed that the most recent missile launched by North Korea was an intercontinental ballistic missile, which has the capability to reach the U.S. without issue.
The very next day, Raytheon was up 1.6% and Orbital ATK was up 2.14%.
An increased global expenditure on weapons and defense — as well as potential for further international partnerships like with Poland and possibly Romania— would bode incredibly well for American arms manufacturers.
Weapons makers that are pushing for war with Russia are just the beginning.
Now that European countries have already purchased missiles from American arms manufacturers to deal with Russia, we may see countries like Japan and South Korea doing the same in order to deal with North Korea’s assaults.
We should expect to see more American arms manufacturers prosper during these times of unrest.
For them, impending war means big money.
That’s all for now.
Until next time,
John Peterson
Pro Trader Today