With President Elect Obama coming into office on January 20th, the stage has been set for the “change”. The only question now is: what will it look like? In our special focus on Aerospace and Defense this week, we spoke to Rick Whittington of JSA Research about what President Elect Obama’s priorities will be in terms of defense spending, and how it will effect companies in this space:
The new President-elect has been pretty clear and his policies and tenor of office I think are already pretty well sketched out. He wants to shift to domestic priorities and away from military.
We ask Mr. Whittington if there was anywhere to look in the military space. Are there any winners in there?
In the defense area, among the large pure plays, no. They’re all losers. We downgraded everything the day after the election and we had already downgraded some previously, but we finished that off and our message to investors is stay away from the military-exposed companies and focus on the commercial. There are going to be no winners in the short term.
That being said, this decrease in focus on military spending is not something that Mr. Whittington is unfamiliar with:
We’ve been here before, so it’s not new and in the past 50 years, we’ve had three instances where military spending was sharply curtailed after a significant upturn and so I think we know what to expect.
For the full Aerospace & Defense issue, including a complete overview of the sector, including interviews with CEOs of top companies and stock picks in the turbulent time, click here.
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