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What is MDEF™ Investing? Strategy before tactics. Strategic investments dictate tactical actions in the Metals, Defense, Energy & Food sectors.

- Jeffrey C. Borneman

The War Machine Continues to Grow - DEMAND for Defense

Jeffrey C. Borneman | October 27, 2014

The list of worldwide Defense deals and shipments is continuing to expand. Yahoo News reports today that Lockheed Martin Corporation was awarded a $4 billion contract to "develop the eighth batch comprising 43 units of F-35 fighter jets for the U.S. military and its allies, including Britain."   

The fighter jet is not cheap and is just now racking up large orders after cost control efforts slowed initial sales. To date, eleven countries have committed to purchasing 3,500 of the F-35 joint strike fighters. Yahoo News said this today: "The F-35 fighter jet is witnessing a sharp rise in demand in the defense market. In Sept. 2014, the Republic of Korea agreed to purchase 40 units of Lockheed Martin’s F-35 Lightning II Joint Strike Fighter aircraft, the 5th Generation stealth fighter, for its F-X fighter acquisition program."

Reuters reported that Turkey and Lockheed Martin just consummated a deal to produce long-range missiles for the F-35 to "meet the increasing demand for long-range, survivable cruise missile technology," quoting Rick Edwards, Executive Vice President of Lockheed Martin Missiles and Fire Control. Turkey has a joint production agreement to build the F-35 engines.

India, the top foreign buyer of U.S. arms last year according to Defense research firm IHS Janesmeans, aims to play a central role on the world's stage as well. India has racked up purchases of some impressive hardware this year and imminent deals expected include Sikorsky Aircraft's S-70B Sea Hawk helicopters and a 16-aircraft tender worth over $1 billion, and over $2.5 billion in orders for Boeing Co's AH-64D Apache and CH-47 Chinook helicopters.

All seem impressive numbers until learning this is just the start. Reuters reported, "Those deals could in turn lay the groundwork for a much larger order of 123 helicopters for the Indian Navy, said one of the sources, who was not authorized to speak publicly."

It is imperative for investors to know that the DEMAND for Defense will be met at the expense of all other things, and therefore, how specifically to allocate assets given the current geopolitical shifts unfolding. Monetary 'adjustments' are failing in all countries and direct fiscal spending on the War machine is evident everywhere. Where, when and between whom conflict comes is the only question. Despite technological advances, regardless of the increased ease with which great wealth can be amassed, our inherent instincts remain the same. Mankind has never changed.

Investor note: Whatever the spark for a large War, it will be a significant pivot and engage those countries that are FOR the Petrodollar against those that are AGAINST the Petrodollar.

If you want to know more about how the MDEF™ Investing strategy is positioned in this, or other geopolitical possibilities, please contact us directly.

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