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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

Defense News

Current Wars and Future Wars … Still About Energy

Jeffrey C. Borneman | October 24, 2016

Secretary of State Clinton’s first official trip abroad in 2009 was famous in establishing the “pivot to Asia” of American military force. And now, mere weeks before the U.S. presidential election there is almost no mention that the U.S. military is engaged in five separate Middle Eastern wars. They are: Iraq, Syria, Yemen, Libya and Somalia.

More on the pivot to Asia below but one must ask why U.S. involvement has increased and not decreased in the Middle East. A simple view of a Mid-East map shows why the U.S. is engaged in Yemen and Somalia. Oil traders and investors know the Gulf of Aden is the ocean highway for 30% of European-bound oil flows. The choke point of the Gulf of Aden is Yemen in the north and Somalia in the south while The Strait of Hormuz accounts for 35% of world oil consumption and is skirted by Iran and Saudi Arabia - the other choke point of world energy. Any shutter of free passage of tankers in these key areas would cause an immediate and heretofore unseen rise in energy prices.

The Syrian War is about who (whose ideology) controls natural gas flows to Europe. In that conflict’s simplest terms, Russia wants Iranian gas to flow to Europe through Syria under the thumb of Russia while a consortium of pro-western powers (U.S., Israel, Saudi Arabia and Qatar) prefer Qatari and Saudi gas to flow through Syria under the thumb of the U.S..

The problem is Syria’s King Assad chose Iranian and Russian partners which the West would not tolerate. Assad had to be replaced with a regime of the West’s choosing. This lead to the now-standard pattern of demonization, paid rioters, attempted coup de etat. The subsequent war between dozens of competing factions has resulted in mass casualties, destruction and millions of refugee’s. The horror’s of war matters little compared to the prize: the control of European energy and payment for same. 

Is it clear to the investor that war over oil/natural gas is ongoing regardless of the feel-good solar push?     

Far East News – Access to Energy = War Delayed?

Philippine President Duterte shocked the Pentagon this week by severing long-standing foreign policy ties with the U.S. in a speech essentially announcing a divorce from the U.S. while simultaneously announcing its engagement with China.

In what is being viewed as a tectonic shift in relations with the U.S., Secretary of Defense Ashton Carter is in shock saying only “that they would look into it” after proclaiming last month that relationship with the Philippines was ironclad.

Any new alliance between China and Duterte is a double-win for China in that China has long sought to exploit the 100 billion barrels of oil and trillions of cubic feet of natural gas in the South China Sea but could not because of conflicting claims of sovereignty. To put 100 billion barrels of oil in perspective: The North Sea has generated about 40 billion barrels in the last 40 years. The entire Far East region is heavily reliant on Middle East oil and the ongoing conflicts there only complicate its reliability and pricing.

Any agreement for a joint development around the Philippines with China could reverse the trend toward disputes and conflict at least in that section of the South China Sea and was discussed in a meeting this week between Duterte and China President Xi. Peace in the region would be a disaster to some.  

Duterte’s announcement may have a secondary and more far reaching benefit to China. It may preclude the U.S. from expanding its military might to the region putting the brakes on, if not seriously slowing, Clinton’s infamous Asian pivot.

The U.S. previously had three major military bases in the Philippines and had signed an agreement (prior to Duterte’s election) in March, 2016 to build five more. Again, looking at a map of the location of the proposed bases it’s easy to see why this loss of military hardware placement would stymie any U.S. efforts at containment including China’s ability to search for energy resources closer to home.

Almost eight years after the vaunted “pivot to Asia” which meant to decouple the U.S. from further military involvement in any Middle Eastern wars, the U.S. finds itself mired in five wars principally about future energy supplies for Europe while maintaining the free flow of energy to the Far East.

The question now seems: how many other “ironclad” allies of the West will find China’s siren song irresistible? Duterte’s pivot to China, coupled with a rejection of U.S. military expansion and allowing China a cooperative search for energy in its own sphere of influence, may serve as the determining factors in keeping the peace with China a little longer, or not.

What can investors glean from understanding these events? That energy; oil and natural gas, aren’t going to be replaced anytime soon and that wars will be fought to own and control them. 

Greece: There is a Plan, Joe - There's Always a Plan

Jeffrey C. Borneman | July 6, 2015

The title above is a line from the iconic movie "Heaven Can Wait" and should speak to frantic investors world-wide. Although this particular game is deep in late innings the rules will be followed, nonetheless. Let me explain:

In G. Edward Griffin's book The Creature from Jekyll Island there, in the second chapter titled "The Name of the Game is Bailout", we find the banking cartel's game plan detailed. While some view Jekyll Island as inconsequential due to its simplicity, Griffin does a masterful job exposing and explaining the goal of the banking cartel.

" ... that the primary objective of that cartel was to involve the federal government as an agent for shifting the inevitable losses from the owners of those banks to the taxpayers."

Some have erred in thinking that Griffin's work speaks only to our own federal reserve and domestic banking. What makes that too narrow a view is the history of how our own U.S. Federal Reserve (with the help of the IMF, World Bank and Bank of International Settlements) established the cartel on every continent and in almost every country, so it is safe to say the rules apply internationally.

According to Griffin, the Greek situation can be likened to a football game with nuanced rules that can morph depending on circumstances - and which only the most sophisticated viewers are meant to understand. I recommend you read Jekyll Island if only for its second chapter, but do so with the Greek banking situation in mind.

To date, we've witnessed threats, riots, cash, food and medicine shortages and a public referendum denouncing the debt owed the EU. But know that any final Greek collapse does the EU and world banking cartel no good. The EU does not want to absorb the Greek losses by allowing it to further default.

Might Greece still refuse a bailout? Might the people of Greece follow the Iceland example and jail the bankers who bankrupted its country? Yes, but the Greek game is different for many reasons. As the situation progresses into extra-inning, the referees will huddle again (tomorrow) to add time and "morph the rules" to placate the people of Greece into accepting some alternative to keep it in the Eurozone.

As of this writing the Greeks have floated the idea that a 30 percent "haircut" of the debt is required to further discuss further bailouts, and of course the EU (lead by Germany) has flatly rejected the idea. Perhaps a smaller haircut for banks combined with the "rescheduling" play or "guaranteed payment" play (see Jekyll Island). The sophisticated banker knows well the value of a non-preforming loan: All that is required to reinstate loan value is to increase the capital lent which allows interest payments to resume.

Aside from the balance-sheet issue we should remember that Greece is a NATO member and borders the entrance to the Black Sea. The Black Sea is home to half of the Russian naval fleet so it is no surprise that Russia (and China) have approached Greece to assist financially. It is doubtful that any disruption to the balance of power of this size would be allowed.

What may make this time different? On the scale of loans to countries, Central banks lend money against assets first - the borrower's ability to repay the loan is important but secondary. There is a chance the assets are running out ... I have referred to this as "running out of wheelbarrows to monetize". If the fear of this becomes widespread, the world will face another bout of very serious inflation, unrest and war.

While the financial stakes are enormous and contagion looms which may dissolve the EU, it should be remembered the original intent of the EU - unification was meant to so dilute a powerful German state to the point that it could never again instigate a European war. The bank's game has continued with only minor modification for some sixty years, so history suggests taxpayers with absorb bank loses through inflation - again. Yes, Greece may be the beginning of a new game; the EU may unravel and cause massive disruptions and war while the referees officiate an unrecognizable game ... but history favors FDR's almost-forgotten quote: "If it happens in politics, you can bet it was well planned in advance."

It was with this, and other, eventualities in mind that the MDEF™ Investing strategy was created. The banking cartel does not really think in terms of money (sound strange?) but only its movement and control of the ultimate assets of Metals, Defense, Energy and Food. A savvy investor will think likewise as "there's always a plan".

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











How Do You Take Your War, Sir: Cold, Hot or Hybrid?

Jeffrey C. Borneman | July 2, 2015

This is an article about DEMAND for Defense

Retiring Gen. Martin Dempsey, chairman of the Joint Chiefs of Staff said Wednesday that “the U.S. military needs to reorganize itself and prepare for war that has no end in sight,” and that “global disorder has trended upward while some of our comparative advantages have begun to erode,” (Defense One).

Americans well remember the term “Cold War” as it was burned into the national psyche for decades with the hope of avoiding nuclear war with the Soviet Union. Deterrence in the Cold War settled on the dreaded MAD (Mutually Assured Destruction) strategy. Americans are also familiar with the idea of “proxy” wars like Vietnam but we can recognize the newest type of warfare deemed the “Hybrid” war - a close cousin to the proxy war scenario with one major nuance. Dempsey explains:

“Hybrid conflicts also may be comprised of state and non-state actors working together toward shared objectives, employing a wide range of weapons such as we have witnessed in eastern Ukraine,” Dempsey writes. “Hybrid conflicts serve to increase ambiguity, complicate decision-making, and slow the coordination of effective responses. Due to these advantages to the aggressor, it is likely that this form of conflict will persist well into the future.”

Hybrid Wars lend themselves well to the concept of Warfare “with no end in sight” as state-sponsored terror group’s form quickly depending on funding (note the speed at which ISIS [ISIL] was recognized and stormed across Iraq). U.S. commanders have repeatedly said it will “take decades to defeat ISIS and its ideology”.

Dempsey went on to mention the various regional conflicts and players – and the list is long and growing: Iran, Israel, Lebanon, Iraq, Syria, Egypt and Yemen, Russia (the Baltic's), Iran, North Korea and China - but a savvy investor will understand Dempsey’s call to reorganize the US war machine for never-ending War. Reorganization on this scale require massive funding as any reorganization would include all NATO member states. Note too Dempsey's use of the term “erode” as it relates to U.S. preparedness: What he is saying is the current structure and armament of U.S. (and by extension, all of NATO) forces are inadequate to fight the never-ending Hybrid War.

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. Fiscal spending on the War machine is evident across the globe. Where, when and between whom major conflict comes is the only question. Mankind has never changed and will not be allowed to as War is both convenient and profitable.

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

US Continues Speed Chess (War Prep) - Prepositioning on Russia's Doorstep

Jeffrey C. Borneman | June 13, 2015

Bound by Agreement not to entice or accept ex-Soviet satellite countries into NATO, the US further breaks the Agreement by announcing a first: Its intent to preposition heavy artillery and equipment in Latvia.

The prodding of the Bear continues ... It appears the US desires armed conflict with Russia - why else such a shift of longstanding policy?

From the New York Times (below): "The amount of equipment included in the planning is small compared with what Russia could bring to bear against the NATO nations on or near its borders ... and the “prepositioned” stocks — to be stored on allied bases and enough to equip a brigade of 3,000 to 5,000 soldiers ...".

We can be assured Russia is not concerned with the size of the force the US is planning but that is not the point.

“This is a very meaningful shift in policy,” said James G. Stavridis, a retired admiral and the former supreme allied commander of NATO ... "It provides a reasonable level of reassurance to jittery allies, although nothing is as good as troops stationed full-time on the ground, of course.”

How would Russia view such an action by NATO?

"The idea of moving prepositioned weapons and materials to the Baltics and Eastern Europe has been discussed before, but never carried out because it would be viewed by the Kremlin as a violation of the spirit of the 1997 agreement between NATO and Russia that laid the foundation for cooperation."

Arm sales to NATO countries has exploded (pardon the pun) since the US sponsored coup that ousted Ukrainian President Yanukovych in January 2014. We've chronicled many of those sales here as well as other prepositioning of material across Europe but investors should be careful to always notice the "shifts" in the balance of power. Moving NATO arms into Latvia would be considered such a shift by the Kremlin.

Will the US follow through and place material in Latvia? If the US is consistent, the move has already happened - The New York Times is just providing us the path to agree with its assumptions: The case that Russia is preparing to attack its unsuspecting neighbors and the US is merely being proactive in avoiding future aggression.

US Investors still have the luxury to calmly watch the Speed Chess portion of events. What follows is Blitz Chess and finally, Bullet Chess. Russia has repeated it will not be dragged into a war with NATO, yet NATO continues to tighten the noose.

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.

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






Read the Original Article

U.S. Poised to Put Heavy Weaponry in East Europe
NYT Original Article Date: 2015-06-13

The Brewing Wars - Three Events Today

Jeffrey C. Borneman | March 10, 2015

The movement of US military hardware to the Baltic's; Repeated calls for a united European War Machine, and; Iran unveils new weapons. Let's take a look and think about the ongoing DEMAND for Defense.

The US & the Baltic's

"The United States on Monday delivered more than 100 pieces of military equipment to vulnerable NATO-allied Baltic states in a move designed to provide them with the ability to deter potential Russian threats," says US Major General John R. O'Connor (AP). The lethal weaponry was delivered to Estonia, Latvia and Lithuania, "all NATO and European Union members since 2004, (which) have very little military hardware of their own."

O'Connor added that the armor would stay "for as long as required to deter Russian aggression". This loosely translates as: The hardware was gift to the States and if it is used, replacement hardware would be forthcoming.

Eurozone News

EU Commission President Jean-Claude Juncker said today that the European Union "needs its own army to face up to Russia and other threats, as well as to restore the bloc's standing around the world," (EurActiv.com). The idea, although vehemently opposed by the United Kingdom, has many facets:

First it would show a united front to (ostensibly) counter Russian aggression but also because NATO, in its current form, would be "too slow" to respond to a Russian invasion of the any of the Baltic States. Secondly the new EU army would "show the world that there would never again be a war between EU countries," Juncker told the Welt am Sonntag newspaper. And lastly: "Such an army would also help us to form common foreign and security policies and allow Europe to take on responsibility in the world."

The road for Germany's entrance onto the world stage has been long in the making. I highlighted last summer Germany's military eagerness and ability to affect geopolitical outcomes. I also highlighted Germany's eagerness to enter the wildly profitable arms-trade. The question is, when might an army be formed? According to Germany's defense minister,Ursula von der Leyen, its formation is inevitable: "This interweaving of armies, with the perspective of one day having a European Army, is, in my opinion, the future."

Iran's Weaponry

On the heels of Netanyahu's US speech about Iran's weaponry and intentions, Iran today unveiled the new the Soumar surface-to-surface missile with improvements, it says, are considerable. According to Iran's Defense Minister Brigadier General Hossein Dehghan, "the new missile enjoys different characteristics in terms of range and pinpoint accuracy in comparison with the previous products," (WJ). He also claims all new missiles can avoid radar which of particular interest to both Israel and the US.

US Investors still have the luxury to calmly watch the Speed Chess portion of events. What follows is Blitz Chess and finally, Bullet Chess. Putin has made it clear that he will not allow Russia to be dragged into a war with NATO, yet NATO continues to tighten the noose. Saudi Arabia is more than 'concerned' about Iran's expansion into Iraq and the recent possible second-front from the fall of Yemen.

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.

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



Following DEMAND in Personal Defense (Update)

Jeffrey C. Borneman | January 8, 2015

The FBI's December figures show 2.3 million background checks for gun purchasers were conducted in one month alone. Americans continued to arm themselves in 2014. While violent crime is actually down in the United States, car-jackings, home invasions and the constant media focus of mob action has American's feeling an intense unease for their personal safety. This, in turn, continues to spur a consistent and increasing DEMAND for personal Defense.

"The FBI made this clear in their report: '[The 2.3 million] represents the number of firearm background checks initiated through the NICS. They do not represent the number of firearms sold'", reported by Breitbart.

Investors should note that the use of the background checks for firearm purchasing is considered baseline DEMAND only; meaning that many more firearms traded hands privately, And while the Christmas season tends to show a sharp increase in firearm sales, the trend-line continues upward as a poll released today states that 74% of American's now fear a terror-attack on US soil is imminent.

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






Vietnam Needs US Arms? Of Course It Does

Jeffrey C. Borneman | September 25, 2014

Two generations removed from the Vietnam "Conflict" the US is moving closer to lifting an arms embargo on its former enemy, with initial sales likely to help Hanoi deal with growing naval challenges from China.

Two senior executives in the U.S. weapons industry told Reuters they expected the U.S. government to lift the arms ban soon. "There is a lot of discussion about allowing weapons sales to Vietnam. It is a promising area for us," said one of the executives, who was not authorized to speak publicly.

Read the Original Article

Exclusive: Courting Vietnam, U.S. prepares to ease arms embargo
Reuters Original Article Date: 2014-09-25

Fiscal Policy At Work In DEMAND For Defense?

Jeffrey C. Borneman | September 9, 2014

Do the British need 600 "armoured" vehicles, or is this just a jobs-program? Could it be both? This caught my attention as it is another of weapons deals committed to at the NATO summit, but it smells of fiscal stimulus unless the British mean to invade Scotland. 

David Cameron said the deal would aid UK security and "underpin" many jobs. At the two-day summit in Newport, due to start on Thursday, the UK will call for increased defence spending by some of Nato's 28 member states. Mr Cameron said the Scout deal would be the Army's largest single order for armoured vehicles for more than 30 years.

Read the Original Article

General Dynamics in Oakdale welcome defence order
BBC Original Article Date: 2014-09-09

DEMAND for Defense Continues Abroad

Jeffrey C. Borneman | September 9, 2014

Turkey buying missiles systems outside of NATO? 

The Turkish move also irritated its allies in NATO, which has said missile systems within the transatlantic military alliance must be compatible with each other.

Read the Original Article

Turkey in talks with France over missile purchase: Erdoğan
Daily News Original Article Date: 2014-09-09

Why Defense - Why Now? Another View

Jeffrey C. Borneman | September 8, 2014

Charles Ortel is one of the few money managers I actually follow andhis Sunday piece in the Washington Times is worth the read. Presented with no further comment.

Read the Original Article

Investors in defense and aerospace can win as World War III erupts
By: Charles Ortel Washington Times Original Article Date: 2014-09-08

That Didn't Take Long ...

Jeffrey C. Borneman | September 2, 2014

DEMAND for Defense - Germany delivers 16,000 rifles and 10,000 grenades to Kurds

Read the Original Article

Germany delivers 16,000 assault rifles, 10,000 grenades to Kurds in Iraq
InvestmentWatch Original Article Date: 2014-09-01

US Army Now Openly Militarizing Space In Arms Race With China & Russia

Jeffrey C. Borneman | August 25, 2014

The above title could also be "Poking the Panda Into War" ... The second test of the US Hypersonic Weapon launched from Alaska has failed. But it portends an arms race that is off most investor's radar screens (pardon the pun). 

"The Advanced Hypersonic Weapon is a joint effort of the Army Space and Missile Defense Command and Army Forces Strategic Command as part of the Pentagon’s Prompt Global Strike program,” said The Washington Free Beacon, quoting a Pentagon official. 

For investors unsure of whether any new arms race is ongoing or who the major players are, it's quite simple: Follow the testing of the Advanced Hypersonic Weapon systems taking place in the US, Russia and China. There is a perceived need to deliver conventional or nuclear ordnance (military supplies) to any spot on the globe within half an hour. This is a remarkable showcase of DEMAND for Defense.

The Washington Free Beacon further reports, "The (US) flight test, the second for the new weapon, took place less than three weeks after China conducted a second flight test of its new Wu-14 hypersonic glide vehicle, a similar weapon system.” Note, however, the Pentagon makes a distinction regarding China's version of the weapons system: 

"The Wu-14 test is part of a system that U.S. intelligence agencies say will be used to deliver nuclear weapons (emphasis mine) and possibly conventional long-range strikes against ships.” The US declares its version will be limited to conventional warheads and such benign targets as “terrorists or storage or development areas used for weapons of mass destruction and missiles that are discovered and must be struck quickly,” said the Pentagon. Don't buy that line. The US would not limit itself to conventional arms if the Chinese version were capable of nuclear delivery.

Let's be frank: China has not just successfully tested its own ICBM system capable of hitting the US with multiple warheads as discussed here; the new Advanced Hypersonic Weapon travels at twice the speed of the US version. The Chinese version, aka the 'carrier-killer,' pushed the US into an unsuccessful test coming weeks after China's test (also a failure). 

Indeed, tensions are so high with China over the recent P-8 surveillance incident that the US is sending a second aircraft carrier strike group to the Asia Pacific region. The strike group, led by the USS Carl Vinson, departed San Diego for the Pacific on Friday and is characterized by the Navy as a “planned deployment,” according to Investment Watch. Let’s not forget Russia in our calculation of Demand: Lt. Gen. David L. Mann, commander of the Army Space and Missile Defense command, said "Russia also is 'heavily involved in looking at this kind of capability.' ”

NOTE: This is a very visible arms race to those who care to look. Speed and height (Space) are the goals which deliver the means to strike any spot on the planet within minutes. This race is also requiring capital that is ‘off the radar,' but rest assured it is satisfying the DEMAND for Defense as the US pokes both the Russian Bear and Panda Bear ...

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

Timothy A. Walton, a defense consultant at the Alios Consulting Group, said in a recent blog post that the Army hypersonic weapon has advanced significantly and is needed to counter and deter China’s hypersonic missiles.

Personal Defense - A Very Quiet Story

Jeffrey C. Borneman | August 25, 2014

I am not a 'Gun Nut' just like I'm not a 'Gold Bug' but both are necessary components to the MDEF™ Investing strategy. DEMAND for Defense extends far beyond missiles and fighter jets, drones and tanks ... Here's a story (link below) that everyone should understand about personal Defense.

Since Illinois started granting concealed carry permits this year, the number of robberies that have led to arrests in Chicago has declined 20 percent from last year ...

Read the Original Article

Krugman's NYT Article on War - Fails Human Nature, History & Economics

Jeffrey C. Borneman | August 18, 2014

Krugman's recent article "Why We Fight Wars" (missing the good 'ol days when fought for "fun and profit") must be seen for what it is: A "leading" economist who avoided every humanities, history and economics class ever offered - yet manages to support the MDEF™ Investing strategy with aplomb.

I won't assume, but you may have read, Paul Krugman's Sunday 'influential' op-ed piece (linked below) so let me cut straight to his main points:

" ... even easy, victorious war - doesn't pay. And this has been true for a long time." What Krugman misses and dismisses is simple human nature. That alone that is a Herculean task which he accomplishes but he summarily dismisses all geopolitical history since the mid-eighteenth century. 

In his effort to sound magnanimous in his confusion of human history and the War debate, Krugman opines: "Yet wars keep happening. Why? One answer is that leaders may not understand the arithmetic."

Oh my ... How wrong can one be? It is precisely because leaders understand the arithmetic that we have been in perpetual War(s) for centuries. The building of the War machine(s) alone has been the mainstay of economies like the US, UK, Israel, Russia, China and even North Korea for decades. Strong economies allows those in power to remain there. All of modern economics revolves around Defense spending and Krugman's dismissal of this foundational fact only adds to his diminishing influence. 

After all, it was Krugman himself who, while decrying the small size of bailouts, stimuli and QE in 2011, said: "It's very hard to get inflation in a depressed economy ... If we discovered that, you know, space aliens were planning to attack and we needed a massive buildup (Defense) to counter the space alien threat and really inflation and budget deficits took secondary place to that, this slump would be over in 18 months."

Yes, Krugman is just another "Keynesian" who sees Inflation as the savior of economies as discussed herehere and here. Perhaps Krugman forgot his "alien" statement for Defense spending as it made him a laughing stock for months. 

Krugman's main point seems to be his assumption that Russia's invasion of Crimea was a miscalculation. Citing Russia's lagging economy, Krugman likens Russia's move to Argentina's invasion of the Falkand Islands as a needed "distraction" from economic stagnation. 

This is where listening to Krugman is dangerous as he couldn't be more wrong. While true that Argentina's economy was a mess at the time and the invasion was intended as a distraction, the comparison fails the history test. Most major economies have been faltering since Q4 2008, and until recently Russia was the exception by taking advantage of higher world crude prices (How can an "economist" miss this point?). 

More importantly Krugman does not acknowledge NATO's tightening noose around Russia's neck. He ignores the coup of President Viktor Yanukovych and NATO's intention to build bases in the Crimea. He refuses to see that Russia was forced to act to prevent NATO weapons, not just from importing them to Russia's backyard, but on its front lawn as well. 

Investors understand the New York Times' goal is to influence the influential. Do we really think that Krugman has no handle on historic realities? No. He understands them perfectly well but is paid to distract (influence) their influential readers. Krugman's last point is to lead readers to think that the Russian government somehow lacks legitimacy:

" ... "authoritarian regimes without deep legitimacy  (emphasis mine) ... are tempted to rattle sabers when they can no longer deliver good performance ... ". 

It makes one wonder what Krugman's definition of "deep legitimacy" is ... but he has gone to great length's to offhandedly suggest Russia's leadership is "illegitimate." This is a dangerous stance to take.

The facts of history and human nature prove the DEMAND for Metals, Defense, Energy and Food are the only resources valuable enough to wage War for (whether to obtain or retain) and even Krugman, in his odd and failing understanding of history, makes the point for us. 

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

Read the Original Article

Why We Fight Wars
nyt Original Article Date: 2014-08-18

$2 Billion Arms Deal Takes Shape - Egypt And Russia

Jeffrey C. Borneman | August 14, 2014

Signed in February of this year, the deal is looking like Egypt will receive “24 Mikoyan MiG- 29 fighter jets, as well as its Kornet anti-tank missile systems, attack helicopters Kamov Ka-25, Mil Mi-28 and Mi-25,” says the Jerusalem Post.

Make no mistake, even as Egypt's income has evaporated with the tourist industry and the average citizen knows hunger, DEMAND for Defense is the primary concern of Egyptian President Abdel Fattah al-Sisi.

So broke is Egypt that the deal was essentially co-signed by wealthier neighbors Saudi Arabia and the United Arab Emirates, who hope to gain some benefit from an armed and friendly Egypt.

What investors should not miss is Russia's effort to steal US influence. As the US has acted coldly to Egypt's new leadership, and NATO encroaches ever-closer to the Russian border and strangles its economy, Russian President Vladimir Putin is playing the hand he has been dealt in spreading Russian influence (Defense) in the Middle East.

"We are supplying arms to Egypt and have agreed to expand this cooperation,” the Russian president said in remarks at a press conference after the talks, the Kremlin website reported. And, just like any NATO arms deal which includes heavy weapons (air-power, tanks) Russia will be supplying troops to properly "train and maintain" the equipment.

Supplying Egypt's DEMAND for Defense is also a two-way street as "Egypt (purchases) around 40 percent of the grain it consumes (from Russia) and ... agricultural products make up 90 percent of its imports from the Arab country."

Other perks offered Egypt were the creation of a free trade zone and the possibility of setting up an Egyptian logistics center on the Black Sea.

Investors should always scrutinize geopolitical events through the lens of Metals, Defense, Energy and Food. These are the only market sectors of concern to those in power as they are the only tools necessary in retaining that power.

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

"The World Is Exploding All Over" - DEMAND For Defense

Jeffrey C. Borneman | August 13, 2014

The title above is a quote from Secretary of Defense Chuck Hagel spoken Tuesday in San Diego, California, addressing a group of Marines. This statement, and others made by Hagel yesterday, are a clear call to all investors. 

DEMAND for Defense takes precedence over all other issues. It supersedes the safety of citizens, Energy and even Food (see here). When asked by a young marine if the United States would have "the resources, the capabilities, the leadership, the bandwidth to continue with the rebalance toward the Asia Pacific?" Hagel simply responded "Yes," according to The Weekly Standard.

Let's take the marine's (vetted) question apart: Will the US have "the resources, the capabilities" to continue a military Pacific pivot? "Resources" in this context means money. So, will the US spend the funds necessary to establish a vast military structure, i.e., "capabilities," to counter any Chinese threat, or combination of threats in the Pacific? 

Hagel was quick to answer in the affirmative but added an interesting twist. He noted "the US will not be retreating from any threats elsewhere in the world." Hagel was addressing a question of retreat that was unasked - but his response was purposefully chosen and designed to assure concerned allies. Hagel's comments were also timed to coincide with news of the US sending more troops (back) to Iraq. Interestingly, we learned of more Russian military exercises on the disputed Pacific islands which sparked a vehement protest by the Japanese government. 

Early in the military buildup around the globe, I challenged investors to play a round of "Spot the DEMAND" in stories I covered. Unlike some other governments, this administration, the US State Department and Department of Defense choose their words carefully to minimize translation error. So, without being frivolous, play another round of "Spot the DEMAND" for Defense spending in Hagel's bold claim:

"We're in more countries, involved in more operations with more partners all over the world than we've ever been in." 

If Hagel were CEO of Starbucks, GE or Ford and made the above assertion regarding operation and partners all over the world, would you consider he had a strong business model? In other words, can anyone miss the US intention regarding DEMAND for Defense?

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

France Needs To Sell Some Weapons

Jeffrey C. Borneman | August 11, 2014

"France, in consultation with its EU partners, is looking at supplying arms to Iraq's Kurds to fight against Islamic State jihadists, Foreign Minister Laurent Fabius said Sunday and quote by Yahoo News.

DEMAND for Defense is everywhere - literally. And note the carefully chosen verbiage used by the foreign minister: "One way or another, they must receive, in a sure way, equipment that will allow them to defend themselves and to counterattack," Fabius said.

 We can take that sentence apart; so let's: "One way or another" could mean by legal means or 'other' but could also refer to the means of transportation. "They must (emphasis mine) receive, in a sure way ...": "Must" can only mean the imperative nature of a dire cause, and " ... in a sure way ... ": directly refers to the manner of transfer. "Equipment" refers only to weaponry to first Defend and then Counterattack.

For those who remember the almost-invasion by the US of Syria last year may also remember France was chomping-at-the-bit to participate. Was it because of the Moslem unrest at home or bloodletting in Syria? No, there were no Moslem riots last spring and the Syrian situation has only worsened. The reason France is so eager to participate now is twofold, but related.

First, and as mentioned here in the MDEF™ Investing thesis, countries tend to War as a distraction to mismanaged fiscal policies. History is replete with nations entering Wars to distract its populace. The inability to provide citizens Food or safety is key. But why is the US not supplying the Kurd's and only bombing the IS terrorists? The answer is the second reason:

France is beyond broke (and broken) and desperate for cash. As noted here, the French sale of ships to Russia is still on despite US penalties. NATO will allow the French sale to the Kurd's to make up for the previous penalty. After all, France is in the NATO club.

The lesson for investors is that DEMAND for Defense will take precedence over all other needs - and it's just business ... 

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

NATO Revamps Russia Strategy - More DEMAND for Defense Spending

Jeffrey C. Borneman | August 4, 2014

NATO chief Anders Fogh Rasmussen drew attention to the defence-spending discrepancies between Russia and Nato members, says the EUobserver, and "noted that while Russia had increased its defence spending by 50 percent over the past five years, Nato countries have, on average, reduced theirs by 20 percent."

The statements come as Russia has "failed to de-escalate the crisis in Ukraine where Russia-backed separatists are fighting for control in eastern parts of the country."

NATO chief Rasmussen is pushing hard to raise the threat level saying the Alliance's member states should “strengthen (their) ability to respond quickly to any threat." He also said that Russia considers NATO a foe and "we have to adapt to this new situation". Regarding the NATO/Russian arms spending discrepancy, he said, "We must reverse this trend." 

Those are very strong words coming from a NATO Chief and investors should 'hear between these lines.'  As reported here last week, the US received its own clarion call to immediately increase Defense spending citing a sharp decline in US military readiness.

The fear for NATO allies in the ongoing civil war in Ukraine is any escalation involving a direct Russian intervention. According to the EUobserver, Germany's chief of relations with Russia Gernot Erlerto said Putin is "under very strong pressure not to let Russian-speaking inhabitants of east Ukraine – who he has taken under protection – in the lurch.”

The fear for NATO member states in a Russian invasion of Ukraine is the same fear that Russia has with Ukraine becoming a NATO member: Neither wants to be neighbors with all the armament that accompanies the other countries alliance. It doesn't help relations when a NATO chief's public statements about Russia considering NATO a "foe."

Back to DEMAND for Defense spending: Investors should remember that both Russia and China receive much more bang-for-the-buck in Defense spending than does the US (labor costs) - which makes the spending discrepancy cited above even more stark. And, while President Obama recently was quoted by The Economist saying that "Russia doesn't make anything," it is important for investors to know that yes, it does. The president's seemingly goading comment aside, it is widely recognized (and feared) that certain Russian arms are superior to NATO's. The fact that Russia is in the midst of building a vast War machine seems to be lost to some in the US.

The diplomatic tack that our administration has taken in speaking of Russia is also highly insulting to the Russian leadership, said our president: " ... we have to respond with resolve in what are effectively regional challenges that Russia presents." To repeatedly refer to Russia as a 'regional' power is a grave error for many reasons, not the least of which is that Russia still possess more nuclear arms than does the US. 

The takeaway for investors is that, regardless of financial condition(s) around the globe, DEMAND for Defense is escalating. This should be seen and understood by all.

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

China's New ICBM's - M.A.D. Mentioned

Jeffrey C. Borneman | August 2, 2014

From China Today we learn: "China has acknowledged the existence of a new intercontinental ballistic missile said to be capable of carrying multiple nuclear warheads as far as the United States, state-run media reported Friday."

A Chinese military analyst was also quoted, saying "As the U.S. continues to strengthen its missile defense system, developing third generation nuclear weapons capable of carrying multiple warheads is the trend (emphasis mine). ”

The US is now shipping weapons to every hot-spot on the globe but for US interests, DEMAND for Defense remains in the east. We are sending every Littoral ship built to maintain a semblance of naval superiority in the pacific as China's navy is now considered on-par with the Japanese naval force. The arms-race is in full swing and most Americans seem unaware. The market adage that "the trend is your friend" is rarely wrong - note the Chinese think they are merely following the US trend in DEMAND in Defense.

The fact that China now claims ICBM capability does not come as a shock to the Western War planners - even with the secrecy surrounding China's War machine - what the West truly fears has been known for several months: the hyper-sonic "Carrier Killer" missiles:

"China's defense ministry in January responded to reports that it had tested a hypersonic (sic) missile delivery vehicle by saying that any military experiments were 'not targeted at any country and at any specific goals.' ”

China intends to be a permanent world power and the implicit threat of Mutually Assured Destruction (MAD) issued by Chinese President Xi Jinping last month was not lost on Western War planners, that "(A)ny confrontation between the two powers (China and the US) “will surely spell disaster for both countries and for the world” is not lost to Western War planners. 

It would be helpful for investors to remember that both Russia and China have a considerable advantage over the US militarily in one crucial area: Cost (as mentioned here yesterday "The Perfect Storm - DEMAND for Defense Spending). So the money quote below (full article follows) should be viewed with a jaundiced eye in that, just because the US spends considerably more on its own DEMAND for Defense, doesn't guarantee we're getting more bang-for-the buck. 

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

Beijing has boosted its military spending by double digit amounts for several years as it seeks to modernize its armed forces, and now has the world's second biggest military outlays after the U.S.

Read the Original Article

China confirms new class long range missiles: report
The China Post Original Article Date: 2014-08-02

What Russia Really Wants In Ukraine - No NATO

Jeffrey C. Borneman | August 1, 2014

A peace plan between Russia and Ukraine is currently on-hold due to the Malaysian Air disaster. Fighting and arms shipments are ongoing but a leaked German peace plan offers investors insight into Russia's aggression in Crimea. 

The secret peace deal seems chock full of perks and cash for Ukraine if it would allow Crimea to be independent (first) and then be annexed by Russia. In return, Russia is willing to stop all aggression and arms supplies; pay Ukraine a sizable sum of money for past rent of Crimea ports; allow Ukraine its freedom to pursue economic ties with the EU, and even offers to negotiate a great deal for natural gas for this winter (and beyond, presumably).

But there is one catch: Ukraine must agree not to seek NATO membership. According to The Independent, aside from allowing Crimea to become part of Russia, it is the only requirement: "At the same time, the Ukrainian President would agree not to apply to join Nato (sic)." 

What does this tell us about real Russian fears? It fears NATO on-the-doorstep as NATO-creep has brought 11 neighbor countries into NATO since 1991. Russia could not and would not tolerate the Crimea becoming a NATO base, as some in NATO desired - which is why Russia took it (the offshore Energy assets were a major bonus). Germany's Merkel is negotiating the peace deal as Germany has much to lose but also much to gain in ending the civil war. 

"Some of Germany’s biggest companies have big operations in Russia ..." and "Although Russia now provides EU countries with a third of their gas supplies through pipelines crossing the Ukraine, Germany has its own bilateral gas pipeline direct to Russia making it less vulnerable than other European countries."

NATO-creep into Ukraine is the threat Russia cannot abide, and it is willing to enter a regional War, world condemnation and loss of GDP to prove it. 

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

The German peace plan is still on the table and the only deal around.

Read the Original Article

Land for gas: Merkel and Putin discussed secret deal could end Ukraine crisis
The Independent Original Article Date: 2014-07-31

How Arms Sales To Enemies Are Justified

Jeffrey C. Borneman | July 28, 2014

One the heels of criticism of the US sale of $11B of arms to Qatar, a high ranking politician says, "And we have to confer with the Qataris, who have told me over and over again that Hamas is a humanitarian organization," said Nancy Pelosi on CNN's "State of the Union" with Candy Crowley.

As you know, I don't comment on domestic politics lest my comments are misconstrued - my sole purpose is to highlight DEMAND in the areas of Metals, Defense, Energy and Food. Right now, Defense DEMAND has never been higher - ever. But having a politician make the statement that she's been assured by a state sponsor of terror, that its major sponsee is a "humanitarian group" while it lobs thousand of missiles, is beyond human understanding. 

Her quote: "And we have to confer with the Qataris, who have told me over and over again that Hamas is a humanitarian organization, maybe they could use their influence to -- ... " We all notice that Pelosi did not finish her sentence so as not to come too close to a real solution as that might lead to a lessening in Defense DEMAND.

Why am I writing on this? Because investors must realize that DEMAND for Defense surpasses all other needs and functions - for both the buyer or seller. Any excuse to continue is sufficient; no matter how inane (insane) it might be. It means little (or nothing) that the end-users of the missiles and helicopters in the $11B US arms will be fighting either US troops or our allies. As I've written here, it's just business - but it is the most important business in the world right now. 

Investors - are you getting the message?

No money quote but full article follows:

Read the Original Article

NATO To Expand Base in Poland - Speed Chess

Jeffrey C. Borneman | July 26, 2014

General Philip Breedlove, NATO's top commander in Europe said the base "would be a 24/7 fully functioning headquarters that forces could quickly fall in on to respond rapidly when needed."  

The general told a briefing in Naples this week that NATO needed (emphasis mine) "pre-positioned supplies, pre-positioned capabilities and a basing area ready to rapidly accept follow-on forces". Let's decipher this:

Pre-positioning of supplies and capabilities is the simple logistics of Warfare and discussed here as Speed Chess. An intuitive investor will recognize the constant flow of news regarding NATO's expansion for what it is: DEMAND for Defense. Whether the preparation (monies committed) will result in Warfare is a political question, but the DEMAND for Defense capabilities is high, global and presents an opportunity. But to further the point and to show the US is far from alone in its view of Russian aggression:

"Britain and other NATO allies backing the general’s plans to place supplies — weapons, ammunition and ration packs — at a new headquarters in eastern Europe, to enable a sudden influx of thousands of NATO troops to be ready for action in the event of a crisis," according to the Atlantic Council, a Washington-based think-tank close to NATO.

The MDEF™ Investing strategy is positioned in the crucial market sectors of Metals, Defense, Energy and Food as the current geopolitical events are leading the world to an unprecedented pivot point and DEMAND shift. If you would like to know more about how the MDEF™ Investing strategy, contact me directly.

Here's another money quote of solidarity from General Breedlove:

General Breedlove "wants to use an existing headquarters in the NATO structure and focus them fully on the Article 5 mission", an alliance source quoted by the Atlantic Council said, referring to one of the founding principles of NATO — that an attack on one is an attack on all.

Read the Original Article

NATO to expand Polish base in response to Russian threat
EurActiv Original Article Date: 2014-07-26

Selling A Russian War - To America

Jeffrey C. Borneman | July 26, 2014

According to Chairman of the Joint Chiefs of Staff Martin Dempsey, Russian President Putin has become the enemy. American politicians and military leadership are parroting the old script that: The first step to selling a War is to demonize the opponent.

As noted here yesterday, the game-changing US decision to supply arms to Ukraine is a major move in the game of Speed Chess (for definition read here). The justification for arms sales to Ukraine is “(t)hey  (Russia) clearly are on a path to assert themselves differently not just in Eastern Europe, but Europe in the main, and towards the United States, ” says Dempsey.

Dempsey paints Putin as a lone wolf dragging his people and military into conflicts that must be stopped before Russia invades all of Europe and ends up on the US doorstep.

“This is very clearly Putin, the man himself, with a vision for Europe as he sees it ... " and, "The strategy is Putin’s alone, he added, and said much of Russia’s military were probably reluctant participants in Putin’s war."

Comparing Putin's push into Crimea with Joseph Stalin was inevitable, expected and necessary if the goal is demonetization. Dempsey said, "Joseph Stalin used similar rhetoric and justifications when he invaded Poland in September 1939, only days after Adolf Hitler’s Nazi army invaded Poland from the other direction." 

I'm not taking a moral stance on Putin's engagement in Crimea but merely pointing out the script. Demonetization is necessary to justify War and the DEMAND for Defense that NATO will require will be very high as this game of Speed Chess might evolve into Bullet Chess. Regardless, any War must first be sold to public and demonetization of the opposition is critical in the sales process. 

I am including the map below to make a further point about DEMAND for Defense. Note the countries that have joined NATO since the collapse of the Soviet Empire. In 1991 the US promised, in exchange for the removal of nuclear weapons from ex-satellite Soviet states, that NATO would not seek nor would it accept any new members from those states. You can clearly see that since that time 11 countries have joined NATO, which are now home to many NATO military bases - all of which are seen by Russia as a threat and termed "NATO-creep." 

The geopolitics of this century are changing rapidly and DEMAND for Defense will remain high as War is not necessarily reserved as a last resort in either territory or resource resolution.

Contact me directly to discuss the MDEF™ Investing strategy. 

Read the Original Article

Spotting Defense DEMAND Has Never Been Easier - The Black Fleet

Jeffrey C. Borneman | July 23, 2014

President Vladimir Putin said Tuesday that "Russia will bolster its defences (sic) to counter the creeping influence of NATO close to its borders," reports Yahoo News. 

Investors will remember that NATO was "mission-less" with the final withdraw of its troops from Afghanistan (recently postponed). Now NATO is alive and well - and with renewed purpose - pressuring Putin as he watches ex-Soviet satellite countries DEMAND an increased NATO presence in its Eastern Wing. And what is the Russian response?

"Today we have started forming a powerful Black Sea fleet with an absolutely different level of air service, coastal missile and artillery troops and marines," said Alexander Vitko, the Black Sea fleet commander.

"Take that, NATO" is the frank Russian response to "creeping NATO". For those new to following the concept of Defense DEMAND, it is worth noting that Russia plans to deploy six special-purpose submarines for its Black Sea Fleet which it says are quieter than nuclear submarines. Coupled with the delivery of two French-made Mistral-class assault carriers that will be stationed in the Crimean city of Sevastopol, Russia has it's Black Fleet. But it doesn't stop there.

"It is necessary to implement all of the country's defence (sic) measures fully and promptly, including of course in Crimea and Sevastopol, where we have to de facto create military infrastructure from scratch," Putin said.

The US has all but demanded that France scrap the the assault-carrier sale to Russia. But France understands Defense DEMAND is high, and it's just good business. After all, the US plays the same game as noted here. Will the US forgive the French faux pas? Of course, as it is a major NATO buyer as well.

The point for investors is to know Russia means to modernize the Black Sea Fleet for regional dominance - because of, or in spite of - "NATO creep" is irrelevant. Russian re-armament and aggression is causing the entire Eastern Wing of NATO to increase its Defense spending. In laymen's terms we have an arms-race.

NATO members are excellent at manufacturing bullets and rifles (the occasional fighter jet and ship), but the US supplies NATO member States the bulk of all heavy Defense.

No money quote (full article below) but if you want to know how the MDEF™ Investing strategy is positioned in this area of high DEMAND, do contact me directly.

Read the Original Article

Russia starts reinforcing naval fleet in Crimea
Yahoo News Original Article Date: 2014-07-23

Eastern Wing of NATO Calls For More Arms & Troops

Jeffrey C. Borneman | July 23, 2014

"The events in Ukraine proved that we cannot take peace and security in Europe for granted," President Rosen Plevneliev said at a meeting in Warsaw of heads of state of NATO countries in central and eastern Europe, according to a statement from his office (Via Reuters).

DEMAND for Defense by ex-Warsaw Pact countries is evident as fears of Russian aggression and expansion persist even as most Defense news has shifted south. 

Bulgaria, Poland and Romania want to increase NATO forces in southeastern Europe and the Black Sea, carry out more joint military exercises, as well as the more active use of joint military facilities in Bulgaria. In essence, the NATO members want to bulk up on Defense (and rattle their new sabers) with the hope The Russian Bear is sufficiently aware of the cost of aggression, or too busy elsewhere, to bother with them. Or, NATO's Eastern wing is eager to add Defense capability now to ensure any Russian aggression can be met with sufficient local force to survive while waiting for NATO backup.

How should investors view these statements by clearly fearful countries? This is clear DEMAND for Defense and is not for small-ticket items based on a short-term strategy. Each country is committed to increasing their respective Defense budgets, cooperation and facilities. This is clear confirmation that even small countries know Defense is paramount to survival. 

A summit is planned for September and could bring decisions aimed at improving the Defense capabilities of NATO's Eastern wing..

Read the Original Article

Bulgaria calls for more NATO troops in southeastern Europe
Reuters Original Article Date: 2014-07-23

National Guard To Southern Border - Still Speed Chess

Jeffrey C. Borneman | July 21, 2014

Governor Rick Perry is preparing to order the Texas National Guard to its border region to stem the tide of illegal crossings - many of the children are drug-mules and many other criminals. How peaceful (if it happens) will this be? Let's review the current world conflicts with an eye to Defense.

As of this morning the Syrian War (mostly unreported as the US is not involved) has claimed over 700 lives in the past week. Conversely, the death toll in Gaza has topped 500 and The Washington Free Beacon reports that the UN had given Hamas rockets (20 un-fired as of last count) which it used against Israel. The Ukraine War is ongoing and death toll goes mostly unreported (US supplying only non-lethal aide) but the discovery of a mass grave of 700+ pro-Ukrainians was discovered over the weekend.

Across Europe we see anit-Israel rallies causing an exodus of Jews (to where?) and a culling of Christians in Iraq and Iran by any means necessary. The point is the world is boiling. What will spark a major War?

Bretton Woods II supposedly laid down the law: No More World Wars ... World Wars are too messy and costly to rebuild. It was instead decided that regional "conflicts" would be tolerated if certain conditions are met: primarily that both sides of the conflict were evenly matched with funds and weapons so to not upset the balance of power. If you have never heard this explanation before, don't be surprised, most people have not. It is why the US never declared War in Viet Nam. It is now why we discuss War as "Overseas Contingency Operations" (OCO's) which we discussed last week here

The world is merely continuing to play Speed Chess (definition here) and if Bretton Woods II is adhered to, events will not be allowed to escalate into Bullet Chess (World War). The point for investors is to know where we are now and look for the catalyst for peace but also place investable assets in front of DEMAND - for the foreseeable future, DEMAND for Defense is high and going higher.

If you would like to know how the MDEF™ Investing strategy views current and possible events, do contact me directly.

Here's the money quote from Brietbart's report with video (full article follows):

Monday, Texas Gov. Rick Perry (R) announced he is deploying 1,000 Texas National Guard to the U.S. border with Mexico, saying he can not idly sit by while "our citizens are under siege."

Read the Original Article

OUR CITIZENS ARE UNDER SIEGE': PERRY SENDS NATIONAL GUARD TO BORDER
Breitbart Original Article Date: 2014-07-21

Speed Chess Accelerates in Ukraine & Gaza

Jeffrey C. Borneman | July 18, 2014

But it's still only Speed Chess (for a definition read here). The difference over the past few day of course is: 295 innocent lives, an airliner, 3 Sukhoi SU-25's and an Israeli ground invasion. As much world press as these incidents is generating, they are still small actions for the War Machine (Defense) being built.

A truce has been called in Ukraine over the Malaysian Air disaster while accusations fly as to who owned the missile(s?) that took out Flight 17 and who pulled the trigger. One theory is Ukraine mistook the airliner for Putin's personal plane coming back from the World Cup games. Meanwhile, Israel's Gaza move requires an additional 15,000 troops for a search-and-destroy mission for "arms-smuggler tunnels" while targeted-bombings continue, and Israel closes its embassy in Turkey.

For the US Defense DEMAND we learn from The Weekly Standard that "senior officials from the Pentagon will testify before Congress on their request for emergency appropriations, known as the Overseas Contingency Operations funding (OCO in military speak)."

For all the talk about exiting Afghanistan soon it seems our Defense planners are having a change of heart. "A decision to maintain troop presence in Afghanistan, a resurgence of radical Sunni terrorism across the Middle east, and Russian expansionism in Europe all seem like good reasons for the administration to request the emergency funding."

Investors should keep in mind that once the Afghanistan mission was over, NATO, as an alliance had no purpose. Investors should also remember NATO's original purpose was to hem-in the old Soviet Union. The names have changed a bit but the game has not, and while the world is transfixed on events, no heavy arms have yet been expended by any country. However, the justification for such is being created by every act on the world's stage.

Serious investors will recognize the DEMAND in Defense. If you'd like to know how the MDEF™ Investing strategy is positioned for the current geopolitical struggle, contact me directly.

$11B Arms Sale To An Enemy - Just Business

Jeffrey C. Borneman | July 17, 2014

Pentagon press secretary Rear Adm. John Kirby said the agreement to sell Qatar $11 billion worth of Apache helicopters and Patriot and Javelin defense systems “underscores the strong partnership between the United States and Qatar in the area of security and defense.”

Investors must realize that when it comes to the ultimate chess game - Defense (War) - the building of the War machine is paramount to both buyer and seller. In the case of $11B sale of Apache helicopters and missiles to a country that funds the very terror groups we fight - well, it's just business. 

NOTE: Defense purchases allow the buyer an immediate capability to defend itself or provide hardware to friends. There's the 'umbrella' effect as well; the 'don't mess with my friend's interests over here, or there.' Whereas Defense sales allow the manufacturer immense freedom to take profits to spend on R&D. This is no small capability as most arms sales are B & C-grade weapons. The sales' profit allows the manufacturer to develop and keep A-grade weaponry for itself. 

Again, the Defense bed-fellows hardly matters when the trades begin with a $"B" and it appears the Qatar deal was a reward as Qatar brokered the deal to free five senior Taliban detainees from Guantanamo Bay in exchange for Sgt. Bowe Bergdahl. This of course includes monitoring their activities for one year. 

The world is still playing only Speed Chess while it builds out the various War machines. Defense (War) will not be denied and investors would benefit from knowing its modern history. If you would like to know how the MDEF™ Investing strategy could benefit your portfolio, contact me directly.

Here's a money quote on the deal (full article follows):

Qatar’s foreign and security policy decisions do not always align with U.S. interests, however.

Read the Original Article

Japan's Defense DEMAND - It's Good Business - That's Why

Jeffrey C. Borneman | July 14, 2014

It is fair to say Japan's economy is in no shape to spend hundreds of billion of yen on developing a next-gen fighter plane, yet Japan is doing just that. Why? Because Defense is both necessary and good business. 

The new proto-type fighter is the Advanced Technology Demonstrator-X (ATD-X) meant to replace the ageing Mitsubishi F-2. The ATD-X will be used only for the development of the F-3, Japan’s next generation stealth jet. Could Japan merely purchase (with its very weak currency) more NATO aircraft to fend off Russian and Chinese aggression and forego years of development costs? What most investors don't see is that Defense has been an excellent business as well as a necessity for two and a half centuries.

It is generally in the building of the war-machine that has the maximum amount of benefit to an economy. If some of the machine is used to keep the flow of new technology coming, so be it; a regional conflict or two becomes the 'norm.' That has been our world since the end of WWII. However, if a true threat emerges, governments will eagerly saddle their citizenry with Inflation and debt (printing or borrowing) to keep the status quo (remain in power). The only goal of government is to remain in power ...

It is safe to say the world is in the position it is because of Defense spending. It is also fair to say the world is well into the next arms race as dictated by geopolitical DEMAND. The question for any investor is, "As the world's economies grind to a halt and war is the only option, where should my investing capital be?' DEMAND in Metals, Defense, Energy and Food (MDEF™) cannot contract - even in a world recession or war ... If you'd like to know more about MDEF  Investing, do contact me directly. 

I you want to see Japan's new Advanced Technology Demonstrator-X (ATD-X), find link below:

Read the Original Article

Japan’s new stealth jet fighter has been officially unveiled
The Aviationist Original Article Date: 2014-07-14

Geopolitics, Chess and DEMAND For Defense

Jeffrey C. Borneman | July 8, 2014

I wrote here recently about the different types of chess matches and how each type is determined by the speed with which it is played. Multiple skirmishes are now escalating and arms sales resemble the frenzy of the finale of "Trading Places." Let's take a look ...

Mitsubishi Electric plans a joint venture Europe's MBDA to supply missiles for the F-35 (handy as it also ordered 42 F-35's) as Abe needs to keep his military expansion within an acceptable budget. Meanwhile, the US has grounded all F-35 fighters (again) due to engine fires. The engine maker, Pratt & Whitney doesn't care what it costs to fix any real or perceived problems.

China has concluded it can defeat the United States at sea over Taiwan or the disputed Japanese islands if it can match the US undersea navy. So we learn about the new Type - 094 and - 095 ballistic missile submarines China is now building for that purpose. Of course, the US Navy's latest 30-year shipbuilding plan includes 12 additional Ohio Class submarines which the navy says it cannot have unless spending were to increase. 

In the Middle East, the Taliban has torched 400 fuel tankers in Kabul which were supplying NATO forces in Afghanistan (think replacement costs) - It was the fourth attack of the current Springtime operation "Khaibar." 

Israel has upped the call-up to 40,000 troops (not cheap)  as it has suffered massive rocket attacks from ISIS in Gaza while committing to assist Jordan "resist" Al Qaeda, Hamas and ISIS threats. 

It appears Ukraine is clear to receive the IMF loan check (bribe) as it performed the required task of going to war for Crimea. Taking the one town has caused the Russian 'rebels' to lick their wounds and regroup elsewhere - and regroup they will.

Investors understand that real DEMAND is always satisfied. Knowing where we are in the "cycle" allows us to see how DEMAND will be addressed. It doesn't matter that the F-35's need more money to be functional; it will be provided (it is the future NATO fighter jet). It doesn't matter how many NATO fuel tankers are destroyed; they will be replaced. It doesn't even matter that the navy's 30-year shipbuilding plan is woefully underfunded as the money will materialize to match any true threat.  

I'm often asked which of the MDEF™ sectors is most important. Investors who study history will see that all are equally crucial for survival but in the geopolitical chess match, it is the DEMAND for Defense that is fed first. 

Speed Chess, Blitz Chess & Bullet Chess in Defense DEMAND

Jeffrey C. Borneman | July 2, 2014

The exact type of any given chess match is determined only by the speed with which it is played. Investors take heed: In the ever-quickening chess match of military geopolitics that is unfolding right now, it is fair to say the world is now playing Speed Chess only; two more styles left. Stay with me for an explanation:

It is a given, a universal law really, that logistics wins or loses wars. Prepositioning of military assets (manufacturing and deployment) is ongoing for major nation states and can be understood as first-gear in a car (Standard Chess); it is often slow, methodical and receives little attention from the press. Second gear moves more quickly and visibly and involves "additional" troop deployments to respond to existential threats, real or perceived (Speed Chess). This is where America and its NATO allies are today in both the middle east and Ukraine. It is the "relative" calm before the storm of War. Blitz and Bullet Chess (third and fourth gears) are just that; very fast implementation of War plans which throw every asset into the fray to achieve victory as fast as possible - or not. The length of the War is determined by both strategy and tactics but both rely on the logistics of "inventory" (how many bullets do you have left ...?").  

Using the gearbox/chess analogies, we find that our administration has now ordered 750 combat troops to the "contested environment" of Iraq according Pentagon spokesperson Kirby. We are also deploying an undetermined number of troops from the US to Europe to counter Russian troop deployment to the border of Ukraine, according to our US NATO commander Breelove. And lastly, Japan has voted today to rewrite its postwar constitution to include "collective" offensive capabilities in its Pacific Rim front against Chinese aggression and expansionism.

The Saudis, Turkey, Jordan and Israel have their collective hands full with ISIS and other areas of unrest (including Hong Kong, Venezuela, Mexico and Argentina). 

Collectively the world is now playing Speed Chess in the game of military geopolitics. These conflicts promise to accelerate into Blitz and Bullet Chess. It is then that NATO allies will come en masse, cash-in-hand to the NATO 7-Eleven at 2 a.m. looking to restock their inventories. Those investors who understand where we are now will position themselves accordingly. 

If you would like to know how the MDEF™ Investing strategy is positioned for such events or to discuss 1H '14 results, do contact me.

US Troops At The Ready - True Defense DEMAND

Jeffrey C. Borneman | June 29, 2014

US bombs and bullets are not yet flying in Iraq but War is in the air - literally. What is flying are armed drones and F-15's and yesterday, Russia delivered a squadron of Su-25's. But Defense DEMAND is also floating in the Persian Gulf.

CNN is now reporting the addition of the USS Bataan carrying 1,000 marines on board. The Bataan joins six other US warships: the USS Arleigh Burke, the USS Truxton, the USS Gunston Hall, the USS George HW Bush, the USS O'Kane, the USS Philippine Sea, and the USS Mesa Verde - along with helicopters and warplanes "that can be used for an invasion or for an evacuation of US citizens."

It was also reported yesterday that Israel is sending - for permanent deployment - three of its German-made submarines to the Gulf. These submarines are armed with nuclear-tipped missiles that Israel says can reach any location in Iran and may be used "if Iran continues its nuclear weapons program," according to an Israeli spokesman.

Investors must recognize real DEMAND and the world's major DEMAND now is Defense. Once War begins in earnest, investors should be watching for reports citing "inventories." The inventory referenced will be the amount of weaponry expended, on-tap and replacement orders. Those figures will be large in both hardware and cost. 

Defense Spending Abroad More Critical Than Water at Home

Jeffrey C. Borneman | June 27, 2014

We are keenly aware that the desertion of Detroit has left the remaining residents with un-affordable water bills. But it is the DEMAND of Defense spending abroad that is taking priority; a key for investor understanding of the world today.

While the middle east (ME) burns as a result of careful timing and planning (not "rudderless" at all), the president is asking congress for another $500M to fund Syrian rebels - it is immaterial the administration calls the rebels "moderate." This is the same group now storming across Iraq, murdering everyone in its path. And, Americans should not worry that weaponry might be used against US troops or Allies, according to the White House, "Syrian rebels would be "appropriately vetted" before being given assistance, in what amounts to an effort to assuage concerns that some equipment provided to the Syrian opposition might ultimately fall into the hands of U.S. enemies." 

Let's be frank: Investors do not have the luxury to see the world as they'd like it to be. The chaos in the ME is just one (a very important one) of several world conflicts that could explode as quickly as Iraq. We could quibble that $500M would build quite a nice southern-border fence or supply the city of Detroit with water, but the focus for investors is to recognize true DEMAND when one sees it. For the foreseeable future, major DEMAND will boil down to the four market sectors of the MDEF™ Investing strategy. If you would like to understand more about the MDEF™ Investing strategy or its performance, do contact me directly.

Here's the false justification money quote (full article follows):

The White House said "the money would help defend the Syrian people, stabilize areas under opposition control, facilitate the provision of essential services, counter terrorist threats, and promote conditions for a negotiated settlement.

Read the Original Article

Obama seeks $500 million from Congress to help moderate Syrian rebels
Yahoo News Original Article Date: 2014-06-27

The Black Swan Widens - Defense & DEMAND

Jeffrey C. Borneman | June 27, 2014

The Iraqi battle theater is becoming a "veritable Babel of war." So far, six countries are involved in varying degrees: the US, Iraq, Iran, Syria, Jordan and Saudi Arabia, so we need a scorecard to know who's who. The latest: ...

This is how it's shaping up today per Debka:The Saudi's and the Egyptians are joining forces as ISIS is seen charging the Saudi border. Arms are being shipped to both sides of the conflict as 300 American "advisors" land in the middle of the fluid war zone. Jordan and the Saudi's will be fighting for survival as the caliphate means to decapitate both the Royal Family and King Abdullah. The extent of American involvement, we are told, will be limited to supplying Defense equipment but no "troops" beyond the advisors (yet). The US has a security pact with The Saudi Kingdom but has recently lost much credibility among all its allies and no word on calls for US help from the Saudis. 

However, Iran is pulling every string: "At least two cargo planes from bases in Iran were landing daily at Baghdad’s military airport, carrying 150 tons of military equipment. More than 1,000 tons were flown in this past week alone. Tehran has replicated for the Iraqi army the routine it established for Bashar Assad’s army, furnishing its needs on a daily basis as per it's commanders requests."

Investors should know that all wars are long in the planning and this is considered a Black Swan event as many didn't expect it now. Its execution will unfold slowly and the resulting impact on Energy pricing will materialize if most or all of Iraq's 3M BBL/day production is threatened. As Energy goes higher, so goes Inflation and Food costs; and Defense never goes out of style.

Debka article below and here's a quote from our SoD:

This is just what US Secretary of State John Kerry meant when he said in Brussels Wednesday June 25, after two days of talks in Iraq, that "the war in Iraq is being widened."

Pivotal Defense News That Will Go Mostly Un-noticed

Jeffrey C. Borneman | June 25, 2014

"It (EU) wants to create a single market on defence, make it more profitable, and intensify and merge research with the civil sector." War is good business and a "single market on defence, make(s) it more profitable," say an EU industry commissioner. 

Profit is a secondary motive as governments are keenly aware of the ramifications of today's EU statement desiring a unified Defense manufacturing agency. While the EU's internal market commissioner Michael Barnier says, "While defence and security remain primarily a matter of national responsibility, more can be done to promote European co-operation." Reading between these lines is just too easy.

The takeaway from this statement is also explained to us: It is a "shift (of) control of industrial and technological assets away from national governments to a new system at the EU level (emphasis mine)." Meaning, a member state's national responsibility will become the EU's. Or, put another way: the death of sovereignty. Why now, and why is this important to investors? 

A bit of history is required here to understand why such innocuous statements are pivotal: The creation of the EU was originally meant to be a United States-like entity but the scars of 20th century warfare were still too fresh for such a unification. The decision was to approach unification in stages. The first stage was the melding of currencies into a single the "Euro" to be overseen by the loose federation known as the Eurozone. The currency stage has been a disaster on many fronts but not unexpected by the overseers (a little chaos is good for the cause).

Regardless of the relative economic strength or weakness of the Eurozone member states, the next stage of unification was a focused central military. What better way to take that next step than establishing one central Defense center for research, development and deployment under one flag - all couched in "profitability" with dual military/civilian use? Germany is the main economic power of the EU and eager to expand its military role as recently noted here

The main takeaway for investors is that the EU is serious about entering the arms race as a supplier. The NATO umbrella bought Europe years of leisure and social programs but today's announcement will be central in propelling the Eurozone from a "lose federation" into one geographic/political/military entity. Who will notice that the long-awaited second stage of unification has begun? Will the loss of sovereignty even be noticed by EU member states as Germany takes the helm of a militarized Eurozone? Will the US eagerly maintain its military edge through increased Defense research and development?  I can only answer the last question with an unequivocal: Yes.  Here's the justification/money quote (full article follows): 

The commission says budget cuts, the crisis, and a fragmented internal market are threats to the industry and the EU's overall defence capabilities.

Read the Original Article

EU wants stronger military industry
EUObserver Original Article Date: 2014-06-25

Iraq Update: Out of Ammo = DEMAND for Defense

Jeffrey C. Borneman | June 23, 2014

In no situation is DEMAND for Defense more dire then when facing slaughter because you've run out of ammunition. This is the situation right now in The Black Swan of Iraq (the unexpected War).   

Investors must remember the first goal of all world leaders is to stay in power. That said, War has served that purpose (justification) for millennia. The worst-case scenario is to find oneself unprepared in an unexpected War. This puts those in power at a distinct disadvantage to those who might supply them the weaponry for holding power. 

This is exactly the situation Iraq's leader Maliki finds himself in now and the US is now rushing to meet this DEMAND. Defense is unlike all other commodities. Its importance can be greater even than Food or Energy because, in War, its consequences are immediate and permanent. The takeaway for investors is that Defense is never, ever cheap. History is replete with examples of rulers trading power or resources for Defense. DEMAND for Defense will always be filled at a cost.

Here's the latest money quote (full ZH article gives the ground details): 

As ABC reports, the Iraqi military ran out of Hellfire missiles six days ago, and though the U.S. is rushing more missiles into the country, Iraq has only two modified Cessna aircraft to launch them in their battle against the radical Islamic militia ISIS. The losses have left the Iraqi military with no offensive capability, and no real air force.

Australia & Defense DEMAND

Jeffrey C. Borneman | June 22, 2014

Australia now buys 10 percent of all U.S. weapons exports. This is an astounding statistic, but wait, there's more ...

Australia’s major arms imports mostly come from the U.S., and Australia is now America’s single biggest major arms customer but are now "keen to see an increase of major arms manufacturing. As tensions and defense spending continue to rise around the region, Australia may find plenty of willing customers amongst its allies." 

With NATO expansion and "tensions" over Energy, the world is in the middle of an undeclared arms race - this is plain to all with only a cursory view of geopolitical events. Prime Minister Tony Abbott has increased his military budget and announced that Australia would buy a further 58 U.S. made F-35 Joint Strike Fighters. Australia has rather small population but it is an enormous country with enormous resources to defend. Defense of those resources would be paramount but Australia clearly understands the world's DEMAND for Defense. 

The article below uses the term "Oceania" with seeming frankness and seriousness. Oceania, for those who've not read Orwell's works, understand it as a futuristic and mythical alliance of countries. Apparently life is now imitating art. If you're interested in how the MDEF™Investing strategy is positioned to take advantage of the world's DEMAND for Defense, do contact me. Here's the money quote (full article follows):

Asia now leads the world in growth in military spending, with arms sales to Asia and Oceania accounting for 47 percent of global arms trade.

Read the Original Article

Australia and the Asian Arms Race
The Diplomat Original Article Date: 2014-06-22

NATO Triples Air Power in Baltics

Jeffrey C. Borneman | June 21, 2014

This is a story about DEMAND for Defense.  "The events in eastern Ukraine, where Russian-speaking insurgents using sophisticated weapons threaten to split the country, have put the whole former Soviet bloc region on alert and eager for NATO reassurance."

We are not hearing much about the civil war in Ukraine now from the US media other than the constant drum-beat of Russian "troops amassing" on the Ukraine border. Foreign reports are chock-full of battles, bloodshed and calls for truce or help. "Help" to the Baltic States means: Call 911 - NATO.

Estonian Prime Minister Taavi Roivas urged NATO on Friday to establish a permanent presence in the Baltic state in response to Russia's actions in Ukraine." Of course, tripling the air power surrounding Russia, calls for NATO membership and establishing permanent bases, is mildly called "provocative" for the press. What it means is NATO-supplied troops and arms to pen Russia within its borders.

Then there's this: "NATO's top military commander, U.S. Air Force General Philip Breedlove, said last month that NATO would have to consider permanently stationing troops in eastern Europe." Yes, we (NATO's leader) would "have to consider" permanent bases there - we just have to ...

I began by saying this is a story about DEMAND for Defense. Investors should see  through the "fog of the controversy" to understand both the DEMAND for, and the need to supply Defense to, the Baltic's. Capital races to fill DEMAND in any area, and the DEMAND created by Russia's Crimea move is no different. This will also, as it was meant, alter the geopolitics within Europe and DEMAND for Energy. It also promises to be very be long lasting and an incredibly large commitment of capital. 

Here's another money quote (full article follows):

Asked about the risk of antagonizing Moscow further, Riovas said: "Russia has done everything to break all agreements and has been very aggressive... we have the alarm bell ringing in Ukraine and I really believe that now is the time to open your eyes and stay awake."

Read the Original Article

Estonia PM calls for permanent NATO presence as bulwark to Russia
Reuters Original Article Date: 2014-06-21

Finland To Dare NATO Membership?

Jeffrey C. Borneman | June 19, 2014

Finland is dismissing Putin's threat that joining the NATO alliance would result in WWIII. "Russia has no reason to fear Finland in NATO," (Defense Minister) Haglund said.

"Although Russia is not a threat to Finland now, it is unpredictable," said Haglund, 35, head of the liberal Swedish People's Party in the country's five-party ruling coalition." Russia does fear Finland militarily. Finland spends modestly on Defense but Russia understands any future conflict with NATO would only add to the 'multiple fronts' it must address as Finnish NATO bases pop up. 

I repeat myself to say that investors should view NATO membership as including a pre-packaged DEMAND for Defense and remind you that the NATO alliance was formed specifically to contain the Soviet aggreesion. Finland is still some time away from a formal request so it is preparing either way as the money quote states (full article follows): 

Its defense budget stood at 3.1 billion euros in 2012.

Whether in NATO or not, Finland should boost its defense spending by some 200 million euros annually to ensure credible defenses, Haglund said

Read the Original Article

Germany Eager To Expand Its Military Role

Jeffrey C. Borneman | June 18, 2014

So, "Germany’s defence minister Ursula von der Leyen said on Tuesday the country could play a bigger military role in UN peacekeeping operations." Let's understand this one ...

Germany wants to play a larger role in UN military operations and assumes it can supply what the UN now lacks in "key capacities and capabilities which other nations do not have." What is happening is both Germany and Japan are jettisoning their respective roles as the contrite and  vanquished foes of WWII and mean to have visible, potent and prepared offensive capabilities. Some might even infer the German attitude as one where it seeks conflict and only must decide among several which to join. 

The worldwide DEMAND for Defense is a response to the myriad of geopolitical threats (mostly Energy) that are clearly causing countries to rewrite their constitutions and re-assume roles that were only recently considered taboo. It is this DEMAND that the MDEF™ Investing strategy addresses squarely. 

Here's the money quote from the local German press (full article follows):

Von der Leyen was visiting the UN headquarters in New York as part of her American tour and subsequently said Germany should play a greater role in UN missions.

Read the Original Article

Germany gears up for more UN missions
The Local (German News in English) Original Article Date: 2014-06-18

War Is What The Economy Needs - Brought To You By the NYTs

Jeffrey C. Borneman | June 16, 2014

A NYTs article last Friday blamed "lack of major wars may be hurting economic growth." What are investors to think of such comments? First and foremost, investors must realize the sole mission of the NYTs is to mold public opinion to accept future events.

In Friday's article, we were treated to the list of technological advancements (and GDP growth) gained by preparation for war, whereas " ... the greater peacefulness of the world may make the attainment of higher rates of economic growth less urgent and thus less likely." What we hear is 'yes, war is bad but we're left with a meager 2% growth rate.' Of course there is also the bonus of the laser-like focus afforded governments in preparation for war, "War brings an urgency that governments otherwise fail to summon." The question remains: What to do with an unused war machine? 

At the end of the article it is pointed out that 2% growth is the price we pay for relative peace, and that might be a good thing (we're not killing people by the millions) but the message has already been delivered: Preparation for war is good for everyone and building the war machine is paramount to technological advancement. The war machine will either be sold off piecemeal to governments who are eager to use it; but it is acceptable if we find a reason of our own. The investor takeaway here is that war is good business. The MDEF™ Investing strategy is based on human nature and war is an aspect of the human that can never change.

Here's the money quote (full article follows) - Play a round of Spot the DEMAND while reading and let me know what you think:

The continuing slowness of economic growth in high-income economies has prompted soul-searching among economists. They have looked to weak demand, rising inequality, Chinese competition, over-regulation, inadequate infrastructure and an exhaustion of new technological ideas as possible culprits. An additional explanation of slow growth is now receiving attention, however. It is the persistence and expectation of peace.

Read the Original Article

The Lack of Major Wars May Be Hurting Economic Growth
NYTs Original Article Date: 2014-06-16

China's Blue Water Navy Expands

Jeffrey C. Borneman | June 13, 2014

Read the Original Article

China Displays World’s Largest Conventional Submarine
The Diplomat Original Article Date: 2014-06-13

Israel Joins Refueling Tanker Hunt

Jeffrey C. Borneman | June 13, 2014

Read the Original Article

Israel bids for $1.4 bil. refueling tankers
Korea Times Original Article Date: 2014-06-13

Iraq: Today's Black Swan

Jeffrey C. Borneman | June 13, 2014

While the world's attention was focused on the Ukraine, NATO, Russia standoff the Black Swan of Isis and Iraq emerged.

This is not a news blog for up-to-the-minute, turn-of-events but rather to focus investor's attention on DEMAND in the MDEF™ arena. Our president has said today that "no (US) boots on the ground" will be allowed (yet). But knowing that Isis has commandeered literally all NATO weapon systems (including Black-hawk helicopters) left by the fleeing Iraqi army, there will be calls for much more Defense hardware for the Maliki government as well as any NATO countries that answer the Iraqi call for help. Here's the money quote (full/short article follows):

Obama did not address speculation about possible U.S. airstrikes in Iraq. The White House has made it clear there will be no U.S. boots on the ground.

Read the Original Article

Obama: No U.S. Troops Will be on the Ground in Iraq
KFBK Radio Original Article Date: 2014-06-13

Iraq Collapsing & Hostages - Turkey Calls For NATO Help

Jeffrey C. Borneman | June 11, 2014

Now it is Sunni "insurgents" taking cities in Iraq and that is a bad thing. The Sunni's were once the 'good guys.'

The recent emergence of Isis and its yet-to-be-declared civil war in Iraq has Turkey calling for an emergency NATO meeting over a hostage situation. NATO has its hands full on Russia's border but never misses a chance to cement its legitimacy. However, from this point forward, I'm encouraging my readers to substitute the phrase "DEMAND for Defense" (spending) when encountering the name "NATO" (It helps to understand that NATO exists somewhat like an inner-city 7-11 weapons depot: Only a fair selection, very high prices but always open). And just as a reminder to investors, NATO is comprised of 28 member-States and still accounts for a clear majority of world military spending. The U.S. and NATO spend more on Defense than Russia and China combined. Not much of a story or money quote, but you get the picture (full article follows):

Turkey has called for an emergency meeting of NATO to discuss the security situation in Iraq after militants took 80 Turkish citizens hostage during a lightning advance ...

Read the Original Article

Turkey calls for emergency NATO meeting on Iraq: Turkish official
Yahoo News Original Article Date: 2014-06-11

Two B-2 Stealths To Europe = NATO DEMAND

Jeffrey C. Borneman | June 11, 2014

In a response to yesterday's open threat by Russian to restore a "balance of power," the US deploys the Queen of Defense in Europe "for short term deployment."  

The MDEF™ Investing strategy concentrates on DEMAND in key market sectors, of which Defense is one. Moving two B-2 Stealth Bombers is akin to moving the Queen in chess: one does not generally move her unless she is to be used. By moving the US bombers to a base in England, the war games by 10 NATO countries taking place on Russia's doorstep has further altered the balance of power by a factor. 

One of two things is happening: First, this could be a mere show of force to let Russia know it can proceed no further in Ukraine or elsewhere; or Second: The US intends to provoke Russia into a conflict to slow its tightening ties to China. Either goal would suffice if the US intent is to also sell many more weapons systems to NATO. In other words, the US is creating DEMAND for Defense.

Short article below but note the use of the term "interoperability" - a term frequently useful to sell congress on weapon's sales to NATO (full article follows):

The training and integration of strategic forces demonstrates to our nation’s leaders and our allies that we have the right mix of aircraft and expertise to respond to a variety of potential threats and situations.

Read the Original Article

War Games, Defense & DEMAND

Jeffrey C. Borneman | June 9, 2014

War games between allies are expected. Joint war games by 10 NATO countries held for the fourth time in a year, and meant to send a message of defiance to Russia; well, that clearly spells DEMAND for Defense.

Russia has called the games 'provocative' and illegal according to Russia's agreement with NATO. Russia also says it "is taking measures to balance the shift in military power." Investors know the Russians are currently conducting war games with the Chinese in the Sea of Japan. Investors will connect the very close dots in that three major powers are practicing for war. In the case of the NATO war games, Russia clearly has intentions to reverse the power shift - how it might choose that end is presently unclear. Here's the money quote from the Russian Times article (full article follows) - but while reading, play a round of Spot the DEMAND:

Of course we won't stand idly and watch the militarization of the countries in our neighborhood and will take all necessary political and military measures to ensure our security.

Read the Original Article

DEMAND, Defense, Turkey and The F-35

Jeffrey C. Borneman | June 9, 2014

The Pentagon’s most expensive arms development project ever, the F-35 Strike Fighter, gets a new engine facility in Turkey. 

Turkey has been a NATO member since 1952 and one of the nine member State's building the F-35 - the fifth generation stealth fighter meant to replace all F-16 & F-18's throughout the NATO alliance. The DEMAND for this fighter, despite its delays and cost overruns, is overwhelming according to the updated orders. This is real world wide DEMAND for Defense. Here's the money quote (full article follows):

The United States and its allies plan to buy more than 3,100 F-35s in the coming years to replace aging F-16s, F/A-18s and other warplanes.

I believe this facility will grow, the number of parts produced here will increase and they will be used for the planes that Turkey will design and manufacture by itself, as well as other vehicles that include high technology.

Read the Original Article

Turkish-American F-35 engine production facility inaugurated in İzmir
Daily News Original Article Date: 2014-06-09

Killing Two Birds With One Sector

Jeffrey C. Borneman | June 7, 2014

A nationally recognized financial analyst recently commented that the MDEF™Investing strategy completely ignores the technology sector. His question was "How could (owning only) four market sectors outperform the S&P while leaving the 'future' on the table?"

Our own Defense Advanced Research Projects Agency (DARPA) is the backbone of the technology toy-land that we consider today's technology sector. Toys are wonderful, convenient and a boost to GDP but DARPA's mandate is Defense. But "once commercialized, these technologies have revolutionized the world."

In an interview with Arati Prabhakar, DARPA's Director of Microelectronics, she talks about the next-generation, "What’s now becoming possible is driven by a host of technologies. It’s this next generation of micro-electronics and microsystems that shrink our physical technologies. It’s the algorithms and the software and the informa­tion systems. We know how powerful they are."

I'm sorry to say I don't hear AAPL's Tim Allen or NFLX's Reed Hasting making similar claims. Investors must remember that DARPA's developments are (and have been) 40-50 years ahead of today's most advanced technologies. There is a marriage between DARPA's research and today's market technologies, but there will always exist an extended lag-time for the commercial market.

Defense is paramount to the continuance of any government and so invests in technology. The MDEF™Investing strategy simply recognizes the value of both in the same sector. Here's one money quote (great, full article follows):

DARPA’s budget is invested across a collection of about 250 programs, a portfolio that is deliberately diversified. Every program that we invest in is all about national security impact, but we know that we need to be investing in some things that can have their impact in the shorter term

Read the Original Article

Taiwan Still Worried China Will Invade

Jeffrey C. Borneman | June 6, 2014

In high level talks with the US, Taiwan is expressing its reluctance to expand the US radar system and renewed its call for more advanced US weaponry, including F-35 or F-22 Raptors and submarines.

“The [People’s Liberation Army] has continued to develop and deploy military capabilities to coerce Taiwan or to attempt an invasion, if necessary.” said Dale Wen-Chieh Jieh, who heads the department of policy planning within the Taiwanese Ministry of Foreign Affairs.

Yes, this is has been clear for some time now, but what isn't clear is the amount of money reported to expand the Chinese military machine. The claimed 12% increase in spending for 2014 apparently doesn't include yet another 15% increase in expense claimed by China. Hence the State Department announcement that China's military expansion is ahead of (US) schedule. This, again, is a DEMAND story for Defense. Even with the obvious miscalculation of the speed of China's build-out, the US is hesitant to supply overtly offensive weapons to Taiwan at this time. The question is whether the US will go through with any sale if either China makes moves into Viet Nam or escalated the tensions with Japan - either is possible. My guess is that Taiwan will obtain these systems regardless, it's just a matter of timing. Here's the money quote (full article with video follows:

in March announced a 12.2 percent increase in military spending to $132 billion. That followed last year’s 10.7 percent increase to $114 billion, giving China the second-highest defense budget for any nation behind the U.S., which spent $600.4 billion on its military last year.

Read the Original Article

Rising red tide: China’s navy, air force rapidly expanding its size and reach
Washington Times Original Article Date: 2014-06-06

WAR, DEMANDed by the IMF

Jeffrey C. Borneman | June 3, 2014

Presented with a comment on the quote below (full article follows): It's right out of Terminator II when John Connors is asked how many police showed up. His reply was: "I think all of them." Just remember this is a DEMAND story relating to Defense. 

It looks like they've brought here all their army and (military) equipment ...

Read the Original Article

Another Billion Dollars of Defense to Europe

Jeffrey C. Borneman | June 3, 2014

Like a child telling the birthday-boy what his present was before he opened it - the NATO secretary general couldn't contain his excitement over Obama's decision to ask congress for an additional $1B in Defense for "Europe" - he spoiled the president's announcement. 

"NATO secretary general Anders Fogh Rasmussen hailed the proposal even before Obama had a chance to formally announce it." But it doesn't stop there. The president wants to increase arms sales to both NATO countries and non-NATO countries near Russia. Selling arms to non-NATO neighbors of Russia presumably gives Putin even more conflict to ponder. SoD Kerry said that Putin's invasion of Crimea has "unfortunately unleashed forces that we had all hoped had been put away ... so it requires new vigilance and it requires clear commitment.” Let me translate this for my investors: The US must unleash a force to meet the Russian aggression. This will be accomplished by arms sales to NATO and non-NATO countries. The US visit resembles a Chamber of Commerce sales pitch but more importantly, it highlights the very real DEMAND of Defense and the spending that must take place. Here's the kumbaya line (full article follows):

“The United States has reacted swiftly after Russia’s illegal military actions in Ukraine,” Rasmussen said as he met with NATO defense ministers in Brussels. “And I appreciate that other allies have followed so that we can announce that all 28 allies are now contributing to reassurance measures.”

Read the Original Article

Obama Asks for $1B to Boost U.S. Military in Europe
Time Original Article Date: 2014-06-03

Preparing for War Means Selling It First

Jeffrey C. Borneman | May 30, 2014

We've seen the snapshot of misery-numbers that is Japan's economy. We know Japan will alter the passivity clause in its constitution to allow offensive capability. Arms trading in the region resembles a scene from "Trading Places" and now Abe is pedaling "peace" in case of war.

In both an attempt to defect fiscal mismanagement (Inflation) on its people and appear strong against the rising tide of Chinese militancy. Japan is as desperate to form a coalition of willing Asian neighbors - including Australia - and the "further" strengthening of the Japan-US alliance as "no one country can defend itself alone.” History dictates a future war in the Pacific so selling the concept that Japan wants peace is key to its acceptance by all. Abe's cites "circumstances" and "the need to protect the lives of the Japanese people" which apparently now includes selling submarines. Defense remains in high DEMAND. Here's the money quote (full article follows);

To underscore the recent change in momentum away from China in the region, Japanese officials on Wednesday said the country is considering selling submarine technology, and perhaps a fully engineered fleet, to Australia.

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Abe’s Attempt to Corner China Through Diplomacy
The Diplomat Original Article Date: 2014-05-30

Ukraine - Already a De Facto War and US is Blamed

Jeffrey C. Borneman | May 29, 2014

Russia has its own "Crazy Uncles" or generals, who speak for the military. The Kremlin allows them to speak when convenient.  

In this case the US is being accused of " ... organizing a coup and putting their own people in charge, to use Ukraine as a detonator against Russia and Europe." In response the Pro-Russian separatists shot down a Ukrainian army helicopter on Thursday, killing 14 soldiers including a general. Make no mistake, this is a war that is just now getting legs. The call for NATO forces and DEMAND for weaponry cannot be far behind. Read between the lines in the money quote (full article follows):

"Any war in Europe results in great gains for America, in the strengthening of its geopolitical influence, and they are sticking to their tradition," he said.

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Kremlin adviser steps up war of words with U.S. over Ukraine
Yahoo Original Article Date: 2014-05-29

Why We Will Not Leave Afghanistan Anytime Soon - Endless War

Jeffrey C. Borneman | May 27, 2014

The announcement today regarding leaving 10,000 troops in Afghanistan comes as no surprise.

The US military needs NATO more than NATO needs the US. That begs the question of whether NATO would exist at all if not for US desire to have a military presence in over 120 countries. For investors who follow Defense, NATO is by far the largest consumer of US weapons-systems. NATO member States also rely on US leadership as heavily as US weapons. Remaining US troops (whether in combat roles or not) justify future weapon sales and the lesson for investors?: follow the DEMAND. The money quote below is the administration's reasoning for the continued troop presence (full article follows):

"After all the sacrifices we've made, we want to preserve the gains that you have helped to win, and we're going to make sure that Afghanistan can never again, ever, be used again to launch an attack against our country," Obama declared.

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U.S. to keep 9,800 troops in Afghanistan
AP Original Article Date: 2014-05-27

Ukraine's New President Wants the IMF Money or "Let's Have a War"

Jeffrey C. Borneman | May 26, 2014

Let's remember the IMF "loans" to Ukraine came with the strings that it retake Crimea from Russia. 

In the starkest desire to play a human round of "Hunger Games" we've seen (and posted on some weeks ago), the IMF made the demand of military action, and Ukraine's new President Poroshenko seems to be up to the role for "David" vs the Russian "Goliath." It remains to be seen what stones Poroshenko will pull from the river that will match the military might of the Russian army. It is safe to assume Poroshenko will bank on NATO for both support and weaponry. This is the next round in the game "Spot the DEMAND" for Defense. Here's the money quote (very short article follows):

Ukraine would press on with an offensive to crush the pro-Russian separatists waging an insurgency in the eastern industrial belt, despite Moscow warning it would be a "colossal mistake".

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Poroshenko vows to retain east Ukraine
The Australian Original Article Date: 2014-05-26

$601B Defense Authorization Bill Passes Congress - Here's Your DEMAND

Jeffrey C. Borneman | May 23, 2014

What other market sector commands the overwhelming bipartisan legislation - other than Defense? This is Real DEMAND. 

The president could still veto this legislation (doubtful) as it continues funding for weapon-systems considered obsolete - including an aircraft carrier; however, I appreciate the Israeli perspective as recipients of Iron Dome funding. If Defense spending is like peanut butter - the thicker, the better - the Defense Bill is by far the largest jar of peanut butter in the store. The rule for any investor is to follow the DEMAND as the capital eagerly seeks to satisfy it ... Here's the Israeli money quote (full article follows)

“Given the significant US taxpayer investment in this system, the committee believes that coproduction of parts and components should be done in a manner that will maximize US industry participation in interceptor and battery deliveries for Israel’s defense needs,” an Armed Services Committee markup of the bill’s text reads.

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US lawmakers vote to double funding for Iron Dome
The Times of Israel Original Article Date: 2014-05-23

Continuous War Footing To ... Continue (DEMAND & Defense)

Jeffrey C. Borneman | May 22, 2014

Emerging from a secret meeting of Senators to discuss the US Authorization of the Use of Military Force (AUMF) doctrine Tuesday night, Senators appeared baffled as to the plan presented by the White House. 

Senator Corker said of the meeting, “I know several of us were involved in a very bizarre discussion last night." And, "This continues a very bizarre discussion,” Corker said at another point.

If the US planned to continue its withdraw from the world stage by declaring the War on Terror over, it would have said so. It appears the US has military goals of its own that may surprise the upstarts, Russia and China. Short article below. Here's the money quote:

“Has the administration proposed any refinement or any redefinition of the AUMF? I mean, have they provided us language in terms of what they think they need to handle the current situation?” Senator Ron Johnson (R.-Wisconsin) asked the State Department’s principal deputy legal adviser, Mary McLeod. “No, senator, we have not, “ she replied.

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Military Moves into Chad ... Humanitarian Purpose Cited

Jeffrey C. Borneman | May 21, 2014

Almost non-charlatanry, the president mentions US troops sent into Chad.

The eighty troops are assisted by "surveillance and reconnaissance aircraft" and drones ostensibly to find 276 kidnapped schoolgirls. A report last year by Hugh Denny of the Army Corps of Engineers issued earlier in 2013 on military expansion projects: " ... this year references 79 such projects in 33 countries between 2011 and 2013, including Benin, Botswana, Burkina Faso, Cameroon, Cape Verde, Chad, Cote D’Ivoire, Djibouti, Ethiopia, Ghana, Guinea, Kenya, Lesotho, Liberia, Malawi, Mali, Mauritania, Mauritius, Mozambique, Niger, Nigeria, Rwanda, Senegal, Sierra Leone, Swaziland, Tanzania, Tunisia, The Gambia, Togo, Uganda, and Zambia. The reported price-tag: $48 million." 

We're wondering if the US was invited to come into Chad for this operation because we're apparently not leaving until we feel like it. Regardless, the US will need Defense hardware to maintain operations and "train" African military's. Here's the money quote (full article follows):

Obama said the service members will help with intelligence, surveillance and reconnaissance aircraft for missions over northern Nigeria and the nearby region. He says the force will stay in Chad until its support is no longer necessary.

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US troops deploy to Chad in hunt for Nigerian girls
Yahoo Original Article Date: 2014-05-21

Wars, Rumors of Wars & the Relevancy of NATO

Jeffrey C. Borneman | May 20, 2014

Ex-NATO Supreme Commander sees NATO's readiness to defend all European sovereign borders. Having done a smashing job in Afghanistan, NATO was without real purpose until the Russian move into Crimea.

Let's recap the other now-possible NATO missions against the backdrop of current events: Russia is poised to move into Ukraine (Will they do it? Did they back away as stated?); China has moved troops and armament to the border of Viet Nam; The US is again threatening an invasion of Syria with it's very eager partner, France (Putin is too busy to intervene again?); Libyan rioting has the US on high-alert to evacuate Embassy staff; At least one new terror organization threat in North Africa, and; the old standby conflict of Israel v (they'll-have-a-bomb-any-minute) - Iran. NATO's plate could be full in a jiffy. That spells DEMAND for Defense and higher Energy prices any way you slice it. Higher Energy costs mean higher Food prices - we can see the pattern ... Here's the money quote from the Ex-NATO chief (full article follows):

NATO is the richest and strongest alliance in the history of the world. The question is how much of that capability we are willing to invest in this situation. I will tell you without a shred of doubt that if any of NATO nations were attacked or invaded, the response would be overwhelming against an invader.

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Ex-NATO commander: West needs to provide military aid to Ukraine
The Japan News Original Article Date: 2014-05-20

Miscalculation might not lead to war because there is nothing miscalculated about what China is doing. China intends to start a war.

Jeffrey C. Borneman | May 19, 2014

David Archibald's piece in American Thinker is "must read" in understanding the intentions of China, both in its sphere of influence and beyond. 

In the geopolitical 3-D chess match unfolding before us, Archibald makes a classic case for the MDEF™ investing strategy via the geopolitics of DEMAND. The US could easily play on this stage but is about to be left behind; seemingly content to supply weaponry to NATO while strangling DEMAND here at home through fiscal mismanagement. A money quote from an excellent overview (full article follows):

All the countries of East Asia know that once Vietnam is defeated, their turn will come. They will effectively become vassal states under the Chinese jackboot.

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China's 'Mobile National Territory'
By: Archibald AmericanThinker Original Article Date: 2014-05-19

A Brief History of Drone Warfare & The Future ... is Now

Jeffrey C. Borneman | May 17, 2014

Great article below (although it leaves out Israel's contribution entirely) re drone development. This is a DEMAND issue. Every country wants them. Every country can have them. So the US must, at any cost, retain the technological edge in both design and deployment. 

Remember that the US (or any weapons producing country) cannot afford effective R&D for its own weapons systems without also supplying lesser systems to others. The point being: If the US is exporting F-35s to others, it feels comfortable it has the edge over its exports. That is how the DEMAND quotient operates. Here's the money quote of a surprising article from the NY Post (full article follows):

Now, two unmanned spy drones are under development. One that appears almost ready for combat is the ... (read the article)

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The Ultra Lethal Drones of the Future
NYP Original Article Date: 2014-05-17

An Excuse For War: The Environment

Jeffrey C. Borneman | May 15, 2014

Connecting the dots on the 'green-push.'

First, adhere to the admittedly flawed climate forecast models and assume imminent catastrophic events. Secondly, declare unabashedly the need for increased military involvement to meet same by " ... wean(ing) the nation, including the military, off of fossil fuels ... " As an investor, this spells DEMAND. This next story wins today's prize in explaining the MDEF™ investment strategy. Play a round of Spot the DEMAND with your friends. Here are two money quotes (full article follows):

The warnings are the same: Rising sea levels and storm surges could wipe out port cities. Drought and flooding could alter crop production and cause famine and civil unrest (war)." And: "And melting polar ice caps could produce new competition for oil and mineral rights as well as conflict (war) over how countries share that wealth.

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Former general sees climate change as ‘catalyst for conflict’
The Columbus Dispatch Original Article Date: 2014-05-15

Why Sell Warships to Russia? France is Broke ...

Jeffrey C. Borneman | May 15, 2014

... and capital always follows DEMAND. The arms dealing among nations has become a game of Go Fish . Nations sitting in a smokey room holding cards close barking "Got any Threes? I mean, amphibious war ships?" 

Russia sells China an aircraft carrier; France sells amphibious warships to Russia. The US is displeased as it attempts to bully France into cancelling the sale and France shrugs. It is clear it needs the money. We can almost hear them say "If we made public the crash in our tax revenues from that hike to the 75% tax rate ... ". The point is capital always follows DEMAND. Here's the money quote:

To critics, the 1.2 billion euro, or more than $1.6 billion, deal that France struck with Russia has emerged as a classic instance in which a European nation has elevated its business dealings with Moscow over exhortations by the United States to take a firm line on Russian meddling in Ukraine.

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Confession: Space Will Now Be Militarized

Jeffrey C. Borneman | May 15, 2014

The admission that space would eventually become a battlefield surprises no one. Couched in the term "security," we now visualize Star Wars-like lasers to blind the eyes of our enemies.

To date, Russia, China and the US plan on establishing a permanent moon presence with eyes on Mars. Strategically, the "high ground" becomes the limit of human travel - the further out, the better. Russia's choice to limit accommodation of US astronauts to the ISS after 2020 means we should expect considerable resources to catapult the US back in front of the new space-race. This is high DEMAND in Defense.

"There will be security concerns," said Jeff Trauberman, vice president of Boeing's Space, Intelligence, and Missile Defense Systems. "There will certainly be security operations going on in space. More and more countries are working on military space-related activities. So it's inevitable."

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A 21st century collision course in space
CNBC Original Article Date: 2014-05-15

Poland said to be eyeing missile defense decision in June, July

Jeffrey C. Borneman | May 14, 2014

Read the Original Article

Poland said to be eyeing missile defense decision in June, July
Reuters Original Article Date: 2014-05-14

RAAF seeks to buy new missiles

Jeffrey C. Borneman | May 14, 2014

Read the Original Article

RAAF seeks to buy new missiles
News.com.au Original Article Date: 2014-05-14

NASA to Become Official Arm of US Defense?

Jeffrey C. Borneman | May 14, 2014

Conjecture to be sure at this point but Russia has decided that US sanctions were to be met by attacking a signature US achievement: Space.

We are now denied Russian rocket engines ... It's not our inability to build rocket engines to carry our satellites and astronauts aloft, it is our political will to bother. As the Russian/US relations continue to freeze, we can expect NASA to be charged with a Manhattan Project-like to reclaim our spot on our own Space Station and military satellite launch capability. Here's the money quote (full article follows):

Russia is to deny the US future use of the International Space Station beyond 2020 and will also bar its rocket engines from launching US military satellites as it hits back at American sanctions imposed over Ukraine crisis.

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Russia to ban US from using Space Station over Ukraine sanctions
The Telegraph Original Article Date: 2014-05-14

Egypt, Defense & A Clearer Understanding

Jeffrey C. Borneman | May 12, 2014

Not many investors have had the opportunity to understand the mess that is Egypt.

Not many investors have had the opportunity to understand the mess that is Egypt. Our media has consistently cast the overthrow of Morsi with a coup d'etat but the article below is a brilliant and concise recap of events and economic landscape. Here are the relevant money quotes (full article follows):

... the Obama administration’s approval of the sale of 10 Apache helicopters signals a more realistic assessment of the interim Egyptian government and the challenges before it ... Once elections are held and el-Sissi likely assumes the presidency, it will be incumbent on Congress to approve $1.5 billion in promised military assistance that Washington suspended in the wake of last June’s revolution.

Read the Original Article

Original Article
USNews Original Article Date: 2014-05-12

If $115M for 200 Helicopters is Acceptable ...

Jeffrey C. Borneman | May 11, 2014

... then $400M for 23 presidential helicopters must be acceptable as well. At Rampart, we follow DEMAND for the MDEF™ Investing strategy, however it is spent.  

Adding in the likely $17 billion price tag for the new project – a number estimated by the Congressional Budget Office – the $20 billion total makes the fleet the most expensive helicopters ever built. Read more: http://www.dailymail.co.uk/news/article-2624495/Obama-administration-green-lights-20-BILLION-helicopter-program-replace-presidents-private-chopper-fleet-wont-ready-2022.html#ixzz31Ri5AeWa Follow us: @MailOnline on Twitter | DailyMail on Facebook

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Original Article
Mail Online Original Article Date: 2014-05-10

Defense & DEMAND

Jeffrey C. Borneman | May 11, 2014

Why is the US Army seizing all the National Guard's attack helicopters?

Why is the US Army seizing all the National Guard's attack helicopters? Ostensibly, the swapping of chopper-types is to save a few dollars but I have never seen this before now. It should tell investors that the attack helicopters are in high DEMAND and to anticipate orders for more shortly. No money quote in the very short article:

Read the Original Article

Original Article
Washington Times Original Article Date: 2014-04-09

Ties That Bind

Jeffrey C. Borneman | May 10, 2014

China thinks in generational terms.

As the US withdraws to play a lesser role on the world stage, China has patiently grown from outsider to economic prominence in a mere two generations. With this new power comes the need to secure and expand its sphere of influence with a variety of alliances. What are the largest areas of trade within these new alliances? They are MDEF trades ... Here's the money quote (full article follows):

That China would embrace Iran is no surprise,” said former Pentagon adviser Michael Rubin. “What worries me is the big picture: China is building a naval base in Pakistan, cementing ties with Iran, building business in Iraq, and also courting Turkey. It’s creating an anti-American alliance through the heart of Asia and the Middle East.

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Iran, Chain Expand Military Ties
FreeBeacon Original Article Date: 2014-05-08

DEMAND for US Defense Hardware - More is Coming

Jeffrey C. Borneman | May 9, 2014

Same footprint, better everything else ...

Same footprint, better everything else ... That sums up the new heavy lift helicopter the US is buying - at a cost of $115M each for 200 units (that is a FOB cost, we can be sure, with lots of add-ons). Here's the money quote (full article follows):

The USMC intends to order at least 200 CH-53Ks and set up eight operational squadrons and one training squadron.

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Sikorsky Roles Out Heavy Lift Helicopter
AINonline Original Article Date: 2014-05-09

Ukraine Update - Defense & DEMAND

Jeffrey C. Borneman | May 9, 2014

Putin is calling NATO and the Pentagon liars as he claims Russian troops have withdrawn to deescalate tensions.

Putin is calling NATO and the Pentagon liars as he claims Russian troops have withdrawn to deescalate tensions. Late yesterday, our Pentagon called Putin's claim "not credible" (to be polite). Now Ukraine has conscripts ready, deployed and waiting for orders to comply with the UN mandate to retake the East or lose the balance of the IMF loan (to be paid in SDRs and not USDs). Let's remember what the IMF terms are: A loan Ukraine cannot afford to repay if it fights to reunify ... bizarre. Here's the money quote (full article follows):

Antonov said that Russia calls on the official representatives of NATO and Pentagon “to quit cynically deluding the international society on the real state of affairs on the Russian-Ukrainian border.

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Ukraine Deploys 15,000 Troops
Tass Original Article Date: 2014-05-09

War & I Robot ... If it Can Kill, it Will Be Built

Jeffrey C. Borneman | May 9, 2014

Defense, or War, is integral to the MDEF strategy because War is human nature; it is part and parcel of our genome.


Defense, or War, is integral to the MDEF strategy because War is human nature; it is part and parcel of our genome. We deplore War but rely on it for too many reasons to restate here. Ponder this next article and remember the Defense Industry is technologically 40-50 years ahead of what we currently understand. Will killer robots be built? It is a simple DEMAND question and safe to assume that, if the UN is to debate it, they are well on their way. Here's the money quote (full article follows):

Those in favour of killer robots believe the current laws of war may be sufficient to address any problems that might emerge if they are ever deployed, arguing that a moratorium, not an outright ban, should be called if this is not the case.

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Killer robots to be debated at UN
BBC Original Article Date: 2014-05-09

DEMAND for US Defense Hardware - More is Coming

Jeffrey C. Borneman | May 9, 2014

Same footprint, better everything else ... That sums up the new heavy lift helicopter the US is buying.

Same footprint, better everything else ... That sums up the new heavy lift helicopter the US is buying - at a cost of $115M each for 200 units (that is a FOB cost, we can be sure, with lots of add-ons). Here's the money quote (full article follows):

The USMC intends to order at least 200 CH-53Ks and set up eight operational squadrons and one training squadron.

Read the Original Article

Slowing DEMAND - Q1 GDP

Jeffrey C. Borneman | May 1, 2014

It is not a question of "if" a market rotation into "need" from "want" will take place - DEMAND dictates it

Watching heads explode on MSM on the terrible Q1 GDP print. Buried in the details we find two key pieces of data. The first: " ... investment on equipment (Cap-Ex), another key economic cog, fell 5.5% to mark the biggest drop in almost five years." CEOs are paid real money to protect their companies (not waste money on non-returning investments). CEOs see much lower DEMAND, hence lower Cap-Ex. NOTE: Always look at the comparisons to '08-'09, a particularly bad economic environment.

The second is the export numbers: "Exports (-7.6%) fell faster than imports (-1.4%) to push the trade deficit higher and also act as a drag on growth." This number speaks to dwindling world-wide DEMAND and with no catalyst for growth across the globe (with the exception of "conflict[s]"), we can expect continued layoffs, calls for higher minimum wage and cover for the Fed to continue - if not raise - the QE. 

It is not a question of "if" a market rotation into "need" from "want" will take place - DEMAND dictates it. Here's the story:

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First-quarter U.S. GDP barely rises, up 0.1%
By: Jeffry Bartash Market Watch Original Article Date: 2014-04-30

Defense Spending Continues (Even away from the US)

Jeffrey C. Borneman | May 1, 2014

The new bucks mean to bolster the Kingdom's Defense as the US "pivots" to Asia.

Why would Saudi Arabia need a fleet of killer-drones? Few remember that when Ayatollah Khomeini returned to Iran in 1979 he declared a war on the (Sunni) Saudi Royal Family for control of OPEC, the ME, and by extension, the world. The Iran/Iraq war was fought because the Sunni leader (Saddam Hussein) of Iraq would not lay down arms and attacked Iran first. Iraq was, literally, in the way of a direct attack by Iran on the Saudi Kingdom. The old-saw Saudi leadership is all but gone now. The new bucks mean to bolster the Kingdom's Defense as the US "pivots" to Asia. in their minds, killer-drones are have many advantages as the threat has never abated. Here's are the money quotes (full article follows):

Saudi Arabia and smaller countries like the UAE are trying to get their hands on whatever they can...

And

As long as there’s a market, there’ll be an incentive to build cheaper and more powerful drones, and the club of drone-armed countries will continue to grow. As Horowitz puts it, "What we know about the history of military technology suggests it will be really difficult to keep a lid on this.

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Saudi Arabia joins the killer drone arms race
By: Russell Brandom The Verge Original Article Date: 2014-04-05

Here's Your DEMAND

Jeffrey C. Borneman | May 1, 2014

The MDEF strategy states countries will often turn to war to cover fiscal mismanagement. War serves many other purposes as well but building the War Machine is a key.

The MDEF strategy states countries will often turn to war to cover fiscal mismanagement. War serves many other purposes as well but building the War Machine is a key. This next story should make the point clearly. Here's the money quote:

The Block IV award is the largest shipbuilding contract in U.S. Navy history in terms of total dollar value

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Navy orders 10 nuclear subs for $17.6B in most lucrative contract ever
By: Douglas Ernst The Washington Times Original Article Date: 2014-04-29