Jon Markman: Now that there is a hint of war in the air again, with rumors that the U.S. may intervene directly in the Syrian civil war to battle the Sunni extremist group known as ISIS, the Pentagon contractors in the iShares Aerospace/Defense (NYSEARCA:ITA) exchange traded fund are roaring back. If it weren’t for the persistent weakness of Boeing (NYSE:BA), in fact, that fund — which performed so well last year — might be back at recent highs.
It had been worrisome that the jet-fighter, aircraft carrier and ammo makers were lollygagging earlier in the summer despite war drums beating. The lack of response by Lockheed Martin (NYSE:LMT), General Dynamics (NYSE:GD), Raytheon (NYSE:RTN) and Northrop Grumman (NYSE:NOC) gave the appearance of a group that had been abandoned by bulls.
But now the world of warcraft is back in gear. The cavalry is here. Not saying that’s a good thing on a moral ground, but it helps many investors. They are all fairly cheap, and tend to do well at this time of year anyway. GD and LMT are the leaders; RTN is the laggard with the most catch-up to do; NOC is in the middle, and should follow its peers to new highs soon.
Smarter Consumers are a Drag on Retail
Cornerstone Macro analysts were out with a fascinating report this week that tries to explain why retail sales growth is stagnating despite the improvements in hiring and the economy. The short version is that consumers feel so burned by debt over the past 20 years that they are finally taking steps to reduce it in persistent ways.